PRESENTED TO: Institute Of Bankers of Pakistan PRESENTED BY: Usman Khalid L3f09mcom5589 Section (C) Internship Report: National

Bank of Pakistan

UNIVERSITY OF CENTERAL PUNJAB

Acknowledgement

For the completion of our report I am indebted to plenty of people for their very sincere cooperation that they extended to me at various stages. First and foremost problem that every student faces is the selection of a Report. I am very thankful to my friend Nauman and Umer for helping me out in time of confusion. During our course and the execution of my report, I had a real chance to learn from his vast experience and immense knowledge.

Executive Summary:-

National Bank of Pakistan is the famous and reputed bank of Pakistan. National Bank of Pakistan maintains first position in banking sector in Pakistan. This report is based on the activities which are performed in this bank. This report contains marketing analysis, competitive analysis, SWOT analysis, bank tariffs and exchange rates of National Bank of Pakistan. There are also stated the activities which I performed during my internship in the branch. In this report also discuss the industry analysis of banking system in Pakistan. There are also mentioned the way of investment, rates of investment, all types of financing and loans facilities the National Bank of Pakistan provides.

TABLE OF CONTENTS
CHAPTER NO

CHAPTERS NAME
PREFACE ACKNOWLEDGMENT

PAGE NO

05 06 07 09 10 17 18 22 23 32 33 36 37 41 42 - 51 52 - 55 56 - 60 61 - 62 63 64

01 02 03 04 05 06 07 08 09

INTRODUCTION HISTORY OF THE NBP OBJECTIVE OF THE NBP BANKING OPERATIONS DEPARTMENTS IN NBP
PRINCIPAL OF ADVANCING MONEY

DEPOSIT MANAGEMENT REMITTANCES CRITICAL ANALYSIS OF NBP RECOMENDATIONS CONCLUSION BIBLIOGRAPHY

History:At the time of independence in 1947 Pakistans Commercial banking Facilities were almost jammed according to a plan. Well at the time of partition the entire banking system was in the control of Non-Muslims. When Hindu capitalist became sure of the partition of the subcontinent, they transferred their funds to India in safe places in order to destabilize Pakistan. Their was also a mass scale migration of Non-Muslims from Pakistan to India, which also caused a reduction in bank deposits

Industrial Sector:In 1947 Pakistan practically had no industries except a few food grains and Agricultural raw material and some textile mills, most of the industries were situated in the areas, which are now part of India.

Banking Facilities In Pakistan:At the time of partition Pakistan was lacking banking facilities and desperately need these services. Many of the banks closed their branches as a result of which only 81 branches remained open on 30th June 1948 out of 487 and people to fled to India because their head offices were in India. Imperial Bank of India was conducting government, receipt and payment work was closed down most of its branches thus blocking the funds needed most by government.

Formation of the State Bank of Pakistan:State Bank of Pakistan was inaugurated by Quaid-e-Azam Muhammad Ali Jinnah on 1st july 1948. This bank lost no time in meeting the national requirement of banking currency and took following serious step:National Bank of Pakistan was established in 1949, which opened its branches all over Pakistan and took over government agency work from Imperial Bank of India in 1952.

Withdrawal of the Indian Currency:National bank withdrew Indian currency notes of Rs.125 crore from general circulation and sent these for recovery to Reserve Bank of India.

Introduction:National Bank of Pakistan is the Pakistans premier bank which is 100% owned by the Government of Pakistan (Gop). National Bank of Pakistan has an extensive domestic branch network of more than 1500 branches located all over Pakistan and also has a presence in 24 international location including Europe, United Kingdom, USA and far East. The head office of NBP is in Karachi ever since NBP was established and has been the leading bank of Pakistan. The bank provides complete banking facilities to the people at over 1436 branches operating all over Pakistan and it equally provide its services in backward areas. Its balance sheet surpasses that of any other bank operating locally. It provides services to individual, corporate entities and government.

Share Capital Issued Capital:The bank was set up with an issued capital of Rs. 1.5 million.

Authorized Capital:Its authorized capital in 2000 was Rs.2.5 billion.

Issued Subscribed and Paid up capital:Issued, subscribed and paid up capital in year 2000 was Rs. 1.46 Billion.

ORGANIZATIONAL CHART OF NBP

DESIGNATIONS FO HIGHER LEVEL OFFICE: PRESIDENT

SENIOR EXECUTIVE VICE PRESIDENT GRADE 22

EXECUTIVE VICE PRESIDENT GRADE 21

VICE PRESIDENT GRADE 20

ASSISTANT VICE PRESIDENT GRADE 19

GRADE I OFFICER GRADE 18

GRADE II OFFICER GRADE 17

GRADE III OFFICER GRADE 16

Core Values
We aim to be an organization that is founded on Growth through creation of sustainable relationships with our customers. Prudence to guide our business conduct. A national presence with a history of contribution to our communities. We shall work to Meet expectations through Market-based solutions and products. Reward entrepreneurial efforts. Create value for all stakeholders. We aim to be peopling who Care about relationships. Lead through the strength of our commitment and willingness to excel. Practice integrity, honesty and hard work. We believe that these are measures of true success. We have confidence that tomorrow we will be Leaders in our industry. An organization maintaining the trust of stakeholders. An innovative, creative and dynamic institution responding to the changing needs of the internal and external environment

DEPARTMENT FUNCTIONING UNDER N.B.P

Account Opening Department Deposit Section Bills Remittance Department Clearing Department Cash Department Credit Department Pension Section

Issue of inland letter of credit Cash Department:Cash Department is the most important section in the bank. It performs the following three main functions:

Bank Payment and Receipt:Bank payments means cash payments to those persons who represent cheques and bank receipts includes cash deposits made by account holders.

Government receipts & payments:Government receipts means collection of income tax, property tax, sales tax and traffic challans. Government payments include salary payments to Govt employees and Pension payments.

Collection of utility bills:It includes collection of all utility bills which includes electricity, gas and water bills. It also includes ptcl bills. The following books are maintained in the cash department: Receiving Cashier Books Token Book Paying Cashier Book Scroll Books Cash Balance Book

Opening of an Account By Individual

After entering into bank premises the person goes through the following steps for opening an account in the bank and for becoming a bank customer.

1. An Introduction:The first important step to take place in bank is to get satisfactory introduction of the person, who wants to become banks customer. This introduction is made from the person /party who are respectable and honorable and have an account with the bank. In N.B.P (Circular Road Branch) the branch manager takes great care of this step and gets introduced with the person himself. His main intention is to determine the prospective customers integrity, respectability, occupation, and nature of business he is doing at the time of opening an account.

2. Account Opening Form and Specimen Signature Card:Now the person is provided with an application form known as Account Opening Form This form contains: Title of account Address I.D. Card number Telephone No. (Office and Residence)

Introductory reference (all above mentioned particulars of introducing him) Signatures of the applicant Amount deposited Check book series No.

The customer will attach a copy of National Identity Card with the form.

Specimen Signature Card:Specimen of signatures will be obtained from depositor at the time of opening his account. A specially designed card is used for this purpose; the card must be countersigned by an official of the bank not below the rank of an officer.

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3.Account Opening Register:

Now the name of the customer will be recorded in account opening register, and from here the account no. of the customer will be written on (top most corners) account opening form and on specimen signature card.

4.Issuance Of Cheque Book And Pass Book:

The cheque book will ordinarily be issued to all customers desiring to have chequing facility. Cheque book consists of 10, 25, 50, or 100 leaves depending upon customer requirement.. Customer can withdraw money by signing a cheque and writing the amount he wants to withdraw from his account. A special cheque book register is kept to enter the name of the person having cheque book.

5. PASSBOOK
PASSBOOK is another important type of book handed over to the customer as he opens the account with the bank. The withdrawal and deposit of money is recorded date wise in this book.

6. Recording into General Ledger:

The concerned officer records the name and amount deposited with the bank in to general ledger. Separate ledgers are maintained for different types of accounts e.g.

Current Account Ledger

Saving Account Ledger

Fixed Deposit Account Ledger

Call Deposit Account Ledger

As and when customer will deposit the money, amount will be credited in general ledger and the withdrawal will be followed by a debit entry in the ledger.

TYPES OF ACCOUNTS MAINTAINED BY NATIONAL BANK OF PAKISTAN (CIRCULAR ROAD BRANCH) NATIONAL BANK OF PAKISTAN:maintain following types of accounts:

1. Current accounts.

2. Profit and loss sharing account.

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3. Fixed deposit account.

4. N.I.D.A. Account

CURRENT ACCOUNT

This account is also known as running balance account. Simply we can say A bank account which may be used to lodge payments or to withdraw money on demand.

Its main purpose is to serve the businessman. Form number F-53 is provided to the person to open the account. It is a statutory requirement to maintain current account.

Its main features are: -

Minimum amount for opening this account is Rs.500

Any person can open the account with the bank

According to inter banks agreement interest is not paid on current account.

Bank act as custodian of money

Over draft facility is provided to the customers

Customer can withdraw money through cheque supplied by bank

Number of depositors in current account in National Bank of Pakistan up to 31-8-2001 were 900 approximately.

PROFIT AND LOSS SHARING ACCOUNT

In general it is also called saving account .To provide interest free banking facilities in Pakistan, this type of account was introduced in January 1982 after the islamization of banking.

The main features of this account are: -

Instead of having fixed return in the form of interest the deposited money will be shared in profit and loss of the bank.

One can open the account by depositing minimum Rs.100

Withdrawal is allowed 8 times in the month total not exceeding Rs.15000.

To withdraw a large amount a notice of 7 days to the bank is necessary.

There is not any kind of interest is provided on money deposited.

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Rate of profit is declared at the close of each half-year.

FIXED DEPOSIT ACCOUNT:This account is the major source of funds for the banks. This account is best for people who have surplus money and dont need such funds in nearer future.

The money is deposited for a fixed period of time. Main features of this account are: -

Fixed amount is deposited for fixed period.

Amount of profit can be obtained after each six months.

Higher will be the time period, higher will be the rate of profit, and vice versa.

A receipt is used for the amount deposited called fixed deposit receipt.

Period of deposit can vary from 3 months to 5 years.

The amount can be withdrawn before maturity after surrendering interest.

SERVICES
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 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 your business and personal needs.

LETTERS OF CREDIT

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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 their Letter of Credit service is just what you are looking for. With competitive rates, security, and ease of transaction, NBP Letters of Credit are the best way to do your business transactions.

TRAVELER'S CHEQUES Negotiability:

Pak Rupees Travelers Cheques are a negotiable instrument

Validity:
There is no restriction on the period of validity

Availability:
At 700 branches of NBP all over the country

Encashment:
At all 400 branches of NBP

Limitation:
No limit on purchase

Safety:
NBP Travelers Cheques are the safest way to carry our money

PAY ORDER
NBP provides another reason to transfer customers money using their facilities. Their pay orders are a secure and easy way to move customers money from one place to another. And, as usual, their charges for this service are extremely competitive.

Issuance of Pay order

1. for NBP Account Holder
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Rs. 50/- (Flat) 2. for NBP Non-Account Holder Rs. 100/- (Flat) Rs. 25/- (Flat) from student for payment of fee favoring educational institution

Issuance of duplicate Pay order

1. for NBP Account Holder Rs. 100/- (Flat) 2. for NBP Non-Account Holder Rs. 150/- (Flat)

MAIL TRANSFER:
Move your money safely and quickly using NBP Mail Transfer service. And they also offer the most competitive rates in the market.

FOREIGN REMITTANCES To facilitate its customers in the area of Home Remittances, National Bank of Pakistan has
taken a number of measures to: Increase home remittances through the banking system Meet the SBP directives/instructions for timely and prompt delivery of remittances to the beneficiaries

New Features:
The existing system of home remittances has been revised/significantly improved and welltrained field functionaries are posted to provide efficient and reliable home remittance services to nonresident Pakistanis at 15 overseas 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.
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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.

National Income Daily Account (NIDA)

The scheme was launched in December 1995 to attract corporate customers. It is a current account scheme and is part of the profit and loss system of accounts in operation throughout the country.

Effective 23rd December 2004 National Income Daily Account (NIDA) Slab Rate
Rs. 2 Million & above but below Rs. 25 Million 1.00 % Rs.25 Million & above but below Rs .50 Million 1.10 % Rs.50 Million & above but below Rs.100 Million 1.30 % Rs.100 Million & above but below Rs. 250 Million 1.50 % Rs.250 Million & above but below Rs. 500 Million 1.75 % Rs.500 Million & above but below Rs. 1000 Million 2.00 % Rs.1000 Million & above but below Rs. 2000 Million 2.25 % Rs.2000 Million & above but below Rs. 5000 Million 2.50 % Rs.5000 Million & above 2.75 %

EQUITY INVESTMENTS
NBP has accelerated its activities in the stock market to improve its economic base and restore investor confidence. The bank is now regarded as the most active and dominant player in the development of the stock market.

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NBP is involved in the following:

Investment into the capital market Introduction of capital market accounts (under process) NBPs involvement in capital markets is expected to increase its earnings, which would result in better returns offered to account holders.

COMMERCIAL FINANCE Let them help make your dreams become a reality
Their dedicated team of professionals truly understands the needs of professionals, agriculturists, large and small business and other segments of the economy. They are the customers best resource in making NBPs products and services work for them.

TRADE FINANCE OTHER BUSINESS LOANS

AGRICULTURAL FINANCE CORPORATE FINANCE

AGRICULTURAL FINANCE
NBP provides Agricultural Finance to solidify faith, commitment and pride of farmers who produce some of the best agricultural products in the World.

Agricultural Finance Services:

I Feed the World program, a new product, is introduced by NBP with the aim to help farmers maximize the per acre production with minimum of required input. Select farms will be made role models for other farms and farmers to follow, thus helping farmers across Pakistan to increase production.

Agricultural Credit:
The agricultural financing strategy of NBP is aimed at three main objectives:Providing reliable infrastructure for agricultural customers Help farmers utilize funds efficiently to further develop and achieve better production
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Provide farmers an integrated package of credit with supplies of essential inputs, technical knowledge, and supervision of farming.

Agricultural Credit (Medium Term):

Production and development Watercourse improvement Wells Farm power Development loans for tea plantation Fencing Solar energy Equipment for sprinklers

Farm Credit:
NBP also provides the following subsidized with ranges of 3 months to 1 year on a renewal basis. Operating loans Land improvement loans Equipment loans for purchase of tractors, farm implements or any other equipment Livestock loans for the purchase, care, and feeding of livestock

Production Loans:
Production loans are meant for basic inputs of the farm and are short term in nature. Seeds, fertilizers, sprayers, etc are all covered under this scheme.

CORPORATE FINANCE Working Capital and Short Term Loans:

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NBP specializes in providing Project Finance Export Refinance to exporters Pre-shipment and Post-shipment financing to exporters Running finance Cash Finance Small Finance Discounting & Bills Purchased Export Bills Purchased / Pre-shipment / Post Shipment Agricultural Production Loans

Medium term loans and Capital Expenditure Financing:

NBP provides financing for its clients capital expenditure and other long-term investment needs. By sharing the risk associated with such long-term investments, NBP expedites clients attempt to upgrade and expand their operation thereby making possible the fulfillment of their clients vision. This type of long term financing proves the banks belief in its client's capabilities, and its commitment to the country.

Loan Structuring and Syndication:

National Banks leadership in loan syndicating stems from ability to forge strong relationships not only with borrowers but also with bank investors. Because they understand their syndicate partners asset criteria, they help borrowers meet substantial financing needs by enabling them to reach the banks most interested in lending to their particular industry, geographic location and structure through syndicated debt offerings. Their syndication capabilities are complemented by their own capital strength and by industry teams, who bring specialized knowledge to the structure of a transaction.

Cash Management Services:

With National Banks Cash Management Services (in process of being set up), the customers sales collection will be channeled through vast network of NBP branched spread across the country. This will enable the customer to manage their companys total financial position right from your desktop computer. They will also be able to take advantage of NBP outstanding range of payment, ejection, liquidity and investment services. In fact, with NBP, youll be provided everything, which takes to manage your cash flow more accurately.

INTERNATIONAL BANKING
National Bank of Pakistan is at the forefront of international banking in Pakistan which is proven by the fact that NBP has its branches in all of the major financial capitals of the world. Additionally, NBP have recently set up the Financial Institution Wing, which is placed under the Risk Management Group. The role of the Financial Institution Wing is:To effectively manage NBPs exposure to foreign and domestic correspondence

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Manage the monetary aspect of NBPs relationship with the correspondents to support trade, treasury and other key business areas, thereby contributing to the banks profitability Generation of incremental trade-finance business and revenues

NBP offers:
The lowest rates on exports and other international banking products Access to different local commercial banks in international banking

SWOT Analysis Strengths Western union facility:

National Bank of Pakistan is only one bank which has the facility of Western union. In this particular scheme money is transfer in Pakistan from abroad. This is the fastest way to money transfer. You can receive the money from bank to see the name and password of particular client.

ATM finder:
There is also strength of NBP that they are found the ATM. They now provide this facility to the customers.

Governments bank:
In commercial banking system NBP is only the government bank. They make their policies according to the governments rules and regulations. It enjoys its position in the market of banking system in Pakistan. Government of Pakistan also facilitating the National Bank of Pakistan.

Customer satisfaction:
Because of governments bank, it is enjoying the customers satisfaction. Customers feels secure their money in NBP.

Weakness Lack of communication between employees:

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During the internship in NBP I found the problem of lack of communication between the employees and management. They have not very much understanding with each other and not share the work of each other.

Punishment is not very strong for employees:

Punishment threat is not very strong for employees. Some employees are not very professional in their field but top management not takes the action against such employees.

Public dealing is not very effective:

Public respect is not very effective in NBP. Employees are not taking care of the customers, especially in pension and bills department.

Staff shortage:
There is also weak point for NBP that staff is very short and more staff is required to meet the needs of the branch work. They help from internees.

Lack of respect of seniors:

They are not a healthy sign for NBP that respect of seniors is not up to the manners. Juniors try to avoid the seniors and no take the help from them.

Opportunities Growing banking system:

Nowadays banking system is growing quickly so NBP have opportunities to improve the standard and get the more share in the market.

NBP have government back:

In growing era there is a chance for NBP to improve itself and increase the shares in the market because it is most trustable due to governments bank.

Increase in economic activities:

The economic activities are increase nowadays, so banks are contributes more in economic activities. Banks are played role in trade and commerce. So the business of commercial banks is increase.

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Threats Increase in no. of banks:

Increase in no. of banks is a threat for National Bank of Pakistan. No. of private banks (commercial and private) are operating their business and provide the same facilities. So increase in no. of banks is a threat for NBP.

Modern type of banking:

Modern and computerized banking is required to fulfill the customers need. So maximum branches of NBP are worked in old traditional ways.

Highly skilled people and management

required to meet the new standard of banking. In NBP some employees are totally irresponsible and lack of complete knowledge of banking system. So these employees are creating continuous problems in the system of NBP.

The whole structure change to online :

NBP have wide network of branches. Only 130 branches are online, so it is very difficult and time consumed to convert all branches to online system. So there is also risk involves that if one commuter of one branch suffers in problem, all system and all commuters of all branches must be turnoff.

Objectives of National Bank:Its primary objectives were To earn the profit To develop the economy To provide the latest banking facilities to its customers To improve customer service To offer specialized services to major corporate

PURPOSE OF THE STUDY

The purpose of my study is to functioning of branch to analyze the overall performance of National bank of Pakistan in the finance and banking sector of Pakistan. The purpose of this study is to analyze the theoretical application of different fields of studies i.e. Management, Finance etc. in practical field of banking with reference to National bank of Pakistan. I have tried my best to cover each and every aspect of the branch.
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My Aim In The Organization:My aim in the organization was to seek banking knowledge which would be helpful in my practical life, to know what are those issues that occurs in banking sector and how they overcome those issues. How they mentain good customer service relation in order to retain their customers and clients.

LIMITATIONS OF STUDY
The following are most common hurdles which I internee felt: Secrecy of the bank. Non-availability of information Lack of Appropriate data Fidelity bond holder

Recommendation:It is strongly recommended that the bank should pay more attention towards internee so that they should learn more about banking sector in a friendly environment and provide the internee with the opportunity so that they he may learn more and should perform the assigned task in time. The internee should be asked to perform duties in each and every department.

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