47356907 NBP Internship Report Sample

7/30/2019 47356907 NBP Internship Report Sample

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Introduction

INTERNSHIP REPORT

ON

NATIONAL BANK OF PAKISTAN LIMITED

(Circular road Branch D.I. Khan)

Submitted by: Ali Raza

MBA (Banking & Finance)Class Roll No: A-1Exam Roll No: 462Sessino: ( 2009-2011)

Date Of Submission: September 16, 2010


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Introduction

Virtual University Of Pakistan

DEDICATIONDEDICATION

I DEDICATE THIS REPORT

To Holy prophet Hazrat Muhammad (P.B.U.H), to my parents who

financially sport me, with out their help I will not be able to complete my

BS (BA) Finance as well as my internship report.


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ACKNOWLEDGEMENTS

I express my deepest sense of gratitude to Almighty ALLAH who enabled

me to complete my BS (BA) Finance.

I would also like to express my thanks and cordial passion to my Mr.

Muhammad Younis Raza, Internship Supervisor for his utmost help,

valuable suggestions and timely reviewing of my Internship Report.

Acknowledgements are made with special thanks to Muhammad Bashir

Shah OGII, Abdul Ghaffar Fawad OGII, and Hassan Ali Hashmat OGIII

who sincerely helped me during the completion of my BS (BA) as well as

internship report.

I am extremely thankful to my parents and sibling, who remembered me

in their prayers.

Ali Raza

BC040400206


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Table of Contents:

Chapter 1:

Introduction Page 8

Chapter 2:

Management and Organization of the Bank

Page 18

Chapter 3:

Banking Operations

Page 26

Chapter 4

General Operations Page 32

Chapter 5

Practical Experience Page 52

Chapter 6

Performance Analysis Of NBP Page 58

Chapter 7

SWOT Analysis Page 69

BIBLIOGRAPHY Page 86


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Introduction

CHAPTER NO I

INTRODUCTION


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Introduction

1.1 Brief Introduction of the Organizational Business sector

Commercial Banks operate under profit motive and perform various

functions in a modern society.

National Bank of Pakistan is a commercial Bank till with socioeconomic

objectives e.g. to earn profit and at the same time develop the

economy of the country and uplift the socioeconomic status of

community. The main objectives of the Bank are as follows

1. MAXIMUM PROFIT

As the name of the Bank indicates that it was established to finance the

nation. As a Business organization its objective is to earn more and more

profit by the least expenditures.

2. GOOD Administrations.

A good administration is an objective of the Bank. Without proper

administration no organization can run successfully. A good

administration should have the following qualities:-

A: Quick decision.

B: Correct decision.


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Introduction

3. CUSTOMER SERVICE.

The main objective of the Bank is to serve his customers. It serves the

customers on both directly and indirectly. Bank collects money from an

individual, firms, and limited Companies etc. It also gives loan to the

people.

4. DEVELOPMENTS.

Banks spending large amount of its profit for its own development.

Therefore, the large amount of its profit is spent on opening the new

branches of the bank and increasing the work efficiency of the Bank.

5. EXPENDITURE DISCIPLINE.

Bank is trying to minimize its expenditure. So, it keeps strict control over

expenditure and avoids wastage of money at every stage. Branch

expenditure must not increase more then 15% of the last year's budget for

correspondence.

6. REGIONAL INSPECTION.

Every branch should be inspected by Regional inspector at least once a

month as directed by Principal Office under B.D. may verify from time to

time.

7. MAXIMUM UTILIZATION OF STAFF.


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Introduction

The staff requirement of the most branches is sufficient. However,

services should be utilized systematically for effective functioning.

1.2Overview Of The Organization


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Introduction

HISTORY OF THE N.B.P.

National Bank of Pakistan was established on November 9, 1949 under

the National Bank of Pakistan Ordinance No. XIX of 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 20th

The history of the N.B.P. is part of Pakistan struggle for economic

independence.

In 1947 at the time of partition the economy of the country was mainly

controlled by non-Pakistanis, most of them were Hindus. This partition of

the Sub-Continent brought wide spread disturbance and bloodshed on

both side of the border. This resulted in the mass migration of population

from one country to another. In this situation the economy of the country

influenced badly.

At the time of independence it had been arranged between India and

Pakistan that Reserve Bank of India should act as the common monetary

authority for both countries up to end of September, 1948. But the

arrangement did not prove satisfactory. In August 1947, Pakistan had

been given a first installment of twenty corer of rupees, out of its shares of


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Introduction

cash balance of undivided India to meet immediate requirements. The

balance amounting to fifty corer rupees was to be paid later, But when

Pakistan demanded that amount, they refused to hand over the money

unless Pakistan agreed to give up interest in Kashmir and thus the

Government of Pakistan could not agree. This situation occurred, when

Reserve Bank of India was functioning as the Central Bank of Pakistan.

As a result of this experience, Pakistan felt it could not place any reliance

on the Reserve Bank of India. It was clear that its own central Bank was

an indispensable necessity and it was opened by the Quaid-e-Azam on the

first of July 1948.

When state Bank came into existence, it claimed its share of the assets of

the Reserve Bank of India against the Indian currency, retired from

Pakistan territory

But again dispute arose. The dispute is still unsettled and these assets have

not been delivered to Pakistan.

Many other disputes occurred between the two countries. As a result of

ratio controversy, the regular trade and payments between the two

countries came to stand still. One of the immediate consequences of this

situation was the withdrawal by Marwari merchants of the India Finance,

which used to be employed annually for the movement of Pakistan's Jute

Crop. A crisis of the first magnitude threatened, because the Jute Crop

was already in the market and so there was no money to move it, prices

begin to fall precipitously. At that time there was no JUTE in Pakistan,

not a single jute loom or spindle and no posibi1ity of utilizing any of the

crop within the country. As jute prices collapsed, foreign merchants and

foreign Banks to promote agrarian nearest, it was very evident that the


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Introduction

Government of Pakistan could not afford to continue as a spectator of

these developments.

So two ordinance were passed immediately, one setting up the Jute Board,

and the other the decision of establishing of National Bank of Pakistan.

The object of the Jute Board was to re-organize and rehabilitate the Jute

trade by helping parties to handle it and to stabilize the market. The

National Bank was established to provide finance to suitable parties

Thus it came about that The National Bank stood behind the Jute trade,

the State Bank of Pakistan stood behind the National Bank and the

Government stood behind the State Bank.


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Introduction

ROLE OF BANK IN ECONOMIC DEVELOPMENT

Banks are the instruments of economic development. In the mobilization

of money, the banking sector can greatly help the country. It can promote

the growth of internal resources for development by attracting deposits

from the public to the maximum possible extent and channeling these

deposits into productive loans and investments.

The Bank has been playing major role in financing developmental

activities in Pakistan. National Bank of Pakistan has helped in the growth

of economy in all spheres of our National life. It has contributed

significantly to economic growth of the country and has served trade and

industry, generally in wide sphere of operations.

For the agricultural growth, N.B.P was the first Bank to introduce schemeof credit to small borrowers, farmers, craftsman, and small traders etc.

The Bank advances liberal credit for rural and agricultural development

and has taken the Banking services literally to the farmer's doors, small,

short run loans given farmers are free of interest. It helps the farmers

giving advances without interest in shape of fertilizers, seeds and other

agricultural instruments so that the country may become self sufficient in

wheat and other crops.

The National Bank of Pakistan has been playing a major role in industrial

development. The Pakistan Government has encouraged private

enterprises by giving fiscal and monetary concessions and has tried to

create a favorable climate for foreign investment in specified industries.

The National Bank of Pakistan has continued to serve industrial needs in


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Introduction

its sphere all along. It provides usually short-term and in some cases

medium term finances. The N.B.P has a predominant share in the total

advances to the industry in country.

This has been possible mainly because of the large resource at the

disposal. The large number of branches all over the country which help

them to attract large deposits, and the comparatively low rate of interest at

which bank is able to make advance to the industry.

National Bank of Pakistan has assisted to accelerate industrial growth in

the country. Now Bank also provides finances to small-scale industries up

to a period of five years. National Bank of Pakistan has introduced the

people's credit facilities to the common man on a large and more liberal

scale than before. The main objective of this scheme is to make a

contribution towards building up of a strong middle class, which is

essential for ensuring strengthened stability to a developing economy.

Bank also helps to promote the establishment of new companies by

underwriting their shares. Bank is making an ever-increasing contribution

to the industrialization of the country. Through their foreign exchange

business in Pakistan and operation abroad the Bank makes a contribution

towards the earning of foreign exchange.

The Bank has also introduced various saving schemes and a

perpetual income plan on attractive term to encourage saving and promote

social security.


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The National Bank of Pakistan is working as an agent of State Bank of

Pakistan. But it does not mean that the Bank has monopoly on

Government Business. It also faces the keenest possible competition from

other banks. The Bank has been able to maintain its position in the

Banking System of the county and to make a substantial contribution to

the development of economy. Efforts had been made, by its officers and

staff particularly the senior officers to improve the working efficiency of

the Bank, to secure more business and to build up sound working

traditions.

As regard the future, the task of the Bank is plain enough, it has been an

instrument of National policy in the past, and so it shall continue in the

years to come. Its doors have been opened for anybody, from anywhere in

Pakistan. They will keep open as before.

National Bank of Pakistan is trying to improve the work efficiency of

their Bank and they want that their Bank and they want that their Bank

should serve the people so the Bank is serving the nation by different

ways and it is playing a major role in economic development of the

country. It will continue to perform these tasks with the same enthusiasm

and vigor. I trust and believe, it will always be said that the National Bank

of Pakistan truly exists in the service of the National.


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Introduction

CHAPTER NO II

MANAGEMENT AND ORGANIZATION OF A BANK.


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Introduction

2.1 Organizational Structure

The management and organizational structure of N.B.P. are described as

under: -

1. BOARD OF DIRECTORS

In the management of the Bank, the Board of Directors is at the top of the

controlling bodies. Since there are no private shareholders, so there is no

general meeting of the shareholders and are no elected Directors. The

Board consists of a nominated President, a Secretary and 9 other

members. After nationalization of Bank in 1974 most of the powers of

Board have been transferred to Banking Council and executive Board.

The Secretary of the board has limited administrative powers.

2. EXECUTIVE BOARD

The general direction and supervision of the' affairs of the Bank lies in

their respective Executive Boards. The President, Secretary and 0 other

members of the Executive Board are appointed by the Federal

Government. The President being the Chief executive of the Board

directors controls and manages the affairs of the Bank.

3. CHIEF EXECUTIVE.The President is the administrative head of a Bank. He presided over

the meetings of the executive Board, manages and controls the affairs

of the Bank. The President holds office at the pleasure of Federal

Government.


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Introduction

4. GROUP CHIEFS.

In order to improve the management and operation of a Bank, it has been

split up into a number of Groups. Each Groups of a Bank is placed under

this supervision and control of Group Chief or Senior Executive Vice

president (SEVP) or Executive Vice President (EVP).

5. REGIONAL CHEIFS.

Each Group has a Regional Chief. Regional Chief that holds the posts of

VP or SVP administers these Regions.

8. BRANCH MANAGERS.

Each Region is divided into several branches. The control and supervision

of each branch is mostly entrusted to AVP or Officer of Grade I or II. A

few big and financially sound branches are even administered by SVPS

and VPS.

It is important to be noted that the head Quarter of National Bank of

Pakistan is located in Karachi


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CHAIRMANCHAIRMAN

Board of DirectorsBoard of Directors

Executive CommitteeExecutive Committee

PresidentPresident

Group ChiefGroup Chief

Regional ManagerRegional Manager

RegionsRegions

Branch ManagersBranch Managers

Finance Deptt.

OfficerFinance Deptt.

Officer

Cash Deptt.

OfficerCash Deptt.

Officer

Admen. Deptt.

OfficerAdmen. Deptt.

Officer

Banking Deptt.

OfficerBanking Deptt.

Officer

Introduction

Organizational Hierarchy Chart of National Bank of Pakistan


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Overseas

Operation

Group

Overseas

Operation

Group

Org

Develop

&TrainingDept

Org

Develop

&Training

Dept

HRM

Dept.

HRM

Dept.

L.TPlanning

Dept. & Imp

Group

L.T

Planning

Dept. & Imp

Group

Audit

&Inspection

Group

Audit

&Inspection

GroupCommercial

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&Retail

Banking

Group

Commercial

-19-

&Retail

Banking

Group

Risk

Mgt

Group

Risk

Mgt

Group

TreasuryMgt

Group

TreasuryMgt

Group

Strategic

Plan & Econ

Research

Group

Strategic

Plan & Econ

Research

Group

Special

AssetsGroup

Special

Assets

Group

Corporate

Invest

Banking

Fin Group

Corporate

Invest

Banking

Fin Group

Operation

Group

Operation

Group

Head Office

Mgt

Structure

Head Office

Mgt

Structure

Introduction


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Introduction

International Net Work


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Introduction

2.2 Plan Of Intern Ship Program

Introduction Of The Branch.

The branch where I did the internship is National of Pakistan Circular

Road Branch D.I.Khan (Code 1433). It is situated at East Circular road

D.I.Khan in a in a very good Commercial area of the city.

Duration Of My Intern Ship Program.I started my internship from very beginning of the month of May 2009

and completed on the end of June 2009.

From 01.05.2009 to 30.06.2009

Ares Of Training.

General Banking Section e.g. Remittances etc: 2 weeks

Finance Department Section (Loans): 2 weeks

Govt. Section (Pension etc): 1 week

Computer Section: 2 weeks

Cash Section: 1 week


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Introduction

CHAPTER NO III

BANKING OPERATION


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Introduction

3.1 BANKING OPERATION

The Bank provides a wide range of facilities for transacting money in and

outside the country. Being' custodian of the money, it manages the assets

in such a way that the Bank remain solve and liquid to a high degree so

that it is able to meet the demand of the customers for cash payments. In

the operation of a Bank, there is a close relation between the Banker andthe customer.

BANK AND CUSTOMER

Banker is a person, whether corporate or not who carries on the business

of the banking. The customer is a person who has some sort of account

either current or fixed o~ some similar relation with a banker.

BANKER AND CUSTOMER RELATION

The relationship between Banker and customer is primarily that of debtor

and creditor with the rules reserved where the customers are relying on aloan from the banker.


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DUTIES OF A BANKER.

1. To honor customers cheques.

The Banker's duty is to honor the cheques of the customers.

i. They are properly drawn.

ii. The customer has balances to his credit.

iii. The loan contract has been signed.

iv. There is no legal bar attaching to the customers funds.

2. Standing orders: -

The Bank abides by the standing orders of the customers in making

periodical payments on his behalf such as club, library and insurance

perineum etc.

3. Secrecy of the customers. Account: -

The Bank owes a contractual duty not to disclose the customers financial

position with out his consent.

4. Valuables for safe custody:-

The Bank takes care of the property deposited with it by the customers

with or without charge. When a Bank does not charge, the Banker is

called gratuitous bailey and when a specific charge is made, the Banker is

then a paid bailey.


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ACCOUNTS OF CUSTOMERS.

A Bank should not open an account for a customer unless a responsible

person known to the Bank duly authenticates his integrity and

responsibility. By opening of an account, the Banker usually gets the

specimen signatures on cards.

a. Authorities to sign an Account.

If a customer desires that his agent also operate on his Account, the Bank

should get a precise written mandate from his customer. The person to

whom the authority has been delegated will continue operating the

account till the authority is revoked in writing.

b. Mental patients:

If the Bank comes to know of a customers lunacy, the Bank will

immediately suspend the OPERATIONS on the account until the court

gives order or the Bank has full proof that his customer has fully

recovered. When the customers are mentally unsound, the court appoints a

receiver who operates the accounts under the direction of Master in

Lunacy.

c. Husband and wife account:

If husband and wife both open an account the Bank will consider it an

ordinary joint account. At the death of the husband, the widow is fully

authorized to withdraw the balance.


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d. Infants: -

An infant can open an account with a Bank, but he is not allowed to

overdraw the account. If the infant customer wishes to have an over draft,

an adult should draw and sign on indemnity contract.

e. Partners: -

When the partner opens an accountthey are to sign a mandate authorizing

any or their entire member to make with drawls. The partners are jointly

responsible for all the loans and other obligation incurred by the firm.

f. Societies, Clubs etc: -

If an incorporate body opens an account in a Bank, the committee of

management deputes certain of lice bearers to operate on the account. The

bank obtains a copy of the resolution of the society or clubs appointing

certain members to administrative funds. If there is any change in the

committee of management, it is notified to the Bank immediately. The

members of the society who are operating the account or not liable for any

draft.


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Introduction

g. Death of customers: -

If a Bank receives the notice of a customers death, all operations on the

account are suspended until the executors or administrators produce the

probate. The executor or administrator places all credits received after the

notice of the death of customer in a new account for disposal later.


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Introduction

CHAPTER NO IV

GENERAL BANKING OPERATIONS


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GENERAL BANKING DEPARTMENT

This department consists of the following sections:-

1. Account opening section.

2. Deposit section.

3. Clearing section.

4. Remittance section.

5. Accounts section.

1. ACCOUNT OPENING SECTION:

A. HOW TO OPEN AN ACCOUNT

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

current or saving account with a Bank. These formalities in brief are as

under

I. FORMAL APPLICATION:

The customer is to filling "Account Opening Form 11 It is a formal request

by a customer to the bank to allow him to have and operate the current or

saving account.

Department of Business Administration Gomal University Page | 32 Khyber.Pakhton.Khwa (Dera Ismail Khan) Pakistan


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II. SPECIMEN SIGNATURE

When the Banker is satisfied about the integrity of the customer, he

agrees to open the account. The Banker obtains the specimen signatures of

the customer on the signature book or on card.

III. MINIMUM INITIAL DEPOSIT:-

In Pakistan the current account can be opened with a minimum of Rs.

500/- and PLS Saving Account with a minimum of Rs 100/- These amounts

are also the minimum balances to be maintained by the account holders with

the Bank.

IV. OPERATING THE ACCOUNT.

When an account is opened in a Bank, the Banker gives to the

customer.

i. Pay in slip book.

ii. Cheque Book and passbook with a view to operate it.



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V. PRECAUTIONS IN PREPARING THE PASS BOOK: -

The Banker should be careful in preparing the passbook however, the

customer himself should.

i. Send the passbook for making entries and also periodically check up

them.

ii. He should also see that the accountant initials the entries.

iii. The customer should verify the entries with own books of account.

iv. In order to safe guard the secrecy of the account, the customer should

receive the passbook in closed cover.

B. WITH-DRAWL.

Withdrawal is made on cheques supplied by the Bank. A new chequebook is

issued only on receipts of the requisition slip attached to the chequebook

issued previously and this presented along with the depositor passbook for

entire against chequebook challan. Chequebook is issued on discretion of the

branch manager.



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C. INTEREST.

The current rate of interest allowed on deposit in saving Bank account is

ascertained at the Bank. This rate is subject to change. The amount of interest

is calculated for each calendar month on the lowest balance at credit of an

account between the close of the sixth day of a month and the end of the

month and only on every complete sum of ten rupees.

Every account is made up half yearly to 30th June 31st December, and the

interest calculated as above is added to the balance of each account as on

these dates. Interest rates on different types of deposits on 31.12.2010 were

as under.

Profit for the half year ended December 31, 2009, on Profit & Loss sharing

Deposits and Other Deposits shall be distributed at the following rates: -

Nature of Accounts Rates of Profit

FromTitle of Accounts (01-07-2009

to 31 -1 2-2009)

1 . S p e c i a l N o t i c e

D e o s i t sa). 7 to 29 days Notice 5.00% p.a.

b). Over 30 days Notice 5.00% p.a.

2. Saving g Accounts

a). Up to Rs.20, 000 5.00% p.a.

b). Above Rs.20, 000 5.00% p.a.

3. Term Deposits

a). Three months 5.30% p.a.

b). Six months 5.60% p.a.

c). One year 5.80% p.a.

d). Two years 6.10% p.a.

e). Three years 6.40% p.a.

f). Four years 6.70% p.a.

g). Five years 7.10% p.a.

h). Above five years 7.80% p.a.

NBP PREMIUM AAMDANI CERTIFICATE:



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Rates

Monthly Income Scheme

Period

(01-07-2009

to 31 -1 2-2009

1st

Year (from 1 to 12th months) 10.50% p.a.2n d Year (from 13 to 24th months) 10.75% p.a.

3rd Year (from 25 to 36th months) 11.00% p.a.

4t h Year (from 37 to 48th months) 11.25% p.a.

5t h Year (from 49 to 60th months) 11.50% p.a.

Rates of NBP PREMIUM AAMDANI CERTIFICATE SCHEME are

effective from July 01, 2009 on a l fresh deposits along with following

previous conditions. But deposits accepted by Regions from July 01, 2009

to August 13, 2009 on existing declared rates w i l l be honored for profit

payment t i l l August 13, 2009. Instructions have been issued by CRBG.

A. Cor p orations Public / Private Limited Com p anies not allowed to

invest in Premium Aamdani Scheme.

Previously Corporations and Public / Private Limited Companies

were allowed to participate in the scheme. Now the Competent

Authorities, has decided that the restriction on target customer to be

reinstated.

B. Ca pp in g on Maximum amount of investment to be reinstated.

Originally in the scheme the maximum amount of investment allowed

was Rs.5.00 Million, which was removed in July 2008. Now the

Competent Authorities has decided to reinstate the upper ceiling of

maximum amount of Rs.5.00 Million on deposits in the scheme.



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NBP PLUS TERM DEPOSIT CERTIFICATE:

Rates (01-07-2009 to 31-12-2009)

Period

Rs.1 to

Rs .

499,999

Rs.0.500-

100 M

Rs.101-

500 M

Rs.501-

1000 M

Over

Rs.1000

M

1 Year 10.00% 11.00% 11.50% 12.00% 12.50%

2 Years 10.25% 11.50% 12.00% 12.50% 13.00%

3 Years 10.50% 12.00% 12.50% 13.00% 13.50%

4 Years 10.75% 12.50% 13.00% 13.50% 14.00%

5 Years 11.00% 13.00% 13.25% 13.75% 14.50%

6 Years 11.50% 13.50% 13.50% 14.00% 15.00%

7 Years 12.00% 14.00% 14.00% 14.50% 15.25%

8 Years 12.50% 14.25% 14.50% 15.00% 15.50%

9 Years 13.00% 14.50% 15.00% 15.50% 15.75%

10 Years 13.50% 15.00% 15.50% 15.75% 16.00%

Profit Rates will be applicable on new issuance only and will remain the

same till the holding period of the certificate. Profit Rates, however, would

be announced six monthly or as desired by the competent authorities and

would be applicable on fresh issuance.

CALCULATION AND PAYMENT OF PROFIT:

Profit will be paid at maturity along with principal amount on non-

cumulative basis. For Example:If a certificate of Rs.500, 000/- is issued for three years will generate a

profit of Rs. 172,500/- as per the following calculations.

Year Rate Calculation Profit Amount

1. 11.00% 500,000 X 11.00% 55,000/-

2. 11.50% 500,000 X 11.50% 57,500/-

3. 12.00% 500,000 X 12.00% 60,000/-

A total profit of Rs. 172,500/- and at maturity the customer will get Rs.672,

500/-, less Zakat and withholding tax where applicable as per rules and

regulations.

ACCOUNT ENTRIES:



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All accounting entries pertaining to issuance of TDR, Profit Payment,

Premature Encashment, Zakat and Withholding Tax Deduction will remain

the same.

NATIONAL INCOME DAILY ACCOUNT (NIDA):

Rates

SLAB (01-07-2009to 31 -1 2-2009

Rs.2 Million & above 5.00% p.a.

NBP PREMIUM SAVER ACCOUNT:

Rates (01-07-2009

to 31-12-2009)

Sr .

#

Current Parameters Parameters (Effective

From 1s t July, 2009)

1. Profit Rate: Profit Rate:

8.50%p.a. 8.50%p.a .

2. Minimum Monthly Balance:

Remain Same / No.

Change

Rs.20, 000/-

Maximum Monthly Balance:

Balance up to Rs.1.00 (Million) will earn

Maximumprofit of up to 8.50%, balance of

Rs.1.001 (Million) and above will earn regular

D. TRANSFER OF AN ACCOUNT.

Account can be transferred to any other branches of N.B.P. free of charge. If

a depositor wants to transfer his account, he presents his passbook personally

or sends it to Bank and writes an application for the transfer of an account.

E. CLOSING OF AN ACCOUNT:



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A depositor willing to do, his account must present his passbook in order that

with drawls and the amount of interest due on the account is entered therein

and final balance stuck. This balance is then paid to the depositor and his

receipt is taken, the passbook is canceled, unused cheque forms on hand are

also surrendered at the same time.

F. SECRECY:

The secrecy of depositors account is the. Responsibility of every official

engaged in the Bank service.

G. MONEY DEPOSITED OR DRAWN BY POST:

When money is sent by post for deposit, the passbook and a letter starting the

amount of the deposit and the number of the account accompany it.

When a depositor wishes to withdraw money by post he must forwards his

pass book with a letter starting the number of his account, the amount to be

drawn and either the money is to be remitted by money-order or in currency

notes registered.

H. TYPES OF BANK ACCOUNT.



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i. Saving account

Saving Account is that account in which customer puts his surplus money

which he saves from his daily expenditure.

Depositing a minimum cash of Rs. 5/- can operate the account. Small

percentage of interest is allowed on the balance of this account.

ii. CURRENT ACCOUNT:

The current account is that one which the customer draws his daily cheques

and is normally operated by the Businessmen. It can be operated by

minimum amount of Rs. 500/- any number of cheques amounting undue

minimum balance limit can be issued by the account holder for withdrawal or

for payment. No interest is allowed on this account.

iii JOINT ACCOUNT

A joint account occurs when two or more than two customers have one

account. The parties to a joint account are considered in law as they are one

person.

iv. PROFIT AND LOSS SHARING ACCOUNT.



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This can be operated by ~ person, firm or organization by depositing Rs.

100/- or above. The holder of this account will get profit of his amount, or he

will bear the loss as the case may be. So an individual is equally participant

in profit and loss.

The holder of account can withdraw up to Rs. 15,000/- per month is eight

withdrawals, in case of higher withdrawal, seven day prior notice is

necessary. This account is operated under interest free system.

v. FIXED DEPOSIT ACCOUNT.

In this account an amount is deposited into the Bank for a fixed period of

time. The fixed period may be three months, six months, one year, two years,

five years and more. The Bank allows a higher rate of interest for larger

period.

At the time of operating on account the Bank issues deposit certificates for

the period and amount. The account holder cannot withdraw his amount

before the specified period, but the same Bank will allow loan against that

certificate. Bank is liable to give interest on this account on maturity date.

2. DEPOSITS SECTION:

There are two types of deposits i.e. current and saving there are different

forms present in the section of or deposits.

1. Current account form.



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2. Saving account form.

3. Private or individual form

4. Private firm account form

In he above-mentioned forms, the bank makes an agreement with his

customers.

3. CLEARING SECTION.

Every Bank performs the paying and receiving functions. Cheques are

collected which are drawn up to Banks for customers. Similarly the cheques

drawn on different Banks and deposited by Banks own customers for

collection within the city is know as clearing The functions of receiving and

paying is mostly done through the clearing house. A clearing house can be

defined as "AA place where that representatives of all Bank get together to

settle the receipts and payment of cheques drawn on each other" Clearing

House provides the facility which can hardly be dispensed with especially, in

case of crossed cheques.

There are two main types of clearing.

i Outward clearing

ii Inward clearing.

i. OUTWARD CLEARING:



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It includes those cheques and other instruments, which are sent by the Bank

to the Banks for payment on behalf of its own clients. Cheques are sent to

clearing house thorough local main branch.

A delivery message from the local main branch comes to every branch at a

fixed time to pick its outward clearing or outward returns as the case maybe.

Outward Clearing at Branch

a. Account number of payee/endorsee is written on the backside of the

cheques.

b. The instrument and the paying in slips are separated.

c. The instruments are sorted I Bank-wise and branch wise.

d. Schedules are prepared.

e. Jotting of all the schedules are taken in the clearing House statement.

Amount of the cheques in written in the "Delivered" and to pay

column.

f. After balancing the outward clearing, the pay in slips are released to

C.D. department.

g. After balancing, a transfer debit voucher is prepared.

h. The instrument, schedule. etc. are delivered to the messenger from the

main branch.

ii. INWARD CLEARING.

The cheques drawn are called inward clearing. Drawn on National Bank

through its representatives on the Bank presented by other Banks for



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payment It includes those cheques and other instruments of Pakistan

branches which other Banks present at the clearing house.

Inward Clearing At The Drawn Branch

a. Number of instruments noted in the schedules is verified immediately.

On receipt.

b. The amount's of all the instruments are jotted down and totaled. If

should be equal to the amount mentioned in schedule from the local

main branch.

c. The amounts are debarred to the relevant accounts if otherwise in

order.

d. The IBCO is prepared crediting the amount of the main branch.

e. If there is any return, that is deducted from the total and IBCO

prepared for the remaining amount.

TYPES OF CHEQUES COLLECTED BY CLEARING SECTION.

1. TRANSFER CHEQUES.

These are the cheques which are collected and paid by same branch of N.B.P.

For example Mr. Ali is a customer of N.B.P. of Khaplu branch and draws a

cheque in favor of Mr. Hussain who is also the customer of the same branch.

2. TRANSFER DELIVERY CHEQUES.



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The cheques, which are collected and paid by two different branches of a

Bank situated in the same city. for example a person draws a cheque on

N.B.P. main branch, D.I. Khan in favor of another person who maintains an

account with N.B.P. Rakh Mandra branch, D.I. Khan.

3. CLEARING CHEQUES.

When the payee/endorse and the drawer of cheque maintains account with

different Banks, the collection Bank in any one of the following methods:-

a. It can collect cash by sending its representative with the cheques to

each of the paying Banks. It is not so much appropriate.

b. The Bank maintains an account with the paying Bank.

c. The cheques can be exchanged by representative of the various Banks

who meet at a fixed time and at a fixed place. This is the most efficient

method of collection and paying cheques.

FUNCTIONS OF CLEARING SECTION IN A BRANCH.

a. To accept transfer, transfer delivery and clearing cheques from the

customer of the branch a~ d to arrange for their collection.

b. To arrange payment of cheques drawn on the branch and gives for

collection to any other branch of N.B.P. or any other member or such

member of local clearing house.

c. To collect amounts of cheques drawn on members of the local

clearinghouse sent for collection by N.B.P. branches not represented at

the local clearinghouse.

PROCEDURE FOR CLEARANCE OF CHEQUE.



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The customers are provided with the copes of pay4n-slip, whenever the

customer wants to deposit any cheque,he fills in the pay in slip himself and

hands it over the counter along with the instrument.

4. REMITTANCE SECTION

Remittance means transfer of money from one place to another place. It is of

two kinds.

I. Inland remittance.

II. Home remittance.

1. INLAND REMITTANCE.

An inland remittance means a transfer of money payable at a certain

place within the country. Inland remittances can be classified as under:-

a. Within locality.

b. Out side locality.

a. WITHIN LOCALITY

When a branch situated in D.I. khan is required to send drafts to any other

branch situated in the same city the process is know as within locality. For

example N.B.P. Main Branch, D.I. Khan sends any draft to N.B.P. Rakh

Mandhra branch, D.I. Khan.



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b. OUTSIDE LOCALITY.

Outside locality is an important type of inland remittances, which means the

transfer of money payable outside the city. For example, N.B.P. Main Branch

D.I. khan sends any draft to a Branch situated at D.I.Khan.

It is commonly done through the following three means:-

i. Telegraphic transfer (T.T)

ii Mail Transfer (M.T)

iii Demand Draft (D. D)

i. TELEGRAPHIC TRANSFER

In telegraphic transfer, the Bank takes commission and telegram chargesfrom the sender. A receipt is issued to the sender for the value received.

The Bank itself transfer the funds to the drawee branch though a coded

message in telegram, confirmatory of which is also sent through routine dak

mentioning all details. All bank Branches have been provided with their code

books name Bank Keys Code Book where from the coded message is agreed

by the drawee branch. T.T. can be sent open, which may be paid in cash in

drawee branch, or may be direct y creditable to relevant account.

ii MAIL TRANSFER (M.T.)



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The Money can be remitted through this means also. In this case the payable

amount at the drawee branch can only be transferred to an account, amount

cannot be paid in cash. Other procedure is same as T. deposit of money at

sending branch. Difference is only of postage and. telegram charges. The

M.T. that in its self is an advice also is sent by registered post, while T.T. is

sent through telegram.

iii DEMAND DRAFT (D.D)

Demand draft is a written order by a branch of a specified Bank, drawn on

another branch of the same Bank to pay a certain sum of money only to or to

the order of the Payee. Demand drafts are purchased by the clients and after

receipt of money Bank issues and delivers the D.D. to the purchaser, who

himself sends it to the payee. In D.D. the Banks do not recover postal

charges as it is payable by the purchaser. The Bank, after deliver of D.D. to

the purchaser also sends its own advice called IBCO (Inter Branch Credit

Order) to the drawee branch mentioning therein all details of issued draft.

5. ACCOUNT SECTION.

Every Business organization deals in money matters. Bank also deals in

money and more over since the money belong to the depositors therefore, itis of utmost importance to keep systematic and correct record.



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Further-more, the Banks are commercial institutions and its main objective is

to earn profit, therefore, then record of all incomes and expenditures are kept

correct an (t systematically.

In N.B.P. the responsibility for maintaining necessary accounting data and to

keep up to date records in a systematic manner has been assigned to the

Accounts Department.

The Branches of Bank Pt perform their daily routine work and deal in moneythat belongs k) deposii6rs. Here account department hold great importance

in banking, because it keeps all the accounting records properly.

ACCOUNTS TERMS.

The account department maintains all the accounting records properly there

are certain accounting terms, which are defined into the following

1. ACCOUNT

A summary of all debit and credit transaction pertaining to a similar nature or

to an individual or body of persons is called an account.

2. VOUCHERS

Written evidence recorded on a price of paper in respect of a money

transaction is called voucher.



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3. GENERAL LEDGER.

Main ledger is a book, where various accounts of different type are kept.

Generally this book is in banded form containing several sheets for several

accounts.

4. SUBSIDIARY LEDGER.

Where a main head has got different sub-head of it: subsidiary leader are

maintained. These subsidiary ledgers are maintained from the main ledger.



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Chapter NO V

PRACTICAL EXPERIENCE



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5.1 PRACTICAL EXPERIENCE IN NATIONAL BANK OFPAKISTAN

During my internship, I learned how to open an account and so many other

works. As we know there are many types of accounts. For example current

account, saving account, fixed account etc. Before opening an account

following are the requirements, which must be fulfilled by the customer.

Two photo copies of computerized national identity card

The photo copy of service card is provided.(if a person have

job)

Introducer signature and account number.(introducer is a

person who have account holder of that bank)

Three photos are provided, if a person is illiterate.

Minimum rupees one thousand to open account and no limitfor maximum.



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5.2 CREDIT SLIP:

Credit slip is used when customer deposits cash into the bank. On credit slip

customer name, account number, amounts in words and figures is written.

Two authorized officer sign on credit slip and cash receipt stamp punch on

the credit slip. One-slip issues to the customer and other slip used as a bank

record.

5.3 CLEARING of CHEQUE:

During my internship, I learned how to prepare clearing of customer cheque

and draft with other banks. When a customer receives cheque of other bank

and he / she want to deposit this cheque in his / her account. On credit slip

cheque serial number, bank name amount in words and figure is written.

The bank uses the services of NIFT (National Institutional Facilitation

Technology). The bank officer record customer name account number

bank /branch name on which cheque is drawn and amount is written in

NIFT register .All the cheques of customers provides to the representative

of the NIFT.



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After internal procedure of NIFT, the next day NIFT provides IBCO (Inter

branch credit order) to the bank. After receiving IBCO the bank match the

amount of IBCO with NIFT register. And after matching the balance bank

credit the customer account and debit the bank/branch where the cheque is

drawn.

5.4 VOUCHERS:

Party Debit Voucher:

Party debit voucher is used when bank issue the chequebook and charged

the commission on draft and travelers cheque. Party debit voucher to

record the expense of the customer and the amount is deducted on customer

account. On party debit voucher bank record the customer name, account

number, amount and summary.

Party Credit Voucher:

When bank provide premium to the customer on saving account or fixed

account. The bank record the amount of premium on party credit vouchers

and write the customer name and account number and date.



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Simple Credit Voucher:

Simple credit voucher is used when bank generate income in the shape of

commission on traveler cheque / bank draft or issue of chequebook .The

bank record his income on simple credit voucher.

Simple Debit Voucher:

Simple debit voucher is used when bank provide cash for stationery and

bank maintenance are recorded on simple debit voucher, stamp of shop

keeper where the goods are purchased are necessary staple with simple debit

voucher.

5.5 REGISTERS:

Cash Receipts Register:

When bank received cash from the customer are recorded on the cash

receipt register.



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Cash Payment Register:

Cash payment register is used when bank provide cash to the customer

against the issue of cheque or provide cash for any other purposes. The

cashier records all the payments on cash payment register.

Transfer Register:

Transfer register is used when customer deposit cheque of any other branch,

the amount of simple debit, simple credit, party debit and party credit

vouchers with customers account number. All of these are recorded on

transfer register. In the transfer register all the transaction are recorded with

out cash transaction



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CHAPTER NO VI

PERFORMANCE ANALYSIS OF NBP



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Balance Sheet as on 31.09.2009

(Un-audited)

Sept 30,

(Audited)Dec 31,

2009 2008Note in '000) ----------------

ASSETSCash and balances with treasury banks 72,976,246 106,503,756

Balances with other banks 26,527,558 38,344,608

Lendings to financial institutions-net 5,098,642 17,128,032

Investments-net 6 240,518,170 170,822,491

Advances-net 7 435,504,840 412,986,865

Operating fixed assets 24,876,923 24,217,655

Deferred tax assets-net 8 3,021,712 3,204,572

Other assets 56,613,570 44,550,347

865,137,661 817,758,326

LIABILITIES

Bills payable 7,397,468 10,219,061

Borrowings 50,587,500 40,458,926

Deposits and other accounts 9 653,518,020 624,939,016

Sub-ordinated loans - -

Liabilities against assets subject to finance lease 24,660 25,274

Deferred tax liabilities - -

Other liabilities 37,951,220 39,656,831

749,478,868 715,299,108

NET ASSETS 115,658,793 102,459,218

REPRESENTED BY

Share capital 10,763,701 8,969,751

Reserves 21,673,557 19,941,047

Unappropriated profit 53,970,735 52,456,204

86,407,993 81,367,002

Surplus on revaluation of assets - net 10 29,250,800 21,092,216

115,658,793 102,459,218

CONTINGENCIES AND COMMITMENTS 11



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ANALYSIS OF SIX YEARS PERFORMANCE OF NATIONAL BANK

OF PAKISTAN

The performance of National bank of Pakistan can be examined by analyzing

its different heads.(All the following amounts are Rupees in million)

Fig .1 Six-Year Performance at a Glance

2003 2004 2005 2006 2007 2008

Total Assets 468,972 553,231 577,719 635,133 762,194 817 .7 58

Deposits (Rs. In Million) 395,492 465,572 463,427 501,872 591,907 624,939

Advances (Rs. In Million) 161,266 220,794 268,839 316,110 340,677 412,987

Investments 166,196 149,350 156,986 139,947 210,788 170,822

Shareholders Equity 18,134 24,900 37,636 53,045 69,271 81,367

Pre-Tax Profit (Rs. In Million) 9,009 11,978 19,056 26,311 28,061 23,001

After-Tax Profit (Rs. In Million) 4,198 6,195 12,709 17,022 19,034 15,459

Earning Per Share (Rs.) 5 7 14 19 21 17

Return on Assets(Pre-Tax Profit)

2% 2.40% 3.40% 4.30% 4% 3.00%

Number o f Branches 1,199 1,226 1,242 1,250 1,261 1,276

Number o f Employees 13,272 13,745 13,824 14,019 14,079 15,204

6.1.1 Assets

If we analyze total assets, there is a consistent increase in total assets each

year. In year 2001, total assets were 415,089. In 2005, its assets were

577,719. During these years, there was maximum increase in the assets. The

increase was 162,630. Then from 2005 to 2006 increase was 57,414, which

was also good. This increase shows that the assets increases in the six years,which is, batten for the organization.



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1.2 Deposits

Deposits of the National Bank of Pakistan increased during these sex years.

In 2001 total deposits were 349,617 while after six years the sum of total

deposits was 501,872. This shows the consistency of growth in National

Bank of Pakistan. The year, which shows the maximum change, was from

2003 to 2004. In this year the increase in deposits was 70,080. The year,

which shows minimum increase in deposits is from 2001 to 2002.



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Fig 6.2

6.1.3 Advances

Advances of National Bank of Pakistan have increased from 170,319 to316,110. The best year for the advances was from 2004 to 2005. In this year

increase in advances was of 48,045. From 2001 to 2002, instead of

increasing, the advances fell down from 170,319 to 140,547. But in very next

year it has again increased.



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Fig 6.3

6.1.4 Investment

National Bank of Pakistan has increased its investment up to 2001. Although

this increase was not consistent. From 2001 to 2002, its investment increased

from 71,759 to 143,522 which show an increase of 71,763. Then again in the

next year they increased investment from 143,522 to 166,196. But in the

2004 the investment fell down up to 149,350. After 2004 National Bank

started to cut back its investment. Now in 2006 the Investment downs to the

investment was 139,947.

Fig 6.4



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6.1.5 Share Holders Equity

Almost every year, there is an increase in shareholders equity. From 2001 to

2006, it goes to 11,959 from 53,045. The maximum increase in the Share

Holders equity was during 2005 to 2005. Shareholders equity increased

from 37,636 to 53,045.

Fig 6.5



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6.1.6 Pre-Tax Profit

Change in the Pre-Tax profit was consistent. From year 2001 to 2006, the

Pre-Tax profit increased from 3,016 to 26,311. So, there was consistent

change in Pre-Tax profit of National Bank of Pakistan.

Fig 6.7

6.1.7 After-Tax Profit

Change in the After-Tax Profit was also consistent. From year 2001 to 2006,

the Pre-Tax profit increased from 1,149 to 17,022. it is clear from the figure

that there is consistent change in the after tax profit.

Fig 6.9



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6.1.8 Earnings Per Share

From year 2001 to 2006, the EPS increased from 3.08 to 24.01, which shows

the consistency. Which have positive impact for the owner's. The major

change appeared from 2001 to 2006 is 20.93.

Fig 6.10



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6.1.9 Return on Assets (Pre- Tax Profit)

Change in the Return on Assets (Pre-Tax profit) was consistent. From year

2001 to 2006, the Return on Assets (Pre-Tax profit) increased from 0.8 % to

4.3%. From 2001 to 2006 there is no downfall seen.

Fig 6.11

Fig 6.12

6.1.10 Number of Branches

National Bank of Pakistan reduced its operation from 2001 to 2003 by

closing branches up to 2003. There is a decrease in number of branches

during this period. But after 2003, it started to increase its branches. In 2001,


1245

1204 1199

1226

12421250

1160

1180

1200

1220

1240

1260

2003 2004 2005 2006 2007 2008

Number of Branches


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total number of branches is 1245. This number was decreased to 1199 in

1996. But now the total number of Branches is 1250.

Fig 6.13

6.1.11 Number of Employees

The number of employees of National Bank of Pakistan has decreased during

2001 to 2002 from 15136 to 12195. Then in the next year it increases to

13272. In the next year it again increase to 130745. In 2005 this number

again raised to 13824. And now in 2006 the total number of Employees ofNational Bank of Pakistan is 14019.


13,27213,745

13,824 14,019 14,079

15,204

12,000

12,500

13,000

13,500

14,000

14,500

15,000

15,500

2003 2004 2005 2006 2007 2008

Number of Employees


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CHAPTER NO VII

SWOT ANALYSIS BASED ON OBSERVATION:



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SWOT ANALYSIS BASED ON OBSERVATION:

SWOT Analysis is the most important part of the report, because it depends

on my personal observation. Only a good, keen and comprehensive analysis

leads to good recommendations for the improvement of the existing

conditions. Therefore in NBP I have observed many things and I have

analyzed them to the best of my efforts & knowledge. Through the technique

of SWOT one can analyze the present performance conditions of a given

organization and its weaknesses. Also the opportunities it can grab in the

external environment and the threats it faces. This technique serves as a base

for sound conclusion and recommendations.

STRENGTHS

Following are the main Strengths of NBP:

1. Serving as an Agent:

National Bank of Pakistan Circular Road Branch serves as an agent of State

Bank of Pakistan. No other bank is allowed to do the Clearing task but NBP

act on the behalf of SBP the clearing task.

2 No of Branches:

Strength of NBP is that there are 1183 branches in Pakistan and 16 branches

in overseas of NBP. So NBP staff members are scattered on the land of

Pakistan and World to provide benefits and serve the people.



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3 Skillful EmployeesThe staff members of NBP Circular Road Branch are an experience, though

they are not qualified people but yet they have enough experience to carry on

the work of bank. It is said, Knowledge is power and experience is wisdom

but experience cannot be defeated by knowledge.

4 Modernization:

National Bank of Pakistan is the first bank, which has started a Foreign

Exchange Company in order to regularize the inflows of foreign money and

control the undesirable blackmailing of private foreign exchange companies

in the country.

It is the only domestic bank of the country, which has been awarded The

Best Domestic Bank consecutively in 2001 and 2002.

WEAKNESSES

Following are the main weaknesses of NBP:

1. Delegation of Authority:

National Bank of Pakistan to great extent is a centralized bank. The manager

of the Circular Road Branch has very limited authority, especially in case of

advances. Lack of delegation of authority creates problems and when the

manager is not present in his office and customers have to wait for many

hours. There is top to bottom flow of authority and lower level of employees

cannot participate in the decision making process. The top level of the

organization takes all the decision. This completely centralized decision-

making decreases the interest and also reduces efficiency of the bank.



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2. Seniority Based Promotions:

Promotion in NBP is purely on seniority basis rather than on performance.

This really de-motivates the employees because they know that it doesnt

matter whether they perform well or bad.

3. Job Rotation:

Most of the employees work in a particular department and they specialize

only in one department. In case of absence of one employee, any other

employee cannot perform this work. In this way bank not only loses the

business but also results in dissatisfaction of the customer.

4. Lack of Theoretical Knowledge of Employees:

There is a lack of theoretical knowledge of the employees of National Bank

of Pakistan. Although their work is mostly routine and practical but

sometimes low background education can disturb the routine work. They

have to consult the Regional Manager Office or General Manager Office.

This factor affects their efficiency.

5. Discouragement of Small Depositors:

The staff members give proper attention and respect to those customers who

have deposited huge amount of money while the small depositors mostly; the

salaried people are discouraged to open an account within the branch. In this

way they discourage saving habits in the general public.

6. Lack of Discipline:



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During my training in National Bank of Pakistan, Circular Road Branch I

observed lack of discipline in the way that some of the employees do not care

about the office timings. They usually come late in the morning. Similarly

employees take long leaves without any valid reasons.

7. Excessive Paper Work:

There is excessive paper work in NBP, which takes more time and reduces

the effective banking performance.

8. Lengthy Process of Loan:

To meet the immediate requirements of the business, customers require quick

financing but due to centralization of decision-making there are unnecessary

delays in sanctioning of loans, resulting in dissatisfaction of the customers.

9. Inadequate Fringe Benefits:

The main purpose of fringe benefits is to retain the employees in the

organization on long-term basis. It has been analyzed that the package of

fringe benefits offered by NBP is not much attractive as compared to other

organizations. Recently NBP has furthermore reduced the fringe benefits of

the employees that may result in de-motivation & reduction the performance

of existing employees.

10.Low Rate of Return:

Due to low rate of return, the depositors are drawing their money from the

banks and depositing in the saving centers, which are offering a good rate of

return as compared to the banks.



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11.Limited Application of Electronic Media:

NBP is not utilizing the electronic media for its promotional campaign. There

is lack of awareness among the customers and general public about the

schemes offered by NBP.

12.Improper Working Conditions:

Most of the branches of NBP are facing the problem of shortage of space like

NBP, Circular Road Branch. The frequent movement of the staff in the

managers office discourages the customers and it is also risky from security

point of view. The arrangement of foreign exchange department in Circular

Road Branch is even worse. There is lack of furniture and inappropriate

arrangements of the seating for the customers.

13.Limited Application of Technology in Bank:

NBP branches are not fully computerized, which is very important to provide

the quick and quality services.

14.Political Interference:

Banks are not free from political influences. Due to political pressures on the

management for sanctioning the loans in favor of their political persons

resulted in huge amount of bad debts because in this way the bank is unable

to recover the loan very difficult, and these loans are not used for productive

purposes.



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OPPORTUNITIES

Following are the main weaknesses of NBP:

1. Financing

Now a days people have enough savings and they want some luxurious

types products such as Car, House and Business etc. So the opportunity for



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NBP is to start car financing scheme to be beneficial for the organization

(Bank).

2. Modernization:

Another opportunity for NBP is to modernize itself because all other banks

have best methodologies to compete others and market there products. As I

know that NBP have not enough modernize system to be compatible with

other banks.

3. Strong Competition:

As we know that todays era is the era of competition. In all the banks are

involved in struck competition so; it is an opportunity for NBP to develop a

strong marketing policies and campaign to further develop itself.

THREATS:

Followings are the major threats for NBP:

1. Other Banks

The major threat for NBP is other banks that have started function in such as

Bank Alfalah, MCB, HBL, UBL, ABL, PICIC, Khyber Bank etc. These are



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the banks that NBP face competition with them. These banks provides a vide

variety of services as compared to NBP.

2. Political Interference:

Banks are not free from political influences. Due to political pressures on the

management for sanctioning the loans in favor of their political persons

resulted in huge amount of bad debts because in this way the bank is unable

to recover the loan very difficult, and these loans are not used for productive

purposes.



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FINANCIAL ANALYSIS

The scope and purpose of financial analysis:

Financial analysis is an evaluation of both a banks past financial

performance and its prospects for the future. Typically, it involves an

analysis of the banks financial statements and its flow of funds. Financial

statement analysis involves the horizontal, vertical and various ratios

analysis. It is used by such interested parties as creditors, investors and

managers to determine the banks financial position relative to that of other.

The way in which banks financial position and operating results are viewed

by investors and creditors will have an impact on the firms reputation.

ANALYSIS OF FINANCIAL STATEMENT

Data presented in financial statement is of significance to analyst.

They develop the relation among the various items of balance sheet and

income statement and interpret their results in theoretical perspective. For

this analysis they adopt various tool and techniques.



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TOOL OF ANALYSIS

1. Comparative Statement.

2. Absolute increase/Decrease.

3. Absolute Increase/Decrease in % ages

4. Trend percentages

5. Common size percentages

6. Ratio analysis

1. COMPARATIVE STATEMENT

In this statement two or more than two years data is presented for

comparison.

2. ABSOLUTE INCREASE/DECREASE

It is a type of Horizontal analysis. It gives changes in absolute data intern of

Rupees amount. It enables the analyst to point out the direction of business.

3. TREND PERCENTAGES

This is the second type of horizontal analysis. It is adopted to know the

tendencies of business position. In it one year is chosen as base year and item

of financial statement of base year related with other years relevant items.



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4. COMMON SIZE PERCENTAGES

This method is for vertical analysis. It represents the change in percentages

in relation to total assets, total liabilities and owner equity. In this method we

take total assets, liabilities and owner equity and sales individually 100% and

develop relationship with their relevant components.

5. RATIO ANALYSIS

Ratio is mathematical relationship of one item to other items. For analysis

these ratios are compared with other years relevant ratios or with the ratios of

other companies of the same nature are industrial averages. Ratios are really

adopted to know the liquidity, stability and profitability position of the

company.

ACCOUNT SECTION:

Like other business organization banks also deals in money matters, as the

bank is custodian of deposited money, therefore, it is of utmost importance to

keep a chronological record, further more, the banks are commercial

institutions therefore, the records of all incomes and expenditure are kept

correctly and systematically.

In Bank of Khyber, the responsibility for maintaining necessary accounting

data and to keep up to date record in a systematic manner has been assigned

to tin; account department. Hundreds of banks branches perform their daily

routine work and deal in money that belongs to depositor. Here account



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section holder great importance in banking, because it keeps all the

accounting records properly.

ACCOUNTING SYSTEM:

In NBP under the companies Act 1913 accounts arc-maintained

according to British System, According to this system every monetary

transactions has got two fold effects, termed as debit and credit.

National Bank Of Pakistan also follows the same procedure. Accounting

Terms:

1. Account:

A summary of all the debit and credit transaction pertaining to a similar

nature or to an individual or group of persons called account.

2. Voucher:Written evidence recorded on a piece of paper in respect of monetary

transaction called a voucher.

3. Main Ledger:

Main ledger is a Book where various accounts of different types are kepi.

Generally this book is in banded form containing several sheets for several

accounts.

4. Subsidiary Ledger:

Where a main head has got different sub heads of it, subsidiary ledgers for

each sub head are also maintained. Thus subsidiary ledgers are maintained a

part from the main ledger.



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Book and Stationary used by NBP

In account section the following books and stationary are used.

1. Cash Book.

2. General ledger.

3. Abstract book.

4. Income and Expenditure Ledger.

5. Vouchers Register

6. Transfer Book.

7. Receiving Cashier book

8. Paying Cashier Book.

9. Supplementary.

10.Different Vouchers.

FUNCTIONS OF ACCOUNT SECTION:

The main functions of the account department of a branch are as following:1. Balancing and Maintenance of Book.

2. Preparation of Statements.

During the course of daily business of branch a number of cheques arc

presented by customers for cash payment, through transfer delivery, clearing

and also a number of new accounts are opened and cash is deposited by the

customers A number of new vouchers are recorded by debiting the account

and crediting another account in branch.

So in order to ensure that during the day all the transactions have properly

been recorded, are completed in all respect and are posted in proper books by



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the branch. This recording is done on daily basis maintained by account

section.



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BALANCING AND MAINTENANCE OF BOOKS:

Balancing the cashbook means that all these transactions (cash, clearing and

transfer) have property been recorded and there is no mistake in any voucher.

a. Arrangements of voucher

b. Preparation of supplementaries.

c. Preparation of summery.

d. Equating the total summary with the total of transfer books.

PREPARATION OF STATEMENT:

To Judge the performance of branches, the Head Office requires periodical

statements from banks through these statements the top management control

performance of the branches and provides necessary guidance. The top

management decisions depend upon these statements. The following are (lie

important statement prepared by the account section,

1. Balance Sheet.

2. Pak Account Extract.

3. Provisional Income and expenditure Statement.

1. BALANCE SHEET:

Balance sheet or statement of affairs is prepared on bank printed proof or mawith the help of figure contained in the cashbook and general ledger. This

statement is prepared on daily basis in the Branch.

PAK ACCOUNT EXTRACT:



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Apart from account section, there is central accounts department functioning

at Head Office. Each branch is required to submit its daily statement known

as Pak Account Extract. According to prevailing procedure each branch

prepares two separate statements. The extract is used for "original entries and

other is used for Responding Entries".



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Reference And Sources:

1. Hasan, Mumtaz (1998). The story of NBP. Karachi.

2. Harold, Koontz and Heiz Weihrich (1984). Management. McGraw

hill 8th edition.

3. Nasir, M Saeed (2004).Banking, currency and finance. Faisalabad:

Kitab markaz.

4. Nasir, M Saeed (2000). Economic theory. Faisalabad: Ilmi kitab

khana.

5. NBP (2002).Annual report of NBP. Karachi.

6. NBP (2004).Bankbook instruction of NBP. Karachi.

7. NBP (2005). Economic bulletin of NBP. Karachi. Sekaran,

Uma.Research Methods For Business 4th Edition

8. Sekaran, Uma.Research Methods For Business 4

th

Edition9. Shah Ali, Gohar, AVP, presentation on NBP.D.I. Khan

10.Shah, Ali, Gohar report on NBP Recruitment & Selection

11. www.nbp.com.pk

12. www.sbp.org.
http://www.nbp.com.pk/http://www.sbp.org/http://www.nbp.com.pk/http://www.sbp.org/

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