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INTERNSHIP REPORT ON
NATIONAL BANK OF PAKISTAN (MAIN BRANCH CHARSADDA)

SUBMITTED BY

AZIZ ULLAH JAN
ROLL NO. 7, MBA (Finance) Final TERM

SUBMITTED TO CONTROLLER OF EXAMINATIONS UNIVERSITY OF PESHAWAR
NATIONAL INSTITUTE OF MANAGEMENT SCIENCES PESHAWAR, PAKISTAN JANUARY 2011
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APPROVAL SHEET INTERNSHIP REPORT ON
NATIONAL BANK OF PAKISTAN (MAIN BRANCH CHARSADDA)

Submitted By
Aziz ullah Jan Roll No. 7, MBA (Finance) Final Term

Of National Institute of Management Sciences Peshawar, Pakistan
Has been approved for submission to the controller of examinations, University of Peshawar in partial fulfillment of the requirement for the degree of

MASTER OF BUSINESS ADMINISTRATION
____________________ Mr. Muhammad Aftab
(Internal Supervisor)

_____________________ Mr. Muhammad Idress
(Principal/Director)

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Date: _________________ _________________

Date:

DEDICATION
To my loving PARENTS who always been a great source of inspiration for me and their guidance and advice always kept me on the right path and their prayers and good wishes have been a source of great strength for me.

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TABLES OF CONTENTS
=========================================================== S.No Title Pages No ============================================================

Acknowledgement Preface Executive Summary
Chapter -1 1.1 1.2 1.3 1.4 1.5 Chapter -2 2.1 2.2 2.4 2.5 Chapter -3 3.1 3.2 Chapter -4 4.1 4.2 4.3 4.4 4.5 4.6 4.7 Chapter -5

I II

INTRODUCTION TO THE REPORT
Background of Study Purpose of Study Scope Of Study Limitations of the Study Methodology of Study

1 1 1 1 2 2 3 3 5 7 7 9 9 11 14 14 14 16 19 22 23 23 25

NATIONAL BANK OF PAKISTAN
History Of NBP Activities Performed By NBP Objectives Of National Bank Branch Network ORGANIZATIONAL STRUCTURE OF NBP Head Office Regions Of NBP

DEPARTMENTATION
Departments of NBP Main Branch Charsadda
Deposits Department

Remittances Department Advance Department Cash Department Government Collection Department Clearance Department

FINANCIAL ANALYSIS

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5.1 5.2 5.3 Chapter-6 6.1 6.2

Five Years Performance At A Glance Ratio Analysis Calculation of different ratios

25 26 26 35 35 37 39

FINDINGS AND RECOMMENDATIONS
Recommendations Conclusion

BIBLIOGRAPHY

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ACKNOWLEDGEMENTS
All praise is due to Almighty ALLAH, the most merciful and the most beneficent, who’s invocation always makes us proud by succeeding in every field through our performance and the ability, courage and patience to come up with the best out put of our struggle. Countless salutation is upon the holy prophet “Hazrat Muhammad” (SAWW), the most perfect and a torch of guidance and knowledge for humanity as a whole. I would like to thanks Hadayat Ali Chartered Accountant (Principal of Ali Associates Chartered Accountants) and Tahir Muhammad (Office In charge) with the help of whom this project gets the complete shape of success and its true color. I would like to thanks Dr. Muhammad Idrees (Director of National Institute Of Management Sciences Peshawar) and Mr. Kamal Khan (Co-ordinator) with the effort of whom we are provided with the best education environment, which make us proud to be the student of National Institute of Management Sciences Peshawar. I am also in debt to my Internship instructor who encourages, helps and guided me through every corner of difficulty that I have faced. He is the one leads us to correct our mistakes and provide the maximum help to all the students. I am greatly thankful to my teachers Mr. Farhad, Miss. Madiha, Mr. Muhammad Aftab for their guidance and valuable suggestions. Finally, I am also thankful to my friends especially Nauman, Aziz Ullah Jan, Maqsood and Abdul Wahid for their good wishses and timely assistance in the completion of this internship report. I would feel it in complete without saying thanks to my loving Parents and Brother Muddassir Khan who supports and encourage me throughout my educational career.

AZIZ ULLAH JAN
MBA Finance

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EXECUTIVE SUMMARY
This report highlights the main operation and functions, which are usually carried out in a Chartered Accountant Firm. CA Firms mainly provides financial advisory and consultancy services to its clients in the shape of Audit, Tax & Corporate Consultancy Services. All the CA firms acts under the umbrella of ICAP which is an autonomous body and came into being through an Ordinance in 1961. This report explains how different functions are carried out in a CA firm and what consultancy services are being provided to the customers/ clients. This report is based on the actual data which I collected during my stay in the Firm as a management trainee. The First Chapter is about the Introduction of the Report, the Second Chapter is about the History of Chartered Accountants whereas the Third Chapter is about the History of Auditing, Fourth about Procedure, Fifth about Taxation, Sixth about Financial Analysis & Seventh about Findings, Conclusion and Recommendations. During the critical review it was observed that Ali Associates Chartered Accountants is one of the leading Firms with one of its branch in London (UK) as well. The Organization is well established and managed by a team of competent manager with great knowledge and skills in their relevant fields. The overall atmosphere is employee friendly. During my stay in the Firm I have witnessed a few shortcomings the recommendation for removing that shortcomings in my opinion are as follows. • • Strong need of decentralization Apart from regular training schedule the firm should also arrange some training workshops for their trainees in order to enhance their knowledge. • • There must be proper reward system in order to motivate the employees. The personnel policy should be well defined.

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•

The managers should apply the Job rotation concept inside and outside the organization.

•

Coordination among the employees & trainees should increase by arousing Team spirit.

•

The firm should expand its operation to other countries. Especially to Afghanistan.

• • •

The CA firm should expand its services. Class differences should be minimized. Process of hiring of trainees should be eased enough so that an average student can get opportunity of training in the firm.

•

Equal opportunities should be provided to all trainee students during stay in the Firm.

•

Trainees should have an access to all the records which can enhance their knowledge & skills proficiency.

•

Managers should make it sure that senior trainees should transfer their knowledge & expertise to the junior without any hesitation.

•

Most of the activities carried out manually should be computerized.

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CHAPTER - 1 INTRODUCTION TO THE REPORT
1.1 BACKGROUND OF STUDY

This report is about National Bank Pakistan. NBP was established in 1949 and since then, it has expended its network, becoming the largest commercial Bank of the country. It offers different products of services to its customers. There are certain characteristics, which sets NBP apart from other nationalized commercial banks. These characteristics are the reasons of the development of NBP. The most important characteristic of NBP is that, it works, as an agent to the State Bank, Where State Bank does not have a branch of its own. The NBP also act as a trustee to the National Investment Trust (NIT), which is one of the premier financial institutions of the country. It is charged the responsibility of mobilizing small savings. The establishment of NBP thus signaled the achievement of another milestone in the development of the banking industry in Pakistan. 1.2

PURPOSE OF STUDY

The purpose or objective of this report is to define and describe different functions and products offered by the bank to its valued customers, to identify some weaknesses related to the management of the Bank, to analyze the performance of the Bank and finally to give some necessary recommendation to the management of the bank. This study can help the students of IBMS in making their reports about their organization. My internship in NBP had certain objectives such as: • • • • • Observe the work in different departments of NBP. Develop the relationship to get more information. Apply managerial skills in real work place. Getting confidence while interviewing the heads of the different departments. Develop analytical skills for organizational analysis and financial analysis etc.

1.3

SCOPE OF STUDY

As an internee in National Bank of Pakistan Main Branch Charsadda the main focus of my study research was on general banking procedures in one of the branches of NBP. I did my practical work in four (4) departments.

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• • • •

Deposit Department Remittances Department Establishment and Advances Department Clearance & A/C Opening department While working in these departments I have identified problems and gave recommendations to overcome these problems. I have done comparative analysis of three years financial statements and SWOT analysis of NBP Main Branch Charsadda. An overview of the five year performance of the overall NBP is also included.

1.4

LIMITATIONS OF THE STUDY

The vast scope of the operations of a bank is difficult to be analyzed in a limited time of two months. The lack of information is another limitation of the study. 1.5

METHODOLOGY OF STUDY

During my internship in NBP Main Branch Charsadda the most important task was to collect as much quality information about the organization as possible. Due to this reason I used a number of techniques to collect the required material and compile the report. The methodology, which I adopted for this research, is based on both the primary data as well as secondary data. 1.5.1 • • 1.5.2 • • • • • The Sources of Primary Data Interviews with bank employees. Personal observations. The Source for Secondary Data Annual Reports Manuals of departments about Report writing Relevant books Brochure and circulars of the bank Internet

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CHAPTER - 2 NATIONAL BANK OF PAKISTAN
2.1 HISTORY OF NBP1
National bank of Pakistan was established in 1949. The government controlled National Bank of Pakistan has played a unique role both as a commercial bank and as a trustee of pubic finances. Operating through a network of 1225 domestic and 24 overseas branches it has been at the forefront of national economic development. Its contribution in the development of small and medium size entrepreneurs is significant. It is credited with introducing such innovative schemes as People’s Credit Scheme (1960), supervised Agricultural Credit Programmed (1972) and educational loans on compassionate grounds. 2.1.1 Formative Phase 1950s

The Bank as originally conceived was allowed an authorized capital of Rs. 60 million. In December 1960 capital was reduced to Rs. 30 million (NBP (Amdt) Ordinance 1960). The Bank was setup with an issued capital of Rs. 15 Million of which the government paid 25 percent, the balance was offered to the public. The shares offered to the public were floated in 1950 and were promptly taken up. In the same year NBP Ordinance was amended so that it could take up ordinary commercial banking business. In 1952 it was felt that the consolidation achieved by National Bank, justified the transfer of the agency of the State Bank for government business from Imperil Bank to this National Institution. As such the National Bank started taking over the government treasury work from Imperil Bank of India in May 1952 and success fully completed the process by end of September. In 1951 NBP started foreign exchange business. The Bank under took a program of expansion. Branch network was expanded and by 1959 it had 129 branches at carefully selected locations in both wings of county as against only 17 in 1950. Its geographical development extended abroad beginning with the establishment of its first overseas branch at Jeddah, Saudi Arabia in 1950 for the specific purpose of providing sterling exchange facilities to bankers and moneychangers having Pilgrim Notes. In view of the some of business available, the Central Board decided to maintain it permanently. In 1955 Jeddah Branch started
1

http://www.nbp.com.pk

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general banking business. The Bank opened another foreign branch in London in 1953 and in Baghdad in 1957; the later was subsequently closed owing to nationalization of Banks. Even in its developmental stage the Banks profit record was extraordinary, it earned profit in the very first five months of its commencing business and maintained a continuous progress ever since. From a profit of Rs. 0.3 million in 1950 it rose to Rs. 5.4 million by 1952 and further to Rs. 10.2 million by 1959. 2.1.2 Period of Reorganization/ Development: 1970s

The 1970s witnessed the nationalization of Pakistani commercial banks operating in the county. On January 1, 1974 National Bank of Pakistan along with 13 other scheduled Pakistani banks were nationalized by the promulgation of the Banks (Nationalization) Ordinance 1974 (Ordinance No. 1 of 1974). Shares not formerly held by the Government were acquired from the private holders after compensating them. Its present shareholding is; 93.4 percent is held by the State Bank of Pakistan, 5.3 percent by Government of Pakistan and 1.3 percent by others. An Executive Board headed by the President and four members replaced the previous Board of Directors. Under the provisions of the Banks (Nationalization) Act, 1974 the safety of all deposits with the bank (including deposits held with foreign branches) stood guaranteed by the Government of Pakistan. According to the Banks (Amalgamation) Scheme 1974, framed by the Pakistan Banking Council in April 1974 in consultation with State Bank of Pakistan, Bank of Bahawalpur Ltd. was amalgamated with National Bank of Pakistan with effect from June 30, 1974. A noteworthy development during this period was the establishment and operation of a project for Agricultural Credit by the Bank in the year 1972. It was felt that in the process of modernization of the agricultural sector, the credit system plays a major part and could contribute better in brought within an institutional framework. There was a need to evolve a concept, which was not only operationally feasible but which served the multitude of small farmers in the vast countryside. National Bank of Pakistan evolved such a concept Banks. the Supervised Agricultural Credit Program. This was highly appreciated by international experts and later adopted by other Pakistani

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2.2

ACTIVITIES PERFORMED BY NBP

Since NBP is a commercial bank, it performs a variety of functions. Like other commercial banks, NBP is engaged in financing international trade. Its other major functions include receiving deposits, advancing loans and discounting of exchange. The functions performed by NBP are: 2.2.1 Accepting Deposits

This function is important because banks largely depend on the funds deposited with them by its customers. Deposits are of many types: i. Current deposits

Current deposits are also called demand liability on current deposits. NBP pays practically no interest on current deposits. Businessmen usually open current accounts. In NBP current account can be opened with a minimum amount of Rs.500/-. ii. PLS saving deposit

Profit and loss sharing deposits (PLS) are also called checking accounts. One can deposit and draw money easily. Profit on PLS is calculated every month but paid after six months. PLS account can be opened with a minimum amount of Rs.500/iii PLS term deposits

Fixed term deposits are deposits with the bank for certain fixed period before the expiry of which they cannot be withdrawn unless giving due notice. In this case the rates of profit will be different depending upon the time period. 2.2.2 Discounting bills of exchange

Discounting of bill is practically speaking lending for exchange at their market rate i.e. it pays to holder of the bill an amount equal to the face value after deducting interest at the current market rate for the period. This bill has to be mature. This is the common way used for keeping a part of assets of the bank in a liquid form.

2.2.3

Agency service

NBP also provides best and unique service to its valued customers. NBP provide the following agency services to the customers:

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i.

Collection of dividends

As NBP deals with the purchase and sale of various types of securities, therefore NBP also provide dividend or interest earned on share or bonds or invested money. ii. Collection of Cheques

In the collection and payment of Cheques, bills and promissory notes etc. National bank of Pakistan acts as an agent for its customers. iii. Acting as an agent

NBP also acts as an agent correspondent for its customer at home or abroad iv. General utility services:

Utilities provided by NBP are as follows: a. Clearance of utility bills

NBP provides the service of clearing the utility bills i.e. electricity, gas and telephonebills of its customers. For this purpose it also provides evening banking services. b. Lockers facility

National bank of Pakistan also provides locker facilities to its customers to keep their valuable assets in it. The charges of different size of lockers are different. c. Acts as a referee

NBP provides useful services to its customers by acting as a referee to their credit worthiness. d. Supply of information

NBP provides operational and advisory service for foreign exchange accounts/ activities.

2.4

OBJECTIVES OF NATIONAL BANK

Objectives are ends towards which an enterprise activity is aimed. The purpose of business is production and marketing of economic goods and services but to

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accomplish these objectives to a number of enterprise objectives may be necessary. National bank of Pakistan has certain objectives. These objectives are • • • • • • Advancing loans Accept deposits Remitting of funds Sale of promissory notes Selling and realizing property of bank claims Investment or underwriting of stocks

2.5

BRANCH NETWORK

With the geographical development of its branches, the Bank has been able to extend its services to a much larger number of Pakistanis all over the country. Today it has more than 8.5 million accounts. Bank maintains its presence in all the major financial centers of the world through its 15 overseas branches and 5 representative offices. Of these, three representative offices have recently been set up at Tashkent (Uzbekistan), Baku (Azerbaijan) and Almaty (Kazakhstan) to take advantage of the emerging opportunities in CIS countries. Bank’s role globally is well assisted by its network of correspondent banks located strategically in Asia, America, Europe and Africa.NBP has an extensive domestic branch network of over 1200 branches located all over Pakistan. The Bank also has a presence in 18 international locations including the USA, United Kingdom, Europe and the Far East.

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CHAPTER - 3 ORGANIZATIONAL STRUCTURE OF NBP
Organizational structure is the framework that defines the boundaries of the formal organization and with which the organization operates. A suitable organizational structure for the nature of the organization leads to better performance. The new organizational structure of the bank constitutes a board of directors and an executive committee as the governing bodies. The head office is operationally in charge of central affairs including the delegation of power and authority to the regional headquarters all over the country. Regional headquarters direct the function of corporate branches.

3.1

HEAD OFFICE

The NBP has its own organizational structure and its Head Office is situated at Karachi. All branches, regional offices and corporate branches work according to the rules and regulations issued by the Head Office from time to time. The Head Office of National Bank of Pakistan, which is primarily responsible for making policies and execution of policy decision include, • • • Board of Directors Executive Committee Divisional head offices and provincial headquarters The Head Office has nine divisions, which are further divided into different wings. It is operationally in charge of central affairs including the delegation of powers and authority to the 29 Regional Headquarters all over the country. These Regional Headquarters direct the functions of the 12 corporate branches.

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ORGANIZATIONAL STRUCTURE OF NBP HEAD OFFICE BOARD OF DIRECTORS

PRESIDENT

EXECUTIVE COMMITTEE

SEVPs/CHIEF SIND AND BALUCHISTAN

SEVPs/CHIEF PUNJAB

SEVPs/CHIEF NWFP OF AJK

SEVPs WINGS

SEVPs WINGS

3.1.1 Board of Directors In the management of banks, the board of directors is at the top of the controlling bodies. Since there are no private shareholders now, so there is no general meeting of the shareholders and there are no elected directors. The board now consists of a nominated president, a secretary and other members. The secretary of the board presents the annual report of the bank. The board has limited administrative powers. Board members of NBP is led by the chairman who is the president and is the Chief executive officer (CEO) of the bank, together with a selected group of six directors, who bring with them vast experience and qualities. The government appoints these directors. The Board of Directors of National Bank of Pakistan NBP has one President and six members as given below: President of the bank SEVPs of the bank Representative of the PBC Representative of government Outsiders Total 1 3 1 1 1 7

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?

ORGANIZATIONAL STRUCTURE OF BODS

The board of directors of NBP and its organizational structure is given below: Syed Ali Raza (President)

Dr. Waqar Masood Khan (Director)

Kamran Mirza (Director)

Abdul Razzaq Tabba (Director)

Rizwan A. Kehar (Director)

Qazi Faez Isa (Director)

Sheikh Humayun Syeed (Director)

S.M. Rafique (Secretary)

Source: Annual Report of NBP 2009

3.1.2

Executive Committee

Executive Committee consists of one President and nine members and among these nine members, one member perform functions of both member and Secretary. Board of Directors nominates executive committee and executive committee nominates the divisional heads. NBP has an executive committee with President as its chairman; five SEVPs are its members and president’s advisor as an observer. This body monitors the day-to-day affairs of the entire bank and has sanctioning authority for financial and business proposals.

3.2

REGIONS OF NBP

On May 13, 2005 a circular was issued in which zones were abolished and the whole country and Azad Kashmir was divided into 29 regions. The changeover process started from 1st August 2004 and was completed by 31st August 2005. The new setup was made fully functional by 15th September. The National Bank has 29 regions (circles) in four provinces and Azad Kashmir.

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Regional Management Committee A regional management committee controls all regions. Regional management consists of • • • • Regional Business Chief Regional Operations Chief Risk management Chief Compliance Chief The names of the regions are: S.No. Region 1 3 5 7 9 11 13 15 17 19 21 23 25 27 Karachi South Federal Capital Rawalpindi Faisalabad Peshawar Multan Sialkot Abbotabad Mardan Quetta Bhawalpur Dera Ismail Khan S.No. Region 2 4 6 8 10 12 14 16 18 20 22 24 Karachi Central Karachi West Lahore East Gujranwala Mirpur A.K. Gujrat Hyderabad Sargodha Jhelum Sahiwaal Dera Ghazi Khan Jhang Sakkhar
Corporate and Gawadar Investment Banking Group Chief

Muzaffarabad A.K. President 26 Larkana
Regional Business Chief Regional Marketing **** Manager

Commercial & Rental Banking 29 Gilgit Group Chief

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****

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ORGANIZATIONAL Operate Group Regional Chief Operations Chief
Regional Compliance Chief Risk Management Group Chief Operation Deptt. of the Region Regional Risk Management Chief Branch Officer

STRUCTURE OF
Branch Manager Branch Operation Manager

Corporation North and REGIONS OF Corporation Head South

NBP

Corporate Branches

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Credit Department of

Credit

?

\Organizational Structure of NBP Main Branch, Charsadda
Branch Manger

Operations Manager

Cash

Customer Service Department Opening/Closing of Accounts Maintenance of Accounts Term deposits/MIS/NIDA Chequebook Issuance Payment Order/Drafts TTs/MTs Clearing Pensions Credit Disbursement Collection

Compliance
IT-System Operation and Maintenance

Cash Receipts Cash Payment Utility Bills Govt. Collections

CHAPTER -4

Computer Input

DEPARTMENTATION

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Departmentation is arranging the activities into meaningful groups. It distributes the workload and increases efficiency and effectiveness. Departmentation can be done on various bases for example, departmentation for customers, by function or by location. National bank of Pakistan, Main Branch Charsadda consists of various departments based on its different functions. So it can be said that the basis for departmentation at NBP is purely functional.

4.1

DEPARTMENTS OF NBP MAIN BRANCH CHARSADDA2

NBP Main Branch Charsadda is operating following departments • • • • • • Deposits Department. Remittances Department. Advance Department Cash Department. Govt. Collection Department Clearance Department All the departments will be discussed in detail below:

4.2

DEPOSITS DEPARTMENT

The principle source of funds of any commercial bank is the deposit account i.e. demand, saving and time deposits. From banking point of view, the term deposit means “the currency, Cheques, or draft given to a financial institution for crediting to a customer’s account”. Like all commercial banks, the primary function of National Bank of Pakistan is to accept and receive surplus money from the people. In order to attract money it offers different types of facilities to its customers. The deposit department of national bank of Pakistan Main Branch Charsadda mainly performs the function of: • •
2

Opening of Accounts Closing of Accounts
NBP Annual report, 2008

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• •

Issuance of Cheque book Issuance of Statement of account Local currency accounts are discussed as follows 4.2.1 1) Types of Local Currency Accounts Current Account

A current account is a running account, which is continuously in operation. NBP current account allows customers to deposit and withdraw cash at their own convenience. The customer can withdraw the current deposits anytime, without any previous notice to the bank. The bank has to honor the cheques to the extent of credit balance in the account. No profit/interest is paid to the customer on these deposits, but the customer is required to maintain a minimum balance in the account. The initial amount required for opening of such an account is, Rs. 5,000. It is opened with Rs 500 only. If balance is less then Rs 5000 than bank deduct Rs 150 twice in a year as bank charges. The current account is opened and operated by traders, business companies, public service bodies, industrialists etc. 2) PLS Saving Account Saving deposits or profit and loss sharing (PLS) are those accounts on which bank offers a relatively lower rates of interest. PLS saving account can be opened with an initial deposit of not less than Rs. 500. Profit is credited to the client’s account at the end of June and December after H.O circular. Withholding tax is deducted on profits. Zakat is also applicable on or certain balance. Prior notice required to cash larger amounts. Simply on PLS Account NBP gives 1.50 % annual profit on the minimum balance of the accounts at the end of each month. PLS Saving Account may be opened in the name of an individual or jointly in the name of two or more persons. Charitable institutions, companies, Associations, Societies, Educational institutions, firms etc, may also open these accounts. Minors and illiterates are also eligible for opening saving accounts. However illiterate customer must present themselves in person for withdrawals. The bank determines the rate of profit or loss on PLS saving account. 3) Term Deposit Account

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These are the deposits than can be withdrawn after a certain specified period of time. The period of time varies from three months to five years. On these deposits return/interest varies with the duration for which the amount is kept with the bank. The rate of interest/return on term deposit is higher than that of a saving deposit. Its interest/return is unaffected for the duration of the deposit irrespective of market fluctuations. Term deposit is best suited for short-term investment. Individuals as well as joint account an be opened by, sole proprietorships, partnerships, joint stock companies, limited companies, clubs/associations/trusts, administration, executors etc. Profit is paid at the maturity of deposit. On these deposits premature withdrawal is permitted but against a reduced rate of interest as agreed at the time of deposit. 4) Finance Facility

Bank also extends finance facility to clients against saving and fixed term deposits on comparatively low markup rate. The deposit is kept under lien, however the customer may withdraw the profit amount credited to his account 5) Call Deposits/ Security Deposit:

This is a security deposit usually initialized by Govt./ Private contractors for auctions etc. This CDR is submitted along with quotation to the concerned department or organization etc. Banks do not pay interest on this deposit. This CDR is non-cashable but only when the concerned person or department releases it, in whose favor it is issued. 4.2.2 1) Classification of Accounts

Individual Accounts Individual accounts as the name implies can be opened and operated by a single person. Single person operates such accounts. Copy of Identity card and proper introduction is required for this account as well as for all of the following accounts. 2) Joint Accounts

Two to four persons can open this type of account. If more than 4 person want to open joint account then they can open only current account. Joint account is opened by two or more persons jointly. Special instructions are obtained to operate the account

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whether singly or jointly and Either or survivor. Then all the account holders must verify it by countersigning the said instruction. These accounts should not be confused with partnership accounts. 3) Partnership Accounts Partnership Account may be operated by a partnership of two or more persons. For this account a partnership deed is required. These accounts are opened in the name of business. Minimum two and maximum twenty people are allowed. Special instructions to operate accounts must be countersigned by all the partners through Resolution. The partnership deed is required if the bank deems necessary. Partnership dissolves in case any of the partner’s dies retires, becomes insolvent or lunatic or a new partner is admitted to the firm. Partnership account can only open a current account. 4) Minor Accounts

According to Pakistani law, a person is regarded as a minor until he has attained the age of 18 years. Under section 3 of majority Act 187, if a competent court of law appoints a guardian of his person or property before his eighteen years, the majority extends to the age of 21 years. 5) Staff Accounts

Staff account is maintained for the employees of the NBP. Salaries of the staff are credited to their account.

4.3

REMITTANCES DEPARTMENT

The word “Remittance” means to send money by mail or any other method. It may also be defined as “Payments send by mail to a center for processing”. National Bank of Pakistan also provides the facility of transfer of funds from one bank to other and from one place to another place. The transfer of funds is mainly the responsibility of the remittances department. At NBP Charsadda Branch, remittances are made in the following manners. 1. 2. 3. Telegraphic transfer (T.T) Mail Transfer (M.T) Demand Draft (D.D)

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4. 5. 1.

Payment Order Cheque collection TELEGRAPHIC TRANSFER (T.T)

It is the fastest made of transfer of money. Sometimes when the remitter urgently desires the remittance, he may request to issue a telegraphic transfer. TT may be issued to general public on their written request and against the value received. The customer fill the forms and deposits cash. The official of National bank of Pakistan send instruction regarding payment to the drawee branch telegraphically in a coded language and under confidential number known as TEST NUMBERS. Or telephone call is made to the said branch, they make payment to customer. Vouchers are sent by ordinary mail to keep the record. Telephone charges are also taken from customers. 2. MAIL TRANSFER

Mail Transfer (MT) is a mode of transferring money from one branch to another branch either within the same city or in cities through out country. MT advises are dispatched by mail. MTs may be issued for transferring funds in one account to another branch or to another branch or to any person not requiring urgent remittance or draft. Customer fills same application and he deposit the cash in the same way. National bank of Pakistan official record the transaction vouchers and advises are made and sent to responding branch. National Bank of Pakistan takes Rs.10 as mail charges from application.

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3.

PAYMENT ORDER

Payment order is made for local transfer of money. Pay order is the most convenient, simple and secure way of transfer of money. NBP takes fixed commission of Rs. 75 per payment order from the account holder and Rs. 100 from a non-account holder. 4. DEMAND DRAFT (DD)

Demand draft is a popular mode of transfer. The customer fills the application form. Application form includes the beneficiary name, account number and a sender’s name. The customer deposits the amount of DD in the branch. After the payment the DD is prepared and given to the customer. NBP officials note the transaction in issuance register on the page of that branch of NBP on which DD is drawn and will prepare the advice to send to that branch. The account of the customer is credited when the DD advice from originating branch comes to the responding branch and the account is debited when DD comes for clearance. DD are of two types. a) b) 5. Open DD: Cross DD: Where direct payment is made. Where payment is made though account.

CHEQUE COLLECTION

“A Cheque may be defined as a written order of a depositor upon a bank to pay to or to the order of a designated party or to a bearer, a specified sum of money on demand.” Cheque is received form the customer by the bank and branch-crossing stamp on the face of the cheque is checked. Cheque is received along with deposit slip. ? CLEARING OF CHEQUES Clearing of cheques is made through SC (short credit), LSC (Local short credit) in clearing house. i. SC (Short Credit)

SC is the short credit, which consists of the cheque outside the district. These cheques are sent in SC outside the district for clearance. Once they are cleared bank charge a certain amount of money spent on the process form the customer.

ii.

LSC (Local Short Credit)

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LSC is the short credit, which consists of the cheques inside the district. Separate register is maintained for it. Local branches for clearance send these cheques for clearance. Bank has no charges on the process form the customer.

4.4

ADVANCE DEPARTMENT

Advances department is one of the most sensitive and important departments of the bank. The major portion of the profit is earned through this department. The job of this department is to make proposals about the loans. The Credit Management Division of Head Office directly controls all the advances. As we known bank is a profit seeking institution. It attracts surplus balances from the customers at low rate of interest and makes advances at a higher rate of interest to the individuals and business firms. Credit extensions are the most important activity of all financial institutions, because it is the main source of earning. However, at the same time, it is a very risky task and the risk cannot be completely eliminated but could be minimized largely with certain techniques. 4.4.1 TYPES OF CREDIT FACILITY

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

This is a very common form of borrowing by commercial and industrial concerns and is made available either against pledge or hypothecation of goods, produce or merchandise. In cash finance a borrower is allowed to borrow money from the banker up to a certain limit, either at once or as and when required. The borrower prefers this form of lending due to the facility of paying markup/services charges only on the amount he actually utilizes. If the borrower does not utilize the full limit, the banker has to lose return on the unutilized amount. In order to offset this loss, the banker may provide for a suitable

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clause in the cash finance agreement, according to which the borrower has to pay markup/service charges on at least on self or one quarter of the amount of cash finance limit allowed to him even when he does not utilize that amount. The bankers allow their customer to draw funds from their Cash Finance Accounts after sanction of proper limit following complete credit investigation and documentation formalities. The cash is with drawn from these accounts by Cheques and the debit balance remains with in the sanctioned limit and the value of the stock is maintained. The debits into the accounts consists of : • • Disbursement installments Bank charges such as godown expenses, insurance, telephone, fax/telex charges and postage charges. • b) Markup Overdraft/Running Finance

This is the also a common form of bank lending. When a borrower requires temporary accommodation his banker allows withdrawals on his account in excess of the balance which the borrowing customer has in credit, and an overdraft thus occurs. This accommodation is generally allowed against collateral securities. When it is against collateral securities it is called “Secured Overdraft” and when the borrowing customer cannot offer any collateral security except his personal security, the accommodation is called a “Clean Overdraft”. The borrowing customer is in an advantageous position in an overdraft, because he has to pay service charges only on the balance outstanding against him. The main difference between a cash finance and overdraft lies in the fact that cash finance is a bank finance used for long term by commercial and industrial concern on regular basis, while an overdraft is a temporary accommodation occasionally resorted to. The facility by way of Running Finance is extended to meet the working capital requirements of the customer. It may be of temporary nature or may be available as regular credit line. Temporary Running Finance should be made available only sparingly and to customer with an established market reputation. By the very nature of its title, the facility is extended for a short period.

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Regular Running Finance Limits should be backed by appropriate approval either under discretionary power or limits sanctioned by the Credit department/Credit Committee. Following factors/elements should be kept in mind while sanctioning Running Finance: • • • • The purpose and consideration for the facility should be clearly spelled out. The advance should be business-related. The credit worthiness of the customer should be undoubted. It would be prudent to obtain credit reports on the customer from their other bankers. The facility may be secured by one or more type of securities. It is essential that the security and charge documentation formalities should be completed prior to the disbursement of the facility. It may almost become impossible to obtain perfect securities once the borrower is allowed to make the drawings c) Demand Financing/Loans

When a customer borrows from a banker a fixed amount repayable either in periodic installments or in lump sum at a fixed future time, it is called a “loan”. When bankers allow loans to their customers against collateral securities they are called “secured loans” and when no collateral security is taken they are called “clean loans”. The amount of loan is placed at the borrower’s disposal in lump sum for the period agreed upon, and the borrowing customer has to pay interest on the entire amount. Thus the borrower gets a fixed amount of money for his use, while the banker feels satisfied in lending money in fixed amounts for definite short periods against a satisfactory security.

4.5

CASH DEPARTMENT

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The basic goal or objective of the banks is to earn profit, and cash department plays an important role in this matter. The bank receives cash from the clients and invests it in business. 4.5.1 FUNCTIONS OF CASH DEPARTMENT

Cash department performs the following functions 1. Receipt

The money, which either comes or goes out from the bank, its record should be kept. Cash department performs this function. The deposits of all customers of the bank are controlled by means of ledger accounts. Every customer has its own ledger account and has separate ledger cards. 2. Payments

It is a banker’s primary contract to repay money received for this customer’s account usually by honoring his cheques. 3. Collection of Bills

The cash department of branch also collects the bills of Sui gas, PTCL, NTC and PESCO. 4. Saving Cash

The officer checking cash physically in the afternoon before the cash is put in the safe. The loose and unstitched notes of all denominations as well as stitched notes of Rs500, Rs1000 and Rs100 are physically counted. In addition the number of stitched bundles and sealed bags containing coins are properly checked and tallied with the cash position. 5. Defective and Cut Notes

Branch makes sure that defective and cut notes are not issued to the customers. For this purpose branch collects sufficient fresh and reissue able notes from the main branch to meet the requirements of the customers.

6.

Cheques and their Payment

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The Negotiable Instruments. Act, 1881, “Cheque is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand”2. Since a Cheque has been declared to be a bill of exchange, it must have all its characteristics as mentioned in Section 5 of the Negotiable Instruments Act, 1881. Therefore, one can say that a Cheque can be defined as an: “An unconditional order in writing drawn on a specified banker, signed by the drawer, requiring the banker to pay on demand a sum certain in money to, or to the order of, a specified person or to the bearer, and which does not order any act to be done in addition to the payment of money”. (Law of Banking by Dr. Hart, p.327).

4.6
4.6.1

GOVERNEMNT COLLECTION DEPARTMENT
GOVERNMENT COLLECTIONS/ RECIEPTS

NBP Main Branch Charsadda carries the responsibility of Govt. collection and perform different services for Govt. NBP collects taxes, duties, challans, renewal of weapons and collection of utility bills which includes Sui Gas, PTCL and PESCO bills. This department also collects the dues of the educational institutes. 6.6.2 GOVERNMENT PAYMENTS

This department also performing the function of payments of salaries, payment of zakat and payment of pensions and salaries to Air Force, Army and civilians is given through Govt. Department. For this purpose pension books are issued to the pensioners. The record of the accounts is also maintained in this department.

4.7

CLEARENCE DEPARTMENT

A clearing house is an association of commercial banks set up in given locality for the purpose of interchange and settlement of credit claims. The function of clearinghouse is performed by the central bank of a country by tradition or by law. In Pakistan, the clearing system is operated by the SBP. If SBP has no office at a place, then NBP, as a representative of SBP act as a clearinghouse. After the World War II, a rapid growth in banking institutions has taken place. The use of cheques in making payments has also widely increased. The collection as settlement of mutual obligations in the form of cheques is now a big task for all the commercial bank. When Cheque is drawn on one bank and the holder (payee)

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deposits the same in his account at the bank of the drawer, the mutual obligation are settled by the internal bank administration and there arises no inter bank debits from the use of cheques. The total assets and total liabilities of the bank remain unchanged. In practice, the person receiving a Cheque as rarely a depositor of the cheque at the same bank as the drawer. He deposits the cheque with his bank other than of payer for the collection of the amount. Now the bank in which the cheque has been deposited becomes a creditor of the drawer’s bank. The depositor bank will pay his amount of the cheque by transferring it from cash reserves if there are no offsetting transactions. The banks on which the cheques are drawn become in debt to the bank in which the cheques are deposited. At the same time, the creditors’ banks receive large amounts of cheques drawn on other banks giving claims of payment by them. The representatives of the local commercial banks meet at a fixed time on all the business days of the week. The meeting is held in the office of the bank that officially performs the duties of clearinghouse. The representatives of the commercial banks deliver the cheques payable at other local banks and receive the cheques drawn on their bank. The cheques are then sorted according to the bank on which they are drawn. A summary sheet is prepared which shows the names of the banks, the total number of cheques delivered and received by them. 4.7.1 FUNCTIONS OF CLEARING DEPARTMENT

These functions are: • To arrange the payment of cheque drawn on the branch and give cheque for collection to any other branch of National bank of Pakistan or any other member or sub member of local clearinghouse. • To collect amounts of cheques drawn on members of local clearinghouse sent for collection by National bank of Pakistan branches.

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CHAPTER - 5 FINANCIAL ANALYSIS
Financial analysis, though varying according to the particular interests of the analyst, always involves the use of various financial statement primarily the balance sheet and income statement. The balance sheet summarizes the assets, liabilities, and owner’s equity of a business at a point in time, and thee income statement summarizes revenues and expenses of the over a particular period f time. A conceptual framework for financial analysis provides the analyst with an interlocking means for structuring the financing. ? Parties interested in Financial analysis

Financial analysis can be undertaken by management of the firm, or by parties outsides the organization via, owners, creditors, investor and others, the nature of analysis depends on the purpose of the analyst. ? ? ? ? Trade creditors Suppliers of Long-term Investors Management of the firm

5.1

FIVE YEARS PERFORMANCE AT A GLANCE
2005 2006 2007 2008 2009

(Source Annual reports 2009)

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From the above table it is very much clear that the NBP performance is going higher and higher. Total assets are at the crest in 2009. The number of deposits and advances are continuously increasing. Similarly the shareholder’s equity increased every year. If we draw a graph this will shows that the graph is upward trend. Profit is increasing from year 2007 to year 2008, but decreased in year 2008 and 2009. NBP increase the number of its branches and employees over the years because large networks of banks.

5.2

RATIO ANALYSIS

Ratio analyses are the most popular form of analyses all over the world and the trusted one also. In ratio analyses as the name suggests ratios are used in analyzing the financial standings of the organization. Ratio analysis is a powerful tool of financial analysis. A ratio is defined as: “The quotient of two mathematical expressions” OR “The relationship between two or more elements” In financial ratio analysis a ratio is used as benchmark for evaluating the financial position and performance of a firm.

5.3

CALCULATION OF DIFFERENT RATIOS:

Here we are going to calculate different ratios, which include both the balance sheet and income statement ratios. These ratios are quite important for analyzing the financial position of a firm. These ratios are calculated for the years 2007, 2008 and 2009 from the ‘balance sheet’ and ‘profit and loss statement’ of NBP. i) Current Ratio:

The current ratio is the ratio of current assets to current liabilities. Current Assets Current Ratio = ---------------------------Current Liabilities Short-term creditors prefer a high current ratio since it reduces their risk. Shareholders may prefer a lower current ratio so that more of the firm's assets are working to grow

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the business. Typical values for the current ratio vary by firm and industry. For example, firms in cyclical industries may maintain a higher current ratio in order to remain solvent during downturns. Current ratio of NBP for the years 2007, 2008 and 2009 are given below: NBP CURRENT RATIO 2007 Current Assets / Current Liabilities Current Ratio 380,198,374 / 39,602,271 9.6 2008 411,964,522 / 43,133,328 9.5 2009 521,162,257 / 49,901,121 10.4

?

Interpretation:

The current ratio of NBP is quiet high because of huge current assets. The ratio is 9.6 in 2007 and 9.5 in 2008. While in 2009 it moves to 10.4. This means that for every 1 rupee liability of the bank it has 10.4 rupees, which is cover from current assets. ii) Cash Ratio:

Finally, the cash ratio is the most conservative liquidity ratio. It excludes all current assets except the most liquid: cash and cash equivalents. The cash ratio is defined as follows: Cash Cash Ratio = ----------------------------Current Liabilities The cash ratio is an indication of the firm's ability to pay off its current liabilities if for some reason immediate payment were demanded. NBP cash ratios are:

NBP CASH RATIO 2007 2008 2009

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Cash / Current Liabilities Cash Ratio

119,266,906 / 39,602,271 3.01

132,346,081 / 43,133,328 3.06

144,848,364 / 49,901,166 2.90

?

Interpretation:

The cash ratio of the bank is 3.02, 3.06 and 2.9 in 2007, 2008 and 2009 respectively. This shows an increase in 2008 and a decrease in 2009. This means that for every rupee of liability bank has 2.9 rupees to cover that liability from cash only. iii) Advances Turnover (Receivables Turnover) Receivable turnover or Advances turnover provides insight into the quality of the firm’s receivable or advances and how successful the firm is in its collection. It is often reported in terms of the number of days that advance (or credit sales for manufacturing firm) remain in accounts receivable before they are collected. This number is known as the collection period. It is calculated by: Mark-up or Interest Earned Advances Turnover Ratio = -------------------------------------Advances Here is the calculation of advances turn over ratio for NBP: NBP ADVANCES (RECEIVABLE) TURNOVER RATIO 2007 Markup or Interest Earned / Advances Receivable Turnover 44,100,934 / 316,110,406 0.14 or 14 % 2008 50,569,481 / 340,318,930 0.15 or 15% 2009 60,942,798 / 412,986,865 0.15 or 15%

?

Interpretation:

The advance turnover ratio of NBP for the years 2007 to 2009 is quite close to each other. There is 0.01% improvement in 2008 as compare to 2007 but it remains constant in 2009. This shows that the turnover of the advances is almost the same for these years. iv) Total Asset Turnover

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Generally the total assets turnover measures the activity of the assets and the ability of the firm to generate sales through the use of the asset. Asset turnover ratio is calculated by: Markup or Interest Earned Total Asset Turnover Ratio = -----------------------------------Total Assets Here is the calculation of total asset turnover for NBP NBP TOTAL ASSET TURNOVER RATIO 2007 Markup Or Interest Earned / Total Assets Asset Turnover 44,100,934/ 81,959,118 0.54 or 54% 2008 50,569,481/ 116,337,654 0.43 or 43% 2009 60,942,798/ 102,459,218 0.59 or 59%

?

Interpretation:

The asset efficiency of NBP has a mix trend in 3 years. Asset efficiency in 2008 is less as compare to the asset efficiency in 2007 i.e. it is 0.54 in 2007 and 0.43 in 2008. But again in 2009 it is jumped to 0.59. Which shows that NBP utilized fewer assets to generate more interest in 2009 and 0.59 interest is earned per rupee of asset investment. v) Fixed Assets Turnover

Sometimes it is needed to find the efficiency of fixed assets to generate interest revenue or sales. Fixed assets turnover is a tool to find how efficiency one the firm’s fixed assets to produce Markup / Interest revenue. Fixed asset turnover ratio is calculated by: Markup Or Interest Earned Fixed Turnover Ratio = -----------------------------------Fixed Assets 2007 Markup Or Interest Earned / Fixed Assets Fixed Asset Turnover 44,100,934 / 9,861,974 4.47 2008 50,569,481 / 25,922,979 1.9 2009 60,942,798 / 24,217,655 2.5

?

Interpretation:

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The comparison of fixed asset turnover ratio of NBP for three years shows that in 2007, NBP generates more interest from fixed assets as compare to 2008. But in 2009, the ratio is again increased to 2.5. A unit investment in fixed assets produced 4.47, 1.9 and 2.5 rupees for the years 2007 to 2009 respectively. vi) Net Profit Margins

This is the conservative method of sales profitability. This ratio gives a measure of Net Income in dollars generated by each dollar of sales, i.e. it measures the firm’s profitability of sales/ interest earned after taking account of all expenses and income taxes. This ratio is calculated by: Net Income Net Profit Margins = ------------------------------------Markup or Interest Earned NBP NET PROFIT MARGIN RATIO 2007 Net Income / Markup or Interest Earned Net Profit Margin 17,022,346 / 44,100,934 0.39 2008 19,033,773 / 50,569,481 0.38 2009 15,458,590 / 60,942,798 0.25

?

Interpretation:

The net profit margins of NBP for 3 years show that the net profit margin of the bank is reduced. As it is was producing 0.39 cents from each rupee of markup earned in 2007 but it is decreased 0.01 cent in 2008. In 2009 it is considerably reduced to 0.25 cent of each rupee of markup earned. This may be due to the increase in the administrative expenses and increase in taxations. vii) Return On Assets:

Return on equity is the bottom line measure for the shareholders, measuring the profits earned for each dollar invested in the firm's stock. This ratio shows the efficiency of organization that how efficiently utilizes their assets. This ratio relates profits to assets. It is calculated as:

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Profit after Tax Return On Asset = -------------------------Total Assets Return on assets NBP is given below: NBP RETURN ON ASSETS 2007 Profit after taxes / Total Assets Return On Assets 17,022,346 / 635,132,711 0.027 or 2.7 % 2008 19,033,773 / 762,193,593 0.025 or 2.5% 2009 15,458,590 / 817,758,326 0.019 or 1.9%

?

Interpretation:

The return on asset of NBP is reduced in 2009 as compare to the year 2007 and 2008. This shows that NBP is employing more assets in 2008 to generate one rupee of profits after paying all the taxes. viii) Debt to assets ratio:

This ratio shows that to which extent the organization assets are financed by debit. This ration is directly related to risk high ratio means high risk and low ratio means low risk. This ratio is high because of more deposits in the bank, and deposits are the liability of customer on bank It is calculated as. Total debt Debt to assets ratio = -----------------Total asset Debt to Asset ratio for NBP for the years 2007 to 2009 is given below: NBP DEBT TO ASSETS RATIO 2007 Total debt / Total Assets Debit to Asset Ratio 553,178,593 / 635,132,711 0.87 or 87% 2008 645,855,939/ 762,193,593 0.85 or 85% 2009 715,299,108/ 817,758,326 0.87 or 87%

?

Interpretation:

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The debt to equity ratio for 2007 is 0.87, which is reduced to 0.85 in 2008. in year 2009 it is again increased to 0.87. Which means that 87% of the total assets is financed by the debt or by the creditors. Or in other worlds we can say that in one rupee total assets 87 paisa is financed by debt. ix) Advances To Deposits Ratios:

This ratio shows that how much efficiently the bank advances the deposits of their customer to borrower. It is calculated as. Advances deposit ratio = Advances -----------------Deposits NBP ADVANCES TO DEPOSITS RATIOS 2007 Advances / Deposits Advances Deposit Ratio 316,110,406 / 501,872,243 0.63 or 63% 2008 340,677,100 / 591,907,435 0.58 or 58% 2009 412,986,865 / 624,939,016 0.66 or 66%

?

Interpretation:

From above table and graph it is clear that the ratio is reduced in 2008 as compare to year 2007 while it is going high in 2009, i.e. bank is advancing 66 paisa per each rupee of deposit. Which means the efficiency on NBP is good and they use their deposits efficiently in advancing to borrowers. Here high ratio is required. The other side of the picture is that the people will think that is risky to deposit the money in the bank.

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Balance Sheet National Bank of Pakistan as at December 31st, 2007 to 2009.
2009 2008 2007

41

NATIONAL BANK OF PAKISTAN, INCOME STATMENT
As At December 31st, 2007 to 2009
2009 2008 2007

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CHAPTER - 6

FINDINGS AND RECOMMENDATIONS
NBP is an effectively operating and profit making organization and carrying out its activities under a specified system of procedure. The main regulatory body is State Bank of Pakistan, which provides policy guidelines and ensures that the money market operates on sound professional basis. The head office specifies the whole procedure of function and operations. This procedure has been modernized with the passage of time with a view to streamline the approach and underlying procedure for effective overhauling of its own capabilities so as to bring them at par with international practices. Here I am giving some recommendations, which in my view can add some input for efficiency and better performance of NBP as an organization in general and NBP Main Branch Charsadda in particular. The recommendations are as follows:

6.1
6.1.1

RECOMMENDATIONS:
Professional Training

NBP staff lacks professionalism. They lack the necessary training to do the job efficiently and properly. Although staff colleges in all major cities but they are not performing well. For this purpose these staff colleges should be reorganized and their syllabus should be made in such a way to help the employee understand the everchanging global economic scenario. Banking council of Pakistan should also initiate some programs to equip the staff with much needed professional training. 6.1.2 Transfer

Transfer is not properly carried out. Some of the employees are continually serving at the same post. They are simply rotated at the same branch. Therefore it is recommended that evenly rotation of every employee should take place after every three years in different braches of the bank.

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6.1.3

Promotion Criteria

The promotion criteria can be better implemented when the management can understand even the small wattage of the person’s performance. The promotion should include three things in my opinion and all of these should be given numbers. The 1st thing is qualification the second thins is seniority and the third is performance of the employee. All these should be given preference according to the order. The career planning can be produced due to this idea. 6.1.4 Improve Technology

This branch has fax, telephones and computers. It is suggested that ATM (Auto Teller Machine) facility. In this area an auto teller machine (ATM) is the need of the hour businessmen can easily check their balance in the bank and also with draw their money conveniently. 6.1.5 Rank Influence Should Be Avoided

Some times high rank officers come and want themselves to be given priority. In these cases bank should strictly follow the rule of ‘first come first serve’. This will maintain the trust of other customers that they are not neglected just because they have no rank. 6.1.6 Promotional Strategies

The existing and proposed products have to be marketed by intensive promotion through print and electronic media. Further detailed information about these products must be available in all branches through broachers & pamphlets. Besides incentives schemes, Seminars, Workshops, may be made regular feature by the bank and participations in trade fairs etc. needs to be ensured for promoting the various products of the bank. 6.1.7 Job Rotation

There should be Job rotation of employees, so that they should know about all departments. This will enhance the capabilities of the employees, as due to change in work they will escape monotony. This will refresh and motivate employees.

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In the branch there were few seats, which were over loaded with work as compared to other seats. So Job rotation is must, so that no body should be overburdened and due to this their motivation level was not at the highest level. 6.1.8 Equal Distribution of Workload

The employees of the branch should be given equal workload.. No body should be given undue relaxation. The personal contacts of some of the employees should not spoil the environment of the branch. 6.1.9 Consumer satisfaction

The National bank of Pakistan has to improve services provided to the pensioners and also they have to adopt scientific methods of paying utility bills. If the consumers are satisfied from the service they will expand his business with the bank. Otherwise bank will loose its customers. All this can be achieved just by imparting proper training to employees. 6.1.10 Improve Filing System The record of the bank is not maintained according to the approved format of the head office. So the department heads should make it sure that that filing of the record is done in the proper and systematic way. For this purpose the bank should utilize its computer technology, to maintain highly reliable and proper information about all kinds of transactions.

6.2

CONCLUSION

The importance of banks in the economy of any country is like a backbone, so the state government decided to start the banking system in their country, and by their own interference control them, secure them, and subsidize them according the situation, and main purpose behind that is to facilitate their nation. So the government of Pakistan has also a banking system, as a head or largest bank in Pakistan known as “STATE BANK OF PAKISTAN” which is largest bank of Pakistan, this bank works as the governmental department and its main function is to monitor all type of banks working inside specially as well as outside the country. National Bank of Pakistan is the second largest bank of Pakistan by all means; National Bank of Pakistan is widely used as an agent for State Bank of Pakistan and is

45

also involved in commercial banking. National bank of Pakistan has a vital role in Pakistan’s banking history as well as in the economy of Pakistan, so it has a great significance. At present the national bank of Pakistan has improving its internal and external conditions, but due to the largest operations in Pakistan (because this is only bank which must cover the backward regions of the country where no any other commercial bank want to go) it still faces many problems, These problems are new marketing strategies, organizational and management problems at the branches of backward regions, and motivation. Another main problem is faced by the NBP is labor unions because labor is most powerful because of CBA union which protect the labor's all action even are getting unjustified advantages all above factors are causing problems of banking functional and growth of banking is being resisted. Mostly recruitment and promotions are under influence of political system of Pakistan, so eliminate it or reduce as much as possible and make it on merit and transparent. During my two months internship, I observed many things at the NBP such as its working procedures, policies, and many other aspects of practical nature of a big organization. On the basis of all these observations, I have come to the conclusion. That the banking field is more competitive and dynamic now-a-days. There is a lot financial institution working side by side. In this competitive environment the bank must have to use more innovative and creative ideas so that to attract customer. Taking care of these things the NBP have started computerized system through which one can send money from one place to another in no time. Which is a good step towards its improvement? Like its major competitor it has also started ATM facility in many big cities due to its customer are loyal to it. Its equity position is very strong and it can compete its competitor in every aspect of banking. NBP is one of the oldest and more settled bank of Pakistan in fact it remained in business of financial services for many years. Despite all these facts there are some areas, which needs to be improved, like it should focus on its organization structure, Equal distribution of work should be done and bring professional people to all of its branches in order to meet the requirements of a new era and to fulfill the needs of 21st century.

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BIBLIOGRAPHY
i. ii. iii. http://www.nbp.com.pk Annual Reports 2007 to 2009 Israr H. Sodium, “Practice and law of banking in Pakistan”, royal book Company, Karachi, 1993, iv. Israr, H. Siddiqi, “Practice & Law of Banking in Pakistan” 5th ed, Royal Book Co., Karachi, 1993. v. Koontz, Harold and Heinz Weihrich. (1993). Management. 10th Edition. Singapore: McGraw Hill. vi. vii. National bank of Pakistan, Brochures of Products & Services. James C. Van Horneand J.M. Wachowicz. J.R. 11th Edition, Fundamentals of Financial Management. New Jersey: Prentice-Hall, Inc. p.150 viii. Bowlin, Oswald D. (1990) Financial Analysis. U.S.A: McGraw Hills International. ix. Block, Stanley B and Hirt, Geottrey A. (7th edition). Foundation of Financial Management. Sydney: Ed Von Hoffmann Press. x. xi. xii. xiii. M. Saeed Nasir, Money Banking and Finance Kottler Philip “Marketing Management” Millennium Edition Page 76. Fred R. David “Strategic Management Concepts Cases” 7th edition. Meigs “Financial Accounting” 11th edition.

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