Description
Complete Report of NBP by Rameez
NBP
Main Branch, Vehari
Internship Report
Submitted To:
MR.MUBASHIR MALIK
Submitted By: RAMEEZ SHAHID Session
2008 to 2010)
Department of Business Administration
UNIVERSITY OF LAHORE
Internship Report
NBP
LAHORE
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This Piece of work is dedicated to my revered parents, Who groomed my personality and provided Me all the facilities to complete my educational career. Their devotion, sincerity and love generated Me a positive approach towards humanity. I owe this achievement of my life to my parents Whose prayers always with me. I pray for their long life and prosperity.
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Acknowledgement
A
ll praises are for Almighty ALLAH who guides us through the darkness of unknown. All respects for Holy Prophet (PBUH) who enables us to recognize our creator and whose spiritual teachings guide us in every matter of life. I am also highly thankful to my honorable teachers for theirs guidance. Special thanks to “MR. Zafar” Manager Operations of National Bank of Pakistan main Branch Vehari, and all other employees of the branch for their cooperation. I cannot forget the kindness and cooperation of Mr.
Khalid and Mr. Ameer Hamza who are very honest to their work and organization. They provide me a lot of information and practical knowledge, many regards to them. I am also thank full to Mr. Naseer Bhatti for his cooperation.
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PREFACE
It is the requirement of the MBA program of University of Lahore that all students of MBA have to spend Six Week in any organization to get practical exposure and to get familiarized with the ways to live in the organizational environment which is dramatically different from the educational environment. That six week period called “Internship period”, if spent properly and sincerely, enables the students to be more confident, more knowledgeable, more responsible and more committed to its work in the practical field. I have also been assigned to do internship of six weeks period in National Bank of Pakistan Main Branch Vehari.It has enabled me to understand effective the practical so scenario our and sharpen our decision making power and utilizing the resources in an manner, that resources generate maximum profit. In preparing this report, I have put al of my best efforts and tried my level best to give maximum knowledge. Despite of my all the coherent efforts, I do believe that there will always be a room for improvement in the efforts of learner like me.
RAMEEZ SHAHID
mail.com
UNIVERSITY OF LAHORE
MBA FINANCE rameezshahid85@g
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Table of Content
Inde Explanation x
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Title Page Bissmillah Dedication
Acknowledgement
Page No.
1 2 3 4 5 6-8 9-11 12 12 13 13-15 16 16-18 19 20 21 22 23-24 25-27 28-30 30 31 32-35 35-36 37 37-39 40 41-43 44 45-46
Preface Table of Content Executive Summary Introduction to Banking What is National Bank of Pakistan What is Commercial Bank Banker and Customer Relationship HISTORY History of Banking Efforts toward Islamic Banking Vision & Mission Statement NBP in Vehari Branch Hierarchy Senior Management Management and Organizational Structure Members of Board of Director DEPARTMENTS OF NBP Cash Department Deposit Department Clearing Department Advance & Credit Department Account Opening Department Securities Types of Advances PRDUCTS OF NBP NBP Premium Aamdani
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Internship Report 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 NBP NBP NBP NBP NBP NBP NBP Premium Saver Karoobar Saibaan Advance Salary Cash Card Investor Advantage Cash n Gold
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47 48-50 51-52 53-54 55-57 58-59 60 61 62-63 64-65 65-66 67 67 68 68 68-69 69 70 70 71-72 73 73-74 75 75 75-76 76
NBP Kisan Taqat NBP Kisan Dost NBP Pak-Remit NBP Protection Shield SERVICES OF NBP International Banking NBP Pak Rupee Traveller’s Cheque Letter of Credit & Commercial Finance Foreign Remittance Swift System Short Term Investment N.I.D.A & Equity Investment Trade Finance and Other Business Loan Utility Bills & Foreign Currency Account Corporate Finance LEARNING AS AN INTERNEE General Banking Cheque at Counter Cheque Payment Procedure & Issuance of Demand Draft & Bills Collection Department Bills Remittance Department & Deposit Department Pension Payment Procedure Outward Bills For Collection NBP Awards & Achievements FINANCIAL ANANLYSIS
77 77-78 78 79-82 83
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Internship Report 62 63 64 65 66 67 68 69 70 Balance Sheet Profit & Loss Account What is Financial Ratio RATIO ANALYSIS PEST ANALYSIS SWOT ANALYSIS RECOMMENDATION & CONCLUSION Internship Letter References
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84-85 86 87 88-97 98 99-102 103 108 109
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Executive Summary
National bank of Pakistan since its formation in 1949 is working as a commercial bank and also providing expert services to the government and State Bank of Pakistan. The bank was nationalized with other main banks in early seventies and since then being a government owned organization it has not been able to gibe an incredible performance. Further, the privatization of other banks has also created an inflexible environment in the banking industry. This report highlights the operations and functions of National Bank of Pakistan. NBP act as financial agent to its customers in return it gets reward for its services in the shape of profit. Being a Government owned institution it plays an important role in development of society as well as in development and growth of the economy. National Bank of Pakistan is one of the leading banks in Pakistan. According to international standards of banking system it is one of the best bank in South Asian region. This report explains how different functions of NBP work and what are their services. The main purpose of the internship is to gather relevant information to compile internship report on National Bank of Pakistan Main Branch Vehari. Another purpose of this Internship program is to enable the students to use the management techniques acquired during their courses, and find out the possible solution of management problems faced by the organization. The report is based on my six week internship program in National Bank of Pakistan. The methodology reported for collection of data is primary as well as secondary data. The biggest source of information is my personal experience, observation while working with staff and having discussion with
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them. The annual report 2005, 2006,2007,2008,2009 also helped me in this regard. It has its head office in Karachi. It’s over 1265 branches in Pakistan and 22 abroad. It is a part of State Bank of Pakistan and it is its major strength. It is providing different facilities to its customers. Inside the bank, in branch banking it has Clearing and Collection Department, Account Government Receipts processing Remittance Department, Opening Department,
Department, Customer Service Department, Cash Department, Deposit Department, Advance and Credit Department. There are the most common departments exist almost each branch. It is offering different deposit choices, Advances, Credit and Securities etc. for its customers. The finance is its major strength. The other strength of this it is acting as a agent of State Bank of Pakistan, providing Agency Arrangements Pakistan for different its government organizations And also include it has WAPDA and PIA, profitability and a vide through corporate branches. coverage throughout
comprehensive range of products it is offering in market. There is large opportunity for this bank to give coverage to consumer banking because it has not yet covered this area comprehensively. Opportunities in Advisory services, investment banking also exist for National Bank of Pakistan. National Bank of Pakistan maintains its position as Pakistan’s premier bank determined to set higher standards of achievements. It is major business partner for the Government of Pakistan with special emphasis on fostering Pakistan’s economic growth through aggressive and balanced lending policies, technologically oriented products and services offered through its large network of branches locally, internationally and representative offices. The National Bank of Pakistan offers a wide range of services to its customers & recognizes the importance of efficient business delivery & providing UNIVERSITY OF LAHORE 10
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timely solutions.Thier competitor are United Bank, MCB Bank, Askari Bank, Faysal Bank, Punjab Bank, Allied Bank etc. The essence of Business philosophy is cater to the banking requirements of small & medium sized entrepreneurs, providing them qualitative & competitive services with emphasis on encouraging exports. Nearly forty percent of our credit portfolio is related to export financing and credit decisions are taken with in 48 hours. Its product are pay order, mail transfer, Foreign Remittance, Foreign currency Accounts, Short term Investment, NIDA *(National Income Daily Accounts), Equity Investment, Commercial Finance etc. The management is considering the fact and doing planning for the sake of getting it through these unjustified pressures but still not been able to implement them in good manner. This is further disturbed by the demotivated and unqualified staff that is working with the bank. To be able to regain the level of performance and profitability the bank has to take serious measures to escape from the political influence, build a competent and qualified pool of employees, make all possible efforts to introduce the modern technology that is serving the banks in the world and to enhance the confidence of the customer, are necessary steps be taken by the bank. I personally very much gain from this internship.
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Introduction To Banking
There are three main topics that we are discussing below. • • • What is National Bank of Pakistan? What is Commercial Bank? Banker and Customer Relationship
What is National Bank of Pakistan?
National Bank of Pakistan (NBP) was established under the National Bank of Pakistan Ordinance 1949. The primary objective of NBP was to purchase jute from the growers in the former East Pakistan and also to perform the commercial banking functions in the country. National Bank of Pakistan is now the biggest financial institution with assets totaling over Rs.944, 233 million with 1265 Domestic and 22 foreign branches, 9Reginol/Representative offices. The bank is the higher financer in agriculture and commodity operation sector.
AGRICULTURE BRANCHES
Agriculture branches of NBP are 839. In which SINDH has 137 branches, PUNJAB has 472 branches, KHYBER PAKHTUNKHWA has 129 branches BALOCHISTAN has 17 branches and MUZAFRABAD and KASHMIR have 84 branches.
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National Bank of Pakistan maintains its position as Pakistan's premier bank determined to set higher standards of achievements. It is the major business partner for the Government of Pakistan with special emphasis on fostering Pakistan's economic growth through aggressive and balanced lending policies, technologically oriented products and services offered through its large network of branches locally, internationally and representative offices
WHAT IS A COMMERCIAL BANK?
A bank is a financial institution which deals with money and credit. It accepts deposits from individuals, firms, and companies at a lower rate of interest and gives at a higher rate of interest to those who apply for loan. The difference between the terms at which it borrows and those at which it lends from the source of its profit. A bank, thus, is a profit earning institute. Any bank that performs this functioning is called the commercial bank.
According to Crowther
“A bank is a firm which collects money from those who have it spare. It lends money to those who require it.”
According to Banking Ordinance 1962
According to Section 5(b) of Banking Ordinance 1962, meaning of banking is as under “Banking company is a company which transacts the business of banking in Pakistan, mainly of accepting, for the purpose of lending and investments of deposits of money from the public, repayable on demand or otherwise and withdraw able by cheque, draft, order, or otherwise”
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BANKER AND CUSTOMER RELATIONSHIP
The relationship between the banker and the customer are of utmost importance. Both serve the society and the economy to expand. Before we discuss the relationships between the banker and the customer, it seems necessary that the two terms banker and customer are made clear.
Banker
A banker is a dealer in capital or more properly a dealer in money. He is an intermediate party between the lender and the borrower and charges a definite amount of money which is the profit of his.
Customer
A customer is a person who maintains a regular account with the bank, without taking into consideration the duration and frequency of operation of his account. The relations between the banker and the customer are generally studied as under:
Debtor and Creditor
The general relationship between banker and customer is primarily that of a debtor and creditor. When customer deposits money with a bank, the bank then is the debtor and the customer is the creditor. The customer expects from the bank that (I) his money will be kept safe by the bank, (II) it will be returned on demand within business hours. The position is reverse if the customer is advanced loan i.e. the banker becomes the creditor and the customer is the debtor.
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Principal and Agent
The special relationship between the customer and the banker is that of principal and agent. The customer (principal) deposits cheques, drafts, dividends etc. are for collection with the bank. He also gives written instruments to the bank to purchase securities, pay insurance premium, installments of loans etc on his behalf. When the bank performs such agency services, he becomes an agent of his customer.
Bailer and Bailment Relationship
A bailment is the delivery of goods in trust. A banker may accept the valuables of his customers such as jewellery, documents, securities etc. for safe custody. In such a case the customer is the bailer and the bank is the bailee. It charges a very small amount of money as service charges for safe custody of valuables.
Pledger and Pledgee
When a customer pledges goods and documents with the bank as security for an advance, he then becomes the pledger and the bank becomes the pledgee. The pledged goods are to be returned intact to the pledger after the debt is repaid by him.
Mortgager and Mortgagee
Mortgage is the transfer of an interest in specific immoveable property for the purpose of securing the payment of money advanced or to be advanced by way of loan. When a customer pledges specific immoveable property with the bank as security for an advance, the customer becomes the mortgager and the bank becomes the mortgagee.
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Bank as a Trustee
The bank acts as a trustee for his customers in those cases where he accepts other valuables for safe custody. In such case, the customer continues to be the owner of the valuables deposited with the bank.
Executor, Attorney, Guarantor
The bank also acts as executor, attorney, and generator for his customers.
History
Here we discuss three topics which are
• •
History of Banking in Pakistan Efforts towards Islamic Banking in Pakistan
HISTORY OF BANKING IN PAKISTAN
The partition plan was announced on June 3, 1947 and August 15, 1949 was fixed as the date on which independence was to take effect. It was decided that the Reserve bank of India should continue to function in the dominion of Pakistan until September 30, 1948 due to administrative and technical difficulties involved in immediately establishing and operating a Central Bank. At the time of partition, total number of banks in Pakistan were 38 out of these the commercial banks in Pakistan were 2, which were Habib Bank Limited and Australia Bank of India. The total deposits in
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Pakistani banks stood at Rs.880 million whereas the advances were Rs.198 million. The Governor General of Pakistan, Muhammad Ali Jinnah issued the order for the establishment of State Bank of Pakistan on 1st of July 1948. In 1949, National Bank of Pakistan was established. It started with six offices in former East Pakistan. There were 14 Pakistani scheduled commercial banks operating in the country on December 1973, the name of these were:
1) National Bank of Pakistan 2) Habib Bank Limited 3) Habib Bank (Overseas) Limited 4) United Bank Limited 5) Muslim Commercial Bank Limited 6) Commerce Bank Limited 7) Australia Bank Limited 8) Standard Bank Limited 9) Bank of Bahawalpur Limited 10) 11) 12) 13) 14) The Premier Bank Limited Pak Bank Limited Lahore Commercial Bank Limited Sarhad Bank Limited Punjab Provincial Co-operative Bank Limited Banking Council prepared banks amalgamation
Pakistan
schemes in 1974 for amalgamation of smaller banks with the five bigger banks of the country. These five banks are as under: 1. 2. 3. National Bank of Pakistan Habib Bank Limited United Bank Limited 17
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4. 5. Muslim Commercial Bank Limited Allied Bank Limited
NBP
So, through the Nationalization of Bank Act 1974, the State Bank of Pakistan, all the commercial banks incorporated in Pakistan and carrying on business in or outside the country were brought under the government ownership with effect from Jan. 1, 1974. The ownership, management, and control of all banks in Pakistan stood transferred to and vested in the Federal Government. The Finance Minister announced plans to start Islamic Banking system in Pakistan in the budget speech on June 26, 1980. The bank believes that Islamic Banking offers good potential for growth. The bank has opened eight (8) branches since 2007, of which three were opened in 2009. During the last two years its asset size has grown significantly with offering of market-driven products like Murabaha and Ijarah. Islamic Banking is making its mark by catering to the Bank’s already existing large customer-base as well as exploring new and untapped markets including SME, Commercial and Corporate. Islamic Banking is developing policies for new products like Diminishing Musharikah, Salam and Istisna to meet customer’s needs. The overall operations showed loss as a result of higher start up cost of three new branches opened this year.
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Efforts Toward Islamic Baking In Pakistan
Pakistan was created in the name of Islam on august 14, 1947. But since then, the interest is paying the cardinal role in resource allocation of the economy. The banking system in Pakistan based on interest divergences with Islamic ideology and is forbidden by Almighty Allah and His Prophet Muhammad (PBUH).Any government till now in the country except President Zia-ul-Haq did not dare to change this system based on interest in banking in Pakistan. The only step taken under this direction is starting of PLS Deposits from January 1, 1982. Only PLS saving account and PLS term deposits shall be accepted on profit and loss sharing basis. The strategic endeavors resulted in expansion in NBP Islamic banking branch network covering all major cities of the country. To evaluate the commercial viability, future profitability and growth of Islamic banking, the committee guided Islamic Banking Group to prepare business plan for the year-2010 and henceforth strategic plan 2011-2013. The bank believes that Islamic Banking offers good potential for growth. The bank has opened eight (8) branches since 2007, of which three were opened in 2009. During the last two years its asset size has grown significantly with offering of market-driven products like Murabaha and Ijarah. Islamic Banking is making its mark by catering to the Bank’s already existing large customer-base as well as exploring new and untapped markets including SME, Commercial UNIVERSITY OF LAHORE 19
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and Corporate. Islamic Banking is developing policies for new products like Diminishing Musharikah, Salam and Istisna to meet customer’s needs. The overall operations showed loss as a result of higher start up cost of three new branches opened this year.
VISION
“To be recognized as a leader and a brand synonymous with trust, highest standards of services quality, international best practices and social responsibility”
MISSION
NBP WILL aspire to the values that make NBP truly the National’s Bank, by • • Institutionalization a merit and performance culture Creating a distinctive brand identify by providing the highest standards of services • Adopting the best international management practices
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• • Maximizing stakeholders value
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Discharging our responsibility as a good corporate citizen of Pakistan and in countries where we operate.
National Bank In Vehari
Vehari is the city in the vehari District, Punjab, Pakistan. It is located about 100 kilometers from the regional metropolis of Multan and about 25 kilometers from the southernmost of the five rivers Sutlej in Punjab Vehari is to the north of the Sutlej River. A headwork’s of canals is located on this river near Luddan on the Luddan Vehari canal providing irrigation water to both banks of the river, which includes the upper fringes of the Cholistan Desert. The summer in Vehari is very hot, but the weather becomes much more pleasant between October and February. Light rainfall leaves the land generally arid and dusty, but the country's agricultural products include mangoes in the summer and guava and other citrus fruits in the winter. Vehari is considered the capital of cotton growing in this part of Pakistan, with dozens of cotton processing factories and cottonseed oil manufacturing plants, and sugarcane farming and processing is also common.
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Competition in banking sector at Vehari is increasing day by day. One reason may be the special attention of the government towards the development of the region. Second one, we can say that SME (Small and Medium Enterprise) sector is demanding the special attraction of banking sector. National Bank is one of them who have paid special attention in SME sector.
BRANCH HIRARCEY
MANAGER Mr. Naseer Bhatti
OPERATION MANAGER Mr.Chudary Zafar
CLEARING DEPARTMENT Mr. Khalid
DEPOSIT DEPARTMENT Mr. Gafar khan
CREDIT DEPARTMENT Mr.Nasrullah
IT INCHARGE Mr.Khuram Zafar
GOVERNMENT INCHARGE
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SENIOR MANAGEMENT OF NBP
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Qamar Hussain Dr. Asif A. Brohi
Chief Operating Officer , Head of Credit & Risk Management Group SEVP & Group Chief, Operations Group
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Shahid Anwar Khan
SEVP & Group Chief, Overseas Banking Group / Corporate & Investment Banking Group SEVP & Group Chief Agriculture Finance Group SEVP & Group Chief, Human Resources Management & Administration Group SEVP & Group Chief, Commercial & Retail Banking Group SEVP & Group Chief, Compliance Group SEVP Group Chief, Assets Recovery Group / Corporate & Investment Banking Group SEVP & Group Chief, Treasury Management Group SEVP & Group Chief, Global Home Remittance Management Group SEVP & Group Chief, Audit & Inspection Group SEVP , Special Assignments, President's Secretariat EVP/Group Chief, Special Assets Management Group EVP & Divisional Head, Islamic Banking Division EVP & Secretary Board of Directors EVP & Head P&IR Division, HRM&A Group EVP & Head HR & OD Division, HRM&A Group EVP & Head SC & CSR Division, HRM&A Group EVP & Chief Information
Ziaullah Khan Dr. Mirza Abrar Baig
Amer Siddiqui Tariq Jamali Nadeem A. Ilyas
Muhammad Nusrat Vohra Khalid Bin Shaheen
Imam Bakhsh Baloch N. B. Soomro Agha Fidaullah Shafique Ahmed Khan Ekhlaq Ahmed Fazal-ur-Rehman Muhammad Hanif Muhammad Iqbal Qasim
Mohammad Kumail Dehradunwala Aamir Sattar LAHORE UNIVERSITY OF Faisal Mahmood
Officer /Head Of Information Technology Division SVP & Divisional Head, Financial 24 Control Division VP & Divisional Head (A) , PMO &
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MANAGEMENT AND ORGANIZATIONAL STRUCTURE
The ownership, management, and control of all the commercial banks were taken over by the Government of Pakistan on January 1st, 1974. A banking council was formed under the Nationalization Act 1974. The banking council was set up for making policy recommendations to the Federal Government, formulating policy guidelines for the banks and their reorganization. The management and organizational structure of the nationalized banks have uniformity. This management and organizational structure is briefly described as under: • • • • • • Board of Directors Executive Board Chief Executive Divisional Chiefs Provisional Chiefs Circle Executive 25
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• • Zonal Heads Branch Managers
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1)
Board of Directors
In the management of the banks, the board of directors is at the top of the controlling body. Since there are no private share holders now, so there is no general meeting of the share holders and no elected directors. The BOD consists of a nominated President, a Secretary, and 9 other members. The board has limited administrative powers because after the Nationalization Act 1974, most of powers are transferred to the Banking Council and Executive Board.
2)
Executive Board
The general direction and supervision of the affairs of commercial banks lies in their respective Executive Boards. An EB also consists of a President, a Secretary, and 9 other members, appointed by the Federal Government.
3)
Chief Executive
The President of the Executive Board is the Chief Executive. He is the administrative head of a bank and presides over the meetings of Executive Board.
4)
Divisional Chiefs
In order to improve the management and operation of a bank, it has been split up into a numbers of divisions. Each division of a bank is placed under the supervision and control of Divisional Chief (also called the Senior Executive Vice President or Executive Vice President)
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5)
Provisional Chiefs
In order to improve the performance of banking system, each bank has a Provisional Chief. PC has the powers for sanctioning finance and other credit facilities. Each headquarter is situated in each province e.g. in Lahore, Peshawar, Quetta, and Karachi.
6)
Circle Executive
Each commercial bank has a number of circles placed directly under the control and supervision of Chief Executive.
7)
Zonal Heads
Each circle is divided into a number of zones. These zones are administered by Zonal Heads who hold the posts of Vice President or Assistant Vice President.
8)
Branch Managers
Each zone of commercial bank is divided into several branches. The control and supervision of each branch is mostly entrusted to Assistant Vice President or Officer G-II.
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Members of Board of Director
Syed Ali Raza Chairman & president Syed Ali Raza is the Chairman and President of National Bank of Pakistan (NBP), the largest commercial bank of the country .
Mr. Tariq Kirmani Director Mr. Kirmani has served on the Boards of various companies and now is serving as a Director on the Board of National Bank of Pakistan.
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Mrs. Haniya Shahid Naseem Director Mrs. Haniya Shahid Naseem is an MBA with more than fifteen years experience of working in the education, social, industrial textile and agriculture sectors of Pakistan. Now is serving as a Director on the Board of National Bank of Pakistan.
Ms. Nazrat Bashir Director Ms. Nazrat Bashir belongs to District Management Group of Civil Services of Pakistan. Besides NBP, she is on the Board of Directors of National Investment Trust (NIT) and Zarai Taraqiati Bank Limited.
Mr. Ibrar A. Mumtaz Director Mr.Ibrar A Mumtaz is also the member of Board of Director. He serve many companies and now is serving as a Director on the Board of National Bank of Pakistan.
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Mr. Sikandar Hayat Jamali Director Mr. Sikandar Hayat Jamali is also the member of Board of Director. He serve many companies and now is serving as a Director on the Board of National Bank of Pakistan.
Mr. Ekhlaq Ahmed Secretary Board of Directors Mr. Ekhlaq Ahmed, EVP is the Company Secretary of the Bank and also the Secretary of Credit & Operations Committees.
DEPARTMENTS OF NBP
For proper functioning of all these activities, the bank has divided its operations into different departments that would be discussed next. These departments are as under:
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(1) Cash Department (2) Deposit Department (3) Clearing Department (4) Advances and Credit Department (5) Account Opening Department
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CASH DEPARTMENT
The following books are maintained in the cash department:1) Receiving Cashier Books 2) Token Book 3) Paying Cashier Book 4) Scroll Books 5) Cash Balance Book
When cash is received in counter, it is entered in the Scroll Book and Receiving Cashier Book. At the close of the day, these are balanced with each other. When the cheque or any negotiable instrument is presented at counter for payment, it is entered in the Token Book and Token is issued to the customer. The Token and the cashier make entry in the Payment Book and the payment is made to payee. At the close of the day, the Token Book and paying Cashier Book is balanced. The consolidated figure of receipt and payment of cash is entered in the Balance Book and drawn closing balance of cash.
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OPENING BALANCE + RECEIPT – PAYMENT = CLOSING BALANCE
This is very important department because cash is the most liquid asset and mostly frauds are made in this department, therefore, extra care sis taken in this department and no body is allowed to enter or leave the area freely. Mostly, cash area is grilled and its door is under the supervision of head of that department. Officer checks the books maintained in this department.
DEPOSIT DEPARTMENT
IMPORTANCE
Bank deals in money and they are merely mobilizing funds within the economy. They borrow from one person and lend to another, the difference between the rates borrowed and lend from their spread or gross profit. Therefore, we can rightly state that deposits are the blood of the banks which cause the body of an institution to get to work. These deposits are liability of the bank so from the viewpoint of bank we can refer to them as liabilities
TYPES OF DEPOSITS
Deposits can be segregated on two bases, one is the duration in which these funds are expected to be with the bank, and second is the cost of getting these funds. So we can divide deposits into two classes according to duration: (1)Time Deposits (2)Demand Deposits
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And on the basis of the cost of acquire these funds, a deposit can be classified as any one of the following four: a) High Cost b) Medium Cost c) Low Cost d) No Cost Bank has different kind of deposit schemes in order to induce deposits. These schemes are a mixture of the above mentioned two types of deposits with and addition of different services and requirements, mode of transactions, basis for calculation of profit, deduction, additional benefits, and eligibility for different groups. In the similar fashion, national Bank of Pakistan has large variety of deposit schemes and some of these are as follows:
1) Current Account
In this type of accounts, the client is allowed to deposit or withdraw money as and when he likes, but there is requirement of maintaining the minimum balance of Rs.5000/- other wise Rs.50/will be deducted every month. Usually the businessmen open this type of account and the bank pays no profit on it. These types of deposits are also exempt from compulsory deduction of Zakat.
2) PLS Saving Account
This type of account is for those persons who want to make small savings. This type of account is opened with a minimum deposit if Rs.200/- If the balance in the account falls below the minimum requirement then a flat charge of Rs.150/- is made in the account once in a half year. Zakat and other withholding taxes are deducted as per rules of the government.
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3) Fixed Deposits
In this type of account a certain amount is deposited for a certain period such as six months, one year, two year or longer. A fixed deposit receipt is issued in the name of the depositor. The receipt is signed by the officer in charge and the bank manager. A notice is given to the depositor on a prescribed from two weeks before the Fixed Deposit Receipt (FDR) falls due, requesting the depositor to withdraw his money or to renew his deposits. The interest is allowed on fixed deposit varies with the period for which the deposit is made.
4) Short Notice Term Deposit
This kind of deposit is for a short period as the name indicates. The depositor may withdraw his deposit at any time by giving seven days notice to the banker. This type of deposit facilitates the trader to withdraw his amount with interest of the deposited period.
5) Call Deposit
Call Deposits are the sorts of deposits, which are deposited with the banker against any tender. This is with out interest deposit, this may be with interest provided with the depositor has agreed to keep this amount with the banker for some fixed period.
6) Cumulative Deposit Certificate
This is just like of fixed deposit. In this kind of deposit, the rate of interest is higher as compared to other kind of deposits, which are mentioned previously. The rate of interest rises gradually as the period extends. Its period ranges from three month to twenty years.
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7) Monthly Income Scheme
National Bank of Pakistan has also introduced Monthly Income Scheme for the benefits of its customers. An individual or institution, company, corporation etc. can take the advantage of this scheme.
LEDGERS OF DEPOSIT DEPARTMENT
The following types of ledgers are concerned with deposit department: 1) 2) 3) 4) 5) 6) 7) 8) Saving Ledgers Current Ledgers Profit and Loss Sharing Ledgers Fixed Deposit Register Cumulative Deposit Certificate Register Cash Book Daily Profit and Loss Summary Book Voucher Register
CLEARING DEPARTMENT
How National Bank Clear the Cheques
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The department in charge Mr. Khalid checks the cheques which came from the different banks. Clearing register Format is like that Check Number 02127900532 Drawer’s Name Masood UBL 3900/= 40000/= 45000/= PUNJAB RSB
401 Joiya 02127900532 Shahid 402 Joiya 02127900532 Rameez 403 Joiya
After record the amount of cheques in the “Clearing Ledger” “AVP”of National Bank prepare “Fan code” in Fan Code he record the entire Vouchers amount which is mention on that voucher. After making fan code all the cheques stapled and their voucher also stapled separately. Then make sticks and stapled that sticks with every bank cheques. Then he totals the amount of cheques which is record in clearing Ledger. And also total the amount of vouchers and also total the amount of sticks. These three totals must be equals.
TYPES OF CHEQUES COLLECTED
1) Transfer Cheque
Transfer cheques are those cheques which are collected and paid by two different branches of the same bank situated in the same city.
2) Clearing Cheque
Clearing Cheques are those cheques which are drawn on the branches of some other bank of the same city or of the same area which covers a particular clearing house.
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3) Collection Cheque
Collection Cheques are those cheques which are drawn on the branches of either the same bank or of another bank, but branches are not in the same city or they are not the members of clearing house.
ADVANCE AND CREDIT DEPARTMENT
The function of Advances and Credit Department is to lend money in the form of clean advances, against the promissory note, as well as secured advances against tangible and marketable securities. The bankers prefer such securities, which do not run the risk of general depreciation due to market fluctuations.
ACCOUNT OPENING DEPARTMENT
This is the department who deal the new clients of the bank. Opening the account is the main duty of this department.
Procedure of Opening New Account
According to my practice in bank, when a customer wants to open an account, the AVP Mr.Khlaid gives him an application form. All information, which is necessary to be known by the bank, are requirements of the application form. Form also requires the essential documents to be attached by the customer.
Required Documents
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Basically following information is required to open an account • • • • • • • • • • • • • Title of Account Full Name of Applicant Occupation Address Telephone No. Currency of account Nature of Business Introducer’s Name, Address & Signatures Special instruction regarding the account Initial Amount of the Deposit Opening Account Appendix Signature of the applicant Reference’s Signature and name
Some important information regarding introducer e.g. the name and account number of the introducer is written on the form. Then in order to find out whether he is a true introducer or not, a letter is sent to him thanking him for this introduction so that anything wrong may come into notice. There are different requirements for different types of accounts and accountholders.
Opening Account Appendix
In this document the signature of Account Holder and the signature of Account opening officer exist and also the number of Account also mention like 189-1
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And the amount which is deposit into Account it depend on the nature of Account that either it is current Account or fixed deposit account.
Now I want to tell all the procedure of Account Opening by a diagram
Procedure to Open an Account
GET THE FORM FROM OPENING
DEPARTMENT
FILL IT AND ATTACH THE
NECESSARY DOCUMENTS
SUBMIT THE COMPLETE TO ACCOUNT OPENING OFFICER VERIFICATION BY NADRA BY ACCOUNT OPENING OFFICER OPEN THE ACCOUNT MANUALLY
AND ONLINE
ISSUE THE CHEQUE BOOK
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Types of Accounts
1. 2. 3. 4. Current Account PLS or SB (Profit &Loss saving Account) Fixed Deposit Account NIDA(National Income Daily Account) Account
SECURITIES
1) Bankers Lien
(Moveable property possessed to the lender cannot be sold in case of default) Lien is the bankers’ right to hold the property until the claim on the property is paid. The bankers look at their lien as a protection against loss on loan or overdraft or any other credit facility. In ordinary lien, the borrower remains the owner if the property, but the real or constructive possession remains with the creditors, though he has no right to sell it.
2) Guarantees
When an application for an advance can offer any tangible security, the banker may rely on personal guarantees to protect himself against loss on advances or overdraft to the applicant.
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3) Mortgage
(Immoveable property possessed to the lender can be sold in case of default) A mortgage is the transfer of an interest in specific immoveable property for the purpose of securing the payment of money advanced or to be advanced by way of loan, and existing of future debt, or the performance of an engagement, which may rise to a particular liability. The person in whose interest the property is transfer is called mortgagee.
4) Hypothecation
(Immoveable property possessed to the borrower can be sold in case of default) When property in the shape of goods is charged as security for a loan from the bank, the ownership and possession is with the borrower, the goods are said to be hypothecated. The essence of hypothecation is that neither the property in goods nor the possession of them passes to the lender, but the security is granted by means of letter of hypothecation which usually provides for a banker’s charge on the hypothecated goods.
5) Pledge
(Moveable property possessed to the lender can be sold in case of default) In a pledge, the ownership remains with pledger (borrower), but the pledgee has the possession of property until the advance is repaid in full. While in case of defaulter, the pledge has the right of sale after giving due notice.
TYPES OF ADVANCES
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1. 2. 3. 4. 5. 6. Demand Finance(Ordinary Loans) Running Finance(Overdraft) Cash Finance Small Finance Finance against Bills Agriculture Loans
NBP
1) Demand Finance (Ordinary Loans)
These are those advances which are allowed in lump sum for a fixed period and are repayable in lump sum or gradually in installments.
2) Running Finance
Running finance are advances, which are gradually given to meet temporary requirements of the customers. A good customer uses the banks running finance limit, as a mean of protecting his credit in the market and as a line of second defense to meet his commitments. There are two types of running finance:
Types of Running Finance
a) Un-Secured
Under this type of overdraft, the bank relies upon the personal security of the customer or customer’s account.
b) Secured
Under this type of overdraft, the bank allows his customer to withdraw more than his deposit after giving security against the amount overdrawn. The securities against which they are given are as under:
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a) Share Certificates b) Savings Certificates c) Deposits d) Mortgage Property e) Guarantee of a person
NBP
3) Cash Finance
These types of loans are given against the following: 1. Against locally manufactured goods 2. Cash finance against rice and paddy 3. Against pledge 4. Against commodities 5. Besides advances against the above commodities bank may be approached by parties for advances against other commodities like tobacco, oil, etc. 6. Against Trust Receipts
4) Small Loans
Loans are allowed to contractors’ clearing and forwarding agents. These loans are repayable within a year.
5) Finance against Bills
The advances are allowed both on local and foreign bills such as: a) Bill of Exchange and Invoices b) Bill of Landing
6) Agriculture Loans
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Agriculture loans are given to the farmers with holding up to 25 acres for meeting their short medium and long term production requirements such as: a) Agriculture inputs b) Tractors instruments c) Tube wells d) Live stock farming e) Land Improvements
PRODUCTS OF NBP
National Bank of Pakistan always makes efforts to improve its goodwill in the general public. It introduces different kind of schemes time to time. The most popular schemes conducted by NBP are as under:
1. NBP Premium Amdani 2. NBP premium Saver 3. NBP karobar 4. NBP Saibaan
5. NBP Advance Salary 6. NBP Cash Card 7. NBP Investor Advantage 8. NBP Cash n Gold UNIVERSITY OF LAHORE 44
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9. NBP Kisan Taqat 10. Dost 11. Remit 12. NBP Protection Shield
NBP
NBP Kisan
NBP Pak
NBP Premium Aamdani
Monthly Income Scheme
• • • • • • Earn up to 12% p.a. plus Minimum deposit of Rs.20,000/- and a maximum deposit of Free Demand Draft Pay Order and Cheque Book Convenience of NBP online Asan Banking (for online banking Free NBP Cash Card(ATM+Debit) Running Finance facility up to 90%
Rs.5,000,000/- for 5 years
customers)
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• • • •
Amount of investment required from Rs. 20,000 to Rs. Investment period is 5 Years Free Demand Draft, Pay Order and NBP online Aasan Banking Free Cheque Book /NBP Cash Card (ATM+Debit)
5000,000
Profit Paid every month as follows:
Period 1st Year 2nd Year 3rd Year 4th Year 5th Year
Profit Rates 7.50% 8.50% 9.50% 10.50% 11%
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• • •
Financing facility available up to 90% o the deposit value. Premature encashment will attract penalties Zakat and withholding tax will be deducted as per rule
NBP PREMIUM SAVER
PLS Saving Account
• Produce up to 7.25% p.a. + • Minimum saving balance of Rs. 20,001/- and a maximum balance of Rs. 300,000/• Free NBP Cash Card (ATM + Debit) • Ease of NBP Online Aasan Banking (for online banking customers) • Two debit withdrawals permitted in a month & no limit on number of
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deposit transactions • Profit planned on monthly and paid on half yearly basis
NBP
•
Minimum saving balance of Rs. 20,001 and maximum balance of Rs. 30,000
• •
Free NBP Cash Card (ATM+Debit) Two debit withdrawals allowed in a month and no limit on number of deposit transaction
•
Profit calculated monthly and paid on half yearly basis
NBP KAROBAR
President Rozgar Scheme
If you are aged between 18 and 45 years, you could be eligible for easy financing for self employment in the categories below: • NBP Karobar Utility Store
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• • • • • NBP Karobar Mobile Utility Store NBP Karobar Mobile General Utility Store NBP Karobar Transport NBP Karobar PCO NBP Karobar Tele-Center
NBP
NBP KAROBAR Utility Store (Shop) Financing facility available to set-up a small scale Retail Outlet (Utility Store in a shop) for purchase of furniture & fixtures. This is also applicable on payment of security deposit / advance rent under franchise from the USC. However, stocks will be purchased by the customer.
NBP KAROBAR Mobile Utility Store Financing facility available to purchase a 2/3 wheeler, 4 stroke Petrol/CNG/LPG Vehicle (Auto Scooter / Motorcycle Rickshaw) with attached Loader body (Thehla type) under franchise from the USC to carry utility goods for retail sale ideally in areas where accessibility to conventional utility stores is difficult. NBP Karobar Mobile General Utility Store NBP Karobar Mobile General Store (without USC Franchise): This financing program has been designed on the similar pattern of Mobile Utility Store. The only difference is that the borrower will have the liberty of procuring stock/supplies/grocery items from open market. Under this product the average loan size of Rs.100, 000/will be given for a maximum period of five years with a grace period of three months
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NBP Karobar Transport
NBP
NBP Karobar Transport: The NBP Karobar Transport is designed to finance 2/3 wheeler, 4 strokes Petrol/CNG/LPG Vehicle (Auto Scooter / Motorcycle Rickshaw) to the eligible citizens of Pakistan for providing less expensive environment friendly transport facility. Under this product average loan size of Rs.100,000/- will be provided for a maximum period of five years with a grace period of three months. NBP Karobar PCO NBP Karobar PCO: This product is designed to finance setting-up a PCO. NBP will be providing financing for the purchase of Mobile/Wireless Telephone Set with connection, Credit Balance. The average amount of financing under this product will be Rs.5,000/for a maximum period of two years with a grace period of three months
NBP Karobar Tele-Center NBP Karobar Utility Store The product has been designed in collaboration with “UTILITY STORES CORPORATION OF PAKISTAN (USC)” to provide financing facility of an average amount of Rs.100, 000/- for a maximum period of five years with grace period of three months. This is available to all eligible citizens of Pakistan for setting-up small-scale Retail Outlet or Mobile Utility Store. The USC will give its franchise to qualifying Pakistani citizens.
Mear Apna Karoabar
• Minimum down payment, 10% of Asset price (5% of PCO & Telecaster) • Tenure 1 to 5 years (for PCO 2 Years)
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• • • • • Grace period 3 months Maximum Loan amount Rs.200,000/Age 18 to 45 Years Mark-up (variable) 1 year KIBOR + 2.00% p.a.
NBP
The customer will pay markup @ 6% p.a ,rest will be borne by
GOP • • Life and disability insurance paid by GOP Subject to availability of subsidy from GOP
NBP Saibaan
National Bank of Pakistan (NBP) has announced the launch of a housing scheme to cover all sections of the society with monthly income starting from as low as Rs. 5000/- per month*. *(Conditions apply)
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Open the door to your dream home with NBP Saiban
Product Items
• • • • • Home Purchase Home Construction Home Renovation Purchase of Land plus Construction Balance Transfer Facility (BTF)
Home Purchase (House or Apartment)
Financing Amount Financing Period Debt to Equity 85 : 15 (Maximum) 3 to 20 Years Up to 35 Million
Home Construction – Product Detail
Financing Amount Financing Period Debt to Equity 85 : 15 (Maximum) 3 to 20 Years Up to 35 Million
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Home Renovation
Financing Amount Financing Period Debt to Equity 80 : 20 (Maximum) 3 to 15 Years Up to 35 Million
Purchase of Land plus Construction
Financing Amount Financing Period Debt to Equity 80 : 20 (Maximum) 3 to 20 Years Up to 35 Million
Balance Transfer Facility (BTF)
If you have a home Finance Facility outstanding with another bank you can have it transfer to NBP through a hassle-free process.
NBP Advance Salary
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In January 2003 National Bank of Pakistan has launched a unique product, NBP Advance Salary. Currently this product is for fixedincome permanent employees of Federal & Provincial Government, Semi-Government, Autonomous, Semi-autonomous, local bodies and other Government organizations. The product is purely cash flow based and offers its holder to avail 20 net salaries in one go to be repaid in up to 60 (sixty) months. With no collateral, insurance or requirements, Advance Salary provides rapid disbursement in a short turnaround time. “NBP advance salary “product alone has attracted many customers. 120months salary in advance (certain conditions apply), minimum documentation, repayable in 5 years, no processing charges; no collaterals, no guarantees, no insurance, Mark-up charged at 15% per annum on reducing balance method Following documents are required to advance salary • • • • CNIC of borrower. Departmental card of borrower. Three last salary slips. Two referring person one of equal Grade other officer Grade and their CNIC and salary slip. • Undertaking by employment on 100 stamp paper.
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• • • • • Three undated Cheques. ICIL Report. C IB Report. Annexure C and D. Auto Rollover Form.
NBP
NBP Cash Card
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Cash Free Spending - Step by Step
Step 1 To identify a merchant outlet that welcomes your card, Just look for the NBP or Orix Logo.
Step 2 To make a payment give your NBP Cash Card to the merchant. The merchant will swipe Your card on the POS (Point Of Sale) machine and the purchase amount will be entered.
Step 3 Enter your digital ATM Pin for verification (this is the same as your cash withdrawal pin).
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Step 4 After Approval a transaction slip will be provided. Collect your card and slip and confirm you transaction amount
Step 5 Your purchase transaction is now complete and the transaction amount has been debited to your NBP account. Please retain your transaction for further reference.
NBP Cash Card Safety Tips • Welcome to our relationship enriched with a wide range of
remarkable e-banking service. For your safety and convenience we would recommend some precautions while using NBP CASH CARD at ATMs and merchant outlets.
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•
NBP
Immediately after receiving the NBP Cash Card, change your
PIN Code at the nearest NBP ATM. • Never share your Personal Identification Number (PIN) or
given it out over telephone. • • • Never write your PIN Code on your card. Never keep your card and PIN at the same place. As you approach an ATM, beware of your surroundings, if you
notice anything unusual, visit the ATM later. • • Immediately report a lost of stolen card to your NBP branch. Stand close to the ATM machine while entering your PIN and
do not allow anyone to watch. • Ensure that the merchant has entered the correct amount of
transaction before you enter your PIN code. • Maintain your POS receipt as a record and ensure that he card
returned to you by the cashier/attendant is yours. • • • Protect your card from direct sunlight and magnetic fields. Do not bend your card. Carefully dispose off your old card when you are issued a new
one.
NBP Investor Advantage
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A margin financing facility developed for retail investors in line with Government’s efforts to promote Pakistani capital markets and will replace the Badla (COT) system with a stable financing system in line with international financial markets. Besides offering a comfortable environment to the retail stock investors, a financing facility will also be available. Willing investors can avail NBP financing at very easy terms requiring minimum documentation and least turn around time. The NBP financing also does not require any security from the customer except for the customer’s equity. Importantly, the customer’s equity will also be freely available for investment. Customer has to fulfill all NBP and SBP regulatory requirements.
To obtain NBP Investor Advantage facility Eligible if
A Pakistani Nationals with valid computerized national ID card
• Over 21 years of age • Have an account with NBP designated branch • willing to invest equity in the form of cash or NBP approved shares • No default with any financial institution
For utilizing the NBP Investor Advantage, please follow the following simple steps
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•
Obtain Facility Application form from the NBP Margin Financial
Desk at NBP Main Branch. • Fill in the application form and submit it to the branch at the
Margin Financial Desk. • On application approval, customer deposits equity as Cash in
the customer’s margin financial account at bank .Alternatively NBP approved Shares can also deposited in the NBP CDC account. • Customer would then be eligible for trading through trading
center of the NBP Subsidiary namely Taurus Securities limited adjacent to the NBP Main Branch at Karachi. • Customer’s own equity and financial amount will both
available for trading.
NBP Cash n Gold
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Get extra benefits from your Gold. Meet your need for ready cash against your idle gold jewellery with no minimum or maximum limits. Facility of Rs. 14000/- against 10 grams of gold. • • Rate of mark up 15.50% p. a. Facility of Rs.14000 against each 10 grams of net content of Gold. • • • • • NO maximum limits of cash. Repayment after one year. Roll over facility. Only Gold ornaments are acceptable. Weight and quality of Gold to be determined by NBP’s appointed schroffs. • No penalty for early payments.
NBP Kisan Taqat
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National Bank Pakistan Dairy Form Scheme
Advantage to Getting Loan from NBP
• • • •
Very Near Banks Branch from you Easy and Short Paper working Get ride from the tension payment of Installments Experience Staff’s Help and Guide
NBP Kisan Dost
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NBP KISAN DOST
NBP’s affordable agricultural program offers you a wide range of financing. Loans available for the farmers for
• • • • • • • • • • • •
Production Development purposes Purchases of tractors Installations of tube wells Purchases of agricultural implements Micro loans Good own construction Construction of fish pond Livestock farming Milk processing Cold storage Bio-gas plants etc.
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1. Production Loans 2. Development Loans
NBP
Production Loans
In production loans, loans are provided for Seeds, Fertilizer and Pesticides. These loans are provided for one year at the rate of 12%. Limit of these loans are Rs.250, 000.The bank provide the loans against the pledge of land.
Development Loans
In this type of loans bank provide loans for Tractor, Life Star, Dairy and Machinery. These loans are provided for more than one year and limit of these loans are Rs.500,000.
Requirements
1) Agri Passbook 2) CNIC 3) Photographs 4) Fard of land guarantors 5) AKS Sajrah 6) ICIL Report 7) NOC 8) SS Card (Specimen Signature Card) 9) CIB report
The borrower makes the payment of loan on annually basis interest + Principal
NBP Pak Remit
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Production Information
Pakremit is an internet based Home Remittance Service. This service is available to U.S. residents for sending money to their family and friends in Pakistan. One must have a valid US Dollar account with a U.S. bank or a US Dollar credit or debit card in order to remit funds through this channel. Remitters in USA can log on to our user friendly website, www.pakremit.com and easily remit funds to Pakistan from the comfort of their homes, in a matter of minutes. The service is fully secure with advance encryption application and is available for use 24 hours a day, 7 days a week. Fees and exchange rate have been set at competitive levels and the remitters have the ability to track delivery of funds as well.
Process
• Remitters log on to www.pakremit.com and after completing
the registration process, are able to remit funds. The whole process takes a few minutes. • Funds in Pak Rupees can be sent to beneficiaries, having an account with any bank in Pakistan, including NBP. While funds are credited directly to beneficiaries maintaining accounts with NBP, a pay order or demand draft is couriered to other banks for their customers. Pay order or demand draft can also be couriered directly to the beneficiary’s office or home, if requested by the remitter. • Funds in US Dollars can be sent only to a Beneficiary maintaining a US Dollar account with one of NBP’s Foreign
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Exchange Branches. Click here for details of NBP Foreign Exchange Branches.
NBP Protection Shield
Insurance Coverage In case of Accidental Death (Including death due to *Riots, Strikes, Civil commotion, Acts of Terrorism and Natural Calamities like Flood, Earth Quake, Cyclones etc.) Coverage of Rs. 200,000/- for Rs. 20/- per month Definitions Provided the insured is not directly involved in these activities Accident Unintentional, unfortunate or a harmful event by chance or apparent cause. Accidental Death Death due to accidental injuries, but not illness. Insured Person A National Bank of Pakistan PLS account holder, aged between 18 years and above, and whose premium is deducted & details are reported to the selected insurance company by NBP. Policy
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Group Personal Accident Policy dated 26/09/05 executed between NBP and Insurer. Principal Sum The amount stated in the Policy’s Schedule of Benefits as respects each Insured Person.
Product Detail
• • • No medical Required No Documentation Fixed Auto Premium deduction Facility (After customer
consent) • Choice of Deactivation
Eligibility
• • NBP PLS Account holder 18 Years and Above
SERVISES OF NBP
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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. Furthermore, we have recently set up the Financial Institution Wing, which is placed under the Risk Management Group. Institution Section is To effectively manage NBP's exposure to foreign and domestic communication
•
The role of the Financial
Manage the monetary aspect of NBP's relationship with the correspondents to support trade, treasury and other key business areas, thereby contributing to the bank's profitability
•
Generation revenues
of
incremental
trade-finance
business
and
NBP offers:
• •
The lowest rates on exports and other global banking products Access to different local commercial banks in international banking
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NBP Pak Rupee Traveller’s Cheque
Negotiability: Validity: Availability Encashment Limitation Safety Pak Rupees Traveler’s Cheques are a negotiable instrument There is no restriction on the period of validity At 700 branches of NBP all over the country At all 400 branches of NBP No limit on purchase NBP Traveler’s Cheques are the safest way to carry our money
Letter of Credit
NBP is committed to offering its business customers the widest range of options in the area of money transfer. If you are a commercial enterprise then our Letter of Credit service is just what you are looking for. With competitive rates, security, and ease of transaction, NBP Letters of Credit are the best way to do your business transactions.
Commercial Finance
Let us help make your dreams become a reality Our dedicated team of professionals truly understands the needs of professionals, agriculturists, large and small business and other segments of the economy. They are the customer’s best resource in making NBP’s products and services work for them.
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Foreign Remittance
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 well-trained 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 AlJazira, Saudi Arabia.
•
Zero Tariffs: NBP is providing home remittance services without any charges.
•
Strict monitoring of the system is done to ensure the highest possible security.
Special courier services are hired for expeditious delivery of home remittances to the beneficiaries.
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-PKKA. All NBP overseas branches and overseas correspondents (over450) are drawing remittances UNIVERSITY OF LAHORE 70
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through SWIFT. Using the NBP network of branches, you can safely and speedily transfer money for our business and personal needs.
Short Term Investment
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, NBP’s rates of profit are extremely attractive, along with the security and service only NBP can provide.
N.I.D.A
National Income Daily Account 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. MODE OF CALCULATION AVERAGE BALANCE DURING A CALENDAR MONTH
Equity Investment
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. NBP is involved in the following:
• •
Investment into the capital market Introduction of capital market accounts (under process)
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NBP’s involvement in capital markets is expected to increase its earnings, which would result in better returns offered to account holders.
Trade Finance and Other Business Loan
Agriculture 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 Provide farmers an integrated package of credit with supplies of essential inputs, technical knowledge, and supervision of farming.
•
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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.
Utility Bills Collection
For the convenience of the customer, National Bank of Pakistan also collects different kinds of utility bills such as: Electricity Bills, Sui-Gas Bills, Telephone Bills etc.
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Foreign Currency Account
Launched to attract deposits in foreign currencies like US Dollars, Pound Sterling, Dutch Mark, and Japanese Yen. Whether you are a resident or a non-resident of Pakistan, NBP invites all to operate in a foreign currency account.
Corporate Finance
Working Capital and Short Term Loans
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 our clients’ vision. This type of long term financing proves the bank’s belief in its client's capabilities, and its commitment to the country.
Loan Structuring and Syndication
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NBP
National Bank’s leadership in loan Syndicating stems from ability to forge strong relationships not only with borrowers but also with bank investors. Because we understand our syndicate partners’ asset criteria, we 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. Our syndication capabilities are complemented by our own capital strength and by industry teams, who bring specialized knowledge to the structure of a transaction.
Cash Management Services
With National Bank’s Cash Management Services (in process of being set up), the customer’s sales collection will be channeled through vast network of NBP branched spread across the country. This will enable the customer to manage their company’s total financial position right from your desktop computer. They will also be able to take advantage of our outstanding range of payment, ejection, liquidity and investment services. In fact, with NBP, you’ll be provided everything, which takes to manage your cash flow more accurately.
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Learning as an Internee
I joined National Bank of Pakistan, Main Branch Vehari on 26 th June, 2010. First day, the manager introduced me about the functioning of the branch and the staff. The manager told me that counter is the most important place of the bank. During the six weeks of my internship, I worked in different sections of the branch and did the maximum practice of banking system details of which is as under:
a) General Banking
First of all, I was asked to work in different sections of general banking. I was attached to Counter with Mr. Khalid who has good command on this section. Here we dealt with new customer who wanted to get information and to deal with the branch. This is a very interesting department because here we met people of different types and deal with them accordingly. In this section, I observed the following functions
b) Cheque at Counter
A cheque to withdraw the amount is presented on the counter with the following requisites: 1) Name of the Account Holder 2) Current or previous date 3) Amount in figures UNIVERSITY OF LAHORE
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4) Amount in wording
NBP
5) One signature of the account holder in the right bottom corner of the cheque 6) Two signature of the bearer on the back 7) Branch Stamp in front of the cheque 8) Verification Stamp in front of the cheque 9) If the Account Holder uses thumb instead of signature then the Pass Book is necessary with the cheque
Operation’s officer checks and verifies all these requisites. If it fulfills all the requisites, it is forwarded for payment after a certain procedure.
c) Cheque Payment Procedure
After all the requisites are verified and then the excessive balance is checked and prescribed amount is deducted narrated on the cheque, then SIGNATURE VERIFIED stamp (in case of signature only) on the signature and a PAY CASH stamp are fixed and a Token is given to the cheque bearer after writing Token No. on the specified cheque. Then the Officer G-II verified the cheque and forwarded it to the cashier where the cheque bearer receives the amount from the account.
d) Issuance of Demand Draft
A Demand Draft is provided to the client in whom he has to specify that bank it is drawn. The amount both in words and figures is written on Demand Draft.
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e) Bills Collections Department
I spent second week of my training in bills collection department. Mr. Ameer Hamza is the in charge of this section. Here we collected utility bills like electricity bills, gas bills, and telephone bills.
f) Bill Remittance Department
This is very important and interesting department. This section deals with the transfer of money from one branch to another branch. Nearly four drafts are issued daily from this department. Here I know how the amount is transferred and what the procedure is. This department also deals with TT transfer of money. I worked nearly two weeks in this department.
g) Deposit Department
Deposit department deals with Current, Savings, and Fixed Accounts. In current account the bank does not give any interest and you can deposit the whole amount in lump sum in business hours. However in PLS savings account we can only withdraw up to Rs.25000/- without any notice otherwise a prior notification of a week is required to the bank if the amount to be withdrawn is more than Rs.25000/- Old ages are interested in Fixed Account usually. The rate of interest is higher more than that of in Current and PLS savings Account but the amount cannot be withdrawn before a specific time fixed by the client. To open the account customer have to fulfill an application form and submit to the concerning authority. In Current and PLS saving Account, a Cheque Book is issued to the client and he becomes the Account Holder of NBP. I worked in this department for one and a half week.
h) Pension Payment Procedure
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The pension payment procedure is the toughest procedure, because a lot of people want to get their pension as soon as possible. Here I seek how the dealing with the retired persons. Here I seek how the pension increase and how the bank gives every month pension to retired persons. Pension 25% increase and medical allowance is also 25%.if BPS less than 15.and if BPS more than 15 the increase 20%and medical allowance is 20%.This year Government have done admirable work. Which is that they family pension is if less than Rs.2250/=, then the pension of family should be Rs.2250/=.and also that person take the medical 25%and now his pension is Rs.2813/=and that person who is alive his pension is if less than Rs.2250/=, it should be direct Rs.3000/= and this person also take the medical 25% and now his/her pension is Rs.3750/=.
i) Outwards Bills for Collection (OBC)
I seek how Outward Bill for collection, the cheques drawn on the bank that is out of city. These cheques are not collected through NIFT. The banks clear these by sending them to the relevant branch through mail. This service includes all activities involved in collecting their claims on customers of the other branches of same bank or of the other banks, located outside the clearinghouse area. Procedure
• • • •
Receive instrument, this instrument It is in the name of the account holding customer Must not be post dated or stale Must have same amount in words and figure
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• Affix special crossing stamp on the face of
NBP
instrument • Affix OBC stamp on the instrument, and on pay-in
slip • • • Entry in OBC register Write OBC# on the instrument Prepare outward bill for collection schedule
NBP Awards & Achievements
•
Best Foreign Exchange Bank 2008 awarded by world's leading financial journal Global Finance.
•
Best Return on Capital for 2006 amongst all Banks in Asia. Banker Magazine in July 2007.
•
World's leading financial journal Global Finance has named NBP as the Best Emerging Market Bank from Pakistan for the year 2006.
•
Best Foreign Exchange Bank Pakistan award for the year 2006 by world's leading financial journal Global Finance.
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•
NBP
Due to consistent improvement in NBP's Core Profitability Asset Quality and Economic Capitalization in recent years, Moody’s Investors Service upgraded the Financial Strength Rating (FSR) rom E+ to D in November 2005.
•
Best Foreign Exchange Bank Pakistan award for the year 2005 by world's leading financial journal Global Finance.
• •
Best Bank Pakistan award for the year 2005 by world's leading financial journal Global Finance. The Asian Banker a reputable financial journal has published the report of its research project on the ranking of 300 of Asia’s Strongest Banks based on an 11 Dimensional Dynamic Scoring Criteria has adjudged National Bank of Pakistan as the Strongest Bank in Pakistan.
•
On the basis of overall financial performance during 2004 NBP has been listed Amongst top 1000 banks in the world and Number 1 Bank in Pakistan by the prestigious Banker Magazine in its issue of July 2005 .
•
The Banker Magazine in July 2005 recognized NBP as the 10th Best Bank in terms of Profit on Capital in the world.
•
Bank of the Year awarded for the year 2005 by the world renowned. The Banker magazine owned by the Financial Times Group London.
•
On an all Pakistan basis National Bank of Pakistan was awarded the Kissan Times Award for the year 2005 by the Prime Minister Mr. Shaukat Aziz for its services in the Agriculture Sector .World leading financial journal Global Finance in an exclusive survey has named NBP as the Best Emerging Market Bank from Pakistan for the year 2005.
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•
Bank of the Year awards for the year 2004 by the world renowned. The Banker magazine owned by the Financial Times Group, London.
•
Euro money Magazine, a leading and prestigious journal, published from London , UK , in its issue of March 2005 has published Moody's Investors Service rankings in which NBP is the only Pakistani bank which has been ranked among the Top 100 banks of Asia for it performance in the fiscal year 2003.
•
WEBCOP-AASHA an alliance against gender discrimination at workplace presented a Recognition Award to National Bank of Pakistan on December 18, 2004 for having a Gender Sensitive Management.
•
In
May
2004,
NBP's
standalone
long-term
rating
was
upgraded by JCR-VIS Credit Rating Agency to AA (double A) from AA (double A minus) with stable outlook while standalone short-term rating was maintained at A-1+ (A one plus). This is now the best rating for a local commercial bank in Pakistan.
•
In its issue of March 2004 Global Finance has also declared NBP as The Best Foreign Exchange Bank in Pakistan.
•
The Banker Magazine in July 2003 recognized NBP as the bank with the highest return on capital in Asia and No.8 in the world.
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•
NBP
World's leading financial journal Global Finance after a worldwide survey declared NBP in its issue of May 2003 as one of the best banks in the emerging markets.
•
Bank of the Year awarded for the year 2002 by the world renowned The Banker magazine owned by the Financial Times Group London.
•
Bank of the Year awarded for the year 2001 by the world renowned. The Banker magazine owned by the Financial Times Group London.
President’s Awards
• Mr. Syed Ali Raza, Chairman & President NBP was awarded. The Asian Banker Leadership Achievement Award 2007 by Asian Banker (an internationally reputed Financial Journal in its issue of June 2007.
•
Mr. Syed Ali Raza Chairman & President, NBP was conferred Sitara-i-Imtiaz by the President of Pakistan General Pervez Musharraf on August 14, 2005.
•
Business Week of The McGraw Hill Companies in its July 11,2005 edition has adjudged Mr. Syed Ali Raza Chairman
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President NBP as one of the twenty five Leaders of Asia at the & Forefront of Change and has identified them as Stars of Asia including the President of Indonesia.
•
Mr. Syed Ali Raza’s (Chairman & President, NBP) capabilities were also recognized by the Institute of Bankers in Pakistan when he was awarded a gold medal in 2003.
Financial Analysis
In this section two topics are discussed. Two major topics of this section are:
• Financial Highlights • Balance Sheet • Profit & Loss Account • Raito Analysis
FINANCIAL POSITION
Different facts and figures of opening balances of the year 2010 about National bank of Pakistan which show the financial position are as under:
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FINANCIAL HIGHLIGHTS
TOTAL DEPOSITS ADVANCES INVESTMENTS AFTER-TAX PROFIT TOTAL ASSETS TOTAL EXPENDITURES NO OF BRANCHES PROFIT NO. OF EMPLOYEES Rs. 726,465 Million Rs. 475,243 Million Rs. 217,643 Million Rs.18,212 Million Rs. 945,903.3 Million Rs. 26.30 Billion 1287 Rs. 18,212 16,248
National Bank of Pakistan Balance Sheet
As at December 31, 2009
ASSETS
Cash and Equivalents Trading Asset Securities TOTAL CASH AND SHORT TERM INVESTMENTS Other Receivables TOTAL RECEIVABLES Restricted Cash Other Current Assets TOTAL CURRENT ASSETS Gross Property Plant and Equipment Accumulated Depreciation
2008 (Rs.in million) 140,477.0 1,009.2 156,995.0 2,105.7 2,105.7 5,792.1 16,276.2 195,166.9 28,214.4 -3,962.7
2009 (Rs.in million) 138,631.3 2,381.3 160,951.5 13,566.9 13,566.9 6,823.6 21,070.2 218,341.3 29,982.1 -4,810.5
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NET PROPERTY PLANT AND EQUIPMENT Deferred Tax Assets, Long Term Other Intangibles Other Long-Term Assets TOTAL ASSETS
NBP 24,251.7 3,203.6 20.3 34,280.7 820,077.2 25,171.6 3,064.5 29.3 32,238.3 945,903.3
LIABILITIES & EQUITY Accrued Expenses Current Portion of Long-Term Debt/Capital Lease Current Portion of Capital Lease Obligations Other Current Liabilities, Total TOTAL CURRENT LIABILITIES Long-Term Debt Capital Leases Minority Interest Unearned Revenue, Non-Current Pension & Other Post-Retirement Benefits Deferred Tax Liability Non-Current Other Non-Current Liabilities TOTAL LIABILITIES Common Stock Retained Earnings Comprehensive Income and Other TOTAL COMMON EQUITY
15,204.6 5,117.9 15.2 10,242.6 687,806.3 3,049.6 10.0 112.7 133.3 3,052.8 -21,573.9 715,738.7 8,969.8 67,612.0 27,756.7 104,338.5
18,247.5 2,921.1 19.0 10,654.7 792,041.4 8,220.9 23.6 110.9 218.0 3,531.0 -20,425.7 824,571.6 10,763.7 78,212.5 32,355.4 121,331.6
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TOTAL EQUITY TOTAL LIABILITIES & EQUITY
NBP 104,338.5 820,077.2 121,331.6 945,903.3
Profit and loss Account For the year ended on December 31, 2009.
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2008 (Rs.in million)
TOTAL REVENUES/SALES Cost of Goods Sold GROSS PROFIT Selling General & Admin Expenses, Total EBT, EXCLUDING UNUSUAL ITEMS Other Unusual Items, Total Other Unusual Items EBT, INCLUDING UNUSUAL ITEMS Income Tax Expense Minority Interest in Earnings Earnings from Continuing Operations NET INCOME NET INCOME TO COMMON INCLUDING EXTRA ITEMS NET INCOME TO COMMON EXCLUDING EXTRA ITEMS 41,957.1 261.8 41,695.3 18,101.5 22,261.3 988.0 988.0 23,249.3 7,565.2 -3.0 15,681.1 15,681.1 15,681.1 15,681.1
2009 (Rs.in million)
45,980.5 330.3 45,650.3 22,486.4 22,198.8 --22,198.8 4,099.8 1.8 18,100.8 18,100.8 18,100.8 18,100.8
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What is Financial Ratio Analysis?
“Financial ratio an index that relates to accounting numbers and is obtained by dividing one number by the other” The level and historical Trends of these ratios can be used to make inferences about a company's financial Condition, its operations and attractiveness as an investment. Ratio Analysis enables to the investor, supplier that they could know the real position of the business. To do this compares your ratios with the average of businesses similar to yours and compare your own ratios for several successive years, watching especially for any unfavorable. There are following Ratios that we discuss below: • • • • • Liquidity Ratio ACID-TEST/ (QUICK) Ratio Leverage Ratio Activity Ratio Profitability Ratio
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LIQUIDITY RATIO
Current Ratio
Current Ratio = Current Assets Current Liabilities 2009
2008
195,166.9/687,806.3 =0.284:1
218,341.3/792,041.4=0.276: 1
Explanation
A relatively high ratio is an indication that the firm is liquid and has the ability to pay its current obligation in time as and when they become due. On the other hand, a relatively low current ratio represents that the liquidity position of the firm is not good and the firm shall not be able to pay its current liabilities in time without facing difficulties. Current ratio of national bank shows that bank is not in position that it pay to its obligation in 2008 and 2009.
Graph
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ACID-TEST/ (QUICK) Ratio
Acid-test (quick) Ratio = Current Assets-Inventories Current Liabilities First of all we find to inventory the method of finding is Years 2008 52584.2 2009 =66143.1 218341.3 138631.3 13566.9 Current Assets 195166.9 Cash Account Receivable = 2105.7 = Inventory - 140477.0
2008 142582.7/687806.3 = 0.20:1
2009 152198.2/792041.4 = 0.19:1
Explanation
The Acid-test ratio is very useful in measuring the liquidity position of firm.it measure the firm’s capacity to pay off current obligations immediately. This ratio of 2008 and 2009 show that the bank is not in position to pay his liabilities immediately, UNIVERSITY OF LAHORE 91
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Graph
Quick-AcidT est
0.202 0.2 0.198 0.196 0.194 0.192 0.19 0.188 0.186 0.184 2008 2009 Quick-Acid Test
Leverage Ratio
In leverage two ratios are included
• Debt-to-Equity • Debt-to-total-Assets
Total Debt
Debt-To-Equity =
____________________________________________ Shareholders Equity (Total Asset – Total Liabilities)
2008 715738.7/104338.5 = 6.86
2009 824571.6/121331.6 = 6.80
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Explanation:
The ratio indicates the proportionate claim of owners and the outsiders against the firm’s assets. If we see to the ratio of both years it indicates that NBP debt is more than its equity so outsiders can claim on its assets any time.
Graph
Debt - to –total –Assets =
Total Debts Total Assets
2008 715738.7/820077.2 = 87%
2009 824571.6/ 945,903.3 =87%
Explanation:
The ratio indicates the relative extent in which firm is using borrowed money. In 2009 and 2008 the company debts are more than to its assets so the only 13% shareholders equities are left for covering to creditor. This ratio shows that the 87% of assets are financed while 13% we have share holder equity. That shows the
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Financial Risk for creditors. More the share holder equity lesser the Financial Risk for creditors.
Graph
D ebt-T otal Assets o-T
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2008 2009
Debt-To-Total Assets
Activity Ratios
Total Assets turnover =
2008 41957.1 / 820077.2 = 0.51
Net Sales Total Assets
2009 45980.5 /945903.3 = 0.49
Explanation:
It indicates the efficiency of Assets to generate sale. If we check to the efficiency of Assets to generate sale in 2008 and 2009 then we can say that it is not satisfactory for NBP.
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Graph
T otal AssetsT urnover
0.515 0.51 0.505 0.5 0.495 0.49 0.485 0.48 2008 2009 Total Assets Turnover
? Receivable Turnover
?
Receivable Turnover in Days
Receivable Turnover = Credit Sale Receivable
2008
41,957.1/2105.7 = 20 times
2009
45,980.5/13866.9 = 3times
Explanation
This ratio shows us that how many times receive cash from receivables. In this ratio we see that in the year 2008 we get cash
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from receivables 20 times, and in 2009 this ratio decreases from 20 times to 3 times.
Graph
Receivable Turnover in Days: 365 RT
2008
365/20 times = 18 days
2009
365/3times = 122 days
Explanation
This ratio indicates that how much days are required to return The Account Receivables. In this ratio we see that in the year 2008 we get cash from receivables in 18 days, and in 2009 years NBP can receive to its Account Receivables in 122 days.
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Graph
Profitability Ratios
•
•
Net Profit Ratio
ROI (return on investment)
Net Profit Ratio = Net profit after tax Net Sales
2008
15,681.1/41957.1 =37%
2009
18,100.8/45,980.5= 39%
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Explanation
The ratio indicates the overall profitability and hence it is very useful to proprietors. The ratio also indicates the capacity of firm to face adverse economic conditions such as price completion, low demanded. So the NBP ratios of 2008 and 2009 indicates that it is good but not as could be.
Graph
Net Profit Ratio
40% 39% 39% 38% 38% 37% 37% 36% 2008 2009
Net Profit Ratio
Return on Investment
Formula = Net profit after taxes Net sales Net Sales Total Assets
2008 5681.1/ 41957.1 41957.1 / 34280.7 100 = 16.47%
2009 18100.8/4598.5 4598.5/32238.3 56% 100 =
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Explanation
This ratio indicates the efficiency of generating profit with available assets. If we see to 2008 then the profit is 16.47% so the profit margin is very low in this year the bank assets have no much capacity to produce more profit for bank on the other hand if we see to 2009 then the profit is 56% in this year the bank assets have the capacity to produce profit.
Graph
Financial Ratios Analysis
Ratios Current Ratio Acid Test/Quick Ratio Debt to Equity Ratio 2008 0.284 0.20 6.86 2009 0.276 0.19 6.80
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Debt to Total Assets Total Assets Turnover Receivable Turnover Receivable In Days Net Profit Ratio Return on Investment Turnover
87% 0.51 20 Times 18 Day
87% 0.49 3Times 122 Day
37% 16.47%
39% 56%
PEST Analysis
Political
• • • • • Privatization policy and de-regulation. Impact on subsidized credit affecting and NCB’s.? Employment practices, unions and association. Political interference and harassment. Incidents of high taxation on banking industry.
Economic:
• • Constraints in mobilizing of public savings because of inflation. Staff cost.
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• • Operating cost. Bad debts.
NBP
Social and cultural:
• • • • • • Inadequate H.R. Cultural strain to saving Defaulter’s lobby Declining education and work ethics. Inadequate accountability. Adequate empowerment.
Technological:
• • • Inadequate communication infrastructure. Inadequate computer Facilities. Inadequate training Facilities.
SWOT ANALYSIS
Here four topics are discussed. They are as under: • Strengths • Weaknesses • Opportunities • Threats
Strengths
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•
NBP
The banking time of at the bank till 5:00 pm. This is highly useful for those customers who find it difficult to leave their officers in the morning. It is also highly useful who deposits their amounts on daily basis at evening.
•
The organization showing concern for the people, ethics and environment enjoy good public reputation and are able to reap the benefits in the long run. National Bank management is quite sensitive to this issue. The productivity of the bank is very good. Bank is providing a high quality service to its customers.
•
Different cameras are located at different locations to monitor the working of staff members and outside customers by branch manager.
•
Bank enjoys a strategic competitive advantage over the JS, Alfalah, and Al-habib bank, RBS, Allied etc
•
With the passage of time National Bank has expand their branches and now running almost 1287 branches.
•
Western union and express money transfer has exist in National Bank of Pakistan
•
Professional staff, right person hired on the right place.
Weaknesses
• In formal language and Dressing used in National Bank of Pakistan.
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•
NBP
In NBP there is no major use of computer for maintaining the records, of branches as compared to other banks of the country.
•
Because NBP is a govt. owned organization so there is a lack of implementation of rules and regulations.
•
In
this
organizational
the
organizational
structure
is
bureaucratic which a barrier in rapid and effective decision making. • Despite, cultural change program the working condition of the NBP is not up to standard. • Due to wrong recruitment policy staff of NBP is not proficient in their work. • In NBP, employees are recruited on the basis of favoritism or through other tools of corruption.
Opportunities
• NBP by establishing new branches in foreign countries can expand its business and can enjoy with the profit. • To enjoy with large amount, NBP can introduce a
comprehensive range of bonds. • NBP can enjoy handsome return its funding base by investing in capital markets in the foreign countries.
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• The basic need of the consumer such
NBP
as housing,
transportation and other durable goods are not adequately financed by the banks. So by initiating these services, the bank can enjoy with more funds. • Until recently the bank perceived as purely commercial banking entity so in order to expand its business the bank may start investment banking by investing in the portfolio of handsome return. • It can establish advisory services in order to facilitate the customers in investing in the securities.
Threats
• The no. of banks in Pakistan is increasing with the passage of time. So due to poor working condition and poor customer service it may be possible NBP will lose its market share in future. • In our country, the rate of inflation is increasing along with the unemployment. So due to the increase in price of the products, the savings of the nation is decreasing with the passage of time. So it is the threat for the banking sector. In the future, the deposits of the bank will decrease. • On NBP Govt. policies have strong impact. A slight change in Govt. policies may affect the performance of the bank. The bank has to work with in the regulation frame work.
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•
NBP
The hiring of uneducated people is a major threat for National Bank of Pakistan
RECOMMENDATION AND CONCLUSION
Here we discuss four topics that are:
• Findings • Suggestions • Recommendations
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Findings
• • • • There is no motivational factor in employees. Company personal policies are not good. The employees are not much aware of the latest Technology Changing market situation, State Bank Rules and regulations and Government policies are causing problems for operating properly in market. • The performance appraisal for the employees is not carrying properly and there is no proper system for evaluation of the employees’ performance. • The top management is not doing sufficient efforts to increase the motivation and job satisfaction of employees that is leading towards decrease in productivity.
Suggestions
• Proper time to time training should be conducted to lower staff as well to enhance their productivity. • The organization should take steps to use the latest IT technology including different banking software to increase the productivity of the organization and reduce the time of different process.
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•
NBP
All the authorities, responsibilities and duties should be clearly communicated to the employees.
•
The computer technology should be used in decision making processes as well as practicing in the developed countries.
•
The management must observe the internal and external environment so that it may able to identify the problems before occurring may these used problems instead so of that solving pro-active it after
approach
be
occurrence. • As the world has become global village, the management should have latest knowledge and information about the world because a little change in any corner of the world can affect your business. • There should be more decentralization in decision making process need less time to execute rather than approvals from even H.O.D. • An effective coordination and relationship among
departments should be there and exercise as well. • The management should recruit right person for job and must avoid favoritism and all other such activities.
RECOMMENDATIONS
PROPER PLANNING
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Bank should make a plan to gear up its recovery efforts on war footing and reorganize the recovery function of global bases. In addition, bank should tighten up control on expenditure
USE OF COMPUTERS
To save the time of the customers and other clients, bank should adopt computerized system for book keeping and other filling systems. It will increase the efficiency of the bank. I know that there are some branches which are computerized but most of the branches in various cities of the country are not computerized. So the bank should mechanize all its branches in the country.
ADOPTION OF ADVERTISING
Bank should launch advertising campaigns through out the year to promote the habits of savings in the people. Bank should open more branches in the remote areas of the country to get deposits and idle resources. Bank should provide similar facilities to all its branches in big cities. The standard of service and other facilities are far better as compared to smaller cities.
PROPER GUIDANCE
Bank should adopt such an induction plan that when a customer opens his account with the bank, he should be supplied with a booklet which enables him to know the procedure of filling the cheques and pay-in-slip etc. It will save a lot of time of the bank staff afterward during of the conduct of the account of that customer.
DIVISION OF WORK
The billing system of national bank of Pakistan must be improved to facilitate the customers and workers. The work should be divided
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among the staff e.g. collection of bills, countering of cash and then entry of these.
CHECK ON EXPENDITURES
Expenditures unnecessary. must be controlled which are very high and
BORROWING AT LOW COST
Deposits must be taken at a lower cost and given at higher interest rate.
Conclusion
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I got a lot of experience from National Bank during my internship. During Internship I came to know that how different activities take place in organizations, what are the rules and procedures Followed in National Bank. National Bank of Pakistan is one of the leading in the Pakistan’s Banking industry with almost 1267 plus national and 22 branches in foreign countries. The Bank is still growing and growing on the way of the prosperity. The management is highly qualified and
experience in its fields. I had a very great opportunity to work as internee so as to gain an over view of practical life and working in industry before entering in practical life. Practical things and knowledge is very much different from the theory and bookish knowledge. I had a very great chance to gain practical experience and to implement my bookish and to very refine theoretical knowledge in practical things.
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Internship Letter
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References
1)
The first important thing is the discussions with the staff of the bank especially with the manager of the branch.
2)
The Bank Book of Instructions for the National Bank of
Pakistan called the B.B.I.
3)
Surfing the website of the National Bank of Pakistan
(www.nbp.com.pk)
4)
Reading the Annual Reports of the National Bank of
Pakistan
5) www.google.pk
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doc_827761197.pdf
Complete Report of NBP by Rameez
NBP
Main Branch, Vehari
Internship Report
Submitted To:
MR.MUBASHIR MALIK
Submitted By: RAMEEZ SHAHID Session
2008 to 2010)Department of Business Administration
UNIVERSITY OF LAHORE
Internship Report
NBP
LAHORE
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This Piece of work is dedicated to my revered parents, Who groomed my personality and provided Me all the facilities to complete my educational career. Their devotion, sincerity and love generated Me a positive approach towards humanity. I owe this achievement of my life to my parents Whose prayers always with me. I pray for their long life and prosperity.
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Acknowledgement
A
ll praises are for Almighty ALLAH who guides us through the darkness of unknown. All respects for Holy Prophet (PBUH) who enables us to recognize our creator and whose spiritual teachings guide us in every matter of life. I am also highly thankful to my honorable teachers for theirs guidance. Special thanks to “MR. Zafar” Manager Operations of National Bank of Pakistan main Branch Vehari, and all other employees of the branch for their cooperation. I cannot forget the kindness and cooperation of Mr.
Khalid and Mr. Ameer Hamza who are very honest to their work and organization. They provide me a lot of information and practical knowledge, many regards to them. I am also thank full to Mr. Naseer Bhatti for his cooperation.
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PREFACE
It is the requirement of the MBA program of University of Lahore that all students of MBA have to spend Six Week in any organization to get practical exposure and to get familiarized with the ways to live in the organizational environment which is dramatically different from the educational environment. That six week period called “Internship period”, if spent properly and sincerely, enables the students to be more confident, more knowledgeable, more responsible and more committed to its work in the practical field. I have also been assigned to do internship of six weeks period in National Bank of Pakistan Main Branch Vehari.It has enabled me to understand effective the practical so scenario our and sharpen our decision making power and utilizing the resources in an manner, that resources generate maximum profit. In preparing this report, I have put al of my best efforts and tried my level best to give maximum knowledge. Despite of my all the coherent efforts, I do believe that there will always be a room for improvement in the efforts of learner like me.
RAMEEZ SHAHID
mail.com
UNIVERSITY OF LAHORE
MBA FINANCE rameezshahid85@g
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Table of Content
Inde Explanation x
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Title Page Bissmillah Dedication
Acknowledgement
Page No.
1 2 3 4 5 6-8 9-11 12 12 13 13-15 16 16-18 19 20 21 22 23-24 25-27 28-30 30 31 32-35 35-36 37 37-39 40 41-43 44 45-46
Preface Table of Content Executive Summary Introduction to Banking What is National Bank of Pakistan What is Commercial Bank Banker and Customer Relationship HISTORY History of Banking Efforts toward Islamic Banking Vision & Mission Statement NBP in Vehari Branch Hierarchy Senior Management Management and Organizational Structure Members of Board of Director DEPARTMENTS OF NBP Cash Department Deposit Department Clearing Department Advance & Credit Department Account Opening Department Securities Types of Advances PRDUCTS OF NBP NBP Premium Aamdani
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Internship Report 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 NBP NBP NBP NBP NBP NBP NBP Premium Saver Karoobar Saibaan Advance Salary Cash Card Investor Advantage Cash n Gold
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47 48-50 51-52 53-54 55-57 58-59 60 61 62-63 64-65 65-66 67 67 68 68 68-69 69 70 70 71-72 73 73-74 75 75 75-76 76
NBP Kisan Taqat NBP Kisan Dost NBP Pak-Remit NBP Protection Shield SERVICES OF NBP International Banking NBP Pak Rupee Traveller’s Cheque Letter of Credit & Commercial Finance Foreign Remittance Swift System Short Term Investment N.I.D.A & Equity Investment Trade Finance and Other Business Loan Utility Bills & Foreign Currency Account Corporate Finance LEARNING AS AN INTERNEE General Banking Cheque at Counter Cheque Payment Procedure & Issuance of Demand Draft & Bills Collection Department Bills Remittance Department & Deposit Department Pension Payment Procedure Outward Bills For Collection NBP Awards & Achievements FINANCIAL ANANLYSIS
77 77-78 78 79-82 83
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Internship Report 62 63 64 65 66 67 68 69 70 Balance Sheet Profit & Loss Account What is Financial Ratio RATIO ANALYSIS PEST ANALYSIS SWOT ANALYSIS RECOMMENDATION & CONCLUSION Internship Letter References
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84-85 86 87 88-97 98 99-102 103 108 109
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Executive Summary
National bank of Pakistan since its formation in 1949 is working as a commercial bank and also providing expert services to the government and State Bank of Pakistan. The bank was nationalized with other main banks in early seventies and since then being a government owned organization it has not been able to gibe an incredible performance. Further, the privatization of other banks has also created an inflexible environment in the banking industry. This report highlights the operations and functions of National Bank of Pakistan. NBP act as financial agent to its customers in return it gets reward for its services in the shape of profit. Being a Government owned institution it plays an important role in development of society as well as in development and growth of the economy. National Bank of Pakistan is one of the leading banks in Pakistan. According to international standards of banking system it is one of the best bank in South Asian region. This report explains how different functions of NBP work and what are their services. The main purpose of the internship is to gather relevant information to compile internship report on National Bank of Pakistan Main Branch Vehari. Another purpose of this Internship program is to enable the students to use the management techniques acquired during their courses, and find out the possible solution of management problems faced by the organization. The report is based on my six week internship program in National Bank of Pakistan. The methodology reported for collection of data is primary as well as secondary data. The biggest source of information is my personal experience, observation while working with staff and having discussion with
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them. The annual report 2005, 2006,2007,2008,2009 also helped me in this regard. It has its head office in Karachi. It’s over 1265 branches in Pakistan and 22 abroad. It is a part of State Bank of Pakistan and it is its major strength. It is providing different facilities to its customers. Inside the bank, in branch banking it has Clearing and Collection Department, Account Government Receipts processing Remittance Department, Opening Department,
Department, Customer Service Department, Cash Department, Deposit Department, Advance and Credit Department. There are the most common departments exist almost each branch. It is offering different deposit choices, Advances, Credit and Securities etc. for its customers. The finance is its major strength. The other strength of this it is acting as a agent of State Bank of Pakistan, providing Agency Arrangements Pakistan for different its government organizations And also include it has WAPDA and PIA, profitability and a vide through corporate branches. coverage throughout
comprehensive range of products it is offering in market. There is large opportunity for this bank to give coverage to consumer banking because it has not yet covered this area comprehensively. Opportunities in Advisory services, investment banking also exist for National Bank of Pakistan. National Bank of Pakistan maintains its position as Pakistan’s premier bank determined to set higher standards of achievements. It is major business partner for the Government of Pakistan with special emphasis on fostering Pakistan’s economic growth through aggressive and balanced lending policies, technologically oriented products and services offered through its large network of branches locally, internationally and representative offices. The National Bank of Pakistan offers a wide range of services to its customers & recognizes the importance of efficient business delivery & providing UNIVERSITY OF LAHORE 10
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timely solutions.Thier competitor are United Bank, MCB Bank, Askari Bank, Faysal Bank, Punjab Bank, Allied Bank etc. The essence of Business philosophy is cater to the banking requirements of small & medium sized entrepreneurs, providing them qualitative & competitive services with emphasis on encouraging exports. Nearly forty percent of our credit portfolio is related to export financing and credit decisions are taken with in 48 hours. Its product are pay order, mail transfer, Foreign Remittance, Foreign currency Accounts, Short term Investment, NIDA *(National Income Daily Accounts), Equity Investment, Commercial Finance etc. The management is considering the fact and doing planning for the sake of getting it through these unjustified pressures but still not been able to implement them in good manner. This is further disturbed by the demotivated and unqualified staff that is working with the bank. To be able to regain the level of performance and profitability the bank has to take serious measures to escape from the political influence, build a competent and qualified pool of employees, make all possible efforts to introduce the modern technology that is serving the banks in the world and to enhance the confidence of the customer, are necessary steps be taken by the bank. I personally very much gain from this internship.
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Introduction To Banking
There are three main topics that we are discussing below. • • • What is National Bank of Pakistan? What is Commercial Bank? Banker and Customer Relationship
What is National Bank of Pakistan?
National Bank of Pakistan (NBP) was established under the National Bank of Pakistan Ordinance 1949. The primary objective of NBP was to purchase jute from the growers in the former East Pakistan and also to perform the commercial banking functions in the country. National Bank of Pakistan is now the biggest financial institution with assets totaling over Rs.944, 233 million with 1265 Domestic and 22 foreign branches, 9Reginol/Representative offices. The bank is the higher financer in agriculture and commodity operation sector.
AGRICULTURE BRANCHES
Agriculture branches of NBP are 839. In which SINDH has 137 branches, PUNJAB has 472 branches, KHYBER PAKHTUNKHWA has 129 branches BALOCHISTAN has 17 branches and MUZAFRABAD and KASHMIR have 84 branches.
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National Bank of Pakistan maintains its position as Pakistan's premier bank determined to set higher standards of achievements. It is the major business partner for the Government of Pakistan with special emphasis on fostering Pakistan's economic growth through aggressive and balanced lending policies, technologically oriented products and services offered through its large network of branches locally, internationally and representative offices
WHAT IS A COMMERCIAL BANK?
A bank is a financial institution which deals with money and credit. It accepts deposits from individuals, firms, and companies at a lower rate of interest and gives at a higher rate of interest to those who apply for loan. The difference between the terms at which it borrows and those at which it lends from the source of its profit. A bank, thus, is a profit earning institute. Any bank that performs this functioning is called the commercial bank.
According to Crowther
“A bank is a firm which collects money from those who have it spare. It lends money to those who require it.”
According to Banking Ordinance 1962
According to Section 5(b) of Banking Ordinance 1962, meaning of banking is as under “Banking company is a company which transacts the business of banking in Pakistan, mainly of accepting, for the purpose of lending and investments of deposits of money from the public, repayable on demand or otherwise and withdraw able by cheque, draft, order, or otherwise”
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BANKER AND CUSTOMER RELATIONSHIP
The relationship between the banker and the customer are of utmost importance. Both serve the society and the economy to expand. Before we discuss the relationships between the banker and the customer, it seems necessary that the two terms banker and customer are made clear.
Banker
A banker is a dealer in capital or more properly a dealer in money. He is an intermediate party between the lender and the borrower and charges a definite amount of money which is the profit of his.
Customer
A customer is a person who maintains a regular account with the bank, without taking into consideration the duration and frequency of operation of his account. The relations between the banker and the customer are generally studied as under:
Debtor and Creditor
The general relationship between banker and customer is primarily that of a debtor and creditor. When customer deposits money with a bank, the bank then is the debtor and the customer is the creditor. The customer expects from the bank that (I) his money will be kept safe by the bank, (II) it will be returned on demand within business hours. The position is reverse if the customer is advanced loan i.e. the banker becomes the creditor and the customer is the debtor.
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Principal and Agent
The special relationship between the customer and the banker is that of principal and agent. The customer (principal) deposits cheques, drafts, dividends etc. are for collection with the bank. He also gives written instruments to the bank to purchase securities, pay insurance premium, installments of loans etc on his behalf. When the bank performs such agency services, he becomes an agent of his customer.
Bailer and Bailment Relationship
A bailment is the delivery of goods in trust. A banker may accept the valuables of his customers such as jewellery, documents, securities etc. for safe custody. In such a case the customer is the bailer and the bank is the bailee. It charges a very small amount of money as service charges for safe custody of valuables.
Pledger and Pledgee
When a customer pledges goods and documents with the bank as security for an advance, he then becomes the pledger and the bank becomes the pledgee. The pledged goods are to be returned intact to the pledger after the debt is repaid by him.
Mortgager and Mortgagee
Mortgage is the transfer of an interest in specific immoveable property for the purpose of securing the payment of money advanced or to be advanced by way of loan. When a customer pledges specific immoveable property with the bank as security for an advance, the customer becomes the mortgager and the bank becomes the mortgagee.
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Bank as a Trustee
The bank acts as a trustee for his customers in those cases where he accepts other valuables for safe custody. In such case, the customer continues to be the owner of the valuables deposited with the bank.
Executor, Attorney, Guarantor
The bank also acts as executor, attorney, and generator for his customers.
History
Here we discuss three topics which are
• •
History of Banking in Pakistan Efforts towards Islamic Banking in Pakistan
HISTORY OF BANKING IN PAKISTAN
The partition plan was announced on June 3, 1947 and August 15, 1949 was fixed as the date on which independence was to take effect. It was decided that the Reserve bank of India should continue to function in the dominion of Pakistan until September 30, 1948 due to administrative and technical difficulties involved in immediately establishing and operating a Central Bank. At the time of partition, total number of banks in Pakistan were 38 out of these the commercial banks in Pakistan were 2, which were Habib Bank Limited and Australia Bank of India. The total deposits in
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Pakistani banks stood at Rs.880 million whereas the advances were Rs.198 million. The Governor General of Pakistan, Muhammad Ali Jinnah issued the order for the establishment of State Bank of Pakistan on 1st of July 1948. In 1949, National Bank of Pakistan was established. It started with six offices in former East Pakistan. There were 14 Pakistani scheduled commercial banks operating in the country on December 1973, the name of these were:
1) National Bank of Pakistan 2) Habib Bank Limited 3) Habib Bank (Overseas) Limited 4) United Bank Limited 5) Muslim Commercial Bank Limited 6) Commerce Bank Limited 7) Australia Bank Limited 8) Standard Bank Limited 9) Bank of Bahawalpur Limited 10) 11) 12) 13) 14) The Premier Bank Limited Pak Bank Limited Lahore Commercial Bank Limited Sarhad Bank Limited Punjab Provincial Co-operative Bank Limited Banking Council prepared banks amalgamation
Pakistan
schemes in 1974 for amalgamation of smaller banks with the five bigger banks of the country. These five banks are as under: 1. 2. 3. National Bank of Pakistan Habib Bank Limited United Bank Limited 17
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4. 5. Muslim Commercial Bank Limited Allied Bank Limited
NBP
So, through the Nationalization of Bank Act 1974, the State Bank of Pakistan, all the commercial banks incorporated in Pakistan and carrying on business in or outside the country were brought under the government ownership with effect from Jan. 1, 1974. The ownership, management, and control of all banks in Pakistan stood transferred to and vested in the Federal Government. The Finance Minister announced plans to start Islamic Banking system in Pakistan in the budget speech on June 26, 1980. The bank believes that Islamic Banking offers good potential for growth. The bank has opened eight (8) branches since 2007, of which three were opened in 2009. During the last two years its asset size has grown significantly with offering of market-driven products like Murabaha and Ijarah. Islamic Banking is making its mark by catering to the Bank’s already existing large customer-base as well as exploring new and untapped markets including SME, Commercial and Corporate. Islamic Banking is developing policies for new products like Diminishing Musharikah, Salam and Istisna to meet customer’s needs. The overall operations showed loss as a result of higher start up cost of three new branches opened this year.
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Efforts Toward Islamic Baking In Pakistan
Pakistan was created in the name of Islam on august 14, 1947. But since then, the interest is paying the cardinal role in resource allocation of the economy. The banking system in Pakistan based on interest divergences with Islamic ideology and is forbidden by Almighty Allah and His Prophet Muhammad (PBUH).Any government till now in the country except President Zia-ul-Haq did not dare to change this system based on interest in banking in Pakistan. The only step taken under this direction is starting of PLS Deposits from January 1, 1982. Only PLS saving account and PLS term deposits shall be accepted on profit and loss sharing basis. The strategic endeavors resulted in expansion in NBP Islamic banking branch network covering all major cities of the country. To evaluate the commercial viability, future profitability and growth of Islamic banking, the committee guided Islamic Banking Group to prepare business plan for the year-2010 and henceforth strategic plan 2011-2013. The bank believes that Islamic Banking offers good potential for growth. The bank has opened eight (8) branches since 2007, of which three were opened in 2009. During the last two years its asset size has grown significantly with offering of market-driven products like Murabaha and Ijarah. Islamic Banking is making its mark by catering to the Bank’s already existing large customer-base as well as exploring new and untapped markets including SME, Commercial UNIVERSITY OF LAHORE 19
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and Corporate. Islamic Banking is developing policies for new products like Diminishing Musharikah, Salam and Istisna to meet customer’s needs. The overall operations showed loss as a result of higher start up cost of three new branches opened this year.
VISION
“To be recognized as a leader and a brand synonymous with trust, highest standards of services quality, international best practices and social responsibility”
MISSION
NBP WILL aspire to the values that make NBP truly the National’s Bank, by • • Institutionalization a merit and performance culture Creating a distinctive brand identify by providing the highest standards of services • Adopting the best international management practices
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• • Maximizing stakeholders value
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Discharging our responsibility as a good corporate citizen of Pakistan and in countries where we operate.
National Bank In Vehari
Vehari is the city in the vehari District, Punjab, Pakistan. It is located about 100 kilometers from the regional metropolis of Multan and about 25 kilometers from the southernmost of the five rivers Sutlej in Punjab Vehari is to the north of the Sutlej River. A headwork’s of canals is located on this river near Luddan on the Luddan Vehari canal providing irrigation water to both banks of the river, which includes the upper fringes of the Cholistan Desert. The summer in Vehari is very hot, but the weather becomes much more pleasant between October and February. Light rainfall leaves the land generally arid and dusty, but the country's agricultural products include mangoes in the summer and guava and other citrus fruits in the winter. Vehari is considered the capital of cotton growing in this part of Pakistan, with dozens of cotton processing factories and cottonseed oil manufacturing plants, and sugarcane farming and processing is also common.
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Competition in banking sector at Vehari is increasing day by day. One reason may be the special attention of the government towards the development of the region. Second one, we can say that SME (Small and Medium Enterprise) sector is demanding the special attraction of banking sector. National Bank is one of them who have paid special attention in SME sector.
BRANCH HIRARCEY
MANAGER Mr. Naseer Bhatti
OPERATION MANAGER Mr.Chudary Zafar
CLEARING DEPARTMENT Mr. Khalid
DEPOSIT DEPARTMENT Mr. Gafar khan
CREDIT DEPARTMENT Mr.Nasrullah
IT INCHARGE Mr.Khuram Zafar
GOVERNMENT INCHARGE
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SENIOR MANAGEMENT OF NBP
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Qamar Hussain Dr. Asif A. Brohi
Chief Operating Officer , Head of Credit & Risk Management Group SEVP & Group Chief, Operations Group
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Shahid Anwar Khan
SEVP & Group Chief, Overseas Banking Group / Corporate & Investment Banking Group SEVP & Group Chief Agriculture Finance Group SEVP & Group Chief, Human Resources Management & Administration Group SEVP & Group Chief, Commercial & Retail Banking Group SEVP & Group Chief, Compliance Group SEVP Group Chief, Assets Recovery Group / Corporate & Investment Banking Group SEVP & Group Chief, Treasury Management Group SEVP & Group Chief, Global Home Remittance Management Group SEVP & Group Chief, Audit & Inspection Group SEVP , Special Assignments, President's Secretariat EVP/Group Chief, Special Assets Management Group EVP & Divisional Head, Islamic Banking Division EVP & Secretary Board of Directors EVP & Head P&IR Division, HRM&A Group EVP & Head HR & OD Division, HRM&A Group EVP & Head SC & CSR Division, HRM&A Group EVP & Chief Information
Ziaullah Khan Dr. Mirza Abrar Baig
Amer Siddiqui Tariq Jamali Nadeem A. Ilyas
Muhammad Nusrat Vohra Khalid Bin Shaheen
Imam Bakhsh Baloch N. B. Soomro Agha Fidaullah Shafique Ahmed Khan Ekhlaq Ahmed Fazal-ur-Rehman Muhammad Hanif Muhammad Iqbal Qasim
Mohammad Kumail Dehradunwala Aamir Sattar LAHORE UNIVERSITY OF Faisal Mahmood
Officer /Head Of Information Technology Division SVP & Divisional Head, Financial 24 Control Division VP & Divisional Head (A) , PMO &
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MANAGEMENT AND ORGANIZATIONAL STRUCTURE
The ownership, management, and control of all the commercial banks were taken over by the Government of Pakistan on January 1st, 1974. A banking council was formed under the Nationalization Act 1974. The banking council was set up for making policy recommendations to the Federal Government, formulating policy guidelines for the banks and their reorganization. The management and organizational structure of the nationalized banks have uniformity. This management and organizational structure is briefly described as under: • • • • • • Board of Directors Executive Board Chief Executive Divisional Chiefs Provisional Chiefs Circle Executive 25
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• • Zonal Heads Branch Managers
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1)
Board of Directors
In the management of the banks, the board of directors is at the top of the controlling body. Since there are no private share holders now, so there is no general meeting of the share holders and no elected directors. The BOD consists of a nominated President, a Secretary, and 9 other members. The board has limited administrative powers because after the Nationalization Act 1974, most of powers are transferred to the Banking Council and Executive Board.
2)
Executive Board
The general direction and supervision of the affairs of commercial banks lies in their respective Executive Boards. An EB also consists of a President, a Secretary, and 9 other members, appointed by the Federal Government.
3)
Chief Executive
The President of the Executive Board is the Chief Executive. He is the administrative head of a bank and presides over the meetings of Executive Board.
4)
Divisional Chiefs
In order to improve the management and operation of a bank, it has been split up into a numbers of divisions. Each division of a bank is placed under the supervision and control of Divisional Chief (also called the Senior Executive Vice President or Executive Vice President)
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5)
Provisional Chiefs
In order to improve the performance of banking system, each bank has a Provisional Chief. PC has the powers for sanctioning finance and other credit facilities. Each headquarter is situated in each province e.g. in Lahore, Peshawar, Quetta, and Karachi.
6)
Circle Executive
Each commercial bank has a number of circles placed directly under the control and supervision of Chief Executive.
7)
Zonal Heads
Each circle is divided into a number of zones. These zones are administered by Zonal Heads who hold the posts of Vice President or Assistant Vice President.
8)
Branch Managers
Each zone of commercial bank is divided into several branches. The control and supervision of each branch is mostly entrusted to Assistant Vice President or Officer G-II.
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Members of Board of Director
Syed Ali Raza Chairman & president Syed Ali Raza is the Chairman and President of National Bank of Pakistan (NBP), the largest commercial bank of the country .
Mr. Tariq Kirmani Director Mr. Kirmani has served on the Boards of various companies and now is serving as a Director on the Board of National Bank of Pakistan.
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Mrs. Haniya Shahid Naseem Director Mrs. Haniya Shahid Naseem is an MBA with more than fifteen years experience of working in the education, social, industrial textile and agriculture sectors of Pakistan. Now is serving as a Director on the Board of National Bank of Pakistan.
Ms. Nazrat Bashir Director Ms. Nazrat Bashir belongs to District Management Group of Civil Services of Pakistan. Besides NBP, she is on the Board of Directors of National Investment Trust (NIT) and Zarai Taraqiati Bank Limited.
Mr. Ibrar A. Mumtaz Director Mr.Ibrar A Mumtaz is also the member of Board of Director. He serve many companies and now is serving as a Director on the Board of National Bank of Pakistan.
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Mr. Sikandar Hayat Jamali Director Mr. Sikandar Hayat Jamali is also the member of Board of Director. He serve many companies and now is serving as a Director on the Board of National Bank of Pakistan.
Mr. Ekhlaq Ahmed Secretary Board of Directors Mr. Ekhlaq Ahmed, EVP is the Company Secretary of the Bank and also the Secretary of Credit & Operations Committees.
DEPARTMENTS OF NBP
For proper functioning of all these activities, the bank has divided its operations into different departments that would be discussed next. These departments are as under:
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(1) Cash Department (2) Deposit Department (3) Clearing Department (4) Advances and Credit Department (5) Account Opening Department
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CASH DEPARTMENT
The following books are maintained in the cash department:1) Receiving Cashier Books 2) Token Book 3) Paying Cashier Book 4) Scroll Books 5) Cash Balance Book
When cash is received in counter, it is entered in the Scroll Book and Receiving Cashier Book. At the close of the day, these are balanced with each other. When the cheque or any negotiable instrument is presented at counter for payment, it is entered in the Token Book and Token is issued to the customer. The Token and the cashier make entry in the Payment Book and the payment is made to payee. At the close of the day, the Token Book and paying Cashier Book is balanced. The consolidated figure of receipt and payment of cash is entered in the Balance Book and drawn closing balance of cash.
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OPENING BALANCE + RECEIPT – PAYMENT = CLOSING BALANCE
This is very important department because cash is the most liquid asset and mostly frauds are made in this department, therefore, extra care sis taken in this department and no body is allowed to enter or leave the area freely. Mostly, cash area is grilled and its door is under the supervision of head of that department. Officer checks the books maintained in this department.
DEPOSIT DEPARTMENT
IMPORTANCE
Bank deals in money and they are merely mobilizing funds within the economy. They borrow from one person and lend to another, the difference between the rates borrowed and lend from their spread or gross profit. Therefore, we can rightly state that deposits are the blood of the banks which cause the body of an institution to get to work. These deposits are liability of the bank so from the viewpoint of bank we can refer to them as liabilities
TYPES OF DEPOSITS
Deposits can be segregated on two bases, one is the duration in which these funds are expected to be with the bank, and second is the cost of getting these funds. So we can divide deposits into two classes according to duration: (1)Time Deposits (2)Demand Deposits
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And on the basis of the cost of acquire these funds, a deposit can be classified as any one of the following four: a) High Cost b) Medium Cost c) Low Cost d) No Cost Bank has different kind of deposit schemes in order to induce deposits. These schemes are a mixture of the above mentioned two types of deposits with and addition of different services and requirements, mode of transactions, basis for calculation of profit, deduction, additional benefits, and eligibility for different groups. In the similar fashion, national Bank of Pakistan has large variety of deposit schemes and some of these are as follows:
1) Current Account
In this type of accounts, the client is allowed to deposit or withdraw money as and when he likes, but there is requirement of maintaining the minimum balance of Rs.5000/- other wise Rs.50/will be deducted every month. Usually the businessmen open this type of account and the bank pays no profit on it. These types of deposits are also exempt from compulsory deduction of Zakat.
2) PLS Saving Account
This type of account is for those persons who want to make small savings. This type of account is opened with a minimum deposit if Rs.200/- If the balance in the account falls below the minimum requirement then a flat charge of Rs.150/- is made in the account once in a half year. Zakat and other withholding taxes are deducted as per rules of the government.
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3) Fixed Deposits
In this type of account a certain amount is deposited for a certain period such as six months, one year, two year or longer. A fixed deposit receipt is issued in the name of the depositor. The receipt is signed by the officer in charge and the bank manager. A notice is given to the depositor on a prescribed from two weeks before the Fixed Deposit Receipt (FDR) falls due, requesting the depositor to withdraw his money or to renew his deposits. The interest is allowed on fixed deposit varies with the period for which the deposit is made.
4) Short Notice Term Deposit
This kind of deposit is for a short period as the name indicates. The depositor may withdraw his deposit at any time by giving seven days notice to the banker. This type of deposit facilitates the trader to withdraw his amount with interest of the deposited period.
5) Call Deposit
Call Deposits are the sorts of deposits, which are deposited with the banker against any tender. This is with out interest deposit, this may be with interest provided with the depositor has agreed to keep this amount with the banker for some fixed period.
6) Cumulative Deposit Certificate
This is just like of fixed deposit. In this kind of deposit, the rate of interest is higher as compared to other kind of deposits, which are mentioned previously. The rate of interest rises gradually as the period extends. Its period ranges from three month to twenty years.
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7) Monthly Income Scheme
National Bank of Pakistan has also introduced Monthly Income Scheme for the benefits of its customers. An individual or institution, company, corporation etc. can take the advantage of this scheme.
LEDGERS OF DEPOSIT DEPARTMENT
The following types of ledgers are concerned with deposit department: 1) 2) 3) 4) 5) 6) 7) 8) Saving Ledgers Current Ledgers Profit and Loss Sharing Ledgers Fixed Deposit Register Cumulative Deposit Certificate Register Cash Book Daily Profit and Loss Summary Book Voucher Register
CLEARING DEPARTMENT
How National Bank Clear the Cheques
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The department in charge Mr. Khalid checks the cheques which came from the different banks. Clearing register Format is like that Check Number 02127900532 Drawer’s Name Masood UBL 3900/= 40000/= 45000/= PUNJAB RSB
401 Joiya 02127900532 Shahid 402 Joiya 02127900532 Rameez 403 Joiya
After record the amount of cheques in the “Clearing Ledger” “AVP”of National Bank prepare “Fan code” in Fan Code he record the entire Vouchers amount which is mention on that voucher. After making fan code all the cheques stapled and their voucher also stapled separately. Then make sticks and stapled that sticks with every bank cheques. Then he totals the amount of cheques which is record in clearing Ledger. And also total the amount of vouchers and also total the amount of sticks. These three totals must be equals.
TYPES OF CHEQUES COLLECTED
1) Transfer Cheque
Transfer cheques are those cheques which are collected and paid by two different branches of the same bank situated in the same city.
2) Clearing Cheque
Clearing Cheques are those cheques which are drawn on the branches of some other bank of the same city or of the same area which covers a particular clearing house.
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3) Collection Cheque
Collection Cheques are those cheques which are drawn on the branches of either the same bank or of another bank, but branches are not in the same city or they are not the members of clearing house.
ADVANCE AND CREDIT DEPARTMENT
The function of Advances and Credit Department is to lend money in the form of clean advances, against the promissory note, as well as secured advances against tangible and marketable securities. The bankers prefer such securities, which do not run the risk of general depreciation due to market fluctuations.
ACCOUNT OPENING DEPARTMENT
This is the department who deal the new clients of the bank. Opening the account is the main duty of this department.
Procedure of Opening New Account
According to my practice in bank, when a customer wants to open an account, the AVP Mr.Khlaid gives him an application form. All information, which is necessary to be known by the bank, are requirements of the application form. Form also requires the essential documents to be attached by the customer.
Required Documents
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Basically following information is required to open an account • • • • • • • • • • • • • Title of Account Full Name of Applicant Occupation Address Telephone No. Currency of account Nature of Business Introducer’s Name, Address & Signatures Special instruction regarding the account Initial Amount of the Deposit Opening Account Appendix Signature of the applicant Reference’s Signature and name
Some important information regarding introducer e.g. the name and account number of the introducer is written on the form. Then in order to find out whether he is a true introducer or not, a letter is sent to him thanking him for this introduction so that anything wrong may come into notice. There are different requirements for different types of accounts and accountholders.
Opening Account Appendix
In this document the signature of Account Holder and the signature of Account opening officer exist and also the number of Account also mention like 189-1
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And the amount which is deposit into Account it depend on the nature of Account that either it is current Account or fixed deposit account.
Now I want to tell all the procedure of Account Opening by a diagram
Procedure to Open an Account
GET THE FORM FROM OPENING
DEPARTMENT
FILL IT AND ATTACH THE
NECESSARY DOCUMENTS
SUBMIT THE COMPLETE TO ACCOUNT OPENING OFFICER VERIFICATION BY NADRA BY ACCOUNT OPENING OFFICER OPEN THE ACCOUNT MANUALLY
AND ONLINE
ISSUE THE CHEQUE BOOK
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Types of Accounts
1. 2. 3. 4. Current Account PLS or SB (Profit &Loss saving Account) Fixed Deposit Account NIDA(National Income Daily Account) Account
SECURITIES
1) Bankers Lien
(Moveable property possessed to the lender cannot be sold in case of default) Lien is the bankers’ right to hold the property until the claim on the property is paid. The bankers look at their lien as a protection against loss on loan or overdraft or any other credit facility. In ordinary lien, the borrower remains the owner if the property, but the real or constructive possession remains with the creditors, though he has no right to sell it.
2) Guarantees
When an application for an advance can offer any tangible security, the banker may rely on personal guarantees to protect himself against loss on advances or overdraft to the applicant.
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3) Mortgage
(Immoveable property possessed to the lender can be sold in case of default) A mortgage is the transfer of an interest in specific immoveable property for the purpose of securing the payment of money advanced or to be advanced by way of loan, and existing of future debt, or the performance of an engagement, which may rise to a particular liability. The person in whose interest the property is transfer is called mortgagee.
4) Hypothecation
(Immoveable property possessed to the borrower can be sold in case of default) When property in the shape of goods is charged as security for a loan from the bank, the ownership and possession is with the borrower, the goods are said to be hypothecated. The essence of hypothecation is that neither the property in goods nor the possession of them passes to the lender, but the security is granted by means of letter of hypothecation which usually provides for a banker’s charge on the hypothecated goods.
5) Pledge
(Moveable property possessed to the lender can be sold in case of default) In a pledge, the ownership remains with pledger (borrower), but the pledgee has the possession of property until the advance is repaid in full. While in case of defaulter, the pledge has the right of sale after giving due notice.
TYPES OF ADVANCES
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1. 2. 3. 4. 5. 6. Demand Finance(Ordinary Loans) Running Finance(Overdraft) Cash Finance Small Finance Finance against Bills Agriculture Loans
NBP
1) Demand Finance (Ordinary Loans)
These are those advances which are allowed in lump sum for a fixed period and are repayable in lump sum or gradually in installments.
2) Running Finance
Running finance are advances, which are gradually given to meet temporary requirements of the customers. A good customer uses the banks running finance limit, as a mean of protecting his credit in the market and as a line of second defense to meet his commitments. There are two types of running finance:
Types of Running Finance
a) Un-Secured
Under this type of overdraft, the bank relies upon the personal security of the customer or customer’s account.
b) Secured
Under this type of overdraft, the bank allows his customer to withdraw more than his deposit after giving security against the amount overdrawn. The securities against which they are given are as under:
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a) Share Certificates b) Savings Certificates c) Deposits d) Mortgage Property e) Guarantee of a person
NBP
3) Cash Finance
These types of loans are given against the following: 1. Against locally manufactured goods 2. Cash finance against rice and paddy 3. Against pledge 4. Against commodities 5. Besides advances against the above commodities bank may be approached by parties for advances against other commodities like tobacco, oil, etc. 6. Against Trust Receipts
4) Small Loans
Loans are allowed to contractors’ clearing and forwarding agents. These loans are repayable within a year.
5) Finance against Bills
The advances are allowed both on local and foreign bills such as: a) Bill of Exchange and Invoices b) Bill of Landing
6) Agriculture Loans
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Agriculture loans are given to the farmers with holding up to 25 acres for meeting their short medium and long term production requirements such as: a) Agriculture inputs b) Tractors instruments c) Tube wells d) Live stock farming e) Land Improvements
PRODUCTS OF NBP
National Bank of Pakistan always makes efforts to improve its goodwill in the general public. It introduces different kind of schemes time to time. The most popular schemes conducted by NBP are as under:
1. NBP Premium Amdani 2. NBP premium Saver 3. NBP karobar 4. NBP Saibaan
5. NBP Advance Salary 6. NBP Cash Card 7. NBP Investor Advantage 8. NBP Cash n Gold UNIVERSITY OF LAHORE 44
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9. NBP Kisan Taqat 10. Dost 11. Remit 12. NBP Protection Shield
NBP
NBP Kisan
NBP Pak
NBP Premium Aamdani
Monthly Income Scheme
• • • • • • Earn up to 12% p.a. plus Minimum deposit of Rs.20,000/- and a maximum deposit of Free Demand Draft Pay Order and Cheque Book Convenience of NBP online Asan Banking (for online banking Free NBP Cash Card(ATM+Debit) Running Finance facility up to 90%
Rs.5,000,000/- for 5 years
customers)
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• • • •
Amount of investment required from Rs. 20,000 to Rs. Investment period is 5 Years Free Demand Draft, Pay Order and NBP online Aasan Banking Free Cheque Book /NBP Cash Card (ATM+Debit)
5000,000
Profit Paid every month as follows:
Period 1st Year 2nd Year 3rd Year 4th Year 5th Year
Profit Rates 7.50% 8.50% 9.50% 10.50% 11%
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• • •
Financing facility available up to 90% o the deposit value. Premature encashment will attract penalties Zakat and withholding tax will be deducted as per rule
NBP PREMIUM SAVER
PLS Saving Account
• Produce up to 7.25% p.a. + • Minimum saving balance of Rs. 20,001/- and a maximum balance of Rs. 300,000/• Free NBP Cash Card (ATM + Debit) • Ease of NBP Online Aasan Banking (for online banking customers) • Two debit withdrawals permitted in a month & no limit on number of
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deposit transactions • Profit planned on monthly and paid on half yearly basis
NBP
•
Minimum saving balance of Rs. 20,001 and maximum balance of Rs. 30,000
• •
Free NBP Cash Card (ATM+Debit) Two debit withdrawals allowed in a month and no limit on number of deposit transaction
•
Profit calculated monthly and paid on half yearly basis
NBP KAROBAR
President Rozgar Scheme
If you are aged between 18 and 45 years, you could be eligible for easy financing for self employment in the categories below: • NBP Karobar Utility Store
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• • • • • NBP Karobar Mobile Utility Store NBP Karobar Mobile General Utility Store NBP Karobar Transport NBP Karobar PCO NBP Karobar Tele-Center
NBP
NBP KAROBAR Utility Store (Shop) Financing facility available to set-up a small scale Retail Outlet (Utility Store in a shop) for purchase of furniture & fixtures. This is also applicable on payment of security deposit / advance rent under franchise from the USC. However, stocks will be purchased by the customer.
NBP KAROBAR Mobile Utility Store Financing facility available to purchase a 2/3 wheeler, 4 stroke Petrol/CNG/LPG Vehicle (Auto Scooter / Motorcycle Rickshaw) with attached Loader body (Thehla type) under franchise from the USC to carry utility goods for retail sale ideally in areas where accessibility to conventional utility stores is difficult. NBP Karobar Mobile General Utility Store NBP Karobar Mobile General Store (without USC Franchise): This financing program has been designed on the similar pattern of Mobile Utility Store. The only difference is that the borrower will have the liberty of procuring stock/supplies/grocery items from open market. Under this product the average loan size of Rs.100, 000/will be given for a maximum period of five years with a grace period of three months
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NBP Karobar Transport
NBP
NBP Karobar Transport: The NBP Karobar Transport is designed to finance 2/3 wheeler, 4 strokes Petrol/CNG/LPG Vehicle (Auto Scooter / Motorcycle Rickshaw) to the eligible citizens of Pakistan for providing less expensive environment friendly transport facility. Under this product average loan size of Rs.100,000/- will be provided for a maximum period of five years with a grace period of three months. NBP Karobar PCO NBP Karobar PCO: This product is designed to finance setting-up a PCO. NBP will be providing financing for the purchase of Mobile/Wireless Telephone Set with connection, Credit Balance. The average amount of financing under this product will be Rs.5,000/for a maximum period of two years with a grace period of three months
NBP Karobar Tele-Center NBP Karobar Utility Store The product has been designed in collaboration with “UTILITY STORES CORPORATION OF PAKISTAN (USC)” to provide financing facility of an average amount of Rs.100, 000/- for a maximum period of five years with grace period of three months. This is available to all eligible citizens of Pakistan for setting-up small-scale Retail Outlet or Mobile Utility Store. The USC will give its franchise to qualifying Pakistani citizens.
Mear Apna Karoabar
• Minimum down payment, 10% of Asset price (5% of PCO & Telecaster) • Tenure 1 to 5 years (for PCO 2 Years)
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• • • • • Grace period 3 months Maximum Loan amount Rs.200,000/Age 18 to 45 Years Mark-up (variable) 1 year KIBOR + 2.00% p.a.
NBP
The customer will pay markup @ 6% p.a ,rest will be borne by
GOP • • Life and disability insurance paid by GOP Subject to availability of subsidy from GOP
NBP Saibaan
National Bank of Pakistan (NBP) has announced the launch of a housing scheme to cover all sections of the society with monthly income starting from as low as Rs. 5000/- per month*. *(Conditions apply)
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Open the door to your dream home with NBP Saiban
Product Items
• • • • • Home Purchase Home Construction Home Renovation Purchase of Land plus Construction Balance Transfer Facility (BTF)
Home Purchase (House or Apartment)
Financing Amount Financing Period Debt to Equity 85 : 15 (Maximum) 3 to 20 Years Up to 35 Million
Home Construction – Product Detail
Financing Amount Financing Period Debt to Equity 85 : 15 (Maximum) 3 to 20 Years Up to 35 Million
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Home Renovation
Financing Amount Financing Period Debt to Equity 80 : 20 (Maximum) 3 to 15 Years Up to 35 Million
Purchase of Land plus Construction
Financing Amount Financing Period Debt to Equity 80 : 20 (Maximum) 3 to 20 Years Up to 35 Million
Balance Transfer Facility (BTF)
If you have a home Finance Facility outstanding with another bank you can have it transfer to NBP through a hassle-free process.
NBP Advance Salary
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In January 2003 National Bank of Pakistan has launched a unique product, NBP Advance Salary. Currently this product is for fixedincome permanent employees of Federal & Provincial Government, Semi-Government, Autonomous, Semi-autonomous, local bodies and other Government organizations. The product is purely cash flow based and offers its holder to avail 20 net salaries in one go to be repaid in up to 60 (sixty) months. With no collateral, insurance or requirements, Advance Salary provides rapid disbursement in a short turnaround time. “NBP advance salary “product alone has attracted many customers. 120months salary in advance (certain conditions apply), minimum documentation, repayable in 5 years, no processing charges; no collaterals, no guarantees, no insurance, Mark-up charged at 15% per annum on reducing balance method Following documents are required to advance salary • • • • CNIC of borrower. Departmental card of borrower. Three last salary slips. Two referring person one of equal Grade other officer Grade and their CNIC and salary slip. • Undertaking by employment on 100 stamp paper.
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• • • • • Three undated Cheques. ICIL Report. C IB Report. Annexure C and D. Auto Rollover Form.
NBP
NBP Cash Card
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Cash Free Spending - Step by Step
Step 1 To identify a merchant outlet that welcomes your card, Just look for the NBP or Orix Logo.
Step 2 To make a payment give your NBP Cash Card to the merchant. The merchant will swipe Your card on the POS (Point Of Sale) machine and the purchase amount will be entered.
Step 3 Enter your digital ATM Pin for verification (this is the same as your cash withdrawal pin).
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Step 4 After Approval a transaction slip will be provided. Collect your card and slip and confirm you transaction amount
Step 5 Your purchase transaction is now complete and the transaction amount has been debited to your NBP account. Please retain your transaction for further reference.
NBP Cash Card Safety Tips • Welcome to our relationship enriched with a wide range of
remarkable e-banking service. For your safety and convenience we would recommend some precautions while using NBP CASH CARD at ATMs and merchant outlets.
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•
NBP
Immediately after receiving the NBP Cash Card, change your
PIN Code at the nearest NBP ATM. • Never share your Personal Identification Number (PIN) or
given it out over telephone. • • • Never write your PIN Code on your card. Never keep your card and PIN at the same place. As you approach an ATM, beware of your surroundings, if you
notice anything unusual, visit the ATM later. • • Immediately report a lost of stolen card to your NBP branch. Stand close to the ATM machine while entering your PIN and
do not allow anyone to watch. • Ensure that the merchant has entered the correct amount of
transaction before you enter your PIN code. • Maintain your POS receipt as a record and ensure that he card
returned to you by the cashier/attendant is yours. • • • Protect your card from direct sunlight and magnetic fields. Do not bend your card. Carefully dispose off your old card when you are issued a new
one.
NBP Investor Advantage
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A margin financing facility developed for retail investors in line with Government’s efforts to promote Pakistani capital markets and will replace the Badla (COT) system with a stable financing system in line with international financial markets. Besides offering a comfortable environment to the retail stock investors, a financing facility will also be available. Willing investors can avail NBP financing at very easy terms requiring minimum documentation and least turn around time. The NBP financing also does not require any security from the customer except for the customer’s equity. Importantly, the customer’s equity will also be freely available for investment. Customer has to fulfill all NBP and SBP regulatory requirements.
To obtain NBP Investor Advantage facility Eligible if
A Pakistani Nationals with valid computerized national ID card
• Over 21 years of age • Have an account with NBP designated branch • willing to invest equity in the form of cash or NBP approved shares • No default with any financial institution
For utilizing the NBP Investor Advantage, please follow the following simple steps
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•
Obtain Facility Application form from the NBP Margin Financial
Desk at NBP Main Branch. • Fill in the application form and submit it to the branch at the
Margin Financial Desk. • On application approval, customer deposits equity as Cash in
the customer’s margin financial account at bank .Alternatively NBP approved Shares can also deposited in the NBP CDC account. • Customer would then be eligible for trading through trading
center of the NBP Subsidiary namely Taurus Securities limited adjacent to the NBP Main Branch at Karachi. • Customer’s own equity and financial amount will both
available for trading.
NBP Cash n Gold
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Get extra benefits from your Gold. Meet your need for ready cash against your idle gold jewellery with no minimum or maximum limits. Facility of Rs. 14000/- against 10 grams of gold. • • Rate of mark up 15.50% p. a. Facility of Rs.14000 against each 10 grams of net content of Gold. • • • • • NO maximum limits of cash. Repayment after one year. Roll over facility. Only Gold ornaments are acceptable. Weight and quality of Gold to be determined by NBP’s appointed schroffs. • No penalty for early payments.
NBP Kisan Taqat
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National Bank Pakistan Dairy Form Scheme
Advantage to Getting Loan from NBP
• • • •
Very Near Banks Branch from you Easy and Short Paper working Get ride from the tension payment of Installments Experience Staff’s Help and Guide
NBP Kisan Dost
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NBP KISAN DOST
NBP’s affordable agricultural program offers you a wide range of financing. Loans available for the farmers for
• • • • • • • • • • • •
Production Development purposes Purchases of tractors Installations of tube wells Purchases of agricultural implements Micro loans Good own construction Construction of fish pond Livestock farming Milk processing Cold storage Bio-gas plants etc.
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1. Production Loans 2. Development Loans
NBP
Production Loans
In production loans, loans are provided for Seeds, Fertilizer and Pesticides. These loans are provided for one year at the rate of 12%. Limit of these loans are Rs.250, 000.The bank provide the loans against the pledge of land.
Development Loans
In this type of loans bank provide loans for Tractor, Life Star, Dairy and Machinery. These loans are provided for more than one year and limit of these loans are Rs.500,000.
Requirements
1) Agri Passbook 2) CNIC 3) Photographs 4) Fard of land guarantors 5) AKS Sajrah 6) ICIL Report 7) NOC 8) SS Card (Specimen Signature Card) 9) CIB report
The borrower makes the payment of loan on annually basis interest + Principal
NBP Pak Remit
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Production Information
Pakremit is an internet based Home Remittance Service. This service is available to U.S. residents for sending money to their family and friends in Pakistan. One must have a valid US Dollar account with a U.S. bank or a US Dollar credit or debit card in order to remit funds through this channel. Remitters in USA can log on to our user friendly website, www.pakremit.com and easily remit funds to Pakistan from the comfort of their homes, in a matter of minutes. The service is fully secure with advance encryption application and is available for use 24 hours a day, 7 days a week. Fees and exchange rate have been set at competitive levels and the remitters have the ability to track delivery of funds as well.
Process
• Remitters log on to www.pakremit.com and after completing
the registration process, are able to remit funds. The whole process takes a few minutes. • Funds in Pak Rupees can be sent to beneficiaries, having an account with any bank in Pakistan, including NBP. While funds are credited directly to beneficiaries maintaining accounts with NBP, a pay order or demand draft is couriered to other banks for their customers. Pay order or demand draft can also be couriered directly to the beneficiary’s office or home, if requested by the remitter. • Funds in US Dollars can be sent only to a Beneficiary maintaining a US Dollar account with one of NBP’s Foreign
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Exchange Branches. Click here for details of NBP Foreign Exchange Branches.
NBP Protection Shield
Insurance Coverage In case of Accidental Death (Including death due to *Riots, Strikes, Civil commotion, Acts of Terrorism and Natural Calamities like Flood, Earth Quake, Cyclones etc.) Coverage of Rs. 200,000/- for Rs. 20/- per month Definitions Provided the insured is not directly involved in these activities Accident Unintentional, unfortunate or a harmful event by chance or apparent cause. Accidental Death Death due to accidental injuries, but not illness. Insured Person A National Bank of Pakistan PLS account holder, aged between 18 years and above, and whose premium is deducted & details are reported to the selected insurance company by NBP. Policy
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Group Personal Accident Policy dated 26/09/05 executed between NBP and Insurer. Principal Sum The amount stated in the Policy’s Schedule of Benefits as respects each Insured Person.
Product Detail
• • • No medical Required No Documentation Fixed Auto Premium deduction Facility (After customer
consent) • Choice of Deactivation
Eligibility
• • NBP PLS Account holder 18 Years and Above
SERVISES OF NBP
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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. Furthermore, we have recently set up the Financial Institution Wing, which is placed under the Risk Management Group. Institution Section is To effectively manage NBP's exposure to foreign and domestic communication
•
The role of the Financial
Manage the monetary aspect of NBP's relationship with the correspondents to support trade, treasury and other key business areas, thereby contributing to the bank's profitability
•
Generation revenues
of
incremental
trade-finance
business
and
NBP offers:
• •
The lowest rates on exports and other global banking products Access to different local commercial banks in international banking
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NBP Pak Rupee Traveller’s Cheque
Negotiability: Validity: Availability Encashment Limitation Safety Pak Rupees Traveler’s Cheques are a negotiable instrument There is no restriction on the period of validity At 700 branches of NBP all over the country At all 400 branches of NBP No limit on purchase NBP Traveler’s Cheques are the safest way to carry our money
Letter of Credit
NBP is committed to offering its business customers the widest range of options in the area of money transfer. If you are a commercial enterprise then our Letter of Credit service is just what you are looking for. With competitive rates, security, and ease of transaction, NBP Letters of Credit are the best way to do your business transactions.
Commercial Finance
Let us help make your dreams become a reality Our dedicated team of professionals truly understands the needs of professionals, agriculturists, large and small business and other segments of the economy. They are the customer’s best resource in making NBP’s products and services work for them.
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Foreign Remittance
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 well-trained 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 AlJazira, Saudi Arabia.
•
Zero Tariffs: NBP is providing home remittance services without any charges.
•
Strict monitoring of the system is done to ensure the highest possible security.
Special courier services are hired for expeditious delivery of home remittances to the beneficiaries.
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-PKKA. All NBP overseas branches and overseas correspondents (over450) are drawing remittances UNIVERSITY OF LAHORE 70
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through SWIFT. Using the NBP network of branches, you can safely and speedily transfer money for our business and personal needs.
Short Term Investment
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, NBP’s rates of profit are extremely attractive, along with the security and service only NBP can provide.
N.I.D.A
National Income Daily Account 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. MODE OF CALCULATION AVERAGE BALANCE DURING A CALENDAR MONTH
Equity Investment
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. NBP is involved in the following:
• •
Investment into the capital market Introduction of capital market accounts (under process)
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NBP’s involvement in capital markets is expected to increase its earnings, which would result in better returns offered to account holders.
Trade Finance and Other Business Loan
Agriculture 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 Provide farmers an integrated package of credit with supplies of essential inputs, technical knowledge, and supervision of farming.
•
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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.
Utility Bills Collection
For the convenience of the customer, National Bank of Pakistan also collects different kinds of utility bills such as: Electricity Bills, Sui-Gas Bills, Telephone Bills etc.
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Foreign Currency Account
Launched to attract deposits in foreign currencies like US Dollars, Pound Sterling, Dutch Mark, and Japanese Yen. Whether you are a resident or a non-resident of Pakistan, NBP invites all to operate in a foreign currency account.
Corporate Finance
Working Capital and Short Term Loans
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 our clients’ vision. This type of long term financing proves the bank’s belief in its client's capabilities, and its commitment to the country.
Loan Structuring and Syndication
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National Bank’s leadership in loan Syndicating stems from ability to forge strong relationships not only with borrowers but also with bank investors. Because we understand our syndicate partners’ asset criteria, we 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. Our syndication capabilities are complemented by our own capital strength and by industry teams, who bring specialized knowledge to the structure of a transaction.
Cash Management Services
With National Bank’s Cash Management Services (in process of being set up), the customer’s sales collection will be channeled through vast network of NBP branched spread across the country. This will enable the customer to manage their company’s total financial position right from your desktop computer. They will also be able to take advantage of our outstanding range of payment, ejection, liquidity and investment services. In fact, with NBP, you’ll be provided everything, which takes to manage your cash flow more accurately.
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Learning as an Internee
I joined National Bank of Pakistan, Main Branch Vehari on 26 th June, 2010. First day, the manager introduced me about the functioning of the branch and the staff. The manager told me that counter is the most important place of the bank. During the six weeks of my internship, I worked in different sections of the branch and did the maximum practice of banking system details of which is as under:
a) General Banking
First of all, I was asked to work in different sections of general banking. I was attached to Counter with Mr. Khalid who has good command on this section. Here we dealt with new customer who wanted to get information and to deal with the branch. This is a very interesting department because here we met people of different types and deal with them accordingly. In this section, I observed the following functions
b) Cheque at Counter
A cheque to withdraw the amount is presented on the counter with the following requisites: 1) Name of the Account Holder 2) Current or previous date 3) Amount in figures UNIVERSITY OF LAHORE
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4) Amount in wording
NBP
5) One signature of the account holder in the right bottom corner of the cheque 6) Two signature of the bearer on the back 7) Branch Stamp in front of the cheque 8) Verification Stamp in front of the cheque 9) If the Account Holder uses thumb instead of signature then the Pass Book is necessary with the cheque
Operation’s officer checks and verifies all these requisites. If it fulfills all the requisites, it is forwarded for payment after a certain procedure.
c) Cheque Payment Procedure
After all the requisites are verified and then the excessive balance is checked and prescribed amount is deducted narrated on the cheque, then SIGNATURE VERIFIED stamp (in case of signature only) on the signature and a PAY CASH stamp are fixed and a Token is given to the cheque bearer after writing Token No. on the specified cheque. Then the Officer G-II verified the cheque and forwarded it to the cashier where the cheque bearer receives the amount from the account.
d) Issuance of Demand Draft
A Demand Draft is provided to the client in whom he has to specify that bank it is drawn. The amount both in words and figures is written on Demand Draft.
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e) Bills Collections Department
I spent second week of my training in bills collection department. Mr. Ameer Hamza is the in charge of this section. Here we collected utility bills like electricity bills, gas bills, and telephone bills.
f) Bill Remittance Department
This is very important and interesting department. This section deals with the transfer of money from one branch to another branch. Nearly four drafts are issued daily from this department. Here I know how the amount is transferred and what the procedure is. This department also deals with TT transfer of money. I worked nearly two weeks in this department.
g) Deposit Department
Deposit department deals with Current, Savings, and Fixed Accounts. In current account the bank does not give any interest and you can deposit the whole amount in lump sum in business hours. However in PLS savings account we can only withdraw up to Rs.25000/- without any notice otherwise a prior notification of a week is required to the bank if the amount to be withdrawn is more than Rs.25000/- Old ages are interested in Fixed Account usually. The rate of interest is higher more than that of in Current and PLS savings Account but the amount cannot be withdrawn before a specific time fixed by the client. To open the account customer have to fulfill an application form and submit to the concerning authority. In Current and PLS saving Account, a Cheque Book is issued to the client and he becomes the Account Holder of NBP. I worked in this department for one and a half week.
h) Pension Payment Procedure
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The pension payment procedure is the toughest procedure, because a lot of people want to get their pension as soon as possible. Here I seek how the dealing with the retired persons. Here I seek how the pension increase and how the bank gives every month pension to retired persons. Pension 25% increase and medical allowance is also 25%.if BPS less than 15.and if BPS more than 15 the increase 20%and medical allowance is 20%.This year Government have done admirable work. Which is that they family pension is if less than Rs.2250/=, then the pension of family should be Rs.2250/=.and also that person take the medical 25%and now his pension is Rs.2813/=and that person who is alive his pension is if less than Rs.2250/=, it should be direct Rs.3000/= and this person also take the medical 25% and now his/her pension is Rs.3750/=.
i) Outwards Bills for Collection (OBC)
I seek how Outward Bill for collection, the cheques drawn on the bank that is out of city. These cheques are not collected through NIFT. The banks clear these by sending them to the relevant branch through mail. This service includes all activities involved in collecting their claims on customers of the other branches of same bank or of the other banks, located outside the clearinghouse area. Procedure
• • • •
Receive instrument, this instrument It is in the name of the account holding customer Must not be post dated or stale Must have same amount in words and figure
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• Affix special crossing stamp on the face of
NBP
instrument • Affix OBC stamp on the instrument, and on pay-in
slip • • • Entry in OBC register Write OBC# on the instrument Prepare outward bill for collection schedule
NBP Awards & Achievements
•
Best Foreign Exchange Bank 2008 awarded by world's leading financial journal Global Finance.
•
Best Return on Capital for 2006 amongst all Banks in Asia. Banker Magazine in July 2007.
•
World's leading financial journal Global Finance has named NBP as the Best Emerging Market Bank from Pakistan for the year 2006.
•
Best Foreign Exchange Bank Pakistan award for the year 2006 by world's leading financial journal Global Finance.
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•
NBP
Due to consistent improvement in NBP's Core Profitability Asset Quality and Economic Capitalization in recent years, Moody’s Investors Service upgraded the Financial Strength Rating (FSR) rom E+ to D in November 2005.
•
Best Foreign Exchange Bank Pakistan award for the year 2005 by world's leading financial journal Global Finance.
• •
Best Bank Pakistan award for the year 2005 by world's leading financial journal Global Finance. The Asian Banker a reputable financial journal has published the report of its research project on the ranking of 300 of Asia’s Strongest Banks based on an 11 Dimensional Dynamic Scoring Criteria has adjudged National Bank of Pakistan as the Strongest Bank in Pakistan.
•
On the basis of overall financial performance during 2004 NBP has been listed Amongst top 1000 banks in the world and Number 1 Bank in Pakistan by the prestigious Banker Magazine in its issue of July 2005 .
•
The Banker Magazine in July 2005 recognized NBP as the 10th Best Bank in terms of Profit on Capital in the world.
•
Bank of the Year awarded for the year 2005 by the world renowned. The Banker magazine owned by the Financial Times Group London.
•
On an all Pakistan basis National Bank of Pakistan was awarded the Kissan Times Award for the year 2005 by the Prime Minister Mr. Shaukat Aziz for its services in the Agriculture Sector .World leading financial journal Global Finance in an exclusive survey has named NBP as the Best Emerging Market Bank from Pakistan for the year 2005.
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•
Bank of the Year awards for the year 2004 by the world renowned. The Banker magazine owned by the Financial Times Group, London.
•
Euro money Magazine, a leading and prestigious journal, published from London , UK , in its issue of March 2005 has published Moody's Investors Service rankings in which NBP is the only Pakistani bank which has been ranked among the Top 100 banks of Asia for it performance in the fiscal year 2003.
•
WEBCOP-AASHA an alliance against gender discrimination at workplace presented a Recognition Award to National Bank of Pakistan on December 18, 2004 for having a Gender Sensitive Management.
•
In
May
2004,
NBP's
standalone
long-term
rating
was
upgraded by JCR-VIS Credit Rating Agency to AA (double A) from AA (double A minus) with stable outlook while standalone short-term rating was maintained at A-1+ (A one plus). This is now the best rating for a local commercial bank in Pakistan.
•
In its issue of March 2004 Global Finance has also declared NBP as The Best Foreign Exchange Bank in Pakistan.
•
The Banker Magazine in July 2003 recognized NBP as the bank with the highest return on capital in Asia and No.8 in the world.
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•
NBP
World's leading financial journal Global Finance after a worldwide survey declared NBP in its issue of May 2003 as one of the best banks in the emerging markets.
•
Bank of the Year awarded for the year 2002 by the world renowned The Banker magazine owned by the Financial Times Group London.
•
Bank of the Year awarded for the year 2001 by the world renowned. The Banker magazine owned by the Financial Times Group London.
President’s Awards
• Mr. Syed Ali Raza, Chairman & President NBP was awarded. The Asian Banker Leadership Achievement Award 2007 by Asian Banker (an internationally reputed Financial Journal in its issue of June 2007.
•
Mr. Syed Ali Raza Chairman & President, NBP was conferred Sitara-i-Imtiaz by the President of Pakistan General Pervez Musharraf on August 14, 2005.
•
Business Week of The McGraw Hill Companies in its July 11,2005 edition has adjudged Mr. Syed Ali Raza Chairman
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President NBP as one of the twenty five Leaders of Asia at the & Forefront of Change and has identified them as Stars of Asia including the President of Indonesia.
•
Mr. Syed Ali Raza’s (Chairman & President, NBP) capabilities were also recognized by the Institute of Bankers in Pakistan when he was awarded a gold medal in 2003.
Financial Analysis
In this section two topics are discussed. Two major topics of this section are:
• Financial Highlights • Balance Sheet • Profit & Loss Account • Raito Analysis
FINANCIAL POSITION
Different facts and figures of opening balances of the year 2010 about National bank of Pakistan which show the financial position are as under:
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FINANCIAL HIGHLIGHTS
TOTAL DEPOSITS ADVANCES INVESTMENTS AFTER-TAX PROFIT TOTAL ASSETS TOTAL EXPENDITURES NO OF BRANCHES PROFIT NO. OF EMPLOYEES Rs. 726,465 Million Rs. 475,243 Million Rs. 217,643 Million Rs.18,212 Million Rs. 945,903.3 Million Rs. 26.30 Billion 1287 Rs. 18,212 16,248
National Bank of Pakistan Balance Sheet
As at December 31, 2009
ASSETS
Cash and Equivalents Trading Asset Securities TOTAL CASH AND SHORT TERM INVESTMENTS Other Receivables TOTAL RECEIVABLES Restricted Cash Other Current Assets TOTAL CURRENT ASSETS Gross Property Plant and Equipment Accumulated Depreciation
2008 (Rs.in million) 140,477.0 1,009.2 156,995.0 2,105.7 2,105.7 5,792.1 16,276.2 195,166.9 28,214.4 -3,962.7
2009 (Rs.in million) 138,631.3 2,381.3 160,951.5 13,566.9 13,566.9 6,823.6 21,070.2 218,341.3 29,982.1 -4,810.5
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NET PROPERTY PLANT AND EQUIPMENT Deferred Tax Assets, Long Term Other Intangibles Other Long-Term Assets TOTAL ASSETS
NBP 24,251.7 3,203.6 20.3 34,280.7 820,077.2 25,171.6 3,064.5 29.3 32,238.3 945,903.3
LIABILITIES & EQUITY Accrued Expenses Current Portion of Long-Term Debt/Capital Lease Current Portion of Capital Lease Obligations Other Current Liabilities, Total TOTAL CURRENT LIABILITIES Long-Term Debt Capital Leases Minority Interest Unearned Revenue, Non-Current Pension & Other Post-Retirement Benefits Deferred Tax Liability Non-Current Other Non-Current Liabilities TOTAL LIABILITIES Common Stock Retained Earnings Comprehensive Income and Other TOTAL COMMON EQUITY
15,204.6 5,117.9 15.2 10,242.6 687,806.3 3,049.6 10.0 112.7 133.3 3,052.8 -21,573.9 715,738.7 8,969.8 67,612.0 27,756.7 104,338.5
18,247.5 2,921.1 19.0 10,654.7 792,041.4 8,220.9 23.6 110.9 218.0 3,531.0 -20,425.7 824,571.6 10,763.7 78,212.5 32,355.4 121,331.6
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TOTAL EQUITY TOTAL LIABILITIES & EQUITY
NBP 104,338.5 820,077.2 121,331.6 945,903.3
Profit and loss Account For the year ended on December 31, 2009.
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2008 (Rs.in million)
TOTAL REVENUES/SALES Cost of Goods Sold GROSS PROFIT Selling General & Admin Expenses, Total EBT, EXCLUDING UNUSUAL ITEMS Other Unusual Items, Total Other Unusual Items EBT, INCLUDING UNUSUAL ITEMS Income Tax Expense Minority Interest in Earnings Earnings from Continuing Operations NET INCOME NET INCOME TO COMMON INCLUDING EXTRA ITEMS NET INCOME TO COMMON EXCLUDING EXTRA ITEMS 41,957.1 261.8 41,695.3 18,101.5 22,261.3 988.0 988.0 23,249.3 7,565.2 -3.0 15,681.1 15,681.1 15,681.1 15,681.1
2009 (Rs.in million)
45,980.5 330.3 45,650.3 22,486.4 22,198.8 --22,198.8 4,099.8 1.8 18,100.8 18,100.8 18,100.8 18,100.8
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What is Financial Ratio Analysis?
“Financial ratio an index that relates to accounting numbers and is obtained by dividing one number by the other” The level and historical Trends of these ratios can be used to make inferences about a company's financial Condition, its operations and attractiveness as an investment. Ratio Analysis enables to the investor, supplier that they could know the real position of the business. To do this compares your ratios with the average of businesses similar to yours and compare your own ratios for several successive years, watching especially for any unfavorable. There are following Ratios that we discuss below: • • • • • Liquidity Ratio ACID-TEST/ (QUICK) Ratio Leverage Ratio Activity Ratio Profitability Ratio
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LIQUIDITY RATIO
Current Ratio
Current Ratio = Current Assets Current Liabilities 2009
2008
195,166.9/687,806.3 =0.284:1
218,341.3/792,041.4=0.276: 1
Explanation
A relatively high ratio is an indication that the firm is liquid and has the ability to pay its current obligation in time as and when they become due. On the other hand, a relatively low current ratio represents that the liquidity position of the firm is not good and the firm shall not be able to pay its current liabilities in time without facing difficulties. Current ratio of national bank shows that bank is not in position that it pay to its obligation in 2008 and 2009.
Graph
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ACID-TEST/ (QUICK) Ratio
Acid-test (quick) Ratio = Current Assets-Inventories Current Liabilities First of all we find to inventory the method of finding is Years 2008 52584.2 2009 =66143.1 218341.3 138631.3 13566.9 Current Assets 195166.9 Cash Account Receivable = 2105.7 = Inventory - 140477.0
2008 142582.7/687806.3 = 0.20:1
2009 152198.2/792041.4 = 0.19:1
Explanation
The Acid-test ratio is very useful in measuring the liquidity position of firm.it measure the firm’s capacity to pay off current obligations immediately. This ratio of 2008 and 2009 show that the bank is not in position to pay his liabilities immediately, UNIVERSITY OF LAHORE 91
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Graph
Quick-AcidT est
0.202 0.2 0.198 0.196 0.194 0.192 0.19 0.188 0.186 0.184 2008 2009 Quick-Acid Test
Leverage Ratio
In leverage two ratios are included
• Debt-to-Equity • Debt-to-total-Assets
Total Debt
Debt-To-Equity =
____________________________________________ Shareholders Equity (Total Asset – Total Liabilities)
2008 715738.7/104338.5 = 6.86
2009 824571.6/121331.6 = 6.80
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Explanation:
The ratio indicates the proportionate claim of owners and the outsiders against the firm’s assets. If we see to the ratio of both years it indicates that NBP debt is more than its equity so outsiders can claim on its assets any time.
Graph
Debt - to –total –Assets =
Total Debts Total Assets
2008 715738.7/820077.2 = 87%
2009 824571.6/ 945,903.3 =87%
Explanation:
The ratio indicates the relative extent in which firm is using borrowed money. In 2009 and 2008 the company debts are more than to its assets so the only 13% shareholders equities are left for covering to creditor. This ratio shows that the 87% of assets are financed while 13% we have share holder equity. That shows the
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Financial Risk for creditors. More the share holder equity lesser the Financial Risk for creditors.
Graph
D ebt-T otal Assets o-T
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2008 2009
Debt-To-Total Assets
Activity Ratios
Total Assets turnover =
2008 41957.1 / 820077.2 = 0.51
Net Sales Total Assets
2009 45980.5 /945903.3 = 0.49
Explanation:
It indicates the efficiency of Assets to generate sale. If we check to the efficiency of Assets to generate sale in 2008 and 2009 then we can say that it is not satisfactory for NBP.
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Graph
T otal AssetsT urnover
0.515 0.51 0.505 0.5 0.495 0.49 0.485 0.48 2008 2009 Total Assets Turnover
? Receivable Turnover
?
Receivable Turnover in Days
Receivable Turnover = Credit Sale Receivable
2008
41,957.1/2105.7 = 20 times
2009
45,980.5/13866.9 = 3times
Explanation
This ratio shows us that how many times receive cash from receivables. In this ratio we see that in the year 2008 we get cash
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from receivables 20 times, and in 2009 this ratio decreases from 20 times to 3 times.
Graph
Receivable Turnover in Days: 365 RT
2008
365/20 times = 18 days
2009
365/3times = 122 days
Explanation
This ratio indicates that how much days are required to return The Account Receivables. In this ratio we see that in the year 2008 we get cash from receivables in 18 days, and in 2009 years NBP can receive to its Account Receivables in 122 days.
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Graph
Profitability Ratios
•
•
Net Profit Ratio
ROI (return on investment)
Net Profit Ratio = Net profit after tax Net Sales
2008
15,681.1/41957.1 =37%
2009
18,100.8/45,980.5= 39%
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Explanation
The ratio indicates the overall profitability and hence it is very useful to proprietors. The ratio also indicates the capacity of firm to face adverse economic conditions such as price completion, low demanded. So the NBP ratios of 2008 and 2009 indicates that it is good but not as could be.
Graph
Net Profit Ratio
40% 39% 39% 38% 38% 37% 37% 36% 2008 2009
Net Profit Ratio
Return on Investment
Formula = Net profit after taxes Net sales Net Sales Total Assets
2008 5681.1/ 41957.1 41957.1 / 34280.7 100 = 16.47%
2009 18100.8/4598.5 4598.5/32238.3 56% 100 =
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Explanation
This ratio indicates the efficiency of generating profit with available assets. If we see to 2008 then the profit is 16.47% so the profit margin is very low in this year the bank assets have no much capacity to produce more profit for bank on the other hand if we see to 2009 then the profit is 56% in this year the bank assets have the capacity to produce profit.
Graph
Financial Ratios Analysis
Ratios Current Ratio Acid Test/Quick Ratio Debt to Equity Ratio 2008 0.284 0.20 6.86 2009 0.276 0.19 6.80
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Debt to Total Assets Total Assets Turnover Receivable Turnover Receivable In Days Net Profit Ratio Return on Investment Turnover
87% 0.51 20 Times 18 Day
87% 0.49 3Times 122 Day
37% 16.47%
39% 56%
PEST Analysis
Political
• • • • • Privatization policy and de-regulation. Impact on subsidized credit affecting and NCB’s.? Employment practices, unions and association. Political interference and harassment. Incidents of high taxation on banking industry.
Economic:
• • Constraints in mobilizing of public savings because of inflation. Staff cost.
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• • Operating cost. Bad debts.
NBP
Social and cultural:
• • • • • • Inadequate H.R. Cultural strain to saving Defaulter’s lobby Declining education and work ethics. Inadequate accountability. Adequate empowerment.
Technological:
• • • Inadequate communication infrastructure. Inadequate computer Facilities. Inadequate training Facilities.
SWOT ANALYSIS
Here four topics are discussed. They are as under: • Strengths • Weaknesses • Opportunities • Threats
Strengths
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•
NBP
The banking time of at the bank till 5:00 pm. This is highly useful for those customers who find it difficult to leave their officers in the morning. It is also highly useful who deposits their amounts on daily basis at evening.
•
The organization showing concern for the people, ethics and environment enjoy good public reputation and are able to reap the benefits in the long run. National Bank management is quite sensitive to this issue. The productivity of the bank is very good. Bank is providing a high quality service to its customers.
•
Different cameras are located at different locations to monitor the working of staff members and outside customers by branch manager.
•
Bank enjoys a strategic competitive advantage over the JS, Alfalah, and Al-habib bank, RBS, Allied etc
•
With the passage of time National Bank has expand their branches and now running almost 1287 branches.
•
Western union and express money transfer has exist in National Bank of Pakistan
•
Professional staff, right person hired on the right place.
Weaknesses
• In formal language and Dressing used in National Bank of Pakistan.
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•
NBP
In NBP there is no major use of computer for maintaining the records, of branches as compared to other banks of the country.
•
Because NBP is a govt. owned organization so there is a lack of implementation of rules and regulations.
•
In
this
organizational
the
organizational
structure
is
bureaucratic which a barrier in rapid and effective decision making. • Despite, cultural change program the working condition of the NBP is not up to standard. • Due to wrong recruitment policy staff of NBP is not proficient in their work. • In NBP, employees are recruited on the basis of favoritism or through other tools of corruption.
Opportunities
• NBP by establishing new branches in foreign countries can expand its business and can enjoy with the profit. • To enjoy with large amount, NBP can introduce a
comprehensive range of bonds. • NBP can enjoy handsome return its funding base by investing in capital markets in the foreign countries.
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• The basic need of the consumer such
NBP
as housing,
transportation and other durable goods are not adequately financed by the banks. So by initiating these services, the bank can enjoy with more funds. • Until recently the bank perceived as purely commercial banking entity so in order to expand its business the bank may start investment banking by investing in the portfolio of handsome return. • It can establish advisory services in order to facilitate the customers in investing in the securities.
Threats
• The no. of banks in Pakistan is increasing with the passage of time. So due to poor working condition and poor customer service it may be possible NBP will lose its market share in future. • In our country, the rate of inflation is increasing along with the unemployment. So due to the increase in price of the products, the savings of the nation is decreasing with the passage of time. So it is the threat for the banking sector. In the future, the deposits of the bank will decrease. • On NBP Govt. policies have strong impact. A slight change in Govt. policies may affect the performance of the bank. The bank has to work with in the regulation frame work.
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•
NBP
The hiring of uneducated people is a major threat for National Bank of Pakistan
RECOMMENDATION AND CONCLUSION
Here we discuss four topics that are:
• Findings • Suggestions • Recommendations
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NBP
Findings
• • • • There is no motivational factor in employees. Company personal policies are not good. The employees are not much aware of the latest Technology Changing market situation, State Bank Rules and regulations and Government policies are causing problems for operating properly in market. • The performance appraisal for the employees is not carrying properly and there is no proper system for evaluation of the employees’ performance. • The top management is not doing sufficient efforts to increase the motivation and job satisfaction of employees that is leading towards decrease in productivity.
Suggestions
• Proper time to time training should be conducted to lower staff as well to enhance their productivity. • The organization should take steps to use the latest IT technology including different banking software to increase the productivity of the organization and reduce the time of different process.
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•
NBP
All the authorities, responsibilities and duties should be clearly communicated to the employees.
•
The computer technology should be used in decision making processes as well as practicing in the developed countries.
•
The management must observe the internal and external environment so that it may able to identify the problems before occurring may these used problems instead so of that solving pro-active it after
approach
be
occurrence. • As the world has become global village, the management should have latest knowledge and information about the world because a little change in any corner of the world can affect your business. • There should be more decentralization in decision making process need less time to execute rather than approvals from even H.O.D. • An effective coordination and relationship among
departments should be there and exercise as well. • The management should recruit right person for job and must avoid favoritism and all other such activities.
RECOMMENDATIONS
PROPER PLANNING
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Bank should make a plan to gear up its recovery efforts on war footing and reorganize the recovery function of global bases. In addition, bank should tighten up control on expenditure
USE OF COMPUTERS
To save the time of the customers and other clients, bank should adopt computerized system for book keeping and other filling systems. It will increase the efficiency of the bank. I know that there are some branches which are computerized but most of the branches in various cities of the country are not computerized. So the bank should mechanize all its branches in the country.
ADOPTION OF ADVERTISING
Bank should launch advertising campaigns through out the year to promote the habits of savings in the people. Bank should open more branches in the remote areas of the country to get deposits and idle resources. Bank should provide similar facilities to all its branches in big cities. The standard of service and other facilities are far better as compared to smaller cities.
PROPER GUIDANCE
Bank should adopt such an induction plan that when a customer opens his account with the bank, he should be supplied with a booklet which enables him to know the procedure of filling the cheques and pay-in-slip etc. It will save a lot of time of the bank staff afterward during of the conduct of the account of that customer.
DIVISION OF WORK
The billing system of national bank of Pakistan must be improved to facilitate the customers and workers. The work should be divided
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among the staff e.g. collection of bills, countering of cash and then entry of these.
CHECK ON EXPENDITURES
Expenditures unnecessary. must be controlled which are very high and
BORROWING AT LOW COST
Deposits must be taken at a lower cost and given at higher interest rate.
Conclusion
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I got a lot of experience from National Bank during my internship. During Internship I came to know that how different activities take place in organizations, what are the rules and procedures Followed in National Bank. National Bank of Pakistan is one of the leading in the Pakistan’s Banking industry with almost 1267 plus national and 22 branches in foreign countries. The Bank is still growing and growing on the way of the prosperity. The management is highly qualified and
experience in its fields. I had a very great opportunity to work as internee so as to gain an over view of practical life and working in industry before entering in practical life. Practical things and knowledge is very much different from the theory and bookish knowledge. I had a very great chance to gain practical experience and to implement my bookish and to very refine theoretical knowledge in practical things.
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Internship Letter
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References
1)
The first important thing is the discussions with the staff of the bank especially with the manager of the branch.
2)
The Bank Book of Instructions for the National Bank of
Pakistan called the B.B.I.
3)
Surfing the website of the National Bank of Pakistan
(www.nbp.com.pk)
4)
Reading the Annual Reports of the National Bank of
Pakistan
5) www.google.pk
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doc_827761197.pdf