Professional Documents
Culture Documents
All praise is to ALLAH ALMIGHTY, for giving me knowledge, insight, devotion and
strength to accomplish this task. I am immensely thankful to all the teachers and friends who
helped me to complete the project. I am grateful to the staff of NBP as well as also thankful to
Mr. Khalid Mehmood (senior Officer at NBP Civic Centre Branch), who supported me lot during
this project and provided comprehensive knowledge of their products and services and banking
practices. Specially thanks to MR. Majid Khan General Manager of Taramri Branch MR.Nizamud-Din, Mr. Javeed and Mr.Afzaal. Their guidelines has lead me to display a picture of NBPs
Management in this report.
In the end I would like to thank all of my friends and family members for their support and
encouragement.
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EXECUTIVE SUMMARY
To interpret my skills and educational knowledge of Finance I make report on National
Bank of Pakistan. The objective of this report was to explore the issues relating to Finance and to
find out problems regarding the theoretical concepts with practical experience working in an
organization and study the system of National Bank of Pakistan. There are many possible
improvements, which we can make positive changes in the system. The report summarizes the
National bank of Pakistan with its working divided into two parts first part deals with the
description of the NBP the second part covers the theory and practices adopted by NBP and at
the end concluding remarks and suggestions are given for improvements. It was too much
difficult for me to describe the functioning of such a vast organization within the limits. In spite
of this I tried best to describe. Finally, for any all too fallible errors, omissions and shortcomings
in the writing of the report only I responsible for whom I hope that all concerning regards of this
report will forgive me.
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TABLE OF CONTENTS
CHAPTER 1
1.4 CORE VALUES
1.5 OBJECTIVES OF THE NBP
1.8 NETWORK OF BRANCHES
1.9 EMPLOYEES BENEFITS OF NBP
1.9.1 PENSION SCHEME
1.9.2 POST-RETIREMENT MEDICAL BENEFIT
1.9.3 BENEVOLENT SCHEME
1.9.4 GRATUITY SCHEME
1.10 OTHER EMPLOYEE BENEFITS
1.10.1 EMPLOYEES COMPENSATED ABSENCES
1.11 TRUST ACTIVITIES OF NBP
1.11.1 NATIONAL INVESTMENT TRUST
1.11.2 LONG TERM CREDIT FUND
1.11.3 QARZ-E-HASNA FUND
CHAPTER 2
STUDENTS LOAN SCHEME
NBP KAROBAR- PRESIDENTS ROZGAR SCHEME
ADVANCES
FINANCE
FINANCE
FINANCE
CHAPTER 3
WORKING ENVIRONMENT OF NBP
REMITTANCE DEPARTMENT
CASH/CLEARANCE DEPARTMENT OF NBP
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CHAPTER 1
INTRODUCTION
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1.1 INTRODUCTION:
The history of National Bank of Pakistan is part of Pakistans struggle for
economic independence. National Bank of Pakistan was established on November 9, 1949 under
the National Bank of Pakistan Ordinance, 1949 in order to cope with the crisis conditions which
were developed after trade deadlock with India and devaluation of Indian Rupee in 1949.British
Govt. devalued its currency in September 1949, India devalued its rupees but Pakistan did not. It
led to a crisis in trading between the two countries and India refused to lift the Pakistan Jute. To
solve this problem i.e. to export jute NBP was established through an Ordinance of GOP.The
Bank commenced its operations from November 20, 1949 at six important jute centres in the
then, East Pakistan and directed its resources in financing of jute crop. The Banks Karachi and
Lahore offices were subsequently opened in December 1949. The National Bank of Pakistan
came forward to establish its offices in the Cotton growing areas and extended credit facilities
liberally in order to restore stability to the market. In 1951, the country was once again faced
with a crisis in the cotton trade when prices was crashed and touched the lowest level since
independence following the cessation of hostilities in Korea. The bank in collaboration with the
cotton board provided the necessary Credit facilities to the trade and the crisis was tided over.
The nature of responsibilities of the Bank is different and unique from other banks/financial
institutions.
The Bank acts as the agent to the State Bank of Pakistan for handling Provincial/Federal
Government Receipts and Payments on their behalf. The Bank has also played an important role
in financing the countrys growing trade, which has expanded through the years as diversification
took place. The National Bank of Pakistan has its headquarters in Karachi, Pakistan. The bank
operates 1249(2008) branches in Pakistan and 22(2008) overseas branches. Under a trust Deed,
the bank also provides services as trustee to National Investment Trust (NIT) including safe
custody of securities on behalf of NIT. The National Bank of Pakistan has assets worth Rupees
737976.44 million on September 30, 2008.
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Deposits held by NBP constituted about 3.1% of total deposits of all Pakistani
Banks in 1949, which rose to 38% in 1952.
ii)
NBP lent out to Textile, Yarn, Iron and Steel and played a pioneer role in support
of agriculture and commerce.
iii)
NBP advances reached Rs.554.4 million by December 1959, which was one third
of the total schedule bank credit.
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quality of, operations, staff, financial strength and products and services To develop a culture of
excellence in every spare of activity of the bank .
1.4CORE VALUES:
Highest standards of Integrity.
Institutionalizing teamwork and performance culture.
Excellence in service.
Advancement of skills for tomorrows challenges.
Awareness of social and community responsibility.
Value creation for all stakeholders.
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1.7 MANAGEMENT:
Management is a distinct process consisting of activities of planning, organizing,
actuating and controlling performed to determine and accomplish stated objectives with
the use of human being and other resources. The management has two types.
Centralized.
Decentralized.
The Branch network of National Bank of Pakistan is divided into following categories
ATM network ( Total ATMs 101 & Total ATMs machines 104)
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1.9.3Benevolent scheme:
The bank also operates an un-funded defined benefit benevolent scheme for its eligible
employees. Provision is made in the financial statements based on the actuarial valuation using
the Projected Unit Credit Method. Actuarial gains/losses are recognized in the period in which
they arise.
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1.9.4Gratuity scheme:
The bank also operates an un-funded defined benefit gratuity scheme for its eligible
contractual employees. Provision is made in the financial statements based on the actuarial
valuation using the Projected Unit Credit Method. Actuarial gains/losses are accounted for in a
manner similar to pension scheme.
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CHAPTER 2
PRODUCTS AND SERVICES
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2.1 DEPOSITS:
The National Bank of Pakistan offers to their clients a variety of Deposit Schemes with
personalized services at competitive rates of interest. Any Pakistani citizen can open his/her
account for any deposit scheme at any of its Branches strategically located throughout Pakistan.
The Bank with its huge network of 1243 branches garners savings from both the rich and the
poor in urban as well as rural areas. Even a poor farmer in a remote village, with his meager
annual income, feels secure to safe keep his minuscule savings in National Bank of Pakistan,
Because National Bank of Pakistan has a long heritage of trust and professional commitment.
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2.2 ADVANCES:
National Bank of Pakistan plays a pivotal role in translating the government's development
plans in terms of growth in industrial, commercial and agricultural sectors in Pakistan.
Accordingly the Bank has formulated its Credit Policy under the guidelines of SBP-the Central
Bank of Pakistan.
2.2.1NBP Saibaan:
The NBP Saibaan is retail product of the bank. It has different product items which are home
purchase, home construction, home renovation and purchase of land plus construction. If anyone
has a Home Finance Facility outstanding with another bank he can have it transferred to NBP
through a hassle-free process.
ABL). Under the Scheme, financial assistance is provided by way of Interest Free Loans to the
meritorious students who have financial constraints for pursuing their studies in Scientific,
Technical and Professional education within Pakistan.
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loans to their customers against collateral securities they are called secured loans and when no
collateral security is taken they are called clean loans.
The amount of loan is placed at the borrowers disposal in lump sum for the period agreed
upon, and the borrowing customer has to pay interest on the entire amount. Thus the borrower
gets a fixed amount of money for his use, while the banker feels satisfied in lending money in
fixed amounts for definite short periods against a satisfactory security.
2.4: REMITTANCES:
NBP offers the following services to the people.
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2.4.6 MAILTRANSFERS:
Move your money safely and quickly using NBP Mail Transfer service. And NBP also
offers the most competitive rates in the market. They charges Rs 50/- exchange rate and RS 75/postage charges on issuing mail transfer.
telex/fax/internet or cable. Payment to the beneficiary is affected directly by the drawee office
upon identification or through credit into beneficiarys bank account. As such remitting office is
not required to issue any instrument payment to the remitter for delivery to the beneficiary.
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NBP provides another reason to transfer your money using our facilities. NBP pay orders
are a secure and easy way to move your money from one place to another. And, as usual, NBP
charges for this service are extremely competitive. The charges of NBP are very low all over the
Pakistan. It charges Rs 50/- for NBP account holders on issuing one payment order. And charges
Rs 100/- for NBP non-account holders on issuing one payment order. It charges Rs 25/- for
students on payment of fees of educational institutions. If someone want a duplicate of payment
order they charges Rs 100/- for NBP account holders and Rs 150/- for non-account holders.
2.5 MISCELLANEOUS:
2.5.1 Lockers:
National of Pakistan also provides lockers facility in the country. The lockers issued only
to the depositors. No lockers are issued to any unknown person. The dual control system is used
for lockers. The officer has master key to apply on the locker but he cannot open the locker of
any person. The locker holder provides the bank has specimen signature. Whenever the locker
holders come to open the locker, his signatures are verified by the officer and then will be able to
open his locker. If the key of the locker is lost company providing these lockers breaks the locker
and new lock is fitted in its locker and lock is destroyed in the presence of the locker holder and
bank charges RS 1200 for that. In case the locker holder dies, the court opens his locker in the
presence of his heir as mentioned in his will or and his belongings are given to them and the
locker is closed.
NBP has accelerated its activities in the stock market to improve its economic base and
restore investor confidence. The bank is now regarded as the most active and dominant player in
the development of the stock market.
2.7.1
Agricultural Credit:
The agricultural financing strategy of NBP is aimed at three main objectives:-
Help farmers utilize funds efficiently to further develop and achieve better production
2.7.2
CORPORATE FINANCE:
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Core banking application is more than just a transaction processing system. It provides
updated data for generating various reports for Management information system (MIS), and will
facilitate Decision Support System (DSS) and Executive Information System (EIS). As data is
located on CDC, branches and administrative offices can concurrently avail updated data when
required.
Business Process Re-engineering
Core Banking would enable implementation of BPR initiatives of a Bank and facilitate
centralized handling of various processes. Branches would do less and less back office work and
would be able to focus on marketing, customer relationship management and cross selling.
2.9
COLLECTION
OF
UTILITY BILLS,
TAXES
AND
CHALLANS:
NBP as an agent of the SBP collects bills from the general public and charge commission
for the services rendered. The commission on each type of bill is Rs. 8/- per bill. The branches
collect the utility bills and the proceeds are then send to head office.
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CHAPTER 3
DEPARTMENTS OF NATIONAL BANK OF PAKISTAN
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3.1.2 Receipt:
The money, which either comes or goes out from the bank, its record should be kept.
Cash department performs this function. The deposits of all customers of the bank are controlled
by means of ledger accounts. Every customer has its own ledger account and has separate ledger
cards.
3.1.3 Payments:
It is a bankers primary contract to repay money received for this customers account
usually by honouring his cheques.
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3.1.6
Payment of Cheques:
It is a bankers primary contract to repay money received for his customers account
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3.2.1
received by the bank in the first clearing. All details of the cheques are recorded in this book.
3.2.2
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Mail Transfer
Open DD:
b)
Cross DD:
the selling office and crediting to the recipients account at the paying bank make the payment
under this transfer. NBP taxes mail charges from the applicant where no excise duty is charged.
Postage charges on mail transfer are actual minimum Rs. 40/- if sent by registered post locally
Rs.40/- if sent by registered post inland on partys request.
Janitorial Services
Sale & Marketing staff for retail products.
3.5.1.3Transfer of Employee:
The regional office controls fifty five (55) branches. All transfer and posting of
employees among these branches is made by HR department keeping in view the staff
requirement at different branches.
3.5.1.4Job Rotation:
Function of Job rotation is also performed by regional office. Normally when an
employee completes three years at a particular seat, he rotates to another seat. This rotation is
very important for internal control, to prevent fraud and forgery and to enhance the employees
skills for different duties.
3.5.1.6Performance Appraisal:
H.R Department also performs the function of performance appraisal of
employees
on
yearly basis .At the close of every year annual confidential report (ACR) of each and every
employee is written by HR department.
This ACR contains subjective and objective evaluation as well as personal traits of an employee.
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3.5.1.10Disciplinary Cases:
HR department deals with all disciplinary cases of employees. These disciplinary cases
include: Afraid & Forgery
Unauthorized leaves
Insubordination
Misconduct of finances
Violation of procedure & policy
3.5.1.11Retirement Benefits:
HR department also manages pensions and group life insurance. Pension is allowed to all
employees after retirement and when the employee dies and his widow can avail this facility till
death. Even if the widow dies, the and daughter/son of employee can avail pension till she/he
attain the age of majority i.e. 18years or she/he married, whichever is happened earlier.
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administration
of
Staff Loans. Salary is being disbursed in last week of the month. NBP allows house building
loan, Motor car loan and computer loan toits employees. Period of house building loan is 20
years, Car loan is 10 years and computer loan is 5 years. Mark up on HBL is 3% and
car/computerloanis4%.
monthly
3.6.1
Account opening:
The opening of an account is the establishment of banker customer relationship. Before a
banker opens a new account, the banker should determine the prospective customers integrity,
respectability, occupation and the nature of business by the introductory references given at the
time of account opening. Preliminary investigation is necessary because of the following reasons.
Avoiding frauds
Safe guard against unintended over draft.
Negligence.
Inquiries about clients.
There are certain formalities, which are to be observed for opening an account with a
bank.
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Formal Application
Introduction
Specimen Signature
Minimum Initial Deposit
Operating the Account
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3.6.3
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CHAPTER 4
COMPANY ANALYSIS
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Neutralizing it threats.
SWOT analysis is one of the most important steps in formulating strategy using the
organization mission as a context; managers assess internal strengths distinctive competencies
and weakness and external opportunities and threats. The goal is to then develop good strategies
and exploit opportunities and strengths neutralize threats and avoid weaknesses.
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4.1.1 STRENGTH
4.1.1.1
OLDEST INSTITUTION:
NBP is one of the oldest bank of Pakistan and first nationalized bank Hence its customer
base is strength from this plus point as customers have more confidence in the bank. The
additional value services as the privilege for the bank.
4.1.1.3
NBP has the relative competence in having more deposits than the other bank. This is
because of the confidence the customer have in the bank. The bank being the privileged and
oldest bank in banking sector of Pakistan enjoys this edge over all others, lacking it.
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In case a customer wants to make balloon payments will not b charged to any panelty in any
advances case of NBP. Its a strength of NBP against its competitors.
4.2 WEAKNESSES
4.2.1 LACK OF MARKETING EFFORT:
The bank does not promote its corporate image, services etc on a competitive way. Hence
lacks far behind in marketing effort .A need for aggressive marketing in there in the era
marketing in now becoming a part of every organization.
4.2.2 NBP UNDER POLITICAL PRESSURE:
The strong political hold of some parties and government and their dominance is affecting
the bank in a negative way. They sometime have to provide loan under the pressure, which leads
to uneven and adjusted feeling in the bank employees.
4.2.3 FAVORITISM AND NEPOTISM:
The promotions and bonuses etc in the bank are often powered by seniors favoritism or
depend upon their wills and decision. This adds to the negative factors, which denominate the
employees thus resulting in affecting their performance negatively.
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The bank lack the strength of being powered by the network of computers, which have saved
time, energy and would have lessened the mental stress, the employees have currently. This
would add to the strength if it were powered by network of computers.
4.2.7 LACK OF MODERN EQUIPMENT:
The bank lacks the modern Equipment that is note counting machine computers. Even if there is
any equipment they lack to fall in the criteria of being rearmed as update and upgraded.
4.2.8 UNEVEN WORK DISTIBUTION:
The workload in NBP is not evenly distributed and the workload tends to be more on some
employees while others abscond away from their responsibilities, which server as a
demonization factor for employees performing above average work.
4.2.9 OLD Employee Awareness:
Computer awareness to old Staff of NBP is a weakness. They should develop employee
development & training programme to effectively update their employees regarding computer
applications & upcoming CORE BANKING SOFTWARE of bank.
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4.3 OPPORTUNITIES
4.3.1 ELECTRONIC BANKING:
The world today has become a global village because of advancement in the technologies,
especially in communication sector. More emphasis is now given to avail the modern
technologies to better the performances. NBP can utilize the electronic banking opportunity to
ensure on line banking 24 hours a day. This would give a competitive edge over others.
4.3.2 MICRO FINANCING:
Because of the need for micro financing in the market, there are lot of opportunities in this
regard. Other banks have already initiated, now the time has arrived when the NBP must realize
it and take on step to cater an ongoing demand.
4.3.3 CAR FINANCING:
This is the major area where NBP has not competed with private banks. As per repute of NBP
they must enter in personal & car financing products.
4.3.4 CORE BANKING SYSTEM:
Implementation of the CORE BANKING SYSTEM is still an opportunity, as till now none
of the banks operating in Pakistan is using this most updated & famous banking application. It
will lead NBP to smooth sailing environment as a leading bank in technology as well as
competing between other banks. This will upgrade NBP from paper & ledger era to the smooth
& sophisticated computer application.
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4.4 THREATS
4.1EMERGENCE OF NEW COMPETITORS:
The bank is facing threats with the emergence of new competitor especially in terms of
foreign banks. These foreign banks are equipped with heavy financial power with excellent and
innovative ways of promoting and performing their services. The bank has to take initiative in
this regard or will find itself far back in competition.
4.3
DOWNSIZI NG
The bank is currently acting upon the policy of downsizing which threaten the environment
of the bank Employees feel insecurity in doing their jobs and work, hence affecting the over all
performance of employees negatively.
4.4
CUSTOMERS COMPLAINTS
There exists no regular and specific system of the removal of customer complaints. Now a
day a need for total customer satisfaction is emerging and in their demanding consequences
customer's complaints are ignored.
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CHAPTER 5
ANALYSIS
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After proper analysis of the organization I divided it into in four parts. This analysis is
mainly based on practical experience of NBP Staff, analysis is as under: Problems at the branch.
Function analysis.
Administrative analysis.
Personal managements analysis.
5.1 PROBLEMS AT THE BRANCH
Customer Satisfaction
Poor record management and filing system
Unequal distribution of work
Marketing visits
5.2 FUNCTIONAL ANALYSIS
Formal Organization
Difference between theory and practice
Bank duty to maintain secrecy.
Excessive paper work
Delegation of authority
5.3 ADMINISTRATIVE ANALYSIS
IN
L O A N A DVANCE M E NT
Lack of appreciation
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CHAPTER 6
CONCLUSION
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INTRODUCTION
NBP is an effectively operating and profit making organization and carrying out its
activities under a specified system of procedure. The main regulatory body is State Bank of
Pakistan, which provides policy guidelines and ensures that the money market operates on sound
professional basis while the head office specifies the whole procedure of function and operations.
Here I am giving some suggestions, which in my view can add some input for efficiency
and better performance of NBP as an organization in general and Taramri branch in particular.
The recommendations are as follows:
6.1 Professional training
NBP staff lacks professionalism. They lack the necessary training to do the job efficiently
and properly. Although staff colleges in all major cities but they are not performing well.
Banking council of Pakistan should also initiate some programs to equip the staff with much
needed professional training.
6.2 Delegation of Authority
Employees of the bank should be given a task and authority and they should be asked for
their responsibility.
6.3 Performance Appraisal
The manager should strictly monitor the performance of every staff member. All of them
should be awarded according to their performance and result in the shape of bonuses to
motivated and incite them to work more efficiently.
6.4 Changes in Policies
There should not be any abrupt policies change by the upper management, as this practice
hurts the customer confidences in the bank. Government should make long-term policies.
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Bank gets Rs. 8 to processes a utility bill, and it is very tire, tough and hard job despite
this working resulting in a loss to then Rs 8 per transaction. These charges should be increased to
RS 10 per bill to enable the branch to cover their handling costs and make some profit.
6.6 Link with the Head Quarter
160 major branches of NBP should established a direct link with the, head quarter in
Karachi, through Internet or Intranet. This will make the functions and decision making of the
management easier and convenient.
6.7 Credit Card
National bank of Pakistan should start its operation in credit card. These cards were very
helpful for the ordinary customer in general and the business people in particular. To make it
mores secure and to eliminate the misuse of it, the management is required to keep proper
security against the card. But as NBP is a GOVT bank so most of the customer gets defaulted
and do not want to repay the CREDIT CARDS amounts. Effective involvement of Collection
officers for the repayment of credited amount rather than treating and provisioning them as NPL.
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In this mode of financing the amount of credit not utilized by the borrower is remained
tax-free. It is recommended that a small amount of interest should be charge on this amount as
well because the bank gas kept-aside the amount for that borrower and can not advance it
anywhere.
6.9 Decreasing Administrative Expenses
Bank should their administrative expenses. This was Rs 12 billion in the year 2011-12.
That can be done by lying off the surplus pool of employee with golden handshakes scheme. The
branches that are not much used could also be closed. Employee can also be how to control the
bank expenses. That will give positive results in the future.
6.10 Needs to be Flexible in credit Policy
As mentioned earlier, NBP is very conservative in advances and loans policy. It reduces
the investment opportunities. Also loans should be given to the small businessmen and the
agriculture sector at the low markup rate. It should adopt flexible credit policy while giving
credit to the agriculture sector.Not only it will be economical but will also reduce the extra
burden of work of the bank. It will also help in reducing the use of excessive paper work.
6.11 I mproper Distribution of Wor k
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I watched during my internship that, there is number of employee who have worked on
one seat for many a year. It can have negative effects motivation of employee who is hard
working and intelligent. Take the example of advances section. In advance section if the
employee is transfer after sixth month or seven month, how can he be able to show his
performances and how can he be able to know the bank customer in a short period of time.
6.13 Complaints of Customer
There should be an information desk to provide the information and to receive the
complaints of the customer in the bank.There is no complaint box available in the branch and not
any person appointed to hear the complaints.Every person cannot go to the manager for the
complaint because most of the people are hesitant. So I suggest management to install a
compliant box in the branch, and recruit a special person for that guidance of the customer when
they are unable to manage some difficulties in banking matters.
6.14 Organizational Commitment
It is suggested that employees working on daily wages basis should be given some
benefits, which the other employees are getting. Their salaries must increase according to
efficiency, performance and service.
6.15 Managerial Leadership
In the analysis, we have discussed the difficulties of the assistant in taking any initiative;
therefore it is recommended that the assistants should he given special training to make them
ready for the leadership.
6.16 Housing and House Hold Goods loans
Bank should initiate these loans because most of banks customers are middle class and
they cannot afford to buy house or household goods at once by their own.
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After the completion of my internship in the NBP I am able to give some suggestions for
the betterment of the organization. During the internship we had discussions with different
persons like manager, operational manager different officers employees and customers. In the
light of these discussions we are able to give some suggestions which are given below.
Use of modern technology.
Training and Development of Employees
Frequent Communication
Promotion on the basis of Ability
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Chapter
Chapter 7
REFERENCES
ONLINE RESOURCES
www.dawn.com.pk
www.sbp.org.pk
www.nbp.com.pk
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