Internship Report

NBP ABDULLAH PUR

Submitted By:

ZAFAR ABBAS RIZVI

(2009-Ag-987)

M.Com (Accounting)

Submitted to:

Sir. YASIN ZIA

INSTITUTE OF BUSINESS MANAGEMENT SCIENCES

UNIVERSITY OF AGRICULTURE

FAISALABAD

ACKNOWLEDGEMENT

First of all I would like to prostrate myself in front of “ALMIGHTY ALLAH” the Omnipotent, the

Omnipresent, the Merciful, the Beneficial who created us among the Muslims and also

bestowed and blessed us with such a lucid intelligence as we could endeavor our services

toward this manuscript. Countless salutations are upon the HOLY PROPHET MUHAMMAD (May

Peace Be upon Him), the fountains of knowledge, who has guided his “Ummah” to seek

knowledge for cradle to grave.

I feel much pleasure to intend my sincerest gratitude, inspiring cooperation and appreciation

to our teacher, Sir. Khalid Latif for his keen interest, expert guidance and invaluable

suggestions during the entire study period and preparation of this manuscript.

I also want to thank our Honorable Parents for their inspiration and moral support, who taught

me the value of hard work by their own example and their encouragement and motivation that

was given to me to carry out the work. Words are lacking to express my humble obligation to

my affectionate and extra caring Parents. I am very grateful for the love and support of my

parents.

Finally, would like to thank all whose direct and indirect support helped me completing my

report in time and attaining this position.

DEDICATION

All My Words Dedicated With Respect and

Reverence Love and Affection to

My Loving Parents, Family & Friends

Whose Love and Prays Always Accompanies Me Like a

Shining Star Whenever I was in Darkness and Enable Me to

Reach This Stage .

Table of Contents

CONTENTS PAGE #EXECUTIVE SUMMARY

1INTERNSHIP PLAN

2INTRODUCTION OF STUDY

3HISTORY AND PROFILE OF NBP

5SERVICES OF NBP

10WORK DONE AT NBP

17SWOT ANALYSIS

32FINANCIAL ANALYSIS

36GENERAL SUGGESTIONS

48

EXECUTIVE SUMMARY

This report highlights the operations and functions of National Bank of Pakistan. NBP act as

financial agent to its customers in return it gets reward for its services in the shape of profit.

Being a Government owned institution it plays an important role in development of society as

well as in development and growth of the economy.

National Bank of Pakistan is one of the leading banks in Pakistan. According to international

standards of banking system it is one of the best bank in South Asian region as well as the bank

of the year 2008. This report explains how different functions of NBP work and what are their

services.

The main purpose of the internship is to gather relevant information to compile internship report

on National Bank of Pakistan Main Branch Islamabad.

Another purpose of this Internship program is to enable the students to use the management

techniques acquired during their courses, and find out the possible solution of management

problems faced by the organization

The report is based on my six week internship program in National Bank of Pakistan. The

methodology reported for collection of data is primary as well as secondary data. The biggest

source of information is my personal experience, observation while working with staff and

having discussion with them. The annual report 2008 also helped me in this regard.

Internship Plan

1st Week

Learn about MAIL TRANSFER

2nd Week

Learn about PENSION PAYMENT

3rd Week

Learn about REMITANCES

4th Week

Learn about CHEQUE PAYMENT

5th Week

Learn about ACCOUNT OPENING

6th Week

Learn ACCOUNT HANDLING

7th Week

Learn about GOVT. RECEIPTS

8th Week

Learn about CLEARING

CHAPTER 1

INTRODUCTION OF STUDY

Scheme of Study

Chapter 1:

An introductory chapter that discuss the introduction of study of report, its Background, Purpose,

Scope, Methodology, limitations and Scheme of the report.

Chapter2:

History of NBP, mission statement, its objectives and functions of National Bank of Pakistan.

Chapter3:

In this chapter the services of NBP were discussed.

Chapoter4:

in this chapter works performed in NBP was discussed

Chapter5:

It tells about Strengths, Weaknesses, Opportunities and Threats of i.e. SWOT analysis of NBP.

Chapter 6:

It consists of comprehensive performance of NBP through past several years. Financial analysis

and those parties, which are interested in financial performance of Bank.

Chapter 7:

In this chapter general suggestions and recommendations has been discussed.

CAHAPTER # 2

HISTORY AND PROFILE OF NBP

HISTORY OF NBP:

The NBP was established vide NBP Ordinance No. XIX of November 9. 1949.

British Govt. devalued its currency in September 1949, India devalued its rupees but Pakistan

did not. It led to a crisis in trading between the two countries and India refused to lift the

Pakistan Jute. To solve this problem i.e. to export jute NBP was established through an

Ordinance of GOP. National Bank of Pakistan maintains its position as Pakistan's premier bank

determined to set higher standards of achievements. It is the major business partner for the

Government of Pakistan with special emphasis on fostering Pakistan's economic growth through

aggressive and balanced lending policies, technologically oriented products and services offered

through its large network of branches locally, internationally and representative offices.

The Bank in 1950 had one subsidiary ‘The Bank of Bahawalpur’ on December4, 1947 by the

former Bahawalpur State.

NBP was undertaking Treasury Operations and Managing Currency Chests or Sub Chests at 57

of its offices where the turnover of the business under the head amounted to Rs.2460 million.

i) Deposits held by NBP constituted about 3.1% of total deposits of all

Pakistani Banks in 1949, which rose to 38% in 1952.

ii) Growth in Deposits was accompanied by increase in Bank portfolio in advances. NBP

lent out to Textile, Yarn, Iron and Steel and played a pioneer role in support of agriculture and

commerce.

iii) NBP advances reached Rs.554.4 million by December 1959, which was one third of the

total schedule bank credit.3

MISSION STATEMENT

“To make the Bank complete and competitive with all international Standard in performing,

quality of, operations, staff, financial strength. And products and services To develop a culture

of excellence in every spare of activity of the bank”

GOALS AND OBJICTIVES

“An organizational objective is the intended goal that prescribes definite scope and suggests

direction to the panning efforts of a organization.”6

GOALS AND OBJICTIVES NBP

“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 offerings.”7

BOARD OF DIRECTORS

Table 1

NAME DISIGNATION

Ali Raza Chairman & President

Dr Waqar Masood Director

Ifthikhar Ali Malik Director

Syed Shafqat Ali Shah Jamoti Director

M Zubair Motiwala Director

Sikandar Hayat Jamali Director

M. Khalid Malik Director

S.M. Rafique SEVP & Sectorary to BD

(Source Annual report 2003)

MANAGEMENT

Management is a distinct process consisting of activities of planning, organizing, actuating and

controlling performed to determine and accomplish stated objectives with the use of human

being and other resources.8

The management has two types.

1 Centralized.

2 Decentralized.

Centralized Management tends to concentrate decision making at the top of the

Organization .

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.

SENIOR MANAGEMENT OF NBP.

Table 2

Masood Karim Sheikh

SEVP & Group Chief, Corporate &

Investment Banking Group and Chief

Financial Officer

S. M. Rafique SEVP & Secretary Board of Directors

Derick CyprianSEVP & Group Chief, Special Assets

& Remedial Management Group

Imam Bakhsh BalochSEVP & Group Chief, Compliance

Group

Shahid Anwar KhanEVP & Group Chief, Commercial &

Retail Banking Group

Nadeem A. DogarEVP & Group Chief, Information

Technology Group

Muhammad Sardar KhawajaEVP & Group Chief, Audit &

Inspection Group

Dr. Asif A. Brohi EVP & Group Chief, Operations Group

Javed MehmoodEVP & Group Chief, Risk Management

Group

Muhammad Nusrat VohraEVP & Group Chief, Treasury

Management Group

Amim Akhtar EVP & PSO to the President

Dr. Mirza Abrar BaigGroup Chief, Human Resources

Management & Administration Group

Uzma BashirGroup Chief,  Organization D&T

Group

(Source www.nbp.com.pk)

REFRENCES

1 Bank Nationalization act 1974.

2 Islamic Banking.

3 www.nbp.com.pk

4 Annual report 1998.

5 Terry and Franklin Principles of Management.

CAHAPTER # 3

SERVICES OF NBP

SERVICES

Services are he outputs of the firm which are in intangible form.

NBP offers the following services to the people.

DEMAND DRAFTS

If you are looking for a safe, speedy and reliable way to transfer money, you can now purchase

NBP’s 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.

SWIFT SYSTEM

The SWIFT system (Society for Worldwide Inter bank Financial Telecommunication) has been

introduced for speedy services in the area of home remittances.  The system has built-in features

of computerized test keys, which eliminates the manual application of tests that often cause delay

in the payment of home remittances.  The SWIFT Center is operational at National Bank of

Pakistan with a universal access number NBP-APKKA.  All NBP overseas branches and

overseas correspondents (over 450) are drawing remittances through SWIFT.

Using the NBP network of branches, you can safely and speedily transfer money for our business

and personal needs.

LETTERS OF CREDIT

NBP is committed to offering its business customers the widest range of options in the area of

money transfer.  If you are a commercial enterprise then our Letter of Credit service is just what

you are looking for. With competitive rates, security, and ease of transaction, NBP Letters of

Credit are the best way to do your business transactions.

TRAVELER'S CHEQUES

Traveler’s cheques are negotiable instruments, and there is no restriction on the period of

validity of the cheques. Rupee traveler’s cheque is available at all 700 branches of NBP. This can

be encashed in all 400 branches of NBP. There is no limit on purchase of this cheque. It is one of

the safest ways for carrying money.

PAY ORDER

NBP provides another reason to transfer your money using our facilities.  NBP pay orders are a

secure and easy way to move your money from one place to another.  And, as usual, NBP

charges for this service are extremely competitive. The charges of NBP are very low all over the

Pakistan. It charges Rs 50/- for NBP account holders on issuing one payment order. And charges

Rs 100/- for NBP non-account holders on issuing one payment order. It charges Rs 25/- for

students on payment of fees of educational institutions. If someone want a duplicate of payment

order they charges Rs 100/- for NBP account holders and Rs 150/- for non account holders.

MAIL TRANSFERS

Move your money safely and quickly using NBP Mail Transfer service.  And NBP also offer the

most competitive rates in the market. They charges Rs 50/- exchange rate and RS 75/- postage

charges on issuing mail transfer.

FOREIGN REMITTANCES:

To facilitate its customers in the area of Home Remittances, National Bank of Pakistan has taken

a number of measures to:

Increase home remittances through the banking system

Meet the SBP directives/instructions for timely and prompt delivery of remittances to the

beneficiaries

COMMERCIAL FINANCE

NBP dedicated team of professionals truly understands the needs of professionals, agriculturists,

large and small business and other segments of the economy.  They are the customer’s best

resource in making NBP’s products and services work for them.

RADE FINANCE OTHER BUSINESS LOANS

There are two types of trade finance.

AGRICULTURAL FINANCE

NBP provides Agricultural Finance to solidify faith, commitment and pride of farmers who

produce some of the best agricultural products in the World.

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.

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

Farm power

Development loans for tea plantation

Fencing

Solar energy

Equipment for sprinklers

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.

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.

 If you require any further information, please do not hesitate to e-mail us.

 CORPORATE FINANCE

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

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

clients’ vision.  This type of long term financing proves the bank’s belief in its client's

capabilities, and its commitment to the country.

Loan Structuring and Syndication:

National Bank’s 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.

Cash Management Services:

With National Bank’s Cash Management Services (in process of being set up), the customer’s

sales collection will be channeled through vast network of NBP branched spread across the

country.  This will enable the customer to manage their company’s 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, you’ll be provided

everything, which takes to manage your cash flow more accurately

INTERNATIONAL BANKING

National Bank of Pakistan is at the forefront of international banking in Pakistan which is proven

by the fact that NBP has its branches in all of the major financial capitals of the world. 

Additionally, we have recently set up the Financial Institution Wing, which is placed under the

Risk Management Group.  The role of the Financial Institution Wing is:-

To effectively manage NBP’s exposure to foreign and domestic correspondence

Manage the monetary aspect of NBP’s relationship with the correspondents to support

trade, treasury and other key business areas, thereby contributing to the bank’s

profitability

Generation of incremental trade-finance business and revenues

 NBP offers:

The lowest rates on exports and other international banking products

Access to different local commercial banks in international banking

Cash and Gold Finance.

Cash and Gold finance means that loan is given against the gold. The gold is mortgaged with

the bank and loan is taken. It is the area of consumer finance. And borrower can take loan for

common use.

Advance salary loan:

This loan is given to those people who are govt servants. They can get a loan up to the salary of

fifteen months.

REFRENCES

1. http/www.nbp.com.pk .services

2. Annual reports 2001, 2002, 2003.

CAHAPTER # 4

WORKS DONE AT ABDULLAH PUR BRANCH

GENERAL BANKING

General banking area is also call the operations group. It consist on following section

ACCOUNTS SECTION

REMITTANCES SECTION

BILLING & GOVERNMENT RECEIPTS

CLEARING

ACCOUNTS SECTION

Accounts Department of the bank can be considered the most important department. This

department is basically concerned with processes and activities of recovering, sorting,

summarizing and reporting data resulting from the whole day transactions of all the departments.

Actually the process of this activity starts from the preparation of all the required vouchers by

different related departments. When these vouchers are prepared, these are posted into

respective computer terminals by the relevant departments. Before merging, a batch list is

printed out by Computer Department and duly checked by the respective departments. After this,

merging stage comes, after which a proof list is printed out. This is the stage, where Accounts

Department starts performing its function. Proof list is checked by the Accounts Department.

This section performs the following functions:

Opening of Accounts

Issuance of checque books

Closing of accounts

Payment of Cheques

Types of accounts

Following types of accounts are open in NBP

Saving account

Current or demand account

Fixed account

Saving account (PLS)  

This type of account is designed to encourage the saving habit of the customer and lead to

a long-term banking or investment relationship.

Bank saving accounts are in the nature of deposits accounts and are not normally

available for drawings. Rates of interest are typically ahead, by a small margin. Saving accounts

with the banking sector represent a very small proportion of total deposits. Customer can make

any withdrawals from type of account. The cash reserve ratio is typically low them the current

account because the withdrawals against this account is very low. The minimum balance for this

account is Rs.100 and interest rate is  

Current or demand account  

These are those deposits, which can be drawn by the depositor at my time by presenting a

cheque to the bank. People deposit their money in this account they gave a ready command on

their account in developed and under developed countries of the world, a very significant part of

money is kept under current or demand account. On this type of account of interest transfer of

cash or by cheque takes place at sight. The cash reserve ratio for this account is very high. The

operating cost for the handling of this type of account is very high because withdrawals are very

regular.  

Fixed account

Fixed accounts are those, which are deposited for a fixed period of time and are repayable

after the expiry of stipulated time to the customers. Those people who have surplus funds and

want to have save investments deposit the amount in the fixed account. The rate of interest given

to depositor varies with the length of deposit, i.e. it is higher for longer period and lowers for

shorter period. The rates on this type of deposits are higher than the saving bank accounts. The

cash reserves against this deposit are very low because there is no fear of withdrawal of a month

before the stipulated of time. No paying books or passes book or cheque book is issued to the

customers against this deposit to the depositors.  

 

The authorities of national bank of Pakistan have the right to revise all these rates of

interest with out any notice to customers generally rates of interest are revised after six months.

The amount deposited for 7 and 30 days short term notice and accumulated for the period

exceeding the limit and the customers can get the interest of the extra days of deposit but in the

case of months and years the customer did not get any additional interest for the exceeding

period of deposit.  

Procedure for Opening an Account

First of all, the customer gets an application from the bank, which requires all information

necessary for opening account and also the documents required. An account can be opened as:

1) An individual account

2) Joint account

3) Proprietorship account

4) Limited company account

5) Partnership

6) Club, society, association and trust

Information Required by the Bank

Name

Address

Telephone No.

Currency of Account

Nature of Business

Country of Residency

Special instructions regarding the account

Signatures

Documentation In case of limited company accounts

Photocopy of National Identity Card of each director

Application form

Copy of company’s memorandum and articles of association

List of directors

Copy of board resolution

Certificate of incorporation

Their signature cards

Certificate to commence business

Documentation In case of Partnership Account

Application form

A copy of partnership deed

Signature cards of partners

Registration certificate copy

A copy of National Identity Card of each partner

Documentation In case of Club, Society, Association or Trust

Application form

Copy of rules

Certified copy of resolution

Signature cards

When the concerned officer is satisfied then he opens the account and gives an account

number that will be used in all communications with the bank in regard to the account and when

making deposits and withdrawals.

Bank has the right not to open an account without assigning any reason or to close the account if

it is not operated in a satisfactory manner by the instructions of the head office.

Issuance of Cheque Book

After opening the account, a cheque book is given to the customer to sign upon which the

number of cheque book issued and the name of the customer is written. Bank issues a cheque

book against requisition. A cheque book may be of 20 (PLS), 25, 50 or 100 leaves (current

A/C). Rs. 4.50 per leaf as excise duty is charged to the customer.

A cheque book register is maintained by the office. In this register, the cheque book inventory,

cheque books issue are recorded.

Loose Cheques

If any customer forgets or leaves his cheque book at his home, which is far away from the

bank or whatever the case may be, the customer applies with the bank for the issuance of loose

cheque by the bank as he does not has his cheque book with him and the money is urgently

required, the this cheque is called the loose cheque.

Bank issues a loose cheque for Rs. 50 as charges for the issuance of the loose cheque plus Rs.

4.50 as excise duty.

Payment of Cheques

It is bank’s primary function to repay the money required for its customer’s account

usually by honoring his cheques. It is a contractual obligation of a banker to honor its

customer’s cheque if the following essential are fulfilled

:

Cheque should be in a proper form

Cheque should not be mutilated

Cheque should be drawn in this particular branch

Cheque should not be damaged

No unauthorized material alterations

Funds must be sufficiently available

Cheque should not be post date or stale

Cheque should be presenting during the banking hours

Procedure for Closing an Account

The customer can close the account. Customer is required to submit an application for closing the

account. Then the account is closed out and his balance is paid to him after deducting the closing charges,

i.e., Rs. 200 and the application is filed in Account Closing File. Remaining leaves of cheques will also be

collected from the customer.

The activities of Accounts Department can further be divided as:

Routing of expenses vouchers

Preparation of daily activity reports

Preparation of weekly and monthly statements

Preparation of statements for tax purpose.

Routing of Expenses

Vouchers of all expenses and material purchases are routed out through this department.

As far as the expenses are concerned, they include the heads of salaries paid to confirmed

employees of bank, wages paid to employees that are on contractual basis, rent of the building,

lease installment and insurance premium paid to insurance company for the insurance of vehicles

and cash in safe and counter. Expenses also include the utility bill, which consists of courier,

electricity, water and gas bills, medical expenses, which are reimbursed.

Preparation of Daily Activity Reports

As far as the daily activity reports of this department are concerned, these include the

following heads:

Voucher collecting of

Loan transactions

General ledger transactions

Foreign currency related transactions

Fixed deposit related transactions

The checking is on daily basis.

Preparation of Daily, Weekly Monthly and Annual Statements

Daily Statements

These statements are sent daily to Main Office Karachi. These are:

Daily Affair Statement, which is same as Balance Sheet

Statement of Income and Expenditure, which includes the details of income generated and

expenses incurred by the bank.

Weekly Statements

These statements are generated on weekly basis for the purpose of sending it to Head

Office. These also include:

Statement of affair

Deposit and advances position of the bank

Monthly Statements

These statements are prepared on monthly basis and also sent to Head Office (Qatar).

These include:

Provisional statement of income and expenses. This statement adjusted for accruals and pre-

payments.

Monthly Balance Sheet and Income Statement

Comparative Statement

Statements for Tax Purpose

The department also prepares two statements for the purpose of paying tax on monthly and

annual basis. These statements are generated for the purpose of submitting to Central Board of

Revenue. These are:

Statement of deduction of income chargeable under the head salary under Section 53

(Tax deducted at source)

Withholding Tax from the payments made to vendors, suppliers and other parties

providing various services. The rate of withholding tax is as follows:

Suppliers 2.5%

For other parties 5%

REMITTANCES SECTION

Remittances can be made through:

Instrumental transfer

Electronic transfer

a. Instrumental Transfer

Instrumental transfers are following

Demand Draft

It is an instrument, which is payable on demand and it is only presentable in the

city/country. When any draft, i.e., an order to pay money, drawn by an office of bank upon

another office of the same bank for a sum of money payable to order on demand, purports to be

issued by or on behalf of the payee, the bank is discharged by the payment in due course.

When a person requires a draft, he should be asked to complete the prescribed application

form in which he should state the amount of the draft, the name of the payee, and the place of

payment. The person to those persons, who have been duly authorized to act on his behalf,

should sign this application form. An advice is prepared and two copies of this advice are sent to

the Head Office. The bank charges 3% withholding tax and commission according to the rate list

(minimum is Rs. 200).

Pay Order

It is an instrument, which is payable in demand and only presentable in city.

Pay order is also called the banker’s cheque drawn upon the issuing bank itself. It is not

negotiable and therefore, bankers tend to cross the instrument “Payee’s account only” to avoid

the possibility of dealing with instruments with forged endorsement. The pay order is issued

favoring individuals, commercial concerns, government departments. On the presentation of pay

order, the bank is liable to pay the amount to the customer. Bank charges excise duty of Rs. 4

and service charges of Rs. 100.

Pay Slip

It is an instrument, which is issued by bank and used for expenditure purposes, i.e.,

electricity bills, maintenance bills, security bills, fixture and fitting, etc.

Call Deposit

Call deposit are not actual deposits of bank. It is in fact the liability of the bank. Call

deposit are ofently prepaid by the bank for contractors

Following steps are involved

1) Depositor fill the credit vouchers for call deposit. He writes the following information

Name of company

Amount

Date

2) He deposits the cash along with filled voucher in the cash department

Encashment of CD

For the encashment of call deposit needed

5 rupee stamp

two signature of customer on the back side of CD

token issued

accountant make entry in the CD register show that it has returned

b. Electronic Transfer

Electronic transfer is of following types

Telegraphic Transfer

It is the message, which is sent from one branch to another on the order of payer to payee

through wire. It is one of the quickest means to transfer fund through the use of

telex/fax/internet or cable. Payment to the beneficiary is affected directly by the drawee office

upon identification or through credit into beneficiary’s bank account. As such remitting office is

not required to issue any instrument payment to the remitter for delivery to the beneficiary.

Issuance and Payment of Telegraphic Transfer Outgoing

Application form is filled by the client in which the name and account number of the

beneficiary, which is to be credited and name of customer is required. For telegraphic transfer,

the payment can be made in case or by cheque or by debiting the customer’s account if he is the

account holder. The amount of Telegraphic Transfer should be written on the form. The amount

is transferred to beneficiary’s account in the other bank. An advice is given to the customer but

application is filled in the record of the bank.

If the beneficiary is not the account holder of DBL, bank credits a Telegraphic Transfer payable

account and when payment is made to the beneficiary, TT payable account is debited.

Issuance and Payment of Telegraphic Transfer Incoming

When a TT is received then an entry is passed in TT incoming register after verifying the test.

When a person comes and wants to encash his TT, bank checks the statements of that person. If

the bank finds any account credited to the person’s account against TT, bank prepares a voucher

for this payment against that TT. The customer then presents that certificate to the cash counter

and collects money.

Mail Transfer

It is the same like TT, but in this type, the message is sent through mail rather than

telex. The procedure is same as TT, but the advice is sent through mail rather than wired.

Traveler’s cheques (TC)

These are also called TC. Traveler’s cheques first came into use century ago. Form of

travel currency giving to the holder .the security of a letter of credit and convenience of a local

currency. In practice, they are acceptable in payments of accounts on board ship, at hotels and in

stories. They are in form of a draft. They should be so signed immediately on issue and place is

provided on the cheque for the signature of the beneficiary on its

BILLING & GOVERNMENT RECEIPTS

This department is performing following functions

Collection of utility bills

Collection of dues of education institution

Payment of salaries

Payment of zakat

Payment of pension

CLEARING

The major function of Clearing Department is to receive the cheques, which are drawn on

some other bank. The customer can get the money in his account at NBP, from the cheques

drawn on another bank. The bank accepts these cheques and collects the amount from that bank

on which cheque is drawn through the Clearing House. Bank charges some commission for this

function.

Procedure for Clearing the Cheques

Pay-in Slip

The customer fills pay-in slip. This slip is just like deposit slip. The cheque number, date,

amount and account number must be written on this slip.

Stamping and Scrutinizing

The officer on receipt of cheques and pay-in slip will stamp the pay-in slip with “cheque

received” and give a portion of slip to customer and the remaining portion is attached with the

original cheque.

The original cheque will be marked with two stamps.

National bank of Pakistan

Clearing Stamp

At the end of day, all cheques are counted and then scrutinized in bank-wise and sent to the

Clearing House.

REFRENCES

1. http/www.nbp.com.pk .services

2. Annual reports 2001, 2002, 2003.

CHAPTER #5

SWOT ANALYSIS

SWOT analysis is one of the most important steps in formulating strategy using the organization

mission as a context, managers assess internal strengths distinctive competencies and weakness

and external opportunities and threats. The goal is to then develop good strategies and exploit

opportunities and strengths neutralize threats and avoid weaknesses.

STRENGTHS

OLDEST INSTITUTION:

NBP in one of the oldest bank of Pakistan and first nationalized bank Hence its customer base is

strength from this plus point as customers have more confidence in the bank. The additional

value services as the privilege for the bank.

ALTERNATE DUTIES IN SBP ABSENCE

The NBP performs additional services for its customers as well as the other bank customer in the

absence of SBP.

MORE DEPOSITS THAN OTHER BANK

NBP has the relative competence in having more deposits than the other bank. This is because of

the confidence the customer have in the bank. The bank being the privileged and oldest bank in

banking sector of Pakistan enjoys this edge over all others, lacking it.

EMPLOYEE BENEFITS

The employers at NBP are offered reasonable monetary benefit. Normally two bonuses are given

Eid-Ul-Fitar & Eid-Ul-Azha. This serves as an additional benefit and competency for the bank

and a source of motivation for the employees.

BROAD NETWORK

The bank has another competency i.e. it has broad-basses network of branches throughout the

country also more than one branch in high productive cities. The customers are provided services

at their nearest possible place to confirm customer satisfied.

WEAKNESSES

LACK OF MARKETING EFFORT:

The bank does not promote its corporate image, services, etc on a competitive way. Hence lacks

far behind in marketing effort .A need for aggressive marketing in there in the era marketing in

now becoming a part of every organization.

NBP UNDER POLITICAL PRESSURE

The strong political hold of some parties and government and their dominance is affecting the

bank in a negative way. They sometime have to provide loan under the pressure, which leads to

uneven and adjusted feeling in the bank employees.

INEFFICIENT COUNTER SERVICES IN THE RUSH HOURS

During the rush hours, the bank is founded out to be a total flop to handle the mob of people

peaking from windows and doors. The bank has deficiency to operate in the stages of rush hours

where the people find them services entangled in a situation of nowhere because they are not

well served.

LACK OF COMPUTERIZED NETWORK

The bank lack the strength of being powered by the network of computers, which have saved

time, energy and would have lessened the mental stress, the employees have currently. This

would add to the strength if it were powered by network of computers.

OPPORTUNITIES

ELECTRONIC BANKING

The world today has become a global village because of advancement in the technologies,

especially in communication sector. More emphasis is now given to avail the modern

technologies to better the performances. NBP can utilize the electronic banking opportunity to

ensure on line banking 24 hours a day. This would give a competitive edge over others.

MICRO FINANCING

Because of the need for micro financing in the market, there are lot of opportunities in this

regard. Other banks have already initiated, now the time has arrived when the NBP must realize

it and take on step to cater an ongoing demand.

THREATS

EMERGENCE OF NEW COMPETITORS

The bank is facing threats with the emergence of new competitors especially in terms of foreign

banks. These foreign banks are equipped with heavy financial power with excellent and

innovative ways of promoting and performing their services. The bank has to take initiative in

this regard or will find itself far back in competition.

POLITICAL PRESSURE BY ELECTED GOVERNMENT

The ongoing shift in power in political arena in the country effects the performance of the bank

has to forward loans to politically powerful persons which create a sense of insecurity and

demoralization in the customer as well as employees.

DOWNSIZING

The bank is currently acting upon the policy of downsizing which threaten the environment of

the bank Employees feel insecurity in doing their jobs and work, hence affecting the over all

performance of employees negatively.

References

1. Daft l Richerd “Management” 4th Edition Pages 254, 256, 269.

2. Kottler Philip “Marketing Management” Millennium Edition Page 76.

3. Fred R. David “Strategic Management Concepts Cases” 7th edition.

CHAPTER # 6

FINANCIAL ANALYSIS

National bank of PakistanStatement of financial position

As on 31 December, 2010

Particulars 2007 2008 2009 2010

Assets        

Cash and balances with treasury banks 9487324910650375

6 115827868 115,442,360

Balances with other banks 37472832 38344608 28405564 30,389,664

Lending to financial institutions 21464600 17128032 19587176 23,025,156

Investments 21078786817082249

1 217642822 301,323,804

Advances 34067710041298686

5 475243431 477,506,564

Operating fixed assets 25922979 24217655 25147192 26,888,226

Deferred tax assets - 3204572 3062271 6,952,666

Other assets 30994965 44550347 59316438 53,496,240

Total Assets 76219359381775832

6 944232762 1,035,024,680

Liabilities        Bills payable 7061902 10219061 10621169 8,006,631

Borrowings from financial institutions 10886063 40458926 45278138 20,103,591

Deposits and other accounts 59190743562493901

6 726464825 832,151,888Liabilities against assets subject to finance lease 33554 25274 42629 106,704

Other liabilities 30869154 39656831 42269623 46,160,038

Deferred tax liabilities 5097831    

  64585593971529910

8 824676384 906,528,852

Net assets 11633765410245921

8 119556378 128,495,828

Represented by      Share capital 8154319 9969751 10763702 13,454,628

Reserves 15772124 19941047 22681707 24,450,244

un-appropriated profit 45344188 52456204 61346510 65,857,438

  69270631 81367002 94791919 103,762,310

surplus on revaluation of assets 47067023 21092216   24,733,518

11633765410245921

8 119556378 128,495,828

National bank of PakistanProfit and loss account

As on 31 December, 2010

Particulars 2007 2008 2009 2010         Mark-up /return/interest earned 50,569,48

160,942,798

77947697

88472134

Mark-up /return/interest expensed 16,940,011

23,884,768

39489649

45,250,476

Net mark-up/interest income 33,629,470

37,058,030

38458048

43,221,658

Provision against non-performing advances 4,723,084 10,593,565

11043469

7,011,046

Provision for diminution in the value of investments

-40,248 373,249 605629 2,954,678

Provision against off balance sheet obligations   4,000 20237 3,965

Bad debts written off directly 39,899   -  

  4,722,735 10,970,814

11669335

9,969,689

Net mark-up/interest income after provisions 28,906,735

26,087,216

26788713

33,251,969

Non mark-up/interest income        

Free, commission and brokerage income 6,781,683 7,925,370 8930391 9,631,5-79

Dividend income 3,263,246 2,878,932 1920336 1,099,493

Income from dealing in foreign currencies 1,042,827 3,969,057 3028165 2,211,139

Gain on sale of securities 2,341,690 395,427 4591894 2,512,363

Unrealized loss on revaluation of investments classified as held for trading

-31,964 1,707 2355 6,730

Other income 147,363 1,245,369 552216 2,171,336

Total non mark-up/interest income 13,544,845

16,415,862

19025357

17,632,640

  42,451,580

42,503,078

45814070

50,884,609

Non-mark-up/interest expense        

Administrative expenses 14,205,911

18,171,198

22571470

26,202,577

Other provisions/write offs 168,027 747,521 620780 148,026

Other charges 17,141 583,361 321647 118,887

Total non mark-up/interest expenses 14,391,07 19,502,08 2351389 26,469,49

9 0 7 0

  28,060,501

23,000,998

22300173

24,415,119

Profit before tax 28,060,501

23,000,998

22300173

24,415,119

Taxation -current 8,311,500 11,762,650

9221513 9,835,048

-Prior year(s) 391,497   -4133282 (939,256)

-Deferred 323,731 -4,220,242

-999904 (2,043,887)

  9,026,728 7,542,408 4088327 6,851,905

Profit after tax 19,033,773

15,458,590

18211846

17,563,214

Un-appropriated profit brought forward 32,074,677

45,344,188

52456204

60,696,510

Transfer from surplus on revaluation of fixed assets

39,007 130,456 123934 117,738

  32,113,684

45,474,644

52580138

60814248

Profit available for Appropriation 51,147,457

60,933,234

70791984

78,377,462

National bank of PakistanStatement of financial position

As on 31 December, 2010

HORIZONTAL ANALYSIS

Particulars 2007 2008 2009 2010

Assets   %  % % %

Cash and balances with treasury banks 100 112 122 122

Balances with other banks 100 102 76 81

Lending to financial institutions 100 80 91 107

Investments 100 81 103 143

Advances 100 121 139 140

Operating fixed assets 100 93 97 104

Deferred tax assets

Other assets 100 144 191 173

Total Assets 100 107 124 136

Liabilities

Bills payable 100 145 150 113

Borrowings from financial institutions 100 372 416 185

Deposits and other accounts 100 106 123 141Liabilities against assets subject to finance lease 100 75 127 318

Other liabilities 100 128 137 150

Deferred tax liabilities 100 0 0 0

  100 111 128 140

Net assets 100 88 103 110

Represented by

Share capital 100 122 132 165

Reserves 100 126 144 155

un-appropriated profit 100 116 135 145

  100 117 137 150

surplus on revaluation of assets 100 45 0 53

100 88 103 110

HORIZONTAL ANALYSIS

COMMENTS

There is a continuous increase trends up to 2009 after that it remain stable, whereas

balance in other bank increase in 2008 and decreases in 2009 &2010.

There is a decreasing trend in the lending to financial institution and in 2010 it is

increasing as compare to last year that is about 16% while investment decreases in 2008

and increasing trends in 2009 and 2010.

There is a increasing trends in advances while operating fixed decrease in 2008 and but

increasing trends in 2009 and 2010.and there is a continuous increasing trends in other

assets.

There is a overall increasing trend in the total assets.

Bill payable and borrowing form bank increase up to 2009 but there is a gradually

decrease in 2010 both liabilities .

There is increasing trend in deposits and other accounts and Liabilities against assets

subject to finance lease is decreasing in 2008 and increasing by 27% & 18% in 2009 and

1010 respectively.

All other liabilities are gradually increasing by 28% 37% 50% respectively in 2008,

2009, 2010.

There are no deffered tax liabilities .

There is decrease in net assets in 2008 and increasing trend in 2009 & 2010.

There is increasing trend in share capital, reserves and un-appropriated profits.

National bank of PakistanStatement of financial position

As on 31 December, 2010VERTICAL ANALYSIS

Particulars 2007 2008 2009 2010

Assets  Cash and balances with treasury banks 12 13 12 11

Balances with other banks 5 5 3 3

Lending to financial institutions 3 2 2 2

Investments 28 21 23 29

Advances 45 51 50 46

Operating fixed assets 3 3 3 3

Deferred tax assets 0 0 1

Other assets 4 5 6 5

Total Assets 100 100 100 100

Liabilities 0 0 0 0

Bills payable 1 1 1 1

Borrowings from financial institutions 1 5 5 2

Deposits and other accounts 78 76 77 80

Liabilities against assets subject to finance lease 0 0 0 0

Other liabilities 4 5 4 4

Deferred tax liabilities 1 0 0 0

  85 87 87 88

Net assets 15 13 13 12

Represented by 0 0 0 0

Share capital 1 1 1 1

Reserves 2 2 2 2

un-appropriated profit 6 6 6 6

 surplus on revaluation of assets 6 3 0 2

15 13 13 12

VERTICAL ANALYSIS

COMMENTS

The change of Share of Cash and balances with treasury banks in total assets is

1%in 2008 & 2010 and there is no change in 2009.there is no change in balance

with other bank in 2008 and decline by 2% in 2009 and 2010.

There share of lending to financial institution is 3% of total assets in 2007 but

decline in 2008, 2009 and 2010 by 1%. The share of investment in total assets is

28% in 2007 and there is a increasing trend in 2008 2009 and 2010.

Advances are 45% of total assets in 2007 bur it has increased in 2008 by 6% and

in 2009 and in 2010 there is a decrease trends. there is no change in the other

operating assets. There is a 1% change in other assets.

The share of bill payable in total liabilities is 1% it remain the same in all years.

Borrowing form financial institution increased up to 2009 and but decline in

2010.there is a increasing trend in deposits with other banks.

Other liabilities increase in 2008 but it has declined by 1% and after that it remain

same.

The share of net assets is 15%, 13%,13%,and 12% respectively in 2007, 2008,

2009 and 2010. there is no change in share capital, reserve and un-appropriated

profit. There is a decreasing trend.in Surplus on revaluation of asset.

National bank of PakistanProfit and loss account

As on 31 December, 2010

HORIZONTAL ANALYSIS (INDEX ANALYSIS)

Particulars 2007 2008 2009 2010  % % % %Mark-up /return/interest earned 100 

121 154

175

Mark-up /return/interest expensed 100 141

233

267

Net mark-up/interest income  100 110

114

129

Provision against non-performing advances 100  224

234

148

Provision for diminution in the value of investments

100  (927)

(1,505)

(7,341)

Provision against off balance sheet obligations  

Bad debts written off directly   - -   100 

232 247

211

Net mark-up/interest income after provisions 100  90

93

115

Non mark-up/interest income  

Free, commission and brokerage income 100  117

132

142

Dividend income 100  88

59

34

Income from dealing in foreign currencies 100  381

290

212

Gain on sale of securities 100  17

196

107

Unrealized loss on revaluation of investments classified as held for trading

100  (5)

(7)

(21)

Other income 100  845

375

1,473

Total non mark-up/interest income 100  121

140

130

  100  100

108

120

Non-mark-up/interest expense  

Administrative expenses 100  128

159

184

Other provisions/write offs 100   445

369

88

Other charges 100  3,403

1,876

694

Total non mark-up/interest expenses 100   136

163

184

    82

79

87

Profit before tax 100   82

79

87

Taxation -current 100  142

111

118

-Prior year(s) 100  -

(1,056)

(240)

-Deferred 100  (1,304)

(309)

(631)

Profit after tax

100   81

96

92

Un-appropriated profit brought forward 100  141

164

189

Transfer from surplus on revaluation of fixed assets

100  334

318

302

  100  142

164

189

Profit available for Appropriation 100  119

138

153

Horizontal analysis Comments

There is increasing trends in interest earned due to which net interest income is also

increaings. There is a increasing trend in net mark up interest after provision.

There is decreasing trend in dividend income. Gain on sale of security decrease in 2008

and increase 96% and 7% respectively in 2009 and 2010.

Other income has significantly increase in 2010 as compare to 2009 and 2008.

Total non mark-up/interest income has increased by 21% 41% and 31% respectively.

Administrative expenses has increased 28% 59%and 84% respectively 2008,2009,2010.

Total non mark-up/interest expenses has increase 36%, 63% and 84% respectively

2008,2009,2010.

Profit before tax has decreased by 18% 21%and 13 % respectively 2008,2009,2010.

and there is a decreasing trend in currend taxation in 2010 as compare to 2008 ,2009.

There is a decreasing trends in profit after tax by 19% 4% and 8% respectively.

There is a increasing trend in Un-appropriated profit brought forward.

There is increasing trend in Profit available for Appropriation it has increased by 19%

38% and 53% respectively.

National bank of PakistanProfit and loss account

As on 31 December, 2010VERTICAL ANALYSIS

Particulars 2007 2008 2009 2010 

Mark-up /return/interest earned 100

100

100

100

Mark-up /return/interest expensed 33

39

51

51

Net mark-up/interest income 67

61

49

49

Provision against non-performing advances 9

17

14

8

Provision for diminution in the value of investments (0)

1

1

3

Provision against off balance sheet obligations -

0

0

0

Bad debts written off directly 0

- -

  9

18

15

11

Net mark-up/interest income after provisions

57 43

34

38

Non mark-up/interest income -

- - -

Free, commission and brokerage income 13

13

11

11

Dividend income 6

5

2

1

Income from dealing in foreign currencies 2

7

4

2

Gain on sale of securities 5

1

6

3

Unrealized loss on revaluation of investments classified as held for trading

(0)

0

0

0

Other income 0

2

1

2

Total non mark-up/interest income 27

27

24

20

  84

70

59

58

Non-mark-up/interest expense -

- - -

Administrative expenses 28

30

29

30

Other provisions/write offs 0

1

1

0

Other charges 0

1

0

0

Total non mark-up/interest expenses 28

32

30

30

  55

38

29

28

Profit before tax 55

38

29

28

Taxation -current 16

19

12

11

-Prior year(s) 1

-

(5)

(1)

-Deferred 1

(7)

(1)

(2)

  18

12

5

8

Profit after tax 38

25

23

20

Un-appropriated profit brought forward 63

74

67

69

Transfer from surplus on revaluation of fixed assets 0

0

0

0

Profit available for Appropriation 101

100

91

89

Vertical analysis

Comments

There is increasing trend in mark up interest expense, and the share of net mark up

income consistently decrease, in 2008 2009 2010.

The share of Net mark-up/interest income after provisions has decreased respectively

The share of dividend income in interest income is consistently decreased.

The gain on sale of securities has decline in 2010 as compare to 2009 and the other

income has increased as compare to last year.

The share of Total non mark-up/interest income gradually decreased

Total non mark up interest /expanse has increased in 2008 as compare to 2007 but

remain constant in 2009 and 2010.

The share of Profit before tax in interest income gradually decreased respectively

The share of profit after tax in interest income gradually decreased respectively

The share of un appropriated profit decreased by 1% 9% 11% respectively in 2008,

2009,and 2010

REFERENCES

1 National Bank of Pakistan (2000, 2003) Annual Report.

2 Block, Stanley B and Hirt Geoffrey A (1994). “Foundations Of Financial Management”

7th edition USA: Michael W Junior, p121-148

3. Van Horne James C and JR Wachowicz M. Jhon” Financial management” 11 editions

4. Meigs “Financial Accounting” 11th edition.

5. R.B Hisrich and Peter P Michael “Entrepreneurship” 5th edition.

6. Simons Harry and Smith J.M “Intermediate Accounting” 5th edition.

7. Watson James “Fundamentals of Accounting” 7th edition.

8. Sober P Parey “Advance accounting” 2nd edition .

9. Tarry Franklin “Principles of Management” 8th edition

11. Vause Bob “The Economist “Guide to analyzing companies”. 3rd edition.

WEBSITE:

www.onlinewbc.gov/docs/finance/fs.ratio/. Html

Chapter # 7

GENERAL SUGGETIONS

NBP is an effectively operating and profit making organization and carrying out its activities

under a specified system of procedure. The main regulatory body is State Bank of Pakistan,

which provides policy guidelines and ensures that the money market operates on sound

professional basis. While the head office specifies the whole procedure of function and

operations. This procedure has been modernized with the passage of time with a view to

streamline the approach and underlying procedure for effective overhauling of its own

capabilities so as to bring them at par with international practices.

Here I am giving some suggestions, which in my view can add some input for efficiency and

better performance of NBP as an organization in genera and City branch in particular.

The recommendations are as follows:

Professional training

NBP staff lacks professionalism. They lack the necessary training to do the job efficiently and

properly. Although staff colleges in all major cities but they are not performing well. For this

purpose these staff colleges should be reorganized and their syllabus should be made in such a

way to help the employee understand the ever changing global economic scenario.

Banking council of Pakistan should also initiate some programs to equip the staff with much

needed professional training.

Performance Appraisal

The manager should strictly monitor the performance of every staff member. All of them should

be awarded according to their performance and result in the shape of bonuses to motivated and

incite them to work more efficiently.

To Over Come Problem of Space and Furniture

In the critical analysis this, problem is discussed. To overcome this problem it is suggested that a

special section should be made inside the branch. Which should only handle the treasury

function, salaries and pensions of federal personnel or the bank should do these functions in the

evening time. Also management should purchase more furniture and arrange them in such a way

which provides maximum space and convenient specially in deposit department and there should

also be convenient sitting place for customers.

Transfer

Transfer is not properly carried out. Some of the employees are continually serving at the same

post. They are simply rotated at the same branch. Therefore it is recommended that evenly

rotation of every employee should take place after every three years in different braches of the

bank.

Utility Bill Charges

Bank gets Rs. 2 to 3 to processes a utility bill, and it is very tire, tough and hard job despite this

working resulting in a loss to then Rs 3 to5 per transaction. These charges should be increased to

RS 10 per bill to enable the branch to cover their handling costs and make some profit.

Credit Card

National bank of Pakistan should start its operation in credit card. These cards are very helpful

for the ordinary customer in general and the business people in particular. To make it mores

secure and to eliminate the misuse of it, the management is required to keep proper security

against the card.

Installing Validator and ATM

Validator machine is used to count the currency notes and its installation will help to eliminate to

counting errors and will save time.

This branch is situated in the City, which is supported to be the hub of business activates. In this

area an auto teller machine (ATM) is the need of the hour businessmen can easily check their

balance in the bank and also with draw their money conveniently.

Technological Advancement

I would like to suggest that at least all the main branches of NBP should be fully computerized in

order to expedite the dealing process among bankers and their customers. Every department

should be provided a computer with adequate training (especially Advances, Deposits and

Foreign Exchange departments).

Daily records should be entered directly into these computers, (instead entering the overall daily

transactions after the banking hours). It will not only reduce transaction time, will increase

accuracy but will also be efficient as well.

Not only it will be economical but will also reduce the extra burden of work of the bank. It will

also help in reducing the use of excessive paper work.

Extended Banking Hours

The banking hours may be extended up to six, as being practiced by HBL opposite to it.

Some of the business community due to law and order situation are now reluctant to keep the

fund in their premises and would want to depart with it. Therefore, City Branch may extend the

night banking to cater to demand of this business community. The branch could also be opened

to cater the requirements of this business community