NBP Markiting Internship-Report

8/3/2019 NBP Markiting Internship-Report

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INTR

ODUCT

ION

INTERNSHIP REPORT ON NATIONAL BANK OF PAKISTAN

INTRODUCTION TO BANKING

There are many definitions of the word Bank even the standardencyclopedia and law books find it difficult to state exactly what aBank is.

There have been many attempts by different writers to explain theexact significance of the term Bank. Here some of the definitions arequoted as follows.

According to the Banking Companies Ordinance 1962Section 5 (b) defines

Banker means a person transacting the business ofaccepting, for the purpose of lending or investment, ofdeposits from the public, and withdrawal by cheques,drafts, order of otherwise, and include any post officesaving banks

According to Crowther

Bank is a dealer of debt, his own and of other people.

According to Gilbert

A bank is a dealer in capital or dealer in money. He is anintermediary party between the borrowers and lenders.

According to Samulelson

Commercial banks provide certain services for customersand in return receive payments from them.

According to Holder

The modern banker is primarily a dealer in credit.

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IMPORTANCE OF BANKING

We can take bank just like a heart in the economicstructure and capital provided by it is like blood in it

Banks play very important role in the economic life of anation. The growth of theeconomy is dependent uponthe soundness of its banking system. Although banks do

not create new wealth but borrow, exchange and consume. Thesemake generation of wealth. In this way they become most effectivepartners in the development of that country.

To encourage the habit of saving and to mobilize these savings is itsbasic purpose. Banks deposit surplus from the public and thenadvances these surpluses in the form of loans to the industrialists,agriculturists, businessmen and unemployed people under differentschemes so that they set up their own business. Thus banks help incapital formation.

If there are no banks, then there would be concentration of wealth infew hands and great portion of wealth of a country would be idle. Inthe fewer developing countries rate of saving is very low and due tothis, rate of investment and rate of growth is also very low. We cantake bank just like a heart in the economic structure and capitalprovided by it is like blood in it. As long as the blood is in circulation,the organs will remain sound and healthy. If the blood is not providedis not provided to any organ then the organ would become useless. Soif the finance is not provided to agriculture sector or to industrialsector, it will be destroyed.

Loan facility provided by bank works as an incentive to the producer toincrease production. Banks provide transfer of payment facility, whichis cheaper, quicker and safe. Many difficulties in the internationalpayment have been overcome and volume of transactions has beenincreased. These facilities are very much helpful for the developmentof trade and commerce.

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COMMERCIAL BANKING IN PAKISTAN

It was very difficult for Pakistan to build up its own Banking systemimmediately after independence without sufficient resources. Followingthe announcement of the partition plan in June 1947 there was a hastemovement on the parts of banks to transfer their funds and accountsacross the borders. The banks having their registered offices inPakistan were transferred to India. In an effort to bring about thecollapse of the new state by the persecuting an international policy ofwithdrawal, the Indian bank offices closed quickly. Those banks, whichstayed, were considering the winding up of their business. By 30th June1948 the number of schedule banks in Pakistan declined from merescratch.

Today there are more than 7000 branches of commercial banks alongwith an established network of supplementary financial institutions. Allthis development in the banking sect is the result of untiring efforts offour decades.

PHASES OF BANKING IN PAKISTAN

Broadly speaking we can divide the development of commercialbanking into four phases

PHASE-1 1947-1974 Establishment of commercial banking system

PHASE-2 1974-1979 Nationalization of banks

PHASE-3 1979-1991 Islamisation process

PHASE-4 1991-2000 Privatization process

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FIRST PHASE (1947-74)

SET UP OF COMMERCIAL BANKING SYSTEM

This was the first phase of development of Pakistans commercialbanking system, which consist of the circumstances under which the

development of banking was started in the country.

INITIAL POSITION OF BANKING IN PAKISTAN

There were 19 non-Indian foreign banks in Pakistan at the time ofindependence with the status of small branch network, whose policiesand operations were controlled by their head offices abroad. Thesebanks were engaged solely in export of corps from Pakistan. Therewere only two Pakistani banks, the Habib bank, which had transferredits head office from Bombay to Karachi after the announcement of thepartition plan, and Australian bank which has been working inPakistani territories prior to June 1947. The government of Pakistantried hard to eliminate the banking crises. Banking Companies

Ordinance 1947 was promulgated to safe guard the interest of boththe bankers and the companys customers. The situation howevershowed no significant improvements. The imperial bank of Indiaclosed down most of its offices in Pakistan, which had been working asthe agent of the reserve bank of India was not willing to purchaseeven token amounts of the government of Pakistan. Securities on theplea that these securities were not marketable. The reserve bank ofIndia was hardly of any help. It refused to help government ofPakistan with advance argument adhoc securities to enable them tomake essential disbursements such as salaries and other obligations toadd to the difficulties.

The Indian government withheld Pakistans share of Rs. 75 crore incash balances held by her at the time of independence. The foregoingdevelopments clearly brought home the urgency of assuming controland currency in Pakistan and brought to the fore the need to setup acentral banking institution to take the place of reserve bank of India.

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Therefore it was agreed between the government of India and Pakistanto authority of Pakistan from 30th September 1947 to 30th June 1948

In order to make necessary arrangements of the establishment of thecentral bank of Pakistan a committee was appointed to recommend the

necessary steps. Consequently the Governor General of Pakistan andfather of the nation Quaid-e-Azam Muhammad Ali Jinnah Inauguratedthe State Bank of Pakistan on 1st July 1948. After the State Bank orderwas promulgated on 12th May 1948.

When it assumed full control of banking and currency in Pakistan thefirst important task before the SBP was to issue of currency notes andwithdrawal of reserve bank of India, which had been in circulating inPakistan so far.

SECOND PHASE (1974-1979)

NATIONALIZATION OF BANKS

The banking reforms turned out to be a transitional and temporarystep and hardly after 18 months had the government nationalized thebanking system. Thus through the Nationalization Bank Act 1974, SBPand all commercial banks incorporated in Pakistan and carrying onbusiness in or outside the country were brought under the government

ownership with effect from January 1974. The ownership andmanagement of all Pakistan banks stood transferred and rested in thefederal government. The shareholders were provided compensation inthe form of federal government bonds redeemable at par any timewithin a period of fifteen years. The amount of compensation wasequal to the break up value of the shares in case of commercial banks.For the State Bank shares the amount of compensation was estimatedon the basis of average of the clearing quotations during the sixworking days preceding nationalization. The chairman, director andchief executives of various banks were remove from their offices other

than those appointed by the federal government and the state bank.The central board of banks, managing committees and similar otherbodies were dissolved. A Pakistani banking counsel was established fornationalized commercial banks to co-ordinate their activities.

As a result of merger of banks the following five major bankingcompanies were formed:

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1. National Bank of Pakistan

2. Habib Bank Limited3. United Bank Limited

4. Muslim commercial Bank Limited5. Allied Bank of Pakistan

THIRD PHASE (1979-91)

INTRODUCTION OF ISLAMIC BANKING

In 1977 the Bhutto government was toppled. The martial lawgovernment planned to reform the banking sector in a novel way. Theoverall policy was to Islamize the economy and the banking system,being based on interest was an important target of the new policy. Themost preferred form of Islamic bank financing profit and loss sharingwould require banks to receive deposit without guaranteeing anyreturn.

The Islamic bank has to acquire a high degree of confidence of thesaver to make him deposit his money with them. Not even the returnof the principle amount if guaranteed. The Islamic bank cannot financethe project of an investor merely on the furnishing of collateral. Thebank will have to be a partner in the project. This will require tocareful security of the project and the assessment of risk involvedbecause profits are the function of the amount of risk in the project.Honesty and trust form both sides of the market are more important tothe system of Islamic Banking.

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FOURTH PHASE (1991-2000)

PRIVATIZATION AND DE-REGULATION

The government headed by Prime Minister Nawaz Sharif was not fullysatisfied with the performance of nationalized. The areas, which wereseverely criticized, were the falling standard of banking services andcommon red-tapism. There were complaints about the services asdelay in home remittances, dispatch of cheques, drafts, inefficientcounter services, bad debts of the banks etc. were on the rise. Thegovernment decided to privatize these banks. In order to implementprivatization policy a privatization commission was established on 22nd

January 1991. The commission has transferred two banks MCB and

ABL to the private sector. Application for privatization of other banksnamely UBL and HBL were also invited but the bidding response wasquite poor. The privatization of these banks is under consideration.Legislation was enacted to permit the establishment of new banks andthe government approved 10 application from the private sector forthe grant of commercial bank licenses by SBP, out of these 9 newbanks have since been incorporated. Till March 1994 there were 20domestic scheduled banks with 9825 branches and 21 foreign bankswith 66 branches in operation in the country. Overall investment of thescheduled banks in the current year rose to 76.7%. at present thereare 24 domestic scheduled with 8137 branches and 19 foreign banks

with 71 branches are in operation in the country. Total assets ofdomestic scheduled banks amounting to Rs. 1563.73 billion on 30th

March 1996. Overall investment of the domestic scheduled banks inthe current year declined by 80% over the same period last year.

1. Bank of Commerce Al Habib Ltd.

2. Soneri Bank Ltd3. Union Bank Ltd.

4. Indus Banks Ltd.5. Mehran Bank Ltd.

6. Prime Commercial Bank Ltd.

7. Askari Commercial Bank Ltd.8. Bolan Bank Ltd.

Now Mehran bank has been absorbed by National Bank Ltd, due to itspoor performance and ultimate failure. Now the ABN Amro Bank hasalso been included in the list of foreign scheduled banks

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HISTO

RY

OF

NBP


BRIEF HISTORY OF NATIONAL BANK OF

PAKISTAN

The normal procedure of establishing a banking company under the

Companies Law was set aside and the Bank was established through

the promulgation of an Ordinance due to the crisis situation that had

developed with regard to financing of jute Trade. The Bank

commenced its operations from November 20, 1949 at six important

jute centers in the then East Pakistan and directed its resources infinancing of jute crop. The Banks Karachi and Lahore offices were

subsequently opened in December 1949.

State bank of Pakistan after its formation demanded from the Indian

Reserve Bank the assets against the Indian currency retired from

Pakistan territory. Government of India refused to hand over the

assets worth about five hundred million rupees. The dispute is still

unsettled and these assets are still not delivered to Pakistan. Until

June 1950, the Bank was engaged exclusively on jute operation.

Thereafter, it was felt that it could expand its business to include other

commodities as well. Bank took a big stride in 1952, when it replaced

the Imperial Bank of India, as an agent of State Bank of Pakistan.

With the passage of time its functioning diversified as they take over

the function of different institution with the passage of time like in past

they took over the function of Imperial bank of India and now of NDFC

(National Development Finance Corporation)

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It is working as the agent of the state bank of Pakistan and performs

its functions wherever state bank of Pakistan is not present.

The government floated its 10 % of the shares in the open market in

past and the ratio became 60: 40 and in future they trying to make it

55: 45.

In 1999 national bank celebrated its golden jubilee during the last fifty

years bank has made substantial strides in the financial services

industry in Pakistan.

In 1999 its market share was around 22% and it remains the largest

financial institution in Pakistan.

We aim to be an organization that is founded on

Growth through creation of sustainable relationships with ourcustomers. Prudence to guide our business conduct. A national presence with a history of contribution to our communities

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We shall work to

Meet expectations throughMarket-based solutions and products. Reward entrepreneurial efforts. Create value for all stakeholders

We aim to be people who

Care about relationships. Lead through the strength of our commitment and willingness to

excel. Practice integrity, honesty and hard work. We believe that these are

measures of true success

We have confidence that tomorrow we will be

Leaders in our industry.

An organization maintaining the trust of stakeholders. An innovative, creative and dynamic institution responding to the

changing needs of the internal and external environment

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Vision and Guide

To be the pre-eminent financial

institution in Pakistan and achievemarket recognition both in the quality

and delivery of service as well as the

range of product offering

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Mission

Statement

To be recognized in the market place by

Institutionalizing a merit & performanceculture, Creating a powerful &

distinctive brand identity, Achieving top-

tier financial performance, and Adopting

& living out ourcore values

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We aim to be an organization that is founded on

Growth through creation of sustainable relationships with our

customers.

Prudence to guide our business conduct.

A national presence with a history of contribution to our communities.

We shall work to

Meet expectations throughMarket-based solutions and products.

Reward entrepreneurial efforts. Create value for all stakeholders

We aim to be people who

Care about relationships. Lead through the strength of our commitment and willingness to

excel. Practice integrity, honesty and hard work. We believe that these are measures of

true success

We have confidence that tomorrow we will be

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MAN

AGEME

NT

OF

NBP


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 and external environment

MANAGEMENT OF NATIONAL BANK OF

PAKISTAN

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.

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MAN

AGEME

NT

OF

NBP

MAN

AGEME

NT

OF

NBP


Syed Ali Raza Dr. WaqarMasoodChairman & PresidentDirector

Iftikhar Ali Malik Syed

Shafqat AliDirector

Director

M. Zubair MotiwalaAzam Faruque

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HI

ERARCHY

OF

NBP


DirectorDirector

Sikandar Hayat Jamali ikhlaq Ahmad Director Security boardof directors

HIERARCHY OF NATIONAL BANK OF PAKISTAN

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PRESIDENT

EXECUTIVE VICEPRESIDENT

SENIOR EXECUTIVEVICE PRESIDENT

SENIOR VICEPRESIDENT

OFFICERS GRADE

I II IIIVICE PRESIDENTASSISTANT VICE

PRESIDENTCASHIERASSISTANTSPEONS


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HI

ERARCHY

OF

NBP


BRANCH HIERARCHY OF NATIONAL BANK

GONDLAWALA ROAD, GUJRANWALA

17

Branch Manger

Managers

Manager Operation

Assistant Manager

Assistant officers

Officers

Deputy Officers

Clerks

Peons and Guards


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MARK

ETING

MIX


The branch manager is the head of the branch is assisted by themanger operations in carrying out the main functions of the branch.Remaining organizational structure is divided according to therequirements of different departments. There are currently threemanagers, two deputy managers, seven offices, 4 deputy officers and2 assistant officers working in the branch. The total number of

employees working in the branch is 18.

MARKETING MIX OF NATIONAL BANK OF

PAKISTAN

Marketing is the task of creating, promoting and delivering goods andservices to consumers and businesses. Organizations identify and

profile distinct group of buyers who might prefer or require varying

products and marketing mixes. The customer seeks for value and

satisfaction. The organizations can increase the value of the customer

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4 Ps 4 Cs

Product/ Service Customer Solution

Price Customer Cost

Place Convenience

Promotion Communication


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PRODUCT

S

OF

NBP


offering in several ways e.g. raising benefits, reducing costs etc.

marketing mix is a set of marketing tools that the firm uses to pursue

its marketing objectives in the target market. These marketing tools

are known as 4 ps of marketing. These four marketing tools are

viewed as 4cs by the consumers.

To identify the customer needs and fulfilling hem is the basic objective

of an organization. Marketing is not just satisfying your customers, you

have to delight them and this can be done by acting upon this phrase.

Under Promise and Over Deliver

National Bank provides a winning combination of products and services

to its prime customers. It is one of the countrys leading commercial

banks, which ensures complete security, and reliability in all-financial

transactions.

PRODUCTS

A product is anything that can be offered to a market to satisfy a want

or need and a service is an act or performance that is essentially

intangible and does not result in the ownership of anything. What

products or services have to be offered to the target market depends

on the market requirement and also the organizations profits. The

organization will offer those products and services, which result in

maximum profits and minimum costs.

A bank is an organization rather a financial institution that provides

products such as different types of deposits and services like foddering

financing facilities to its customers.

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PRODUCT

S

OF

NBP


National Bank offers a diversified line of products and services to its

customers. The unique products and services offered by National Bank

are as follow:

Consumer banking

Corporate banking

Commercial banking NBP advance salary

NBP cash card NBP cash & gold

NBP Karobar

NBP Kisan Dost

NBP online banking NBP Saibaan

SWIFT

CORPORATE BANKING

These are branches which have an exposure of over Rs. 100 million.

Usually includes multinational & public sector companies.

COMMERCIAL BANKING

The branches which has a credit exposure of less than Rs. 100 million

but having a credit portfolio of more than Rs. 20 million (excluding

staff loans)

Usually branches in large markets and commercial areas come underthis category.

CONSUMER BANKING

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PRODUCT

S

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NBP


These are the branches which have exposure up to Rs. 20 million and

these include all the branches which are neither corporate nor

commercial branches.

NBP ADVANCE SALARY

Affordable installments from 1 to 60

Months, Take up to 15 advance salaries.

Currently for NBP account holders of government or related

organization employees.

NBP CASH CARD

ATM plus debit card in one -------- One Card

does it all

NBP CASH & GOLD

Meet your need for ready cash against youridle gold jewelry with no minimum limits

GET EXTRA BENEBIT FROM YOUR GOLD

NBP KAROBAR

This is a Rozgar scheme introduced byPresident of Pakistan recently, this includes

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PRODUCT

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OF

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NBP Sasti SavariNBP Chalti Pharti DukanNBP Rabata Duniya SeNBP Maal atao Pasey Kamao

NBP KISAN DOST

NBP affordable agriculture program offersyou a wide range of financing

Recently National Bank of Pakistan hasintroduces home finance scheme with name ofSaibaan.

Affordable

Easy installment

No surprises

Flexible

Mark-up choices

Grace period option

Convenient

Structured and programmed

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PRICE

S

OF

NBP


Minimum approval and disbursement timing

PRICE

It is second important tool of marketing mix because it plays

a major role in determining the customers choice. Also it is

the only marketing tool that results into revenue. The banks

offer advances to their clients by charging ascertain rate of

mark up or interest. This mark up or interest charged is the

price. The customer makes a comparison between the prices

offered by other financial institutions and National Bank and

then selects the most suited offer.

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PLACE

S

OF

NBP


The charges are stated in a schedule of charges for every

facility. Some of them are given:

NBP Products Rate of chargesCash & Gold 12% per annumNBP Karobar 7.5% per annumKisan Dost 6.5% per annumNBP Saibaan 7.5% per annum

PLACE

The location of the bank plays a vital role in making its

operations profitable. If the bank is located in some business

center then it will be very easy for it to attract business

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Punjab 732

Sindh 290NWFP 110

Blochistan 32

Azad Kashmir 31

Regional Offices 29

Domestic 1224

Overseas 18

Total 1242


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PLACE

S

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NBP


people as its customers. Therefore NBP has most of its

branches at places where it can reach its targets customer

easily. The branch network of National Bank is given as

follows:

Here is a list of the banks locations in Pakistanaccordanceto each province or territory;

Sindh: Dadu, Sanghar,

Hyderabad, Jacobabad, Shikarpur,

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PLACE

S

OF

NBP


Karachi, Larkana, Mirpurkhas, Badin, Nawabshah,

Sukkur, Khairpur, Tharparkar.

Punjab: Bahawalpur, D.G. Khan, RYKhan, Faisalabad,

Gujranwala, Sialkot, Narowal, Jhang, Jhelum, Gujrat,

Chakwal, Darya Khan , Bhakkar, Lahore, Multan,

Murree, Attock, Gilgit, Rawalpindi, Sahiwal, Sargodha,

Sheikhupura.

NWFP: Abbottabad, Mansehra, Bannu, D.I. Khan,

Kohat, Mingora, Mardan, Peshawar.

Baluchistan:Quetta,

Azad Kashmir: Muzaffarabad, Mirpur.

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http://en.wikipedia.org/wiki/Punjab_(Pakistan)http://en.wikipedia.org/wiki/North_West_Frontier_Provincehttp://en.wikipedia.org/wiki/Baluchistanhttp://en.wikipedia.org/wiki/Quettahttp://en.wikipedia.org/wiki/Azad_Kashmirhttp://en.wikipedia.org/wiki/Punjab_(Pakistan)http://en.wikipedia.org/wiki/North_West_Frontier_Provincehttp://en.wikipedia.org/wiki/Baluchistanhttp://en.wikipedia.org/wiki/Quettahttp://en.wikipedia.org/wiki/Azad_Kashmir


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29 Regional Offices

1,195 Branches

143 Online Branches

4 Subsidiaries

INTERNATIONAL NETWORK

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PL

ACES

OF

NB

P


NBP also has branches in USA, Canada, Germany, France,

Bahrain, Egypt, Bangladesh, Hong Kong, Japan, South

Korea, The Peoples Republic of China, Afghanistan,

Turkmenistan, Kyrgyz Republic, Kazakhstan, Uzbekistan and

Azerbaijan

18 Overseas Branches

4 Representative Offices

1 Subsidiary

1 Joint Venture

PROMOTION

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PROM

OTION

OF

NB

P

DEPA

RTMEN

TS

OF

NBP


National Bank is actively participating in promotion of itsproducts and services through advertisement and other

promotional schemes.Initially, the bank focused on the upper class customersonly and offered products for a limited class of people. Butnow the strategy has been changed and the bank is nowtargeting the middle market also. The products offered areof diverse nature to cater the needs of maximum number ofpeople.

Customer Oriented Attitude

National Bank values its customers. Customers complaintsare encouraged because it gives an opportunity to know theneeds of the customer and build more confidence in them.Most of the promotional efforts are done through

Direct marketing

Public relations

National bank sometimes gets suggestions andrecommendations from its good customers.

Branch layout is being designed in such a way that more andmore customers are attracted. Some of the branches ofNational Bank have a very good entrance and outlook butmany still need to be improved.

FIELD OF ACTIVITIES OF NBP

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D

EPOSI

T

DEP

ARTMEN

T


This is the practical portion of my report and here I willexplain different departments of NBP and how these

departments work. Following are the main department ofNational Bank of Pakistan.

DEPOSIT DEPARTMENT

ADVANCES DEPARTMENT

CLEARING DEPARTMENT

BILLS DEPARTMENT

REMMITTANCE DEPARTMENT

ACCOUNT DEPARTMENT

TECHNOLOGY DEPARTMENT

DEPOSIT DEPARTMENT

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D

EPOSI

T

DEP

ARTMEN

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The function of deposit department is to collect depositsfrom customers. Following type of deposits are offered by

National Bank.1. Current deposit

2. Saving bank deposit

3. Profit and loss saving account

4. Fixed deposit

5. Short notice term deposit

6. Foreign currency deposit7. Cumulative deposit certificate (other)

CURRENT DEPOSIT

In this type of account the client is allowed to deposit orwithdraw money as and when he likes. He may, thus,deposit or with draw several times in the day if he likes.Usually the bank allows this and service chargers arededucted by the bank.

SAVING BANK DEPOSIT

This type of account is for those persons who want to makesmall savings. This type of account is opened with Rs. 500.In this case deposits can be made only up to a costingamount and with drawls are allowed twice a week. If thedepositors wants to withdraw more than Rs. 15000 a sevendays notices is required before the withdrawal.

PROFIT & LOSS SAVING A/C

These types of accounts are one step towards theIslamisation of Banking system in the Pakistan. Under such

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D

EPOSI

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DEP

ARTMEN

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types of accounts the bank allows no interest to thecustomers. The executive board of the bank declares profitor loss every year. PLS saving account having a runningminimum credit balance of Rs. 100 would be eligible for

sharing profit/loss of the bank. The rate of profit or loss onPLS saving accounts shall be determined by the bank at theclose of each half year, in its sole discretion and the banksdecisions shall be final and binding on the PLS accountholder

Fixed Deposit

In this type of account a certain amount is deposited for a

certain, period such as six-month, two years or longer. A fixdeposit receipts is issued in the same of the depositor. Theofficer incharge and the bank manager sign the receipt. Anotice is given to the depositor requesting the depositor towithdraw his money or to renew this deposit. The interestallowed on fixed varies with the period for which thedeposits are made.

SHORT NOTICE TERM DEPOSIT

This kind of deposit is for a short period. The depositor maywithdraw his deposit at any time by giving seven days noticeto the banker. In this type of deposit facility the trader isallowed to withdraw his amount with interest of thedeposited period.

FOREIGN CURRENCY DEPOSIT

Foreign currency account is opened by depositing foreigncurrency. In NBP, you can open foreign currency account in:

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CL

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DEPARTMEN

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1. Us Dollar ($)

2. Pound Sterling ()

3. Japanese Yen ()

4. Deutsche Mark (DM)

CLEARING DEPARTMENT

Every bank acts in two way i.e.

1. Paying Bank

2. Collection Bank

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CL

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DEPARTMEN

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Here in theory no legal obligation on a banker to collectcheques, drawn up to other banks for a customer. It is,however, an important function of crossed cheques. A large

part of this work is carried out though the bankers clearinghouse wherever it is established.

CLEARING HOUSE

A clearing house is the place where representatives, of allthe banks get together for the purpose of off setting theinter bank indebtedness arising from the transfer of depositsby a customer of a particular bank to another bank.

ADVANTAGES OF CLEARING HOUSE

The advantages are manifold. It prevents the cost and wasteinvolved in collection each and every cheque and claim.Which a banker holds against another, across the counterwith all the danger of loss in the transit incumbent upon it.

Great economy is also achieved in the employment of liquidcash by setting the difference by simpler transfer of creditfrom one account to another, there by minimizing thenecessity of holding large wash balances, clearing houseworks under the control of State Bank of Pakistan.

A banker has no legal obligation to collect cheque drawn

upon other banks for the customers, though modern bankshave assumed this important function of their own choice.Therefore, it is very important that since they have assumedthis function, the banker should be very careful in theirperformance, otherwise they will face more difficulties. So, ifthey provide this facility when the cheques are crossed.

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DEPARTMEN

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FUNCTIONS OF CLEARING DEPARTMENT

The following are the main functions of clearing department.

1. To accept transfer deliveries and clearing cheques fromthe customer of the branch and to arrange for theircollection.

2. To arrange the payment of cheque drawn on the branchand given for collection to any other branch of NationalBank of Pakistan or any other members, or sub-membersof the local clearing house.

3. To collect amounts of cheques drawn on members, sub-members of the local clearing house, sent for collectionby those National Bank Limited branches which are notrepresented the local clearing house.

PROCEDURE OF DEPOSITING CHEQUES IN CLEARINGHOUSE

Whenever a customer wants to deposit cheque, etc, he fills apay in slip and hands it over the counter along with theinstruments he wants to deposit with bank. As far aspossible, the customer desire that on of the staff member fillin a slip for him, he should be obliged promptly.

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The smaller portion of the perforated pay in slip is handedover to the depositor and the portion becomes the regularportion of a credit voucher.

1. Transfer Cheques

Transfer cheques are those cheques, which are collected andpaid by the same branch of bank.

2. Transfer Delivery Cheques

Transfer Delivery cheques are those cheques, which are

collected and paid by two different branches of a bank,situated in the same city.

3. Clearing ChequesClearing cheques are those cheques in which the payee(Person who deposit cheques for collection) and the drawerof a cheque maintain the account with different banks.

SCRUTINY OF CHEQUE

When the cashier receives the cheques, which are to bedeposited for clearing purpose the following points must be

verified.

The instrument should be neither stale nor post dated.

If the instruments is crossed, not negotiable, it can be forthe third party (can be endorsee of an order cheque, or aholder of bearer cheque)

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The instrument should not bear any unauthorizedalteration.

The amount in words and figures should be the same.

The instruments should be drawn on a member, or any oflocal branches.

If the cheque is crossed Account payees Accountpayee only or Payees Account, it should be acceptedfor collection for the payees account.

The cheques or drafts should not be crossed specially toany other bank.

A cheque payable to one of the joint account holdershould not be collected for the joint account without the

payees endorsement, or consent.

A cheque payable to a firm should not be accepted forcredit to a partners account.

A cheque drawn by a customer in the capacity of anagent. Attorney, or Manager of his company or firm,should not be collected for credit to his personal account.

Pay orders, although negotiable, should not be collectedfor third parties.

Do not collect an instrument in the account of an agent,or of the servant of the payees of endorsee of theinstruments.

Mail transfer Receipts pay ships and treasury receiptshould not be collected for persons other than the payee.

If an account is new, or the balance or operation of theaccount is not satisfactory, satisfy yourself about the

titles of the customer to the instruments before the titlesof the customer to the instrument before accepting thedeposit.

Brach agents permission should be obtained beforeaccepting a third party cheque or draft for creditor theaccount of the staff member.

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If the payee is a government department, governmentofficial, or a trust account, the instrument cannot becollected, but of the payees account.

If the payee of an instrument is NBP, it can collected forcredit of the drawers account, or the amount of theinstrument may be utilized as desired be the drawer inwriting.

Cheque payable to a trust, account should not becollected for credit to at trustee account.

All the endorsement should be regular, and onendorsement should be missing. After the cashierscrutinizes the cheques he must also scrutinize the pay in

slip.

SCRUTINY OF PAY-IN-SLIP

Following steps are involved in the scrutiny of pay in slip.

1. On both the counterfoil and the pay in slip followingshould be checked.

I. Date of Deposits

II. Account numberIII. Title of the accountIV. The cheque/number and the drawer bank/name.V. Total amount in words and figures

2. Customer should use separate pay in slip for transfer,transfer delivery, and clearing cheques.

3. The amount noted should be the same as the amount ofthe instruments, and the amount in words and figuresshould be same

PROCEDURES AFTER SCRUTINIZING

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After scrutinizing the cheques and other deposit instrumentsand paying slip at the counter the following procedure isunder taken by cashier if he is satisfied.

1. Fixing the stamp.

2. Scrutiny, and receipt by the authorized officer

3. Returning the counter foil to the depositor.

4. Certificates and confirmation by the officer-incharge of the

department.

5. Separating the cheque into transfer delivery, and clearingcheque

PROCEDURE OF CLEARING AT CLEARING HOUSE

The mechanism of setting inters bank indebtedness operatesas follows:

Clerks representing various banks meet at a common place,The Clearinghouse, everyday. Every clerk then delivers tothe others the cheques and the other claims which their

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respective banks hold against his banks hold against hisbank cheques and other documents dishonored will bereturned to the representative of the respective bank. Thevarious amounts of receipts and deliveries are now added up

and a balance is struck there in and the final settlement iseffected by the supervisor of the clearing house bytransferring balance kept and the central bank by thesevarious clearing banks.

ADVANCES DEPARTMENT

INTRODUCTION

The function of advances department is to lend in the formof clean advances, against promissory notes, as well assecured advances against tangible and marketablesecurities. According to the Prudential Regulations of the

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State Bank of Pakistan, No bank can issue a clean advanceof more than Rs. 100,000/-. The bankers prefer suchsecurities that do not run the risk of general depreciationdue to market fluctuations.

Common Securities for the bankers advances are as under:

SECURITIES

GUARANTEES

When an application for advance cannot offer any tangiblesecurity, the banker may rely on personal guarantees to

protect himself against loss on advances or overdraft tothe applicant.

MORTGAGE

A mortgage is the transfer of an interest in specificimmovable property for the purpose of security thepayment of money advanced or to be advanced by; wayof loan, and existing or future debt, or the performance of

an engagement which may rise to a pecuniary liability.The transfer is called a mortgagor, the transferee amortgage.

HYPOTHECATION

When property in the shape of goods is charged as securityfor a loan form the bank the ownership and possession is left

with the borrower, the goods are said to be hypothecated.The essence of hypothecation is that neither the property inthe goods not the possession of them are possessed by thelender, but the security is granted by means of letter ofhypothecation, which usually provides for a bankers chargeon the hypothecation goods.

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PLEDGE

In a pledge the ownership remains with pledge, but thepledgee has the exclusive possession of property until theadvance in repaid in full. While in case of the default thepledgee has the power of sale after giving due notice.

PROMISSORY NOTE

Sometimes promissory note is also accepted as a security,A promissory note is an instruments in writing containing

an unconditional undertaking signed by the maker, to pay;on demand or at a fixed or determinable future time acertain sum of money only, to or to the order of certainpersons, or to the bearer or the instrument. A promissorynote is incomplete until has been delivered to payee or thebearer. Moreover, the sum promised in a promissory notemay be made by two or more makers who may be liablethere on jointly and severally.

KINDS OF ADVANCES

The advances which are given by National Bank are asunder:

RUNNING FINANCE (Overdraft)

Running finance (old name overdrafts) is a short term loanallowed by the bank for a period of one year. The runningfinance account can be operated and daily sale proceeds can

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be deposited into the account. The mark-up is recovered onthe products of daily outstanding balance. The runningfinance is suitable for meeting day to day financial needs ofthe business.

CLASSIFICATION OF RUNNING FINANCE

1. UnsecuredUnder such type of overdraft the bank pay upon thepersonal security of the customers mentioned on thecustomers account.

2. Secured

Under this type of overdraft the bank allows his customer to

withdraw more than his deposits after giving security againstthe amount overdrawn.

The Securities against which they given are:

Share certificate, Saving Certificate

Deposits

Mortgage of property

Guarantee of person

DEMAND FINANCE (DF)

Demand Finances are those advances which are allowed inlump sum for fixed period and are repayable lump sum orgradually in installments which could be monthly, quarterly,

biannually or annually.

CLASSIFICATION OF (DF)

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1. Demand Finance (Packing Credit)

Scheme introduced by SBP for exporter of carpet, surgicalinstruments, at zero percent rate of interest. While banks

provides at concessional rate of interest.

2. Ordinary Loan

Qarz-e-Hasana Scheme Loans are allowed to the students,teachers without any interest or mark up with therecommendation of the MPA or MNA.

3. Loan for Staff

Loans are offered to the staff of the following categories.

House Building Loans against mortgage of property.

Loan for purchasing vehicles.

Loan equivalent to months salary.

CASH FINANCE (COMMERCIAL LOANS INWARD)

These type of loans are given against following:

Against locally manufactured goods. Against pledge

Against commodities

Against Trust Receipts

FINANCE AGAINST FOREIGN BILLS (FAFB)

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This facility is available to both local and foreign bills

1. FAFB (local) advance against Railway receipts and truckreceipt, a company with bills of exchange and invoices,are given under this head.

2. FAFB (foreign) advances against foreign bill covering billsof exchange, bills of lading airway bills of exchange etc.

AGRICULTURE LOANS

Loans to the farmers with holding up to 25 acres for meetingtheir short term, medium and long term agriculturalproduction requirements, such as:

Agricultural inputs

Tube Wells

Live Stock Framing

Land improvements

INDUSTRIAL LOANS

Besides the short-term loans which play an important part inworking capital requirements, medium and long-term loansare also given to industrial sector for purchases ofmachinery and other capital nature goods.

IMPORT EXPORT BUSINESS/TRADE FINANCE

NBP Provides highly efficient trade finance services forimport/export business for our clients/customers through

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large number of authorized branches where trained andmotivated staff is available to handle the business on behalfof customer

BILLS DEPARTMENT

Bills department the following functions:

1. Inward Bills for Collection (IBC)2. Outward Bills for collection (OBC)

INWARD BILLS FOR COLLECTION (IBC)

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These are bills or cheques etc. which is collected locally.These are received from outstation branches banks andparties.

Demand Draft

It refers to the payment of money on demand of the holderof draft. Demand draft includes DD issues and DD payable.

OUTWARD BILLS FOR COLLECTION (OBC)

Clean BillsThese are negotiable instruments, drawn on outstationbranches, bills sent for collection on behalf of the customersi.e. cheques, drafts or treasury bills etc.

Documentary Bills

These are bills accompanied by documents such as R.R.T.R.Bills of lading etc. having title to goods, collected by the

bankers on behalf of their customers.

PAY SLIP

Pay slip is an instrument in receipt, issued by the bank inthe following cases:

1. On account of expenditure incurred by the bank.2. On account of refund of a payment to a persons undercertain circumstances.

PAY ORDER

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Pay order is issued to other banks for collection of paymentsas said.

ACCOUNTS DEPARTMENT

Usually accounts are maintained in two ways:

1. Journal System2. Voucher System

In journal system entries are posted in Journal Books andthen posted to ledger. It is adopted by industrial institutions.

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Voucher system is use for every transaction. Voucher has tobe prepared either in cash or in transfer or in clearing. The

sheet upon which these vouchers are summarizedtransactions-wise and consolidated into a figure is calledsupplementary.

Types of Supplementary

Supplementary are of two types:

1. Debit Supplementary

2. Credit Supplementary

Debit Supplementary is used for debit voucher and creditsupplementary is used for credit voucher books.

BOOKS AND REGISTERS

Books and registers used by bank are as follows:

General ledger

Ledger of A/Cs

Balance Book (for a/c ledger)

Token Book

Cashier Long Book

Cash Order Register (SND, DAC & Pay order isrecorded)

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Daily Transaction Long Book

Day Book

Transfer Book

Open/Close Register Pak A/C Book

Suspense A/C Book

Weekly Telegram Book (Cost is written)

T.T. Issued Register

T.T. or Telegraphic Transfer Payable Register

D.D. Issued Register

D.D. or Demand Draft Payable Register

Law Charges Recoverable A/C Book (under suitaccount)

Office Order Book

P/L Income and Expenditure Accounts Book

P/L Balance Book for Income and Expenditure A/C(weekly balances of expenditure A/C are recorded)

Cheque Book Issue Register

Stock Register Cheque Books in hand

PLS (TDR) Term Deposit Register

Stationery in Hand Register

OBC (Outward Bills for Collection) Register

Dak Inward Register

Dak Outward Register

Stationery in Hand Register

Cash in Transit Register

Clearing Register Inward/Outward Running Finance Register

Office Attendance Register

INCOMES

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Income Includes

1. Brokerage (A bank sells and buys shares, stocks,debentures, other securities and receives payments for

these services)2. Discount

3. Service Charges

4. Rent (On Building)5. Commission (from utility services)

EXPENDITURES

Expenditures Includes

1. Salaries, allowances and provident fund

2. Rent, taxes, insurance, lighting etc.

3. Profit paid on deposits and borrowings

4. Postage, telegram, and stamps

5. Stationary, printing and advertisement charges etc.

6. Auditors fee and legal charges

REMMITTANCES DEPARTMENT

Remittance department performs following functions:

1. Mail Transfer (MT)

2. Telegraphic Transfer (TT)

3. Demand Drafts (DD)

MAIL TRANSFER (MT)

When a customer requests the bank to transfer his moneyfrom one branch of bank to another branch of the same

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bank or from one city to another city to the same bank orany other bank. Customer fills the form given by bank. If thecustomer has an account with that amount as mentioned inthe application form then concerned officer will undertake

the following procedure to make the mail transfer complete.

1. Branch Mail transfer form

2. Receiving Branch Register copy

3. Issuing branch register Copy

4. beneficiary advice

5. advice to customer

In case where the customer is not account holder of thebank then the customer will have to deposit the amountwhich he wants to transfer under Mail. Then the above saidprocedure will be done.

TELEGRAPHIC TRANSFER (TT)

This type of transfer is simple. After filling the applicationform the concerning officer shall fill the telegraphic transferform. Then it is sent to the required bank which on receivingit immediately makes the payment to the customer andafterwards the voucher are sent to that bank by ordinarymail.

DEMAND DRAFT (DD)

Demand draft is just like cheques and issued when thecustomer wants to take cash with him personally. The ideabehind is to avoid the risk and burden of currency notes in

huge quantity. Demand draft can easily be handledwhatever amount it has and the money can easily be takenfrom the bank when it is presented. In fact, the bankpersuades the customer to transfer money by drafts andavoid the risk of frauds involves in MT and T.T. Draft is only

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issued when the bank knows customer and bank has theconfidence in him

In case of transfer of money by drafts, the customer has to

fill an application form. Then the concerned officer fills thefollowing forms:

1. Customers advice

2. Customers debit form

3. Register copy

4. Cover Advice

A foreign bank uses the cover advice if draft is issued to

National Bank of Pakistan.

FOREIGN DEMAND DRAFT

Foreign Demand Draft is just like demand draft. The onlydifference is that a bank issues FDD to the bank of anothercountry. It requires foreign exchange and it involves sevenforms, which are to be filled.

TECHNOLOGICAL DEPARTMENT

Technological advancements are also affecting the bankingindustry. The foreign banks have a competitive edge over alllocal banks in their technologies' advancements andautomated systems. Local banks have also realized thegravity oil this situation and are striving to add computerizedsystems to their branches

NBP is now fully concentrated on it. There are more than1242 branches of NBP all over Pakistan and out of these

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more than 143 branches are fully computerizedAlmost all.the branches of big cities are computerized; therefore, theneed for a technology department at each branch isgrowing. Now a day, a computer division is working in each

city to provide service to ad the branches of that area. ATMsystem is also introduced in many branches in major cities.Following is the brief description of these ATM machines.

NBP ATM NETWORK

CITIES NUMBER OF ATMS

1. Burewala 01

2. Faisalabad 06

3. Gujar Khan 01

4. Gujranwala 04

5. Gujrat 01

6. Hyderabad 06

7. Islamabad 16

8. Karachi 21

9. Lahore 13

10. Mirpur 02

11. Multan 04

12. Muzaffarabad 03

13. Peshawar 04

14. Quetta 04

15. Rawalpindi 05

16. Sheikhupura 01

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WORK

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17. Sialkot 03

18.Taxila 01

19. Wah Cantt 01

WORK DONE BY ME

During my internship in the National Bank of Pakistan

Limited, I really enjoyed to work with the staff of

Branch, Gondlawala Road, Gujranwala from

20thJuly to 2nd September, 2006 and have a wish

to be employee of National Bank of Pakistan

Limited. It was almost impossible to work in all the

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departments within that limited time. But on my

request, the staff of the branch provided me the

opportunity to work in the different departments

for the sake of practical knowledge. I am really

very thankful to branch manager Sir Ashraf

Meher sb that provides me a learning environment

in the branch.

During my internship training in the National Bank of

Pakistan as I early mentioned that I have worked in different

departments & seats and learnt the followings.

OPENING OF NEW ACCOUNT

Account opening and closing is the function of accountsdepartments. Banks customers may be individuals

(Single or Joint), firms(partnership/proprietorship), Autonomouscorporations, Limited Companies, CharitableInstitutions, Associations Educational Institutions orLocal Bodies. NBP normally opens following typesof accounts.

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Current account

Saving account

BASICS TO OPEN AN ACCOUNT

During the span of mine internship in National Bank, Ilearned and observed a lot of about the opening of anaccount. Basically I think that the opening of an account isthe establishment of a contractual relationship between the

banker and the customer. By opening an account at a banka person becomes a customer of a bank. Further I amgoing to express the basic requirements and steps involvedin the opening of an account.

INTRODUCTION AND PRELIMINARY INVESTIGATION

Before opening an account National Bank of Pakistan as likethe other banks in Pakistan ascertain whether or not theperson who is going to open the account is a desirablecustomer or not. Then National Bank of Pakistan determine

the prospective customers integrity, respectability,occupation and the nature of business by the introductoryreferences given at the time of account opening. Negligencein this informal preliminary investigation may result inserious consequences not only for the banker concerned

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directly but also for other bankers and the general publicwho may be affected indirectly.

In order to further strengthen and streamline this process,

the Federal Ombudsman of Pakistan, vide his ruling oncomplaint No. II/31/5186, has directed the banks to retainwith the account opening form a Photostat copy each of theNational Identity Cards of the person desiring to open anaccount as well as that of the introducer. As per thesedirections, the concerned Branch Managers are required toobtain the original National Identity Cards along with theirPhotostat copies and then return the original after attestingthe authenticity of the retained copy.

Preliminary investigation is necessary because of thefollowing reasons:

Avoid Frauds: In this regard I learned that if a banker doesnot make the necessary inquiries mentioned above he mayenable dishonest persons to possess cheque books forfraudulent purposes. If any such person happens to be anundercharged bankrupt, the banker might be placed in anawkward position for having allowed such a person to openand open a bank account.

Safeguard against unintended overdrafts: Sometimesdue to a mistake an account may be given an overdraft, Forinstance, the ledger keeper, misreading the balance of anaccount honors a cheque for an amount larger than thebalance. Similarly a credit entry belonging to a customermay be made by mistake in another customers account. Insuch situations the excess amount withdrawn by thecustomer can only be realized if the customer is arespectable person.

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Inquiries about clients: Being a banker I think NationalBank of Pakistan has a business obligation to respond toinquiries from other banks etc. about his customers financialposition. Though the banker gives only a general ideal about

the financial standing of his customer, it should neverthelesshave the necessary information available with him.

SPECIMEN SIGNATURE

When an account is opened with National Bank of Pakistancustomer provides to the bank a specimen of the form ofsignature which would appear on all his cheques to expresshis authority for the payment of cheques drawn on hisbanker. This specimen is taken generally on a card speciallydesigned for this purpose, and rule for the customers, fullname, and account number are entered on it.If the bank has reasons to doubt the genuineness of asignature, he should either get it confirmed for hissatisfaction or return the cheque with the remark Signaturediffers. If the signature of the customer is forged the bankercannot escape his liability because he has actually acted onhis customers mandate.

SIGNATURE OTHER THAN IN ENGLISH

If a customer signs in a language other than English orUrdu, he is requested to fill a Vernacular Form. This is a type

of indemnity whereby the customer relieves the bank of anyresponsibility in case there is any mis-verification ofsignatures by the bank and the cheque is paid. Thevernacular Form is obtained because the bank officers arenot used to verification of signatures other than in English orUrdu; hence there is likelihood of misverification.

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HOW TO OPEN AN ACCOUNT (GENERAL)

Before opening an account in National Bank of Pakistan Iobserved that the following points must be considered in thisregard.

Another account holder of the bank should properlyintroduce the new customer.

The account holder should sign the account openingform in the presence of bank officer and the signatureis duly verified.

A copy of identity Card is required by Bank.

Against submission of the Banks prescribed applicationform, duly introduced in the manner provided and onsupplying such document, as may be required andaccount may be opened. The Bank reserves to itself theright to refuse to open and account without assigningany reason.

Each account shall be allotted a distinct number that isto be quoted in all correspondence with the bankrelation to the account.

Minimum amount for opening and continuedmaintenance of various types of accounts is as follows:

Rs.

Saving 500

Current 500

Term Deposit 1000

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The bank reserves the right to change the above mentionedminimum balance requirement at any time without anynotice.

PROCEDURE TO OPEN AN ACCOUNT

According to my practice in National Bank of Pakistan, When

a customer wants to open an account, the bank officer giveshim an application form. All information, which is necessaryto be known by the bank, are requirements of theapplication form. Form also requires the essential documentsto be attached by the customer.

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Basically following information is required to open anaccount with National Bank of Pakistan.

Title of Account

Full Name of Applicant

Occupation

Address

Telephone No.

Currency of account

Nature of Business

Introducers Name, Address & Signatures

Special instruction regarding the account

Initial Amount of the Deposit

Signature of the applicant

DOCUMENTS TO BE ATTACHED

Further I learned that if you wanted to open an account withNational Bank of Pakistan then you should attach the

following documents with your application form which aredifferent for different categories.

SOLE PROPRIETORS ACCOUNT

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In order to open an account with National Bank of PakistanLimited Sole Proprietors have to submit their businessregistration certificate number.

PRIVATE / JOINT ACCOUTS

For individual or private or joint accounts National IdentityCard is required.

JOINT STOCK COMPANY

Before an account of a Public Limited Company is openedNational Bank of Pakistan Limited must ask the personauthorized to do so to submit the certified copies or thefollowing documents:

Certified true copy of the Memorandum and Articles ofAssociation of the company.

Certified true copy of the resolution of the board ofdirectors / managing committee / governing bodyregarding conduct of the account.

Certified list containing names and signatures of thedirectors / office bearers.

Certified true copy of the certificate of incorporation orregistration.

Certified true copy of the certificate of commencementof business (in case of public limited companies).

Balance Sheet

I.D. Card copy of each director

Original is also enclosed for inspection and return

List of persons authorized to operate the account.

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Power of Attorney in favor of the person openingaccount.

PARTNERSHIP FIRM ACCOUNT

Information which is required to be submitted to NationalBank of Pakistan Limited by a partnership firm in this case isas follows:

Full Names

Address

Specimen of signatures of the partners

Certified true copy of partnership deed Registration No. if the Partnership is registered

SOCIETIES / CLUBS AND ASSOCIATIONS ACCOUNT

National Bank of Pakistan Limited is authorized to open theaccounts of the societies/clubs and associations, These arenon-trading organizations, formed for the promotion of

culture, science, education, recreational activities andcharitable purposes etc. some of these institution areregistered under the Societies Registration Act, 1866, andare issued a certificate of registration after they have beenfound fit for registration.

ISSUANCE OF CHEQUE BOOK

When a customer opens an account with the bank, he isprovided with cheque book for withdrawals from account.However, the first cheque book is given to the customer onlywhen all the required documents are checked. A chequebook contains ten, twenty five, fifty or hundred leaves. The

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cheque book also carries a requisition slip for the issuance ofthe new cheque book. This slip is duly filled and singed bythe customer. The signature of the customer is verified bythe bank and new cheque book is issued to the customer

and serial numbers of the cheque are duly entered in thebook of the bank. Along with the signature, person shouldalso write his full name & address.

Usually only one cheque book is issued at a time, howeverbig concerns who need a number of cheque books at a time,may ask the bank to stock as number of cheque books intheir name and to point their name on these cheque books.

Bank debits the clients account for excise duty of Rs.2.50/-

per cheque and keeps the cheque book ready for thecustomer, as on his advice.

The officer keeps and maintains the cheque book registerCheque book inventory and cheque books issued arerecorded in this register. The account number for which thecheque book is issued and the number of leaves are alsorecorded in this register when the cheque book issued anentry is passed in the cheque book issue register.

In case of loss of cheque book or requisition slip on chequebook the customer has to fill the Form No. 216-B to obtain anew cheque book.

PAYMENT OF CHEQUES

In the National Bank of Pakistan Limited I learnt how tomake payment of a cheque. In fact I done the duty of tokenclerk mostly but I also worked and participated the

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procedure followed for the payment of cheques. Actually thecustomer is required to withdraw its deposits through thecheques out of cheque book issued to him drawn on thebranch where he is maintaining the account. The cheques

are paid in one of the following ways:-

By cash payment over the counter

By transfer (from one account to an other)

By collection/clearing

TOKENS / HANDLING / ISSUANCE

Before commencement of business, the cashier inchargeshall hand over the stock of tokens (supplied by C. O. K) tothe token issuing official against acknowledgement in thetoken issue (hand over) Register R-84, indicating therein thenumber of tokens received. Token issuing official shall countthe tokens received, arrange them in serial order in a pokerready for issuance.

At the close of the business, all un-issued tokens shall be

received back by the cahier incharge, against his initials inthe register from the token issuing official. He shall tally thetotal with the number of tokens issued in the morning byadding the number of tokens received back by him (fromcustomers) and number of tokens pending with thecustomer (if any). When the quantity of tokens physicallyheld by him agrees with the number of tokens issued in themorning, these shall be placed in the cash safe along withthe closing cash of the day.

The loss of any token need not to be circulated amount thebranches and be treated as local issue to be dealt by branchat its own. The paying cashier will keep a list of numbers ofthe tokens which have been lost.

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On presentation of cheque instrument for cash payment atoken shall be issued by the token issuing official afterscrutinizing its following aspects:-

1. The cheque/instrument presented relates to the branchand is not crossed.

2. The cheque/instrument is bearer or order, in case it is anorder one the payee is known to the branch.

3. The date on the cheque/instrument is in order. Theinstrument is not undated or post-dated or stale. Acheque is stale or out of date, which is more than sixmonths old on the date of presentation.

4. Amount in words and figures agrees and is absolutelycertain.

5. It has been duly signed by drawer i. e. the accountholder/issuing branch and is also signed by thepayee/bearer.

6. There is no alteration/cutting/over-writing.

7. The cheque/instrument is not mutilated, torn or cancelled.

8. All cancellations and alterations on the cheque

instruments have been authenticated by the drawer underhis full signature.

9. Crossed cheques/instrument presented by a bank forpayment at the counter is accompanied by its memo dullysigned by authorized person (s) of the presenting bank.

10. In case of telegraphic transfers the payee has signedrevenue stamps of adequate value affixed on the receipt,and his signatures have been verified.

11. Cash Payment voucher has been signed:

a) By manager and accountant/authorized officer of thebranch.

b) By the payee on the reverse.

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12. In case of demand draft/pay order payee has beenidentified and has signed on the back of the instrument.

After verifying the above points and satisfying thatcheque/instrument is apparently in order the token issuingofficial will affix the rubber stamp on the reverse of thecheque/instrument as per specimen given below. He shallgive token No. of the token being issued by him against thecheque, record the date and time of issuance and shall puthis initials at the relevant column. At the time of payment,cashier making the payment shall note down the time of

payment under his initial:-After recording token No., date and time on the back of thecheque, token issuing official shall state in the relevantcolumn. Token No. and Nature of Account, Name of Accountthrough bearer or self and amount on the payment side ofthe cash book. In case of telegraphic transfer demand draft,pay order and cash payment vouchers relevant head ofaccount, amount and other particulars shall be noted byhim.

The token made of brass, engraved with bank and branchname and serial number shall be delivered to the bearer ofcheque and other instruments ensuring that it is beingdelivered to the presenter only and in case of any doubtfresh signature of the presenter shall be taken beforedelivering the taken.

68

National BANK OF PAKISTAN LTD.

.....Branch

Token No.....

Date ....

Time Token Issued......

Initial ......Time of Payment ....

Cashiers Initial ......


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SCRUTINY OF THE CHEQUE BY LEDGER KEEPER BEFOREITS POSTING IN THE LEDGER OR ACCOUNT CARD

On completion of formalities referred above the cheque ishanded over to the ledger keeper and other instruments tothe concerned departments. Ledger keeper will againscrutinize check and verify the points as given below:-

The account on which cheque is drawn is neither closed

nor dormant or inoperative.

It bears token stamp on the reverse.

The cheque is of our bank and the branch.

The cheque is out of the cheque book(s) issued.

The signature of drawer is there.

The account number, title of account is there.

Is not un-dated, post-dated, stale or out of date.

Payment of the cheque has not been stopped by thedrawer.

There is no legal bar for the payment of chequeaccount is not attached, under lien or the accountholder is deceased.

The funds are available/sufficient to honor the chequei.e. the amount does not exceed the credit balance ofthe account (or the un-drawn portion of the sanctioneddrawing power in case of cash finance account orcurrent account) having approved running financefacility.

Amount in words and figures tallies.

No. previous entry in the ledger is un-authenticated.

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In case it is drawn on account marked as similaraccount, it should be ensured that the cheque is beingposted to the correct account.

Endorsement made thereon is prima facie in order. Alternations/mutilations/cuttings/over-writings, (if any)

is confirmed by the drawer under his full signatures.

In case cheque is presented in transfer delivery,Transfer Delivery stamp is affixed.

The collecting banks discharge is in order.

Crossings of other bank (if any) are properly cancelled.

Where the cheque has been presented through

clearing, it bears crossing and clearing stamps of thesame bank with date.

POSTING OF CHEQUES/OTHER INSTRUMENTS ANDFIXATION OF STAMP AS PER NATURE OF PAYMENT

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After proper scrutiny the cheque is posted in the ledger/cardfolio number/sheet number of the account is entered on thetop left corner of the cheque and Pay Cash or TRANSFERstamp as the case may be is affixed on the face of the

cheque. The ledger keeper shall sign on the cheque with thenarration Entered to signify that it has been posted afterproper checking and is in order.

In case transfer cheques another stamp as perspecimen given, is affixed:

Debits to an account against unlearned cheque are notallowed without the authority of the branch manager. Thecredit slips on local banks shall be retained till receipt ofproceeds from them. The credits to the accounts in respectof cheque in clearing shall be posted in the evening onreceipt of advices from the main branch (clearing) and

withdrawal against such credits will be allowed on the nextmorning.If payment of a cheque creates an authorized orunauthorized finance or a debit balance is within or excessof the authorized drawing power, then all such cheques beentered in the payment Authority Register (R-No. 65) withfull particulars of the cheque, the balance of the accountagainst which they are drawn and the amount of theauthorized drawing power and /or unlearned cheques (if

any) be presented in register to the manager, who shallwrite Pay or Return in the register under his initials. Incase of Return he shall add the objection under which it isto be dishonored. The officer incharge Deposits must see byreference to this register that no such cheque is paid withoutthe sanction of the manager.

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P A S S E D

Manager Accountant


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WHEN CHEQUES ARE RETUNED FOR INSUFFICIENTFUNDS THE RELATIVE MEMOS MUST BE INITIALED BY

THE MANAGER / ACCOUNTANT

The Officer Incharge Deposits/Accountants/Manager shallagain scrutinize the cheque and after satisfying himself thatthe cheque is in order in all respects he will pass it in theledger or in the account card for payment under his fullsignatures. The cheques shall be cancelled in red ink in sucha way that signatures of authorized officer cross out thesignatures of the drawer. Cheques shall be passed by

authorized officers singly or jointly in accordance with thesigning/passing powers delegated.The Cheque cancelled/passed for cash payment shall beforwarded to the paying cashier for payment.

HOW TO CLOSE AN ACCOUNT

The account can be closed by the customer at any point in

time. The customer is required to submit and application forclosing the account. Then the account is closed out and hisbalance is paid to him. Cheque book is returned back tobank and the officer cancel and the remaining cheques incheque book.

UTILITY BILLS COLLECTION

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THIR

D

WEE

K


I worked in the utility bills collection department as the

National Bank of Pakistan collects utility bills on behalf of

WAPDA, Sui Gas Companies, and Pakistan

Telecommunication Corporation Limited by putting the

stamp on the utility bills Paid, Date of payment, Signature

of the officer receiving the utility bills. After receiving utility

bills a list is made on the form which is called Bills scroll

form. One copy of the scroll is with the bank for evidence

whereas the original copy with the receipt of the bills is sent

to the billing department of the respective corporation. The

bank charge commission on the bills.

CASH MANAGEMENT

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FOUR

TH

WE

EK


The most important department of National Bank of Pakistanlimited which deals in money (receiving deposits at lower

rates and lend them out at higher rates of interest). Thisdepartment also called as Chest Department and manager ofit is called Cash Manager or Chest Manager. In thosebranches where this department is not separately existed,the branch manager performs the duties of the ChestManager.

The excess cash (More than its insured limit by theinsurance company) of the branches of the region iscollected by the main branch. The main branch is also bound

to send its excess cash (more than its insured limit) to theState Bank of Pakistan. No branch can have cash its safemore than its insurance at any time at the time of closingcash, if it is so the manager will be responsible (not theinsurance company) whether or not he informed to theregional office (exception to the limit which is insured for theday).New Notes and Prize Bonds are also part and parcel of theCash Management. Keys of the Safe lockers are with the

three authorized persons each one of them is responsible forcash as at the time of closing the cash the officers includingCash officer presented and lock the safe after counting andscrutinize the cash. The cash officer maintain its daily cashbook with specification of notes (Bonds are also recorded inthe books in relation with cash) and other vouchers, afterbeing satisfied the manager authenticates the books andvouchers regarding cash with stamp and signature. at theend I would like to conclude that the cash management is

being done in the National Bank of Pakistan Limited veryeffectively.

PROCEDURE FOR ADVANCING LOAN

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FIFT

H

WEEK


I also worked in the credit department, where I learnt aboutcredit applications. In this regard the bank adopts thefollowing procedure in order to grant a loan. A customerapplies for a loan to the manager, who says him to givedetails of his property. The details of the proposal and thephotocopies of the document to the title of property are sentto the legal advisor of bank. The legal advisor gives hislegal opinion upon the documents. The branch manager, inthe light of the opinion received from the legal advisor,

discusses the proposal with the advancing manager whetherto give or not the loan to the applicant. If manager allowsgranting the loan all the documents along with request letterare sent to regional office for approval. In the regionaloffice the proposal is analyzed and if the office is satisfied aconsent letter prepared which is signed by the regionalcontroller credit. This letter is sent to the branch manager.After receiving it the manager finance reviews the consentletter, and prepares a DAC (Disbursement Authorization

Certificate). DAC can be made only for people who have abank account.

The following documentation is made for loan.

An application or request letter for loan by thecustomer

Legal opinion of the legal advisor of the bank (for thetitle deeds)

Consent letter from the regional office

Vetting C

Documents

NBP Markiting Internship-Report