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01 INTRODUCTION OF BANKING
1.1 What is Bank?
While the question may seem elementary, the answer can be quite complex. Understanding
what banking is all about will help you make better financial decisions.
A bank is a financial institution where you can deposit your money. Banks provide a system
for easily transferring money from one person or business to another. Using banks and the many
services they offer saves us an incredible amount of time, and ensures that our funds "pass
hands" in a legal and structured manner. There are also other types of financial institutions that
operate just like banks.
A bank is a financial institution licensed by a government. Its primary activities include
providing financial services to customers while enriching its investors. Many financial activities
were allowed over time. For example banks are important players in financial markets and offer
financial services such as investment funds. In some countries such as Germany, banks have
historically owned major stakes in industrial corporations while in other countries such as the
United States banks are prohibited from owning non-financial companies. In Japan, banks are
usually the nexus of a cross-share holding entity known as the zaibatsu. In France,
bancassurance is prevalent, as most banks offer insurance services (and now real estate
services) to their clients.The level ofgovernmentregulation of the banking industry varies widely, with countries such
asIceland, the United Kingdom and the United States having relatively light regulation of the
banking sector, and countries such as China having relatively heavier regulation (including
stricter regulations regarding the level ofreserves).
1.2 Why Do You Need a Bank Account?
With all the changes taking place in the banking marketplace today, you might ask yourself
Do I really need a bank? Why can't I just find a way to avoid all these fees? What types ofaccounts are available to me? It can be mind-boggling. There are many reasons why a banking
relationship is vital:
When you deposit money in a bank, you have the comfort of knowing your money is in a
safe, insured place. Deposits in most banks are insured by the Federal Deposit Insurance
Department of Business Administration
Faculty of Administrative Sciences Kotli Azad Kashmir
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Corporation (FDIC). This means your money is protected up to $100,000 per depositor. You can
also think of it as "out of sight, out of mind." If you don't have a daily visualization of your cash
at hand, you'll probably be less tempted to spend it frivolously.
Most people and businesses, including your employer, need to have a paper trail to
document transactions. Checks are a perfect way to keep a permanent record of business
activities, even when they are personal. Even if you bank online, there is a well-documented trail
of all your transactions.
Department of Business Administration
Faculty of Administrative Sciences Kotli Azad Kashmir
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1.3 How Banks Operate?
In addition to providing a safe place for your money, banks also loan money to businesses and
consumers. A large portion of a bank's business is lending. How do banks get the money they
loan? The money comes from depositors like you. Banks use these deposits to make loans. Everyfee you pay to your bank enables them to reinvest in themselves, giving them more money to
loan to you, for another fee, of course.
Banks are in business to make a profit. Their profit generally comes from the difference in
interest paid to depositors and the interest earned on loans. Making loans helps banks make
money, and offering checking accounts is a way to attract deposits, which banks turn into
profitable loans. Banks cannot legally loan all of their deposited money all at once. The Federal
Reserve Board, which is part of the Federal Reserve System, requires that banks must keep a
certain percentage of their deposits in reserve at all times, assuring you, the customer, can
withdraw your money when you need to. The remaining funds, which are not subject to reserve,
are used to make consumer loans.
1.4 Types of banks
Banks' activities can be divided into retail banking, dealing directly with individuals and small
businesses; business banking, providing services to mid-market business; corporate banking,
directed at large business entities; private banking, providing wealth management services to
high net worth individualsand families; and investment banking, relating to activities on the
financial markets. Most banks are profit-making, private enterprises. However, some are owned
by government, or are non-profit organizations.
Central banks are normally government-owned and charged with quasi-regulatory
responsibilities, such as supervising commercial banks, or controlling the cash interest rate.
They generally provide liquidity to the banking system and act as the lender of last resort in
event of a crisis.
1.4.1 Types of retail banks
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Faculty of Administrative Sciences Kotli Azad Kashmir
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Commercial bank: the term used for a normal bank to distinguish it from an investment bank.
After the Great Depression, the U.S. Congress required that banks only engage in banking
activities, whereas investment banks were limited tocapital market activities. Since the two no
longer have to be under separate ownership, some use the term "commercial bank" to refer to a
bank or a division of a bank that mostly deals with deposits and loans from corporations or large
businesses.
Community Banks: locally operated financial institutions that empower employees to
make local decisions to serve their customers and the partners.
Community development banks: regulated banks that provide financial services and
credit to under-served markets or populations.
Postal savings banks: savings banks associated with national postal systems. Private banks: banks that manage the assets of high net worth individuals.
Offshore banks: banks located in jurisdictions with low taxation and regulation. Many
offshore banks are essentially private banks.
Savings bank: in Europe, savings banks take their roots in the 19th or sometimes even
18th century. Their original objective was to provide easily accessible savings products to all
strata of the population. In some countries, savings banks were created on public initiative; in
others, socially committed individuals created foundations to put in place the necessary
infrastructure. Nowadays, European savings banks have kept their focus on retail banking:
payments, savings products, credits and insurances for individuals or small and medium-sized
enterprises. Apart from this retail focus, they also differ from commercial banks by their broadly
decentralised distribution network, providing local and regional outreachand by their socially
responsible approach to business and society.
Building societies and Landesbanks: institutions that conduct retail banking.
Ethical banks: banks that prioritize the transparency of all operations and make only what
they consider to be socially-responsible investments.
Islamic banks: Banks that transact according to Islamic principles.
Department of Business Administration
Faculty of Administrative Sciences Kotli Azad Kashmir
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1.4.2 Types of investment banks
Investment banks "underwrite" (guarantee the sale of) stock and bond issues, trade for their
own accounts, make markets, and advise corporations on capital market activities such as
mergers and acquisitions.Merchant banks were traditionally banks which engaged in trade finance. The modern
definition, however, refers to banks which provide capital to firms in the form of shares rather
than loans. Unlike venture capital firms, they tend not to invest in new companies.
Both combined
Universal banks, more commonly known as financial services companies, engage in several of
these activities. These big banks are very diversified groups that, among other services, also
distribute insurance hence the term bancassurance, a portmanteau word combining "banque
or bank" and "assurance", signifying that both banking and insurance are provided by the same
corporate entity.
1.4.3 Other types of banks
Islamic banks adhere to the concepts of Islamic law. This form of banking revolves around
several well-established principles based on Islamic canons. All banking activities must avoid
interest, a concept that is forbidden in Islam. Instead, the bank earns profit (markup) and fees on
the financing facilities that it extends to customers.
1.5 Banks in the economy
Size of global banking industry
Department of Business Administration
Faculty of Administrative Sciences Kotli Azad Kashmir
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Worldwide assets of the largest 1,000 banks grew 16.3% in 2006/2007 to reach a record $74.2
trillion. This follows a 5.4% increase in the previous year. EU banks held the largest share, 53%,
up from 43% a decade earlier. The growth in Europes share was mostly at the expense of
Japanese banks, whose share more than halved during this period from 21% to 10%. The share of
US banks remained relatively stable at around 14%. Most of the remainder was from other Asian
and European countries.[8]The United States has the most banks in the world in terms of
institutions (7,540 at the end of 2005) and possibly branches (75,000).[citation needed] This is an
indicator of the geography and regulatory structure of the USA, resulting in a large number of
small to medium-sized institutions in its banking system. As of Nov 2009, China's top 4 banks
have in excess of 67,000 branches (ICBC:18000+, BOC:12000+,CCB:13000+,ABC:24000+)
with an additional 140 smaller banks with an undetermined number of branches. Japan had 129
banks and 12,000 branches. In 2004, Germany, France, and Italy each had more than 30,000
branchesmore than double the 15,000 branches in the UK.[8]
1.6 Bank crisis
Banks are susceptible to many forms of risk which have triggered occasional systemic crises.
These include liquidity risk(where many depositors may request withdrawals beyond available
funds), credit risk (the chance that those who owe money to the bank will not repay it), and
interest rate risk(the possibility that the bank will become unprofitable, if rising interest rates
force it to pay relatively more on its deposits than it receives on its loans).Banking crises have
developed many times throughout history, when one or more risks have materialized for a
banking sector as a whole. Prominent examples include the bank run that occurred during the
Great Depression, the U.S. Savings and Loan crisis in the 1980s and early 1990s, the
Japanese banking crisis during the 1990s, and the subprime mortgage crisis in the 2000s.
Usually, the governments bail out the bank through rescue plan or individual public intervention.
[9]
1.7 Challenges within the banking industry
Department of Business Administration
Faculty of Administrative Sciences Kotli Azad Kashmir
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The banking industry is a highly regulated industry with detailed and focused regulators. All
banks with FDIC-insured deposits have the FDIC as a regulator; however, for examinations,
[clarification needed] theFederal Reserveis the primary federal regulator for Fed-member state banks;
the Office of the Comptroller of the Currency (OCC) is the primary federal regulator for
national banks; and the Office of Thrift Supervision, or OTS, is the primary federal regulator
forthrifts. State non-member banks are examined by the state agencies as well as the FDIC.
National banks have one primary regulatorthe OCC.Each regulatory agency has their own set
of rules and regulations to which banks and thrifts must adhere.The Federal Financial
Institutions Examination Council (FFIEC) was established in 1979 as a formal interagency
body empowered to prescribe uniform principles, standards, and report forms for the federal
examination of financial institutions. Although the FFIEC has resulted in a greater degree of
regulatory consistency between the agencies, the rules and regulations are constantly changing.In
addition to changing regulations, changes in the industry have led to consolidations within the
Federal Reserve, FDIC, OTS and OCC. Offices have been closed, supervisory regions have been
merged, staff levels have been reduced and budgets have been cut. The remaining regulators face
an increased burden with increased workload and more banks per regulator. While banks
struggle to keep up with the changes in the regulatory environment, regulators struggle to
manage their workload and effectively regulate their banks. The impact of these changes is that
banks are receiving less hands-on assessment by the regulators, less time spent with each
institution, and the potential for more problems slipping through the cracks, potentially resulting
in an overall increase in bank failures across the United States.The changing economic
environment has a significant impact on banks and thrifts as they struggle to effectively manage
their interest rate spread in the face of low rates on loans, rate competition for deposits and the
general market changes, industry trends and economic fluctuations. It has been a challenge for
banks to effectively set their growth strategies with the recent economic market. A rising interest
rate environment may seem to help financial institutions, but the effect of the changes on
consumers and businesses is not predictable and the challenge remains for banks to grow and
effectively manage the spread to generate a return to their shareholders.
The management of the banks asset portfolios also remains a challenge in todays economic
environment. Loans are a banks primary asset category and when loan quality becomes suspect,
Department of Business Administration
Faculty of Administrative Sciences Kotli Azad Kashmir
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the foundation of a bank is shaken to the core. While always an issue for banks, declining asset
quality has become a big problem for financial institutions. There are several reasons for this,
one of which is the lax attitude some banks have adopted because of the years of good times.
The potential for this is exacerbated by the reduction in the regulatory oversight of banks and in
some cases depth of management. Problems are more likely to go undetected, resulting in a
significant impact on the bank when they are recognized. In addition, banks, like any business,
struggle to cut costs and have consequently eliminated certain expenses, such as adequate
employee training programs.
02 INTRODUCTION AND OVERVIEW OF NATIONAL BANK OF
PAKISTAN
2.1 INTRODUCTION
National Bank of Pakistan (the bank) was incorporated in Pakistan under the National Bank of
Pakistan Ordinance, 1949 and is listed on all the stock exchanges in Pakistan. Its registered and
head office is situated at II Chundrigarh Road Karachi. The Bank is engaged in providing
commercial banking and related services in Pakistan and overseas. The bank also handles
treasury transactions for the Government of Pakistan as and agent to the State Bank Of
Pakistan ( SBP). The bank operates 1,243 (2007: 1232) branches in Pakistan and 22 (2007:
18) overseas branches (including the Export Processing Zone branch Karachi.). under a Trust
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Deed, the bank also provides services as trustee to National Investment Trust (NIT) including
safe custody of securities on behalf of NIT.
National Bank of Pakistan maintains its position as Pakistans premier bank determined to set
higher standards of achievements. It is business partner for the Government of Pakistan with
special emphasis on fostering Pakistans economics growth through aggressive and balanced
lending policies, technologically oriented products and services offered through its large
network of branches locally, internationally and representative offices.
The Bank is providing all banking services of mercantile and commercial banking permissible
in the country, which includes:
Handling of treasury transactions for the Government of Pakistan as an agent to the
State Bank of Pakistan.
Providing services under a Trust Deed as Trustee to the National Investment Trust
(NIT) including safe custody of securities on behalf of NIT.
Accepting of deposits of money on current, fixed, saving, term deposit and profit and
loss sharing accounts.
Borrowing money and arranging finance from other banks.
Advancing and lending money to its clients.
Financing of projects, including technical assistance, project appraisal through long
term short term loans, term finance and musharika certificates, etc.
Buying, selling, dealing, including entering into forward contracts of foreign exchange.
Financing of seasonal crops like cotton, wheat, rice, sugar cane, tobacco, etc.
Carrying on agency business of any description other than managing agent, on behalf of
clients including Government and local authorities.
Generating, undertaking, promoting, etc. of issue of shares and, bonds, etc.
Transacting guarantee and indemnity business.
Joint venturing with foregn dealers, agents and companies for its representation abroad.
Participating in World Bank and Asian Development Banks lines of credit
Providing personalized Hajj services to intending Hajjis.
2.2 OVERVIEW OF THE ORGANIZATION
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Vision Statement
To be the pre-eminent financial institution in Pakistan and achieve market recognition both in
the quality and delivery of service as well as the range of product offering
Mission StatementTo be recognized in the market place by Institutionalizing a merit & performance culture,
Creating a powerful & distinctive brand identity, Achieving top-tier financial performance,
and Adopting & living out our core values.
Core Values
We aim to be an organization that is founded on
Growth through creation of sustainable relationships with our customers.
Prudence to guide our business conduct.
A national presence with a history of contribution to our communities.
We shall work to
Meet expectations through Market-based solutions and products.
Reward entrepreneurial efforts.
Create value for all stakeholders.
We aim to be people who
Care about relationships.
Lead through the strength of our commitment and willingness to excel.
Practice integrity, honesty and hard work. We believe that these are measures of true
success.
We have confidence that tomorrow we will be
Leaders in our industry.
An organization maintaining the trust of stakeholders.
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An innovative, creative and dynamic institution responding to the changing needs of the
internal and external environment.
2.3 History
NBP is the largest commercial bank in the Pakistan and was established under the National
Bank of Pakistan Ordinance on November 8, 1949 in Pakistan. It was established in crisis
conditions following the deadlock with India. The original intention was to setup it sometime
in 1950. The plans for its establishment had to be advanced in view of the critical situation,
which developed especially in the jute trade as a result of Indias refusal to accept the exchange
rate of Pakistans rupee. It played a notable role in financing the jute trade in collaboration with
the Jute Board so that crisis was eventually overcome. The timely opening of the bank
branches enabled the jute growers in East Pakistan to obtain a fair price of their products and
helped the country in maintaining its foreign exchange earnings from raw jute. Later on, it
established its office in West Pakistan to help and finance the cotton crop.
The national bank of Pakistan took over the agency work of the State Bank of Pakistan in 1952
for transacting Government business and managing currency chests at places where the State
Bank of Pakistan does not has an office of its own. The National Bank of Pakistan in view of
its relationships with the Government and as agent of the State Bank of Pakistan holds unique
position among commercial banks in Pakistan. For example, for years it had a monopoly inGovernment and Semi-Government deposits. This is both a privilege and a responsibility. On
the one hand, the bank is given special support and assistance and on the other, it is also
expected to serve as an instrument for the promotion of national objectives and policies. It also
undertakes Government Treasury operations. National Bank of Pakistan maintains its position
as Pakistans premier Bank determined to set higher standards of achievements. It is the major
business partner for the Government of Pakistan with the special emphasis on fostering
Pakistans economic growth through aggressive and balanced lending policies, technologically
oriented products and services offered through its large network of 1406 branches locally, 24
branches internationally and representative offices.
2.4 Nature of the Organization
National Bank of Pakistan is a Governmental Organization. It is functioning as an agent
of State Bank of Pakistan. It implements the policies of SBP. Its basic objective was to extend
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credit to the agriculture sector. It is the major business partner for the Government of Pakistan
with special emphasis on fostering Pakistans economic growth through aggressive and
balanced lending policies, technologically oriented products and services offered through its
large network of branches. It deals all Government Revenue, collection and payments of
salaries, pensions and Government Treasury. It is a complete commercial, retail and corporate
bank as well.
The National Bank of Pakistan a commercial bank generally makes advances for a
period not exceeding one year, except in case of small and medium industries for which
advance may be made for a maximum period of five years. The bank makes not only against
the security of stocks and goods hypothecated or pledged to the bank, but also against
documents of goods and property, shares re various joint stock companies, Government
securities, Insurance policies deposits receipts, etc. the margin and rate of interest are
determined by several factors including the type of security the size of loan and the integrity of
the party.
National Bank of Pakistan maintain its position as Pakistans premier bank determined
to set higher standards of achievements. It is the major business partner for the Government of
Pakistan with special emphasis on fostering Pakistans oriented products and services offered
through its large network of branches locally and internationally and representative offices.
2.5 Operations AND Functions
The main operations and Functions that are performed by the NBP Are as follows:
Accepting the Deposits of money from the customer
Borrowing money and arranging finance from other banks
Advancing and lending money to its clients and customers
Financing of projects including technical assistance, project appraisal through long term
short term loans
Buying selling dealing and discounting of bills of exchange, promissory notes drafts
bill of lading, and other instruments of securities.
Foreign exchanger business
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Financing of seasonal crops
Receiving of bonds scrips valuable for safe custody
Generating, Undertaking promoting etc of issue of shares. Bonds
Undertaking and executing trusts
Making investment in Other Companies
Joint Venture with foreign dealers, agent and companies for its representation abroad
Utility Services
Providing Hajj Services to intending persons
Agent of SBP for collecting
Payment of pension on behalf of provincial and central government
Treasury business
Gold Finances
Through mail transfer, demand drafts, telegraphic transfers, payment orders
Locker services
Establishing Letter of Credit for importers
Negotiating the Letter of Credits (Exports)
Collection based Export Document Selling
Foreign Remittances through SWIFT (Society for Worldwide Inter-bank Financial
Telecommunications)
Foreign Currency Accounts handling (US $, Pound Sterling, Japanese Yen & Dutch
Mark)
SBP Export Refinance Scheme
Remittances both inward and outward.
.2.6 Objectives of NBP
National bank of Pakistan is also a commercial organization and its main objective is profit
maximization. This is achieved in two ways:
1. By increasing deposits.
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2. By charging interest on loans provided to the private sector and business community.
These are explained as:
2.6.1 Increase in deposits:
Competition in banking is intense and every bank whether it is Pakistani, foreign, private or
nationalized tries to increase its deposits by providing better facilities to its customers. By
increasing its deposits a bank can extend greater amount of loan and hence achieves higher
profit. NBP is also improving its facilities and services to attract customers with higher volume
of deposits. There are two main factors involved in increasing the deposits. These factors are
improving the services and courtesy. NBP is continuously working on these two factors to
increase its deposits.
2.6.2 Extension of loans:
The profitability of a bank largely depends on the amount given to people as loan and the type of
people to whom credit is given i.e. the credit worthiness of the borrowers. This strategy has
worked quite well for NBP. Deposits are collected from the people and invested in different
projects. NBP prefers to give loans to financially sound and reliable parties, after securing the
collators. NBP has an extremely well organized section. The staff is adequately trained, and
educated and competent. They carry out extensive financial analysis before deciding on the loan.
Interest charged on the loans potentially contributes to higher profits.
Some of the other objectives of NBP are:
i. Improve customer services.
ii. Quick disposal of credit cases.
iii. Efficient operation of the branches.
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iv. Better Public Relations.
v. Operational and advisory services for foreign exchange accounts activities
03 STRUCTURE OF NAITONAL BANK OF PAKISTAN
3.1 Management of National Bank of Pakistan
Management is a distinct process consisting of activities of planning, organizing, actuating an
controlling performed to determine and accomplish stated objectives with the use of human being a
other resources.8
The management has two types.
1. Centralized.
2. Decentralized.
Centralized Management tends to concentrate decision making at the top of the
Organization.
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Decentralized disperses decision making and authority throughout and further down the
organizational hierarchy.9
NBP have a centralized type of management because all the decisions are taken by the top
management.
3.1.1 SENIOR MANAGEMENT OF NBP.
Table 2
Masood Karim Sheikh
SEVP & Group Chief, Corporate &
Investment Banking Group and Chief
Financial Officer
Qamar HussainChief Operating Officer & Head of
Credit & risk Management
Tajammal Hussain BokhareeSEVP & Group Chief, Special Assets &
Remedial Management Group
Imam Bakhsh BalochSEVP & Group Chief, Compliance
Group
Shahid Anwar KhanSEVP & Group Chief, Overseas
Banking Group
Nabi Bakhsh SoomroSEVP & Group Chief, Islamic Banking
Group
Muhammad Sardar KhawajaEVP & Group Chief, Audit &
Inspection Group
Dr. Asif A. Brohi SEVP & Group Chief, OperationsGroup
Ekhlaqa Ahmed EVP & Secretary Board of Directors
Muhammad Nusrat Vohra SEVP & Group Chief, Treasury
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Management Group
Aamir Sattar SVP & Financial Controller/Divisional
Head, Financial Control Division
Dr. Mirza Abrar Baig
SEVP & Group Chief, Human
Resource Management &
Administration Group
Atif Hassan KhanSVP & Group Chief (A) Information
Technology Group
(Source www.nbp.com.pk)
3.2 BOARD OF DIRECTORS
Table 1
NAME DISIGNATION
Ali Raza Chairman & President
Mohammad Ayub Khan Tarin Director
Mian Kausar Hameed Director
Abrat A Mumtaz Director
Tariq Karmani Director
Sikandar Hayat Jamali Director
M. Khalid Malik Director
S.M. Rafique SEVP & Sectorary to BD
(Source Annual report 2008)
3.3Net Work of Branches:
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NBP have wide range of branches inside the country and outside the country.
3.3.1 Domestic operation
NBP has a vast network of 1254 branches within Pakistan.
Its subsidiaries are:
NBP Leasing Limited (formerly NBP) Capital Limited)
NBP Modaraba Management Company Limited
NBP Exchange Company Limited
Taurus Securities Limited
3.3.2 NBP Regional Offices
1. Karachi (South) 16.Multan
2. Karachi (West) 17.Bahawalpur
3. Hyderabad 18.Dera Ghazi Khan
4. Larkana 19.Sahiwal
5. Sukkur 20.Abbottabad
6. Quetta 21.Gujrat
7. Gawadar 22.Rawalpindi
8. Lahore (Cenral) 23.Jhelum
9. Lahore (East) 24.Peshawar
10. Gujranwala 25.Mardan
11. Sialkot 26.Dera Ismail Khan
12. Faisalabad 27.Muzaffarabad (A.K.)
13. Jhang 28.Mirpur (A.K.)14. Sargodha
15. Federal Capital Islamabad
3.3.3 Overseas Branch Operations
22 overseas Branches
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United States of America 2 Republic of Korea 1
France 1 Japan 2
Germany 1 Afghanistan 4
Bahrain 1 Turkmenistan 1
Pakistan EPZ 1 Kyrgyzstan 1
Bangladesh 4 Azerbaijan 1
Hong Kong 2
04 DEPARTMENTS OF NBP
4.1 Operation Department
The department that is most commonly used for general banking is called the operation
department. In the District Courts Mirpur branch it is being run effectively under the
supervision of CHIEF OPERATION MANAGER
The following are the some categories according to the type of work done by the operation
officers.
4.1.1 Remittances
The main functions of the remittances are as follows
4.1.2 Demand Draft
If you are looking for a safe, speedy and reliable way to transfer money, you can now purchase
NBPs Demand Drafts at very reasonable rates. Any person whether an account holder of the
bank or not, can purchase a Demand Draft from a bank branch.
It is a bill either on demand or otherwise by one bank on another in favour of third party or by
one branch of the same bank or by the head office on the branch or otherwise.
4.1.3 The issuance of the DD
The amount both in words and figures is written and the applicant has to sign on two places
which will be helpful in case DD is to be cancelled. The client has to deposit the cheque
(Account holder) or cash at the counter and will receive the receipt that will be paid to the
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officer who will issue the DD in favour of the holder and the entry will be recorded in the DD
issued register.
4.1.4 Mail Transfer
Move your money safely and quickly using NBP Mail Transfer service. And we also offer the
most competitive rates in the market.
The money will be transferred to the other branch either locally or not through mail.
If the customer is the account holder then his account will be debited, if not then he will have
to make the cash payment at the Cash counter and the receipt will be presented to the MT
issuer officer. The following forms will be used for this purpose
1. Branch mil transfer form
2. Receiving Branch registered Copy
3. Issuing Branch Registered Copy
4. Debt Voucher
5. Beneficiarys Advice
6. Advice to customer
4.1.5 Pay Order
NBP provides another reason to transfer your money using our facilities. Our pay orders are a
secure and easy way to move your money from one place to another. And, as usual, our
charges for this service are extremely competitive.
It is mostly used locally and its procedure is same as the DD issued procedure.
4.1.6 Telegraphic Transfer
It is the most efficient way t transfer the money from one place to another on one phone call
only. It is an application form provided to the customer in which he has to specify the name of
the payee, the place of the transfer and the amount.
After filling of the voucher the client will make the payment and get the stamp of Cash paid by
the Cash Officer And then Authorized person will make tests on the receipt. The tests are thesecret codes that are not understandable to any unauthorized person.
After making the call the tested messages will be delivered to the other branch officer who
will complete the transaction.
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4.2 Cash Department
The deptartment that Deals with the payment and receipt of the Cash or we can simply say that
it is the deptt. that is involved in the cash management . Being the main branch there are two
types of cash involved.4.2.1 Local Cash
The cash that is involved in the same branch for payment of the dues or for any requirement
of the branch
4.2.2 Chest Cash
The payment and receipt of the cash from all other branches of the same city.
4.2.3 Cash Books
The following books are maintained in the cash department of branch
Receiving Cashier Books
Paying
Token Books
Scroll Book
Cash balance Book
When cash is received on the counter, it is entered in the scroll book in the cashier book.
At the close of the day these books are balanced with each other. When the cheque of
negotiable instrument is presented at the counter for payment, Token is used to the customer.
After consolation the token and the instrument is presented to the cashier for payment. The
cashier makes entry in the paying cashier book and payment is made to the Payee. The
Consolidated of the receipt and payment of cash in entered in the cash balance book and drawn
closing balance
Closing Balance = Cash + Receipt _Payments
4.2.4 Govt. Receipt And Payment
This department also comes under the operations of the branch. It deals with the payment and
collection of dues on behalf of the local, provincial and federal govt.
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The payment side involves the payment of all type of pensions and other funds that are
announced by the govt. or any tax returns by the CBR.
The collection of dues includes the collection of Sales Taxes, Income Taxes, Property taxes
and any other fee that is to be submitted in the account of the Central Treasury. The collection
of the Challan forms, fees and the payment made to the Punjab Public Service Commission is
also included in this counter.
4.2.5 Collection Of Utility Bills
The counter for the collection of utilitity bills also play a great role in the general banking
setup. The NBP collects all type of bills on behalf of the concerned organizations for a pre
agreed fee.
4.3 Clearing Department
The department that is responsible for the clearing of the cheques that are drawn on the other
banks or the cheques that have been drawn on the NBP.In the past it was a more complicated
process, because SBP was the custodian so it had to make the arrangements for the clearance of
cheques that have been drawn on the others. So a person representing his or her bank had to go
to SBP for the Clearance of these cheques which was a time consuming method and it was
taking at least 4 to 5 days for the clearance.
Now the SBP has made the thing so easy for all the banks by making a contract to a privatized
insitutionNIFT. Now all the clearing is being done through the NIFT against a Fee that is
Rs.2.5 for every cheque that has get cleared.
4.3.1 Types of Cheques Collected by the Clearing
a)Transfer Cheques
The cheques that are collected and paid by the same branch of the bank
b)Transfer Delivery Cheques
The cheques that are collected and paid by two different branches of a bank situated in the
same city.
c)Clearing Cheques
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When the endorsee (the person who deposit the cheque for collection) and the the person on
whom the cheque has been drawn are the account holders of two different banks then these
type of cheques can be get cleared through the NIFT.
4.4 HUMAN RESOURCE DEPARTMENT
Being the District Courts Branch of Mirpur Hr department has to play a big role in the success
ph the branch. The HR is considering great importance now a day and should get also because
the personnel are the main asset of the NBP. Being the main branch the staff is also a key
factor. The primary objective of the Hr department is to get the jobs done effectively,
economically and with as little friction as possible. The department is focusing mainly on the
policies that are focused on the personnel.
Most talented people are hired through proper recruitment process. Discrimination of any kind
is counter productive to performance.
The objectives/functions that has to be performed by the personnel are clearly mentioned in the
JOB DESCRIPTION.
The code of conduct provides s framework of NBPs values and ethical standards. The
following principles must be applied for the governing the code of conduct of the bank
employees while on the job.
All decisions and actions must be confirmed with all applicable laws, regulations and
corporate policies.
Business must only be succored for NBP on the basis of the belief in competitive
market system and the appropriateness of earning a profit by providing our customer with
efficient services.
Individual must be honest and trust worthy in all actions and relationships for, and in
behalf of the NBP.
Each decision or act must be proper, in terms of both our own sense of integrity and the
scrutiny of others.
Ethical conduct should be recognized and valued by all employees and agents of the
bank.
Formal appraisal is a year round activity and a formal appraisal report is prepared at least once
a year. The appraisal comments are based on achievements against key job objectives. In NBP
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the good performance of the employees is always acknowledged by giving them monetary
rewards. Excellence awards, merit increments, gifts, visiting tickets to abrade and promotions.
Transfers are usually made on the promotions from one country to another or from one branch
to another or maybe from one department to another.
4.5 COMPLIANCE DEPARTMENT
The department that deals with the Audit/Checking and inspection is known as the Compliance
department. The department is being run under the supervision of the COMPLIANE OFFICER.
It is involved in the checking of all types of work that is being conducted in the branch.
The inspection is carried out on daily, weekly and monthly basis depending upon the nature of the
work.
Generally it includes the following type of functions;
Checking of all type of registers that are maintained by the officers of remittances, and that
are
o Demand Draft issued Register
o Telegraphic Transfer issued Register
o Main Transfer issued Register
o Pay Order issued Register
o Register of all type of Advices received against DD, MT, and TT
o Demand Draft received Register
o Telegraphic Transfer received Register
o Main Transfer received Register
o Pay Order received Register
Inspection of the Dak/Mail register issued and received
Inspection of all books that are maintained at the clearing
Inspection of the Cash Book
Inspection of the Scroll Book
Inspection of the Cheque Book Issued Register
Inspection of the all the payments made to pensioners
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Inspection of the all type of Receipts
Inspection of the Cash issued to the branches
Inspection of the utility bills collected
Inspection of the receipts and the payments of the Govt. Counter Inspection of the all type of Deposits
Inspection of the of the all type of loans
Inspection of the Corporate Cell
4.6 CREDIT ADMINISTRATION DEPARTMENT
The most important department of the NBP main branch. The credit department of a bank is
the most profit generating department of any bank. The department is being run effective under
the supervision of CAD Officer. The department is involved in all the process of Booking the
loan, documentation, Risk Analysis, Sanctioning /Approval Documentation, Sanction Advice,
Securitization, Disbursement, Monitoring, Collection, Recovery.
The financing process starts with
4.6.1 Loan Booking
Introduction
Funds requirement
Nature of Utilization
Nature of Business
Financial position
Character
Security
4.6.2 Documentation (Pre-Sanction)
Information about business
Personal data
Security Valuation
Security Documents
Encumbrance
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BLA Report (Bench Legal Advisor)
Loan History (CIB Report)
Loan Application Form
4.6.3 Analysis Financial Analysis
Sector Analysis
Product Analysis
Political Factors
Industry Analysis
SBP Prudential Regulations
4.6.4 Securitization
The complete process is made for the security that is being used for the approval of
loan. The securities may be of the following types:
Personal Guarantee
Personal Guarantee + Hypothecation
Pledge
Mortgage
Charge/Lien on the Current Asset
4.6.5 Approval Document
Then an approval document is received from the appropriate/competent authority.
4.6.6 Sanction Advice
Then the terms and conditions are advised with the approval document.
4.6.7 Disbursement of Loan
Then the loan is disbursed to the party after the completion of all the above stated
requirements.
4.6.8 Monitoring
The monitoring involves all the steps that will be taken for the maintenance of the advances of
the customers. The officers will determine that either the person is paying the installments or
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not. In case of short tern loans the time period will short and the customer should be in a
position to payback the loan.
4.6.9 Collection
This sub head is involved in the collection of all the payments and advance if the time period is
finished.
4.6.10 Recovery
In case of default by the customer, the recovery process will be on. During recovery all legal
actions will be taken against the customers regarding payment of the loans.
4.7 Foreign Exchange
Foreign Exchange means expression of value of local currency when exchanged in terms of
currencies of other nations. The Foreign Exchange Department of NBP is the most competentdepartment and is contributing a lot in the overall performance of the Branch.
The main operations of the Foreign Exchange department are
Imports
Exports
Remittances
Foreign Exchange Account handling
4.7.1 IMPORTS
The import deals primarily with the letter of Credit, Contract and the Advance payment .
AnLc is a familiar instrument in setting trade between buyer and seller located in different
countries for the purchase and sale of goods. It is usually a guarantee by the bank for the
payment of the goods delivered by the exporter to the importer.
Important documents for the Import are
Bill of Exchange
Commercial Invoice
Transportation Documents e.g Air way bill or bill of lading
Insurance documents for the goods
Packing List
Pre-shipment inspection certificate
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Form I
In contract the most popular is CAD (Cash against Documents). That is the payment will be
made at the collection of the documents that were involved in the negotiation process.
The third way is the advance payment that will be made to the exporter either full or partial
depending upon the nature of the transaction.
4.7.2 Exports
Export is mainly involed with the collection of the documents or the discounting of the LC. In
the negotiation process Export Bill negotiation A/c will be debited.
Documents Required for the negotiation:
Form-E
Bill of Exchange
Commercial Invoice
Transportation Documents e.g Air way bill or bill of lading
Packing List
Letter of Credit
4.7.3 Documents to be forwarded
Bill of Exchange
Commercial Invoice Transportation Documents e.g. Air way bill or bill of lading
Packing List
Other specific Documents
4.7.4 Documents Remained in hand
Form-E
Copy of Commercial Invoice
Copy of Packing List
Letter of Credit
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05 PRODUCTS OF NBP
5.1 NBP Premium Aamdani
NBP Premium Aamdani (Monthly Income Scheme)
Eligibility Criteria:
Minimum deposit of Rs. 50,000 and a maximum deposit of Rs. 5,000,000 for 5 years
Free Demand Draft, Pay Order and NBP Online Aasan Banking*
Free Cheque Book / NBP Cash Card (ATM + Debit)
Profit paid every month as follows
Period** Profit Rates***
1 year 7.50%
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2 year 8.50%
3 year 9.50%
4 year 10.50%
5 year 11.00%
5.2 NBP Premium Saver (PLS Saving Account)
Eligibility Criteria:
Minimum saving balance of Rs. 20,001 and a maximum balance of Rs. 300,000
Free NBP Cash Card (ATM + Debit)
Two debit withdrawals allowed in a month and no limit on number of deposit
transactions
Profit calculated monthly and paid on half yearly basis
Earn up to 7.25% p.a.
Profit rates are expected
Certain conditions apply
Premature encashment will result in lower rates of return
Expected rates are for the given year
5.3 NBP Karobar (Another step towards your prosperity)
5.3.1 NBP Rozgar Scheme:
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If you are aged between 18 and 40 years, you could be eligible for easy financing for self
employment inthe categories below
Karobar Details:
Government of Pakistan (GOP) support:
1) Life and disability insurance paid by GOP with no medical examination required.
2) 6% mark-up paid by customer, rest paid by GOP.
Subject to availability of subsidy/confirmation from GOP.
Note: The mark-up rate will be revised on annual basis.
Financing Terms & Conditions:
Minimum Down Payment:
10% of asset price (5 % for PCO and Tele center)
Mark-up Rate Variable:
1 year KIBOR + 2% (For the first year mark-up will be 12%) The customer will pay markup
@ 6%p.a as long as GOP provides the balance markup to NBP on a monthly basis)
1 to 5 Years (for PCO 2 years)
Initial 3 months
Rs. 200,000/-
5.4 NBP Saibaan
Under the scheme of NBP Saibaan following types of products to the customers. His scheme is
launched especially for the people those who want to have loan for the construction, renovation
or purchase of land.
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Product Items:
Home Finance
Home Construction
Balance Transfer Facility (BTF)
Home Renovation
Purchase of Land + Construction
Home Purchase (House or Apartment)
Financing Amount Up to 35 Million
Financing Period 3 to 20 Years
Debt to Equity 85:15 (Maximum)
Home Construction Financing Amount Up to 35 Million
Financing Period 3 to 20 Years
Debt to Equity 85:15 (Maximum)
Home Renovation
Financing Amount Up to 15 Million
Financing Period 3 to 15 Years
Debt to Equity 70:30 (Maximum)
Purchase of Land and for Construction thereon
Financing Amount Up to 15 Million
Financing Period 3 to 15 Years
Debt to Equity 70:30 (Maximum)
Re-Financing (Balance Transfer Facility (BTF))
If you have a Home Finance Facility outstanding with another bank you can have
it transferred to NBP through a hassle-free process.
5.5 NBP Advance Salary
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Take upto 20 advance salaries(currently for NBP account holders of govt. or relatedorganization employees).
In January-2003, National Bank of Pakistan has launched a unique product, NBP-Advance
Salary. Currently this product is for fixed-income permanent employees of Federal &
Provincial Government, Semi-Government, Autonomous, Semi-autonomous, local bodies and
other Government organizations. The product is purely cash flow based and offers its holder to
avail 20 (twenty) net salaries in one go to be repaid in up to 60 (sixty) months. With no
collateral, insurance or requirements, Advance Salary provides rapid disbursement in a short
turnaround time.
Terms and Conditions:
Eligibility Permanent Employees of Govt., Semi-Govt.,
Autonomous, Semi Autonomous, Local &
other bodies who are maintaining their Salary
A/Cs at NBP.
Repayment Direct deduction from Salary A/C
Maximum Loan
Amount
Rs. 490,000/-
Security Employer will provide undertaking that
borrowers Salary and end of service benefits
will route through his/her Salary A/C
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maintained at NBP during the tenure of the
loan and his/her end of service benefits are at
least equal to the amount of Advance Salary
required.
Hypothecation of Consumer durables owned
by the borrower.
Three (3) Undated Cheques
Max. Repayment
Period
5 years (60 months)
Advance in terms of #
of net take home
salaries
Up to 20 net take home salaries
Markup Rate 15 % *
(Based on diminishing balance method)
Processing Fee 1% of Loan Amount
Verification Charges Rs 500/-
Life Insurance No Insurance of any kind.
Documentation
Charges
at actual
Contact Your Salary disbursing NBP Branch.
Remaining Service Age At the time of approval and disbursement the
applicants remaining service age should be 6
months after maturity of the loan
Debt Burden 50%
Minimum net take
home salary
no minimum take home requirement
5.6 NBP Cash Card
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To identify a merchant outlet that welcomes your card, just look for the NBP or Orix Logo. To
make a payment give your NBP Cash Card to the merchant. The merchant will swipe your card
on the POS (Point Of Sale) machine and the purchase amount will be entered. Enter your
digital ATM Pin for verification (this is the same as your cash withdrawal pin). After Approval
a transaction slip will be provided. Collect your card and slip and confirm you transaction
amount. Your purchase transaction is now complete and the transaction amount has been
debited to your NBP account. Please retain your transaction for further reference.
5.6.1 NBP Cash Card Safety Tips
Welcome to our relationship enriched with a wide range of remarkable e-banking service. For
your safety and convenience we would recommend some precautions while using NBP CASH
CARD at ATMs and merchant outlets.
Immediately after receiving the NBP Cash Card, change your PIN Code at the nearest
NBP ATM.
Never share your Personal Identification Number (PIN) or given it out over telephone.
Never write your PIN Code on your card.
Never keep your card and PIN at the same place.
As you approach an ATM, beware of your surroundings, if you notice anything
unusual, visit the ATM later.
Immediately report a lost of stolen card to your NBP branch.
Stand close to the ATM machine while entering your PIN and do not allow anyone to
watch.
Ensure that the merchant has entered the correct amount of transaction before you enter
your PIN code.
Maintain your POS receipt as a record and ensure that he card returned to you by the
cashier/attendant is yours.
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Protect your card from direct sunlight and magnetic fields.
Do not bend your card.
Carefully dispose off your old card when your are issued a new one.
5.7 NBP Cash n Gold Card
With NBP's Cash n Gold, you can meet your need for ready cash against your idle gold
jewelry.
Rate of mark-up 12% p.a.
Facility of Rs. 7,000 against each 10 gms of net contents of gold
No maximum limits of cash
Repayment after one year
Roll over facility
Only gold ornaments acceptable
Weight and quality of gold to be determined by NBP's appointed scruffs
No penalty for early repayment
5.7.1 NBP Kisan Taqat- General Information
If you are a progressive milk supplier of Nestle Milk Pack
By financial aid of National Bank of Pakistan, you can increase the production of milk
efficiently.
Benefits of National Bank of Pakistans Loan:
Branches, closest to you
Easy and shortened documented procedure
Relaxation from paying installments
Guidance and help of experienced people
Government bank with more than 50 years of age
5.8 NBP Kisan Dost
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National bank of Pakistan has started for Farmers an Agriculture loan system names Kisan
Dost whose basic objective is this that a farmer can acquire a loan with full trust and without
any bribery and reference according to his requirements. He should have access to approved
loan when he needs it and whenever he wants it he may withdraw money in future from his
account as per his requirement, approved on revolving basis during three years without any
paper documents. So, now every farmer can very easily increase his production with easy
access to loan.
Features:
Lowest mark up on loans, i.e. 12% per annum
Fast and easy procedure for loan approvals
Availability of loans on time and when needed, on the door of farmer
On every step, guidance of farmers through agriculture experts
For the acquirement of loans, a wide range of agriculture loans (schemes)
Facility of agriculture loan at agricultural pass book, jewelry and paper securities
Providence of loan up to 0.1 million on personal guarantee to non-owner farmers
Facility of revolving basis of loans for three years for which new documents
requirement is not required
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06 DEPOSIT AND LENDING POLICIES OF NBP
6.1 Deposit Policies of NBP
As well as deposit is concerned the deposits are the life blood of the bank because the
borrowed capital is much greater than their own capital. The difference between the borrowed
money interest and the lending rate of interest will be the profit margin of the bank because the
lending rate is higher than the borrowing rate. Following are the major deposits of the bank:
6.1.1 Current Account
Current accounts are opened for meeting the current needs of the customer. On such account
there is no markup paid to the accountholders. These are also called non-interest bearing
accounts. Minimum balance requirement is Rs. 5,000 if balance of the account will be less than
5,000 than Rs. 50 to be deducted each month. Pension, Government employees, students,
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widow are exempted from this restriction. No Zakat will be deducted from the current Account
holder.
2% tax will be deducted if the customer withdraw more than 25000 in a day
.Requirements for the Current account
CNIC of the customer
CNIC of the next of Kin
CNIC of the Introducer
Two photographs for the illiterate person.
Specimen of the signatures of the educated person
The introducer must be an existing current account holder.
6.1.2 PLS Saving AccountThe customers in this account deposit a lot of amount. On such amount there is markup paid to
account holders. Minimum balance requirement is Rs. 5,000 if balance of the account will be
less than 5,000 than Rs. 50 to be deducted each month. Pension, Government employees,
students, widow are exempted from this restriction. Zakat will be deducted from the Account
holder.
2% tax will be deducted if the customer withdraw more than 25000 in a day.
Requirements for the Saving account
CNIC of the customer
CNIC of the next of Kin
CNIC of the Introducer
Two photographs for the illiterate person.
Specimen of the signatures of the educated person
The introducer must be an existing account holder.
Mark Up Rate is 1.2% per annum for 100 Rupees.
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6.1.3 PLS Term Deposit
These type of deposits are offered for a term or a specific time period. The minimum deposit
should be for the 7 days at least. If the customer will want to withdraw from the term deposit
then the saving rate will be applied on the amount.
Requirements
CNIC of the customer
CNIC of the next of Kin
CNIC of the Introducer
Two photographs for the illiterate person.
Specimen of the signatures of the educated person
The introducer must be an existing account holder.Following Rates will be applicable depending upon the time period involved.
For 7 days 1.2% per annum
For 30 days 1.5% per annum
For 3 Months 1.27% per annum
For 6 Months 1.8% per annum
For 1 Years 2% per annum
For 2 Years 2.3% per annum
For 3 Years 2.7% per annum
For 4 Years 3% per annum
For 5 Years and above 3.25% per annum
6.1.4 PLS Saver
The newly introduced scheme by the NBP is PLS Saver which is effective from the 1.1.2007.
The customers in this account deposit a lot of amount. On such amount there is markup paid to
account holders. Minimum balance requirement is Rs. 20,000 and the maximum limit is
300,000. if balance of the account will be less than 5,000 than Rs. 50 to be deducted each
month. Pension, Government employees, students, widow are exempted from this restriction.
Zakat will be deducted from the Account holder.2% tax will be deducted if the customer
withdraw more than 25000 in a day.
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Requirements for the Saver account
CNIC of the customer
CNIC of the next of Kin
CNIC of the Introducer
Two photographs for the illiterate person.
Specimen of the signatures of the educated person
The introducer must be an existing account holder.
The mark up rate is 7.25% annually.
6.2 Lending Policies of NBP
Basically lending policies are governed by SBP lending policies, however, NBP has some
discountary powers in respect of lending policies. The advances made by the NBP hasincreased so much and are involved in creating a great amount of return for the bank. Deposits
and the Advances are the two important functions of any bank. NBP takes deposits from the
customers and lend them to the others for earning a profit. The difference between the deposit
rate and the lending rate will be the benefit of the bank. Civil line branch of NBP is playing the
most important role in this category because it has a separate department to deal with the
peoples those who want to have money. Civil line branch is dealing with the Corporate sector
as well.
6.2.1 Working Capital and Short Term Loans:
NBP specializes in providing Project Finance Export Refinance to exporters Pre-shipment
and Post-shipment financing to exporters Running finance Cash Finance Small Finance
Discounting & Bills Purchased Export Bills Purchased / Pre-shipment / Post Shipment
Agricultural Production Loans
6.2.2 Medium term loans and Capital Expenditure Financing:
NBP provides financing for its clients capital expenditure and other long-term investment
needs. By sharing the risk associated with such long-term investments, NBP expedites clients
attempt to upgrade and expand their operation thereby making possible the fulfillment of our
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clients vision. This type of long term financing proves the banks belief in its client's
capabilities, and its commitment to the country.
6.2.3 Loan Structuring and Syndication:
National Banks leadership in loan syndicating stems from ability to forge strong relationships
not only with borrowers but also with bank investors. Because we understand our syndicate
partners asset criteria, we help borrowers meet substantial financing needs by enabling them
to reach the banks most interested in lending to their particular industry, geographic location
and structure through syndicated debt offerings. Our syndication capabilities are
complemented by our own capital strength and by industry teams, who bring specialized
knowledge to the structure of a transaction.
6.2.4 Cash Management Services:
With National Banks Cash Management Services (in process of being set up), the customers
sales collection will be channeled through vast network of NBP branched spread across the
country. This will enable the customer to manage their companys total financial position right
from your desktop computer. They will also be able to take advantage of our outstanding
range of payment, ejection, liquidity and investment services. In fact, with NBP, youll beprovided everything, which takes to manage your cash flow more accurately.
6.2.5 Generally Leading Policies Include:
Clean Credit Report
Compliance with maximum exposure by the bank
Compliance with maximum exposure that can be allowed to a single party
Funded = 4 times of equity of the firm
Non-Funded = 10 times of equity of the firm
Lending Policies made by the NBP have categorized the loans in the following types according
to the requirements of the customers.
6.2.6 TYPES OF ADVANCES
1. Security Vice
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Clean Advances
In these types of advances only the personal guarantee of the
borrower is involved. The best example is the Credit Card.
Secured LoansThe loans the sectioned of those are associated with the security. The
securities may be of the following types:
Personal Guarantee
Personal Guarantee + Hypothecation
Pledge
Mortgage
Charge/Lien on the Current Asset
2. Period Vice
The loans that are designed according to the time periods needs.
Short Term Loans (For 1 year only)
Long Term Loans (For 5 years)
3. Utilization Vice
The advances that are typically designed according to the utilization
requirements of the loans.
Working Capital Requirement
Project Finance
4. Customer Vice
According to the customer
Consumer finance
SME lending
Corporate Financing
5. Sector Vice
The advances that are according to the sectors, such as
Agriculture
Textile
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Chemical sector
6.3 Types of Finance
All the types of advances comes under the following Credit Heads
1. Small Finance2. Cash Finance
3. Running Finance
4. Demand finance
5. Agriculture Finance
6. Corporate Loans
6.3.1 Small Finance
As the name indicates, this head involves small amount that will be financed
by the bank. The loan is for the business people only. The loan will be issued against any
tangible security of the businessman. These small loans are sanctioned for short period of times
i.e for 1 year only. After one year the customer will have to pay back the amount or will renew
his loan.
The loan amount will be 60% of the amount of the property that is being pledged.
The mark-up Rate Is fixed 12% annually.
Under Small Finance following types are included.
Gold Finance
Commercial finance
Industrial Finance
6.3.2 Gold Finance
If the customer has the gold then he can use it for the generation of the money.
60% of the gold amount will be financed by the NBP after evaluation from the jewelers those
are under that contract of NBP. It is a short tern loan and must be paid or renewed after 1 year.
Following documents will be required
CNIC
Complete information of Business
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CIB Report
Application Form
Security Evaluation from authorized Jewelers
BLA Report IB 6A (Gold Agreement)
IB12 (Promissory Note)
IB 26 (Pledge of security)
Any other document as per the requirement of the NBP.
6.2.3 Commercial & Industrial Finance
For the small businessmen those are doing business at commercial level mainly for sole
proprietorship. The upper limit that will be sanctioned under this finance is Rs. 250,000. Forsmall industrialists this facility is also available. In this case the upper limit will be 500,000.
Mark-up will be 12% and the loan is for 1 year.
Following documents will be required
CNIC
Complete information of Business
CIB Report
Application Form Security Evaluation from authorized Jewelers
BLA Report
IB 6R (Finance Agreement duly signed by the Bank and customer)
IB12 (Promissory Note)
IB 26 (Pledge of security)
IB 25 (Hypothecation of stock)
HOX7 (Mark-up Rate Agreement)
Any other document as per the requirement of the NBP.
6.3.4 Running Finance
This financing facility is also for short period of times, i.e for 1 year only. After 1 year it must
be renewed or cleared. It is mostly issued against some type of liquid assets, such as Defense
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Saving Certificates (DSC) or term deposits. These loans are typically taken for the working
capital requirements. While sanctioning the loan the bank will create lien on the DSC or term
deposit from the Issuing bank. There is no limit for the loan.
75% of the DSC or Term Deposit will be given to the customer.
Mark-up Rate will be fixed 12% per annum.
Following documents will be required
CNIC
Complete information of Business
CIB Report
Application Form
Security Evaluation from authorized Jewelers
BLA Report
IB 6R (Finance Agreement duly signed by the Bank and customer)
IB12 (Promissory Note)
IB 26 (Pledge of security)
IB 28 & 31 (For liquid assets)
HOX7 (Mark-up Rate Agreement)
Any other document as per the requirement of the NBP.
6.3.5 Demand Finance
Demand finance is provided to the customer on demand by him. In NBP it is mostly issued to
the Staff. The others can also take this facility. There is no upper limit for the loan amount. The
loan is issued against some type of property that will be pledged by the bank. In this type of
loan the borowwer will take the whole amount at once.
The loan can be sanctioned for 1 year or for 5 years.
Markup for the Staff is 4%.
Markup for the others is Kiber +2.3%
Following documents will be required for Staff
CNIC
Application Form
IB 6C (Finance Agreement with staff)
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IB12 (Promissory Note)
IB 25 (Hypothecation)
HOX7 (Mark-up Rate Agreement)
Any other document as per the requirement of the NBP.Following documents will be required for others
CNIC
Complete information of Business
CIB Report
Application Form
Security Evaluation from authorized Jewelers
BLA Report IB 6R (Finance Agreement duly signed by the Bank and customer)
IB12 (Promissory Note)
IB 25(Hypothecation)
HOX7 (Mark-up Rate Agreement)
Any other document as per the requirement of the NBP.
6.3.6 Cash Finance
The limit of this type of cash is above 500,000. It is both for long run and short run.
This type of loan is mostly sectioned to big industrials and businessmen.
The main advantage of this type of advance is that the customer can have loan up to his
requirement within the limit that has been sectioned to him. The mark up will be charged on
the amount that has been used by the customer not on the whole, which is the case in Demand
Finance.
Mark Up Rate is KIBER+2.3% Per annum.
Documents Requirement
CIB Report
Application Form
Security Evaluation from authorized Jewelers
BLA Report
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IB 6R (Finance Agreement duly signed by the Bank and customer)
IB12 (Promissory Note)
IB 26 (Pledge of security)
HOX7 (Mark-up Rate Agreement) IB 25 (Hypothecation of Stock)
Any other document as per the requirement of the NBP.
6.3.7 Agriculture Finance
NBP provides Agricultural Finance to solidify faith, commitment and pride of farmers who
produce some of the best agricultural products in the World.
6.4 Agricultural Finance Services:
I Feed the World program, a new product, is introduced by NBP with the aim to help
farmers maximize the per acre production with minimum of required input. Select farms will
be made role models for other farms and farmers to follow, thus helping farmers across
Pakistan to increase production.
6.4.1 Agricultural Credit:
The agricultural financing strategy of NBP is aimed at three main objectives:-
Providing reliable infrastructure for agricultural customers
Help farmers utilize funds efficiently to further develop and achieve better production
Provide farmers an integrated package of credit with supplies of essential inputs,
technical knowledge, and supervision of farming.
Agricultural Credit (Medium Term):
Production and development
Watercourse improvement
Wells
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Farm power
Development loans for tea plantation
Fencing
Solar energy
Equipment for sprinklers
6.4.2 Farm Credit:
NBP also provides the following subsidized with ranges of 3 months to 1 year on a renewal
basis.
Operating loans
Land improvement loans
Equipment loans for purchase of tractors, farm implements or any other equipment
Livestock loans for the purchase, care, and feeding of livestock
6.5 Production Loans:
Production loans are meant for basic inputs of the farm and are short term in nature. Seeds,
fertilizers, sprayers, etc are all covered under this scheme.
The mark up Rate is Fixed 12% annually.
Chanpter No. 7
Financial Position of NBP
7.1 Consolidated Balance Sheet
7.2 Consolidated Profit & Loss AccountDepartment of Business Administration
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7.3 Consolidated Cash Flow Statement
7.4 STATEMENT OF CHANGES IN EQUITY
Six years performance at a Glance
(Rs. in Million)
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Financial Position of NBP
National Bank of PakistanConsolidated Balance SheetAs at December 31st, 2008
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National Bank of PakistanConsolidated Profit & Loss Account
For the year ended December 31st, 2008
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National Bank of PakistanConsolidated Cash Flow Statement
For the period ended December 31st, 2008
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NATIONAL BANK OF PAKISTANSTATEMENT OF CHANGES IN EQUITY
For the year ended December 31, 2008
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08 Area of Study
Work Done By Me at the Branch
On the very first day of my internship at NBP District Courts Mirpur A.K the Manager warmly
welcomed me. He visited me at the different departments