A) DEPARTMENTATION

5.1 CASH DEPARTMENT

Cash department performs the following functions

5.1.1) Receipt

The money, which either comes or goes out from the bank, its record should be kept.
Cash department performs this function. The deposits of all customers of the bank are
controlled by means of ledger accounts. Every customer has its own ledger account and
has separate ledger cards.

5.1.2) Payments

It is a banker’s primary contract to repay money received for this customer’s account
usually by honoring his cheques.

5.1.3) Cheques and their Payment

The Negotiable Instruments. Act, 1881,

“Cheque is a bill of exchange drawn on a specified banker and not expressed to be

payable otherwise than on demand”2.

Since a Cheque has been declared to be a bill of exchange, it must have all its
characteristics as mentioned in Section 5 of the Negotiable Instruments Act, 1881.
Therefore, one can say that a Cheque can be defined as an:

“An unconditional order in writing drawn on a specified banker, signed by the drawer,
requiring the banker to pay on demand a sum certain in money to, or to the order of, a
specified person or to the bearer, and which does not order any act to be done in
addition to the payment of money”3. (Law of Banking by Dr. Hart, p.327).

5.1.4) the Requisites of Cheque

There is no prescribed form of words or design of a Cheque, but in order to fulfill the
requirements mentioned in Section 6 above the Cheque must have the following.

a) It should be in writing

b) The unconditional order

c) Drawn on specific banker only

d) Payment on Demand

e) Sum Certain in money

f) Payable to a specific person

g) Signed by the drawer

5.1.5) Parties to Cheque

The normal Cheque is one in which there is a drawer, a drawee banker and a payee, or no
payee but bearer.

a) The Drawer

b) The Drawee

c) The Payee

5.1.6) Types of Cheques

Bankers in Pakistan deal with three types of cheques

a) Bearer Cheques

Bearer cheques are cashable at the counter of the bank. These can also be collected
through clearing.4

b) Order cheque
These types of cheques are also cashable on the counter but its holder must satisfy the
banker that he is the proper man to collect the payment of the cheque and he has to show
his identification. It can also be collected through clearing.

c) Crossed Cheque

These cheques are not payable in cash at the counters of a banker. It can only be credited
to the payee’s account. If there are two persons having accounts at the same bank, one of
the account holder issues a cross-cheque in favour of the other account holder. Then the
cheque will be credited to the account of the person to whom the cheque was issued and
debited from the account of the person who has actually issued the cheque.

5.1.7) Payment of Cheques

It is a banker’s primary contract to repay money received for his customer’s account
usually by honouring his cheques. Payment of money deposited by the customer is one of
the root functions of banking. The acid test of banking is the receipt of money etc. from
the depositors, and repayment to them. This paying function is one, which is the
distinguishing mark of a banker and differentiates him from other institutions, which
receive money from the public. However the bankers’ legal protection is only when
payment is in ‘Due Course’. The payment in due course means payment in accordance
with the apparent tenor of the instrument, in good faith and without negligence to any
person in possession thereof under circumstances, which do not afford a reasonable
ground of believing that he is not entitled to receive payment of the amount therein
mentioned. It is a contractual obligation of a banker to honor his customer’s cheques if
the following essentials are fulfilled.

a) Cheques should be in a proper form:

b) Cheque should not be crossed:

c) Cheque should be drawn on the particular bank:

d) Cheque should not mutilated:

e) Funds must be sufficient and available:

f) The Cheque should not be post dated or stale:

g) Cheque should be presented during banking hours:

5.2 CLEARANCE DEPARTMENT

A clearinghouse is an association of commercial banks set up in given locality for the

purpose of interchange and settlement of credit claims. The function of clearinghouse is
performed by the central bank of a country by tradition or by law. In Pakistan, the
clearing system is operated by the SBP. If SBP has no office at a place, then NBP, as a
representative of SBP act as a clearinghouse.

After the World War II, a rapid growth in banking institutions has taken place. The use of
cheques in making payments has also widely increased. The collection as settlement of
mutual obligations in the form of cheques is now a big task for all the commercial bank.
When Cheque is drawn on one bank and the holder (payee) deposits the same in his
account at the bank of the drawer, the mutual obligation are settled by the internal bank
administration and there arises no inter bank debits from the use of cheques. The total
assets and total liabilities of the bank remain unchanged.

In practice, the person receiving a Cheque as rarely a depositor of the cheque at the same
bank as the drawer. He deposits the cheque with his bank other than of payer for the
collection of the amount. Now the bank in which the cheque has been deposited becomes
a creditor of the drawer’s bank. The depositor bank will pay his amount of the cheque by
transferring it from cash reserves if there are no offsetting transactions. The banks on
which the cheques are drawn become in debt to the bank in which the cheques are
deposited. At the same time, the creditors’ banks receive large amounts of cheques drawn
on other banks giving claims of payment by them.

The easy, safe and most efficient way is to offset the reciprocal claims against the other
and receive only the net amount owned by them. This facility of net inter bank payment
is provided by the clearinghouse.
The representatives of the local commercial banks meet at a fixed time on all the business
days of the week. The meeting is held in the office of the bank that officially performs the
duties of clearinghouse. The representatives of the commercial banks deliver the cheques
payable at other local banks and receive the cheques drawn on their bank. The cheques
are then sorted according to the bank on which they are drawn. A summary sheet is
prepared which shows the names of the banks, the total number of cheques delivered and
received by them. Totals are also made of all the cheques presented by or to each bank.
The difference between the total represents the amount to be paid by a particular bank
and the amount to be received by it. Each bank then receives the net amount due to it or
pays the net amount owed by it.

5.2.1) In-Word Clearing Books

The bank uses this book for the purpose of recording all the cheques that are being
received by the bank in the first clearing. All details of the cheques are recorded in this
book.

5.2.2) Out-Word Clearing Book:

The bank uses outward clearing register for the purpose of recording all the details of the
cheques that the bank has delivered to other banks.

5.3 ADVANCES DEPARTMENT

Advances department is one of the most sensitive and important departments of the bank.
The major portion of the profit is earned through this department. The job of this
department is to make proposals about the loans. The Credit Management Division of
Head Office directly controls all the advances. As we known bank is a profit seeking
institution. It attracts surplus balances from the customers at low rate of interest and
makes advances at a higher rate of interest to the individuals and business firms. Credit
extensions are the most important activity of all financial institutions, because it is the
main source of earning. However, at the same time, it is a very risky task and the risk
cannot be completely eliminated but could be minimized largely with certain techniques.
Any individual or company, who wants loan from NBP, first of all has to undergo the
filling of a prescribed form, which provides the following information to the banker.

5.3.1) Name and address of the borrower.

a) Existing financial position of a borrower at a particular branch.

b) Accounts details of other banks (if any).

c) Security against loan.

d) Exiting financial position of the company. (Balance Sheet & Income Statement).

e) Signing a promissory note is also a requirement of lending, through this note

borrower promise that he will be responsible to pay the certain amount of money
with interest.

5.3.2) Principles of Advances

There are five principles, which must be duly observed while advancing money to the
borrowers.

Safety

Liquidity

Dispersal

Remuneration

Suitability

a. Safety

Banker’s funds comprise mainly of money borrowed from numerous customers on

various accounts such as Current Account, Savings Bank Account, Call Deposit Account,
Special Notice Account and Fixed Deposit Account. It indicates that whatever money the
banker holds is that of his customers who have entrusted the banker with it only because
they have full confidence in the expert handling of money by their banker. Therefore, the
banker must be very careful and ensure that his depositor’s money is advanced to safe
hands where the risk of loss does not exist. The elements of character, capacity and
capital can help a banker in arriving at a conclusion regarding the safety of advances
allowed by him.

b. Character

It is the most important factor in determining the safety of advance, for there is no
substitute for character. A borrower’s character can indicate his intention to repay the
advance since his honesty and integrity is of primary importance. If the past record of the
borrower shows that his integrity has been questionable, the banker should avoid him,
especially when the securities offered by him are inadequate in covering the full amount
of advance.

It is obligation on the banker to ensure that his borrower is a person of character and has
capacity enough to repay the money borrowed including the interest thereon.

c. Capacity

This is the management ability factor, which tells how successful a business has been in
the past and what the future possibilities are. A businessman may not have vast financial
resources, but with sound management abilities, including the insight into a specific
business, he may make his business very profitable. On the other hand if a person has no
insight into the particular business for which he wants to borrow funds from the banker,
there are more chances of loss to the banker.

d. Capital

This is the monetary base because the money invested by the proprietors represents their
faith in the business and its future. The role of commercial banks is to provide short-term
capital for commerce and industry, yet some borrowers would insist that their bankers
provide most of the capital required. This makes the banker a partner. As such the banker
must consider whether the amount requested for is reasonable to the borrowers own
resources or investment.

e. Liquidity

Liquidity means the possibilities of recovering the advances in emergency, because all
the money borrowed by the customer is repayable in lump sum on demand. Generally the
borrowers repay their loans steadily, and the funds thus released can be used to allow
fresh loans to other borrowers. Nevertheless, the banker must ensure that the money he is
lending is not blocked for an undue long time, and that the borrowers are in such a
financial position as to pay back the entire amount outstanding against them on a short
notice. In such a situation, it is very important for a banker to study his borrower’s assets
to liquidity, because he would prefer to lend only for a short period in order to meet the
shortfalls in the wording capital. If the borrower asks for an advance for the purchase of
fixed assets the banker should refuse because it shall not be possible for him to repay
when the banker wants his customer to repay the amount. Hence, the baker must adhere
to the consideration of the principles of liquidity very careful.

f. Dispersal

The dispersal of the amount of advance should be broadly based so that large number of
borrowing customer may benefit from the banker’s funds. The banker must ensure that
his funds are not invested in specific sectors like textile industry, heavy engineering or
agriculture. He must see that from his available funds he advances them to a wide range
of sector like commerce, industry, farming, agriculture, small business, housing projects
and various other financial concerns in order of priorities.

Dispersal of advances is very necessary from the point of security as well, because it
reduces the risk of recovery when something goes wrong in one particular sector or in
one field.

g. Remuneration
A major portion of the banker’s earnings comes form the interest charged on the money
borrowed by the customers. The banker needs sufficient earnings to meet the following:

a) Interest payable to the money deposited with him.

b) Salaries and fringe benefits payable to the staff members.

c) Overhead expense and depreciation and maintenance of the fixed assets of the
bank.

d) An adequate sum to meet possible losses.

e) Provisions for a reserve fund to meet unforeseen contingencies.

f) Payment of dividends to the shareholders.

h. Suitability

The word “suitability’ is not to be taken in its usual literary sense but in the broader sense
of purport. It means that advance should be allowed not only to the carefully selected and
suitable borrowers but also in keeping with the overall national development plans
chalked out by the authorities concerned. Before accommodating a borrower the banker
should ensure that the lending is for a purpose in conformity with the current national
credit policy laid down by the central bank of the country.

5.3.3 Forms of Loans

In addition to purchase and discounting of bills, bankers in Pakistan generally lend in the
form of cash finance, overdrafts and loans. NBP provides advances to different people in
different ways as the case demand.

a) Cash Finance

This is a very common form of borrowing by commercial and industrial concerns and is
made available either against pledge or hypothecation of goods, produce or merchandise.
In cash finance a borrower is allowed to borrow money from the banker up to a certain
limit, either at once or as and when required. The borrower prefers this form of lending
due to the facility of paying markup/services charges only on the amount he actually
utilizes.

If the borrower does not utilize the full limit, the banker has to lose return on the un-
utilized amount. In order to offset this loss, the banker may provide for a suitable clause
in the cash finance agreement, according to which the borrower has to pay
markup/service charges on at least on self or one quarter of the amount of cash finance
limit allowed to him even when he does not utilize that amount.

b) Overdraft/Running Finance

This is the most common form of bank lending. When a borrower requires temporary
accommodation his banker allows withdrawals on his account in excess of the balance
which the borrowing customer has in credit, and an overdraft thus occurs. This
accommodation is generally allowed against collateral securities. When it is against
collateral securities it is called “Secured Overdraft” and when the borrowing customer
cannot offer any collateral security except his personal security, the accommodation is
called a “Clean Overdraft”. The borrowing customer is in an advantageous position in an
overdraft, because he has to pay service charges only on the balance outstanding against
him. The main difference between a cash finance and overdraft lies in the fact that cash
finance is a bank finance used for long term by commercial and industrial concern on
regular basis, while an overdraft is a temporary accommodation occasionally resorted to.

c) Demand Financing/Loans

When a customer borrows from a banker a fixed amount repayable either in periodic
installments or in lump sum at a fixed future time, it is called a “loan”. When bankers
allow loans to their customers against collateral securities they are called “secured loans”
and when no collateral security is taken they are called “clean loans”.

The amount of loan is placed at the borrower’s disposal in lump sum for the period
agreed upon, and the borrowing customer has to pay interest on the entire amount. Thus
the borrower gets a fixed amount of money for his use, while the banker feels satisfied in
lending money in fixed amounts for definite short periods against a satisfactory security

5.4 REMITTANCE DEPARTMENT

Remittance means a sum of money sent in payment for something. This department deals
with either the transfer of money from one bank to other bank or from one branch to
another branch for their customers. NBP offers the following forms of remittances.

a) Demand Draft

b) Telegraphic Transfer

c) Pay Order

d) Mail Transfer

5.4.1) Demand Draft

Demand draft is a popular mode of transfer. The customer fills the application form.
Application form includes the beneficiary name, account number and a sender’s name.
The customer deposits the amount of DD in the branch. After the payment the DD is
prepared and given to the customer. NBP officials note the transaction in issuance
register on the page of that branch of NBP on which DD is drawn and will prepare the
advice to send to that branch. The account of the customer is credited when the DD
advice from originating branch comes to the responding branch and the account is
debited when DD comes for clearance. DD are of two types.

a) Open DD: Where direct payment is made.

b) Cross DD: Where payment is made though account.

NBP CHARGES FOR DD5

I. Up to Rs. 50,000/- is Rs 50/- only

II. Over Rs. 50,000/- is 0.1%

 5.4.2) Pay Order

Pay order is made for local transfer of money. Pay order is the most convenient, simple
and secure way of transfer of money. NBP takes fixed commission of Rs. 25 per pay
order from the account holder and Rs. 100 from a non-account holder.

5.4.3) Telegraphic Transfer

Telegraphic transfer or cable transfer is the quickest method of making remittances.

Telegraphic transfer is an order by telegram to a bank to pay a specified sum of money to
the specified person. The customer for requesting TT fills an application form. Vouchers
are prepared and sent by ordinary mail to keep the record. TT charges are taken from the
customer. No excise duty is charged on TT. The TT charges are:

Telegram/ Fax Charges on TT = Actual-minimum Rs.125.

Cable telegram transfer costs more as compared to other title of money. In cable transfer
the bank uses a secret system of private code, which is known to the person concerned
with this department and branch manager.

5.4.4) Mail Transfer

When the money is not required immediately, the remittances can also be made by mail
transfer (MT). Here the selling office of the bank sends instructions in writing by mail to
the paying bank for the payment of a specified amount of money. Debiting to the buyer’s
account at the selling office and crediting to the recipient’s account at the paying bank
make the payment under this transfer. NBP taxes mail charges from the applicant where
no excise duty is charged. Postage charges on mail transfer are actual minimum Rs. 40/-
if sent by registered post locally Rs.40/- if sent by registered post inland on party’s
request.

5.5 HUMAN RESOURCE MANAGEMENT

Human Resource plays a vital role in the success of every service organization. They
interact between man and machine. Their attitude can win or loose the customer. The
positive attitude could only be created in a conducive environment, which can make the
staff dedicated towards the organization and its objectives. In reality the man is more
important than machine as it is the human which could get maximum out of machine to
keep a happy customer. However, most organizations give little importance to this very
important asset.

Various aspects related to human resource of National Bank of Pakistan are critically
examined in the following text:

5.5.1) Selection & Recruitment

Although the Bank believes in merit but in practice the selection of employees is not
done on merit. Most of the employees are low educated. This shows that candidates with
some strong family background or political pressure are given preference in recruitment
and qualified candidates are sometimes left behind.

5.5.2) Job for Life

Like the employee of public sector organizations in Pakistan, the employees of NBP also
enjoy their job for life. Since there is no risk of early retirement or redundancy in rank,
they do not perform with their full potentials. This is one redundancy in rank, they do not
perform with their full potentials, and this is one of the reasons responsible for the low
productivity of the employees of the Bank.
5.5.3) Performance Appraisal

The performance of employees of the Bank are appraised though their annual confidential
reports at the end of each year. This has become an outdated method of performance
appraisal and no longer used due to the following reasons:

1. The performance of employees is evaluated after quite a long time.

2. Element of subjectivity is involved in this method.

3. Employee’s participation is not ensured in the process of evaluation.

4. Objectives of employee’s are not quantified.

5.5.4) Inter Personal Relationship

Modern management acknowledges human resources as one ‘of the most important
assets of an organization. But by their very nature, human beings are also the most
unpredictable. Where a number of persons work together, interactions among them, of
necessity, will lead to conflicts and NBP is no exception. Most interpersonal conflicts in
NBP can be traced back to the following major heads.

Lack of Communication

Lack of communication is for the biggest reason for conflicts. Not only it is due to the
failure to send a massage but to an interpretation given to the massage by the receiver is
different from that intended.

5.5.5) Diversity in Values

Diversity in values, perceptions, cultural background and life-style is another reason

responsible for inter personal conflicts in NBP. Different values and perceptions about
the same issue, event or personality hinder understanding. When things come to such a
pavement, therefore, interpersonal conflicts are generated.
The dominant trend in all modern industrial societies of the world is merit and expertise,
which helps promote cohesion and reduce conflicts. But the feudalistic mindset is still
very strong in our set up and there is no tradition of tolerance for differing viewpoints.
Hence, interpersonal conflicts are generated.

5.5.6) Corruption

Our social acceptance of corruption gives rise to corruption at every level of social and
organizational set up. Corruption involves financial embezzlement, favoritism, nepotism,
cronyism and other number of such practices. All these cause resentment that keep
building up and lead to conflict sooner or later.

In the past few years, some cases of frauds have happened in different branches. The
reasons can be linked with the employee dissatisfaction of NBP.

5.5.7) Discipline & Authority

Maintaining discipline and implementation of authority (tables) in letter and spirit is the
key to success of any organization. In NBP, The authority tables are not strictly
maintained. Line managers are not fully equipped with the authority with no vertical or
horizontal interference.

5.6) DEPOSIT DEPARTMENT: -

It controls the following activities:

a) A/C opening.

b) Issuance of cheque book.

c) Current a/c

d) Saving a/c

e) Cheque cancellation

f) Cash
5.6.1 Account opening

The opening of an account is the establishment of banker customer relationship. Before a

banker opens a new account, the banker should determine the prospective customer’s
integrity, respectability, occupation and the nature of business by the introductory
references given at the time of account opening. Preliminary investigation is necessary
because of the following reasons.

i. Avoiding frauds

ii. Safe guard against unintended over draft.

iii. Negligence.

iv. Inquiries about clients.

There are certain formalities, which are to be observed for opening an account with a
bank.

• Formal Application

• Introduction

• Specimen Signature

• Minimum Initial Deposit

• Operating the Account

1. Pay-In-Slip Book

2. Pass Book

3. Issuing Cheque Book

a) Qualification of Customer

The relation of the banker and the customer is purely a contractual one, however, he must
have the following basic qualifications.

• He must be of the age of majority.

• He must be of sound mind.

• Law must not disqualify him.

• The agreement should be made for lawful object, which create legal relationship

• Not expressly declared void.

b) Types of Accounts

Following are the main types of accounts

1) Individual Account

2) Joint Account

3) Accounts of Special Types

 Partnership account

 Joint stock company account

 Accounts of clubs, societies and associations

 Agents account

 Trust account

 Executors and administrators accounts

 Pak rupee non-resident accounts

  Foreign currency accounts1

5.6.2 Issuing of cheque book:

This deptt issue cheque books to account holders.

Requirements for issuing cheque book

a) The account holder must sign the requisition slip

b) Entry should be made in the cheque book issuing book

c) three rupees per cheque should be recovered from a/c holder if not then debit his/her
account.

5.6.3 Current account

These are payable to the customer whenever they are demanded. When a banker accepts
a demand deposit, he incurs the obligation of paying all cheques etc. drawn against him
to the extent of the balance in the account. Because of their nature, these deposits are
treated as current liabilities by the banks. Bankers in Pakistan do not allow any profit on
these deposits, and customers are required to maintain a minimum balance, failing which
incidental charges are deducted from such accounts. This is because the depositors may
withdraw Current Account at any time, and as such the bank is not entirely free to
employ such deposits.

Until a few decades back, the proportion of Current Deposits in relation to Fixed
Deposits was very small. In recent years, however, the position has changed remarkably.
Now, the Current Deposits have become more important; but still the proportion of
Current Deposits and Fixed Deposits varies from bank to bank, branch to branch, and
from time to time.

5.6.4 Saving account

Savings Deposits account can be opened with very small amount of money, and the
depositor is issued a cheque book for withdrawals. Profit is paid at a flexible rate
calculated on six-month basis under the Interest-Free Banking System. There is no
restriction on the withdrawals from the deposit accounts but the amount of money
withdrawn is deleted from the amount to be taken for calculation of products for
assessment of profit to be paid to the account holder. It discourages unnecessary
withdrawals from the deposits.

In order to popularize this scheme the State Bank of Pakistan has allowed the Savings
Scheme for school and college students and industrial labor also. The purpose of these
accounts is to inculcate the habit of savings in the constituents. As such, the initial
deposit required for opening these accounts is very nominal.

5.6.5 Cheque cancellation:

This deptt can cancel a cheque on the basis of;

a) Post dated cheque

b) Stale cheque

c) Warn out cheque

d) Wrong sign etc

5.6.6 Cash

This deptt also deals with cash. Payment of cheques, deposits of cheques etc.

5.7 FOREIGN EXCHANGE/DEPARTMENT:

This deptt mainly deals with the foreign business. The main functions of this deptt are:

a) L/C dealing.

b) Foreign currency accounts dealing.

c) Foreign Remittance dealing.

5.7.1 L/C dealing

NBP is committed to offering its business customers the widest range of options in the
area of money transfer. If you are a commercial enterprise then our Letter of Credit
service is just what you are looking for. With competitive rates, security, and ease of
transaction, NBP Letters of Credit are the best way to do your business transactions.

5.7.2 Foreign currency account dealing:

This deptt deals with the foreign currency accounts which mainly include dollar account,
euro account etc.

5.7.3 Foreign Remittance dealing.

This is very important function of this deptt.

B) DEPARTMENTATION OF CIVIL SECTERIATE

BRANCH NBP.

Dividing an organization into different parts according to the functions is called

departmentation. So NBP Hayatabad township branch is divided into two main parts.

1. Cash Department

2. General Banking Department.

5.1 Cash Department:

Cash department mainly deals in cash. The Head of department is Mr. Imdad
Khan and two cashier Mehraban Shah and Faiq Shah the objective of cash department.

“To facilitate people in the payments of their bills and taxes and repayments of cash”

There are two main functions of cash department.

i. Payment ii. Receipts

 i. Payments are the function that they pay their cheques and pay cash.

ii. Receipts mean collection of utilities bills, taxes etc.

5.2 General Banking

In this section of the bank the general banking function is performed. It is divided
into five departments.

i. Remittances Department.

ii. Computer Department.

iii. Advances Department.

iv. Clearing Department.

v. Establishment Department.

5.2.1 Remittances Department:

This department is header by Zahoor Ahmad a very competent person. The objective of this department is:-

“To transfer the money of people from one place to another place in safe and
comparable way”

The main functions of this department are:

i. Issuing of demand draft.

ii. Issuing of Mail transfer.

iii. Issuing of Telegraphic transfer.

iv. Issuing of payment order.

v. Issuing of call deposit.

vi. Pension payments etc.

 vii. Closing and scrolling of government collections.

5.2.2 Advances department:

Every bank has a department which advances money to borrowers. In NBP

Hayatabad township branch the advances department is head by the Business Manager
Sir Asim and Operation Manager Sir Pervez. Both are very competent persons. The
objective of Advances Department is

“To facilitate people by giving short term and long term loans on easy terms and
conditions”.

The main function of this Department is to take surplus money from the people at
low rates and lend this money to borrowers at high rates to earn profit.

5.2.3 Clearing Department:

A clearing house is an association of commercial banks set in State Bank of

Pakistan for the purpose of interchange and settlement of credit claims.

In NBP Hayatabad Branch this department is headed by Ameer Shehzad having

experience of about thirty years. The objective of this department is to

“To facilitate customers for payment their Cheques of other banks”.

Two type of clearing books are maintained.

i. In word clearing books:

The bank uses this book for the purpose of recording all the cheques that are
being received by the bank in the first clearing. All detail of the cheques are recorded in
this book.

ii. Out word clearing book:

The bank uses outward clearing register for the purpose of recording all the details of
the cheques that the banks have delivered to other banks.
5.2.4 Computer Department:

This department headed by the accountant Tariq Afridi and two other persons Mr. Junaid
and Mr. Shahid are performing the real function.

The objective of this Department is to facilitate customers in payment of their cheques”.

The main functions performed by this department are:

a) Checking balance.

b) Deduction from balance on clearing cheques.

c) Issuing bank statements.

d) Dealing Western Union.

5.2.5 Establishment Department:

NBP Hayatabad Branch having an Establishment Department. This Department

consists of only one person Haji Misri Kha very competent and experienced person. This
department mainly deals with the branch employees. The main objective of this
department is to

“To regulate bank business”.

Main functions of this department are:

a) Keeps the record of attendance of employees.

b) Employee’s salaries distribution.

c) Employee’s bonuses etc.

SWOT ANALYSIS

SWOT analysis is an acronym that stands for strengths, weakness, opportunities, and
threats SWOT analysis is careful evaluation of an organization’s internal strengths and
weakness as well as its environment opportunities and threats.

“SWOT analysis is a situational which includes strengths, weaknesses, opportunities and

threats that affect organizational performance.”1

“The overall evaluation of a company strengths, weaknesses, opportunities and threats is

called SWOT analysis.”2

In SWOT analysis the best strategies accomplish an organization’s mission by:

1. Exploiting an organizations opportunities and strength.

2. Neutralizing it threats.

3. Avoiding or correcting its weakness.

SWOT analysis is one of the most important steps in formulating strategy using the
organization mission as a context, managers assess internal strengths distinctive
competencies and weakness and external opportunities and threats. The goal is to then
develop good strategies and exploit opportunities and strengths neutralize threats and
avoid weaknesses.

6.1 STRENGTHS:

6.1.1 OLDEST INSTITUTION:

NBP in one of the oldest bank of Pakistan and first nationalized bank Hence its customer
base is strength from this plus point as customers have more confidence in the bank. The
additional value services as the privilege for the bank.
6.1.2 ALTERNATE DUTIES IN SBP ABSENCE

The NBP performs additional services for its customers as well as the other bank
customer in the absence of SBP.

6.1.3 MORE DEPOSITS THAN OTHER BANK

NBP has the relative competence in having more deposits than the other bank. This is
because of the confidence the customer have in the bank. The bank being the privileged
and oldest bank in banking sector of Pakistan enjoys this edge over all others, lacking it.

6.1.4 EMPLOYEE BENEFITS

The employers at NBP are offered reasonable monetary benefit. Normally two bonuses
are given Eid-Ul-Fitar & Eid-Ul-Azha. This serves as an additional benefit and
competency for the bank and a source of motivation for the employees.

6.1.5 BROAD NETWORK

The bank has another competency i.e. it has broad-basses network of branches throughout
the country also more than one branch in high productive cities. The customers are
provided services at their nearest possible place to confirm customer satisfied.

6.1.6 STRICTLY FOLLOWED RULES &REGULATION:

The employees at NBP are strict followers of rule & regulation imposed by bank. The
disciplined environment at NBP bolsters its image and also enhances the over all out put
of the organization.

6.1.7 PROFESSIONAL COMPETENCE

The employees at NBP here have a good hold on their descriptions, as they are highly
skilled Professionals with back ground in business administration, banking, economics
etc. These professional competencies enable the employees to understand and perform
the function and operation in better way.
6.1.8 HEALTHY ENVIROMNMENT

The working condition in the NBP branch here is very conductive and favorable for
better output. The informal environment affects the performance of the employees in a
positive way.

6.1.9 RELATION BETWEEN STAFF AND OTHER EMPLOYESS

The bank enjoys a good plus point when it comes to the employee manager relationship
the hearing as removing of discrepancies if any, between the employees, and between the
manager and employees.

6.2 WEAKNESSES

6.2.1 LACK OF MARKETING EFFORT:

The bank does not promote its corporate image, services, etc on a competitive way.
Hence lacks far behind in marketing effort .A need for aggressive marketing in there in
the era marketing in now becoming a part of every organization.

6.2.2 NBP UNDER POLITICAL PRESSURE

The strong political hold of some parties and government and their dominance is
affecting the bank in a negative way. They sometime have to provide loan under the
pressure, which leads to uneven and adjusted feeling in the bank employees.

6.2.3 FAVORITISM AND NEPOTISM

The promotions and bonuses etc in the bank are often powered by senior’s favoritism or
depends upon their wills and decision. This adds to the negative factors, which
denominate the employees thus resulting in affecting their performance negatively.

6.2.4 LACK OF FINACIAL PRODUCT

The bank falls far behind when the innovative and new schemes are considered. It has not
been involved in the tug of war between the competitors to the accounts and strengthens
the existing customer base. This stands out to be the major incompetence and weakness
of the banks.

6.2.5 INEFFICIENT COUNTER SERVICES IN THE RUSH HOURS

During the rush hours, the bank is founded out to be a total flop to handle the mob of
people peaking from windows and doors. The bank has deficiency to operate in the stages
of rush hours where the people find them services entangled in a situation of nowhere
because they are not well served.

6.2.6 LACK OF COMPUTERIZED NETWORK

The bank lack the strength of being powered by the network of computers, which have
saved time, energy and would have lessened the mental stress, the employees have
currently. This would add to the strength if it were powered by network of computers.

6.2.7 LACK OF MODERN EQUIPMENT

The bank lacks the modern Equipment that is note counting machine computers. Even if
there is any equipment they lack to fall in the criteria of being rearmed as update and
upgraded

6.2.8 UNEVEN WORK DISTIBUTION.

The workload in NBP is not evenly distributed and the workload tends to be more on
some employees while others abscond away from their responsibilities, which server as a
demotivation factor for employees performing above average work.

6.3 OPPORTUNITIES

6.3.1 ELECTRONIC BANKING

The world today has become a global village because of advancement in the
technologies, especially in communication sector. More emphasis is now given to avail
the modern technologies to better the performances. NBP can utilize the electronic
banking opportunity to ensure on line banking 24 hours a day. This would give a
competitive edge over others.

6.3.2 MICRO FINANCING

Because of the need for micro financing in the market, there are lot of opportunities in
this regard. Other banks have already initiated, now the time has arrived when the NBP
must realize it and take on step to cater an ongoing demand.

6.4 THREATS

6.4.1 EMERGENCE OF NEW COMPETITORS

The bank is facing threats with the emergence of new competitors especially in terms of
foreign banks. These foreign banks are equipped with heavy financial power with
excellent and innovative ways of promoting and performing their services. The bank
has to take initiative in this regard or will find itself far back in competition.

6.4.2 POLITICAL PRESSURE BY ELECTED GOVERNMENT

The ongoing shift in power in political arena in the country effects the performance of the
bank has to forward loans to politically powerful persons which create a sense of
insecurity and demoralization in the customer as well as employees.

6.4.3 DOWNSIZING

The bank is currently acting upon the policy of downsizing which threaten the
environment of the bank Employees feel insecurity in doing their jobs and work, hence
affecting the over all performance of employees negatively.

6.4.4 CUSTOMERS COMPLAINTS

There exists no regular and specific system of the removal of customer complaints. Now
a day a need for total customer satisfaction is emerging and in their demanding
consequences customer's complaints are ignored
6.5 COMPETITIVE ANALYSIS

Porter’s five forces model:

This approach is widely used for competitive analysis. It is because of the high intensity
of competition among companies there five main competitive forces.

6.5.1 Rivalry among competitive firms:

It is a very powerful force among the competitive forces the strategies pursued by
one firm can be successful only to extent that they provide competitive advantages
over the competitor. These competitive strategies may be lowering prices, best quality
series. The NBP offering very low charges an demand draft, telegraphy transfer, mail
transfer and give other additional services to the customers and to the Nation.
Because NBP is a “Nation’s Bank”.

6.5.2 Potential entry of new competitors:

Whenever new firms ca easily enters a particular industry, the competition increases.
The gout restriction, tariffs, patents etc can stop new firm to enter into the business as
per Banking industry is concerned this market is already very situated in Pakistan and
there are banks with quality services and low charges. So there is no threat to NBP
from potential entry and NBP is also a public sector bank because of that no other
new bank not takes over it.

6.5.3 Potential Development of substitute products:

This is the third factor affecting the competitions. There may be some other product
can be substitute the product of that industry. For example banks offering sawing
schemes in Pakistan and these schemes are also offered by GPOs in Pakistan so they
must compete them in this field. If they offer low rates than GPOs so people will go
to deposit in GPOs. People concentration high rates so that’s why sawing PLS
accounts are more then current accounts. The next examples will ATM which
substitute presenting Cheques at counter and encash it. The NBP is lacking in this
field. It must improve in this field to compete the competitors.

6.5.4 Bargaining Power of Suppliers:

The bargaining power of supplier affects the intensity of competition, especially when
there are a large number of suppliers. In case of banks the suppliers are customers
they supply the money to banks. Now they must offer good services, quality, and
safety. Low charges etc to customers. In this field NBP is very good. B/C at offers
good quality services to customers. They charge low charges on remittances. So that’s
it is competitions other banks.

6.5.5 Bargaining Power of Consumers:

When customers are concentrated or large, or buy in volume, their bargaining power
represents a major force affecting intensity of competition. Now the number
customers in Pakistan for banks are very high. Banks offering variety of products and
services to their customers. NBP have a large number of customs. Now it must offer
good services and products to their customers to attract them to come to NBP.
GENERAL OBSERVATION

I have divided general observation in four parts. Which are as under. This analysis is
mainly based on my general observation.

• Problems at the branch.

• Function analysis.

• Administrative analysis.

• Personal management’s analysis.

8.1 PROBLEMS AT THE BRANCH

8.1.1 Customer Satisfaction

In NBP customer dealing is will, but during rush hour the customer has to wait for a long
time for their turn. It’s quite hard for a new customer or potential customer to get the
required information.

8.1.2 Poor record management and filing system

During my internship I observed that filing system of branch is not good. When certain
record is needed the staff has to struggle to find it out and a lot of time is wasted.

8.1.3 Unequal distribution of work

Work is not equally distributed. On one hand some employee have to work all day
without relaxing while some others have nothing to do at all. This not only creates
confusion among employees but also hurting and disturbing for overall setup of the bank.
And above all it results in dissatisfaction among customers as well.
8.1.4 Marketing visits

A useful mode of contact is through personal marketing visits. Such visits are important
in informing and perusing the existing and potential customers about the products and
creating a sense of belongingness with them.

8.2 FUNCTIONAL ANALYSIS

8.2.1 Formal Organization

Formal organization includes the activities of two or more person, which are cautiously

determined groups and coordinated towards a given objective. It provides base when

people are able to communicate with other, when they have common purpose and they

are willing to work.

In NBP, we find a formal organization. Bernard referred to an organization as a formal

when the activities of two or more persons are coordinated towards a given objective.
The formal organization comes into being when people are able to communicate with one
another or willing to act and share a purpose.

In this formal organization of NBP the activities are carried out in a more formal way. In

theoretical terms it provides basis for communication with one another but in practice it is

not exercised because an employee at high level cannot get straight away to manager or

SVP and ask him about of his problem faced by him, because first he has to talk to his

immediate superior and follow a proper channel of communication.

8.2.2 Difference between theory and practice

A vast difference exists between theory and practice and NBP has written procedure but
practical work done by employees is a bit different from written procedures.

8.2.3 Bank duty to maintain secrecy.

They don’t care about maintaining secrecy, especially during the rush hours. They speak
loudly about the account position and while getting clearance of Cheques the person can
easily get the whole information from the ledge. The deposit clerk must be careful while
passing any Cheques. In this regard another shortfall is in giving the information about
the balance on telephone.

8.2.4 Excessive paper work

It is notified that due to the lengthy procedure of paper work the bank employee are over
burdened. They are unable to give proper attention to the clients and face difficulties in
getting their job done. One reason for lengthy procedure and excessive paper work in the
bank is the lack of computerized technology.

8.2.5 More accounts fewer deposits.

Efficient banking is one which does not emphasize on number of accounts but on greater
amount of deposits. NBP is more interested in increasing its number of account
irrespective to its deposit. The main reason behind it is that bank does not provide
personalize service to all the account holders and does not improve its quality and
services

8.2.6 Delegation of authority

Manager has very limited authority; he has to take the approval from his management
authority i-e. In case of advance he has to take the approval of general and regional
manager. The other problem is created, when the manager is not present in his office, the
customer have to wait for hours. This discourages both customer and officers because
they have to suffer a lot

8.3 ADMINISTRATIVE ANALYSIS

8.3.1 Job analysis is not effective

Only on the basis of job analysis it can be decided how a right person can be hired,

trained, compensated or promoted. It is very important for an organization that nature of

the job is described and job specifications are mentioned. Most of the employees are

simple graduate and do not have proper background about their job. This creates

problems both for organization and for the employees. In NBP salaries are given

according to the seniority and grades. People with simple or complex responsibility are

getting the same salary and facilities. This creates dissatisfaction among employees.

8.3.2 Carelessness in opening of account

When customer comes to open an account, the staff does not bother to check his/her place
phone number and permanent address. It is important because in case of overdraft by
mistake or anything which places his account in debit it will be difficult to trace him. On
the other hand he may be involved in any fraudulent activities against the bank. In this
case the bank will be in awkward position.

8.3.3 Lack of specialized training

NBP does not provide adequate facility of specialized training to their staff. Training is
generalized rather than specialized. As the worker finishes his training, he is inducted
into a specific field without having great deal of knowledge about the field.

In the Hayatabad branch the newly recruited employee training was not imparted, they all
learned things on the job.

8.3.4 Low Profit Rates

Most of the customers shifted their account to the National Saving Center because of the

low rates of saving deposit discourages the customers. Bank should increase their profit

rates to attract customers.

8.3.5 Poor job rotation.

There is absence of job rotation in NBP Hayatabad branch. A person placed in one
department remains their forever. It reduces career opportunities as well boredom and in
the end results in career platueing. Job rotation is very important for employee especially
for those who are newly recruited. The newly recruit should be rated in all department of
the banking in order to get familiar with working of different departments so that when
they get a responsible position they have know how of the whole system.

8.3.6 Delays in Loan Advancement

It has been observed that there are delays in sanctioning of cases form the head office,
which results in customer dissatisfaction.

8.3.7 Lack of appreciation

Another very important thing which is ignored in the bank is appreciation if the employee
on their good performance. If hard work and performance of employees is not recognized
and appreciated they become dishearten which results in decline in performance.

8.4 PERSONAL MANAGEMENT ANALYSIS

8.4.1 Need for better training program

Need of training is greatly emphasized all around the world. Training of the personnel is
part of human resource management. It has been noticed that the training program of
NBP is not adequate.

Once the candidate is selected and placed on the respective job. It becomes essential to
train him adequately for the task. They should learn new methods for motivating
customers. The training programmed of the bank should include scientific techniques to
improve the decision making and interpersonal as will individual needs of the employee
both specialized to fresh as well as on job to maintain the high standards of service.
8.4.2 Developing Managerial Leadership

Leadership is a practical term of visible, clear on objective and communicating better

control on financial and administrative matters. Manager is not only responsible for their

own units in business, but also in people terms i.e. training, recruiting, grievance handling

and taking immediate initiative in crisis situation to take major decision affection the

future of the bank and banking community.

8.4.3 Recruitment policy

Human resources are the lifeblood of the organization. If the personnel are recruited

carefully they can become asset to the organization in the case of carelessness a liability

on the organization. Bank is not following its recruitment policy properly due to

favoritism, nepotism and political pressure. Both the top authority and staff union tries

their best recruit their favorites, indulgence of political pressure add salt to the wounds.

The persons selected through these channels are infantile and do not work for the

betterment for the bank.

8.4.4 Promotions

Promotion in NBP is purely on the basis of seniority, so the new young person having
high qualification remains behind for quite a lot of time. Top management and staff union
put pressure for the promotion of their favorites, which gives a sense of deprivation to the
deserving employee and their efficiency is affected. As the concept of promotion is
attached with better in terms of greater responsibility, more prestige, greater skills and
increased rate of salary. Thus a better and impartial policy of promotion needs to be
followed.
8.4.5 Transfer

Transfer means when a person is shifted from one place to another place. It is done either
that person is needed more on the other branch or for improving his skill variety. It is the
policy of the Bank to transfer each employee 3 to 4 years.

8.4.6 Marketing at desk

Bank employee come in daily contact with many people who happen to deal with the

casual remittance, travelers cheques, safe custody, pensioners, depositing license fee and

variety of other functions and variety of other people with whom the Bank has no account

or regular business relationship. The Bank employees are doing very little on their own to

explore the possibilities of selling banking services to them as a marketing contributor.

The entire Bank community should make a conscious effort in addition to their normal

work to explore the possibilities of selling banking services to them. The market

opportunities are hidden in every dealing a banker handles; the question is that if he has

the art and urge to seize such opportunities.

8.4.7 Lack of business communication

There is no proper way to give information to their customer. To avoid this minor
dissatisfaction and tension in the mind of customer, and deficiency of the service, it is
recommended that the bank should provide brochures etc containing information in
details.

Some general information should be placed in information notice board on the entrance
where customer can see it easily or it should be self-attractive.