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Introduction

INTERNSHIP REPORT ON NATIONAL BANK OF PAKISTAN LIMITED (Circular road Branch D.I. Khan)

Submitted by:

Ali Raza MBA (Banking & Finance) Class Roll No: A-1 Exam Roll No: 462 Sessino: ( 2009-2011)

Date Of Submission:

September 16, 2010

Department of Business Administration Gomal University


Khyber.Pakhton.Khwa (Dera Ismail Khan) Pakistan

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Virtual University Of Pakistan

DEDICATION

I DEDICATE THIS REPORT To Holy prophet Hazrat Muhammad (P.B.U.H), to my parents who financially sport me, with out their help I will not be able to complete my BS (BA) Finance as well as my internship report.

Department of Business Administration Gomal University


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Introduction

ACKNOWLEDGEMENTS

I express my deepest sense of gratitude to Almighty ALLAH who enabled me to complete my BS (BA) Finance. I would also like to express my thanks and cordial passion to my Mr. Muhammad Younis Raza, Internship Supervisor for his utmost help, valuable suggestions and timely reviewing of my Internship Report. Acknowledgements are made with special thanks to Muhammad Bashir Shah OGII, Abdul Ghaffar Fawad OGII, and Hassan Ali Hashmat OGIII who sincerely helped me during the completion of my BS (BA) as well as internship report. I am extremely thankful to my parents and sibling, who remembered me in their prayers.

Ali Raza BC040400206

Department of Business Administration Gomal University


Khyber.Pakhton.Khwa (Dera Ismail Khan) Pakistan

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Introduction

Executive Summary Every student of Bachelor of Science in Business Administration (Finance) at Virtual University Of Pakistan has an essential requirement to do Eight-week internship in any of the well-reputed organization. The purpose of this program is to acquaint the students with practical applications of theoretical concepts taught to them during conduct of their BS (BA) Finance program. My internship was arranged at NBP, circular Road Branch, and D.I. Khan. Really, it this opportunity provided me a chance to have a close comparison of theoretical concept in practical field, involving the use of primary and secondary data. All the efforts on the way are summarized in shape of this Internship Report. This Report may depict deficiencies on my part but still it is an output of students efforts, for which I beg pardon. The output of my analysis is summarized in a shape of Internship Report, the contents of the report shows the detail of sequence of these. The report is concluded with problem and suggestions. I have no wards to express my gratitude to my advisors for their intellectual guidance without which it could have been rather difficult for me to complete this report.

February 04,2010

Ali Raza Roll No. BC040400206

Department of Business Administration Gomal University


Khyber.Pakhton.Khwa (Dera Ismail Khan) Pakistan

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Table of Contents: Chapter 1: Introduction Chapter 2: Management and Organization of the Bank Page 18 Chapter 3: Banking Operations Page 26 Chapter 4 General Operations Chapter 5 Practical Experience Chapter 6
Performance Analysis Of NBP

Page 8

Page 32

Page 52

Page 58 Page 69 Page 86

Chapter 7 SWOT Analysis BIBLIOGRAPHY

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Introduction

CHAPTER NO I

INTRODUCTION

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Introduction

1.1 Brief Introduction of the Organizational Business sector Commercial Banks operate under profit motive and perform various functions in a modern society. National Bank of Pakistan is a commercial Bank till with socioeconomic objectives e.g. to earn profit and at the same time develop the economy of the country and uplift the socioeconomic status of community. The main objectives of the Bank are as follows 1. MAXIMUM PROFIT

As the name of the Bank indicates that it was established to finance the nation. As a Business organization its objective is to earn more and more profit by the least expenditures. 2. GOOD Administrations.

A good administration is an objective of the Bank. Without proper administration no organization can run successfully. A good administration should have the following qualities:A: Quick decision. B: Correct decision.

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3.

CUSTOMER SERVICE.

The main objective of the Bank is to serve his customers. It serves the customers on both directly and indirectly. Bank collects money from an individual, firms, and limited Companies etc. It also gives loan to the people. 4. DEVELOPMENTS.

Banks spending large amount of its profit for its own development. Therefore, the large amount of its profit is spent on opening the new branches of the bank and increasing the work efficiency of the Bank. 5. EXPENDITURE DISCIPLINE.

Bank is trying to minimize its expenditure. So, it keeps strict control over expenditure and avoids wastage of money at every stage. Branch expenditure must not increase more then 15% of the last year's budget for correspondence. 6. REGIONAL INSPECTION.

Every branch should be inspected by Regional inspector at least once a month as directed by Principal Office under B.D. may verify from time to time.

7. MAXIMUM UTILIZATION OF STAFF.


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The staff requirement of the most branches is sufficient. However, services should be utilized systematically for effective functioning.

1.2 Overview Of The Organization

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Introduction

HISTORY OF THE N.B.P. National Bank of Pakistan was established on November 9, 1949 under the National Bank of Pakistan Ordinance No. XIX of 1949 in order to cope with the crisis conditions, which were developed after trade deadlock with India and devaluation of Indian Rupee in 1949. Initially the bank was established with the objective to extend credit to the agriculture sector. The normal procedure of establishing a banking company under the companies Law was set aside and the Bank was established through the promulgation of an ordinance due to the crisis situation that had developed with regard to financing of jute trade. The Bank commenced its operations from November 20th The history of the N.B.P. is part of Pakistan struggle for economic independence. In 1947 at the time of partition the economy of the country was mainly controlled by non-Pakistanis, most of them were Hindus. This partition of the Sub-Continent brought wide spread disturbance and bloodshed on both side of the border. This resulted in the mass migration of population from one country to another. In this situation the economy of the country influenced badly. At the time of independence it had been arranged between India and Pakistan that Reserve Bank of India should act as the common monetary authority for both countries up to end of September, 1948. But the arrangement did not prove satisfactory. In August 1947, Pakistan had been given a first installment of twenty corer of rupees, out of its shares of

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Introduction

cash balance of undivided India to meet immediate requirements. The balance amounting to fifty corer rupees was to be paid later, But when Pakistan demanded that amount, they refused to hand over the money unless Pakistan agreed to give up interest in Kashmir and thus the Government of Pakistan could not agree. This situation occurred, when Reserve Bank of India was functioning as the Central Bank of Pakistan. As a result of this experience, Pakistan felt it could not place any reliance on the Reserve Bank of India. It was clear that its own central Bank was an indispensable necessity and it was opened by the Quaid-e-Azam on the first of July 1948. When state Bank came into existence, it claimed its share of the assets of the Reserve Bank of India against the Indian currency, retired from Pakistan territory But again dispute arose. The dispute is still unsettled and these assets have not been delivered to Pakistan. Many other disputes occurred between the two countries. As a result of ratio controversy, the regular trade and payments between the two countries came to stand still. One of the immediate consequences of this situation was the withdrawal by Marwari merchants of the India Finance, which used to be employed annually for the movement of Pakistan's Jute Crop. A crisis of the first magnitude threatened, because the Jute Crop was already in the market and so there was no money to move it, prices begin to fall precipitously. At that time there was no JUTE in Pakistan, not a single jute loom or spindle and no posibi1ity of utilizing any of the crop within the country. As jute prices collapsed, foreign merchants and foreign Banks to promote agrarian nearest, it was very evident that the

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Introduction

Government of Pakistan could not afford to continue as a spectator of these developments. So two ordinance were passed immediately, one setting up the Jute Board, and the other the decision of establishing of National Bank of Pakistan. The object of the Jute Board was to re-organize and rehabilitate the Jute trade by helping parties to handle it and to stabilize the market. The National Bank was established to provide finance to suitable parties Thus it came about that The National Bank stood behind the Jute trade, the State Bank of Pakistan stood behind the National Bank and the Government stood behind the State Bank.

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Introduction

ROLE OF BANK IN ECONOMIC DEVELOPMENT Banks are the instruments of economic development. In the mobilization of money, the banking sector can greatly help the country. It can promote the growth of internal resources for development by attracting deposits from the public to the maximum possible extent and channeling these deposits into productive loans and investments. The Bank has been playing major role in financing developmental activities in Pakistan. National Bank of Pakistan has helped in the growth of economy in all spheres of our National life. It has contributed significantly to economic growth of the country and has served trade and industry, generally in wide sphere of operations. For the agricultural growth, N.B.P was the first Bank to introduce scheme of credit to small borrowers, farmers, craftsman, and small traders etc. The Bank advances liberal credit for rural and agricultural development and has taken the Banking services literally to the farmer's doors, small, short run loans given farmers are free of interest. It helps the farmers giving advances without interest in shape of fertilizers, seeds and other agricultural instruments so that the country may become self sufficient in wheat and other crops. The National Bank of Pakistan has been playing a major role in industrial development. The Pakistan Government has encouraged private enterprises by giving fiscal and monetary concessions and has tried to create a favorable climate for foreign investment in specified industries. The National Bank of Pakistan has continued to serve industrial needs in
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Introduction

its sphere all along. It provides usually short-term and in some cases medium term finances. The N.B.P has a predominant share in the total advances to the industry in country. This has been possible mainly because of the large resource at the disposal. The large number of branches all over the country which help them to attract large deposits, and the comparatively low rate of interest at which bank is able to make advance to the industry. National Bank of Pakistan has assisted to accelerate industrial growth in the country. Now Bank also provides finances to small-scale industries up to a period of five years. National Bank of Pakistan has introduced the people's credit facilities to the common man on a large and more liberal scale than before. The main objective of this scheme is to make a contribution towards building up of a strong middle class, which is essential for ensuring strengthened stability to a developing economy. Bank also helps to promote the establishment of new companies by underwriting their shares. Bank is making an ever-increasing contribution to the industrialization of the country. Through their foreign exchange business in Pakistan and operation abroad the Bank makes a contribution towards the earning of foreign exchange. The Bank has also introduced various saving schemes and a perpetual income plan on attractive term to encourage saving and promote social security.

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Introduction

The National Bank of Pakistan is working as an agent of State Bank of Pakistan. But it does not mean that the Bank has monopoly on Government Business. It also faces the keenest possible competition from other banks. The Bank has been able to maintain its position in the Banking System of the county and to make a substantial contribution to the development of economy. Efforts had been made, by its officers and staff particularly the senior officers to improve the working efficiency of the Bank, to secure more business and to build up sound working traditions. As regard the future, the task of the Bank is plain enough, it has been an instrument of National policy in the past, and so it shall continue in the years to come. Its doors have been opened for anybody, from anywhere in Pakistan. They will keep open as before. National Bank of Pakistan is trying to improve the work efficiency of their Bank and they want that their Bank and they want that their Bank should serve the people so the Bank is serving the nation by different ways and it is playing a major role in economic development of the country. It will continue to perform these tasks with the same enthusiasm and vigor. I trust and believe, it will always be said that the National Bank of Pakistan truly exists in the service of the National.

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Introduction

CHAPTER NO II

MANAGEMENT AND ORGANIZATION OF A BANK.

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Introduction

2.1

Organizational Structure

The management and organizational structure of N.B.P. are described as under: 1. BOARD OF DIRECTORS

In the management of the Bank, the Board of Directors is at the top of the controlling bodies. Since there are no private shareholders, so there is no general meeting of the shareholders and are no elected Directors. The Board consists of a nominated President, a Secretary and 9 other members. After nationalization of Bank in 1974 most of the powers of Board have been transferred to Banking Council and executive Board. The Secretary of the board has limited administrative powers. 2. EXECUTIVE BOARD

The general direction and supervision of the' affairs of the Bank lies in their respective Executive Boards. The President, Secretary and 0 other members of the Executive Board are appointed by the Federal Government. The President being the Chief executive of the Board directors controls and manages the affairs of the Bank. 3. CHIEF EXECUTIVE.

The President is the administrative head of a Bank. He presided over the meetings of the executive Board, manages and controls the affairs of the Bank. The President holds office at the pleasure of Federal Government.

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Introduction

4.

GROUP CHIEFS.

In order to improve the management and operation of a Bank, it has been split up into a number of Groups. Each Groups of a Bank is placed under this supervision and control of Group Chief or Senior Executive Vice president (SEVP) or Executive Vice President (EVP). 5. REGIONAL CHEIFS.

Each Group has a Regional Chief. Regional Chief that holds the posts of VP or SVP administers these Regions. 8. BRANCH MANAGERS.

Each Region is divided into several branches. The control and supervision of each branch is mostly entrusted to AVP or Officer of Grade I or II. A few big and financially sound branches are even administered by SVPS and VPS. It is important to be noted that the head Quarter of National Bank of Pakistan is located in Karachi

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Introduction

Organizational Hierarchy Chart of National Bank of Pakistan

CHAIRMAN CHAIRMAN

Board of Directors Board of Directors

Executive Committee Executive Committee

President President

Group Chief Group Chief

Regional Manager Regional Manager

Regions Regions

Branch Managers Branch Managers

Cash Deptt. Cash Deptt. Officer Officer

Admen. Deptt. Admen. Deptt. Officer Officer

Banking Deptt Banking Deptt. .

Officer Officer

Finance Deptt. Finance Deptt. Officer Officer

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Overseas Overseas Operation Operation Group Group Org Org Develop Develop &Training &Training Dept Dept

Operation Operation Group Group

Corporate Corporate Invest Invest Banking Banking Fin Group Fin Group Special Special Assets Assets Group Group

HRM HRM Dept. Dept.

Head Office Head Office Mgt Mgt Structure Structure

Strategic Strategic Plan && Econ Plan Econ Research Research Group Group

L.T L.T Planning Planning Dept. && Imp Dept. Imp Group Group Audit Audit &Inspection &Inspection Group Group
Commercial Commercial -19-19&Retail &Retail Banking Banking Group Group

Treasury Treasury Mgt Mgt Group Group Risk Risk Mgt Mgt Group Group

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Introduction

International Net Work

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Introduction

2.2

Plan Of Intern Ship Program

Introduction Of The Branch. The branch where I did the internship is National of Pakistan Circular Road Branch D.I.Khan (Code 1433). It is situated at East Circular road D.I.Khan in a in a very good Commercial area of the city. Duration Of My Intern Ship Program. I started my internship from very beginning of the month of May 2009 and completed on the end of June 2009. From 01.05.2009 to 30.06.2009 Ares Of Training. General Banking Section e.g. Remittances etc: 2 weeks Finance Department Section (Loans): 2 weeks Govt. Section (Pension etc): 1 week Computer Section: 2 weeks Cash Section: 1 week

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Introduction

CHAPTER NO III

BANKING OPERATION

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Introduction

3.1

BANKING OPERATION

The Bank provides a wide range of facilities for transacting money in and outside the country. Being' custodian of the money, it manages the assets in such a way that the Bank remain solve and liquid to a high degree so that it is able to meet the demand of the customers for cash payments. In the operation of a Bank, there is a close relation between the Banker and the customer.

BANK AND CUSTOMER

Banker is a person, whether corporate or not who carries on the business of the banking. The customer is a person who has some sort of account either current or fixed o~ some similar relation with a banker. BANKER AND CUSTOMER RELATION

The relationship between Banker and customer is primarily that of debtor and creditor with the rules reserved where the customers are relying on a loan from the banker.

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DUTIES OF A BANKER. 1. To honor customers cheques. The Banker's duty is to honor the cheques of the customers. i. ii. iii. iv. They are properly drawn. The customer has balances to his credit. The loan contract has been signed. There is no legal bar attaching to the customers funds.

2.

Standing orders: -

The Bank abides by the standing orders of the customers in making periodical payments on his behalf such as club, library and insurance perineum etc. 3. Secrecy of the customers. Account: -

The Bank owes a contractual duty not to disclose the customers financial position with out his consent. 4. Valuables for safe custody:-

The Bank takes care of the property deposited with it by the customers with or without charge. When a Bank does not charge, the Banker is called gratuitous bailey and when a specific charge is made, the Banker is then a paid bailey.

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ACCOUNTS OF CUSTOMERS. A Bank should not open an account for a customer unless a responsible person known to the Bank duly authenticates his integrity and responsibility. By opening of an account, the Banker usually gets the specimen signatures on cards. a. Authorities to sign an Account.

If a customer desires that his agent also operate on his Account, the Bank should get a precise written mandate from his customer. The person to whom the authority has been delegated will continue operating the account till the authority is revoked in writing. b. Mental patients: If the Bank comes to know of a customers lunacy, the Bank will immediately suspend the OPERATIONS on the account until the court gives order or the Bank has full proof that his customer has fully recovered. When the customers are mentally unsound, the court appoints a receiver who operates the accounts under the direction of Master in Lunacy. c. Husband and wife account:

If husband and wife both open an account the Bank will consider it an ordinary joint account. At the death of the husband, the widow is fully authorized to withdraw the balance.
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d.

Infants: -

An infant can open an account with a Bank, but he is not allowed to overdraw the account. If the infant customer wishes to have an over draft, an adult should draw and sign on indemnity contract.

e.

Partners: -

When the partner opens an account they are to sign a mandate authorizing any or their entire member to make with drawls. The partners are jointly responsible for all the loans and other obligation incurred by the firm. f. Societies, Clubs etc: -

If an incorporate body opens an account in a Bank, the committee of management deputes certain of lice bearers to operate on the account. The bank obtains a copy of the resolution of the society or clubs appointing certain members to administrative funds. If there is any change in the committee of management, it is notified to the Bank immediately. The members of the society who are operating the account or not liable for any draft.

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g.

Death of customers: -

If a Bank receives the notice of a customers death, all operations on the account are suspended until the executors or administrators produce the probate. The executor or administrator places all credits received after the notice of the death of customer in a new account for disposal later.

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Introduction

CHAPTER NO IV

GENERAL BANKING OPERATIONS

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GENERAL BANKING DEPARTMENT This department consists of the following sections:1. 2. 3. 4. 5. 1. A. Account opening section. Deposit section. Clearing section. Remittance section. Accounts section. ACCOUNT OPENING SECTION: HOW TO OPEN AN ACCOUNT

There are certain formalities, which are to be observed for opening of a current or saving account with a Bank. These formalities in brief are as under I. FORMAL APPLICATION:

The customer is to filling "Account Opening Form 11 It is a formal request by a customer to the bank to allow him to have and operate the current or saving account.

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II.

SPECIMEN SIGNATURE When the Banker is satisfied about the integrity of the customer, he

agrees to open the account. The Banker obtains the specimen signatures of the customer on the signature book or on card.

III.

MINIMUM INITIAL DEPOSIT:In Pakistan the current account can be opened with a minimum of Rs.

500/- and PLS Saving Account with a minimum of Rs 100/- These amounts are also the minimum balances to be maintained by the account holders with the Bank. IV. OPERATING THE ACCOUNT. When an account is opened in a Bank, the Banker gives to the customer. i. ii. Pay in slip book. Cheque Book and passbook with a view to operate it.

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V.

PRECAUTIONS IN PREPARING THE PASS BOOK: -

The Banker should be careful in preparing the passbook however, the customer himself should. i. Send the passbook for making entries and also periodically check up them. ii. iii. iv. He should also see that the accountant initials the entries. The customer should verify the entries with own books of account. In order to safe guard the secrecy of the account, the customer should receive the passbook in closed cover. B. WITH-DRAWL.

Withdrawal is made on cheques supplied by the Bank. A new chequebook is issued only on receipts of the requisition slip attached to the chequebook issued previously and this presented along with the depositor passbook for entire against chequebook challan. Chequebook is issued on discretion of the branch manager.

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C.

INTEREST.

The current rate of interest allowed on deposit in saving Bank account is ascertained at the Bank. This rate is subject to change. The amount of interest is calculated for each calendar month on the lowest balance at credit of an account between the close of the sixth day of a month and the end of the month and only on every complete sum of ten rupees. Every account is made up half yearly to 30th June 31st December, and the interest calculated as above is added to the balance of each account as on these dates. Interest rates on different types of deposits on 31.12.2010 were as under. Profit for the half year ended December 31, 2009, on Profit & Loss sharing Deposits and Other Deposits shall be distributed at the following rates: Nature of Accounts
Title of Accounts 1 . S pe c i a l N o t i c e
D e p o s i t s

Rates of Profit
From (01-07-2009 to 31 -1 2-2009)

a). 7 to 29 days Notice b). Over 30 days Notice 2. Saving g Accounts a). Up to Rs.20, 000 b). Above Rs.20, 000 3. Term Deposits a). Three months b). Six months c). One year d). Two years e). Three years f). Four years g). Five years h). Above five years

5.00% p.a. 5.00% p.a. 5.00% p.a. 5.00% p.a. 5.30% p.a. 5.60% p.a. 5.80% p.a. 6.10% p.a. 6.40% p.a. 6.70% p.a. 7.10% p.a. 7.80% p.a.

NBP PREMIUM AAMDANI CERTIFICATE:


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Monthly Income Scheme Period 1st Year (from 1 to 12th months) 2n d Year (from 13 to 24th months) 3rd Year (from 25 to 36th months) 4t h Year (from 37 to 48th months) 5t h Year (from 49 to 60th months)

Rates (01-07-2009 to 31 -1 2-2009) 10.50% p.a. 10.75% p.a. 11.00% p.a. 11.25% p.a. 11.50% p.a.

Rates of NBP PREMIUM AAMDANI CERTIFICATE SCHEME are effective from July 01, 2009 on a l fresh deposits along with following previous conditions. But deposits accepted by Regions from July 01, 2009 to August 13, 2009 on existing declared rates w i l l be honored for profit payment t i l l August 13, 2009. Instructions have been issued by CRBG.
A.

Corporations Public / Private Limited Companies not allowed to

invest in Premium Aamdani Scheme. Previously Corporations and Public / Private Limited Companies were allowed to participate in the scheme. Now the Competent Authorities, has decided that the restriction on target customer to be reinstated.
B. Capping on Maximum amount of investment to be reinstated.

Originally in the scheme the maximum amount of investment allowed was Rs.5.00 Million, which was removed in July 2008. Now the Competent Authorities has decided to reinstate the upper ceiling of maximum amount of Rs.5.00 Million on deposits in the scheme.

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NBP PLUS TERM DEPOSIT CERTIFICATE:


Rates (01-07-2009 to 31-12-2009)
Period 1 Year 2 Years 3 Years 4 Years 5 Years 6 Years 7 Years 8 Years 9 Years 10 Years Rs.1 to Rs. 499,999 10.00% 10.25% 10.50% 10.75% 11.00% 11.50% 12.00% 12.50% 13.00% 13.50% Rs.0.500100 M 11.00% 11.50% 12.00% 12.50% 13.00% 13.50% 14.00% 14.25% 14.50% 15.00% Rs.101500 M 11.50% 12.00% 12.50% 13.00% 13.25% 13.50% 14.00% 14.50% 15.00% 15.50% Rs.5011000 M 12.00% 12.50% 13.00% 13.50% 13.75% 14.00% 14.50% 15.00% 15.50% 15.75% Over Rs.1000 M 12.50% 13.00% 13.50% 14.00% 14.50% 15.00% 15.25% 15.50% 15.75% 16.00%

Profit Rates will be applicable on new issuance only and will remain the same till the holding period of the certificate. Profit Rates, however, would be announced six monthly or as desired by the competent authorities and would be applicable on fresh issuance. CALCULATION AND PAYMENT OF PROFIT: Profit will be paid at maturity along with principal amount on noncumulative basis. For Example: If a certificate of Rs.500, 000/- is issued for three years will generate a profit of Rs. 172,500/- as per the following calculations.
Year 1. 2. 3. Rate 11.00% 11.50% 12.00% Calculation 500,000 X 11.00% 500,000 X 11.50% 500,000 X 12.00% Profit Amount 55,000/57,500/60,000/-

A total profit of Rs. 172,500/- and at maturity the customer will get Rs.672, 500/-, less Zakat and withholding tax where applicable as per rules and regulations.

ACCOUNT ENTRIES:

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All accounting entries pertaining to issuance of TDR, Profit Payment, Premature Encashment, Zakat and Withholding Tax Deduction will remain the same.

NATIONAL INCOME DAILY ACCOUNT (NIDA): SLAB Rs.2 Million & above NBP PREMIUM SAVER ACCOUNT:
Sr. # 1. 2. Current Parameters Profit Rate: 8.50% Rates (01-07-2009 to 31-12-2009) Parameters (Effective From 1 s t July, 2009) Profit Rate: 8.50%

Rates (01-07-2009 to 31 -1 2-2009)

5.00% p.a.

p.a.

p.a.

Minimum Monthly Balance: Rs.20, 000/Maximum Monthly Balance: Balance up to Maximum Rs.1.00 (Million) will earn Remain Same / No. Change

profit of u p to 8.50%, balance of

Rs.1.001 (Million) and above will earn regular savin g rate.

D.

TRANSFER OF AN ACCOUNT.

Account can be transferred to any other branches of N.B.P. free of charge. If a depositor wants to transfer his account, he presents his passbook personally or sends it to Bank and writes an application for the transfer of an account.

E.

CLOSING OF AN ACCOUNT:

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A depositor willing to do, his account must present his passbook in order that with drawls and the amount of interest due on the account is entered therein and final balance stuck. This balance is then paid to the depositor and his receipt is taken, the passbook is canceled, unused cheque forms on hand are also surrendered at the same time.

F.

SECRECY:

The secrecy of depositors account is the. Responsibility of every official engaged in the Bank service.

G.

MONEY DEPOSITED OR DRAWN BY POST:

When money is sent by post for deposit, the passbook and a letter starting the amount of the deposit and the number of the account accompany it. When a depositor wishes to withdraw money by post he must forwards his pass book with a letter starting the number of his account, the amount to be drawn and either the money is to be remitted by money-order or in currency notes registered.

H.

TYPES OF BANK ACCOUNT.


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i.

Saving account

Saving Account is that account in which customer puts his surplus money which he saves from his daily expenditure. Depositing a minimum cash of Rs. 5/- can operate the account. Small percentage of interest is allowed on the balance of this account.

ii.

CURRENT ACCOUNT:

The current account is that one which the customer draws his daily cheques and is normally operated by the Businessmen. It can be operated by minimum amount of Rs. 500/- any number of cheques amounting undue minimum balance limit can be issued by the account holder for withdrawal or for payment. No interest is allowed on this account.

iii

JOINT ACCOUNT

A joint account occurs when two or more than two customers have one account. The parties to a joint account are considered in law as they are one person.

iv.

PROFIT AND LOSS SHARING ACCOUNT.

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This can be operated by ~ person, firm or organization by depositing Rs. 100/- or above. The holder of this account will get profit of his amount, or he will bear the loss as the case may be. So an individual is equally participant in profit and loss. The holder of account can withdraw up to Rs. 15,000/- per month is eight withdrawals, in case of higher withdrawal, seven day prior notice is necessary. This account is operated under interest free system. v. FIXED DEPOSIT ACCOUNT.

In this account an amount is deposited into the Bank for a fixed period of time. The fixed period may be three months, six months, one year, two years, five years and more. The Bank allows a higher rate of interest for larger period. At the time of operating on account the Bank issues deposit certificates for the period and amount. The account holder cannot withdraw his amount before the specified period, but the same Bank will allow loan against that certificate. Bank is liable to give interest on this account on maturity date. 2. DEPOSITS SECTION:

There are two types of deposits i.e. current and saving there are different forms present in the section of or deposits.

1.

Current account form.


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2. 3. 4.

Saving account form. Private or individual form Private firm account form

In he above-mentioned forms, the bank makes an agreement with his customers. 3. CLEARING SECTION.

Every Bank performs the paying and receiving functions. Cheques are collected which are drawn up to Banks for customers. Similarly the cheques drawn on different Banks and deposited by Banks own customers for collection within the city is know as clearing The functions of receiving and paying is mostly done through the clearing house. A clearing house can be defined as "AA place where that representatives of all Bank get together to settle the receipts and payment of cheques drawn on each other" Clearing House provides the facility which can hardly be dispensed with especially, in case of crossed cheques.

There are two main types of clearing. i ii Outward clearing Inward clearing.

i.

OUTWARD CLEARING:
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It includes those cheques and other instruments, which are sent by the Bank to the Banks for payment on behalf of its own clients. Cheques are sent to clearing house thorough local main branch. A delivery message from the local main branch comes to every branch at a fixed time to pick its outward clearing or outward returns as the case maybe. Outward Clearing at Branch a. b. c. d. e. Account number of payee/endorsee is written on the backside of the cheques. The instrument and the paying in slips are separated. The instruments are sorted I Bank-wise and branch wise. Schedules are prepared. Jotting of all the schedules are taken in the clearing House statement. Amount of the cheques in written in the "Delivered" and to pay column. f. g. h. After balancing the outward clearing, the pay in slips are released to C.D. department. After balancing, a transfer debit voucher is prepared. The instrument, schedule. etc. are delivered to the messenger from the main branch. ii. INWARD CLEARING.

The cheques drawn are called inward clearing. Drawn on National Bank through its representatives on the Bank presented by other Banks for

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payment It includes those cheques and other instruments of Pakistan branches which other Banks present at the clearing house. Inward Clearing At The Drawn Branch a. b. Number of instruments noted in the schedules is verified immediately. On receipt. The amount's of all the instruments are jotted down and totaled. If should be equal to the amount mentioned in schedule from the local main branch. c. d. e. The amounts are debarred to the relevant accounts if otherwise in order. The IBCO is prepared crediting the amount of the main branch. If there is any return, that is deducted from the total and IBCO prepared for the remaining amount. TYPES OF CHEQUES COLLECTED BY CLEARING SECTION. 1. TRANSFER CHEQUES.

These are the cheques which are collected and paid by same branch of N.B.P. For example Mr. Ali is a customer of N.B.P. of Khaplu branch and draws a cheque in favor of Mr. Hussain who is also the customer of the same branch.

2.

TRANSFER DELIVERY CHEQUES.

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The cheques, which are collected and paid by two different branches of a Bank situated in the same city. for example a person draws a cheque on N.B.P. main branch, D.I. Khan in favor of another person who maintains an account with N.B.P. Rakh Mandra branch, D.I. Khan. 3. CLEARING CHEQUES.

When the payee/endorse and the drawer of cheque maintains account with different Banks, the collection Bank in any one of the following methods:a. b. c. It can collect cash by sending its representative with the cheques to each of the paying Banks. It is not so much appropriate. The Bank maintains an account with the paying Bank. The cheques can be exchanged by representative of the various Banks who meet at a fixed time and at a fixed place. This is the most efficient method of collection and paying cheques. FUNCTIONS OF CLEARING SECTION IN A BRANCH. a. b. To accept transfer, transfer delivery and clearing cheques from the customer of the branch a~ d to arrange for their collection. To arrange payment of cheques drawn on the branch and gives for collection to any other branch of N.B.P. or any other member or such member of local clearing house. c. To collect amounts of cheques drawn on members of the local clearinghouse sent for collection by N.B.P. branches not represented at the local clearinghouse. PROCEDURE FOR CLEARANCE OF CHEQUE.
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The customers are provided with the copes of pay4n-slip, whenever the customer wants to deposit any cheque, he fills in the pay in slip himself and hands it over the counter along with the instrument. 4. REMITTANCE SECTION

Remittance means transfer of money from one place to another place. It is of two kinds. I. II. 1. Inland remittance. Home remittance.

INLAND REMITTANCE. An inland remittance means a transfer of money payable at a certain

place within the country. Inland remittances can be classified as under:-

a. b. a.

Within locality. Out side locality.

WITHIN LOCALITY

When a branch situated in D.I. khan is required to send drafts to any other branch situated in the same city the process is know as within locality. For example N.B.P. Main Branch, D.I. Khan sends any draft to N.B.P. Rakh Mandhra branch, D.I. Khan.

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b.

OUTSIDE LOCALITY.

Outside locality is an important type of inland remittances, which means the transfer of money payable outside the city. For example, N.B.P. Main Branch D.I. khan sends any draft to a Branch situated at D.I.Khan. It is commonly done through the following three means:i. ii iii Telegraphic transfer (T.T) Mail Transfer (M.T) Demand Draft (D. D)

i.

TELEGRAPHIC TRANSFER

In telegraphic transfer, the Bank takes commission and telegram charges from the sender. A receipt is issued to the sender for the value received. The Bank itself transfer the funds to the drawee branch though a coded message in telegram, confirmatory of which is also sent through routine dak mentioning all details. All bank Branches have been provided with their code books name Bank Keys Code Book where from the coded message is agreed by the drawee branch. T.T. can be sent open, which may be paid in cash in drawee branch, or may be direct y creditable to relevant account.

ii

MAIL TRANSFER (M.T.)

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The Money can be remitted through this means also. In this case the payable amount at the drawee branch can only be transferred to an account, amount cannot be paid in cash. Other procedure is same as T. deposit of money at sending branch. Difference is only of postage and. telegram charges. The M.T. that in its self is an advice also is sent by registered post, while T.T. is sent through telegram.

iii

DEMAND DRAFT (D.D)

Demand draft is a written order by a branch of a specified Bank, drawn on another branch of the same Bank to pay a certain sum of money only to or to the order of the Payee. Demand drafts are purchased by the clients and after receipt of money Bank issues and delivers the D.D. to the purchaser, who himself sends it to the payee. In D.D. the Banks do not recover postal charges as it is payable by the purchaser. The Bank, after deliver of D.D. to the purchaser also sends its own advice called IBCO (Inter Branch Credit Order) to the drawee branch mentioning therein all details of issued draft. 5. ACCOUNT SECTION.

Every Business organization deals in money matters. Bank also deals in money and more over since the money belong to the depositors therefore, it is of utmost importance to keep systematic and correct record.

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Further-more, the Banks are commercial institutions and its main objective is to earn profit, therefore, then record of all incomes and expenditures are kept correct an (t systematically. In N.B.P. the responsibility for maintaining necessary accounting data and to keep up to date records in a systematic manner has been assigned to the Accounts Department. The Branches of Bank Pt perform their daily routine work and deal in money that belongs k) deposii6rs. Here account department hold great importance in banking, because it keeps all the accounting records properly. ACCOUNTS TERMS. The account department maintains all the accounting records properly there are certain accounting terms, which are defined into the following 1. ACCOUNT

A summary of all debit and credit transaction pertaining to a similar nature or to an individual or body of persons is called an account. 2. VOUCHERS

Written evidence recorded on a price of paper in respect of a money transaction is called voucher.

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3.

GENERAL LEDGER.

Main ledger is a book, where various accounts of different type are kept. Generally this book is in banded form containing several sheets for several accounts. 4. SUBSIDIARY LEDGER.

Where a main head has got different sub-head of it: subsidiary leader are maintained. These subsidiary ledgers are maintained from the main ledger.

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Chapter NO V PRACTICAL EXPERIENCE

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5.1 PRACTICAL PAKISTAN

EXPERIENCE

IN

NATIONAL

BANK

OF

During my internship, I learned how to open an account and so many other works. As we know there are many types of accounts. For example current account, saving account, fixed account etc. Before opening an account

following are the requirements, which must be fulfilled by the customer. Two photo copies of computerized national identity card The photo copy of service card is provided.(if a person have job) Introducer signature and account number.(introducer is a person who have account holder of that bank) Three photos are provided, if a person is illiterate. Minimum rupees one thousand to open account and no limit for maximum.

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5.2 CREDIT SLIP: Credit slip is used when customer deposits cash into the bank. On credit slip customer name, account number, amounts in words and figures is written. Two authorized officer sign on credit slip and cash receipt stamp punch on the credit slip. One-slip issues to the customer and other slip used as a bank record.

5.3 CLEARING of CHEQUE: During my internship, I learned how to prepare clearing of customer cheque and draft with other banks. When a customer receives cheque of other bank and he / she want to deposit this cheque in his / her account. On credit slip cheque serial number, bank name amount in words and figure is written. The bank uses the services of NIFT (National Institutional Facilitation Technology). The bank officer record customer name account number bank /branch name on which cheque is drawn and amount is written in NIFT register .All the cheques of customers provides to the representative of the NIFT.

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After internal procedure of NIFT, the next day NIFT provides IBCO (Inter branch credit order) to the bank. After receiving IBCO the bank match the amount of IBCO with NIFT register. And after matching the balance bank credit the customer account and debit the bank/branch where the cheque is drawn.

5.4 VOUCHERS: Party Debit Voucher: Party debit voucher is used when bank issue the chequebook and charged the commission on draft and travelers cheque. Party debit voucher to record the expense of the customer and the amount is deducted on customer account. On party debit voucher bank record the customer name, account number, amount and summary.

Party Credit Voucher: When bank provide premium to the customer on saving account or fixed account. The bank record the amount of premium on party credit vouchers and write the customer name and account number and date.

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Simple Credit Voucher: Simple credit voucher is used when bank generate income in the shape of commission on traveler cheque / bank draft or issue of chequebook .The bank record his income on simple credit voucher.

Simple Debit Voucher: Simple debit voucher is used when bank provide cash for stationery and bank maintenance are recorded on simple debit voucher, stamp of shop keeper where the goods are purchased are necessary staple with simple debit voucher.

5.5 REGISTERS: Cash Receipts Register: When bank received cash from the customer are recorded on the cash receipt register.

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Cash Payment Register: Cash payment register is used when bank provide cash to the customer against the issue of cheque or provide cash for any other purposes. The cashier records all the payments on cash payment register.

Transfer Register: Transfer register is used when customer deposit cheque of any other branch, the amount of simple debit, simple credit, party debit and party credit vouchers with customers account number. All of these are recorded on transfer register. In the transfer register all the transaction are recorded with out cash transaction

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CHAPTER NO VI

PERFORMANCE ANALYSIS OF NBP

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Balance Sheet as on 31.09.2009


(Un-audited) Sept 30, 2009

ASSETS Cash and balances with treasury banks Balances with other banks Lendings to financial institutions-net Investments-net Advances-net Operating fixed assets Deferred tax assets-net Other assets

Note -------------------------------

(Audited) Dec 31, 2008 in '000) ----------------------------106,503,756 38,344,608 17,128,032 170,822,491 412,986,865 24,217,655 3,204,572 44,550,347 817,758,326

6 7 8

72,976,246 26,527,558 5,098,642 240,518,170 435,504,840 24,876,923 3,021,712 56,613,570 865,137,661

LIABILITIES Bills payable Borrowings Deposits and other accounts Sub-ordinated loans Liabilities against assets subject to finance lease Deferred tax liabilities Other liabilities NET ASSETS REPRESENTED BY Share capital Reserves Unappropriated profit

7,397,468 50,587,500 653,518,020 24,660 37,951,220 749,478,868 115,658,793

10,219,061 40,458,926 624,939,016 25,274 39,656,831 715,299,108 102,459,218

10,763,701 21,673,557 53,970,735 86,407,993 10 29,250,800 115,658,793

8,969,751 19,941,047 52,456,204 81,367,002 21,092,216 102,459,218

Surplus on revaluation of assets - net

CONTINGENCIES AND COMMITMENTS

11

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ANALYSIS OF SIX YEARS PERFORMANCE OF NATIONAL BANK OF PAKISTAN The performance of National bank of Pakistan can be examined by analyzing its different heads.(All the following amounts are Rupees in million) Fig .1 Six-Year Performance at a Glance
2003 2004 2005 2006 2007 2008

Total Assets Deposits (Rs. In Million) Advances (Rs. In Million) Investments Shareholders Equity Pre-Tax Profit (Rs. In Million) After-Tax Profit (Rs. In Million) Earning Per Share (Rs.) Return on Assets
(Pre-Tax Profit)

468,972 395,492 161,266 166,196 18,134 9,009 4,198 5 2%

553,231 465,572 220,794 149,350 24,900 11,978 6,195 7 2.40%

577,719 463,427 268,839 156,986 37,636 19,056 12,709 14 3.40%

635,133 501,872 316,110 139,947 53,045 26,311 17,022 19 4.30%

762,194 591,907 340,677 210,788 69,271 28,061 19,034 21 4%

817 .7 58 624,939 412,987 170,822 81,367 23,001 15,459 17 3.00%

Number of Branches Number of Employees

1,199 13,272

1,226 13,745

1,242 13,824

1,250 14,019

1,261 14,079

1,276 15,204

6.1.1 Assets If we analyze total assets, there is a consistent increase in total assets each year. In year 2001, total assets were 415,089. In 2005, its assets were 577,719. During these years, there was maximum increase in the assets. The increase was 162,630. Then from 2005 to 2006 increase was 57,414, which was also good. This increase shows that the assets increases in the six years, which is, batten for the organization.

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1.2

Deposits

Deposits of the National Bank of Pakistan increased during these sex years. In 2001 total deposits were 349,617 while after six years the sum of total deposits was 501,872. This shows the consistency of growth in National Bank of Pakistan. The year, which shows the maximum change, was from 2003 to 2004. In this year the increase in deposits was 70,080. The year, which shows minimum increase in deposits is from 2001 to 2002.

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Fig 6.2

6.1.3 Advances Advances of National Bank of Pakistan have increased from 170,319 to 316,110. The best year for the advances was from 2004 to 2005. In this year increase in advances was of 48,045. From 2001 to 2002, instead of increasing, the advances fell down from 170,319 to 140,547. But in very next year it has again increased.

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Fig 6.3 6.1.4 Investment National Bank of Pakistan has increased its investment up to 2001. Although this increase was not consistent. From 2001 to 2002, its investment increased from 71,759 to 143,522 which show an increase of 71,763. Then again in the next year they increased investment from 143,522 to 166,196. But in the 2004 the investment fell down up to 149,350. After 2004 National Bank started to cut back its investment. Now in 2006 the Investment downs to the investment was 139,947.

Fig 6.4

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6.1.5 Share Holders Equity Almost every year, there is an increase in shareholders equity. From 2001 to 2006, it goes to 11,959 from 53,045. The maximum increase in the Share Holders equity was during 2005 to 2005. Shareholders equity increased from 37,636 to 53,045.

Fig 6.5

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6.1.6 Pre-Tax Profit Change in the Pre-Tax profit was consistent. From year 2001 to 2006, the Pre-Tax profit increased from 3,016 to 26,311. So, there was consistent change in Pre-Tax profit of National Bank of Pakistan.

Fig 6.7 6.1.7 After-Tax Profit Change in the After-Tax Profit was also consistent. From year 2001 to 2006, the Pre-Tax profit increased from 1,149 to 17,022. it is clear from the figure that there is consistent change in the after tax profit.

Fig 6.9
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6.1.8 Earnings Per Share From year 2001 to 2006, the EPS increased from 3.08 to 24.01, which shows the consistency. Which have positive impact for the owner's. The major change appeared from 2001 to 2006 is 20.93.

Fig 6.10

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6.1.9 Return on Assets (Pre- Tax Profit) Change in the Return on Assets (Pre-Tax profit) was consistent. From year 2001 to 2006, the Return on Assets (Pre-Tax profit) increased from 0.8 % to 4.3%. From 2001 to 2006 there is no downfall seen.

Fig 6.11 Fig 6.12


1260 1240 1220 1200 1180 1160 2003 2004 2005 2006 2007 2008 1204 1199 1245 1226

Number of Branches
1242 1250

6.1.10 Number of Branches National Bank of Pakistan reduced its operation from 2001 to 2003 by closing branches up to 2003. There is a decrease in number of branches during this period. But after 2003, it started to increase its branches. In 2001,

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total number of branches is 1245. This number was decreased to 1199 in 1996. But now the total number of Branches is 1250. Fig 6.13
15,500 15,000 14,500 14,000 13,500 13,000 12,500 12,000

Number of Employees
15,204 13,272 14,019 14,079 13,745 13,824

2003

2004

2005

2006

2007

2008

6.1.11 Number of Employees The number of employees of National Bank of Pakistan has decreased during 2001 to 2002 from 15136 to 12195. Then in the next year it increases to 13272. In the next year it again increase to 130745. In 2005 this number again raised to 13824. And now in 2006 the total number of Employees of National Bank of Pakistan is 14019.

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CHAPTER NO VII SWOT ANALYSIS BASED ON OBSERVATION:

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SWOT ANALYSIS BASED ON OBSERVATION:

SWOT Analysis is the most important part of the report, because it depends on my personal observation. Only a good, keen and comprehensive analysis leads to good recommendations for the improvement of the existing conditions. Therefore in NBP I have observed many things and I have analyzed them to the best of my efforts & knowledge. Through the technique of SWOT one can analyze the present performance conditions of a given organization and its weaknesses. Also the opportunities it can grab in the external environment and the threats it faces. This technique serves as a base for sound conclusion and recommendations. STRENGTHS Following are the main Strengths of NBP: 1. Serving as an Agent:

National Bank of Pakistan Circular Road Branch serves as an agent of State Bank of Pakistan. No other bank is allowed to do the Clearing task but NBP act on the behalf of SBP the clearing task. 2 No of Branches: Strength of NBP is that there are 1183 branches in Pakistan and 16 branches in overseas of NBP. So NBP staff members are scattered on the land of Pakistan and World to provide benefits and serve the people.

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Skillful Employees

The staff members of NBP Circular Road Branch are an experience, though they are not qualified people but yet they have enough experience to carry on the work of bank. It is said, Knowledge is power and experience is wisdom but experience cannot be defeated by knowledge. 4 Modernization: National Bank of Pakistan is the first bank, which has started a Foreign Exchange Company in order to regularize the inflows of foreign money and control the undesirable blackmailing of private foreign exchange companies in the country. It is the only domestic bank of the country, which has been awarded The Best Domestic Bank consecutively in 2001 and 2002. WEAKNESSES Following are the main weaknesses of NBP: 1. Delegation of Authority: National Bank of Pakistan to great extent is a centralized bank. The manager of the Circular Road Branch has very limited authority, especially in case of advances. Lack of delegation of authority creates problems and when the manager is not present in his office and customers have to wait for many hours. There is top to bottom flow of authority and lower level of employees cannot participate in the decision making process. The top level of the organization takes all the decision. This completely centralized decisionmaking decreases the interest and also reduces efficiency of the bank.
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2. Seniority Based Promotions: Promotion in NBP is purely on seniority basis rather than on performance. This really de-motivates the employees because they know that it doesnt matter whether they perform well or bad. 3. Job Rotation: Most of the employees work in a particular department and they specialize only in one department. In case of absence of one employee, any other employee cannot perform this work. In this way bank not only loses the business but also results in dissatisfaction of the customer. 4. Lack of Theoretical Knowledge of Employees: There is a lack of theoretical knowledge of the employees of National Bank of Pakistan. Although their work is mostly routine and practical but sometimes low background education can disturb the routine work. They have to consult the Regional Manager Office or General Manager Office. This factor affects their efficiency. 5. Discouragement of Small Depositors: The staff members give proper attention and respect to those customers who have deposited huge amount of money while the small depositors mostly; the salaried people are discouraged to open an account within the branch. In this way they discourage saving habits in the general public. 6. Lack of Discipline:
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During my training in National Bank of Pakistan, Circular Road Branch I observed lack of discipline in the way that some of the employees do not care about the office timings. They usually come late in the morning. Similarly employees take long leaves without any valid reasons. 7. Excessive Paper Work: There is excessive paper work in NBP, which takes more time and reduces the effective banking performance. 8. Lengthy Process of Loan: To meet the immediate requirements of the business, customers require quick financing but due to centralization of decision-making there are unnecessary delays in sanctioning of loans, resulting in dissatisfaction of the customers. 9. Inadequate Fringe Benefits: The main purpose of fringe benefits is to retain the employees in the organization on long-term basis. It has been analyzed that the package of fringe benefits offered by NBP is not much attractive as compared to other organizations. Recently NBP has furthermore reduced the fringe benefits of the employees that may result in de-motivation & reduction the performance of existing employees.

10.Low Rate of Return: Due to low rate of return, the depositors are drawing their money from the banks and depositing in the saving centers, which are offering a good rate of return as compared to the banks.

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11.Limited Application of Electronic Media: NBP is not utilizing the electronic media for its promotional campaign. There is lack of awareness among the customers and general public about the schemes offered by NBP. 12.Improper Working Conditions: Most of the branches of NBP are facing the problem of shortage of space like NBP, Circular Road Branch. The frequent movement of the staff in the managers office discourages the customers and it is also risky from security point of view. The arrangement of foreign exchange department in Circular Road Branch is even worse. There is lack of furniture and inappropriate arrangements of the seating for the customers. 13.Limited Application of Technology in Bank: NBP branches are not fully computerized, which is very important to provide the quick and quality services. 14.Political Interference: Banks are not free from political influences. Due to political pressures on the management for sanctioning the loans in favor of their political persons resulted in huge amount of bad debts because in this way the bank is unable to recover the loan very difficult, and these loans are not used for productive purposes.

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OPPORTUNITIES

Following are the main weaknesses of NBP: 1. Financing

Now a days people have enough savings and they want some luxurious types products such as Car, House and Business etc. So the opportunity for
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NBP is to start car financing scheme to be beneficial for the organization (Bank). 2. Modernization:

Another opportunity for NBP is to modernize itself because all other banks have best methodologies to compete others and market there products. As I know that NBP have not enough modernize system to be compatible with other banks. 3. Strong Competition:

As we know that todays era is the era of competition. In all the banks are involved in struck competition so; it is an opportunity for NBP to develop a strong marketing policies and campaign to further develop itself.

THREATS: Followings are the major threats for NBP: 1. Other Banks The major threat for NBP is other banks that have started function in such as Bank Alfalah, MCB, HBL, UBL, ABL, PICIC, Khyber Bank etc. These are

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the banks that NBP face competition with them. These banks provides a vide variety of services as compared to NBP. 2. Political Interference: Banks are not free from political influences. Due to political pressures on the management for sanctioning the loans in favor of their political persons resulted in huge amount of bad debts because in this way the bank is unable to recover the loan very difficult, and these loans are not used for productive purposes.

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FINANCIAL ANALYSIS The scope and purpose of financial analysis: Financial analysis is an evaluation of both a banks past financial performance and its prospects for the future. Typically, it involves an analysis of the banks financial statements and its flow of funds. Financial statement analysis involves the horizontal, vertical and various ratios analysis. It is used by such interested parties as creditors, investors and managers to determine the banks financial position relative to that of other. The way in which banks financial position and operating results are viewed by investors and creditors will have an impact on the firms reputation. ANALYSIS OF FINANCIAL STATEMENT Data presented in financial statement is of significance to analyst.

They develop the relation among the various items of balance sheet and income statement and interpret their results in theoretical perspective. For this analysis they adopt various tool and techniques.

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TOOL OF ANALYSIS 1. 2. 3. 4. 5. 6. Comparative Statement. Absolute increase/Decrease. Absolute Increase/Decrease in % ages Trend percentages Common size percentages Ratio analysis

1.

COMPARATIVE STATEMENT

In this statement two or more than two years data is presented for comparison. 2. ABSOLUTE INCREASE/DECREASE

It is a type of Horizontal analysis. It gives changes in absolute data intern of Rupees amount. It enables the analyst to point out the direction of business. 3. TREND PERCENTAGES

This is the second type of horizontal analysis. It is adopted to know the tendencies of business position. In it one year is chosen as base year and item of financial statement of base year related with other years relevant items.

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4.

COMMON SIZE PERCENTAGES

This method is for vertical analysis. It represents the change in percentages in relation to total assets, total liabilities and owner equity. In this method we take total assets, liabilities and owner equity and sales individually 100% and develop relationship with their relevant components.

5.

RATIO ANALYSIS

Ratio is mathematical relationship of one item to other items. For analysis these ratios are compared with other years relevant ratios or with the ratios of other companies of the same nature are industrial averages. Ratios are really adopted to know the liquidity, stability and profitability position of the company. ACCOUNT SECTION: Like other business organization banks also deals in money matters, as the bank is custodian of deposited money, therefore, it is of utmost importance to keep a chronological record, further more, the banks are commercial institutions therefore, the records of all incomes and expenditure are kept correctly and systematically. In Bank of Khyber, the responsibility for maintaining necessary accounting data and to keep up to date record in a systematic manner has been assigned to tin; account department. Hundreds of banks branches perform their daily routine work and deal in money that belongs to depositor. Here account

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section holder great importance in banking, because it keeps all the accounting records properly.

ACCOUNTING SYSTEM: In NBP under the companies Act 1913 accounts arc-maintained according to British System, According to this system every monetary transactions has got two fold effects, termed as debit and credit. National Bank Of Pakistan also follows the same procedure. Accounting Terms: 1. Account: A summary of all the debit and credit transaction pertaining to a similar nature or to an individual or group of persons called account. 2. Voucher: Written evidence recorded on a piece of paper in respect of monetary transaction called a voucher. 3. Main Ledger: Main ledger is a Book where various accounts of different types are kepi. Generally this book is in banded form containing several sheets for several accounts. 4. Subsidiary Ledger: Where a main head has got different sub heads of it, subsidiary ledgers for each sub head are also maintained. Thus subsidiary ledgers are maintained a part from the main ledger.

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Book and Stationary used by NBP In account section the following books and stationary are used. 1. Cash Book. 2. General ledger. 3. Abstract book. 4. Income and Expenditure Ledger. 5. Vouchers Register 6. Transfer Book. 7. Receiving Cashier book 8. Paying Cashier Book. 9. Supplementary. 10.Different Vouchers. FUNCTIONS OF ACCOUNT SECTION: The main functions of the account department of a branch are as following: 1. 2. Balancing and Maintenance of Book. Preparation of Statements.

During the course of daily business of branch a number of cheques arc presented by customers for cash payment, through transfer delivery, clearing and also a number of new accounts are opened and cash is deposited by the customers A number of new vouchers are recorded by debiting the account and crediting another account in branch. So in order to ensure that during the day all the transactions have properly been recorded, are completed in all respect and are posted in proper books by

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the branch. This recording is done on daily basis maintained by account section.

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BALANCING AND MAINTENANCE OF BOOKS: Balancing the cashbook means that all these transactions (cash, clearing and transfer) have property been recorded and there is no mistake in any voucher. a. b. c. d. Arrangements of voucher Preparation of supplementaries. Preparation of summery. Equating the total summary with the total of transfer books.

PREPARATION OF STATEMENT: To Judge the performance of branches, the Head Office requires periodical statements from banks through these statements the top management control performance of the branches and provides necessary guidance. The top management decisions depend upon these statements. The following are (lie important statement prepared by the account section, 1. 2. 3. 1. Balance Sheet. Pak Account Extract. Provisional Income and expenditure Statement. BALANCE SHEET:

Balance sheet or statement of affairs is prepared on bank printed proof or ma with the help of figure contained in the cashbook and general ledger. This statement is prepared on daily basis in the Branch. PAK ACCOUNT EXTRACT:
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Apart from account section, there is central accounts department functioning at Head Office. Each branch is required to submit its daily statement known as Pak Account Extract. According to prevailing procedure each branch prepares two separate statements. The extract is used for "original entries and other is used for Responding Entries".

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Reference And Sources:


1. Hasan, Mumtaz (1998). The story of NBP. Karachi. 2. Harold, Koontz and Heiz Weihrich (1984). Management. McGraw

hill 8th edition.


3. Nasir, M Saeed (2004). Banking, currency and finance. Faisalabad:

Kitab markaz.
4. Nasir, M Saeed (2000). Economic theory. Faisalabad: Ilmi kitab

khana.
5. NBP (2002). Annual report of NBP. Karachi. 6. NBP (2004). Bankbook instruction of NBP. Karachi. 7. NBP (2005). Economic bulletin of NBP. Karachi. Sekaran,

Uma.Research Methods For Business 4th Edition


8. Sekaran, Uma.Research Methods For Business 4th Edition

9. Shah Ali, Gohar, AVP, presentation on NBP.D.I. Khan 10.Shah, Ali, Gohar report on NBP Recruitment & Selection
11. www.nbp.com.pk
12.

www.sbp.org.

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