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Internship Report on

NATIONAL BANK OF PAKISTAN


Khyber Bazaar Branch Peshawar

SAMIULLAH
M.Com Final Year Roll No.697 Morning

GOVERNMENT COLLEGE OF MANAGEMENT SCIENCES PESHAWAR


SESSION: 2011 - 2012

Internship Report on

NATIONAL BANK OF PAKISTAN


Khyber Bazaar Branch Peshawar

Internship Report submitted to the University of Peshawar in partial fulfillment of the requirements for the Degree of Master In Commerce August 2012

In the Name of Allah,

The Most Merciful the Beneficent

Dedicated to my Parents
I dedicated this report to my lovely parents whose prays, affection and support is always besides me. The dedication of this humble effort of mine is deserved only by my Parents constant encouragement and counseling my life as well as the confidence and spirit instilled by them has enable me to carry out this research successfully.

SAMIULLAH

INSTITUTE OF GCMS PESHAWAR

Internship Report on

NATIONAL BANK OF PAKISTAN


Khyber Bazaar Branch Peshawar

COORDINATOR RESEARCH & DEVELOPMENT DIVISION

Submitted to :

____________________

Submitted by:

Sami ullah

SUPERVISOR
Name: Designation: Signature: Masroor Asim Lecturer ______________________

Acknowledgment

All gratitude and thanks to almighty ALLAH the gracious, the most merciful and beneficent who gave me courage to undertake and complete this task. I am very much obliged to my ever caring and loving parents whose prayers have enabled to reach this stage. I am grateful to almighty ALLAH who made me able to complete the work presented in this report. It is due to HIS unending mercy that this work moved towards success. I am highly indebted to my course instructor Mr. Sir Masroor Asim for providing me an opportunity to learn about the Banking system of National Bank of Pakistan" which is vital ingredient of M.com program. I am very great full to my teacher Mr.Sir Masroor Asim for providing me guideline for the completion of this report. I feel great pride and pleasure on the accomplishment of this report.

SAMIULLAH
M.com Final Year ROLL NO, 697 MORNING

Preface
Once there was a man, who wanted to learn swimming; he bought and studied many books on how to swim. One day he was passing by the bank of river along with his books; he fell into the river with his books and drowned. The research is like that; unless you jump into water you cant learn it. For the application of our theoretical knowledge in a practical place I did the feasibility study of National Bank of Pakistan by working for two months as an internee. With all praise and thanks to Almighty Allah, Who has been so kind in blessing me with the energy, courage and resources to conduct this challenging report in time. The banking profession, especially the modern day banking with its challenging and progressive methods has always interested me. Since I have an academic background in finance and accounting, banking seemed an appropriate area for my internship. I found National Bank of Pakistan the best available option for my internship. I am humbly grateful to the Coordinator of M.com Final of GCMS Mr. Masroor Asim he is also my supervisor, whose guidance and knowledge, strengthened my confidence to complete this report. Moreover, I am extremely thankful to Mr. Masroor Asim & all those who helped me to complete this report.

SAMIULLAH

TABLE OF CONTENTS
S. No. Preface Table of Contents List of Tables & Charts List of Acronyms Executive Summary Title Page No.

vii. viii. INTRODUCTION Introduction 1 1 1 1 1-2 2-3

1. SECTION

1.1 1.2 1.3 1.4 1.5

Chapter - 1 Introduction Background of the Study Purpose of the Study Scope of the Study Methodology of the Report Scheme of the Report

2. SECTION
2.1 2.2 2.3 2.4 2.5 3.1 3.2 3.3 3.4 3.4.1 3.4.2 3.4.3 3.4.4 3.5 3.5.1 3.6 3.7 3.7.1 3.7.2 3.8 3.8.1 3.8.1.1 3.8.1.2 3.8.1.3 3.8.2 3.8.3

Chapter 2 Banking Evaluation of Banking Banking Growth During (1948-1970) Banking Reforms in 1972 References Chapter 3 Nationalization Of Banks (1974) Islamization of Banking Dis-Investment & Deregulation of Banking-1991 Interest Free Banking History of NBP Mission Statement Goals & Objectives Goals & Objectives of NBP Board of Directors Management Senior Management of NBP Network of Branches Objectives of NBP Increase in Deposits Extension of Loans Function of NBP Accepting Deposits Current Deposits PLS Saving Deposits PLS Term Deposits Discounting bill of exchange Agency Services

REVIEW Evolution of Banking in Pakistan 5 6 6-9 10-11 12 15 16 16 16 17 18 18 18 19 19 20 20 20 20 21 21 21 22 22 22 22

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3.8.3.1 3.8.3.2 3.8.3.3 3.8.3.4 3.9 3.10 3.11 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.7.1 4.8 4.9 4.9.1 4.9.2 4.10 4.10.1 4.11 4.12 4.12.1 4.12.1.1 4.12.1.2 4.12.1.3 4.12.1.4 4.12.1.5 4.12.2 4.12.2.1 4.12.2.2 4.12.2.3 4.12.2.4 4.13 4.13.1 4.14 4.15 4.16

Collecting of Dividends Collection of Cheques Acting as an Agent General Utility Services Unmatched Banking Facilities NBP at the for front of PAK-AFGH Trade References Chapter 4 Services of NBP Demand Drafts Swift System Letter of Credit Travelers Cheques Pay Order Mail Transfers Foreign Remittances New Features Short Term Investment National Income Daily Account (NIDA) Silent Features Rates on NIDA Investments NBP Involved Investment Commercial Finance Trade Finance & other Business Loan Agriculture Finance Agriculture Finance Services Agriculture Credit Agriculture Credit (Medium Term) Farm Credit Production Loans Corporate Finance Working Capital & Short Term Loans Medium Term Loans & Capital Expenditure Finance Loan Structuring & Indicates Cash Management Services International Banking NBP Offers Cash & Gold Finance Advance Salary Finance References

22 22 23 23 23-24 24 25 27 27 27 28 28 28 28 29 29 29 29 30 30 30 30 30 31 31 31 31 32 32 32 32 32 33 33 33 34 34 34 35

3. SECTION
5.1 5.1.1 5.1.2 Chapter 5 Cash Department Receipts Payments

BANK DEPARTMENT Departmentalization 36 36 36

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5.1.3 5.1.4 5.1.5 5.1.6 5.17 5.2 5.2.1 5.2.2 5.3 5.3.1 5.3.2 5.3.3 5.4 5.4.1 5.4.2 5.4.3 5.4.4 5.5 5.6 5.7 5.1 5.2 5.2.1 5.2.2 5.2.3 5.2.4 5.2.5 5.3

Cheques & Their Payment The Requisites of Cheques Parties to Cheques Types of Cheques Payment of Cheques Clearance Department In Word Clearing Book Out Clearing Book Advance Department Name & Address of The Borrowers Principles of Advances Forms of Loans Remittances Department Demand Draft Pay Order Telegraph Transfer Mail Transfer Human Resource Management Deposits Department Foreign Exchange Department NBP (Khyber Bazaar Branch Department) Cash Department General Banking Remittances Department Advances Department Clearing Department Computer Department Establishment Department References Department ANALYSIS Chapter 6 Financial Analysis Introduction to Financial Analysis Purposes of Financial Analysis Ratio Analysis Liquidity Ratio Activity Ratio Profitability Ratio NBP Balance Sheet NBP Income Statement Chapter 7 SWOT Analysis Strength of Branch Weakness of Branch Opportunities of Branch Threats of Branch

36 37 37 37 38 39 40 40 40 41 41 44 46 46 46 47 47 47 50 54 54 55 55 56 56 57 57 59

4. SECTION

6.1 6.2 6.3 6.4 6.5 6.6 6.7 6.8 7.1 7.2 7.3 7.4

60 60 62 62 66 70 77 78 79 79 80 80

5. SECTION

MY RECOMMENDATION

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8.1 8.2 8.3 8.4 8.5 8.6 8.7 8.8 8.9 8.10 8.11 8.12 8.13 8.14 8.15 8.16 8.17

Chapter 8 Recommendation There Should be Contingency Plan Lacking in Personnel Knowledge Lacking in Staff Staff Should be Trained Improve Technology Secrecy Should be there Avoid Informal Interaction High Level Influence be Avoided Promotion & Reward System Should be there Old Loan & Locker Facilities Monitoring System General Working Condition must be improved Customer Orientation Job Rotation New Talent & Professional Should be hired Conclusion Bibliography

81 81 81 81 81 82 82 82 82 82 82 82 82 83 83 83 84

LIST OF TABLE AND GRAPHS


S.No
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Board of Director Senior Management of NBP Organizational Structure of NBP NBP three years Performance Ration Analysis Cash Ratio Current Ratio Earning Per share Ratio Spread Ratio Return On Asset Total Assets Turn Over Ratio Fixed Assets Turn Over Ratio Return on Assets Net Profit Margin Debt Ratio Debt/Equity Ratio Return on Equity Time Interest Earned Ratio Investment to Deposit Ratio Balance sheet Income Statement

Topic

Page No
18 20 26 59 60 60 61 62 63 64 65 66 67 68 69 70 71 72 73 75 76

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LIST OF ACRONYMS
AVP NCB DD ADBP GM HO L/C NBP OGI RTC SBP SEVP SVP TT NIB IMF DM FDD MT VP RHQ ATM SME R&D Assistant Vice President Nationalize Commercial Banks Demand Draft Agricultural Development Bank of Pakistan General Manager Head Office Letter of Credit National Bank of Pakistan Officer Grade I Rupee Travelers Checks State Bank of Pakistan Senior Executive Vice President Senior Vice President Telegraphic Transfer Non Interest Banking International Monetary Fund Deutsche Mark Foreign Demand Draft Mail Transfer Vice President Regional Head Quarter Automated Teller Machine Small and Medium Enterprises Research and Development

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Executive Summary
Banking sector is considered as the backbone of an economy of a country because it has major contribution in the economics development of a country. NBP, being the nationalized commercial bank of Pakistan, has vital role in the field of providing commercial banking services and significance in the banking sector due to being pioneer in launching various innovative products and services in the banking sector of Pakistan. The purpose of this report is to highlight the problems being faced by the bank, by analyzing financial and operational performance in order to give feasible and constructive recommendation for the development of the bank. The methodology of study is based on both primary as well as secondary data. Being nationalized bank i.e. NBP, there is a government security to banks customers. Bank has successfully launched Hub and Spokes Branch concept, has goodwill for being pioneer in launching various products and services, much familiarity for services being required by customer, spent huge amount on the computerization of its regional offices and Hub branches, authority to deal foreign exchange, to give guarantee for imports and exports. However, bank has burden of defaulted loans which can be overcome by speeding up recovery system through appointment of exclusive judges who should decide the defaulted cases in less time, the debt recovering agencies regulated law may be used. Bank needs improvement in the credit management by giving refresher courses regarding creditor and risk management to the concerned employees. Bank may overcome the problem of not offering competitive and required products and services by hiring professionally competent people who may do research for designing the products and services according to changing needs and effectively market them. Bank has spectacular history in the banking sector of Pakistan, more than 1200 branches and high deposits but still it needs improvements for development i.e. in the organizational hierarchy of the bank, downward communication is dominant over upward communication which may be overcome by giving encouragement to the feedback by the employees and arranging the informal meetings and introducing new style of the organizational hierarchy. There is lack of motivation among the employees,

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which may be detached by giving those incentives increasing salaries and rewarding them. There is need of changes in promotion basis recruitment policy which is based on short term, which should be make long term. The absence of coordination among the functional divisions and overlapping of functions may be eliminated by complete coordination among functions of various departments and the advancement growth and opportunities for achievements. In spite of various problems currently being faced by the bank, it has lot of potential to grow by efficiently utilizing its human and organizational assets for meeting the changing demands in the globalize world of today in order to be competitive in the banking sector of Pakistan.

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