NBP Data

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.
Faculty of Administrative Sciences Kotli
Department of Business Administration
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
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. Shershah-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.
Then the a. Joint stock Bank c. Imperial Bank of India b. Exchange Bank 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
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.
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.
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
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
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.
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 the banks 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.
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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 2- Dr. Waqar Masood Khan 3- Iftikhar Ali Malik 4- Syed Shafaqat Ali Shah 5 - Sikandar Hayat Jamali 6 - Mr..Zubair Motiwala 7 - Mr. Khalid Malik Chairman& President Director Director Director Director Director Director
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Senior Management of National Bank of Pakistan

1- Masood Karim Shaikh 2- Shahid Anwer Khan 3- Dr. Asif A. Brohi 4- Muhammad Sardar Khawaja 5- S.M Rafique 6- Imam Bakhsh Baloch 7- Ziaullah Khan 8. Imim Akhter 9. Javed Mahmood 10. M. Nusrat Vohra 11- Nadeem A. Dogar 12- Dr. Mirza Abrar Baig 13- Mrs. Khurshid Maqsood Ali 14- Tahir Yaqoob 15- Mrs. Uzma Bashir SEVP SEVP SEVP SEVP SEVP SEVP SEVP EVP EVP EVP EVP EVP EVP EVP Group Chief, Organization Development and Training group 16- Syed Farhan Ahmed Financial Controller
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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.
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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.
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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
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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: Limitation: Safety: At all 400 branches of NBP No limit on purchase 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
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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
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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.
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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.
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Chapter no 3
OVERSEAS AND DOMESTIC OPERATION OF NBP

3.1 National Bank of Pakistan Among Top 10 Global Banks
Karachi National Bank of Pakistan s profitability has earned it a place among the top ten banks of the world. Global finance intelligence magazine, The Banker published by the financial times group, London has complied a merit list of 1000 banks on the basis of best profit on capital, capital to assets and profit on assets ratios. On the best profit on capital scale, National Bank of Pakistan has been rated as the highest in Asia and the 8th in the world. The survey also showed that banks from the Islamic world are becoming more efficient in performance. This year, five banks from the Muslim countries including Pakistan, Turkey, Indonesia and Libya are placed in the best ten banks of the world in terms of return on capital.
3.2 National Bank of Pakistan and Western Union

NBP teams up with Western Union Financial Services Inc. a worldwide money transfer service, to facilitate the remittance of money through legal channels. This mode of
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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.
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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 Chief Manager
Operational
Manage r
Compliance Offi Administration Manage
Foreign Pension Ex. Dept. H
Accounts
Dept.
Remittance Dept. Advances
Clearing
Dept.
Dept.
Officers dealing
Exports
Assistant
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Clerical Staff
Officers
Officers
Dealing wi
Officers
Dealing Officers wi
Clerical Staff
Postage Officer
3.5 Branches of National Bank of Pakistan

3.5.1Overseas Branches Total branches 18 04 01 01
Representative offices Subsidiary Joint venture
3.5.2 Regional Branches
Total branches
1208
Representative offices
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Subsidiary
04
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Chapter no 4
Departments of NBP
4.1 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.
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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
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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
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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.
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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
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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
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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,
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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
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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
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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.
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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.
34
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
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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 memberclearing 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
36
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
37
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
38
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) b) c) d) e) f) g) a) Transfer through pay order Transfer through demand draft Telegraphic transfer Issuing of SBP cheques Mail transfer Local/internal transfer Preparation of balance certificates 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
39
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
40
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.
41
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. 2. Outgoing FCY Remittance 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) 2) 3) 4) US$ (U.S. Dollar), GBP (Great Britain Pounds) DEM (German Mark) 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:
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1. 4. 1. Spot sell
Spot sell Forward purchase
2. 5.
Spot purchase Deposit
3. 6.
Forward sell Clearing
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
43
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
44
* * *
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's bank
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. 3. 5. 7. Bill of exchange Invoice performs Form of country of origin Insurance (if any) 2. Airway bill/bill of lading 4. E-Form 6. Packing list
4.7 Credit Department

In NBP the credit activities are played under a separate department. So the main activities of this department are: a) b) c) To give credit to customers Closely monitor the development in different accounts Reporting to SBP & head office.
What is credit?
45
"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. 2. 1. Funded facilities/cash credit Non funded facilities/Non cash credits 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. * * 1. Opening import letters Issuance of bank guarantee CASH CREDITS
Cash credits or funded facilities are of the following types.
46
a) b) c) d) a)
Running finance/overdraft Demand finance Term finance Discount/purchase export bills 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
47
Non-cash credit or non-funded facilities are described below: a) b) a) Letter of credit (L/C) Guarantees 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
48
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
49
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
50
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. 2. 3. Demand Drafts Mail transfer 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.
51
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
52
Assets
Cash and balance with other banks Balances with other banks Lending to financial institutions Investments Advances Other assets Operating fixed assets Deferred tax assets Total assets Liabilities Bills payable Borrowing from financial institutions Deposits and other accounts Liabilities against assets Other liabilities Deferred tax liabilities Total liabilities Net assets Share capital Reserves Unappropriated profit Total Surplus on revaluation of assets Total
Rs. In 000s 2007

71,196,956 31,019,330 16,282,942 156,985,378 268,838,779 23,941,056 9,454,365 577,718,80 6 1,741,156 8,756,847 463,426,602 16,629 23,496,910 4,462,718 501,900,86 2 758,167,94 4 12,178,495 12,354,256 19,372,523 37,635,706 38,182,238 75,817,944
Rs. In 000s 2008

78,625,227 40,641,679 23,012,732 139,946,995 316,110,406 27,113,698 9,681,974 635,132,71 1 10,605,663 11,704,079 501,872,243 13,235 26,596,300 2,387,073 553,178,59 3 81,954,118 7,090,712 13,879,260 32,074,677 53,044,649 28,909,469 81,954,118
6.2 Profit and Loss Statement PROFIT AND LOSS STATEMENT For the year ended September 30th, 2008
53
Particular
Rs. In 000s 2008

30,153,716 12,162,892 42,316,608 13,433,441 (17,283) 208,327 13,634,485 9,008,708 4,810,605 4,19,103 36,394,869 24.01 24.01
Rs. In 000s 2007

23,370,897 9,392,351 32,763,248 11,221,789 198,298 63,206 11,483,293 12,025,158 5,782,229 6,242,929 23,594,628 17.92 17.92
Net markup /interest income Net non-markup /interest income Total income Operating expense Administrative expense Other provisions Other charges Total operating expense Profit before tax Net taxes payable Profit after tax Profit available for appropriation Basic Earning per share Diluted Earning per share
6.3 Horizontal Analysis of Profit & Loss Statement
54
HORIZONTAL ANALYSIS PROFIT & LOSS STATEMENT

FOR THE
SEP 30TH, 2008

2007 (Rs.000) 33,692,665 4,926,604 1,718,478 1,205,638 177,839 41,721,22 4 10,321,768 (245,881) 2,446,739 23,069 11,221,789 198,298 63,206 6,346,584 30,375,57 2 Increase/ Decrease 10,095,96 3 1,218,024 1,173,277 128,202 449,779 1,306,52 4 3,313,144 (463,580) 628,984 (17,785) 2,221,652 (181,015) 145,121 2,941,647 8,588,16 8 %age change 30.0 24.76 68.2 252 31.31 100 32 (188) 25 (77) 19 (91.2) 229 46 28.27
Income & Expenditure Markup/Interest earned Fee Commission and Brokerage income Dividend income Income from Dealings Other income TOTAL OPERATING EXPENDITURE Interest Expense Provision For diminution in the value of investment Profit against nonperforming loans and advances Bad debts written off directly Administrative expenses Other provisions Other charges Taxes Total
2008 (Rs.000) 43,788,628 6,144,628 2,891,755 1,333,840 627,618 54,786,46 9 13,634,912 709,461 3,075,723 5,284 13,443,441 (17,283) 208,327 9,288,231 39,829,17 4
6.4 Horizontal Analysis of Balance Sheet HORIZONTAL ANALYSIS
55
BALANCE SHEET
AS ON
SEP 30TH, 2008 2007 (Rs.000) 71,196,956 31,019,330 16,282,942 156,985,73 8 268,838,77 9 23,941,056 9,681,974 577,718,8 06 1,741,156 8,756,847 463,426,60 2 16,629 23,496,910 4,462,718 501,900,8 62 75,817,94 4 5,908,927 12,354,256 19,372,523 38,182,238 CHANGE (Rs.000) 7,428,271 9,622,349 6,729,790 (17,038,7 43) 47,271,62 7 3,172,642 227,609 57,413,5 45 8,864,507 2,947,232 38,445,64 1 (3,394) 3,099,390 (2,075,64 5) 51,277,7 31 6,135,81 4 242,315 747,537 319,519 3,483,972 %age change (10.43) 31.0 41.3 (10.5) 17.5 13.2 2.40 9.937 509 33.65 8.28 (20) 13.19 46.51 10.21 8.09 10.000,00 4 32.8,013, 848 26.163,44 8 183.274,1
Assets Cash on Hand Balance with other Banks Lending to Financial Institutions Investments Advances Other Assets Operating Fixed Assets Total Assets Liabilities Bills Payable Borrowing from Financial Institutions Deposits and other Accounts Liabilities against assets of leasing Other Liabilities Deferred Tax liabilities Total Liabilities Net assets Share Capital Reserves Un-Appropriated Profit Surplus on revaluation of assets
2008 (Rs.000) 78,625,227 4,064,167 23,012,732 139,946,99 5 316,110,40 6 27,113,698 9,681,974 635,132,7 11 10,605,663 11,704,079 501,872,24 3 (13,235) 26,596,300 2,387,073 553,178,5 93 81,954,11 8 7,090,712 13,879,260 32,074,677 28,909,469
56
Total
81,954,11 8
75,817,94 4
6,135,81 4
53 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.
57
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
58
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
59
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.
60
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.
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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.
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Chapter no 1

1.2 Definition of Bank

Faculty of Administrative Sciences Kotli

Department of Business Administration

1.3 History of Banking

Faculty of Administrative Sciences Kotli

Department of Business Administration

1.3.1 Banking in Indo-Pak Sub Continent

1.3.2 Emergence of Public Banks in India

Faculty of Administrative Sciences Kotli

Department of Business Administration

1.3.3 Banking in Pakistan

Faculty of Administrative Sciences Kotli

Department of Business Administration

Faculty of Administrative Sciences Kotli

Department of Business Administration

Providing trade activities

1.4 Role of State Bank of Pakistan

Less Reliance on Foreign Trade

Financing Development for capital Formation

Assisting in the Development

Faculty of Administrative Sciences Kotli

Department of Business Administration

1.4.1 The Central Bank

1.4.3 Changing Scenario for Banks Operating in Pakistan

Faculty of Administrative Sciences Kotli

Department of Business Administration

Faculty of Administrative Sciences Kotli

Department of Business Administration

Faculty of Administrative Sciences Kotli

Department of Business Administration

National Bank of Pakistan

2.2 history of national bank of pakistan

Faculty of Administrative Sciences Kotli

Department of Business Administration

Faculty of Administrative Sciences Kotli

Department of Business Administration

Senior Management of National Bank of Pakistan

Faculty of Administrative Sciences Kotli

Department of Business Administration

2. 4 Mission Statement of NBP

be recognized in the market place by

NBP aim to be an organization that is founded on

Faculty of Administrative Sciences Kotli

Department of Business Administration

NBP shall work to

Create value for all stakeholders.

NBP aim to be people who

NBP have confidence that tomorrow we will be

2.6 Objectives of National Bank of Pakistan

Faculty of Administrative Sciences Kotli

Department of Business Administration

2.7 Services Provided By National Bank of Pakistan

2.7.1 Demand Drafts

Faculty of Administrative Sciences Kotli

Department of Business Administration

2.7.2 Pay Order

Faculty of Administrative Sciences Kotli

Department of Business Administration

2.7.3 Mail Transfers

TELEGRAPHIC TRANSFER (TT)

2.7.5 Foreign Remittances

Faculty of Administrative Sciences Kotli