Professional Documents
Culture Documents
By
ANUM SHAKIR
April, 2010
By
ANUM SHAKIR
(08031020-081)
MBA-FINANCE
Session: 2008-2010
UNIVERSITY OF GUJRAT
Internship
Supervisor:
NAME: -----------------------------
DESIGNATION -----------------------------
SIGNATURE -----------------------------
Chairman:
NAME -----------------------------
SIGNATURE -----------------------------
My report is comprised upon four section 1st section denote the introduction
of internship, and purpose of purpose, and 2nd is over all role and functioning
of bank (Highlights the operations and functions of bank) and 3rd one is about
NBP history, introduction, performance, etc and 4th section denote that policies
and strategies of NBP and success.5th is about SWOT analysis, pest analysis,
ratios analysis and chapter 6th consist on some recommendations and
suggestion. Banks acts as financial agents to their customer; in return they get
reward for their services. Banks play important role in development of society.
A strong economy must have a good banking system.
Introduction denotes that what is the purpose of my internship. After that how
banking enter in the Pakistan. What is its working structure? It is review and
organizational structure.
For the completion of our report I am indebted to plenty of people for their
very sincere cooperation that they extended to me at various stages. First and
foremost problem that every student faces is the selection of a Report. I am
very thankful to my friend Sara for helping me out in time of confusion.
During our course and the execution of my report, I had a real chance to learn
from his vast experience and immense knowledge.
Finally I am thankful to the most merciful and Almighty Allah who gives me
the strength that I fulfill my task. With efficiently.
Executive Summary VI
Acknowledgement VII
CHAPTER NO. 01
Introduction of Internship Report
Introduction………………………………………………..…01
1.1 Background of study…………………………………………...…01
CHAPTER NO. 02
NBP and its role & Functions
Introduction …………………………………………………..05
2.1 NBP in Pakistan……………………………………..05
2.2 Role of NBP in Pakistan…………………………….07
Products of NBP
2.3 Overall organization & functions of organization in Pakistan….10
Functions of NBP in Pakistan
CHAPTER NO. 03
Introduction of NBP
Introduction ……………………………………………………………….15
3.1 Brief history of NBP……………………………………………..15
Board of directors
Management
Cash Department
Clearance Department
Advances Department
Remittances Department
&
General Banking
Inquiry Section
CHAPTER NO. 04
NBP Policies & Strategies
Introduction………………………………………………………………35
4.1 Policies………………………………………………………….35
4.2 Strategies………………………………………………………..35
4.3 Success………………………………………………………….36
4.4 Summary………………………………………………………..39
CHAPTER NO. 05
Different analysis of NBP
Introduction………………………………………………………………40
5.1 SWOT analysis…………………………………………………40
5.2 PEST analysis…………………………………………………..43
5.3 Ratios analysis………………………………………………….45
5.4 Summary……………………………………………………….49
CHAPTER NO. 06
6.1 Introduction…………………………………………………….50
6.2 Recommendations …………………………………………….56
6.3 Summary
List of Abrevations…………………………………………….X
References……………………………………………………..XI
LIST OF ABBREVATIONS:
CHAPTER # 01
This report is about National Bank of Pakistan. NBP was established in 1949
and since then, it has expended its network, becoming the largest commercial
Bank of the country. It offers different products of services to its customers.
1.2Purpose:
The main purpose of the study in hand is together relevant information to
compile internship report on National Bank of Pakistan.
To observe, analyze and interpret the relevant data competently and in a
useful manner.
To work practically in an organization.
1.3Scope:
As an internee in National Bank of Pakistan the main focus of my
study research was on general banking procedures in one of the
1.4Objective:
The primary purpose of this study is to fulfillment of the requirements
for the degree of MBA (Finance).For this connection each student of
this particular course is required to undertake training in a relevant
organization selected by them, for a period of 5-7 weeks.
The secondary purpose of this internship is to understand how the
theoretical knowledge can be applied to the practical situations and
examine an organization’s financial issues and identify its
opportunities/ problems and also suggest corrective measures. This
internship is also very necessary to gain confidence and become aware
of the mechanism of an organization. As an internee I want to achieve
following objectives during my internship and organization study:
To familiarize with a business organization.
To familiarize with the different departments in the
organization and their functioning.
To enable myself to understand how the key business process
are carried out in organization.
To understand how information is used in an organization for
decision making at various levels.
I want to develop my skills in the application of theory to
practical work situations.
To develop my attitude conducive to effective interpersonal
relationships.
To acquire good work habits and sense of responsibility.
1.5Methodology:
The report is based on my two months internship program in National
Bank of Pakistan. The methodology reported for collection of data is
Primary data:
Secondary data:
1.6 Organization:
The NBP was established vide NBP Ordinance No. XIX of November
9. 1949. British Govt. devalued its currency in September 1949, India
devalued its rupees but Pakistan did not. It led to a crisis in trading
between the two countries and India refused to lift the Pakistan Jute.
To solve this problem i.e. to export jute NBP was established through
an Ordinance of GOP. National Bank of Pakistan maintains its position
as Pakistan's premier bank determined to set higher standards of
achievements. It is the major business partner for the Government of
Pakistan with special emphasis on fostering Pakistan's economic
growth through aggressive and balanced lending policies,
technologically oriented products and services offered through its large
network of branches locally, internationally and representative offices.
1.7 Summary:
In this chapter, I concluded that internship is a best way of analyzing
and understanding the market before the entrance in market, during
internship we see practically implementations of our knowledge so we
can say that internship program is a good fortune for all of the students
during their studies. Because it’s a initial plate form during our study
to analyze the market situations. Although there were some restrictions
during but I tried my best to full fill the purpose and objective of the
study.
CHAPTER # 02
Products of NBP:
Meet your need for ready cash against your idle gold jewelry
with no minimum limits
Cash n Gold Home Page
Pakistan
Basically NBP is surviving as a major shareholder of financial sector in
Pakistan. NBP is in the top ten financial institutions in Asia. NBP is surviving
in less human force with modern IT equipment to meet all challenges of the
time and it is the biggest financial earning unit in Pakistan. Its profitability is
higher than other banks.
Basically NBP is the institution of lower middle class and middle class of the
country. People feel quite relax while dealing with it.
To fully satisfy their customer, and for efficient working, they assign different
services to different departments.
Cash Department
Clearance Department
Advance Department
Remittance Department
2.5 Summary
Banks acts as financial agents to their customer; in return they get reward for
their services. Banks play important role in development of society. A strong
economy must have a good banking system. In this chapter we seen NBP
importance and functioning through which I concluded that it is playing a vital
role in development of banking sector in Pakistan as well as in country.
CHAPTER # 03
INTRODUCTION OF NBP
Introduction:
In this Chapter I am going to clarify the analysis of the organization that
contains brief history of NBP, what is the management structure of NBP, how
many departments are there, and their working. Current staff members of the
branch, their qualification and experience, salary structure, and promotion
strategy. What are the responsibilities of their employees, incentives and
motivation methods. Working hours of the organization, physical facilities
(working environment) provided to the employees. How they communicated
with in the organization. A critical analysis of the branch, its performance in
VISION
VALUES
BOARD OF DIRECTORS
NBP, Board of Directors list consist the following members and their
designation.
NAME DISIGNATION
PRESIDENT
GRADE 22
GRADE 21
GRADE 20
GRADE 19
GRADE I OFFICER
GRADE 18
GRADE II OFFICER
GRADE 17
GRADE 16
Cash Department
Clearance Department.
CASH DEPARTMENT
Receipt
The money, which either comes or goes out from the bank, its record should
be kept. Cash department performs this function. The deposits of all customers
of the bank are controlled by means of ledger accounts. Every customer has its
own ledger account and has separate ledger cards.
Payments
Since a Cheque has been declared to be a bill of exchange, it must have all its
characteristics as mentioned in Section 5 of the Negotiable Instruments Act,
1881. Therefore, one can say that a Cheque can be defined as an:
CLEARANCE DEPARTMENT
After the World War II, a rapid growth in banking institutions has taken place.
The use of cheques in making payments has also widely increased. The
collection as settlement of mutual obligations in the form of cheques is now a
big task for all the commercial bank. When Cheque is drawn on one bank and
the holder (payee) deposits the same in his account at the bank of the drawer,
the mutual obligation are settled by the internal bank administration and there
arises no interbank debits from the use of cheques. The total assets and total
liabilities of the bank remain unchanged.
The easy, safe and most efficient way is to offset the reciprocal claims against
the other and receive only the net amount owned by them. This facility of net
interbank payment is provided by the clearinghouse.
The representatives of the local commercial banks meet at a fixed time on all
the business days of the week. The meeting is held in the office of the bank
that officially performs the duties of clearinghouse. The representatives of the
commercial banks deliver the cheques payable at other local banks and receive
the cheques drawn on their bank. The cheques are then sorted according to the
bank on which they are drawn. A summary sheet is prepared which shows the
The bank uses this book for the purpose of recording all the cheques that are
being received by the bank in the first clearing. All details of the cheques are
recorded in this book.
The bank uses outward clearing register for the purpose of recording all the
details of the cheques that the bank has delivered to other banks.
ADVANCES DEPARTMENT
Principles of Advances
There are five principles, which must be duly observed while advancing
money to the borrowers.
a. Safety
b. Liquidity
c. Dispersal
d. Remuneration
e. Suitability
Forms of Loans
a) Cash Finance
b) Overdraft/Running Finance
This is the most common form of bank lending. When a borrower requires
temporary accommodation his banker allows withdrawals on his account in
excess of the balance, which the borrowing customer has in credit, and an
overdraft thus occurs. This accommodation is generally allowed against
collateral securities. When it is against collateral securities it is called
“Secured Overdraft” and when the borrowing customer cannot offer any
collateral security except his personal security, the accommodation is called a
“Clean Overdraft”. The borrowing customer is in an advantageous position in
an overdraft, because he has to pay service charges only on the balance
outstanding against him. The main difference between a cash finance and
overdraft lies in the fact that cash finance is a bank finance used for long term
by commercial and industrial concern on regular basis, while an overdraft is a
temporary accommodation occasionally resorted to.
c) Demand Financing/Loans
The amount of loan is placed at the borrower’s disposal in lump sum for the
period agreed upon, and the borrowing customer has to pay interest on the
entire amount. Thus the borrower gets a fixed amount of money for his use,
while the banker feels satisfied in lending money in fixed amounts for definite
short periods against a satisfactory security.
REMITTANCE DEPARTMENT
a) Demand Draft
b) Pay Order
c) Mail Transfer
Demand Draft
Demand draft is a popular mode of transfer. The customer fills the application
form. Application form includes the beneficiary name, account number and a
sender’s name. The customer deposits the amount of DD in the branch. After
the payment the DD is prepared and given to the customer. NBP officials note
the transaction in issuance register on the page of that branch of NBP on
which DD is drawn and will prepare the advice to send to that branch. The
account of the customer is credited when the DD advice from originating
branch comes to the responding branch and the account is debited when DD
comes for clearance. DD are of two types.
Pay Order
Pay order is made for local transfer of money. Pay order is the most
convenient, simple and secure way of transfer of money. NBP takes fixed
commission of Rs. 25 per pay order from the account holder and Rs. 100 from
a non-account holder.
Mail Transfer
When the money is not required immediately, the remittances can also be
made by mail transfer (MT). Here the selling office of the bank sends
instructions in writing by mail to the paying bank for the payment of a
specified amount of money. Debiting to the buyer’s account at the selling
office and crediting to the recipient’s account at the paying bank make the
payment under this transfer. NBP taxes mail charges from the applicant where
no excise duty is charged. Postage charges on mail transfer are actual
minimum Rs. 40/- if sent by registered post locally Rs.40/- if sent by
registered post inland on party’s request.
GENERAL BANKING
General banking section consists of following sub sections:
Inquiry section
Inland Remittances
Deposits
Cash Department
Utility Bills
INQUIRY SECTION
Account opening
Issuing Cheque Book
TYPES OF BRANCHES
There are a lot of different branches of National Bank of Pakistan. We explain
them one by one.
There are main branches in every city. In one city there is only one
main branch, it is directly under the zonal office.
Then there are commercial branches. These are the ordinary branches
and are in the commercial areas such as the Mall Road Branch.
The Industrial Branches are exclusively in industrial zones.
There are also Residential Branches. These are exclusively in
residential colonies.
Another type is the Mixed Branch such as civil secretariat branch.
Every kind of work is done.
There are also Project Branches created for specific purposes i-e the
project and are at the site.
3.2.3 Workload
Workloads means how many hours they work in bank or facilitate the
customers on daily basis .Here as we are concerned with National bank of
Pakistan, they facilitate their customers 9am to 1.30pm and done their work
3.2.7 Responsibilities
3.3.1 Communication
Communication system between branch employees is very good and admiring.
They easily communicate their problems with each other The employees of
NBP (2025) are all linked with each other from top to lower management. So
when any problem arises in branch they just discuss with each and solve it in
few minutes. We can say that there is open and simple communication system
within branch. But there is one flaw that there is high communication gap
between head office and branches because it take a lot time to reach in head
office and in taken approval.
3.4 Performances:
There are two types of performance measurement one of them is customer
satisfaction and other is in terms of sales (number of account averagely open
in a month).
In term of quality
First I am going to focusing on customer satisfaction, in NBP (2025) all
employees were very experienced people so, they always deal the customer
politely and in very impressive way. That’s why they can easily attracting and
retaining the customer in this competitive environment. Only due to customer
satisfaction and trust on bank products NBP (2025) achieve very best
performance with respect to its operational time or activation time.
In term of quality
Secondly sales or no. of Accounts is based on the how much a banker can
satisfy and attract the customer. In NBP in which I done my internship its age
is 2 years but its customer volume spreads to 1300, which is remarkable
according to budget point of view. Bank not just achieved its budgeted target
3.6 Summary
During my stay in National Bank of Pakistan, I found it as among one of the
best banks in Pakistan. As an internee, I enjoy working there. NBP has a very
cooperative staff .I worked there in very congenial and supportive
environment.
According to Euro money magazine the leading journal of UK in the month of
March 05 declared:
“NBP is the only Pakistani bank which has been
Ranked among the top100 banks of Asia”
It offers very good package of salary and benefits to its employees.
Management is trying to regulate a system for promotions. It has both contract
as well as regular employees as it beliefs on the use of strangeness for the
cross fertilization of ideas. It has unlimited offers for its employees in the
areas of economic well being &development. National bank of Pakistan gives
many benefits and allowances to their employees (executives, officers, clerical
& non clerical staff).
CHAPTER # 04
Introduction
4.1 Policies
Policy is a projected programme consisting of desired objectives and the
means to achieve them. Following are some policies implemented by NBP.
4.2 Strategies
Five year plan approved by BOD is hollow and does not address any serious
thinking on:
1. Development required for serving major sectors of the economy
2. Productivity improvement and benchmarking with the competition
4.3 Successes
After effectively implementing the policies and strategies NBP had achieve its
goals efficiently and effectively in previous year performance. In below there
are number of successes which has been achieve by NBP.
Best Return on Capital for 2006 amongst all Banks in Asia . -“ Banker
Magazine” in July 2007
World's leading financial journal, “Global Finance” has named NBP as the
Best Emerging Market Bank from Pakistan for the year 2006 .
"Best Foreign Exchange Bank – Pakistan” award for the year 2006 by
world's leading financial journal “Global Finance ”.
“ Best Bank - Pakistan” award for the year 2005 by world's leading financial
journal “Global Finance ”.
The Asian Banker, a reputable financial journal, has published the report of
its research project on the ranking of 300 of Asia 's Strongest Banks based on
a 11-Dimensional Dynamic Scoring Criteria has adjudged National Bank of
Pakistan as the Strongest Bank in Pakistan .
On the basis of overall financial performance during 2004, NBP has been
listed “Amongst top 1000 banks in the world” and “ Number 1 Bank in
Pakistan” by the prestigious “Banker Magazine” in its issue of July 2005 .
The “Banker Magazine” in July 2005 recognized NBP as the 10th Best
Bank in terms of ‘Profit on Capital' in the world .
“ Bank of the Year” awarded for the year 2005 by the world renowned “The
Banker” magazine owned by the Financial Times Group, London.
“ Bank of the Year” award for the year 2004 by the world renowned “ The
Banker” magazine owned by the Financial Times Group , London .
President's Awards:
1) Mr. S. Ali Raza, Chairman & President, NBP was awarded “The Asian
Banker Leadership Achievement Award 2007” by Asian Banker ( an
internationally reputed Financial Journal) in its issue of June 2007
2) Mr. S. Ali Raza Chairman & President, NBP, was conferred Sitara-i-
Imtiaz by the President of Pakistan , General Pervaiz Musharraf on August
14, 2005
4.4 Summary
CHAPTER # 05
Strengths:
Weaknesses:
The Major problem with NBP is its image as it is a Govt. bank so the
vision of the customer is not positive about it.
People think it will not provide them satisfactory services.
In many branches management is not up to date.
In small area’s branches employees have less education.
Award and promotion policies are not implemented in all branches.
There is no concept of job rotation
Employees have low coordination level among each other.
Opportunities:
Threats:
Political:
Economical:
Technological:
Profitability Ratios:
Profitability means “Measure of the ability of business to generate returns for
the business or for the owner” or “Overall effectiveness of the management is
known as profitability”
Here we will calculate Solvency ratios of NBP to evaluate its financial
position.
To calculate this ratios we needed these items Operating profit, net profit,
operating fixed assets, total assets, total investments with in business,
operating fixed assets.
Critical Analysis:
Debt Management.
Debt Management 2007 2008 2009
Critical Analysis
These above ratios of NBP have no effect of recession and bank maintained as
well as improves the above ratios that show the efficiency of the NBP
activities.
Liquidity Ratios
Liquidity Ratios 2007 2008 2009
Growth Rates
Growth Rates 2007 2008 2009
Critical Analysis
This table of ratios is telling about the future of banking sector in Pakistan. In
2007 all the world was under the recession and it also affects the economy of
Pakistan. Banks are the industry that was hardly hit by this recession and the
profits of all banks convert into negatives but in 2009 hope for bright future
arises because now the NBP come back on the track and generating the profit.
Analysis
As the above data shows the average price of shares of NBP is very high in
2007 but later it trend to decline and in 2009 the price of share is less than
three times as compare to the 2007. It is due to the economic recession that
effect badly to the banking sector.
Solvency Ratios:
Solvency Ratios 2007 2008 2009
Critical Analysis
This section of NBP ratios explains the portfolio of the NBP, explaining that
NBP portion of advances in the portfolio has increases and others have the
decreasing trend.
5.4 Summary
CHAPTER # 6
INTRODUCTION
Here I am giving some suggestions, which in my view can add some input for
efficiency and better performance of NBP as an organization in general and
City branch in particular.
Professional training
NBP staff lacks professionalism. They lack the necessary training to do the job
efficiently and properly. Although staff colleges in all major cities but they are
not performing well. For this purpose these staff colleges should be
reorganized and their syllabus should be made in such a way to help the
employee understand the ever-changing global economic scenario.
Banking council of Pakistan should also initiate some programs to equip the
staff with much needed professional training.
Delegation of authority
Employees of the bank should be given a task and authority and they should
be asked for their responsibility.
Performance Appraisal
The manager should strictly monitor the performance of every staff member.
All of them should be awarded according to their performance and result in
the shape of bonuses to motivated and incite them to work more efficiently.
Transfer
Transfer is not properly carried out. Some of the employees are continually
serving at the same post. They are simply rotated at the same branch.
Changes in Policies
There should not be any abrupt policies change by the upper management, as
this practice hurts the customer confidences in the bank. Government should
make long-term policies
Bank gets Rs. 10 to processes a utility bill, and it is very tire, tough and hard
job. These charges should be increased to RS 15 per bill to enable the branch
to cover their handling costs and make some profit.
100 major branches of NBP should established a direct link with the, head
quarter In Karachi, through Internet or Intranet. This will make the functions
and decision making of the management easier and convenient.
Credit Card
National bank of Pakistan should start its operation in credit card. These cards
are very helpful for the ordinary customer in general and the business people
in particular. To make it more secure and to eliminate the misuse of it, the
management is required to keep proper security against the card.
Clean Loans
Clean loan or clean overdraft is the credit facility extended to the customers to
the customers without any security. These types of small term loans should not
be extended to anybody, because sometime these loans are provided to blue-
eyed people of the management and they become a part of bad debts.
Cash Financing
In this mode of financing the amount of credit not utilized by the borrower is
remained tax-free. It is recommended that a small amount of interest should be
charge on this amount as well because the bank gas kept-aside the amount for
that borrower and cannot advance it anywhere..
Technological Advancement
I would like to suggest that at least all the main branches of NBP should be
fully computerized in order to expedite the dealing process among bankers and
their customers. Every department should be provided a computer with
adequate training (especially Advances, Deposits and Foreign Exchange
departments).Daily records should be entered directly into these computers,
(instead entering the overall daily transactions after the banking hours). It will
In the City branch during my internship I saw that when some of the
employees are transfer to other places, due to their relation with influential
people and with top management they can cancel their transfer in few weeks,
when they are unsatisfied at that place.
The branch should adopt various marketing strategy and promotion strategy to
promote the bank and its product. The most important in my opinion is
personal marketing; it is the most effective of all when you think in term of
branch level. But on the whole organization level, they should arrange the
seminar within the bank and outside the bank. They should introduce various
prizing schemes just like Allied Bank. Karamad Scheme, Bank Al-Falah
(monthly income earning scheme) and various others. They should do more
advertising through newspaper and media and through channel of personal
contacts.
Complaints of Customer
Every person cannot go to the manager for the complaint because most of the
people are hesitant. So I suggest management to install a compliant box in the
branch, and recruit a special person for that guidance of the customer when
they are unable to manage some difficulties in banking matters.
Organizational Commitment
Managerial Leadership
Credit Monitoring
The credit department of the bank should carries out vigilant credit
monitoring. They should ensure the proper payment of installments and the
mark-up by the borrower. The staff members who have done all the paper
work of the loan extension should perform the monitoring, as he/she will be
having more information about the borrower.
Some of the business community due to law and order situation are now
reluctant to keep the fund in their premises and would want to depart with it.
Therefore, City Branch may extend the night banking to cater to demand of
this business community. The branch could also be opened to cater the
requirements of this business community
Limited staff:
6.3 Summary: