AC K N OWLE DG E M E NT

All praise is to ALLAH ALMIGHTY, for giving me knowledge, insight, devotion and
strength to accomplish this task. I am immensely thankful to all the teachers and friends who
helped me to complete the project. I am grateful to the staff of NBP as well, who supported me
lot during this project and provided comprehensive knowledge of their products and services and
banking practices. Specially Syed Hammad Raza Naqvi, Branch Incharge CAD, NBP Civil Lines
Branch Jhelum & Syed Muhammad Fakhir Hassan Naqvi, Compliance Officer, NBP Civil Lines
Branch Jhleum. Their guidelines have lead us to display a picture of NBPs Management in this
report.
In the end I would like to thank all of my friends and family members for their support and
encouragement.

PREFACE
Banking sector pivotal importance in the economy of any country through its
vibrant functions. Moreover, the practice and familiarity learned during this
tenure would also attest very helpful and alleviating in the awaiting proficient
life.
This report is an upshot of my six weeks internship in NBP. NBP possess
an imperative and historical importance in the banking sector of Pakistan. It
always remains the center of hustles in business activities. It always endows
with great covenant of really round in terms of funds and services at all epochs
of its dynamism.
Although, a derisory period of six weeks is not enough to learn the
complex operations of NBP yet I made industrious efforts to converse them
comprehensively in this report. Particularly, I have remunerated more accents on
study of distinguishing features and services of NBP. I have made maximum
venture to elaborate this report with the material read, listed and observed.
Dear readers, I hope you will appreciate my report and sense that reading my
report is not like to waste the time in any respect because of the four principal
reasons as under:

I have made 100% realistic attempt to provide you the exact information
about NBP.

All

the

terms

have

been

explained

carefully

in

simple

and

comprehensive way.

This report is wholly up to date, equipping the information about currently

prevailing functioning and services of the banking system of NBP.

Objectives of Studying the Organization

The primary purpose of this study is to fulfillment of the requirements for the degree of MBA
(Banking & Finance).For this connection each student of this particular course is required to
undertake training in a relevant organization selected by them, for a period of 6-8 weeks.
The secondary purpose of this internship is to understand how the theoretical knowledge can be
applied to the practical situations and examine an organizations financial issues and identify its
opportunities/ problems and also suggest corrective measures. This internship is also very
necessary to gain confidence and become aware of the mechanism of an organization. As an
internee I want to achieve following objectives during my internship and organization study:
1. To familiarize with a business organization.
2. To familiarize with the different departments in the organization and their functioning.
3. To enable myself to understand how the key business process are carried out in
organization.
4. To understand how information is used in an organization for decision making at various
levels.
5. To relate theory with practice.
6. I was also keen to gain professional experience in an actual testing environment.
7. I want to develop my skills in the application of theory to practical work situations.
8. To develop my attitude conducive to effective interpersonal relationships.
9. To acquire good work habits and sense of responsibility.
10. To enhance my learning experience by application of fundamental concepts previously
learned.
11. To observe, analyze and interpret the relevant data competently and in a useful manner.
12. To develop my interpersonal communication.
13. I want to enhance my knowledge of the discipline of banking administration.

EXECUTIVE SUMMARY

CHAPTER # 1

HISTORY OF NBP
1. INTRODUCTION
The history of National Bank of Pakistan is part of Pakistans struggle for
economic independence. National Bank of Pakistan was established on November 9,
1949 under the National Bank of Pakistan Ordinance, 1949 in order to cope with the
crisis conditions which were developed after trade deadlock with India and devaluation of
Indian Rupee in 1949.British Govt. devalued its currency in September 1949,
India devalued its rupees but Pakistan did not. It led to a crisis in trading
between the two countries and India refused to lift the Pakistan Jute. To
solve this problem i.e. to export jute NBP was established through an
Ordinance of GOP. . 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. 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.i

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 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.
The precise summary of National Bank of Pakistan regarding its countrywide and
overseas operations is as follows:
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.
6

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.
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.
National Bank of Pakistan maintains its position as Pakistan's premier
bank determined to set higher standards of achievements. It is the
major business partner for the Government of Pakistan with special
emphasis on fostering Pakistan's economic growth through aggressive
and balanced lending policies, technologically oriented products and
services

offered through its

internationally

and

large network of branches

representative

offices.NBP

was

locally,

undertaking

Treasury Operations and Managing Currency Chests or Sub Chests at

57 of its offices where the turnover of the business under the head
amounted to Rs.2460 million.
i)

Deposits held by NBP constituted about 3.1% of total deposits

of all Pakistani Banks in 1949, which rose to 38% in 1952.

ii)

Growth in Deposits was accompanied by increase in Bank

portfolio in advances. NBP lent out to Textile, Yarn, Iron and
7

Steel and played a pioneer role in support of agriculture and

commerce.
iii)

NBP advances reached Rs.554.4 million by December 1959,

which was one third of the total schedule bank credit.

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.

Nature of National Bank of Pakistan

The nature of responsibilities of the Bank is different and unique from other
banks/financial institutions. The bank also handles treasury transactions for the
Government of Pakistan as an agent to the State Bank of Pakistan for handling
provincial/Federal Government receipts and payments on their behalf. The National Bank
of Pakistan has also played an important role in financing the countrys growing trade,
which has expanded through the years as diversification took place. The bank is
providing all banking services of mercantile and commercial banking permissible in the
country, which include:
Accepting of deposits of money on current, fixed, saving, term deposit and profit
and loss sharing accounts.
Borrowing money and arranging finance from other banks.

Advancing and lending money to its clients.

Financing of projects, including technical assistance, project appraisal through
long term/ short term loans, term finance and musharika certificates, etc.
Buying, selling, dealing, including entering into forward contracts of foreign
exchange.
Financing of seasonal crops like cotton, wheat, rice, sugar cane, tobacco, etc.
Receiving of bonds, valuables, etc. for safe custody.
Carrying on agency business for any description other than managing agent, on
behalf of clients including Government and local authorities.
Generating, undertaking, promoting, etc. of issue of shares and, bonds etc.
Transacting guarantee and indemnity business.
Undertaking and executing trusts.
Joint venturing with foreign dealers, agents and companies for its representation
abroad.
Participating in World Bank and Asian Development Banks lines of credit.
Providing personalized Hajj services to intending Hajjis.

1.1 MISSION STATEMENT

To make the Bank complete and competitive with all international
Standard in performing, quality of, operations, staff, financial strength
and products and services To develop a culture of excellence in every
spare of activity of the bank
.
CORE VALUES:
Highest standards of Integrity.
institutionalizing teamwork and performance culture.
Excellence in service.
Advancement of skills for tomorrows challenges.

 Awareness of social and community responsibility.

Value creation for all stakeholders.

1.2 GOALS AND OBJICTIVES

An organizational objective is the intended goal that prescribes definite
scope and suggests direction to the panning efforts of an organization

1.3 GOALS AND OBJICTIVES NBP

To be the pre-eminent financial institution in Pakistan and achieve
market recognition both in the quality and delivery of service as well as
the range of product offerings.

10

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

actuating

and

controlling

performed

to

determine

and

accomplish stated objectives with the use of human being and other
resources. The management has two types.
i)
ii)

Centralized.
Decentralized.

Centralized Management tends to concentrate decision making at

the top of the organization.
Decentralized disperses decision-making and authority throughout
and further down the organizational hierarchy.
NBP have a centralized type of management because the top management
takes all the decisions.
1.7 Net Work of Branches:
NBP have wide range of branches inside the country and outside the
country.
In Pakistan it has 28 regional offices, 1285Branches and 4 Subsidiaries.
In overseas it has 24 overseas branches, 6 other offices.
The Branch network of National Bank of Pakistan is divided into following categories
ATM network ( Total ATMs 101 & Total ATMs machines 104)
Domestic network ( 1249 Branches)
Islamic network ( 5 Branches)
Online network ( 156 Branches)
Overseas network ( 29 Branches)

11

Swift network ( 12 Branches)

Customer Facilitation Centers (6 Customer Facilitation Centers)
Agriculture branches ( 825 Branches)

Employee benefits of National Bank of Pakistan

Defined Benefit Plans
1. Pension Scheme
The bank operates defined benefit approved funded pension scheme for its eligible
employees. The banks costs are determined based on actuarial valuation carried out
using Projected Unit Credit Method. Net cumulative un-recognized actuarial gains/losses
relating to previous reporting period in excess of the highest of 10% of present value of
defined benefit obligation or 10% of the fair value of plan assets are recognized as
income or expense over the estimated working lives of the employees. Where the fair
value of plan assets exceeds the present value of defined benefit obligation together with
unrecognized actuarial gains or losses and unrecognized past service cost, the bank
reduces the resulting asset to an amount equal to the total of present value of any
economic benefit in the form of reduction in future contributions to the plan and
unrecognized actuarial losses and past service costs.
2. Post retirement medical benefits
The bank operates an un-funded defined post retirement medical benefits scheme for all
of its employees. Provision is made in the financial statements for the benefit based on
actuarial valuation carried out using the Projected Unit Credit Method. Actuarial
gains/losses are accounted for in a manner similar to the pension scheme.
3. Benevolent scheme
The bank also operates an un-funded defined benefit benevolent scheme for its eligible
employees. Provision is made in the financial statements based on the actuarial valuation
using the Projected Unit Credit Method. Actuarial gains/losses are recognized in the
period in which they arise.
4. Gratuity scheme

12

The bank also operates an un-funded defined benefit gratuity scheme for its eligible
contractual employees. Provision is made in the financial statements based on the
actuarial valuation using the Projected Unit Credit Method. Actuarial gains/losses are
accounted for in a manner similar to pension scheme.

Other employee benefits

1. Employees' compensated absences
The bank accounts for all accumulating compensated absences when employees render
service that increases their entitlement to future compensated absences. The liability is
determined based on actuarial valuation carried out using the Projected Unit Credit
Method.

Trust activities of National Bank of Pakistan

a) National Investment Trust (NIT)
Under a trust deed, the bank provides services, as a trustee to NIT and is performing
functions of sale/purchase of NIT units, safe custody and maintaining unit holders
accounts.
b) Long-term Credit Fund (LTCF)
Consequent upon the NDFC amalgamation, the bank manages on behalf of the
Government of Pakistan, LTCF established from the proceeds of loans disbursed by
various international funding agencies for financing private sector energy development
projects. The National Bank of Pakistan is in process of negotiating the charge of fee in
consideration of administrative services to the LTCF.

c) Qarz-e-Hasna Fund
The work relating to Qarz-e-Hasna Scheme was attended by Pakistan Banking Council
(PBC) since inception. PBC was dissolved in January 1997. In order to fill the void
created by the dissolution of PBC and in order to continue the scheme, SBP decided to
entrust all funds and transfer all record relating to Qarz-e-Hasna scheme for education to
the bank with the instructions to perform all work relating to the Fund.

13

Chapter# 2

PRODUCTS AND SERVICES

The followings are the main consumer banking products of NBP.

1. Deposits
The National Bank of Pakistan offers to their clients a variety of Deposit Schemes with
personalized services at competitive rates of interest. Any Pakistani citizen can open
his/her account for any deposit scheme at any of its Branches strategically located
throughout Pakistan. The Bank with its huge network of 1243 branches garners savings
from both the rich and the poor in urban as well as rural areas. Even a poor farmer in a
remote village, with his meager annual income, feels secure to safe keep his minuscule
savings in National Bank of Pakistan, Because National Bank of Pakistan has a long
heritage of trust and professional commitment.

Accepting Deposits
This function is important because banks largely depend on the
funds deposited with them by its customers. Deposits are of many
types:
1.8.2Current deposits
Current deposits are also called demand liability on current deposits. NBP pays
practically no interest on current deposits. Businessmen usually open current
accounts. In NBP current account can be opened with a minimum amount of
Rs.500/i)

PLS saving deposit

14

Profit and loss sharing deposits (PLS) are also called

checking accounts. One can deposit and draw money easily.
Profit on PLS is calculated every month but paid after six
months. PLS account can be opened with a minimum amount
of Rs.500/ii)

PLS term deposits

Fixed term deposits are deposits with the bank for certain
fixed period before the expiry of which they cannot be
withdrawn unless giving due notice. In this case the rates of
profit will be different depending upon the time period.
iii)

iii) Foreign Currency Account

Foreign currency accounts are opened, on proper introduction

and submission of required documents along with an initial
deposit prescribed from time to time. Rates of return on
foreign

currency

determined

in

deposits

accordance

are
with

subject
State

to

fluctuation

Bank

of

as

Pakistan

directives and will be paid on six monthly basis whereas the

return on term deposit/SNTD will be paid on maturity or as
prescribed by SBP. Foreign currency accounts, can be opened
in United States Dollars, Pound Sterling, Euro and Japanese
Yen in any of the authorized branches of commercial banks
throughout the country.

iv)

NBP Premium Aamdani

NBP Premium aamdani is a retail product of the bank. The amount of
investment required for this account is Rs. 20,000/-to Rs. 5,000,000.The
investment period is 5 years. Zakat and withholding tax will be deducted as
per rules. In NBP premium aamdani, the account holders have benefit of
free demand draft, pay order; free cheque book and NBP cash card

15

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

value

v) NBP Premium Saver

NBP Premium saver is a retail product of the bank. The minimum saving
balance of Rs. 20,001 and a maximum balance of Rs. 300,000 are required
for opening a premium saver account. Two debit withdrawals allowed in a
month and no limit on number of deposit transactions. The profit is
calculated monthly and Paid on half yearly basis. Free NBP Cash Card
(ATM + Debit) facility is available to account holder

2. Advances
National Bank of Pakistan plays a pivotal role in translating the government's
development plans in terms of growth in industrial, commercial and agricultural sectors
in Pakistan. Accordingly the Bank has formulated its Credit Policy under the guidelines
of SBP-the Central Bank of Pakistan

a) NBP Saibaan
The NBP Saibaan is retail product of the bank. It has different product items which are
home purchase, home construction, home renovation and purchase of land plus
construction. If anyone has a Home Finance Facility outstanding with another bank he
can have it transferred to NBP through a hassle-free process.

b) NBP Advance Salary

The NBP Advance salary has been the flag-ship product for NBP. NBP Advance Salary,
the leading personal loan product of the country, is maintaining its inimitability ever since
it was launched. This was only possible due to its swift growth and remarkable loan
disbursement of over 118 billion. Any employee can avail up to 20 net take home salaries
with easy repayment installments. Its hassle free acquisition with no prior formalities and
easy availability in a short turnaround time is attributed as the most distinguishing
features of the product. The product is offered countrywide.
16

Cash and Gold Finance.

Cash and Gold finance means that loan is given against the gold. The gold
is mortgaged with the bank and loan is taken. It is the area of consumer
finance. And borrower can take loan for common use.

Students Loan Scheme

Pursuant to the announcement made by the Federal Finance Minister in his 2001-2002
budget speech, a Student Loan Scheme (SLS) for Education was launched by the
Government of Pakistan in collaboration with major commercial banks of Pakistan (NBP,
HBL, UBL, MCB and ABL). Under the Scheme, financial assistance is provided by way
of Interest Free Loans to the meritorious students who have financial constraints for
pursuing their studies in Scientific, Technical and Professional education within Pakistan.

c) NBP Karobar- Presidents Rozgar Scheme

The solution of Pakistans major socio-economic problems primarily lies in the
development and growth of small & micro businesses. These will not only provide
employment opportunities to ever-growing population demand but will also become the
catalyst for breaking the vicious circle of poverty. In this regard, NBP has developed a
full range of Products under the Presidents Rozgar Scheme with a brand name of NBP
KAROBAR. The scheme will be offered to eligible young and literate citizens of
Pakistan, falling within an age group of 18-40 years having a minimum qualification of
Matriculation (except for females in the PCO/Tele-center product). The eligible
borrowers will be required to make a down payment of 15%. Asset and Life & Disability
insurances will be mandatory under this scheme. The 15% down payment will include 1st
years asset insurance premium. However, the cost of life and disability insurance will be
borne by GOP. The mark-up rate for the 1st year will be 12% and for the subsequent
years it will be 1 year KIBOR + 2%. Fifty percent (50%) of this rate will be paid by the
customer i.e. 6% and the balance of 6% will be borne by GOP. Additionally, first 10% of
the losses under the scheme will be taken-up by GOP. Initially, under the Presidents
Rozgar scheme, NBP will offer following products:
a) NBP Karobar Utility Store (under a Franchise with Utility Stores Corporation)

17

b)
c)
d)
e)

NBP Karobar Mobile General Store (without USC Franchise)

NBP Karobar Transport
NBP Karobar PCO
NBP Karobar Tele-center

3:Corporate Advances
a) Cash Finance
This is a very common form of borrowing by commercial and industrial concerns and is
made available either against pledge or hypothecation of goods, produce or merchandise.
In cash finance, a borrower is allowed to borrow money from the banker up to a certain
limit, either at once or as and when required. The borrower prefers this form of lending
due to the facility of paying markup/services charges only on the amount he actually
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 cash finance agreement, according to which the borrower has to pay
markup/service charges on at least on self or one quarter of the amount of cash finance
limit allowed to him even when he does not utilize that amount.

a) Running Finance/ Overdraft

This is the most common form of bank lending. When a borrower requires temporary
accommodation his banker allows withdrawals on his account in excess of the balance
which the borrowing customer has in credit, and an overdraft thus occurs. This
accommodation is generally allowed against collateral securities. When it is against
collateral securities it is called Secured Overdraft and when the borrowing customer
cannot offer any collateral security except his personal security, the accommodation is
called a Clean Overdraft. The borrowing customer is in an advantageous position in an
overdraft, because he has to pay service charges only on the balance outstanding against
him. The main difference between a cash finance and overdraft lies in the fact that cash
finance is a bank finance used for long term by commercial and industrial concern on
regular basis, while an overdraft is a temporary accommodation occasionally resorted to.

a) Demand Finance

18

When a customer borrows from a banker a fixed amount repayable either in periodic
installments or in lump sum at a fixed future time, it is called a loan. When bankers
allow loans to their customers against collateral securities they are called secured loans
and when no collateral security is taken they are called clean loans.
The amount of loan is placed at the 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 a fixed amount of money for his use, while the banker feels satisfied in
lending money in fixed amounts for definite short periods against a satisfactory security.

4:

Remittances

NBP offers the following services to the people.

4.1 DEMAND DRAFTS
If you are looking for a safe, speedy and reliable way to transfer money,
you can now purchase NBPs Demand Drafts at very reasonable rates. Any
person whether an account holder of the bank or not, can purchase a
Demand Draft from a bank branch.
2.4 LETTERS 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.
2.5

TRAVELER'S CHEQUES

Travelers cheques are negotiable instruments, and there is no restriction

on the period of validity of the cheques. Rupee travelers cheque is

19

available at all 700 branches of NBP. This can be cashed in all 400
branches of NBP. There is no limit on purchase of this cheque. It is one of
the safest ways for carrying money.
2.6

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.
2.3 SWIFT SYSTEM
The

SWIFT

system

(Society

for

Worldwide

Interbank

Financial

Telecommunication) has been introduced for speedy services in the areas

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-APKKA . 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.
2.7

MAILTRANSFERS

Move your money safely and quickly using NBP Mail Transfer service.
And NBP also offers the most competitive rates in the market. They
charges Rs 50/- exchange rate and RS 75/- postage charges on issuing mail
transfer.

Telegraphic Transfer
20

Telegraphic Transfer is a form of remittance, which is advised by telegram, telex or fax

machines. The fundamental principles of such transfer are otherwise identical with the
Mail Transfer. It is the message, which is sent from one branch to another on the order of
payer to payee through wire. It is one of the quickest means to transfer fund through the
use of telex/fax/internet or cable. Payment to the beneficiary is affected directly by the
drawee office upon identification or through credit into beneficiarys bank account. As
such remitting office is not required to issue any instrument payment to the remitter for
delivery to the beneficiary.

2.8

PAY ORDER

NBP provides another reason to transfer your money using our facilities.
NBP pay orders are a secure and easy way to move your money from one
place to another.

And, as usual, NBP charges for this service are

extremely competitive. The charges of NBP are very low all over the
Pakistan. It charges Rs 50/- for NBP account holders on issuing one
payment order. And charges Rs 100/- for NBP non-account holders on
issuing one payment order. It charges Rs 25/- for students on payment of
fees of educational institutions. If someone want a duplicate of payment
order they charges Rs 100/- for NBP account holders and Rs 150/- for
non-account holders.

5:Miscellaneous
a) Lockers
National of Pakistan also provides lockers facility in the country. The lockers issued only
to the depositors. No lockers are issued to any unknown person. The dual control system
is used for lockers. The officer has master key to apply on the locker but he cannot open
the locker of any person. The locker holder provides the bank has specimen signature.
Whenever the locker holders come to open the locker, his signatures are verified by the
officer and then will be able to open his locker. If the key of the locker is lost company

21

providing these lockers breaks the locker and new lock is fitted in its locker and lock is
destroyed in the presence of the locker holder and bank charges RS 1200 for that. In case
the locker holder dies, the court opens his locker in the presence of his heir as mentioned
in his will or and his belongings are given to them and the locker is closed.

b) NBP Cash Card

NBP Cash Card is a 24-hour direct access ATM/Debit card to your bank account, which
lets you pay directly from your account as an alternative payment method to cash. The
transaction is authorized and processed by entering PIN. The NBP Cash Card holders are
able to transact at any of the 4000 + Merchants where Orix logo is displayed and can
withdraw cash from NBP, 1-Link & M-NET ATMs across the country. The followings
are the main features of this product:
You won't need to carry a lot of cash with you every time you go out.
Secure and Safe transaction.
Account Information on tips (like: Mini Statement, Balance Inquiry, Utility Bill
Payment etc.)
Enable To Withdraw Cash From 1-Link ATMs / MNET ATMs.
Enable to Make Purchases from Around 4000 POS (Merchants) Countrywide
including 2500+ POS in Karachi.
No Card Issuance Fee for first 12 Months

c) International Banking
National Bank of Pakistan is at the forefront of international banking in Pakistan which is
proven by the fact that NBP has its branches in all of the major financial capitals of the
world. Additionally, the Bank has recently set up the Financial Institution Wing, which is
placed under the Risk Management Group. The role of the Financial Institution Wing is:To effectively manage NBP's exposure to foreign and domestic correspondence
Manage the monetary aspect of NBP's relationship with the correspondents to
support trade, treasury and other key business areas, thereby contributing to the
bank's profitability
Generation of incremental trade-finance business and revenues

22

.
SHORT TERM INVESTMENTS
NBP now offers excellent rates of profit on all its short-term investment
accounts.

Whether you are looking to invest for 3 months or 1 year,

NBPs rates of profit are extremely attractive, along with the security and
service only NBP can provide.
2.10 National Income Daily Account (NIDA)
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.
2.11 QUITY INVESTMENTS
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.

2.12

COMMERCIAL FINANCE

NBP dedicated team of professionals truly understands the needs of

professionals, agriculturists, large and small business and other segments
of the economy. They are the customers best resource in making NBPs
products and services work for them.
2.13

TRADE FINANCE OTHER BUSINESS LOANS

There are two types of trade finance.

2.13.1

Agricultural Credit:
23

 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.
2.13.2

CORPORATE FINANCE
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

Post

Shipment

Agricultural

Production Loans
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 banks belief in its

client's capabilities, and its commitment to the country.
2.14.1 Cash and Gold Finance.
Cash and Gold finance means that loan is given against the
gold. The gold is mortgaged with the bank and loan is taken.
It is the area of consumer finance. And borrower can take
loan for common use.

24

2.14.2 Advance salary loan

This loan is given to those people who are Govt servants.
They can get a loan up to the salary of fifteen months.

Core Banking Application

The single biggest achievement of implementing the Core Banking Solution is that each
customer is truly the customer of the Bank and not just the customer of the Branch, where
his/her account is maintained. The customer can go to a branch anywhere in the country
and perform a transaction. This is possible as the entire Customer Database is centrally
located at the central Data Centre and can be accessed throughout the network of
branches. Business processes in all the branches of National Bank of Pakistan update a
common database in a central server located at data centre, which gives a consolidated
view of banks operations.

Key features of the Core banking application of NBP

24X7 Banking
As a result of implementing Core Banking, most of the facilities being offered by bank
are available to Customers 24 hours a day, 7 days a week. The transactions are performed
using multiple channels such as ATMs, Internet Banking, Phone Banking and Mobile
Banking.
Anywhere Banking
Customers can avail of banking services across the branch and Channel network
irrespective of location where their account is maintained.
Integration with strategic sectors
Core Banking integrates all strategic sectors of Banking such as Trade Finance, Treasury,
Asset-Liability Management and Corporate Balance Sheet. As a result, the information
related to these areas is centrally available for use or reference.
Strengthening MIS, DSS and EIS
Core banking application is more than just a transaction processing system. It provides
updated data for generating various reports for Management information system (MIS),
25

and will facilitate Decision Support System (DSS) and Executive Information System
(EIS). As data is located on CDC, branches and administrative offices can concurrently
avail updated data when required.
Business Process Re-engineering
Core Banking would enable implementation of BPR initiatives of a Bank and facilitate
centralized handling of various processes. Branches would do less and less back office
work and would be able to focus on marketing, customer relationship management and
cross selling.
COLLECTION OF UTILITY BILLS, TAXES AND CHALLANS:NBP as an agent of the SBP collects bills from the general public and
charge commission for theservices rendered. The commission on each
type of bill is Rs. 8/- per bill. The branches collectthe utility bills and the
proceeds are then send to head office through MT.FOREIGN EXCHAGE
DEPARTMENT:-

26

Main

objectives

of

my

study

w ere

to

see

following

areas

Working Environment of NBP

Remittance Department
HR Department of NBP
Cash/clearance Department of NBP

CHAPTER# 3

BUSINESS OPERATIONS AND DEPARTMENTS OF NBP

Dividing an organization into different parts according to the functions is
called departments. So NBP can be divided into the following main
departments.
3.1 DEPARTMENTS OF NBP
3.1.1 CASH DEPARTMENT
Cash department performs the following functions
3.1.2 Receipt
The money, which either comes or goes out from the bank, its record
should be kept. Cash department performs this function. The deposits
of all customers of the bank are controlled by means of ledger
accounts. Every customer has its own ledger account and has separate
ledger cards.
3.1.3 Payments
It is a bankers primary contract to repay money received for this
customers account usually by honoring his cheques.
27

3.1.4 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 payable otherwise than on demand.

3.1.5 Types of Cheques

3.1.5(i) Bearer Cheques
Bearer cheques are cashable at the counter of the bank. These
can also be collected through clearing .
3.1.5(ii) Order Cheque
These types of cheques are also cashable on the counter but
its holder must satisfy the banker that he is the proper man to
collect the payment of the cheque and he has to show his
identification. It can also be collected through clearing.
3.1.5(iii) Crossed Cheque
These cheques are not payable in cash at the counters of a
banker.

It can only be credited to the payees account. If

there are two persons having accounts at the same bank, one
of the account holder issues a cross-cheque in favour of the
other account holder. Then the cheque will be credited to the
account of the person to whom the cheque was issued and
debited from the account of the person who has actually
issued the cheque.
3.1.6 Payment of Cheques

28

It is a bankers primary contract to repay money received for his

customers account usually by honouring his cheques. It is a contractual
obligation of a banker to honor his customer s cheques if the following
essentials are fulfilled.
a)

Cheques should be in a proper form:

b)

Cheque should not be crossed:

c)

Cheque should be drawn on the particular bank:

d)

Cheque should not mutilated:

e)

Funds must be sufficient and available:

f)

The Cheque should not be postdated or stale:

g)

Cheque should be presented during banking hours

3.2 CLEARANCE DEPARTMENT

A clearinghouse is an association of commercial banks set up in given
locality for the purpose of interchange and settlement of credit claims.
The function of clearinghouse is performed by the central bank of a
country by tradition or by law. In Pakistan, the clearing system is operated
by the SBP. If SBP has no office at a place, then NBP, as a representative
of SBP act as a clearinghouse.
In practice the person receiving a Cheque as rarely a depositor of the
cheque at the same bank as the drawer. He deposits the cheque with his
bank other than of payer for the collection of the amount. Now the bank in
which the cheque has been deposited becomes a creditor of the drawers
bank. The depositor bank will pay his amount of the cheque by
transferring it from cash reserves if there are no offsetting transactions.
29

The banks on which the cheques are drawn become in debt to the bank in
which the cheques are deposited. At the same time, the creditors banks
receive large amounts of cheques drawn on other banks giving claims of
payment by them.
The easy, safe and most efficient way is to offset the reciprocal claims
against the other and receive only the net amount owned by them. This
facility of net interbank payment is provided by the clearinghouse.

3.2.1 in-Word Clearing Books

The bank uses this book for the purpose of recording all the
cheques that are being received by the bank in the first clearing.
All details of the cheques are recorded in this book.

3.2.2 Out-Word Clearing Book:

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

3.3 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 to make proposals about the
loans. The Credit Management Division of Head Office directly controls
all the advances. As we known bank is a profit seeking institution. It
attracts surplus balances from the customers at low rate of interest and

30

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

firms. Credit extensions are the most important activity of all financial
institutions, because it is the main source of earning. However, at the
same time, it is a very risky task and the risk cannot be completely
eliminated but could be minimized largely with certain techniques.
Any individual or company, who wants loan from NBP, first of all has
to undergo the filling of a prescribed form, which provides the
follow ing information to the banker.
a)

Existing financial position of a borrower at a particular branch.

b)

Accounts details of other banks (if any).

c)

Name & address of the borrower

d)

Security against loan.

e)

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

Statement).

f)

Signing a promissory note is also a requirement of lending, through

this note borrower promise that he will be responsible to pay the
certain amount of money with interest.

3.4 REMITTANCE DEPARTMENT

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

Demand Draft

31

b)

Telegraphic Transfer

c)

Pay Order

d)

Mail Transfer

A) Demand Draft
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. The customer deposits the
amount of DD in the branch. After the payment the DD is prepared
and given to the customer. NBP officials note the transaction in
issuance register on the page of that branch of NBP on which DD is
drawn and will prepare the advice to send to that branch. The
account of the customer is credited when the DD advice from
originating branch comes to the responding branch and the account
is debited when DD comes for clearance. DD are of two types.
a)

Open DD:

Where direct payment is made.

b)

Cross DD: Where payment is made though account.

B) Pay Order
Pay order is made for local transfer of money. Pay order is the most
convenient, simple and secure way of transfer of money. NBP takes
fixed commission of Rs. 25 per pay order from the account holder
and Rs. 100 from a non-account holder.
C) Telegraphic Transfer
Telegraphic transfer or cable transfer is the quickest method of
making remittances. Telegraphic transfer is an order by telegram to
32

a bank to pay a specified sum of money to the specified person. The

customer for requesting TT fills an application form. Vouchers are
prepared and sent by ordinary mail to keep the record. TT charges
are taken from the customer. No excise duty is charged on TT. The
TT charges are:
Telegram/ Fax Charges on TT = Actual-minimum Rs.125.
D) Mail Transfer
When the money is not required immediately, the remittances can
also be made by mail transfer (MT). Here the selling office of the
bank sends instructions in writing by mail to the paying bank for the
payment of a specified amount of money. Debiting to the buyers
account at the selling office and crediting to the recipients account
at the paying bank make the payment under this transfer. NBP taxes
mail charges from the applicant where no excise duty is charged.
Postage charges on mail transfer are actual minimum Rs. 40/- if sent
by registered post locally Rs.40/- if sent by registered post inland
on partys request.
3.5 HUMAN RESOURCE DEPARTMENT
Human Resource plays a vital role in the success of every service
organization. They interact between man and machine. Their attitude can
win or lose the customer. The positive attitude could only be created in a
conductive environment, which can make the staff dedicated towards the
organizational objectives
. Functions of HR Department .
MAJOR FUNCTIONS
Following are the functions of HR Management and Administration
department, National Bank of Pakistan.
1. Human Resource Planning
33

Human Resource Planning is conducted by the HR department. They

assess the existing number and nature of staff and then place / post them
at needy branches according to the requirement of that branch. For
example, if the load on cash counter is increasing, one new cashier will be
posted at the Branch.
2. Recruitment of Staff
Another important function of HR department is recruitment of staff as
per availability of vacancies. At NBP, recruitment of permanent staff is
centralized and all recruitments are made by their Head Officer Karachi.
However, in near past limited authority has been given to regional offices
to hire the services of outsourced staff i.e staff provided by the
employment companies. This type of recruitment is being made in
following areas:
a.Security Guards
b.Janitorial Services
c.Sale & Marketing staff for retail products.
3. Transfer of Employee
The regional office controls fifty five (55) branches. All transfer and
posting of employees among these branches is made by HR department
keeping in view the staff requirement at different branches.
4. Job Rotation
Function of Job rotation is also performed by regional office. Normally
when an employee completes three years at a particular seat, he rotates to
another seat. This rotation is very important for internal control, to
prevent fraud and forgery and to enhance the employees skills for
different duties.
5. Human Resource Development & Training
H.R Department analyzes the day to day requirement of SBP regulation
for different Banking activities, and plans for training and development of
staff .This training may also be based upon introduction of new Banking
produces and competition with rival Banks.
6. Performance Appraisal
H.R Department also performs the function of performance appraisal of
employees on yearly basis .At the close of every year annual confidential
report (ACR) of each and every employee is written by HR department.
This ACR contains subjective and objective evaluation as well as personal
traits of an employee.
7. Promotion of employees
NBP HR department performs the function of promotion. Normally NBP
promotes its employees after every three yours on the basis of their past

34

performance, availability of vacancies in each grade/cadre and quota

approved by the Ministry of Finance, for each grade/cadre.
8. Lay Off
Lay off function is also performed by HR department. NBP is a govt.
owned organization and its employees retire at the attainment of age of 60
years. However, in 1998 and 2002 the NBP announced the Golden Hand
Shakeschemes and almost 5000 and 3500 employees separated from Bank
services in these respective years.
9. Health & Safety
H R department arranges for medical facilities to its employees. There are
several hospitals on Banks panel and employees can avail medical
facilities from these hospitals. Hospitals bills are being paid by HR
department after proper verification. NBP extend medical facility to
employees, their spouse (wife) and children as well as parents of the
employee. Brother or sister or any other relation is not entitled for this
medical facility.
10. Disciplinary Cases
HR department deals with all disciplinary cases of employees. These
disciplinary cases include: a. afraid & Forgery
b. Unauthorized leaves
c. Insubordination
d. Misconduct of finances
e. Violation of procedure & policy
11. Retirement Benefits
HR department also manages pensions and group life insurance. Pension is
allowed to all employees after retirement and when the employee dies and
his widow can avail this facility till death. Even if the widow dies, the and
daughter/son of employee can avail pension till she/he attain the age of
majority i.e. 18years or she/he married, whichever is happened earlier.
12. Personnel Information System
HR department is responsible to keep and maintain complete data of
Each and every employees this data includes his personal data as well as
professional data and being used to place right person for the right job.
13. Equal Employment Chance
NBP provides equal employment chance to men & women. HR department
is responsible to implement this policy, too.
14. Salary & Loan Administration
HR department performs the function of disbursement of Salary and
administration of Staff Loans. Salary is being disbursed in last week of
35

the month. NBP allows house building loan, Motor car loan and computer
loan toits employees. Period of house building loan is 20 years, Car loan
is 10 years and computer loan is 5 years. Mark up on HBL is 3% and
car/computerloanis4%.
HR department pays salaries to employees after deduction of monthly
installments of loans, already availed by them.

3.6. DEPOSIT DEPARTMENT

It controls the following activities:
3.6.1 Account opening
The opening of an account is the establishment of banker customer
relationship. Before a banker opens a new account, the banker
should

determine

the

prospective

customer s

integrity,

respectability, occupation and the nature of business by the

introductory references given at the time of account opening.
Preliminary investigation is necessary because of the following
reasons.
i.
ii.

Avoiding frauds
Safe guard against unintended over draft.

iii.

Negligence.

iv.

Inquiries about clients.

There are certain formalities, which are to be observed for opening

an account with a bank.
Formal Application
Introduction

36

 Specimen Signature
Minimum Initial Deposit
Operating the Account

3.6.2 Types of Accounts

Following are the main types of accounts
1)

Individual Account

2)

Joint Account

3)

Basic Banking Accounts

4)

Profit support Accounts

5)

Pensioner Accounts

6)

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

37

 Foreign currency accounts

3.6.3 Issuing of cheque book:
This department issue cheque books to account holders.
Requirements for issuing cheque book
a) The account holder must sign the requisition slip
b) Entry should be made in the cheque book-issuing book
c) Three rupees per cheque should be recovered from a/c
holder if not then debit his/her account.
3.6.4 Current account
These are payable to the customer whenever they are demanded.
When a banker accepts a demand deposit, he incurs the obligation of
paying all cheques etc. drawn against him to the extent of the
balance in the account. Because of their nature, these deposits are
treated as current liabilities by the banks.
3.6.5 Saving account
Savings Deposits account can be opened with very small amount of
money, and the depositor is issued a cheque book for withdrawals.
Profit is paid at a flexible rate calculated on six-month basis under
the Interest-Free Banking System. There is no restriction on the
withdrawals from the deposit accounts but the amount of money
withdrawn is deleted from the amount to be taken for calculation of
products for assessment of., profit to be paid to the account holder.
3.6.6 Cheque cancellation:
This department can cancel a cheque on the basis of;

38

a) Post dated cheque

b) Stale cheque
c) Warn out cheque
d) Wrong sign etc

39

CHAPTER # 4

COMPANY ANALYSIS
4.1 SWOT ANALYSIS
To carryout the SWOT and Financial Analysis of NBP through the help of
calculating necessary ratios in this section.
SWOT analysis is an acronym that stands for strengths, weakness,
opportunities, and threats SWOT analysis is careful evaluation of an
organizations internal strengths and weakness as well as its environment
opportunities and threats.
SWOT analysis is a situational which includes strengths, weaknesses,
opportunities and threats that affect organizational performance.
The overall evaluation of a company strengths, weaknesses,
opportunities and threats is called SWOT analysis.
In SWOT analysis the best strategies accomplish an organizations mission
by:
a)

Exploiting an organizations opportunities and strength.

b)

Neutralizing it threats.

c)

Avoiding or correcting its weakness.

SWOT analysis is one of the most important steps in formulating strategy

using the organization mission as a context; managers assess internal
strengths

distinctive

competencies

and

weakness

and

external

opportunities and threats. The goal is to then develop good strategies and

40

exploit

opportunities

and

strengths

neutralize

threats

and

avoid

weaknesses.

4.1.1 STRENGTH
(i) OLDEST INSTITUTION:
NBP is one of the oldest bank of Pakistan and first nationalized bank Hence
its customer base is strength from this plus point as customers have more
confidence in the bank. The additional value services as the privilege for the
bank.
(ii) ALTERNATE DUTIES IN SBP ABSENCE
The NBP performs additional services for its customers as well
as the other bank customer in the absence of SBP.
(iii) MORE DEPOSITS THAN OTHER BANKS
NBP has the relative competence in having more deposits than the other bank.
This is because of the confidence the customer have in the bank. The bank
being the privileged and oldest bank in banking sector of Pakistan enjoys this
edge over all others, lacking it.
(iv) EMPLOYEE BENEFITS
The employers at NBP are offered reasonable monetary benefit. Normally two
bonuses are given Eid-Ul-Fitar & Eid-Ul-Azha. This serves as an additional
benefit and competency for the bank and a source of motivation for the
employees.
(v) BROAD NETWORK

41

The bank has another competency i.e. it has broad-basses

network of branches throughout the country also more than one
branch in high productive cities. The customers are provided
services at their nearest possible place to confirm customer
satisfied.
(vi) STRICTLY FOLLOWED RULES & REGULATION :
The employees at NBP are strict followers of rule & regulation imposed by
bank. The disciplined environment at NBP bolsters its image and also
enhances the over all out put of the organization.
(vii) PROFESSIONAL COMPETENCE
The employees at NBP here have a good hold on their descriptions, as they are
highly skilled Professionals with background in business administration,
banking, economics etc. These professional competencies enable the
employees to understand and perform the function and operation in better
way.
(viii) HEALTHY ENVIROMNMENT
The

working

conductive

condition

and

in

favorable

the
for

NBP branch
better

output.

here

is

very

The

informal

environment affects the performance of the employees in a

positive way.
(ix)RELATION

BETWEEN

STAFF

AND

OTHER

EMPLOYEES
The bank enjoys a good plus point when it comes to the
employee manager relationship the hearing as removing of
discrepancies if any, between the employees, and between the
manager and employees.

42

(x) NBP ADVANCE SALARY

The product of the year 2008,2009. the product was developed by
NBP Credit Group, their basic target is salaried Govt Employees.
This has increased NBPs Credit portfolio with a major boost.
With minimum default ratio, its been the success story of NBP.
Still its a good product than their competitors personal loans.
The interest rate charged to this loan is SBP Discount Rate + 5%.
(xi) NO panelty on Late Payment or Early Settlement of
Loans
NBP is one of those banks, who donot impose any panelty to
their customers regarding late payment of installments or markup
and early settlement of laons or balloon payments in case of
credits.
In case a customer wants to make balloon payments will not b
charged to any panelty in any advances case of NBP. Its a
strength of NBP against its competitors.
(xii) NBP Premium Aaamdani
This is the only product of any commercial bank in the country
which is competing with the NATIONAL SAVINGS CENTERs
products. NBP is offering rates to the customers who deposits
money in multiples of Rs 50,000/- with them till five years.

At first year 7.5%

At second year 8.5%

At third year 9.5%

At fourth year 10.5%

43

At fifth year 11.5%

44

4.2 WEAKNESSES
a) LACK OF MARKETING EFFORT:
The bank does not promote its corporate image, services etc on a
competitive way. Hence lacks far behind in marketing effort .A
need for aggressive marketing in there in the era marketing in
now becoming a part of every organization.
b) NBP UNDER POLITICAL PRESSURE
The strong political hold of some parties and government and
their dominance is affecting the bank in a negative way. They
sometime have to provide loan under the pressure, which leads to
uneven and adjusted feeling in the bank employees.4.3.3
c) FAVORITISM AND NEPOTIS
The promotions and bonuses etc in the bank are often powered
by seniors favoritism or depend upon their wills and decision.
This

adds

employees

to

the

thus

negative

resulting

factors,
in

which

affecting

denominate

their

the

performance

negatively.
d) LACK OF FINACIAL PRODUCT
The bank falls far behind when the innovative and new schemes
are consider. 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.

45

e) INEFFICIENT COUNTER

SERVICES

IN

THE

RUSH

HOURS
During the rush hours, the bank is founded out to be a total flop
to handle the mob of people peaking from windows and doors.
The bank has deficiency to operate in the stages of rush hours
where the people find them services entangled in a situation of
nowhere because they are not well served.
f) LACK OF COMPUTERIZED NETWORK
The bank lack the strength of being powered by the network of
computers, which have saved time, energy and would have
lessened the mental stress, the employees have currently. This
would add to the strength if it were powered by network of
computers.
g) LACK OF MODERN EQUIPMENT
The bank lacks the modern Equipment that is note counting
machine computers. Even if there is any equipment they lack to
fall in the criteria of being rearmed as update and upgraded.
h) UNEVEN WORK DISTIBUTION.
The workload in NBP is not evenly distributed and the workload
tends to be more on some employees while others abscond away
from their responsibilities, which server as a demonization factor
for employees performing above average work.
i) OLD employee awareness

46

Computer awareness to old Staff of NBP is a weakness. They

should develop employee development & training programme to
effectively

update

their

employees

regarding

computer

applications & upcoming CORE BANKING SOFTWARE of bank.

4.3

OPPORTUNITIES
a) ELECTRONIC BANKING
The world today has become a global village because of
advancement in the technologies, especially in communication
sector. More emphasis is now given to avail the modern
technologies to better the performances. NBP can utilize the
electronic banking opportunity to ensure on line banking 24
hours a day. This would give a competitive edge over others.
b) MICRO FINANCING
Because of the need for micro financing in the market, there are
lot of opportunities in this regard. Other banks have already
initiated, now the time has arrived when the NBP must realize it
and take on step to cater an ongoing demand.
c) CAR FINANCING
This is the major area where NBP has not competed with private
banks. As per repute of NBP they must enter in personal & car
financing products.
d) CORE BANKING SYSTEM
Implementation of the CORE BANKING SYSTEM is still an
opportunity, as till now none of the banks operating in Pakistan

47

is using this most updated & famous banking application. It will

lead NBP to smooth sailing environment as a leading bank in
technology as well as competing between other banks. This will
upgrade NBP from paper & ledger era to the smooth &
sophisticated computer application.

4.4

THREATS
a) EMERGENCE OF NEW COMPETITORS
The bank is facing threats with the emergence of new competitor
especially in terms of foreign banks. These foreign banks are
equipped with heavy financial power with

excellent and

innovative ways of promoting and performing their services. The

bank has to take initiative in this regard or will find itself far
back in competition.
b) POLITICAL PRESSURE BY ELECTED GOVERNMENT
The ongoing shift in power in political arena in the country
effects the performance of the bank has to forward loans to
politically powerful persons which create a sense of insecurity
and demoralization in the customer as well as employees.
c) DOWNSIZING
The bank is currently acting upon the policy of downsizing
which threaten the environment of the bank Employees feel
insecurity in doing their jobs and work, hence affecting the over
all performance of employees negatively.

48

d) CUSTOMERS COMPLAINTS
There exists no regular and specific system of the removal of
customer complaints. Now a day a need for total customer
satisfaction is emerging and in their demanding consequences
customer's complaints are ignored.

CHAPTER # 5

ANYLASIS
After proper analysis of the organization I divided it into in four parts.
This analysis is mainly based on practical experience of NBP Staff,
analysis is as under: Problems at the branch.
Function analysis.
Administrative analysis.
Personal managements analysis.
5.1 PROBLEMS AT THE BRANCH
Customer Satisfaction
Poor record management and filing system
Unequal distribution of work
Marketing visits

49

5.2 FUNCTIONAL ANALYSIS

Formal Organization
Difference between theory and practice
Bank duty to maintain secrecy.
Excessive paper work
More accounts fewer deposits.
Delegation of authority

5.3 ADMINISTRATIVE ANALYSIS

Job analysis is not effective
Carelessness in opening of account
Lack of specialized training
Low Profit Rates
Poor job rotation.
Delays in Loan Advancement
Lack of appreciation
5.4 PERSONAL MANAGEMENT ANALYSIS
Need for better training program
Developing Managerial Leadership
Recruitment policy
Promotions
Transfer
50

 Marketing at desk
Lack of business communication

51

CHAPTER # 6

CONCLUSION
INTRODUCTION
NBP is an effectively operating and profit making organization and
carrying out its activities under a specified system of procedure. The main
regulatory body is State Bank of Pakistan, which provides policy
guidelines

and ensures that the money market

operates

on sound

professional basis while the head office specifies the whole procedure of
function and operations.
Here I am giving some suggestions, which in my view can add some input
for efficiency and better performance of NBP as an organization in general
and City branch in particular.
The recommendations are as follows:
6.1 Professional training
NBP staff lacks professionalism. They lack the necessary
training to do the job efficiently and properly. Although staff
colleges in all major cities but they are not performing well.
Banking

council

of

Pakistan

should

also

initiate

some

programs to equip the staff with much needed professional

training.
6.2 Delegation of Authority
Employees of the bank should be given a task and authority
and they should be asked for their responsibility.
6.3 Performance Appraisal

52

The manager should strictly monitor the performance of every

staff member. All of them should be awarded according to
their performance and result in the shape of bonuses to
motivated and incite them to work more efficiently.
6.4 Changes in Policies
There should not be any abrupt policies change by the upper
management, as this practice hurts the customer confidences
in the bank. Government should make long-term policies.
6.5 Utility Bill Charges
Bank gets Rs. 5 to 8 to processes a utility bill, and it is very
tire, tough and hard job despite this working resulting in a
loss to then Rs 5 to 8 per transaction. These charges should be
increased to RS 10 per bill to enable the branch to cover their
handling costs and make some profit.
6.6 Link w ith the Head Quarter
160 major branches of NBP should established a direct link
with the, head quarter in Karachi, through Internet or
Intranet. This will make the functions and decision making of
the management easier and convenient.
6.7 Credit Card
National bank of Pakistan should start its operation in credit
card. These cards were very helpful for the ordinary customer
in general and the business people in particular. To make it
mores

secure

and

to

eliminate

the

misuse

of

it,

the

management is required to keep proper security against the

card. But as NBP is a GOVT bank so most of the customer
gets defaulted and do not want to repay the CREDIT CARDS
53

amounts. Effective involvement of Collection officers for the

repayment

of credited

amount

rather

than treating

and

provisioning them as NPL.

6.8 Cash Financing

In this mode of financing the amount of credit not utilized by
the borrower is remained tax-free. It is recommended that a
small amount of interest should be charge on this amount as
well because the bank gas kept-aside the amount for that
borrower and can not advance it anywhere.
6.9 Decreasing Administrative Expenses
Bank should their administrative expenses. This was Rs 8
billion in the year 2009. That can be done by lying off the
surplus pool of employee with golden handshakes scheme.
The branches that are not much used could also be closed.
Employee can also be how to control the bank expenses. That
will give positive results in the future.
6.10 Needs to be Flexible in credit Policy
As mentioned earlier, NBP is very conservative in advances
and loans policy. It reduces the investment opportunities.
Also loans should be given to the small businessmen and the
agriculture sector at the low markup rate. It should adopt
flexible credit policy while giving credit to the agriculture
sector.

54

Not only it will be economical but will also reduce the extra
burden of work of the bank. It will also help in reducing the
use of excessive paper work.

6.11 Improper Distribution of Work

Proper

distribution

organization.

Proper

work

leads

to

distribution

of

success
work

in

every

prevents

the

employee from over and under work situation. So for a

smooth running of an organization proper distribution of work
is the hint to be followed.
During my internship I observed that there was no proper
distribution of work in the bank. I saw that some of the
employee worked like ants other sat idle starting here and
there. So this created a lot of over work situation for while
relaxation for other.
6.12 Inter Departmental Transfer
I watched during my internship that, there is number of
employee who have worked on one seat for many a year. It
can have negative effects motivation of employee who is hard
working and intelligent. Take the example of advances
section. In advance section if the employee is transfer after
sixth month or seven month, how can he be able to show his
performances and how can he be able to know the bank
customer in a short period of time.
6.13 Complaints of Customer

55

There

should

be

an

information

desk

to

provide

the

information and to receive the complaints of the customer in

the bank.
There is no complaint box available in the branch and not any
person appointed to hear the complaints.
Every person cannot go to the manager for the complaint
because most of the people are hesitant. So I suggest
management to install a compliant box in the branch, and
recruit a special person for that guidance of the customer
when they are unable to manage some difficulties in banking
matters.
6.14 Organizational Commitment
It is suggested that employees working on daily wages basis
should be given some benefits, which the other employees are
getting. Their salaries must increase according to efficiency,
performance and service.
6.15 Managerial Leadership
In the analysis, we have discussed the difficulties of the
assistant in taking any initiative; therefore it is recommended
that the assistants should he given special training to make
them ready for the leadership.
6.16 Housing and House Hold Goods loans
Bank should initiate these loans because most of banks
customers are middle class and they cannot afford to buy
house or household goods at once by their own.

56

6.17 SOME MORE Solutions / Improvements suggested

After the completion of my internship in the NBP I am able to
give some suggestions for the betterment of the organization.
During the internship we had discussions with different
persons like manager, operational manager different officers
employees and customers. In the light of these discussions we
are able to give some suggestions which are given below.
Use of modern technology .
Training and Development of Employees
Frequent Communication
Promotion on the basis of Ability

57

AREFERENCES
NBP annual report (2010)
NBP annual report (2011)
NBP annual report (2012)
ONLINE RESOURCES
www.da wn.com.pk
www.sbp.org.pk
www.nbp.com. pk

www.onlinewbc.gov/docs/finance/fs.ratio

58

NBP Quarterly Report September 2008