internship report ahsan
TRANSCRIPT
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Internship ReportON
National Bank OF Pakistan
UNIVERSITY OF WAH
WAH CANTT
PREPARED By
M.AHSAN IRSHAD
BBA(hons)
SESSION: 2008 - 2012
ROLL NO: 030
Acknowledgement
First and foremost all praise is to Almighty Allah to give me the courage and patience to
carry out this responsibility successful.
My report will remain incomplete if I do not mention the efforts of those people who
helped me in completing this work.
First of all I will thank to Mr.Malik Yousaf Zaman who gave me opportunity to work in
such a prestigious organization. I also tribute to my all teachers who able me to work
with experienced persons and enable me to work very efficiently throughout the period of
Internship.
The administration department of NBP prepared my internship program. Operations
manager Mr.Choudhary Shahzad Ahmad with special attention prepared this program.
The program was organized in such a way that sufficient time was given to each
department according to its importance. I am really thankful for his co-operation during
the internship.
At last, I would like to thank all those persons who helped me in completing this report.
I am also indebted to the persons under mentioned because without their help, it would
not have been possible for me to achieve this practical knowledge.
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Executive Summary
This report is based on internship in National Bank of Pakistan Gol Bagh Branch Multan.
It is a famous and reputed bank of Pakistan. National Bank of Pakistan maintains first
position in banking sector in Pakistan. This report is based on the activities which are
performed in this bank. This report contains, Financial analysis, SWOT analysis, bank
tariffs and exchange rates of National Bank of Pakistan. There are also stated the
activities which I performed during my internship in the branch. In this report also
discuss the history of NBP, organizational structure their corporate level strategies. There
are also mentioned the way of investment, rates of investment, all types of financing and
loans facilities the National Bank of Pakistan provides. In the advances side the bank has
been successful in deploying its resources in the best way in all commercial, industrial
and agricultural sectors of the country. These advances have been increasing with the
increasing trade and commerce, and bank has been able to meet the requirements up to
the maximum extent. The introduction of a new set of services in shape of foreign
currency accounts has further given a sharp rise in the banking field. This has made easy
for the foreigners residing in Pakistan to be encouraged and make the inflow of foreign
exchange in the country more stable. This new service, though shaken its importance
after undue freezing of all accounts in 1998 have spread a situation of non-confidence
among the masses, still these accounts are increasing in number.
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INTRODUCTIONVision……………………………………………………………………………………7
Mission………………………………………………………………………………….8
Core Values………………………………………………………………………….....9
Goals…………………………………………………………………………………....10
History of Company…………………………………………………………………...11
Nature of Organization………………………………………………………………..13
Unique Feature of Company………………………………………………………….13
Business Volume………………………………………………………………………16
Organizational Structure……………………………………………………………..17
Chapter-2......................................................................................................18
Introduction of Departments
Admin (HR) Department……………………………………………………………..19
Foreign Exchange Department……………………………………………………….27
Local Remittance………………………………………………………………………29
Foreign Remittance …………………………………………………………………...32
Retail Department……………………………………………………………………..39
Advances Department…………………………………………………………………47
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TABLE OF
Chapt
Chapt
Account Opening Department………………………………………………………...52
Deposit Department……………………………………………………………………56
.......................................................................................................58
Work Done By Me…………………………………………………...................59
Account Opening Department………………………………………………………...59
Remittance Department……………………………………………………………….60
Credit Department……………………………………………………………………..61
Foreign Exchange Department………………………………………………………..61
Retail Department……………………………………………………………………...61
Chapter-4........................................................................................................62
Financial Analysis……………………………………………………………….63
Ratio Analysis…………………………………………………………………………..63
Balance Sheet Ratios…………………………………………………………………...64
Profit & Lass Accounts Ratios………………………………………………………...64
Inter-Statement OR Combined Ratios………………………………………………..64
Balance Sheet…………………………………………………………………………...73
Profit &Loss Account…………………………………………………………………..74
Chapter-5……………………………………………………………………76
SWOT Analysis....................................................................................................77
i. Strength…………………………………………………………………………77
ii. Weakness……………………………………………………………………….78
iii. Opportunities…………………………………………………………………..79
iv. Threats………………………………………………………………………….79
Suggestions & Recommendations……………………………………………………..80
Conclusion………………………………………………………………………………83
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Chapt
Chapt
Chapt
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Chapter-1
INTRODUCTIO
NVision
Mission
Core Values
Goals
History of Company
Nature of Organization
Unique Feature of Company
Business Volume
Organizational Structure
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History of Company
National Bank of Pakistan (the Bank) was established on November 9, 1949 under the National Bank of Pakistan Ordinance, 1949 in order to cope with the crisis conditions which were developed after trade deadlock with India and devaluation of Indian Rupee in 1949. Initially the Bank was established with the objective to extend credit to the agriculture sector. The normal procedure of establishing a banking company under the Companies Law was set aside and the Bank was established through the promulgation of an Ordinance due to the crisis situation that had developed with regard to financing of jute trade. The Bank commenced its operations from November 20, 1949 at six important jute centres in the then East Pakistan and directed its resources in financing of jute crop. The Bank’s Karachi and Lahore offices were subsequently opened in December 1949. 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 country’s growing trade, which has expanded through the years as diversification took place. Today the Bank finances import/export business to the tune of Rs. 52.7 billion, whereas in 1960 financing under this head was only Rs. 1.54 billion.
History 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.
1955 By this time NBP had branches in London and Calcutta.
1957 NBP established a branch in Baghdad, Iraq.
1962 NBP established a branch in Dar-es-Salaam, Tanganyika.
1964 The Iraqi Government Nationalized NBP's Baghdad branch.
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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%. Also that year, NBP closed its branch in New York.
2002 Pakistan International Bank renamed itself United National Bank Limited (UNB). The ownership structure of the UNB remained as before. The only change to the shareholding structure is that UBL had recently been privatized in Pakistan and was now owned 49% by the Government of Pakistan and 51% by a joint foreign consortium of Abu Dhabi.
2003 NBP received permission to open a branch in Afghanistan.
2005 NBP closed its offshore branch in Cairo.
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Nature of Organization
National Bank of Pakistan (the bank) was incorporated in Pakistan under the National
Bank of Pakistan Ordinance, 1949 and is listed on all the stock exchanges in Pakistan. It's
registered and head office is situated at I.I. Chundrigar Road, Karachi. The bank is
engaged in providing commercial banking and related services in Pakistan and overseas.
The bank also handles treasury transactions for the Government of Pakistan (GOP) as an
agent to the State Bank of Pakistan (SBP). The bank operates 1,287 (2009: 1,287)
branches in Pakistan and 22 (2009: 18) overseas branches (including the Export
Processing Zone branch, Karachi). Under a Trust Deed, the bank also provides services
as trustee to National Investment Trust (NIT) and Long-term Credit Fund (LTCF).
During the year, the Bank has increased its Paid-up-Capital from Rs. 10,763,702,260 to
Rs.13, 454,627,830 as approved by shareholders in their general meeting held on March
31, 2010.
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Unique Features of CompanyNational 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 large network of branches locally, internationally and representative offices.
The Bank is providing all banking services of mercantile and commercial banking permissible in the country, which include:
Handling of treasury transactions for the Government of Pakistan as agent to the
State Bank of Pakistan.
Providing services under a Trust Deed as Trustee to the National Investment Trust
(NIT) including safe custody of securities on behalf of NIT.
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, scrips, valuables, etc. for safe custody.
Carrying on agency business of any description other than managing agent, on behalf of clients including Government and local authorities.
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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 Bank's" lines of credit.
National Bank of Pakistan is the largest commercial bank operating in Pakistan. Its balance sheet size surpasses that of any of the other banks functioning locally. It has redefined its role and has moved from a public sector organization into a modern commercial bank. The Bank's services are available to individuals, corporate entities and Government. While it continues to act as trustee of public funds and as the agent to the State Bank of Pakistan (in places where SBP does not have a presence) it has diversified its business portfolio and is today a major lead player in the
Debt equity market
Corporate investment banking
Retail and consumer banking
Agricultural financing
Treasury services
International operations
Islamic banking
Operations
Information technology
Human resource
Retail banking
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Business Volume(Rs. in Millions)
Authorized capital 13,454,627,830
Paid up capital 10,763,702,260
Shareholder’s equity 94792
Deposits 726465
Advances 475243
Investments 217643
Total Assets 944233
Pre tax Profit 22300
After tax Profit 18212
Earning per share 16.92
No. of branches 1287
No of employees 16248
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Product line
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Chapter-2Introduction of DepartmentsAdmin(HR) Department
Foreign Exchange Department
Local Remittance
Foreign Remittance
Retail Department
Advances Department
Account Opening Department
Deposit Department
Admin (HR) Department
Human Resource Management (HRM)
Human Resource Management (HRM) is a general term used to describe a variety of functions aimed at effectively managing an organization’s employees or “Human Resources” HRM professionals oversee the “people” side of an organization including benefits, career development, training, hiring, and many other functions. The goal of HRM is to assist NBP to meet their strategic goals by attracting and retaining qualified employees, and managing them effectively while ensuring that the organization complies with all appropriate labor laws.
Human Resource Recruitment and Selection
If the firm hires only unskilled labor, it may find a plentiful supply knocking on its door and have no need for recruiting. But skilled labor, and especially executive talent, must usually be sought. The process of attracting applications from people is called recruitment.
Objectives of Recruitment
The basic objective of recruitment is to obtain an adequate number of applicants with the necessary qualifications. Since there are usually some applicants who do not meet the requirements, this means attracting more applicants than there are openings. Experience will usually indicate what proportion of applicants is rejected, and therefore how large a pool of applicants is needed.
Recruitment also serves the purpose of expanding the pool of applicants beyond immediate requirements. There are at least three reasons for doing so. First, the more applicants you have, the more selective you can be and the better are your chances to of finding outstanding employees. Second, affirmative-action plans may require that you make special efforts to attract female and minority group applicants. Third, you may wish to make contact that will result in good will and future applications. College and University recruiters often spend more time “selling the company” than trying to screen applicants. If the interviewee isn’t interested in the job, he or she may have a friend who At NBP an important function of recruiting which is often overlooked is the projection of a clear corporate image. If the potential applicants know what the firm is like and what kinds of employees it is looking for, they will be able to exercise some self-selection. [Type text]
This requires that the company communicates clearly the duties of the position and the skills and experience required, as well as the managerial philosophy of the firm.
Methods of Recruitment
There are many ways of recruiting applicants: newspapers and magazine advertisements, interviewers who talk to graduating students, word of mouth advertisements by current employees, and notices of vacancies sent to public and private employment agencies.
NBP uses newspaper advertisements and word of mouth advertisements by current employees. For regular CVs are received every day from so many job seekers mainly through Internet and a database is maintained. For management trainee officers newspaper advertisement is used once a year.
Selection
Selection is the process of measuring and assessing the characteristics of a group of applicants and choosing those people who are most likely to succeed on the job. The criteria of success may include productivity on the initial job and on subsequent jobs, tenure with the company, rate of promotion, and final level achieved. The choice of criteria depends on the goals of the organization.
There are two types of hiring at NBP.
Regular Intake.
Management Trainee Officers
Regular Intake
Selection in case of regular intake is based on experience and knowledge. There is no written examination for regular intake. They just have to give interview.
Management Trainee Officers
Selection of management trainee officers is made once a year. The applicants first have to take a written examination based on GMAT format. Top scorers give interview to a panel. The panel consists of 5 members. The panel includes M.D, president, chief executive etc.
Criteria for Selection
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The criteria for selection of management trainee officers are MBA, M.Sc economics, or equivalent from any well-known institution. The age limit is more than 21 years and less than 26 years.
Job Orientation
Once the applicant has been chosen and placed, the next step is orientation to familiarize the person with the requirements of the job, the way it relates to other jobs and to the goals of the bank, the new employee will be working with, and the policies of the organization.
On the average, orientation includes at least an introduction to fellow employees a quick tour of the facilities, rest and lunch breaks, and the pay period. The employee is often presented with a set of written policies and procedures.
Goals of Training and Development
At NBP training is used to improve knowledge, skills, and attitudes. There is considerable interaction among the three purposes for training.
Knowledge is generally considered the easiest to change and the most susceptible to a direct approach. It is usually not difficult to improve skills, at least in the short run. Attitudes are the most difficult to influence directly. But often an attempt must be made to change attitudes along with skills in order to support and reinforce the desired behavioral change.
Training and Development
In a sense, virtually everything a person does can be a learning experience. Thus it could be argued that ordinary performance on the job constitutes a form of training. However exclude every day work from the training category unless it is planned as learning experience.
NBP has its own training academy where management trainee officers and other employees get training. Bank also offers one or two training programs every year to its employees. The term development tends to be applied to learning experiences designed for high level employees, possibly of longer duration and with less structure than usual training. Bank encourages employees to participate in decision making, which is not normally considered to be a form of training.
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When a person is appointed on the permanent basis he/she gets the 30 weeks training of three phases. NBP provides training to its employees. It has its own Training College.
1st phase: 4 weeks commercial banking training at IBP (Institute of bankers of Pakistan)
2nd Phase: 6 weeks training on NBP banking procedure and practices at NBP staff college.
3rd Phase: 20 weeks on the job training at NBP major branches.
Performance Appraisal
The key to use merit pay as an incentive is a well-planned performance appraisal system. If employees feel that the basis for determining merit pay is faire and objective, the will probably be willing to strive for a high merit rating. But there are many pitfalls in designing a good performance appraisal system.
There is a complete performance appraisal system at NBP for good performers. There are different incentives for performance appraisal but NBP mainly uses merit pay system on the basis of efficiency, effectiveness and productivity of employees.
Job Design
At NBP job design refers to the study of individual tasks in an attempt to make them more relevant to the company and to the employee. From bank’s point of view, jobs that are performed efficiently and effectively are optimal. Following job design techniques are used.
Job Enlargement
In this tasks are combined to give a worker more of the same types of duties to perform e.g. bank employees usually have to perform same type of tasks according to their job position.
Job Enrichment
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Job enrichment is altering jobs by giving the worker more authority and control over activities. The concept of job enrichment exists at NBP employees have the authority to make certain types of decisions regarding their work.
Job Rotation
It is moving workers through several jobs of same level to increase variety.
Employees are rotated in the organization from department to department from their own discretion and also from the management.
Leadership
A leader is someone who exercises influence over other people (Huczynski and Buchanan, 1993).
Leadership is creating vision to which others can aspire and energizing them to work towards this vision (Anita Riddick, 1992).
Leadership Has Great Importance At NBP
There are three main styles of leadership.
Authoritarian/Autocratic: In this style of leadership leaders make all final decisions for the group.
Consultative/Participative: In this style of leadership leader makes decisions after consultation with the group. There is total communication between leader and members.
Democratic/Participative: In this leadership style decisions made by the group, by consultation or vote. Voting based on the principles of one person, one vote, and majority rules. All members are bound by the group decision and support it.
At NBP authoritarian/autocratic leadership style is practiced, the top management makes final decisions and employees have to follow it.
Key Leadership Roles
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At NBP the job of a top manager contains following interrelated roles.
Figurehead: acts as legal and symbolic head and performs obligatory social, ceremonial, or legal duties.
Leader: motivates, develops, and guides subordinates. He also acts as role model; provides a vision for the bank’s future.
Monitor: seeks and obtains information needed for understanding the bank and its environment ( reads business periodicals; subscribes to data services; review key indicators of bank’s performance)
Disseminator: Transmits information to the rest of the top management team and other key people in the bank (chairs staff meetings, communicates strategic plan, and makes policy announcements).
Spokesperson: he transmits information on the behalf of the bank to groups and people.
Disturbance handler: takes corrective actions in times of crises or trouble.
Negotiator: represents the bank in negotiating important agreements
Motivation
Employee Motivation
Motivation can be defined as the willingness to do something.
Whenever an employee is motivated he wants some rewards. There are basically two types of rewards.
Intrinsic rewards: these include verbal praise, certificate of merit etc.
Extrinsic rewards: this type of rewards includes bonus, promotions, increase in salary
etc.
Management of NBP motivates its employee through both intrinsic and extrinsic rewards. In extrinsic rewards they provide, good salary package to the employees, annual increments, performance sharing (i.e. on the basis of both individual and team [Type text]
performance), promotions on the basis of good performance, allowances i.e. winter allowance, special duty etc.
Management also motivates employees through intrinsic rewards. These rewards include verbal praise, 20 casual leaves, 30 days medical leave per year.
Facilities
NBP is providing following facilities to its employees.
House rent allowance i.e. 40% of the basic pay of the employee.
10 % utilities allowance is provided to the employees.
Through the car buy back scheme executives can buy the car he/she is using at the book value.
Employees can get loan through loan policy.
The above mentioned facilities also act as motivating factors.
Organizational Behavior
Basically organizational behavior relates to the behavior of employees and management or as a whole it is structure and culture of the organization.
There is friendly relation ship between employees and management at NBP. They have adopted a quality culture in the bank.
In organizational behavior following factors are very important.
People: NBP considers employees as individual and as a group for shaping their behaviors and attitudes.
Structure: it basically defines roles of an individual in an organization. Roles of top management are clearly defined but there is no clear role description for the employees working at OG1, OG2, and OG3.
Technology: technology has changed the organization’s behavior to a great extent. They gradually moved towards the provision of Internet banking services and computer based record keeping.
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General Pay structure
Basic Pay:………………………………………………..According to Grade
House Rent……………………………………………….50% of basic pay
Education…………………………………………………2500 fixed
Cost of Medicine………………………………………….15% of basic pay
Utility Bills………………………………………………..12% of basic pay
Dearness Allowance………………………………………15% of basic pay
Petrol………………………………………………………OG3:120 liters
OG2:130 liters
OG1: 140 liters
Foreign Exchange Department
“The transfer of credits to a foreign country to settle debts or account between resident of home country and those of the foreign country” or
“The foreign bills currencies etc used to settle such accounts”
Foreign exchange department deals within
Import Export Money transfer
National Bank of Pakistan and Western Union started business in May2002 with 53 locations that has since been extended to 1001 NBP locations Western Union operators are called Front Line Associates (FLAs).
Types of Money transfer
Inward Outward
But here in the branch they are just dealing with inward money transfer.
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Working of Western Union Money Transfer
Installation of Western Union Translink Software Personal ID and password issued by NBP WU to FLA
Procedure for Making Payment to Beneficiary
1) The beneficiary must tell the CNIC no, Passport or Driving license to the operator 2) The beneficiary must tell the code which has been told by the sender3) The operator initiates a search into the system of MTCN (Money Transfer Control
Number). 4) Operator must match the following particulars: Payee’s first, middle and last name along with photo I.D. Senders first, middle and last name Amount expected {must not be less then or greater than 10% of the actual
amount} Name of the originating country i.e. from where money transfer has been sent. 5) After matching the transaction operator gets two Automated Cash Receipts
(ACR)ACR will be signed by: i. Operator
ii. Incharge foreign exchange or operations manager or the branch manager
iii. Incase the amount exceed Rs.25000 the operator will get the signatures of to officer.
iv. At branch where operations manager is not posted, the head cashier will singed the form.
6) The operator hand over one copy of the ACR to the beneficiary with the request to present to the cash counter second copy of the ACR to the cashier. And one form along with a photocopy of identification will be kept by the operator as the permanent record.
7) At the time of making payment to customer following entries will be passed. i. Debit Western Union Settlement Account
ii. Credit Cash.
8) At the close of business hours operator will generate End of the Day “Activity Report” (summary of all payments made during the day) and pass on the Operations Manger/ Branch Manager who will review & arrange for passing following entry:i. Debit National Bank of Pakistan General Account. (HASRAT
MOHANI BR)
ii. Credit Western Union Settlement Account.
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9) A copy of activity report will be couriered to NBP Hasrat Mohani Road Branch Karachi claiming reimbursement of payouts of the day.
10) WU operators before requesting for Remote Transaction to NBP WUCSC must ensure that QUICK FORM is neatly filled in with capital letters and contain following details:
Money Transfer Control Number(MTCN) Payee 1st & last name Senders 1st and last name Originating Country name Expected amount Payee date of birth Payees Identification number Payees identification expiry date Branch code and stamp Branch return fax number Operator plus Ops manager or Manager signature Customers signature
Local Remittance Department
The need of remittance is commonly felt in today’s business. A major function of any bank is to “transfer of funds from one place to another place” National Bank of Pakistan Uses the following modes of transfer of funds.
Demand Draft Telephonic Transfer Pay Order Mail transfer Online Transfer
Funds Transfer Facility
National Bank is providing the facility to transfer the funds in the remote part of the country for the payment / credit to the account of customer himself or to third party.
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The term Inland Remittance is used for the funds transferred within the country and for out of the country Foreign Remittance is used. National Bank transfers the funds in following modes.
Demand Drafts
Telephonic Transfer
Pay order / Cash order
Mail Transfer
Online Transfer
Federal Excise Duty (FED)
Bank makes a commission/service charges on every issuance of any instrument. Govt. takes 10% as a tax and that is called Federal Excise Duty (FED).
Demand Drafts
It is an order Cheque (instrument) drawn by one branch of the bank upon another branch or any other bank in Pakistan. It is negotiable instrument and can be made payable to bearer and it is only credited in the account of drawer himself or in the third party account. A demand draft is an order instrument by the issuing bank requiring the other branch of the bank to pay a specified amount of money to the person on presentation of the draft in the specified branch. A draft can be obtained by a person who wants to send money by paying the amount of the draft and commission to the housing bank, and can be sent by post to the person needed to be paid. Demand draft is safe, secure and convenient to send / carry instead of cash.
Software
Following are the NBPs own software that are being used for punching inward and outward demand drafts.
EBS: Electronic Banking System
BBO: Branch Back Office (Dos based).
Telephonic Transfer
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Telephonic transfer is the quickest mean of transaction. When customer desires to send
funds one place to another on urgent basis. Such funds are transferred through TT from
one account to another account. Through TT money is transferred within 24 hours and
this is purely inter-bank / inter-branch transaction.
Pay Order / Cash Order
If funds are to be transferred within a city then Pay Order is used. It is an instrument like DD and payment of instrument is made by cash / Cheque payment. . On every pay order there is a crossing stamp, which is used to minimize risk and for security purpose. If the pay order is crossed it can’t be converted into cash. First of all it must be submitted into the very branch account and then receiver can receive the cash.
Mail Transfer
It is another quick way to transfer the funds from one station to another. In this mode the funds are transferred through main and may take two or more than two days. . The issuing bank charges a commission of issuance, which is, called MT rate. Mail Transfer is carried just between National Bank and can be outside the city and Beneficiary must be the A/C holder. If the branch is online then MT can be online but sender and beneficiary must be the A/C holder.
NBP General A/C
This A/c must reconcile within 30 days from both sides means sender and receiver. If we want to credit any branch we use F15 RBV (fanfold). If we want to debit any branch we
Use F16 RBV (fanfold)
Online Transfer
Online transfer is used for online transferring money within sometime. In online transfer we enter the advice/data into the system and at the day ending.
If the branch is not online we issue the mail transfer advice
No instrument is accepted except 2 officer’s signatures.
Reconciliation
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The Head Office matches the original and responding advice. Any discrepancy found between the original and responding advice is then check by the Head Office, on fortnightly basis. Then Head Office informs the corresponding responsible branches about that discrepancy and advises them to remove their mistakes.
Clearing Department
Before discussing it is necessary to know what is “Clearing”.
“The process by which cheques exchanged between the collecting and paying bank and the ensuing financial settlement is called “Clearing”.
This facility is provided by the state bank of Pakistan for offsetting of cross obligations between the different banks. Clearing is of two types:
1) Inward clearing
2) Outward clearing
Clearing
Every banker acts both as a paying as well as a collecting banker. It is however an important function of crossed cheques. A large part of this work is carried out through the bankers clearing house. A clearing house is a place where representatives of all the banks of a city get together and settle the receipts and payments of cheques drawn on each other bank. As the collecting banker runs the certain risks in receipt of their ownership, the law has provided certain protections to the banks.
NIFT (National Institute of facilitation Technology)
Deals with clearing of all instruments issued by bank except MT.
Clearing House
A clearinghouse is a place where the representative of all banks get together to settle the payment and receipts of Cheque drawn on each other.
Foreign Remittance
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“The transfer of credits to a foreign country to settle debts or account between resident of home country and those of the foreign country” or “the Foreign bills currencies etc used to settle such accounts”.
Foreign Exchange department deals within exports imports and Money transfer.
National Bank of Pakistan acts as importer bank as well as exporter bank for different parties who are interested in the business of export & import.
DEFINE IMPORTAll goods and services brought into a country that were purchased from organizations located in other countries.
DEFINE EXPORTAll goods and services sent from one country to another country.
Documents required for ExportThe person who is exporting goods to the foreign countries requiring the following documents.
National tax number Registration with export promotion Bureau Sales tax registration Commercial Invoices Bill of Lading Packing List Bill of exchange Promissory Note E-Form Letter of Credit Certificate of origin Beneficiary certificate
After compiling the entire task by resident country that is exporting goods in favor of foreign importer now it will be his turn to make payment.
TYPES OF LETTER OF CREDIT
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Importer bank issues a document on request stating that it will pay the exporter when exporter fulfill the terms of letter of credit. Letter of credit is of two types:
1. At Usance L/C2. At Sight L/C
SIGHT L/CRequires the importer / importing bank to pay as soon as it receives the clean documents from exporter.
USANCE L/CIt extends time period (30days, 60days, 90days, 120days, 150days, & 180days).to importing bank for payment. After specified time period importer have to pay.
Letter of guarantee gives in behalf of person that I will pay in case of default.
SWIFT (Society for world wide inter bank financial telecommunication)
It is the only network. No institute involved among it.
CERTIFICATE OF ORIGIN
This certificate shows that goods are from Pakistan.
COVERING SCHEDULE
If in covering schedule, it is given that “Please remit proceed to our Karachi office account # 574348812 with (Standard Chartered Bank) USA for onward credit to National Bank of Pakistan.
BENEFICIARY CERTIFICATE
If L/C requires some information as proof of anything from exporter then exporter has to present beneficiary certificate for that proof.
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E-FORM
E-form has four copies:
One for custom officer One for exporter
Triplicate copy for SBP
Duplicate copy for bank
Bank reporting or duplicate and triplicate is done by bank. Custom officer should clear product. (Date is given on the foot form).
PAYMENT FROM IMPORTER BANK
It is the choice of importer to open L/C from any bank and the bank from which L/C is opened can also refer to some other bank for payment. So bill of exchange is sent to refer bank and other documents are sent to L/C opening bank.
IMPORTS
L/C is opened by the importer. There are two types of L/C:
a) Revocable L/C b) Irrevocable L/C
NECESSARY REQUIREMENTS
If place of issue and port of loading is different on bill of lading, then along with the stamp of shipment on board, vessel name and port of shipment is written.
A. Issue date of bill of lading – shipment on board.B. There should not be cutting on bill of lading without authentication.
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C. Bill of lading should show capacity of agent. If bill of lading can be taken by the agent of Importer Company, then his name should be mentioned on bill of lading.
D. Original GSP should be presented.
E. If TT reimbursement is not acceptable, it means bill of lading is necessary.
F. When documents are received for export, do enter into lodgment register.
DOCUMENTS FOR IMPORT
I. Performa invoice signed by importerII. category pass book copy attested by any bank
III. L/C opening application filled in by the customer
IV. Importer registration with export promotion bureau
V. Annexure
VI. Verification of signature by S.S. Card
VII. L/C issued on basis of L/C application form
VIII. Insurance if covered by buyer
IX. Insurance cover note
X. Insurance policy
DOCUMENTARY CREDIT
TRADE SERVICE DEPARTMENTNational Bank of Pakistan has his full fledged trade service department. As a credit instrument and as a means of making as a payment the documentary credit is an essential instrument for conducting word trade today. A documentary credit represents a commitment bank to pay the seller of goods or services a certain amount provided present stipulated documents evidencing the shipment of the goods with prescribed period of time.
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For the cases of imports or exports first the parties have to do upon a sale contract regarding the term and condition of sale. One method of payment is by L/C which is secured and now a day mostly uses the business.
Letter of credit is under taking by opening bank that it will make payment if documents are as per terms of LC.
Four parties are involved in Letter of Credit
1. Applicant Importer2. Beneficiary Exporter3. Issuing Bank Bank of importer4. Advising bank Bank of importer
According to import policy, no import is valid without import license which is issued by the chief controller of import and export or we can say export promotion bureau. If a person desires to take up import trade must get his name, his firm or his limited company, registered with EPB. On being granted registration certificate, he will be eligible to import goods according to import policy. There is no special condition of eligibility for registration. They only requirement is that he should be a Pakistani and must be registered with income tax department.
L/C OPENING PROCEDURE
When the importer obtained import license, then bank will open letter of credit. “A letter of credit is undertaking by LC opening bank to put an agreed sum of money to seller’s bank of behalf of the buyer of the goods under clearly defined terms and conditions”.
Pakistani banks open only irrevocable LC. An essential feature of the irrevocable LC is that it can not be modified, altered, amended, or canceled without the prior consent of all the parties. Party comes to the bank and fills the form which is provided on the payment of Rs.100. This form is filled by the party and is return to the bank, it includes details like.
Name of company Address Country of origin Branch name Quantity
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Shipment to Insurance company Shipment from
One thing should also be submit which is INDENT. If the foreign party has any agent they will issue the indent with following details:
o To Messer,Importers, etc
DOCUMENTS REQUIRED FOR L/C OPENINGWhen the bank opens L/C, it requires following documents:
a) Valid import licenseb) Performa invoicec) Importer should be Pakistanid) Letter of undertaking from importere) Insurance cover.
An important point which the bank will consider before opening of LC is that sufficient funds be available in the LC opener’s accounts. At the time of establishment the LC the opening bank generally retains a maximum margin to safe guard its own commitment.
The margin may vary from nil to 100% according to the nature of commodities and it also depends upon the party. At the item of establishing the LC opening bank charges bank commission, postage and other charges from the LC opener account. Another main important point is that value of LC should not increase the value of import license.
After all the documents are being checked and signs are verified by the bank. A sanction slip is attached with each form so that the approval can be gained from the manager of the bank.
After the approval is made four copies are prepared and the entries are made on the computer and the printout is taken the margin amount is checked from the importer account and if the amount is not found then L/C is not opened and the party is informed about the situation. On the deposit of the margin then L/C is opened LC limit if set by the bank are also checked.
After the LC is opened following entries are made:
A. LC opening registerB. Margin / Liability Account Register.
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PAYMENT TO SELLERThe negotiating bank upon receiving the documents from the seller checks the documents according to terms and conditions of credit upon satisfying it self of this the negotiating bank makes payment to the seller if sight credit. It then forwards the documents to the opening bank and reimburses it self through the opening banks account with itself.
DOCUMENTS RECEIVED BY THE OPENING BANK
Importer bank or opening bank receives the following documents from the exporter’s bank or negotiating bank.
I. Bill of exchange II. Invoices
III. Bill of lading IV. Certificate of origin V. Packing list
VI. Insurance
Retail Department
There are three products in retail department of NBP.
Advance Salary NBP Saibaan NBP Karobar
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Advance Salary
We all are aware that NBP advance salary is the market leader in Personal Loan category and is considered the largest Personal Loan Product of the country with loan disbursement of over Rs.80 Billion. One of the foremost reasons for this astonishing success is the fact that NBP kept on modifying the product parameters as and when required by keeping an eye on the changing market conditions and varying competition. The Bank has decided to make following changes in the product parameters to further improve the operational efficiency and Turn around Time (TAT) and to increase the disbursement pace.
NBP advance salary is a consumer financing retail product which is used for domestic needs like home appliances. It can only be used for domestic needs and for that purpose they get undertaking that the person will use it only for domestic purposes. It was launched in 2003 and at that time NBP gives only three salaries in advance.
Gross Salary: Basic pay plus Allowances (in shape of house rent, medical, education, etc)
Take Home salary: Gross Salary minus deduction
When an employ gets advance salary then that person has to pay it in 60 installments. In the beginning a person can get only three advance salary with markup of 15%.With the passage of time bank increased advance salary package and a person can take 10 take
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home salaries with mark up 9% and after that NBP increased it and now a person can get 20 take home salaries with markup of 19%.persons who can apply for advance salary are
Fed Govt Employ Provincial Autonomous Bodies Local Bodies Semi Govt Employees
3 take home salaries………………………………………..Mark up..………………..9%
10 take home salaries………………………………………Mark up…………………11%
Mark up…………………13%
Mark up…………………15%
Mark up…………………18%
20 take home salaries…………….………………………..Markup………………….19%
Documents Required
1) Three months salary slip2) LAF (Life loan Application form)3) CNIC4) Two references of work colleagues
a. 1 reference same grade 1 salary slip CNICb. 2 reference officer grade 1 salary slip CNIC
5) Three blank Cheque6) Employer undertaking7) Service certificate
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Saibaan
In NBP Saibaan finance is available only for home purchase, home construction, and home improvement. Its repayment period is between 3 to 5 years and loans are available up to maximum of Rs.10 millions. When a person gets loan then bank has some markup on it and that mark up ranges between 13% to 16%.the persons who can apply
Salaried class Self employed Business class
Home Financing
• Home Purchase• Home Construction• Home Renovation• Purchase of Land + Construction• Balance Transfer Facility (BTF)NBP Saibaan
Product ItemsHome PurchaseHome ConstructionHome RenovationPurchase of Land + ConstructionBalance Transfer Facility (BTF)
Home Purchase (House or Apartment) * Financing Amount Upto 35 MillionFinancing Period 3 to 20 YearsDebt to Equity 85:15 (Maximum)
Home Construction * Financing Amount Up to 35 MillionFinancing Period 3 to 20 Years
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Debt to Equity 85:15 (Maximum)
Home Construction * - Product DetailFinancing Amount Up to 35 MillionFinancing Period 3 to 20 YearsDebt to Equity 85:15 (Maximum)
Home Renovation * Financing Amount Up to 15 MillionFinancing Period 3 to 15 YearsDebt to Equity 80:20 (Maximum)
Purchase of Land and for Construction thereon *Financing Amount Up to 35 MillionFinancing Period 3 to 20 YearsDebt to Equity 80:20 (Maximum)
Re-Financing (Balance Transfer Facility (BTF)) *
If you have a Home Finance Facility outstanding with another bank you can have it transferred to NBP through a hassle-free process. Mark Up Rates ** Variable Rate Option: SBP Discount Rate with (+2%) with12 months re-pricing
Processing Fee Government Employees: Rs. 500/- irrespective of financing amount.
For Others : Financing below Rs. 1 Million Rs. 1000 Financing between Rs. 1 to 4 Million Rs. 3000 Financing above Rs. 4 Million Rs. 6000
Other Charges ** Income Estimation, Legal and valuation fee will be charged as per actual
Prepayment Option Available Pre-payment (Complete/Partial option available).Eligibility *
Must be Pakistani Resident (National)
Aged between 21 and 65 years at the time of application/disbursement of loan.
Salaried Person, Self-employed professionals and businessmen.
Property located in NBP approved localities.
Service duration: Two years for salaried class Three years for self-employed/business class.
Required Documents
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• Property Documents:Any title document available (other documents may be required)
AND
1) FOR SALARIED PERSONS, WHOSE SALARIES ARE DISBURSED THROUGH
NBP BRANCH• Employer Undertaking for remittance of salary at relevant NBP branch for credit to customer's account (to be provided at a later stage, format available at relevant branch) • Employee ID Copy attested by NBP Branch (where applicable)• Attested copies of last three (3) months salary slips• Attested copies of last three (3) months bank statements
2) FOR SALARIED PERSONS OF MNCs AND NBP APPROVED COMPANIES• Employer Undertaking duly attested by relevant NBP Branch, where applicable (to be provided at a later stage, format available at relevant branch)• Attested copies of last three (3) months Salary Slips • Letter of Verification of Employment on Company Letterhead mentioning the date of joining • Attested copies of last three (3) months bank statements
3) FOR OTHER SALARIED PERSONS • Letter of Verification of Employment on Company Letterhead mentioning the date of joining • Attested copies of last three (3) months Salary Slips• Attested copies of last twelve (12) months bank statements• Attested copies of last three (3) months paid bills for electricity and telephone OR copies of last (12) twelve months credit card bills (which ever is available)
4) FOR BUSINESS PERSONS• Bank Certificate stating applicant maintaining Business Account and the date of account opening • Attested copy of latest Form 29 in case of Private or Public Limited Company• Attested copy of Partnership Deed (where applicable)
5) FOR SELF-EMLPLOYED PERSONS• Attested copy of current professional association membership/practicing certificate. Adequate proof of professional engagement like bank certificates • Attested copy of Partnership Deed (where applicable)
**Any other document may be required on case to case asis by the bank
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With Applications Form **
• Two attested passport size photographs• Two attested copies of your National Identity Card• Cheque for the processing charges
NBP Karobar (Mera apna Karobar)
The solution of Pakistan’s 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 with a President's Rozgar Scheme brand name of “NBP KAROBAR”.
if you are aged between 18 and 45 years, you could be eligible for easy financing for self employment in the categories below:
NBP Karobar Utility Store NBP Karobar Mobile Utility Store
NBP Karobar Mobile General Store
NBP Karobar Transport
NBP Karobar PCO
NBP Karobar Tele-Centre
Mera Apna Karobar• 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• 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*
STEP BY STEP PROCEDURE
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Customer to visit any NBP branch to obtain loan application form and scheme details. Application form could also be downloaded from the NBP web site. Photo copy of the form will also be accepted. Each form will cost Rs. 5. In case of photocopy or down-loaded form, form fees will be charged at the time of application submission
Branch to provide details of the scheme along with the required documents to be submitted with the application form
Customer to submit the application form along with all the required documents as well as the verification and the processing fees
The application form and all the relevant papers of the customer will be checked by the Branch staff and if found complete, application processing will commence
If the case is approved then the customer will be informed accordingly and will be advised to deposit the Down payment and fulfill all the other product specific formalities
Upon fulfillment of all the details and approval of the loan by the competent authority, Purchase Order in favor of vendor will be issued and a copy of the same will be given to the customer
Delivery of the financed asset will be made directly to the customer by the NBP selected
Advances DepartmentThe function of Advances and Credit Department is to lend money in the form of clean advances, against the promissory note, as well as secured advances against tangible and marketable securities. The bankers prefer such securities, which do not run the risk of general depreciation due to market fluctuations. Common securities for the banker’s advances are as under:
Securities
BANKERS’ LIEN [Type text]
(Moveable property possessed to the lender cannot be sold in case of default)
Lien is the bankers’ right to hold the property until the claim on the property is paid. The bankers look at their lien as a protection against loss on loan or overdraft or any other credit facility. In ordinary lien, the borrower remains the owner if the property, but the actual or constructive possession remains with the creditors, though he has no right to sell it.
(1) GUARANTEES
When an application for an advance can offer any tangible security, the banker may rely on personal guarantees to protect himself against loss on advances or overdraft to the applicant.
(2) MORTGAGE
(Immoveable property possessed to the lender can be sold in case of default)
A mortgage is the transfer of an interest in specific immoveable property for the purpose of securing the payment of money advanced or to be advanced by way of loan, and existing of future debt, or the performance of an engagement, which may rise to a particular liability. The person in whose interest the property is transfer is called mortgagee.
(3) HYPOTHICATION
(Immoveable property possessed to the borrower can be sold in case of default)
When property in the shape of goods is charged as security for a loan from the bank, the ownership and possession is with the borrower, the goods are said to be hypothecated. The essence of hypothecation is that neither the property in goods nor the possession of them passes to the lender, but the security is granted by means of letter of hypothecation which usually provides for a banker’s charge on the hypothecated goods.
(4) PLEDGE
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(Moveable property possessed to the lender can be sold in case of default)
In a pledge, the ownership remains with pledger (borrower), but the pledgee has the possession of property until the advance is repaid in full. While in case of defaulter, the pledge has the right of sale after giving due notice.
TYPES OF ADVANCESTYPES OF ADVANCES1 ... ... Demand Finance(Ordinary Loans)
2 ... ... Running Finance(Overdraft)
3 ... ... Cash Finance
4 ... ... Small Finance
5 ... ... Finance against Bills
6 ... ... Agriculture Loans
Demand Finance (Ordinary Loans)These are those advances which are allowed in lump sum for a fixed period and are repayable in lump sum or gradually in installments.
RUNNING FINANCE Running finance are advances, which are gradually given to meet temporary requirements of the customers. A good customer uses the banks running finance limit, as a mean of protecting his credit in the market and as a line of second defense to meet his commitments. There are two types of running finance:
UN-SECUREDUnder this type of overdraft, the bank relies upon the personal security of the
customer or customer’s account.
SECURED
Under this type of overdraft, the bank allows his customer to withdraw more than his deposit after giving security against the amount overdrawn. The securities against which they are given are as under:
a ... ... Share Certificates[Type text]
b ... ... Savings Certificates
c ... ... Deposits
d ... ... Mortgage Property
e ... ... Guarantee of a person
CASH FINANCE These types of loans are given against the following:
1 ... ... Against locally manufactured goods
2 ... ... Cash finance against rice and paddy
3 ... ... Against pledge
4 ... ... Against commodities
5 ... ... Besides advances against the above commodities bank
may be approached by parties for advances against other
commodities like tobacco, oil, etc.
6 ... ... Against Trust Receipts
SMALL LOANSLoans are allowed to contractors’ clearing and forwarding agents. These loans are repayable within a year.
FINANCE AGAINST BILLSThe advances are allowed both on local and foreign bills such as:
Bill of Exchange and Invoices
Bill of Landing
AGRICULTURE LOANSAgriculture loans are given to the farmers with holding up to 25
acres for meeting their short medium and long term production requirements such as:
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a ... ... Agriculture inputs
b ... ... Tractors instruments
c ... ... Tube wells
d ... ... Live stock farming
e ... ... Land Improvements
Credit WorthinessThe following 4C's are pillars of credits management for determination of credit
worthiness of a borrower.
CharacterThe expected borrower must be selected as a 'good citizen' in all respects.
Banker's opinion regarding the character may be established on the basis of following source of information;
Past credit history showing willingness and ability to pay.
Character reference reforms other valued customers.
Market reputation
Capacity
The ascertaining of the capacity of the borrower to repay its obligation carries a great important to a banker. Following are three sources of loan repayments.
Cash flow
Asset liquidation
Another source of financing
Capital
What is the volume of the wealth put into business by proprietor or partner of shareholders in case of limed companies? What is the ability of these?
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Collateral
Securities may be in the name of borrowers or in the name of third parties. Usually securities against which the finance as allowed are called "Primary" whether in the name of borrower or third partners that are offered by the borrower in addition to primary security / securities are called collateral securities.
MarkupRate of markup charged varies from client to client, but the average rate of markup is decided according to:
“KIBOR: Karachi Inter Bank Offering Rate.
It is the standard rate or Base rate for all banks & it changes quarterly. Banks are than allowed to add up certain amount to this base rate, according to the bank’s requirement, depending upon the nature of loan, customer, & market’s competition.
For example:
KIBOR + 4% i.e. (base rate + rate charged by the bank)
Accounts Opening and Closing Department
ACCOUNT OPENING PROCEDURE The depositor can open the account with the bank in following ways.
Individually
Jointly
Sale proprietor ship
Partner ship
Corporation
Individually Account A person can open account with the bank in Pakistan rupee. First of opening form provided by the bank. Then Introduction of account holder is done before the manager. [Type text]
For this purpose he has to provide the existing account holder of the bank or officer of the bank as Introducer. If the person is illiterate then thumbprint is used instead of signature. In order to stop the payment from the account. It is necessary for him to give the instruction to the manager. He may get the statement of account from the bank accounting to his own will.
Joint Account The joint account means that two person operate this account. A form to be filled and attach a photo copy of the NIC cards. An introducer and copy of his NID cards is required. If any or both are illiterate that be or they give the thumb print on the card. He also sates about the modes of operation that how the amount will be drawn from the accountant as jointly or alone.
Sole Proprietor Ship The person who is the sole owner of the business can upon the account with the NBP by providing the following decrement to the bank officer.
Current License
Registration Certificate
Copy of ID card.
If the bank is in doubt can get additional documents for proper verification. After the verification the Documents the account of the party is opened with the bank
Partner Ship Firm The partnership firm can also opened the account with the bank but for this they have to provide the following types of information to the bank. For this purpose a form is provided to account holders in which they provide the following information to the bank and the person is also nominated who can draw the amount from the bank.
Name of firm
Name of partners
Identity and of partners
Registration of certificate of the firm with the authorities
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Photograph of partner in cash illiterate and thumb print.
LTD. Company / Corporation Before an account of a public LTD company is opened the banker must ask the person authorized to do so to submit the certified copy of the following documents.
Resolution of the board of directors
Memorandum and Article of Association
Certificate of in corporation
Balance sheet
The account of the company is opened on the resolution of the board of directors. Which nominates the person authorized to operate upon the account. The banker must take the specimen signature of the authorized person and allow the operation on the account under those signatures as long as the authority is not terminated. When a banker receives a notice of death, retirement or dismissal of the authorized person, he should stop the operation the account and wait for a fresh resolution authorizing. Another person for operation. The banker should honour however the cherub singed by the authorized person before his death, retirement or dismissal, because they were valid instruments before the termination of his authority. Any doubt or suspicion should be referred bank to the company. The banker may open the account of a newly floated public. LTD company without the certificate of commencement of business in order to receive the amount of issued capital form prospective share holders both should not allow any withdrawal from the account till the certified copy of certificate of. Commencement of business is submitted to him. Failure to obtain this certificate necessitates the refund of the amount to the prospective shareholders by the promoters.
Documents The following document are necessary for opening an account in NBP
Account opening form (Account may be saving or current account).
introductory Reference
ID card
Signature Card
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Letter of thanks is send to both account holder and reference
Issue a cheque book in the name of account holder.
Depositing slip is given to account holder.
Closing Of Account There are many reasons for closing of account. Some of the more common reasons are follows.
Death of account holder
Bank ruptcy of account holder
Closing of account due to bad demeanor of account holder etc.
Account holders own request.
An account is closed at the request of a account holder or as a result of improper conduct of the account holder or because of nil balance of the account. In first case account holder request to the manager of the bank to. Close his account. While in lateral case the bank manager is authorized to close the account. But bank before closing the account first sends the letter or the account holder that your account is going to be closed. So after fulfilling the legal requirement it is marked on the account holder’s number that the account has been closed.
ISSUANCE OF CHEQUE BOOKThe procedure for issuance of Cheque book is:
Client has to give requisition slip of previous Cheque book.
The requisition slip should be properly filled.
If requisition slip lost, then client has to give application with proper reasoning.
The # of new Cheque book issued will be registered and signature of the client is also taken.
On the face of the Cheque book, the name, account # on each leaf branch stamp and account # is written.
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Rs. 63 is debited from the account of client for the issuance of new Cheque book.
Deposit Department:
Deposits are the lifeblood of a bank and their classification is based on the duration and purpose for which the deposits are to be kept at the bank before the depositors can withdraw them. At present NBP accepts deposits in both local & foreign currencies and provides a variety of accounts where these sums are put in at the desire of the customers.
Local Currency Deposits:
In local currency (PkR) the following type of accounts are available at the bank
1-Cruuent Account
2-Saving A/c
3-Short term deposits
4-Fixed deposit receipts
A brief explanation of the above stated accounts is given below:
CURRENT ACCOUNTThese are payable to the customer whenever they are demanded. The bank treats these deposits as current liabilities. No profit is given on these accounts and there is no restriction of minimum balance to be kept in these accounts.
SAVING ACCOUNTIn such types of account, the depositors are normally allowed to withdraw a limited amount of money only twice a week.
FIXED DEPOSIT RECEIPTSIn these accounts the amounts are deposited for fixed period which may be 1 month, 3 months,6 months and 1 year.
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SHORT TERM DEPOSITSIn these accounts the amounts are deposited for fixed period but shorter than that of fixed deposit receipts, which may be 7 days ,and 30 days.
Foreign Currency DepositsAt present NBP Main Branch accepts foreign currency deposits. For these foreign currency deposits bank has offered the following accounts.
1-Foreign Currency Accounts.
2-Foreign Currency Saving Accounts.
A brief description of above stated accounts is given under
i- FOREIGN CURRENCY CURRENT ACCOUNTSNo profit is given on these accounts and no restriction as per the minimum balance required.
ii- FOREIGN CURRENCY SAVING ACCOUNTSNBP pays the interest that is earned on the sums available in the accounts by making investments.
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Chapter-3Work Done By MeAccount Opening Department
Remittances Department
Credit Department
Foreign Exchange Department
Retail Department
Work Done By Me I joined National Bank of Pakistan, Dera Adda Branch Multan (1495) at Jan 17, 2011. First day, the Manager introduced me about the functioning of the branch and the staff. The Manager told me that Counter is the most important place of the bank. During the six weeks of my internship, I worked in different sections of the branch and did the maximum practice of banking system details of Major activities performed during my internship program are as follows;
ACCOUNT OPENNING DEPARTMENTIn this department, I gain the practical knowledge about opening account. This department deals with opening current and saving account for its customers and all matters regarding thereof. The customers opening current and saving accounts can be categorized as following.
-Individual
-Firm
-Company
-Trust
-Staff
OPENING AN ACCOUNTIn order to open an account, first of all the customers have to fill a form prescribed by the bank. The person is required to bring some reference or introduction for opening the account. Introducer may be the person who has any account with NBP.
Some important information regarding introducer e.g. the name and account number of the introducer is written on the space provided on the specimen signature card. Then in order to find out whether he is a true introducer or not, a letter is sent to him thanking him for this introduction so that anything wrong may come into notice.
ISSUANCE OF CHEQUE BOOK
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The accountholders request for the new cheque book by presenting the requisition slips along with the authority letter to the concerned office. His signatures are verified before giving him a new cheque book. The presence of the accountholders is compulsory to get a new cheque book. But if he sends a third person to get his cheque book then the procedure is as follows;
An authority letter is given to the third party by the accountholders.
The accountholders verify the signature of the third person on that authority letter.
The bank officer gets the signature of that third person to confirm whether he is the
same to whom the accountholder has sent.
The bank issues the new Cheque book and authority letter is kept buy the bank.
REMITTANCES DEPARTMENT
I worked in this department for one week. This department deals in transfer of money from one place to another or country by:
-Demand drafts
-Mail transfer
-Telegraphic transfer
In this department internees are advised only to observe the working of transfer of money from one place to another place of the country by the above modes of transferring money. During my stay in this department I observed that how demands draft be issued. The procedure is as follows.
First the bank receives a written request from the customer to issue a bank draft. The written request is either in banks standard form or separate paper signed by the applicant enclosed with cash or Cheque covering the amount of the draft and other charges of the bank.
While issuing a bank draft it is necessary that the draft should be free from alternations. All the details must be written clearly in ink. After issuance a demand draft it is handed over to the applicant and its advice containing the particulars of the draft is sent to drawer branch with its necessary information and payment of the draft is making on its presentation.
CREDIT DEPARTMENT[Type text]
I spent a week of my training in credit department. It deals with the advancing of loans. This department is further divided into some sections like cash finance, demand finance, finance against property, finance against shares, modaraba financing, musharika financing etc.
Foreign Exchange Department:
In foreign exchange department I learnt how money is transferred in different countries. Here I worked with Western Union operator.
Working of Western Union Money Transfer
Installation of Western Union Translink software Personal ID and password issued by NBP WU to FLA
Here I learnt how money is made to the beneficiary for this the beneficiary must tell the CNIC no, Passport or Driving license to the operator the beneficiary must tell the code which has been told by the sender. The beneficiary must have the CNIC in original and code after that the beneficiary would collect money from the operator.
Retail department I worked in retail sector of National Bank of Pakistan with Retail officer Mr. Zulfiqar Abbass. In retail sector I learnt about the advances product of National bank of Pakistan. There are three retail products of NBP.
Advance Salary NBP Saibaan NBP Karobar
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Chapter-4Financial RatiosRatio Analysis
Balance Sheet Ration
Profit & Loss Account Ratios
Inter-Statement or Combined Ratios
Balance Sheet
Profit & Loss Account
Financial AnalysisFinancial analysis of the firm provides the performance scope to the investor of funds whether in the form of credit investor (short term or long term credit investors) or Equity investors as owner of the firm. What kind of investor the basic object is behind is to get the positive return from that investment which has in form of surplus amount and to avoid from the inflationary risk? On the other hand the investor is also looking for the risk associated with his investment.
To analyze all these he used certain tools, which provide the investor to access the liquidity, creditability, operational efficiencies and growth opportunity in the organization. The most common tools are
Ratio Analysis
The figures in financial statements, do not tell the whole truth. To obtain meaningful information relationship between relevant figures must be examined. For instance:
Relationships which help find the liquidity of the business.
Relationship which reflect the effectiveness of the financial policies adopted and the potential fund raising ability.
Relationships which help evaluate the effectiveness of operational policies.
To achieve the aim, we undertake Ratio Analysis. Ratios provide the means of showing the relationship which exists between figures on the Balance Sheets and Income Statements. The analysis is undertaken to assess important characteristics of business like liquidity, solvency and profitability. A study on these aspects enables drawing conclusions as to financial requirements and capabilities of business units.
Ratios may be classified in a number of ways to suit any particular purpose. Different kinds of ratios are selected fro different types of situations.
Balance Sheet Ratios
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These ratios are also called financial ratios. The components for computation of these ratios are drawn from the Balance Sheet. Example, Current Ratio, Liquid Ratio, Debt Equity Ratio etc.
Profit & Loss Account Ratios
Theses ratios are also called operating ratios. The items used for the calculation of these ratios are usually taken out from the profit and loss statement. Example Gross profit Ratio, Operating Ratio etc.
Inter-statement or Combined Ratios
The information required for the computation of these ratios I normally drawn from both the Balance Sheet and Profit & Loss Accounts. Examples: Debtors Turnover Ratio, Stock Turnover Ratio, Net Profit to Fixed Ratio etc.
The bankers to arrive at a definite conclusion concerning liquidity and solvency of the business club these ratios as follows:
Gross Spread Ratio = Net Markup Income
Gross Markup Income
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2008 2009 2010 2011
69.66% 68.38% 66.50% 60.85%
The gross spread ratio tells the amount of interest earned with relation to amount of interest expensed in the last five year gross spread ratio shows decreasing trend
Net Profit Margin = Net Income
Total interest income
As we all know the basic motive of any organization is profit maximization, but in case of my organization the profit after tax is continuously decreasing which an alarming sign is for organization
Current Ratio = Current Assets
Current Liabilities
Current ratio shoes the ability of firm to pay its short term obligations,
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2006 2007 2008 2009
38.59% 37.63% 25.36% 38.90%
2008 2009 2010 2011
1.14 1.15 1.12 1.65
According to thumb rule the current ratio of any organization should be 2 or more than 2, its mean current asset should be 2 times than current liability, in our case current ratio most of the times was less than 2 which is not a healthy sign
Working Capital = Current Asset – Current Liability
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2011 101,392,474
2010 80,392,807
2009 95,491,135
2008 74,155,644
Working capital is the difference between the current assets and current liabilities, higher the working capital better an organization can meet its day to day expenses, unfortunately in our case of National bank working capital is showing a decreasing trend which is not a good sign
Return on Total Assets (ROA)
= Net Income
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ROA shows relation between the earning after tax and total assets through which the profit has been generated, in last few years ROA has bee decreasing trend
Return on Equity (ROE)
= Net Income
Stock Holder’s Equity
Roe stands for return on equity. The higher value of return on common equity shows the higher return earned on the common stockholders investment in the firm. It is higher over the years but lower in 2008 due to economic instability.
Return on Equity Capital[Type text]
2008 2009 2010 2011
2.68% 2.49% 1.89% 1.93%
2008 2009 2010 2011
20.77% 16.36% 15.08% 15.23%
= Net income
Paid up capital *100
Equity Ratio
= Share holders Equity
Total Asset
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2008 2009 2010 2011
195% 240% 233% 172%
2008 2009 2010 2011
14.72% 13.90% 15.26% 12.52%
Total Asset Turnover
= Sales
Total Assets
Total asset turn over shows the revenue generated against the total asset. Although the ratio of TAT is low but fortunately there was an increasing trend in the last five years
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2008 2009 2010 2011
0.08 0.06 0.06 0.07
Return on Deposits
= Net Income
Total deposits
Advances to Total Deposits
= Advance
Total Deposit
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2008 2009 2010 2011
3.19% 3.39% 3.21% 3.47%
Advances and deposits are prime components of financial statements of banking industry organizations because mainly there trading is commonly depend on these items so these both ratios are very important
Earning Per Share
Earning per share shows what you have earned in your each share pf investment, likewise other profitability ratios which have decreasing trend in the last five years, earning per share also having a decreasing trend and not very attractive for investor
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2008 2009 2010 2011
24.01 13.63 16.36 16.92
Balance SheetRupees in Millions
ASSETS 2008 2009 20010 2011Cash and balances with treasury banks 78,625,227 99,873,249 156,503,756 185,827,868Balances with other banks 40,641,679 37,472,832 38,344,608 28,405,564Lending’s to financial institutions 23,012,732 21,464,600 17,128,032 19,587,176Investments 139,946,995 210,787,868 170,822,491 217,642,822Advances 316,110,406 340,677,100 412,986,865 475,243,431Operating fixed assets 9,681,974 25,922,979 24,217,655 25,147,192Deferred tax assets _ _ 3,204,572 3,062,271Other assets 27,113,698 30,994,965 44,550,347 59,316,438TOTLAL ASSETS 635,132,711 762,193,593 817,758,326 944,232,762
LIABILITIES
Bills payable 10,605,663 7,061,902 10,219,061 10,621,169Borrowings from financial institutions 11,704,079 10,886,063 40,458,926 45,278,138Deposits and other accounts 501,872,243 591,907,435 624,939,016 726,464,825Sub-ordinated loans _ _ _ _Liabilities against assets subject to finance lease
13,235 33,554 25,274 42,629
Other liabilities 26,596,300 30,869,154 39,656,831 42,269623Deferred tax liabilities net 2,387,073 5,097,831 _TOTAL LIABILITIES 553,178,593 645,855,939 715,299,108 824,676,384NET ASSETS 81,954,118 116,337,654 102,459,218 119,556,378REPRESENTED BYShare capital 7,090,712 8,154,319 8,969,751 10,763,702
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Reserves 13,879,260 15,772,124 19,941,047 22,681,707Inappropriate Profit 32,074,677 45,344,188 52,456,204 61,346,510
53,044,649 69,270,631 81,367,002 94,791,919Surplus 28,909,469 47,067,023 21,092,216 24,764,459TOTAL EQUITY 81,954,118 116,337,654 102,459,218 119,556,378
TOTAL LIABILITIES AND EQUITY 635,132,711 762,193,593 715,299,108 944,232,762
Profit & Loss AccountRupees in Millions
2008 2009 2010 2011Markup/return/interest earned 44,100,934 50,569,481 60,942,798 77,974,697Markup/return/interest expensed 13,947,218 16,940,011 23,884,768 39,489,649Net markup/interest income 30,153,716 33,629,470 37,058,030 38,458,048Provisions against non-performing advances 3,075,723 4,723,084 10,593,565 11,043,469Provision for/(reversal of) diminution in the valueof investments
-709,461 -40,248 373,249 605,629
Provision against off balance sheet obligations Nil Nil 4,000 20,237Bad debts written off directly 5,284 39,899 Nil Nil
2,371,546 4,722,735 10,970,814 11,669,335Net markup/interest income after provisions 27,782,170 28,906,735 26,087,216 26,788,713NON MARKUP/ INTEREST INCOMEFee, Commission & brokerage income 6,144,628 6,781,683 7,925,370 8,930,391Dividend income 2,891,755 3,263,246 2,878,932 1,920,336Income form dealing in foreign currencies 1,333,840 1,042,827 3,969,057 3,028,165Gain on sale & redemption of securities-net 1,169,515 2,341,690 395,427 4,591,894Investments classified as held for trading -4,464 -31,964 1,707 2,355Other income 627,618 147,363 1,245,369 552,216Total non-markup/ Interest income 12,162,892 13,544,845 16,415,862 19,025,357Total income ( Interest + non-Interest) 39,945,062 42,451,580 42,503,078 45,814,070NON MARKUP/ INTERSET EXPENSESAdministration expenses 13,443,441 14,205,911 18,171,198 22,571,470Other provisions written off -17,283 168,027 747,521 620,780Other charges 208,327 17,141 583,361 321,647Total non markup/ Interest expenses 13,634,485 14,391,079 19,502,080 23,513,897PROFIT BEFORE TAXATION 26,310,577 28,060,501 23,000,998 22,300,173Taxation Current 8,695,598 8,311,500 11,762,650 9,221,513
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Prior years 530,652 391,497 Nil -4,133,282 Deferred 61,981 323,731 -4,220,242 -999,904
9,288,231 9,026,728 7,542,408 4,088,327PROFIT AFTER TAXATION 17,022,346 19,033,773 15,458,590 18,211,846Inappropriate Profit brought forward 19,372,523 32,074,677 45,344,188 52,456,204Transfer from surplus on revaluation of fixed assets on account of incremental depreciation
41,060 39,007 130,456 123,934
Profit available for appropriation 36,435,929 51,147,457 60,933,234 70,791,984Basic Earning Per Share 24.01 13..63 14.32 16.92
Diluted Earning Per Share 24.01 13.63 14.32 16.92
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Chapter-5SWOT AnalysisStrength
Weakness
Opportunities
Threats
Suggestions & Recommendations
Conclusion
Swot Analysis
The SWOT analysis is done by the organization for the environmental scanning. The strength and weaknesses and opportunities and threats are analyzed by organization from the external environment. NBP SWOT analysis is given below:
Strengths
Western Union facility:
National Bank of Pakistan is only one bank which has the facility of Western union. In this particular scheme money is transfer in Pakistan from abroad. This is the fastest way to money transfer. You can receive the money from bank to see the name and password of particular client.
ATM finder:
There is also strength of NBP that they are found the ATM. They now provide this facility to the customers.
Government’s Bank:
In commercial banking system NBP is only the Government bank. They make their policies according to the Government’s rules and regulations. It enjoys its position in the market of banking system in Pakistan. Government of Pakistan also facilitating the National Bank of Pakistan.
Customer satisfaction:
Because of government’s bank, it is enjoying the customer’s satisfaction. Customers feels secure their money in NBP.
Online banking:
There is also strength of NBP that 130 branches are online. It helps the speedy services giving to the customers. There is also help in checking the balances and daily transactions just at one key press.
Employee’s loyalty:
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Employees are very much loyal to NBP. Employee’s turnover is very low in NBP. Very few employees are leaving the jobs in NBP. So it is very big strength that your employees are loyal to your organization.
Wide area of services:
They provide the wide area of services. They offer no. Of services relating to the banking system like, pension to retired government employees, traffic challans, fees received of AIOU, farms of AIOU, utilities bills, deposits, sales tax , withholding tax, property tax, and various loan schemes.
Weakness
Lack of communication between employees:
During the internship in NBP I found the problem of lack of communication between the employees and management. They have not very much understanding with each other and not share the work of each other.
Punishment is not very strong for employees:
Punishment threat is not very strong for employees. Some employees are not very professional in their field but top management not takes the action against such employees.
Public dealing is not very effective:
Public respect is not very effective in NBP. Employees are not taking care of the customers, especially in pension and bills department.
Staff shortage:
There is also weak point for NBP that staff is very short and more staff is required to meet the needs of the branch work. They help from internees.
Lack of respect of seniors:
They are not a healthy sign for NBP that respect of seniors is not up to the manners.
Juniors try to avoid the seniors and no take the help from them.
Opportunities
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Growing banking system:
Nowadays banking system is growing quickly so NBP have opportunities to improve the standard and get the more share in the market.
NBP have government back:
In growing era there is a chance for NBP to improve itself and increase the shares in the market because it is most trustable due to government’s bank.
Increase in economic activities:
The economic activities are increase nowadays, so banks are contributes more in economic activities. Banks are played role in trade and commerce. So the business of commercial banks is increase.
Threats
Increase in no. of banks:
Increase in no. of banks is a threat for National Bank of Pakistan. No. of private banks (commercial and private) are operating their business and provide the same facilities. So increase in no. of banks is a threat for NBP.
Modern type of banking:
Modern and computerized banking is required to fulfill the customer’s need. So maximum branches of NBP are working in old traditional ways.
Highly skilled people and management required to meet the new standard of banking. In NBP some employees are totally irresponsible and lack of complete knowledge of banking system. So these employees are creating continuous problems in the system of NBP.
The whole structure change to online :
NBP have wide network of branches. Only 130 branches are online, so it is very difficult and time consumed to convert all branches to online system. So there is also risk involves that if one commuter of one branch suffers in problem, all system and all commuters of all branches must be turnoff.
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Suggestions and Recommendations
The global economic environment has changed, creating challenges and opportunities for the world’s policy makers. The privatization drive has emerged as a strong tool of transformation which is being recognized as an essential ingredient for the economic well being of the countries themselves and for the rest of the world. Now there is a greater awareness that in an interdependent world all countries gain individually if these countries become positive contributor to world economic growth as whole. Banks are playing very important role in the economic growth of the countries. N.B.P. no doubts a positive contributor in this respect but I think there are certain points by adopting which can serve more effectively and efficiently. These points are as under:
1. This is a computer era. With the use of computer we can increase our efficiency. N.B.P. should computerize all its branches. By the use of computer properly these branches can increase there working efficiency.
2. N.B.P. as public service oriented institution has to create business opportunities for themselves. Now a day there is a competition between the banks.
3. Central Asian Republics (CARs) have great opportunities of new business so N.B.P should open new branches in these Republic.
4. Model Banks like City Bank M.C.B. are using media very effectively to increase the business of banks. So N.B.P should use electronic media for its business developments.
5. The interference of union in banking business should be minimized as it decreases the working efficiency of the employee as well as the bank.
6. The working of the Dera Adda Branch Multan is satisfactory but still these working efficiencies are for from the standard of modern banking system.
7. The bank should finance its loans in those projects which are meeting the required standard and should avoid the political pressure.
8. The bank should bring forward the new talent as fresh knowledge and education is considered very important to increase the efficiency and production.
9. There is needed to make the outlook situations o branches in that manners that can complete the other modern banks in the banking market.
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10. Keeping in view the hard work by the staff members at all levels of Management, Staff should be given bonus and increment every year.
11. CREDIT CARDS are issued by the different banks like MCB, ABP and Citi Bank etc. but NBP don’t issued this type of finance scheme, there is a place for this type of scheme in this bank.
12. Separate desk or counter should be established in every branch to provide the information as required by the clients.
13. The environment of the offices should be comfortable so that the client and staff must feel comfort during business in bank.
14. Unsecured loan are not to be provided in case of banks directions, their families, companies or firms.
15. There are some clients having sound and successful plan but without financially sound and providing securities bank should firms such policies which may solve this problem.
16. I observed that many branches of NBP are over crowded. Less people can work which is performed by extra people. No. of employees should decrease or new branches should opens for the adjustment of these extra employees.
17. There is too much dependence or handwork and they are not getting at with computer programmed. All the branches of NBP should be computerized.
18. There are some employees untrained which decreases the efficiency of the bank branch. All the employee should well trained.
19. Most of the bank employees are sticking to one seat only, with the result that they become master of one particular job and loose their grip on other banking operation. In my opinion each employee should have regular job change.
20. Refreshes courses for staff are most important in my international organization. All the employees should have their courses according to their requirement.
21. Every year some of the employees should be sent for training to other countries and employees from other countries should be brought here.
22. In commercial institutions like bank, reward and punishment system should be introduced. Means achieve, smart, educated, skilled, self spoken and well dressed, staff
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should be rewarded and appreciated and lazy, lethargic staff should be warned and punished.
23. People have to wait for re-cashing their Cheque and for paying their utility bills, which are not good for reputation of bank, it should be improved.
24. Promotion should be given to competent persons on merit basis.
Conclusion
The importance of banks in the economy of any country is like a backbone, so the state Government decided to start the banking system in their country, and by their own interference control them, secure them, and subsidize them according the situation, and main purpose behind that is to facilitate their nation. So the government of Pakistan has also a banking system, as a head or largest bank in Pakistan known as “STATE BANK OF PAKISTAN” which is largest bank of Pakistan, this bank works as the governmental department and its main function is to monitor all type of banks working inside specially as well as outside the country.
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National Bank of Pakistan is the second largest bank of Pakistan by all means; National Bank of Pakistan is widely used as an agent for State Bank of Pakistan and is also involved in commercial banking. National bank of Pakistan has a vital role in Pakistan’s banking history as well as in the economy of Pakistan, so it has a great significance.
At present the national bank of Pakistan has improving its internal and external conditions, but due to the largest operations in Pakistan (because this is only bank which must cover the backward regions of the country where no any other commercial bank want to go) it still faces many problems, These problems are new marketing strategies, organizational and management problems at the branches of backward regions, and motivation. Another main problem is faced by the NBP is labor unions because labor is most powerful because of CBA union which protect the labor's all action even are getting unjustified advantages all above factors are causing problems of banking functional and growth of banking is being resisted. Mostly recruitment and promotions are under influence of political system of Pakistan, so eliminate it or reduce as much as possible and make it on merit and transparent.
NBP should fully concentrate to improve its performance and standards to meet the challenges by the economy as well as by the competitors and for that purpose it need to overcome the problems and improve the quality of services specially in advance section, that will prevent it from huge losses .
During my six weeks internship, I observed many things at the NBP such as its working procedures, policies, and many other aspects of practical nature of a big organization. On the basis of all these observations, I have come to the conclusion that the banking field is more competitive and dynamic now a day. There is a lot financial institution working side by side. In this competitive environment the bank must have to use more innovative and creative ideas so that to attract customer. Taking care of these things the NBP have started computerized system through which one can send money from one place to another in no time. Which is a good step towards its improvement?
Like its major competitor it has also started ATM facility in many big cities due to its customer are loyal to it. Its equity position is very strong and it can compete its competitor in every aspect of banking. NBP is one of the oldest and more settled bank of
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Pakistan in fact it remained in business of financial services for many years. During its course of history NBP contributed a lot in the development and fostering the growth of economy in the country.
Despite all these facts there are some areas, which needs to be improved, like it should focus on its organization structure, Equal distribution of work should be done and bring professional people to all of its branches in order to meet the requirements of a new era and to fulfill the needs of 21st century.
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