Upload
idrees-ilyas
View
214
Download
0
Embed Size (px)
Citation preview
7/28/2019 NBP Data
1/62
Chapter no 1
INTRODUCTION OF BANKING
1.1 WHAT IS BANK?A bank is an institution for the custody, loan or exchange of money for sanctioning
credit, for transferring funds by domestic and foreign bills of exchange. It is a pipeline
through which currency moves in to and out of circulation.
As it is clear from the definition of banking, the main activity or function of banking is
borrowing and lending of money with a margin of gain. However, as far as the present
day banking is concerned, there are a number of different banks, set up under specific
different objectives, performing various functions.
1.2 Definition of Bank
Bank is an institution for the keeping, lending and exchanges etc. of money.
Crowther,
The bankers business is to take the debts of other people to offer his own in exchange
and there by create money.
Grower
Bank is dealer in debts his own and of other people
Kent says,
That bank is an organization whose principle operations are concerned with the
accumulation of the money from public for the purpose of advancing to others for
expenditures.
Department of Business Administration
Faculty of Administrative Sciences Kotli1
7/28/2019 NBP Data
2/62
From the point of view of Sayers transferring of bank deposits from one person or
corporation to another giving the secured or unsecured promises of businessmen
repay is called bank
Banking infect is one primitive as human society. When human know the
importance of money as a medium of exchange, the necessity of a controlling
agency or regulating institution was felt naturally.
1.3 History of Banking
The history of banking is traced to as early as 2000BC by Babylonians. The priests in
Greece used to keep money and valuable of the people in temples. These priests act as
financial agents the origin of banking is also traced to earlier Goldsmith. They use to
keep strong safes for stoning the month.
Despite the classical origin, Banking in its modern form and structure started in Britain
in fourteenth century, from the Lombard merchants. Hen they came in England, they
were so powerful and resourceful that even the king also depends upon them for loans.
After this discovery of America gave modern banking a tremendous boost. In 1965 a
number of Goldsmith bankers formed themselves into a corporation known as the bank of
England. In 1700 Bank of England start to issuing the notes and conducting the accounts
for customers. This bank was only authorized, to issue bank notes. After a time the same
process was developed in London that withdrawn from joint stock banks and was referred
to private banks.
Joint stock companies take another step in 1854 and that was the era of corporations. In
1946 the labor govt. nationalized the bank of England. From 1955 the British Banks
Department of Business Administration
Faculty of Administrative Sciences Kotli2
7/28/2019 NBP Data
3/62
made a departure from traditional banking by undertaking the hire purchase finance by
buying industrial plants and machinery. Now the modern Banking was born.
1.3.1 Banking in Indo-Pak Sub Continent
The Hindustani society was quite familiar with banking quite from the beginning. During
the fifty century people were used Hindus as a credit instrument. Loans were given to the
people against personal and other securities such as ornaments goods and immovable
properties and banker and customer has a very cordial relation. They were charging very
high rate of interest per annum against their standing crops.
Agriculture sector plays a vital role in Indian society. Muslim rulers provide substantial
encouragement to the formers by giving them interest free loans and grants in cash on
one hand and allowing them to pay the land revenue in cash or king other hand. Muslims
of 12th have also mentioned some bankers known as mutani-a-scruffs who were acting as
agents to the Govt. to collect revenue as also to change money to Government.
Muhammad toughly was the first king to have introduced taken currency in India. Sher-
shah-sure and the Mughal emperors further streamlined this system. They did not
introduce banks but they revolutionized structure in India.
1.3.2 Emergence of Public Banks in India
In the 17th century when English traders came to India public banks are introduce in
India. The east India Company appointed their own agency houses for his purposes. But
Indian govt. did not take any step towards the establishment of the banks till 1809. After
this the bank of Bengal was introduce then bank of Bombay and in 1843 the bank of
Madras was establish.
Department of Business Administration
Faculty of Administrative Sciences Kotli3
7/28/2019 NBP Data
4/62
Then the
a. Joint stock Bank b. Exchange Bank
c. Imperial Bank of India d. Reserve Bank of India was established.
nation, Quaid-e-Azam inaugurated the state Bank of Pakistan or July 1st, 1948.
The first task which the S.B.P had to attend was the issue of currency notes in Pakistan
and that was issued in October, 1948in the denomination of RS. 1.4
1.3.3 Banking in Pakistan
When Pakistan came into being, the areas that constitute. Pakistan was producing only
food grains and agriculture raw material for indo- Pakistan subcontinent. Pakistan
inherited a weak-banking system at the time of independence 1947. Commercial facilities
are not also good. Only 487 officers received by Pakistan at the time of independence. To
regulate the growth of banking on sound bases government of Pakistan took all possible
measured to attract and dominate the enterprise in Pakistan. A committee was formed to
study the issue of banking system in Pakistan. In 1948 Pakistan decided to establish a
full- fledged central Bank in Pakistan. Consequently the Governor General and father of
the 5.10 and 100. In order to develop sound banking, the banking Companies Act was
also implemented in 1949.
The Korean War in 1950, provided a great boom for Pakistani experts, as a result the
demand for bank advances increased sharply. The separation of East Pakistan and its
results in the form of economic depression caused a lot of difficulties to the Banking
system in Pakistan. Besides this growth, specialized credit and financial institution have
also developed over the year. National Investment Trust (NIT). People finance
Department of Business Administration
Faculty of Administrative Sciences Kotli4
7/28/2019 NBP Data
5/62
corporations equally participating in funds and small business corporations are
contributing remarkable role in economic development of the country.
Banking sector as a economic factor in Pakistan In 1947 January 01, nationalization of
banks has opened a great era of development. Till then to now a day the banks are doing
a great job in economy of Pakistan.
The fact shows that the banking sector has made a tremendous progress and achieved a
phenomenal growth and played a vital role in mobilizing the saving of people in
countrys economy. State Bank of Pakistan established on July 01, 1948 stands at the
apex and is responsible for the operation of the banking system in Pakistan. The other
banks, which from the banking structure in Pakistan, are playing an active role in the
economic development of the country. Here is an effort to summaries the role of banking
in the economy of the country
Saving Mobilization
The three nationalized banks namely,
National Bank of Pakistan
Habib Bank of Pakistan
First Women Bank
And other privatized banks like,
United Bank Limited
Muslim Commercial Bank
Allied Bank limited
Have opened their branches in rural and urban areas to mobilize the saving of the people.
Department of Business Administration
Faculty of Administrative Sciences Kotli5
7/28/2019 NBP Data
6/62
Providing trade activities
The credit institutions collect the saving of the people and make them available for
facilitating the trade activities in both domestic as well as international level.
1.4 Role of State Bank of Pakistan
SBP as the Central Bank control and regulate the money and capital market in the best
interest of the country. It is also the chief instrument of the Government for
implementation of the monitory policies.
Less Reliance on Foreign Trade
A well-planned banking system can easily meet the capital development and
requirements in the country. Thus the company will rely less upon imports and make a
free and open environment for domestic investment projects.
Financing Development for capital Formation
The banks advance short, intermediate and long term loans for financing of public
development and other projects
Assisting in the Development
The commercial banks are the p0rofit generating and seeking enterprises. In order to
maximize the profits, they have the incentives to maximize the loans, and accelerate the
rate of growth and investment in the countries.
Department of Business Administration
Faculty of Administrative Sciences Kotli6
7/28/2019 NBP Data
7/62
1.4.1 The Central Bank
A bank which constitute the apex of monetary and banking structure of its country and
which performs as best as it can in the national economic interest
OR
A banking system in which a single bank has either complete
1.4.2 Functions of Central Bank
1. As the note issuing agency;
2. As the banker to the state;
3. As the bankers bank;
4. As the guardian of the money market, through control of credit;
5. As the lender of the last resort;
6. It undertakes to maintain the external value of the domestic currency;
7. It ensures the stability of the internal value of the currency;
8. It undertakes exchange control operations
9. It fights economic crises and fluctuations and ensures economic stability of the
country.
1.4.3 Changing Scenario for Banks Operating in Pakistan
The banking sector environment in Pakistan has been undergoing a phenomenal change
since 1990. These changes from the major plans of the ongoing economic reforms in
Pakistan. Financial reforms have been all encompassing institutional strengthening,
restructuring of the banks and development finance institutions and improvement in
Department of Business Administration
Faculty of Administrative Sciences Kotli7
7/28/2019 NBP Data
8/62
regulatory framework. Reforms were aimed to instill competition and switch over to
market based and relatively more efficient monetary and credit mechanism.
In the recent past (FY99-01), a tight monetary policy was pursued to contain price
increases and buttress exchange rates so to build exchange reserves.
It was only later, July 2001 that the State Bank of Pakistan began the process of easing of
monetary policy with a percentage point cut in discount rate. This was subsequently
followed by more such reductions, reducing the rate to 7.5% by November2002, a level
left unchanged since. It was for the first time under the market-based mechanism of
interest rate determination that discount rate was cut and interest rates lowered.
The year 2002 witnessed a change in the interest rate environment. Lending rates come
down significantly from 13.4% in December 01 to 10.3% in December02, while lending
spread was reduced to 6.7 %( 8.4%in December01). The rate plunged to 8.3% by end
March 2003 and to 7.09% by May same year. Meanwhile, the spread has come down to
4.68%. With in the banking sector, all banking groups made the cuts in lending rates.
Presently privatized banks average lending rates are the lowest (6.07%) followed by
nationalized banks (6.48%). The spread for both banks categories in also lower than that
of all groups.
In 2002, of their respective investment for the year investment in market treasury bills
were high. National Bank of Pakistan has invested 54%, Muslim Commercial Bank 61%,
Bank Al- Falah 485, Credit Agricole Indosuez 93%, Standard Chartered 88%, American
Express83%, Habib Bank AG Zurich 29%, Bolan Bank 45%, among others.
Along with decline in lending rates, return on Government securities and national saving
Schemes have fallen. Falling returns makes investment in government securities no more
Department of Business Administration
Faculty of Administrative Sciences Kotli8
7/28/2019 NBP Data
9/62
an attractive avenue for investment. This plus an abundance of liquidity with commercial
banks, plus decline in banking spreads is posing a serious challenge to the banking sector.
These developments are likely to affect the sectors profitability, unless the banks
diversify their lending their portfolio lower the stock of non-provisioned non-performing
loans and increase their non-interest income. This change in scenario, where banks are
teeming with liquidity and are faced with a significant decline in their interest income,
has led them to explore new avenue and launch new products.
Consumer finance has emerged `as one of the sectors where commercial banks move
into. This offers banks an opportunity to increase their non-fund income, do their job of
allocating capital in the economy and at the same time has ushered in a phase where
consumer financing would contribute to increase demand, promote production and
generate employment. It would give an impetus to the development of a wide range of
industries including, housing, automobiles, and varied household items.
Department of Business Administration
Faculty of Administrative Sciences Kotli9
7/28/2019 NBP Data
10/62
Chapter no 2
National Bank of Pakistan
2.1 Introduction to National Bank of Pakistan
The National Bank of Pakistan was established on 20th November 1949 under the
National Bank of Pakistan Ordinance No. X1X of 1949, promulgated on 8 th November
1949, describing it as a semi- commercial bank. The bank operates like any other
commercial bank in the country, seeking funds from the depositors and providing credits
for all sectors of the economy including agriculture, industry, trade etc.
2.2 history of national bank of pakistan
The National Bank of Pakistan was established on 20th November 1949 under the
National Bank of Pakistan Ordinance No. X1X of 1949, promulgated on 8 th November
1949, describing it as a semi- commercial bank. The bank operates like any other
commercial bank in the country, seeking funds from the depositors and providing credits
for all sectors of the economy including agriculture, industry, trade etc.
The National Bank has a distinction, in addition, to act as an agent of the Central Bank
and operates treasuries where the State Bank does not any branch. The bank was
nationalized in January 1974 when thebanks were taken over by the Government; the
Bank of Bahawalpur was subsequently merged in the National Bank. National Bank of
Pakistan has not released its annual report as yet. National Bank of Pakistan maintains its
position as Pakistanis premier Bank determined to set higher standards of achievements.
Department of Business Administration
Faculty of Administrative Sciences Kotli10
7/28/2019 NBP Data
11/62
It is the major business partner for the government of Pakistan with special emphasis on
fostering Pakistanis economic growth through aggressive and balanced lending policies
technologically oriented products and services offered through its large network of
branches.
2.3 Management
An Executive Board composed of six Senior Executives of the Bank and the President
who is also the Chief Executive supervises the affairs and business of the Bank.
Board of Directors
The supreme governing body of the National Bank of Pakistan is the Board of Directors.
Governments representatives, Pakistan Banking Council nominee, nominee of corporate
sector and three members from the National Bank of Pakistan are the summary of the
board. The members of the board are
1- Mr. S. Ali Raza Chairman& President
2- Dr. Waqar Masood Khan Director
3- Iftikhar Ali Malik Director
4- Syed Shafaqat Ali Shah Director
5 - Sikandar Hayat Jamali Director
6 - Mr..Zubair Motiwala Director
7 - Mr. Khalid Malik Director
Department of Business Administration
Faculty of Administrative Sciences Kotli11
7/28/2019 NBP Data
12/62
Senior Management of National Bank of Pakistan
1- Masood Karim Shaikh SEVP
2- Shahid Anwer Khan SEVP
3- Dr. Asif A. Brohi SEVP
4- Muhammad Sardar Khawaja SEVP
5- S.M Rafique SEVP
6- Imam Bakhsh Baloch SEVP
7- Ziaullah Khan SEVP
8. Imim Akhter EVP
9. Javed Mahmood EVP
10. M. Nusrat Vohra EVP
11- Nadeem A. Dogar EVP
12- Dr. Mirza Abrar Baig EVP
13- Mrs. Khurshid Maqsood Ali EVP
14- Tahir Yaqoob EVP
15- Mrs. Uzma Bashir Group Chief, Organization
Development and Training group
16- Syed Farhan Ahmed Financial Controller
Department of Business Administration
Faculty of Administrative Sciences Kotli12
7/28/2019 NBP Data
13/62
2. 4 Mission Statement of NBP
To 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
2.5 Function of the National Bank
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.
NBP 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 communities.
Department of Business Administration
Faculty of Administrative Sciences Kotli13
http://www.nbp.com.pk/Services.htmhttp://www.nbp.com.pk/Branch_Nwt.htmhttp://www.nbp.com.pk/Services.htmhttp://www.nbp.com.pk/Branch_Nwt.htm7/28/2019 NBP Data
14/62
NBP shall work to
Meet expectations through Market-based solutions and products.
Reward entrepreneurial efforts.
Create value for all stakeholders.
NBP 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.
NBP have confidence that tomorrow we will be
Leaders in our industry.
An organization maintaining the trust of stakeholders.
An innovative, creative and dynamic institution responding to the changing needs of
the internal.
2.6 Objectives of National Bank of Pakistan
Objectives are the means to reach some beneficial end. No one can achieve any target
before setting it firstly. So in the same way National bank has some objectives, which it is
trying to achieve. Following are some of them:
To maximize profit
To provide all sort of banking services.
Department of Business Administration
Faculty of Administrative Sciences Kotli14
7/28/2019 NBP Data
15/62
To serve the humanity in all parts of the world through its network of branches
throughout the world.
To satisfy customers beyond their expectations by providing personalized
effective & efficient services in best & possible manner.
To serve Pakistan better in order to give socio-economic uplift.
To provide the maximum profit to depositors by achieving sound profitable
growth.
To develop & enhance its system & technology.
To train its staff.
Providing information & advice to its customers.
Providing facilities of foreign currency accounts.
2.7 Services Provided By National Bank of Pakistan
National Bank of Pakistan provides following main services to its customers:
2.7.1 Demand Drafts
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.
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
Department of Business Administration
Faculty of Administrative Sciences Kotli15
7/28/2019 NBP Data
16/62
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.
To View SWIFT Codes of NBP - Click here
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 easy of
transaction, NBP Letters of Credit are the best way to do your business transactions.
Traveler's Cheques
Negotiability: Pak Rupees Travelers Cheques are a negotiable instrument
Validity: There is no restriction on the period of validity
Availability: At 700 branches of NBP all over the country
Encashment: At all 400 branches of NBP
Limitation: No limit on purchase
Safety: NBP Travelers Cheques are the safest way to carry our money
2.7.2 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.
a. Issuance of Pay order
Department of Business Administration
Faculty of Administrative Sciences Kotli16
7/28/2019 NBP Data
17/62
1. for NBP Account Holder Rs. 50/- (Flat)
2. for NBP Non-Account Holder Rs. 100/- (Flat)
Rs. 25/- (Flat) from student for payment of fee favoring educational institution
b. Issuance of duplicate Pay order
1. for NBP Account Holder Rs. 100/- (Flat)
2. for NBP Non-Account Holder Rs. 150/- (Flat)
2.7.3 Mail Transfers
Move your money safely and quickly using NBP Mail Transfer service. And NBP also
offer the most competitive rates in the market.
2.7.4 TELEGRAPHIC TRANSFER (TT)
Generally a mail transfer takes 3 to 4 days to reach its destination. T.T is the fastest mode
of transferring funds from one bank to another bank not in days but in hours or minutes.
In such cases transfer of funds message is passed on through a telegram, to the drawee
branch of the same bank.
When the urgency of situation demands that the payment is to be made immediately then
the message is conveyed to the drawee branch by telephone.
Payment to the beneficiary is effected directly by the drawee office upon identification or
through credit into beneficiary's bank account.
2.7.5 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
Department of Business Administration
Faculty of Administrative Sciences Kotli17
7/28/2019 NBP Data
18/62
Meet the SBP directives/instructions for timely and prompt delivery of remittances to the
beneficiaries
2.7.6 Foreign Remittances
The existing system of home remittances has been revised/significantly improved and
NBPll-trained field functionaries are posted to provide efficient and reliable home
remittance services to nonresident Pakistanis at 18overseas branches of the Bank besides
Pakistan International Bank (UK) Ltd., and Bank Al-Jazira, Saudi Arabia.
Zero Tariffs
NBP is providing home remittance services without any charges.
Strict monitoring of the system is done to ensure the highest possible security.
Special courier services are hired for expeditious delivery of home remittances to the
beneficiaries.
Short Term Investments
NBP now offers excellent rates of profit on all its short-term investment accounts.
Whether you are looking to invest for 3 months or 1 year, NBPs rates of profit are
extremely attractive, along with the security and service only NBP can provide.
2.8 NBP- Relief Fund for Earthquake Victims 2005
The National Bank of Pakistan (NBP) has announced a relief package for the earthquake
victims. The Bank has donated Rs. 35 Million to Presidents Relief fund for earthquake
victims-2005. The employees of the Bank have also voluntary donated one-days basic
salary to the fund. NBP has initiated he process of formulation to special teams at local
level for providing on the spot financial and other aid in earth quake affected areas.
Department of Business Administration
Faculty of Administrative Sciences Kotli18
7/28/2019 NBP Data
19/62
Special arrangements have made for collection of donations at all domestic and overseer
branches.
An Emergency Relief Committee has been formed which is empowered to provide
immediate reliefs in terms of blankets / tents /food / medicines for the NBP employees
and their dependents affected by the earthquake.
Arrangement for collection of donations.
For providing relief to the people in the wake of recent earthquake in Pakistan and to
mobilize resources and proactively rendering a helping hand and the relief efforts to the
people affected by the earth quake, all branches of NBP have opened account of
Presidents Relief fund for earthquake victims 2005 and payments into the aforesaid fund
are accepted by issuing receipts duly signed by Brach officials.
Department of Business Administration
Faculty of Administrative Sciences Kotli19
7/28/2019 NBP Data
20/62
7/28/2019 NBP Data
21/62
transfer will ensure that the remittances reach the mainstream of national economy and
are able to contribute to its growth. This will also assist in reaching the Governments
goal in revitalizing the economic sector, attaining self-reliance and achieving
transparency.
3.3 National Bank of Pakistan and Saibaan
Is set to make your dreams come true
National Bank of Pakistan has announced the launch of a housing scheme to cover
sections of the society with monthly income starting from as low as Rs. 5000/- per month
Branded as NBP Saibaan (Housing for all), the scheme offers a maximum loan of Rs. 10
million in accordance with the debt burden criterion. Loans are available for home
construction, home purchase and home improvement. For home improvement loans the
maximum amount is Rs. 2.00 million. Home construction and home purchase loans can
be repaid over a period of 20 years, whereas the repayment period for home improvement
loan is 15 years.
The scheme was launched at a function in Karachi presided over by Mr. Shoukat Aziz
Pakistans Finance Minister.
Introduction to NBP Saibaan
NBP Saibaan is the most affordable with easy installments house financing
scheme.
Customers can avail now and repay over a 3 to 20 years period.
Department of Business Administration
Faculty of Administrative Sciences Kotli21
7/28/2019 NBP Data
22/62
Home purchase loans up to million.
Home reconstruction loans up to million.
It has flexible mark-up choices and grace period option.
It is convenient structured and programmed with minimum approval and
disbursement timing.
The rules and regulations and documents and other requirements can be had from the
application form of Saibaan that is attached at the end of he report.
3.4 Hierarchical Structure Of Regional Office Kotli
Department of Business Administration
Faculty of Administrative Sciences Kotli22
ChiefManager
Operational
Manage
Administration
Manage
Compliance
Offi
Foreign Ex.
H
Pension Dept. Accounts
Dept.Advances
De t.
Remittance Dept. Clearing
Dept.
Officers dealingExports
tant
7/28/2019 NBP Data
23/62
3.5 Branches of National Bank of Pakistan
3.5.1Overseas Branches
Total branches
18
Representative offices04
Subsidiary01
Joint venture01
3.5.2 Regional Branches
Total branches 1208
Representative offices 29
Subsidiary 04
Department of Business Administration
Faculty of Administrative Sciences Kotli23
Clerical Staff ers Officers Dealing
wi
Officers Dealing
wi
ers
Clerical Staff Postage Officer
7/28/2019 NBP Data
24/62
Chapter no 4
Departments of NBP4.1 Accounts Department
In almost all the banks have their opening and closing departments and this is the
especially function of A/C department. Firstly all types of Accounts which can be opened
in NBP has been described:
Categories of Accounts
Current account
Saving account
Fixed account.
Current Accounts
This type of account is basically used to meet the daily transactions. Current account
provides safety to the customer's money, gives the advantage of paying debts by the
convenient and safe means of sending cheques through the post thus avoiding the trouble
and loss that units in PKR, US$, GBP and DM.
Saving Account
This is the profit-oriented category of the accounts. There is a time limit for drawing
cash; customer cannot draw money before a certain time.
In NBP saving a/c is used as current a/c, & there is no main difference between current &
saving account except profit.
Department of Business Administration
Faculty of Administrative Sciences Kotli24
7/28/2019 NBP Data
25/62
This account can be opened by limited company, Partnership Company, club societies &
associations, joint & sole proprietorship.
Fixed account
These deposits are fixed for particular period. Commercial Banks also pay an interest on
these accounts.
4.2 Cash Dealing Department
Cash department of NBP is given the complete responsibility of handling all receipts &
disbursement of cash, as a result of transaction in both local & foreign currencies & near
cash items such as traveler cheque etc (when they are issued against cash).
As a consequence it is also responsible for the bookkeeping of these transactions & the
safe custody of cash & near cash securities. Following are the major functions of the cash
dealing department of NBP:
Cash receipts (or receive deposits)
Encashment of cheque
Cash department of NBP is a separate close part covered with glasses. No one other than
cash department's employee is allowed to enter into that area.
Cash Receipt
The depositor uses cheque deposit slip (or cash deposit slip) for depositing the amount.
There are two types of cash deposit slip:
One for current account-holders
Department of Business Administration
Faculty of Administrative Sciences Kotli25
7/28/2019 NBP Data
26/62
Other for saving account holders.
Both are in different colours for clear identification. There are two parts of cash
deposit slips:
Counter foil
Adjacent credit voucher
Procedure
The cashier first verifies all the requirements of the cash deposit slip that whether these
are fulfilled or not & verifies the amount written in words & figures. After that he enters
the detail of the receipt in the "Inward Cash Register".
The deposit slip is stamped, cash is received & counter foil is given to the depositor. The
adjacent credit voucher is used for recording & posting purposes.
Encashment of Cheque
Cheque encashment involves following four main steps. These steps are:
Accepting of cheques
Affirmation of signatures
Computer terminal process
Payment of cash
Requirements to Encash a Cheque
Following requirements are essential to encash a cheque.
No Stop Payment Instruction
No stop payment instruction is presented for the account.
Instrument in Writing
Department of Business Administration
Faculty of Administrative Sciences Kotli26
7/28/2019 NBP Data
27/62
It must be in writing. However, there is no bar on writing material but the cheque written
with lead pencil is not honored by the bank in practice because unauthorized alternations
can also easily be made are difficult to detect so a cheque should be either typed or pen
written or printed.
Cheque must not be crossed
The cheque which could be presented to the drawee bank for encashment over the
counter should not be crossed whereas crossed cheques are deposited into account.
The sum of money must be certain
A cheque must contain an order to pay a certain sum of money only amount in figures
and words must be same.
Drawer's Signature
The document in order to be validly called a cheque must bear the drawer's (account
holder) signature or that of his authorized person. At the time of opening an account a
customer provides a banker with a specimen of his signatures, so the signature on the
cheque must tally with that.
Sufficient Balance
Sufficient balance should be present in the customer's (drawer's) account to encash
cheque.
Stop Payment Instructions
If a customer lost his chequebook he would make stop payment instruction to cash
department of NBP. Stop payment instructions can be made in two ways.
Department of Business Administration
Faculty of Administrative Sciences Kotli27
7/28/2019 NBP Data
28/62
Verbal
Written
The customer could inform the cash department on telephone or face to face meeting to
stop payment, but later a written instruction must be made on a prescribed form.
If customer make stop payment instruction to the bank and bank make payment to some
one else after lodgment of stop payment instruction in the computer, Bank would become
liable for this fault.
Acceptance of Cheque
The cash is paid against the cheque of the client. The following points are kept in mind
while receiving the cheque from the client.
Cheque should be drawn on NBP.
It should not be post dated.
It should be a bearer cheque so the word bearer should not be crossed.
Payment is not stopped by the drawer.
Amount in words & figure should be same.
Alternation in date/figure/word require drawer's full signature, with signature on the
cheque.
If signatures are not the same then it is returned back otherwise forwarded to computer
terminal.
Affirmation of Signatures
Department of Business Administration
Faculty of Administrative Sciences Kotli28
7/28/2019 NBP Data
29/62
After receiving the cheque the officer verifies the signature of the account-holder with the
signature on the cheque. If signatures are not the same then it is returned back otherwise
forwarded to computer terminal.
Computer Terminal Process
The cheque is received in computer terminal, where the computer operator checks the
balance of the account holder. The operator also sees whether the stop payment
instructions are received from account holder or not. After considering these two points
computer operator posts the cheque in account holder ledger & returns the cheque back to
the officer.
Payment of Cash
The cheque is cancelled after posting & is returned to cashier. The cashier enters the
cheque in "cash paid register" & pays against the second signature of the receiver on the
back of the cheque.
Nearly everyday in the morning time, cash comes from State Bank of Pakistan through
Brinks (which provide safe cash delivery services). This cash is required by the bank to
meet the current needs of cash.
This cash is received from the Brinks in the presence of an authorized officer & cashier
of bank, with full satisfaction.
4.3 Clearing Department
Almost all commercial banks engage to furnish a wide variety of services to their
customers. Clearing service is one of more significance and important activity of all
commercial banks. The elementary function of clearing department is to facilitate the
customers to with regard to collection of their cheques pertain to other banks, regardless
Department of Business Administration
Faculty of Administrative Sciences Kotli29
7/28/2019 NBP Data
30/62
related with inside or outside the city. The customer can amass money in his account at
NBP from the cheques issued on another bank. First of all, bank accepts the cheque in the
clearing department & afterward on collects these cheque from the bank on which it is
issued through the clearinghouse i.e. SBP.
For instance, an account holder of NBP presents a cheque, which is not issued on NBP
but the, but the person has an account in NBP, in this situation bank accepts this Cheque
in clearing department & subsequent to collecting the amount from that bank on which
cheque is issued, NBP credits the account of customer. This task is called clearing
function.
Clearing
It can be demonstrated as shift of funds from one branch of bank to the other branch of
the identical bank or the dissimilar bank on which the instrument is issued, without
linking cash through State Bank's clearing house or in other words cheques which can not
be cashed at the cash counter of the bank.
Clearing House
This services is directly related with central bank i.e., SBP to the other commercial banks.
SBP is considering a single provider clearing house facility. Many commercial banks are
the members of the clearinghouse. All banks represent their bank in the clearinghouse.
More specifically it can be explained in the following way. A clearinghouse is an
association of commercial banks set up in a given locality for the purpose of interchange
& settlement of credit claims.
As mentioned earlier a representative of each bank represents his bank in the
clearinghouse and represents its cheques on behalf of its banks account holder cheques,
Department of Business Administration
Faculty of Administrative Sciences Kotli30
7/28/2019 NBP Data
31/62
which are not issued on their own bank in the clearinghouse. Clearing house hand over
these cheques to the respective banks on which these cheques are drawn & receives
cheques from other banks, if any. The SBP maintains the accounts of the NBP like other
scheduled banks and debits the account of the drawee bank and credits the presented bank
which is NBP in that case.
Types of Cheque
The NBP Main Branch Kotli deals with such type of cheques. These can be demonstrated
in the following way.
Local cheque
Out standing cheque
In house cheque
Local Cheque
It can be explained in the following way as collection of cheques from the banks which
are the members of the clearinghouse and which are placed within the city.
Out Stading Cheque
It means collection of cheque from the banks, which are positioned outside the city and
presenter bank and the bank on which the cheque is issued are not placed in the same
city.
In House Cheque
Department of Business Administration
Faculty of Administrative Sciences Kotli31
7/28/2019 NBP Data
32/62
It indicates that the house cheques, which are issued on one branch of NBP and presented
to another branch of NBP such cheques, are marked with transfer stamp.
Types of Clearing
Now I would like to explain the dealing of clearance department. Actually it deals with
the two type of the clearance.
Inward clearance
Outward clearance
Inward Clearance
It means cheque issued on NBP and offered to other Banks or handed over to NBP agent
in clearing house. It is an inward clearance for NBP and causes outflow of money to
collecting banks dropping the balance in the clearing account.
Outward Clearance
It is the reciprocal of inward clearance. It reveals cheque which is issued on other, bank
and presented to NBP are known as outward clearance for NBP and causes inflow of
money from paying bank into the clearing account maintained with the clearing house,
rising the balance in the clearing account.
However outward clearing may be due to:
Local clearing
Outstation clearing
As mentioned earlier surplus of outward clearing over inward clearing delivers a net
increment in the clearing account balance. Surplus of inward clearing over outward
Clearing delivers a net decrease in the clearing account balance. The first situation is
Department of Business Administration
Faculty of Administrative Sciences Kotli32
7/28/2019 NBP Data
33/62
considered as favorable clearing & the second situation is consider as unfavorable
clearing. The balance of incoming & outgoing clearing should be nil (zero).
Probable Instruments at Clearing Department
I found the following instruments which are exploited in the clearing department:
Cheques
Demand drafts
Pay orders
Collection of Cheques
First of all the Pay-in-slip is verified then treated as inward collection or outward
collection. Subsequent to making the entry the counter foil is reverted to the client.
Inward Bills for Collection (IBC)
It indicates that the cheque received & drawn on NBP for payment. Inward bills for
collection depicts those cheques received from another branch for clearing. First of all,
these cheques are cleared and then departed to the account of branch account e.g. cheque
deposited in Kotli branch for UBL, Kotli branch, will receive in Kotli branch at first then
issued for clearing in UBL.
Outward Bills for Collection: (OBC)
It is the reciprocal of inward bills for collection. It indicates that outward collection
means the cheque of other banks that is drawn on bank & deposited in other bank.
Department of Business Administration
Faculty of Administrative Sciences Kotli33
7/28/2019 NBP Data
34/62
For instance, Z, who is in Hajira and payment? Now seller will deposit, the cheque
deposit slip in his bank, UBL Hajira. UBL will prepare a draft & letter & send it to NBP
Main branch, Kotli. NBP Main Branch; Kotli will debit his customer Z's a/c & credit
clearing. This draft will be then return back to Hajira through clearing where credit will
be given to customer & debit to clearing house. Within 3 days payment should be
received otherwise evoke will be send to the payer to pay amount either through courier
service or TCS etc. If payment is not received within 15 days then evoke should be send
after 8 days of 15 days limit.
Stamping
Now I would like to spotlight the following stamps, which are exploited for IBC &
OBC functions.
Stamp of OBC (or IBC) whichever is the case.
Crossing stamp.
Payee's a/c will be credited.
First two stamps are plotted on front side of cheque whereas the 3rd stamp is plotted on
the backside of the cheque.
Treatment is enrolled in the register of OBC (or IBC) and from the register the no. Of
OBC (or IBC) is given on the cheque.
Procedure of Clearing the Cheques
Pay in Slip
This pay slip that is filled by the customer. It is identical with deposit slip. It includes
cheque number, date, amount, & account number.
Department of Business Administration
Faculty of Administrative Sciences Kotli34
7/28/2019 NBP Data
35/62
Stamping and Scrutinizing
When the officer receives the pay slip then he will stamp it with Cheque Received and
furnishes a fraction of slip to customer and the rest fraction is close with the creative
cheque. The creative cheque will manifest with two stamps:
NBP
Clearing Stamp
Remember before 12:30 P.M all cheques are counted and then secused in bank wise and
communicate to clearing house.
Stamping Of The Instruments
The related officer who conducts secused of the instruments receives the stamped
instrument at the counter of the bank. If no mistakes are noted then the officer should
sign the pay-in-slip and its counter foil.
The counter-foil & the pay-in-slip should then be stamped in the following manner.
The clearing stamp bearing the date of the next working day should be affixed
on the face of the cheques.
Special crossing stamp containing "the name & branch name of bank" should
also be affixed on the face of the cheques.
The third necessary stamp indicates the paying bank to "credit payee's account".
It is the conformation of outward clearing.
If "payee's account only" is mentioned on the cheque, the payee should sign on
the back of cheque for endorsement of cheque to another person.
Forms Of Clearing
Department of Business Administration
Faculty of Administrative Sciences Kotli35
7/28/2019 NBP Data
36/62
Local clearing
Collection
Local Clearing
It means mean collection of cheques from the banks, which are member of clearinghouse
within the city. Banks take responsibility by endorsing these cheques. Explore out these
cheques bank wise; prepare the settlement sheet bearing the name of the bank and
number of cheques with total amounts.
Now I would like to explain the time for presenting the cheques in clearinghouse. If
before that time cheques are not sent to clearing house. Then they will be postponed for
next day. Because on the specific time gate of clearing house has been shutdown and no
one can insert into it and next Islamabad t day bank presents cheques in clearing house.
However, cheque sent to clearing department must be debited to SBP and credited to
customer account, and when bank receive back these cheques then debits customer and
credits SBP.
Collection
It is a kind cheque clearing facility enjoyed by those banks that are not the member-
clearing house. The bank present or receives cheques through collection.
Items to Be Checked On Clearing Cheques
It indicates that when cheques are received from the clearing demands that following
items should be checked instantly:
Cross stamp
Clearing stamp
Department of Business Administration
Faculty of Administrative Sciences Kotli36
7/28/2019 NBP Data
37/62
Date (which should be current)
Endorsement stamp on backside
Amount in figures and words should be matched
Cheque Returned
As name indicate that when the bank returns cheque when it is received from clearing.
This may be due to or more than one reasons. These reasons are mentioned on the slip,
which is then affiliated with the returned cheque by marking (x) against that reason for
which cheque is return.
This slip is called "cheque returned slip" and contains following items:
Cheque no.,
Amount of cheque,
Name of a person who has drawn it and
Date
This cheque return slip contains the list of following reasons:
Refer to drawer
Not arranged for
Payment stopped by drawer
Exceeds arrangement
Amount in words and figures differs
Drawer's signature incomplete/required
Drawer's signature differs
Department of Business Administration
Faculty of Administrative Sciences Kotli37
7/28/2019 NBP Data
38/62
Bank discharge irregular
Cheque is mutilated
Cheque post dated/out of date
Alteration in date/words/figures requires signature
Goods not yet received please present again
Payees endorsement required
Payees endorsement irregular
Endorsement requires Bank's guarantee/confirmation
Clearing bank's endorsement required
Clearing stamp required
Payee's discharge on revenue stamp required
Advice not received
Crossed cheque must be presented through a bank
Account closed
Effects not cleared please present again
4.4 Remittance Department
Remittance is the monitory transfer from one place to another place or from one country
to another country to fulfill the requirements of the customers by the order of the
customer.
Category of Remittance
1. Local Remittance
Department of Business Administration
Faculty of Administrative Sciences Kotli38
7/28/2019 NBP Data
39/62
2. Foreign Remittance
Local Remittance
Local remittance section deals with remittance (incoming and outgoing but only in local
i.e. Pakistan rupee and within Pakistan.
Local remittance include the following eight functions in NBP:
a) Transfer through pay order
b) Transfer through demand draft
c) Telegraphic transfer
d) Issuing of SBP cheques
e) Mail transfer
f) Local/internal transfer
g) Preparation of balance certificates
a) Transfer through Pay Order
Pay order is also called as cashier order, manager's cheque, & banker's cheque, & cheque
on services.
Pay order is an instrument through which payment can be made from one bank to another
bank within city.
In case of NBP, pay orders are also used, instead of demand drafts; outside the city where
NBP does not has its branch. So, we can say except Karachi for all other cities pay orders
are issued by NBP.
B) Transfer through Demand Draft
Department of Business Administration
Faculty of Administrative Sciences Kotli39
7/28/2019 NBP Data
40/62
It has been defined as an unconditional order in writing addressed by one person to
another, signed by the person giving it (the drawer), and requiring the person to whom it
is addressed (the drawee) to pay on demand or at a fixed or determinable future time a
certain sum of money to or to the order of, a specified person (the payee) or to the bearer.
Demand Draft (DD)
Demand draft is an instrument which is payable on demand, & through which funds are
transferred outside the city or country, where NBP has its branch.
Main Purpose
The main & important purpose of issuing the demand draft from the bank is that
environment of our country is not too good to carry cash from one place to another. So
demand draft helps us to overcome this situation to some extent because it avoids
carrying cash amount with us.
C) Telegraphic transfer (TT)
Generally a mail transfer takes 3 to 4 days to reach its destination. T.T is the fastest mode
of transferring funds from one bank to another bank not in days but in hours or minutes.
In such cases transfer of funds message is passed on through a telegram, to the drawee
branch of the same bank.
When the urgency of situation demands that the payment is to be made immediately then
the message is conveyed to the drawee branch by telephone.
Payment to the beneficiary is effected directly by the drawee office upon identification or
through credit into beneficiary's bank account.
d) SBP Cheques
Department of Business Administration
Faculty of Administrative Sciences Kotli40
7/28/2019 NBP Data
41/62
In this country where law and order situation is getting worse and worse every day, SBP
cheque is another way to ensure safety in carrying the amount from one place to other.
SBP cheques are issued on the request of clients of bank who do not want to carry cash.
On the written request of the account holder, account officer is asked to issue SBP
cheque.
SBP cheques are issued in favour of individuals and beneficiary. Bank receives the
cheque on the day of issuance. SBP cheques are allowed within city or clearinghouse.
e) Mail Transfer (MT)
This is an order to pay money, drawn by one branch of a bank upon another branch of the
same bank or Mail transfer is the transfer of funds from one branch to another branch of
the same bank within Pakistan.
If such balance is transferred by means of mail, it is described as mail transfer remittance.
f) Local/Internal Transfer (LT)
Local or Internal transfer is the transfer of funds from one account to another account
within the same branch i.e., Main branch, Lahore.
g) Preparation of Balance Certificates
It is also the duty of remittance department to prepare the balance certificates of their
clients. These certificates are prepared on monthly basis. These certificates show the
balance (or amount) of the clients in their account, & can also be prepared on the request
of the client when he needs it as early as possible.
Department of Business Administration
Faculty of Administrative Sciences Kotli41
7/28/2019 NBP Data
42/62
These certificates of balance are then sent to the clients on the address of their offices or
on residence address. So that they remain aware of the position of their accounts in the
bank.
Foreign Remittances
Foreign Remittances section deals with remittances (incoming and outgoing) but in
foreign currency and outside Pakistan.
Funds are transferred into four types of currencies by Remittance department.
i. USD ii. GBP iii. JPY iv. DEM
This section of foreign remittance is divided into two parts:
1. Outgoing FCY Remittance
2. Incoming FCY Remittance
These terms outgoing & incoming remittance means sale & purchase of foreign exchange
in the above four currencies.
4.5 Foreign Exchange Department
Foreign exchange department of NBP deals in four currencies namely;
1) US$ (U.S. Dollar),
2) GBP (Great Britain Pounds)
3) DEM (German Mark)
4) YEN (Japanese YEN)
As fluctuations in PAK. Rupees are very frequent so accounts in foreign currency are
profitable for customers.
Functions
This department performs the following functions:
Department of Business Administration
Faculty of Administrative Sciences Kotli42
7/28/2019 NBP Data
43/62
1. Spot sell 2. Spot purchase 3. Forward sell
4. Forward purchase 5. Deposit 6. Clearing
1. Spot sell
Sale of Dollars on daily basis is called a spot sell.
2. Spot purchase
When dollars are purchase for fulfilling the daily needs of the payment, this process is
called a spot purchase.
3. Forward sell
If the payment is received in advance then these dollars will be sold at current rate, this is
called forward sell.
4. Forward purchase
When dollars are required in future, then these are purchase at current rate for future
purposes. This is called a forward purchase.
5. Deposit
In this case, $100,000 comes in any customers account of NBP, the bank is not allowed
to keep extra dollar amount (or foreign currency) with them but to sell them to SBP.
So these dollars (or any foreign currency) will be sold and forward booking will be made
for that customer, in case he demands for his money. So whenever the customer demands
his money it will be given to him at current rate (if need in Pak rupee).
6. Clearing
Department of Business Administration
Faculty of Administrative Sciences Kotli43
7/28/2019 NBP Data
44/62
Foreign exchange department also performs this function. We can define clearing that
transfer of funds from one branch of bank to the other branch of same bank or the other
bank on which the instrument is drawn without involving cash, through the State Bank of
Pakistanis clearing house.
Whenever there is need of sale or purchase of dollars e.g. in import, export, credit, cash,
or remittance department they are reported under foreign exchange department & its
commission is given to the credit department. Banks are not allowed to keep dollars with
them but sell them. So purchase the dollars only, when they are needed.
Head office is responsible for sale or purchase of currencies, in the market at market rate.
4.6 Export Department
There is no single country in the world, which is self-sufficient. In order to survive in the
international market and fulfill its needs a country needs foreign exchange. Export is a
major source of earning foreign exchange. Contrary to imports, every country wants to
increase its exports because the foreign exchange earned through exports can help in
meeting the other need of the country.
As exports play a major role in the economic development of a country, governments
take major steps to boost the export of the country. If country has more exports than
imports, then the balance of payments is favorable or surplus. On the other hand if the
exports are less than imports then the balance of payment is unfavorable or deficit.
Conditions for Exporter
For export purpose following requirements are necessary.
* Export registration fee is Rs.1500
Department of Business Administration
Faculty of Administrative Sciences Kotli44
7/28/2019 NBP Data
45/62
* Exporter has to fill E-Form and to attach invoice with it.
* Realization Certificate for rebate purpose.
* Test Agrees: This stamp should be on L/C which is received by exporter'sbank
otherwise L/c will not be accepted by NBP as Negotiating/Remitting Bank.
The bank hands over the L/C to the exporter after receiving the L/C from the L/C
advising bank. The exporter prepares the goods according to the instructions of the L/C.
When the shipment is ready then the documents are prepared according to the
instructions as mentioned in the L/C.
The main documents L/C are:
1. Bill of exchange 2. Airway bill/bill of lading
3. Invoice performs 4. E-Form
5. Form of country of origin 6. Packing list
7. Insurance (if any)
4.7 Credit Department
In NBP the credit activities are played under a separate department. So the main activities
of this department are:
a) To give credit to customers
b) Closely monitor the development in different accounts
c) Reporting to SBP & head office.
What is credit?
Department of Business Administration
Faculty of Administrative Sciences Kotli45
7/28/2019 NBP Data
46/62
"Credit means any arrangement, however named or described, whereby a bank (the
issuing Bank) acting at the request and on the instructions of a customer (the applicant),
or on its own behalf".
i) It is to make a payment to or to the order of a third party (the beneficiary) or is to
accept and pay bills of exchange (drafts) drawn by the beneficiary.
ii) A authorizes another bank to effect such payment, or to accept and pay such bills
of exchange (draft).
Types of Credit Facilities
The types of credit facilities offered to customer are of two basic kinds.
1. Funded facilities/cash credit
2. Non funded facilities/Non cash credits
1. Cash Credits
Cash credits are those where the bank actually advances money against further
repayment. These are also known as funded facilities.
2. Non-Cash Credits
Non-cash credit are those where the bank substitutes its own credit for that of its
customer e.g.
* Opening import letters
* Issuance of bank guarantee
1. CASH CREDITS
Cash credits or funded facilities are of the following types.
Department of Business Administration
Faculty of Administrative Sciences Kotli46
7/28/2019 NBP Data
47/62
a) Running finance/overdraft
b) Demand finance
c) Term finance
d) Discount/purchase export bills
a) Running Finance / Over Draft
Running finance is a credit facility established usually in local currency for a specified
period of time at fluctuating rates of mark up (interest) whereby the customer is allowed
to overdraw his account to an agreed amount.
Mark up is charged on the outstanding balance.
b) Demand Finance
Demand finance is a credit facility, which is different from running finance in the sense
that a fixed amount is credited to the customers account, which can be drawn by
customer at any time at lump sum. Interest or mark up is charged on the full amount
whether it is utilized or not.
c) Term Finance
Terms loan is provided for a fixed period of time. Time period for term finance is more
than one year and mark up rate depends upon the period-involved customer credit
worthiness and SBP regulation.
d) Discount / Purchase of Export Bills
Lahore Main branch of NBP provides loan against export documents by purchasing or
discounting them for its customers.
The Bank charges mark up on the credit amount till it is reimbursed by importer's bank.
2. Non Cash Credits
Department of Business Administration
Faculty of Administrative Sciences Kotli47
7/28/2019 NBP Data
48/62
Non-cash credit or non-funded facilities are described below:
a) Letter of credit (L/C)
b) Guarantees
a) Letter of Credits (L/C)
From the lending or risk point of view, L/Cs are the facilities involving the substitution of
the bank's credit for that of the customer whereby they takes on the commitment to pay a
third party subject only to the terms and conditions of the L/Cs can be divided into two
categories.
Sight L/Cs
.Usance L/Cs
Chapter no 5
Activities performed By Me at the Bank
What so ever I was to perform at the bank is given as follows?
5.1 Accounts Department
In this department, I gain the practical knowledge about opening account. This
department deals with opening current and saving account for its customers and all
Department of Business Administration
Faculty of Administrative Sciences Kotli48
7/28/2019 NBP Data
49/62
matters regarding thereof. The customers opening current/saving accounts can be
categorized as following:
Individual, Firm, Company, Trust, Staff, &Others
5.2 Opening an Account
In order to open an account, first of all the customer has to fill a form prescribed by the
bank. The person is required to bring some reference or introduction for opening the
account. Introducer may be the person who has any account with NBP.
Some important information regarding introducer e.g. the name and account number of
the introducer is written on the space provided on the specimen signature card. Then in
order to find out whether he is a true introducer or not, a letter is sent to him thanking him
for this introduction so that anything wrong may come into notice.
There are different requirements for different types of accounts and accountholders.
5.3 Deposits
The procedure undertaken upon receiving deposits from the customer is as follows:
i) Examining the deposit slip to ensure that the name and the account numbers are
clearly indicated.
ii)Counting the cash/cheques and agree the total with the amount on the deposit slip.
iii) After that the payin slip is validated for cash transaction / transfer / clearing
transfer as appropriate before the counterfoil is handed over to the customer.
iv) Cheques signed by directors, partners or employees of a company, drawn in
favour of themselves and credited in their account in the bank are to be scrutinized.
5.4 Withdrawals
Department of Business Administration
Faculty of Administrative Sciences Kotli49
7/28/2019 NBP Data
50/62
Amount can be withdrawn by cheques. The withdrawals can be made only at the branch
where the account is maintained.
All cash withdrawals are authorized by the officer under his full signature. No third party
withdrawal is permitted.
In current account, the bank does not offer any interest. We can deposit or withdraw any
amount during banking hours.
5.5 Issuance of Cheque Book
The account older requests for the new chequebook by presenting the requisition slip
along with the authority letter to the concerned office. His signatures are verified before
giving him a new chequebook. The presence of the account older is compulsory to get a
new chequebook. But if he sends a third person to get his chequebook then the procedure
is as follows:
i) An authority letter is given to the third party by the account holder.
ii)The account holder verifies the signature of the third person on that authority letter.
iii) The bank officer gets the signature of that third person to confirm whether
he is the same to whom the accountholder has sent.
iv) The bank issues the new chequebook and authority letter is kept by the bank.
5.6 Clearing Department
In this department, I have worked for two weeks. Main branch receives the cheques from
all of its branches and makes the lots of these cheques again. Main branch send these
cheques to the State Bank of Pakistan where a clearinghouse exists. In this clearing house
the representatives receive their cheques and go back to their bank's main branch. Then
Department of Business Administration
Faculty of Administrative Sciences Kotli50
7/28/2019 NBP Data
51/62
main branch sends these cheques to their relevant branches where the validity of these
cheques are verified and the accounts of the relevant clients are affected.
The statement of clearing was submitted before 1.00 P.M. daily. The whole procedure of
clearing is completed within 2 days.
5.7 Remittances Department
I worked in this department for one week. This department deals in transfer of money
from one place to another or country by:
1. Demand Drafts
2. Mail transfer
3. Telegraphic Transfer
In this department internees are advised only to observe the working of transfer of money
from one place to another place or country by the above modes of transferring money.
During my stay in this department I observed that how demands draft was issued. The
procedure is as follow.
First the bank receives a written request from the customer to issue a bank draft. The
written request is either in banks standard form or separate paper signed by the applicant
enclosed with cash or cheque covering the amount of the draft and other charges of the
bank.
While issuing a bank draft it is necessary that the draft should be free from alternations.
All the details must be written clearly in ink. After issuance a demand draft it is handed
over to the applicant and its advice containing the particulars of the draft is sent to drawer
branch with its necessary information and payment of the draft is made on its
presentation.
Department of Business Administration
Faculty of Administrative Sciences Kotli51
7/28/2019 NBP Data
52/62
5.8 Bills Collection Department
I spent one week of my training in bills collection department. Here I collected utility
bills like electricity, water and telephone etc.
Chapter no 6
Financial performance
6.1 Balance Sheet
BALANCE SHEET
As on September 30th, 2008
Department of Business Administration
Faculty of Administrative Sciences Kotli52
7/28/2019 NBP Data
53/62
6.2 Profit and Loss Statement
PROFITAND LOSS STATEMENT
For the year ended September 30th, 2008
Department of Business Administration
Faculty of Administrative Sciences Kotli
Rs. In000s
Rs. In000s
Assets 2007 2008Cash and balance with other banks 71,196,956 78,625,227
Balances with other banks 31,019,330 40,641,679Lending to financial institutions 16,282,942 23,012,732Investments 156,985,378 139,946,995Advances 268,838,779 316,110,406Other assets 23,941,056 27,113,698Operating fixed assets 9,454,365 9,681,974Deferred tax assets - -
Total assets 577,718,806
635,132,711
LiabilitiesBills payable 1,741,156 10,605,663Borrowing from financial institutions 8,756,847 11,704,079
Deposits and other accounts 463,426,602 501,872,243Liabilities against assets 16,629 13,235Other liabilities 23,496,910 26,596,300Deferred tax liabilities 4,462,718 2,387,073Total liabilities 501,900,86
2553,178,59
3
Net assets 758,167,944
81,954,118
Share capital 12,178,495 7,090,712Reserves 12,354,256 13,879,260Unappropriated profit 19,372,523 32,074,677
Total 37,635,706 53,044,649Surplus on revaluation of assets 38,182,238 28,909,469Total 75,817,944 81,954,118
53
7/28/2019 NBP Data
54/62
Particular Rs. In000s
Rs. In000s
2008 2007Net markup /interest income 30,153,716 23,370,897
Net non-markup /interestincome
12,162,892 9,392,351
Total income 42,316,608 32,763,248
Operating expense
Administrative expense 13,433,441 11,221,789
Other provisions (17,283) 198,298
Other charges 208,327 63,206
Total operating expense 13,634,485 11,483,293
Profit before tax 9,008,708 12,025,158
Net taxes payable 4,810,605 5,782,229
Profit after tax 4,19,103 6,242,929
Profit available forappropriation
36,394,869 23,594,628
Basic Earning per share 24.01 17.92
Diluted Earning per share 24.01 17.92
6.3 Horizontal Analysis of Profit & Loss Statement
Department of Business Administration
Faculty of Administrative Sciences Kotli54
7/28/2019 NBP Data
55/62
HORIZONTAL ANALYSIS
PROFIT & LOSS STATEMENT
FORTHE SEP 30TH, 2008
Income & Expenditure 2008(Rs.000)
2007(Rs.000)
Increase/Decrease
%agechange
Markup/Interest earned 43,788,628 33,692,665 10,095,963
30.0
Fee Commission andBrokerage income
6,144,628 4,926,604 1,218,024 24.76
Dividend income 2,891,755 1,718,478 1,173,277 68.2Income from Dealings 1,333,840 1,205,638 128,202 252Other income 627,618 177,839 449,779 31.31
TOTAL 54,786,469
41,721,224
1,306,524
100
OPERATING EXPENDITUREInterest Expense 13,634,912 10,321,768 3,313,144 32Provision For diminution inthe value of investment
709,461 (245,881) (463,580) (188)
Profit against non-performing loans andadvances
3,075,723 2,446,739 628,984 25
Bad debts written offdirectly
5,284 23,069 (17,785) (77)
Administrative expenses 13,443,441 11,221,789 2,221,652 19
Other provisions (17,283) 198,298 (181,015) (91.2)Other charges 208,327 63,206 145,121 229Taxes 9,288,231 6,346,584 2,941,647 46
Total 39,829,174
30,375,572
8,588,168
28.27
6.4 Horizontal Analysis of Balance Sheet
HORIZONTAL ANALYSIS
Department of Business Administration
Faculty of Administrative Sciences Kotli55
7/28/2019 NBP Data
56/62
7/28/2019 NBP Data
57/62
53
Total 81,954,118
75,817,944
6,135,814
8.09
Suggestions
The role of the banks is economic development of a country is very vital. Basically banks
remove the deficiency of capital by mobilizing savings and investment. A sound banking
system integrators the small and scattered savings of he community and makes them
available for productive purposes. National Bank of Pakistan. Is playing an important role
in mobilizing and allocating finances from and to different industrial and commercial
sectors. The bank is acting as a bridge between savers and he investors. Without a
commercial bank like National Bank, money saved would remain idle and the sectors
short of funds would remain unfed. This would stray the economic activities of life and
enthusiasm although in this report only important factions have been emphasized, the
agency and he utility services e provided the National Bank are also of significant
important. The main objection is to provide to their people, which will save their time
and money.
Department of Business Administration
Faculty of Administrative Sciences Kotli57
7/28/2019 NBP Data
58/62
Recommendations
During their internship period at National bank I have come across certain aspects, which
need some attention and improvement. I would like to give a few suggestions and
recommendations which might assist in the advancement and achievement of the bank.
Computerization in Banking.
National Bank has computerized its accounts but it has computerize its daily counter
services. Computerization its accounts but it has not computerize its daily counter
services. Computerization of all the branches may be a difficult task, but it could result in
a lot of saving for the bank. National Bank has computerized its accounts but it has not
computerized its daily counter services. Computerization of all the branches may be a
difficult task, but it could result in a lot of saving for the bank.
Evening Bank
In big cities and especially the branches located in commercial areas should extend
evening banking services to its clients as safe keeping of money after close of business
house not free of danger.
Proper Safeguarding of bank Branches
Department of Business Administration
Faculty of Administrative Sciences Kotli58
7/28/2019 NBP Data
59/62
In these days many branches of various banks have been looted. In order to avoid any
such incidence, proper safeguarding measures should be taken to protect the life and
property.
Room for Improvement In Customer Services
Due to nationalization of banks the customers services of the bank are below than the
standard. Employees are not as active as they should have been, they have no concern
about customer service they only do their routine work. This is only possible when they
around give incantation to their employees. In some branches there is shortage of staff
and there is also over staffing in some branches. With proper staffing improved services
could be extended to the clients. In the National Bank there is a need for the introduction
of new saving schemes for low and middle in come people.
Reward System & Timely Promotions
There is no inventive of reward for the performance and hard working of employees,
promotion is only based on seniority. As a result, employees do not try to work hard. In
order to increase the productivity and performance of he employees Bank should raise
reward system, so that can accomplish their objects successfully and discharge their
duties efficiently. In many cases officers are drawing maximum of their pay scale for
year together. In such cases timely promotions should be made to create enthusiasm
amongst its employees.
Effective Chequing System.
In Pakistan, an effective chequing system is not prevailing. People prefer to receive
payment in hard cash rather than in the form of a cheque. This is mainly due to the fact
Department of Business Administration
Faculty of Administrative Sciences Kotli59
7/28/2019 NBP Data
60/62
that in Pakistan collection of cheques takes time. In addition cheques are dishonored
mainly due to the reason there are insufficient fund in he drawers accounts. If the
collection of cheque procedure is speeded up and the account holders are made bound be
bank to write cheques only when they have funds in their accounts, an effective chequing
system can be developed in our country.
Loans Should be sanctioned on Merit
Unfortunately most of the loans are being given on the basis of political background
rather than on merit. Cash loans are later written off politically resulting in a heavy
amount of losses for the bank. It is suggested that the loan sanctioning body of the bank
must consist technical people. There should be no pressure from the government
regarding sanctioning and writing off of the loans.
Professionalism.
In National Bank, there is a lack of professionalism at most of the levels. Employees feel
overburdened due to the shortage of staff. The bank should create now jobs to have
competent and professional persons for various posts, so increase in the number of staff
can raise the efficiency of the Bank.
Department of Business Administration
Faculty of Administrative Sciences Kotli60
7/28/2019 NBP Data
61/62
Conclusion
National Bank of Pakistan, no doubt, doing well in the field of banking and it is aimed to
provide better services to its customers. It is specially performing its activities in the
customer advances.
It has a lot of potential to progress in future. The bank can do the good job of opening
branches in the rural areas that will, not only boost saving but also help the people to
raise their standard of living through these savings.
The staff in the bank is found to be very cooperative towards subordinates. I wish that the
bank may progress by leaps and bound, and keep on providing internship to students with
the same dedication.
Summing, I pay my deep gratitude to the bank for providing me with the opportunity of
having internship with it.
Department of Business Administration
Faculty of Administrative Sciences Kotli61
7/28/2019 NBP Data
62/62
Bibliography
1. Money Banking and Credit.
2. Branch Manager National Bank of Pakistan Super Market Branch Isl
3. Sunday Magazine (Dawn)
4. www.nbpl.Com
5. Informative Meeting with senior executives.
6. Personal Observations.
http://www.nbpl.com/http://www.nbpl.com/