INTERNSHIP REPORT ON NATIONAL BANK OF PAKISTAN

Internship Report submitted to the Faculty of Management & Administrative Sciences in Partial Fulfillment of the Requirements for the Degree of Bachelors of Business Administration.

By: Name of Student: Ghazala Nawaz Roll Number:10012454-013 Program & Session

UNIVERSITY OF GUJRAT
Date of Submission

Name of program coordinator----------------------------Signature of program coordinator--------------------------

University of Gujrat
(Hafiz Hayat Campus)

Faculty of Management and Administrative Sciences

Course Title: Internship (Report based on Internship) Course Code MGT-403

Contents
2

 Chapter#1
Introduction Scope Objectives of the Studies Limitation of the Study Research Methodology

Chapter#2
Overview of the organization Brief history The vision statement The mission statement Nature of the Organization

Chapter#3
Business volume Reward honors &success stories etc during last 5 years Product /service lines PESTL analysis Contribution of NBP toward economic development

Chapter #4
Organizational Structure Organizational hierarchy chart Management and organization of a bank Number of employees in National Bank of Pakistan Main Offices

Chapter #5
Introduction of all the departments

 Comments on the Structure of National Bank of Pakistan

Chapter#6
A brief introduction of the branch where I did my internship Detail of Supervisors Weekly timetables Names of the departments in which I got training during my Internship Detailed description of the operations / activities performed by the department(s) I worked in. Cheques

Chapter#7
Summary of learning Skills and qualifications that I have gained from the internship Responsibilities that I have undertaken during my internship period

Chapter#8
Conclusion SWOT analysis

Chapter#9
Recommendations for Improvements

References

All the praises are for the almighty Allah, the creator of universe, the most gracious & merciful, and the source of all knowledge, wisdom within and beyond my comprehension. Allah is the only, who can help us in every field of life. I bow my head before him who enabled me to work on this report and helped me to complete this report successfully. All praises after almighty Allah are due to holy prophet Hazarat Muhammad (Peace be upon him), the most perfect exalted among, who & us is forever a torch of guidance and knowledge for humanity as a whole. Afterward, I am greatly indebted to my Parents and the instructor for providing me excellent guidance to successfully complete my Internship report of National Bank of Pakistan. I here by provided a golden opportunity to perform working activities at NBP for a period of 6 weeks. The aforesaid occupancy bestow me precious moments to make learning and get experience of the practice life with a successful approach. Soon after, I am heartily grateful to Mr. Abdul baqi ,Branch Manager of the National Bank of Pakistan, who confer me possibility to enhance my understanding and knowledge about the working systems of NBP, which would ultimately useful for my future career and whose cooperation enables me to compile this comprehensive report.

Executive Summary
In order to interpret my knowledge and working skills, I have performed 6 weeks internship at National Bank of Pakistan, Kunjah Branch, Gujrat. The objective of the internship was to explore the issues related to finance and the implementation of financial terms, which I learnt from my course books. In this report, I have given a very brief review of what I have seen and felt during my internship in customer service, cash clearing account and Loan department. I have mentioned all of my active and passive learning in my Internship report.

During my internship, I conclude the strengths of the organization as good dynamic environment, large deposit and automatic operation. Furthermore, I have discussed about my learning skills and capabilities in the whole tenure that is all about the Banking Terminologies, Operation activities and working activities of Finance Department. I have made it possible to write each and every thing that I have learnt over there. I have all my practical efforts in the form of this manuscript thats the asset for my future career.

Chapter#1
Introduction
As part of the academic requirement for completing Associate Degree of Commerce of the students are required to under go six months of internship with an organization. The internship is to serve the purpose of acquainting the students with the practice of knowledge of the discipline of banking administration. 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.

1.1 Scope
This study will facilitate the students regarding the working of Banking sector of Pakistan because most of the teachers during their lectures use the examples of Banks like MCB, National Bank, UBL, Bank Alfalah and many others, students should study this report so that they must grasp the functioning of such Banks.

1.2 Objectives of the Studies

The main of the study in hand is together relevant information to compile internship report on National Bank of Pakistan. To observe, analyze and interpret the relevant data competently and in a useful manner. To work practically in an organization. To develop interpersonal communication.

1.3 Limitation of the Study: The study is done with the sole purpose of doing the best work but there were certain limitation faced during the internship period. The most important limitation from which the study suffers is the non-availability of information in a manner required for analysis and the secrecy of the bank. Another important limitation of the study is time and space constraint. 1.4 Research Methodology The report is based on my two months 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 observation while working with staff and having discussion with them. Formally arranged interviews and discussions also helped me in this regards.
Primary data: Personal observation Interviews of staff Secondary data: Journals Magazine Annual reports Internet

Chapter#2
Overview of the organization
2.1Brief history

The normal procedure of establishing a banking company under the Companies Law was set aside and the Bank was established through the promulgation of an Ordinance due to the crisis situation that had developed with regard to financing of jute Trade. The Bank commenced its operations from November 20, 1949 at six important jute centers in the then east Pakistan and directed its resources in financing of jute crop. The National Bank of Pakistan is one of the largest commercial bank of Pakistan .It was incorporated in 1949 under the National Bank of Pakistan Ordinance 1949. Initially, it was owned by Govt. of Pakistan and later on moved to modern commercial banking. NBP works as an agent to State Bank of Pakistan and has its Head Office at Karachi, along with more than 1250 branches in all over the Pakistan. NBP advances have reached to rupees 554.40 million in 1950, which was one third of the total scheduled banks credit. The Bank's Karachi and Lahore offices were subsequently opened in December 1949.State bank of Pakistan after its formation demanded from the Indian Reserve Bank the assets against the Indian currency retired from Pakistan territory. Government of India refused to hand over the assets worth about five hundred million rupees. The dispute is still unsettled and these assets are still not delivered to Pakistan. Until June 1950, the Bank was engaged exclusively on jute operation. Thereafter, it was felt that it could expand its business to include other commodities as well. Bank took a big stride in 1952, when it replaced the Imperial Bank of India, as an agent of State Bank of Pakistan. With the passage of time its functioning diversified as they take over the function of different institution with the passage of time like in past they took over the function of Imperial bank of India and now of NDFC (national development finance corporation).It is working as the agent of the state bank of Pakistan and performs its functions wherever state bank of Pakistan is not present.The government floated its 10 % of the shares in the open market in past and the ratio became 60: 40 and in future they trying to make it

55: 45. In 1999 national bank celebrated its golden jubilee during the last fifty years bank has made substantial strides in the financial services industry in Pakistan.In 1999 its market share was around 22% and it remains the largest financial institution in Pakistan. NBP has been declared as the best bank for 2001- 2002 by United Kingdom and is the bank of the year for 2003-2004 of Pakistan. Moreover, NBP has been awarded with AAA and AAA+1 rating by JCR-VIS Credit co. Ltd and affiliated of Japan Credit Rating Agency for 2001 and 2002 respectively.

The vision statement of NBP is; To be recognized as a leader and a brand synonymous with trust, highest standards of service quality, international best practices and social responsibility.

The mission statement of NBP is that NBP will aspire to the values that make NBP truly the Nations Bank, through: Institutionalizing a merit and performance culture. Creating a distinctive brand identity by providing the highest standards of services; Adopting the best international management practices; Maximizing Stake holders value; Discharging their responsibility as a good corporate citizen of Pakistan and other countries.

10

2.2 Nature of the Organization

National Bank of Pakistan provides both commercial as well as pubic sector services.NBP is serving as a lead player in the debt equity market. NBP has extended its area of services beyond the country. The branches of NBP is spread all over the world, which includes USA, Canada, Germany, France, Bahrain, EJapan, South Korea, China, Afghanistan, Turkmenistan, Kyrgyz Republic, Kazakhstan, Uzbekistan and Azerbaijan. The bank is engaged in providing commercial banking and related services in Pakistan and overseas. NBP is the main business partner for the Government of Pakistan, with special emphasis on fostering Pakistan's economic growth, through aggressive and balanced lending policies and technologically oriented products & services. NBP furthergypt, Bangladesh, Hong Kong, consolidated its position as one of the top players in corporate and investment banking of the country in 2007 and has built a strong customer relationship with the premier corporate clients. Additionally, NBP have recently set up the Financial Institution Wing, which is placed under the Risk Management Group. The role of the Financial Institution Wing is; To effectively manage NBP's exposure to foreign and domestic correspondence Manage the monetary aspect of NBP's relationship with the correspondents to support trade, treasury and other key business areas, thereby contributing to bank's profitability. Generation of incremental trade-finance business and revenues.

11

Chapter#3

Year Total Assets Deposits Advances Investments Share holders 'equity Pre-tax Profit After-Tax Profit Earnings per Share Rs. Number of Branches Number of employees

2010 1,035,025 832,152 477,507 301,324 103,762 24,415 17,563 13.05 1289 16457

2009

2008

2007 762,194 591,907 340,319 211,146 69,271 28,061 19,034 14.15 1,261 14,079

2006 635,133 501,872 316,110 139,947 53,045 26,311 17,022 12.65 1,250 14,019

944,583 817,758 727,465 624,939 475,243 412,987 217,643 170,822 94,142 21,300 17,562 13.05 1,287 16,248 81,367 23,001 15,459 11.49 1,276 15,441

12

2.2 Reward honors &success stories etc during last 5 years

National Bank of Pakistan Awarded Best Emerging Markets Bank 2011 Awarded By Global Finance Magazine. Bank of the Year awarded for the year 2010 by the world renowned The Banker magazine owned by the Financial Times Group, London NBP is awarded President of Pakistan Trophy, a top slot award by Federation of Pakistan Chambers of Commerce and Industry in 2010. NBP is awarded Prime Minister of Pakistan Trophy, a top slot award by Lahore Chambers of Commerce and Industry in 2010 Among the global leading banks, NBP is the only Pakistani bank appearing in top 500 banks of the world in The Banker magazine owned by the Financial Times Group, London Bank of the Year awarded for the year 2008 by the world renowned The Banker magazine owned by the Financial Times Group, London

13

Worlds Best Foreign Exchange Bank 2008 awarded by worlds leading financial journal Global Finance Stable AAA/A-1+(Triple A/A-One Plus) rating (Standalone Basis) by JCR-VIS (July 2007) Best Return on Capital for 2006 amongst all Banks in Asia. - Banker Magazine in July 2007 Worlds 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 worlds leading financial journal Global Finance Due to consistent improvement in NBPs Core Profitability, Asset Quality and Economic Capitalization in recent years, Moodys 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 worlds leading financial journal Global Finance Best Bank - Pakistan award for the year 2005 by worlds 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 Asias Strongest Banks based on a 11-Dimensional Dynamic Scoring Criteria has adjudged National Bank of Pakistan as the Strongest Bank in Pakistan

14

On the basis of overall financial performance during 2004, NBP has been listed Amongst top 1000 banks in the world. Core values:

Highest standards of Integrity Institutionalising a teamwork and performance culture Excellence in service Advancement of skills for tomorrows challenges Awareness of social and community responsibility Value creation for all stakeholders
3.3Product /service lines Demand Drafts NBP provides a safe, speedy and reliable way to transfer money through NBP's Demand Drafts at very reasonable rates. Any person whether an account holder of the bank or not, can purchase a Demand Draft from any of the branch of NBP. (i) Letter of Credit NBP is committed to offering its business customers the widest range of options in the area of money transfer. NBP provides the service of Letter of Credit with competitive rates, security, and ease of transaction to commercial enterprises. (ii) Mail Transfers NBP mail Transfer service helps to move money safely and quickly with competitive rates in the market.

15

(iii)TRAVELER'S CHEQUES

Negotiability: Pak Rupees Travelers Cheques are a negotiable instrument Validity: There is no restriction on the period of validity Availability: At 700 branches of NBP all over the country Encashment: At all 400 branches of NBP Limitation: No limit on purchase Safety: NBP Travelers Cheques are the safest way to carry our money

(iv)Short Term Investments

16

NBP now offers excellent rates of profit on all its short term investment accounts. Whether customers invest for 3 months or 1 year, NBP's rates of profit are extremely attractive, along with the security and services, only NBP can provide. (v) National Income Daily Account (N.I.D.A) The scheme of National Income Daily Account 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. (vi)WIFT 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 NBPAPKKA. All NBP overseas branches and overseas correspondents (over 450) are drawing remittances through SWIFT. Using the NBP network of branches, you can safely and speedily transfer money for our business and personal needs. (vii)PAY ORDER NBP provides another reason to transfer your money using our facilities. NBP pay orders are a secure and easy way to move your money from one place to another. And, as usual, NBP charges for this service are extremely competitive. The charges of NBP are very low all over the Pakistan. It charges Rs 50/- for NBP account holders on issuing one payment order. And charges Rs 100/- for NBP non-account holders on issuing one payment order. It charges Rs 25/- for students on payment of fees of

17

educational institutions. If some one want a duplicate of payment order they charges Rs 100/- for NBP account holders and Rs 150/- for non account holders. (viii)FINANCE AGRICULTURAL NBP provides Agricultural Finance to solidify faith, commitment and pride of farmers who produce some of the best agricultural products in the World. (ix)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. Agricultural Credit (Medium Term):

Production and development Watercourse improvement

18

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. (x)CORPORATE FINANCE

19

Working Capital and Short Term Loans: NBP specializes in providing Project Finance Export Refinance to exporters Preshipment 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 banks belief in its client's capabilities, and its commitment to the country. EQUITY INVESTMENTS NBP has accelerated its activities in the stock market to improve its economic base and restore investor confidence. The bank is now regarded as the most active and dominant player in the development of the stock market. NBP is involved in the following:

Investment into the capital market Introduction of capital market accounts (under process)

NBPs involvement in capital markets is expected to increase its earnings, which would result in better returns offered to account holders Loan Structuring and Syndication:

20

National Banks 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 Banks Cash Management Services (in process of being set up), the customers sales collection will be channeled through vast network of NBP branched spread across the country. This will enable the customer to manage their companys total financial position right from your desktop computer. They will also be able to take advantage of our outstanding range of payment, ejection, liquidity and investment services. In fact, with NBP, youll be provided everything, which takes to manage your cash flow more accurately. Cash and Gold Finance. Cash and Gold finance means that loan is given against the gold. The gold is mortgaged with the bank and loan is taken. It is the area of consumer finance. And borrower can take loan for common use. Ready Cash Against Gold

Facility of Rs. 35,000/- against each 10 gms of net weight of Gold Ornaments No maximum limit of cash Repayment after one year Roll over facility

21

No penalty for each repayment

Advance salary loan: This loan is given to those people who are govt servants. They can get a loan up to the salary of fifteen months. FOREIGN REMITTANCES To facilitate its customers in the area of Home Remittances, National Bank of Pakistan has taken a number of measures to:

Increase home remittances through the banking system Meet the SBP directives/instructions for timely and prompt delivery of remittances to the beneficiaries.

New Features: The existing system of home remittances has been revised/significantly improved and 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 United National Bank (the joint venture between NBP and UBL in UK)., and Bank Al-Jazira, Saudi Arabia.

Zero Tariff: 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. 3.4PESTL analysis Political Privatization policy and de-regulation.

22

Impact on subsidized credit affecting and NCBs. 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. Operating cost. Bad debts.

Social and cultural: Inadequate H.R. Cultural strain to saving Defaulters lobby Declining education and work ethics. Inadequate accountability. Adequate empowerment.

Technological: Inadequate communication infrastructure.

23

Inadequate computer Facilities. Inadequate training Facilities.

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

24

This has been possible mainly because of the large resource at the disposal. The large number of branches all over the country which help them to attract large deposits, and the comparatively low rate of interest at which bank is able to make advance to the industry. National Bank of Pakistan has assisted to accelerate industrial growth in the country. Now Bank also provide finances to small scale industries upto a period of five years. National Bank of Pakistan has introduced the people's credit facilities to the common man on a large and more liberal scale than before. The main objective of this scheme is to make a contribution towards building up of a strong middle class which is essential for ensuring strengthened stability to a developing economy. Bank also helps to promote the establishment of new companies by underwriting their shares. Bank is making an ever increasing contribution to the industrialization of the country. Through their foreign exchange business in Pakistan and operation abroad the Bank makes a contribution towards the earning of foreign exchange.The Bank has also introduced various saving schemes and a perpetual income plan on attractive term to encourage saving and promote social security. The NATIONAL Bank of Pakistan is working as an agent of State Bank of Pakistan. But it does not mean that the Bank has monopoly on Government Business. It also faces the keenest possible competition from other banks. The Bank has been able to main its position in the Banking System of the county and to make a substantial contribution to the development of economy. Efforts had been made, by its officers and staff particularly the senior officers to improve the working efficiency of the Bank, to secure more business and to build up sound working traditions. NATIONAL Bank of Pakistan is trying to improve the work efficiency of their Bank and they want that their Bank and they want that their Bank should serve the people so the Bank is serving the nation by different ways and it is playing a major role in economic

25

development of the country. It will continue to perform these tasks with the same enthusiasm and vigor. I trust and believe, it will always be said that the National Bank of Pakistan truly exists in the service of the National.

26

Chapter #4

Organizational Structure

27

Organizational hierarchy chart

28

President

DIRECTORS/ SEVPS Provincial Chiefs/SEVPs Regional Chief / EVP Zonal Chief / SVP

Vice President Assistant Vice President Officer Grade-I, II, III Clerical and nonclerical staff
4.3MANAGEMENT AND ORGANIZATION OF A BANK

29

A well-developed and properly coordinate structure is an important requirement for the success of any organization. It provides the basic framework within which functions and procedures are performed. Any organization needs a structure, which provides a frame work for successful operations. The operation of an organization involves a number of activities, which are related to decision making, and communication of these decisions. These activities must be well coordinated so that the goals of the organization are achieved successfully. The Organization Structure (Annexed I) shows the internal operations and reporting lines of theNational Bank of Pakistan. The bank has clearly defined organizational structure, which supports clear lines of

communications and reporting relationships. There exists a properly defined financial and administrative power of various committees and key management personnel, which supports delegations of authority and accountability. The internal operations of the Bank are organized into 15 main departments and divisions headed by senior management of the bank and are report directly to the Board of Directors. The organizational structure of National Bank of Pakistan is centralized because all the decisions of the bank are taken by the top Management. The management and organizational structure of N.B.P. are described as under:Board of Directors In the management of the Bank, the Board of Directors is at the top of. The controlling bodies. Since there are no private share holders, so there is no general meeting of the share holders and are no elected Directors. The Board consists of a nominated President, a Secretary and 9 other members. After nationalization of Bank in 1974 most of the powers of Board have been transferred to Banking Council and executive Board. The Secretary of the board has limited administrative powers. Executive Board

30

The general direction and supervision of the affairs of the Bank lies in their respective Executive Boards. The President, Secretary and 0 other members of the Executive Board are appointed by the Federal Government. The President being the Chief executive of the Board Directors controls and manages the affairs of the Bank. Chief Executive. The President is the administrative head of a Bank. He presided over the meetings of the executive Board, manages and controls the affairs of the Bank. The President holds office at the pleasure of Federal Government. Divisional Chiefs. In order to improve the management and operation of a Bank, it has been split up into a number of divisions. Each division of a Bank is placed under this supervision and control of Divisional Chief or Senior Executive Vice president (SEVP) or Executive Vice President (EVP).

Provincial Chiefs. In order to improve the performance of the Banking system, each Bank has a PROVINCIAL Chief. The Provincial Chief has the powers for sanctioning finance and other credit facilities. The headquarters of the Chiefs are situated in each Province i.e. Lahore, Karachi, Peshawar and Quetta. Circle Executive. Bank has a number of circles. They are placed directly under the supervision and control of the Chief executive. The chief executive is usually SVP or VP. Zonal Heads.

31

Each circle is divided into a number of zones. Zonal heads that holds the posts of VP or AVP administers these zones. Branch Managers. Each zone is divided into several branches. The control and supervision of each branch is mostly entrusted to AVP or Officer of Class II. A few big and financially sound branches are even administered by SVPS and VPS. It is important to be noted that the head Quarter of NATIONAL Bank of Pakistan is located in Karachi. Board of Directors of National Bank of Pakistan Chairman, NBP Board of Directors President of National Bank of Pakistan Director of National Bank of Pakistan Director of National Bank of Pakistan Director of National Bank of Pakistan Mr. S. Ali Raza Mr. Qamar Hussain Mr. Tariq Kirmani Mrs. Haniya Shahid Naseem Ms. Nazrat Bashir

4.4Number of employees in National Bank of Pakistan An employee may be defined as: "A person in the service of another under any contract of hire, express or implied, oral or written, where the employer has the power or right to control and direct the employee in the material details of how the work is to be performed."

Year

2010

2009

2008

2007

2006

32

Number of employees

16457

16,248

15,441

14,079

14,019

4.5Main Offices
Head office
Branch Name Branch Code Address Phone Fax Tehsil District Province Swift Code Status Email Main Branch Karachi 0002 NBP/Head Office Building,Talpur Road I.I.Chundrigar 99212220-99212244 -99211984 99212731 Karachi South Karachi South Sindh NBPAPKKAMBR Online manager0002@nationalbank.com.pk , opsmanager0002@nationalbank.com.pk

The Head Office of the National Bank of Pakistan is at Karachi. NBP carries on its business all the way through a wide set up of branches those are situated in the country and out of the country very professionally and in point of fact. All branches execute their functions under the rule of local Regional Offices and regional offices are proscribed by the Head Office situated a superb building in the heart of Karachis center. NBP has a wide domestic branch network consist of more than 1266 branches situated in all over the country. NBP has also more than 23 branches out of the country.

Head Officce Management Structure

33

Overseas Operation Group Org Devel &Training Dept

Operation Group

Corporate Invest Banking Fin Group

Special Assets Group

Strategic

HRM Dept.

Head Office

Mgt
Structure

Plan & Econ Research

Group

L.T Planning Dept. & Imp Group Audit &Inspectio n Group

Treasury Mgt Group Risk Mgt

Comercial & Retail Banking Group

Group

34

SINDH In the Sindh the main offices of the NBP are in the following cities; Karachi Dadu/ Sanghar Hyderabad Jacobabad/ Shikarpur Larkana Mirpurkhas/ Badin Nawabshah/ N' Feroze Sukkur/ Khairpur Tharparkar PUNJAB Punjab has the main offices of the NBP in the following cities; Lahore Faisalabad Gujranwala Sialkot/ Narowal Islamabad Jhang Jhelum/ Gujrat/ Chakwal Bahawalpur D.G. Khan/ RYKhan Multan/ Baha'nagar Murree/ Attock/ Gilgit Rawalpindi

35

Sahiwal Sargodha/ Sheikhupura NWFP In the NEFP main offices are in the following cities; Peshawar Abbott Abad D.I. Khan Kohat Mardan BALUCHISTAN Main Branches of NBP are in the following cities; Queta Azad Kashmir Muzaffarabad Mirpur NBP overseas branches America and Europe Region US Canada Germany France

36

Far East Region Hong Kong Japan South Korea China

Middle East, Africa & South Asia Region Bahrain Egypt Bangladesh EPZ

37

Chapter#5
Introduction of all the departments The Directors and Management of National Bank of Pakistan recognized the worth of specialization and division of work, therefore, a number of departments have been established to cope with changing and competitive environment. These departments are discussed here under one by one; 5.1Deposit Accounts Deposits are those accounts in which customers keep their savings, and there are numbers of those accounts, like PLS Saving Accounts, Current Accounts, Special saving accounts i.e. Premium Saving Accounts and NBP Premium Amdani Certificates. Usually bank gives semi-annually profits on PLS Saving Accounts as well provides there customer with certain more facilities. Whereas in Current A/c Profit is not given semi-annually, this A/c is specially for businessmen, so thats why special waivers are given to them according to nature of the account, Like providing certain free of cost services etc. Where else in Special A/cs profit is given on certain rules, like monthly basis profit system on fixed percentage of ratio of amount.

38

5.2Loan Facility (Advances): Advances are one of the types of loans. It may be long term as well short term. NBP gives loan to borrowers for their personal or business usage. Advances for personal usage are low as compared to business use. At the same time bank is giving advances for various sectors for various tenure. Some of the forms of advances, which are given for various sectors for various tenures, are here as under Small Finance, Cash Finance, Agriculture Finance, Cash & Gold Loan, Personal Loans, Demand Finance, Running Finance, Corporate Finance, Export Import Financing, House Building Finance (Saiban) and NBP Karobar Scheme etc.In advances, loans are given to the party under some guarantee, like pledging of land, mortgage loans etc.

PRINCIPLES OF ADVANCING MONEY

Basically there are five principles which must be duly observed while advancing money to the borrowers 1. Safety 2. Liquidity 3. Disposal 4. Remuneration 5. Suitability

1.Safety

39

Banker's fund comprises Tijarat Ganjly of money borrowed from numerous customers on various accounts, such as current Account, Saving Bank Account, Call Deposit Account Special Notice Account and Term Deposit Account. It indicates whatever money the Bankers holds is that of his customers who have entrusted the Banner with it only because they have full confidence in the expert handling of money by their Banker. Therefore, the Baker must be very careful and ensure that his depositor's money is advanced to safe hands where the risk of loss does not exist. The elements of safety i.e. character, capacity and capital can help a Banker in arriving at a conclusion regarding the safety of advances allowed by him. a.Character It is the most important factor in determining the safety of advance, as there is no substitute character. A Borrowers character can indicate his intention to repay the advance. Since his honesty and integrity is of primary importance. If the post record of the borrower shows that his integrity has been questionable, the Banker should avoid him, especially when these securities offered by him are inadequate in covering the full amount of advance. The sobriety, the promptness of payment, good habits, personality, the ability and willingness to carryout a project through from beginning to end, and the reputation of the people with whom he deals, will go to make the character of a customer. b.CAPACITY A businessman may not have vast financial resources, but with sound management abilities including the insight into a specific business, he may make his business very profitable.On the other hand if a person has no insight into the particular business for which he wants to borrow funds from the Banker, there are more chances of loss to the Banker.

40

c. CAPITAL This is monetary base, because the money invested by the proprietors represent their faith in the business and its future. The role of commercial Bank is to provide short term capital for commerce and industry. 2.LIQUIDITY Liqidity means the possibilities of recovering the advance in emergency, because all the money borrowed by the customer is repayable in lump sum on demand. Generally, the borrowers repay their loans steadily and thus released funds can be used to allow fresh loans to other borrowers.Nevertheless, the banker must ensure that the money lending is not blocked for an undue long time and that the borrowers are in such financial position so as to pay back all the amount outstanding against them on a short notice. In such a situation, it is very important for a banker to study the borrowers assets for liquidity. because he would prefer to lend only for a short period in order to meet the short falls in the working capital. 3.DISPOSAL As a principle, the disposal of the amount of advances should be broadly based so that a large number of borrowing customers may be benefited from the Banker's funds. The Banker must ensure that his funds are not invested in specific sector like textile industry, heavy engineering or agriculture etc. The Banker must give advances to a wide range of sectors like commerce, industry, farming agriculture concerns, small business, housing projects and various financial concerns in order of priorities. Disposal of advance is very necessary from point of security because it reduces the risk of non-recovery when some thing goes wrong in one particular sector or in one field.

41

4.REMUNERATION The Banker needs sufficient earnings to see the followings: a. Profit payable to the money deposited with him. b. Salaries and fringe benefits payable to the staff members. c. Overhead expense and depreciation and main of the fixed assets of the bank. d. Adequate sum to meet possible losses. e. Provisions for a reserve fund to meet unforeseen contingencies. f. Payments of dividends to the shareholders. A major portion of the bankers, earnings comes from the mark up charged on the money borrowers by the customers. The fixation of the rate of markup to be charged for advances of various classes depends on the type of security offered to him and also on the duration for which the advance is allowed. When the security offered is sound and easily encashable, the Banker may charge a lower rate of markup on an advance for a fixed period as compared to that of fluctuating over draft. In order to meet his above mentioned expenses the Banker runs a great risk and he has to think twice that the money advance should not become bad or doubtful He should not lend his funds to a borrower with when remuneration may be much bit also equally risky. On the other hand Banker should prefer a borrower who is willing to offer a higher rate of markup on a comparatively lesser risk. 5. SUITABILITY Here the word "Suitability" is not to be taken in its usual literary sense. It is used broader sense, which means that advance should be allowed not only to the suitable borrowers,

42

but also in keeping with the overall national development plans chalk authorized concerned.

out by the

Before accommodating a borrower, a Banker should ensure that the lending is for the purpose in conformity with the current national credit policy laid down by the Central Bank of the country. Since the Bankers mainly provide short term working capital to commerce and industry. They should see that their lending solve borrowers financial problems. In doing so the Bankers should retain his primary status as commercial lender only. Government Payer: As National Bank of Pakistan is the main Government bank, so because of this reason it is functioning as an agent of SBP. All types of Government Payments like pension, salaries of almost every Govt. dept, Zakat, Benevolent Fund, Treasury Refund and Taxes Refund proceed through the bank. . Receipts for Government: National Bank of Pakistan is also acting as an agent of Government in the act of receiving of government receipts. In this department all types of Government receipts i.e. Revenues, Taxes, Abyana, Agriculture Tax, Government Fees, EOBI Funds and Utility Bills are deposited. This way NBP is serving great job of revenue collection from public. Remittance Facilities: This department deals in transfer of money from one place to another or country by: Demand drafts Mail transfer

43

Telegraphic transfer People send their money to the other persons and organizations through various way i.e. Bank draft, Telegraphic Transfer, Mail Transfer, Coupons, Govt. Draft and Western Union Money Transfer etc. It works both inward and outward. It is centrally controlled by the main head office, means all the transactions are further treated by the head office. 5.3Bills / Traveler Cheques Customers collect their money/amount through bills. They present their cheque, drafts and other bills for collection within the city and out of the city through mail. Now a days Online Banking is becoming more popular for this purpose but the branch where I got training is still not have this facility. 5.4Cash Department: National bank deals Government treasury on behalf of State Bank of Pakistan. There are Chest, Sub-chest and Non-chest branches in the bank. SBP supplies currency notes to the bank and monitors its cash flow, as well the main function of this department is to controlling of the spoiled currency noted in the market and it possible that everybody should get good quality of currency notes (sorted notes). 5.5FBR Collection Department Federal board of revenues collection is one of the very important sources of governments income, for this purpose NBP is playing great role for collection of FBR

44

(CBR) taxes/revenue. A separate counter is established at branch level to facilitate the taxpayers. 5.6Islamic Banking Islamic banking operation came into existence from year 2007. During the year under review, in addition to active participation in various Sukuk transactions, two more Islamic banking branches at Lahore and Peshawar started operations. NBPs plans for the year 2010 include opening of Faisalabad and Rawalpindi branches with the focus on growing organically by opening more standalone Islamic banking branches, utilizing NBPs existing branch network of 1,200 plus conventio nal branches and looking into strategic acquisitions for expansion in this field. 5.7Online Banking The functioning of this department is the online linkage of other branches with each others; this department facilitates its customers to feel at home, because with the help of online. 5.8Clearing department National Bank of Pakistan performs the function of paying and collection of cheques drawn on other bank by the customer of the bank with out charging fees. They perform this clearance function for the customers or others bank in their area because National Bank of Pakistan acts on the behalf of the State Bank of Pakistan. Functions of the clearing dept in branch are:

45

To arrange the payment of cheque drawn on the branch and give cheque for collection to any other branch have ABL or any other commercial banks.

To collect amounts of cheques drawn on member of local clearinghouse sent for collection by National Bank of Pakistan branches.

5.9Comments on the Structure of National Bank of Pakistan The structure of National Bank of Pakistan is tremendously competitive. It is purely because of the interrelated working efficiency among its departments. In order to achieve the goals of NBP, each of its department deals with its own responsibilities and contributes in the strategic, tactical, and operational planning of the business. Now days, the rapid appearance of technology played a vital role in the efficiency and effectiveness of the business. The Technology replaced the manual power and probably plays a major role to enhance and expand the business. Moreover, in this era of technology, the Information is the key to success in the business. This means that the successful businessman will be who will have the right information at the right time. In order to achieve the levels of technology and keep itself in the race of progress, National Bank of Pakistan uses the most reliable versions of financial software, including Oracle E Business Suite Financials. In tenure of my 6 weeks, I came to know that the companys progress has mainly attained through dedication of employees. The effectiveness of its management, their willingness to take advantage of opportunities and face challenges of changing economic picture is really appreciable, for the devotion and hard work of all the employees of the company.

46

Chapter#6

6.1A brief introduction of the branch where I did my internship

I have performed my internship in National Bank of Pakistan at: Name of the branch : Branch Code: Region: Address: Phone # Name of the Manager: Name of My Supervisor: Name of Operation Manager: Name of Cashier: Name of Assistant: Name of Costomer Service Officer: National Bank of Pakistan, Kunjah 0666 Gujrat Kunjah 0533381220 Mr. Abdul baqi Mr. Abdul baqi Mirza Ansar Mehmood Mr.Tariq Mehmood Nadeem Miss Shazia Mushtaq Ch. Saeed Akbar , Shoaib Abbas

47

Starting and Ending dates of my Internship

Time duration of my Internship at National Bank of Pakistan is 6 weeks. Starting date is August 1, 2011. Ending date is November 20, 2011. Weekly timetables

Weeks 1st week

Dates 01.08.2011

Departments Account opening ,Issuance of cheque book

2nd week

08.08.2011

Clearing , collection of utility bills

3rd week 4th week

15.08.2011 22.08.2011

Remittances Govt. Payments & Receipts

5th week 6th week

29.08.2011 05.09.2011

Advances Advances

Controlling Supervisor Name : Mr. Abdul baqi

48

6.2Names of the departments in which I got training during my Internship During my internship period at NBP, I got training in vrious departments of the branch. A brief introduction of these departments is as under; 1.General Banking a. Account Opening b. Issuance of Cheque Book c. Clearing 2. Cash department a. All kinds of payments b. All kinds of receipts c. Collection of utility bills d.Deposits 3.Advances a. Advance salary b. Agriculture finance c. Cash finance d. Demand draft e. Advance on gold

49

4.Western Union 5. Remittances 6.3Detailed description of the operations / activities performed by the department(s) I worked in. National Bank of Pakistan uses dissimilar departments to execute its tasks and functions with the harmonization of work force with the help of available resources and technology. All theses interrelated departments performing their particular responsibilities and make their required contribution in achievement of its goals.Here; detail description of the operations and activities of the departments where I have conduct my internship report. 1. Account Opening Department: In this department, I have acquired the knowledge regarding the dealings of this department with opening current and saving account for its corporate customers and deals with all other matters. National Bank of Pakistan has subsequent kinds of customers under this department. Staff Firm Company Individual

In order to opening of an account following general practice have been followed by the NBP; A. Confirmation from NADRA

50

At first, the person gets himself verified through NADRA in order to opening of an account. Moreover, the customers have to bring some reference of those, who already have an account in NBP. Some important information regarding customer e.g. the name and account number is written on the space provided on the sample signature card. B. Form of Opening an Account On confirmation, such person has been provided with an application form, to fill, known as Account Opening Form. NBP has PLS Term account, Premium Saver account, Premium Adman account, Current Account and PLS Saving. The account opening form has following particulars; Title of Account Address CNIC Number Profession Telephone number may be of office, mobile or residential National Bank of Pakistan has accessible services to following types of individuals; Accounts of special customers it includes Proprietorship Account, Govt. Institutions, Account of clubs, Societies and Associations, Corporate Bodies,Trust Accounts, Partnership Account and Limited Company Accounts. Accounts of general customers it includes Joint Account, Minor account and Illiterate Persons Account. C. Zakat Deduction

51

Accept current account, the aforesaid department deducts the Zakat on each type of account, on 1st day of the Ramzan at the rate of 2.5%. In order to avoid Zakat deduction the customers have to submit affidavit/declaration as per zakat rules. D. Signatures of the applicant Signature of the applicant has been saved for future verification. E.Deduction of Bank Service Charges This department of NBP also makes deductions of bank service charges as per bank's tariff. Following are the persons, who are relaxed from the deduction of bank service charges; Employees of the Government Pensioner Student Widows State Bank of Pakistan now authorize all the banks to deduct service charges on all types of accounts when the balance of the customer become less from 5000/-. Rs. 55/per month is deducted from the customer's account. 5000/- is the minimum amount which should be kept by the customer in his account. F. Specimen Signature Card (SS card) After getting relevant thing there comes the turn of SS card, this is a card on which specimen of signature will be obtained from depositor at the time of opening of account. A specially designed card is used for this purpose, this card is always counter

52

signed by an official of bank having IBS number, officials below rank or not having IBS number are not eligible to counter sign it. For illiterate person a recent picture of the newly account holder is taken and attached with SS Card, as they cannot sign so for that purpose except sign there thumb impression is taken along with picture. To reduce the risk of frauds and misuse of the cheques of an illiterate person the specimen signature card and account opening form both are stamped by the Personal Visit stamp. Persons who are using thumb impression, it is very important for them to visit personally for every transaction done from their account. G. Account Opening Register After taking signature / thumb impression, it is necessary to write the name, NIC number in account opening register. H. Issuance of Letter of thanks Once, the account has been opened, a Letter of Thanks has been generated by the system and delivered to such customer. Following are the key reasons for the issuance of letter of thanks; To say thanks, to the customer for opening the account in their bank. To confirm the address, provided by the customer while opening the account. I. Issuance of Cheque Book The cheque book is issued to all customers having account in bank or to those who want to avail the facility of cheque book. First cheque book is issued to customers who

53

get the letter of thanks and requests for the issuance of cheque book, and first cheque book after opening of new account is issued free of cost. A Cheque book consists of: PLS 25 leaves or pages per order CD 50 leaves or pages per order A special cheque book register is maintained by the bank to enter the name of person having cheque book. It is also signed by the customer when cheque book is handed over to the customer. J. Pass Book Pass book is be known as the record book which is handed over to the customer at the time of opening of account by bank. In this book all types of transaction are recorded like withdrawal and deposit in a proper date wise manner. K. Documents Enclosed by Customer at opening of account All the customers on opening of account will have to submit the required documents as per the status of Individual Account, Companies Account, Partnership Account, Trust Account, Agent Account and account for Club, Society or Association. Following is the detail of documents generally required to be attached by the customers; Application form Copy of CNIC/NICOP/POC Copy of driving license in case CNIC is without photograph Applicant photograph and VNIC copy

54

Copy of service card/ evidence of employment in case of salaried person Photographs in case of illiterate person Zakat exemption declaration Evidence for exemption of account from levy of service charges Proof of age in case opening of account with minor Copy of any utility bill. Copy of companys memorandum and articles of association List of directors Copy of board resolution Certificate of incorporation Their signature cards Certificate to commence business Power of Attorney, etc. L. Stamping and Scrutinizing After the fulfillment of all the necessary terms and conditions and checking of the form the relevant officer of Account Opening affixes the required stamps on the Account Opening Form and comply all the formal rules and regulation. M. Closing of Accounts In order to closing of account, the customer is required to submit an application for closing of account. On satisfaction of application, the account is closed and his balance is paid to him after deduction of account closing charges i.e., Rs. 200 and the application is filed in Account Closing File. Moreover, the remaining leaves of cheques will also be collected from the customer. 2. Deposit of Current and PLS Saving Accounts

55

A. Deposits The procedure undertaken upon receiving deposits from the customers is as follows: Examining the deposit slip to ensure that the name and the account numbers are clearly indicated. Reconciles the amount on cheques or in cash with the amounts on deposit slips. Where the deposit slip is proves validate, the cash transaction, balance transferring or clearing transfer has been made and appropriate counterfoil is handed over to the customer. B. Withdrawals The withdrawals can be made only at the branch, where the account is maintained. The officer under his full signature authorizes all cash withdrawals. No third party withdrawal is permitted. In current account, the bank does not offer any interest. C. Issuance of Cheque Book The accountholders request for the new cheque books by presenting the requisition slips along with the authority letter to the concerned office. His signatures are verified before giving him a new cheque book. The presence of the accountholders is compulsory to get a new cheque book. But if he sends a third person to get his cheque book then the procedure is as follows; An authority letter is given to the third party by the accountholder. The accountholders verify the signature of the third person on that authority letter. The bank officer gets the signature of that third person to confirm whether he is the same to whom the accountholder has sent. The bank issues the new cheque book and authority letter is kept by the bank.

56

6.4CHEQUES A cheque is a bill of exchange drawn on a Banker and payable on demand. According to Dr. Hard, "A cheque is an unconditional order in writing drawn on a Banker signed by the drawer, requiring the Banker to pay on demand a certain sum in money to or to the order of a specified person or to learner." Cheque is merely an order on a Bank by its clients to pay a sum of money to himself or to a third party on demand. There are three parties involve in a cheque: (i) (ii) (iii) The drawer. The drawee and The payee.

The drawer is the person who signs the cheque. The party which is authorized to pay back the money is called drawer. The person to whom or to whos or order the money is to be paid is called payee. A cheque in order to be valid must bear the signature of the drawer. It should be in writing preferable by means of a pen. KINDS OF CHEQUES There are three kinds of cheques : i. ii. iii. (i) Bearer Cheque: Order Cheque: and Cross Cheque: Bearer cheque:

Bearer cheque is that which can be cashed from a Bank by any person who possesses the cheque and presents it at the counter.

57

(ii)

Order Cheque:

If the word bearer is struck off from the cheque, it then becomes an order cheque. Order cheque is a safe form of payment because it can not be encashed unless it is ascertained by a Bank that it is paid to the right person. If cheque is drawn payable to the order of a specified person the Bank will make the payment only after the identification of the specified person. (iii) Cross Cheque:

If the parallel lines are drawn across the face of the cheque and the words "& Co" are written between them, it becomes a crossed cheque. The payments made by the crossed cheque are the safest forms of payments because a cheque can only be deposited in the payee's account or it can be endorsed to somebody's else account by the payee. The crossed cheque can not be cashed when it is presented at the counter of the Banker. (I) (i) DATE OF THE CHEQUE: Undated cheque:

If a cheque does not bear any date, the holder of the cheque can insert the date and cheque will quite valid. (ii) Post dated cheque:

The post dated cheque is, infect, not a cheque because it is not payable on demand. It is equivalent to a bill of exchange, when the cheque is due for payment, the cheque will be honored by the Bank. If a Bank makes payment of post dated cheque before it falls due, the Bank would be liable to the drawer for the amount. (iii) Stale and Over due cheque:

58

If a cheque is in circulation for an unreasonable period of time, the cheque is said to be stale or over due. Normally, if the cheque is presented six on seven months after the date, it is marked as "Stale" or "out of date". The out of date cheque requires the confirmation of the drawer. (iv) Alterations on a cheque:

If the drawer is to make changes in the date or amount or in the name of the person then full signature must be obtained on all the material alterations made on the cheque. (iv) Mutilated Cheque:

If a cheque is torn in two or more than two-pieces and after pasting the pieces together is presented to the Bank for payment. the Bank would return it to the drawer marked, "Multitude Cheque". If the drawer confirms the mutilated cheque, the Bank's position is then quite safe. 2. (i) PAYMENT BY CHEQUE: Conditional payment:

A cheque or bill of exchange is not a legal tender money. A debtor, therefore, can not compel a creditor to accept the cheque or bill of exchange as a means of payment. When the cheque is honored and payment is made by the Bank, the date is then effectual discharged. (ii) Cheque through the post:

If a cheque or other negotiable instrument is sent by post and is lost in transit and is presented and paid by the bank, the loss if any rests on the sender. However, if the creditor requests the debtor to send the cheque by post, than the risk is to be borne by the creditor.

59

(iii)

Cheques as evidence of payment:

When the payee receives the amount written on the cheque from the Bank, it serves prima face as evidence of receipt. THE PAYING BANKER: The obligation to pay: the paying Banker or the drawer Bank is under legal to honor his customers cheque provided:There is sufficient credit in the account of the customers to cover the amount written on the face of the cheque : The cheque are properly drawn: Are not stale or over due: and There is no legal prohibiting the Bank to make payment.

2.

Time Allowed for Payment :

When a cheque is presented over the counter, the following rules are usually observed: If a cheque is properly drawn and is complete in every respect it must ordinarily be said or dishonored at once. If a cheque is presented through a clearing House, then the rules of the Clearance House regarding time are to be observed. If the cheque of a customer is sent by another commercial Bank is to send the notification of payment or dishonor within 24 hours of the receipt of the cheque to the presenting Bank. If the holder of a cheque presents it through the post to the paying Banker the usual practice for drawer Bank is to send back the cheque instructing the holder

60

to either present the cheque in person or the collection should be made through another Bank. 3.Payment in Due Course: If a cheque is drawn in proper form and is paid by the paying Banker in good faith the Bank does not incur any liability. 4.Protection of paying Banker: If the paying Banker makes payment of a cheque drawn on him with forged signature of the drawer, He will not be held responsible provided: The payment is made in good faith. The payment is made in the ordinary course of Business.

Similarly, in case of crossed cheque, the drawer Bank is protected of the forged document only if The payment is made in good faith: In the ordinary course of Business: Without the negligence of the Banker and According to directions contained in crossing. 5.Fraudulent Alteration of Amount: If a drawer draws the cheque in such a manner that it makes room for alternation of the amount, or hi signs a Blank cheque, and the Bank pays in good faith the amount which is fraudulently increased, the Bank will not be held responsible for the customers loss. Banker's Authority To Terminate The Payment Of Cheques:

61

1.Countermand of Payment: The drawer of a cheque can stop the payment of a cheque by informing the Banker either on telephone or through a special message or in writing. The Banker will mark on the orders not to pay or payment countermanded by telegram payment postponed pending confirmation present again: If the cheque has been presented and cashed before the countermand is received in time, the Banker will stop the payment of the cheque even if he was about to pay. In all such cases, where the payment is stopped well in time, the operative signatures are cancelled and the cheque is returned with a marked "Cancelled in error, payment countermand." 2. Customer's Balance:-

The Banker can refuse to make the payment of a customer's cheque 1 if his balance is not sufficient to cover the cheque. However, if the Bank has allowed the facility of overdraft, the Banker is bound to make the payment provided the amount is within the limit of the overdraft. 3. Cheque is not an assignment of funds:-

A holder of a cheque can not ask the Banker to earmarl credit balance of the drawer in his favor. If the customer's balance is sufficient to cover the cheque, the payment will be made. The cheque will be dishonored if the Balance available for drawing the cheque is not sufficient. The holder of the cheque can not either have an equitable claim against the drawer Banker.

4.

Payment in due Course:-

62

The Banker will refuse to make the payment of a cheque if: i. ii. It is not in accordance with the drawers instructions and It is also presented after office hours or is not in the ordinary course of Business. 5. Advising Fate By Telegram:-

If cheques are presented direct to the Banker or through the collecting Banker with a request to wire fate and the paying Banker's answer is in the affirmative then the Banker has to make the payment even if he receives the countermand of payment written or oral from the Customer. 6. Marking Cheques:-

A drawer may get a particular cheque 'Marked' from his Banker. The Banker will retain the amount in order to honor the "marked" cheques. If' the other cheques issued by him are not covering his credit Balance, Bank will dishonor them for want of funds. 7. Forgery of the Drawer's signatures:-

If the Banker is doubtful of the drawer's signature of in the alternation of amount the Bank can refuse to make the payment. 8. Notice of Customers Death:-

The Banker will terminate the payment of a cheque if he receives the notice of the customer death. 9. Bankruptcy Petition:-

If the customer is unable to pay his debt i.e. he is insolvent, then he or his creditors present as petition to the court to take over the debtors, property for distribution among

63

creditors. If the Bank receives a notice of t he refuse to honor the cheque forthwith.

10.

Making of a Receiving order:-

If the customer is satisfied that the customer appears to be insolvent, it will immediately issue a receiving order. The Bank will refuse to make payment on the advertisement of receiving order of its customer in the news paper or on direct intimation from the court. 11. Trust Funds:-

If the Banker is satisfied that his customer by breach of trust is crediting the trust fund to his account, the Banker may refuse to pay the cheques. 12. Garnishee Order:-

If the creditor of Banks customer gets a garnishee order from the court, the customer is not allowed to operate the account by the Bank. 13. Account Closed:-

If the drawer has closed his account, the Bank will dishonor the cheque presented to the Bank. 14. Mutilated Cheques:-

If a cheque is mutilated, torn or cancelled, the Bank will refuse to debit the account of the customer. The payment on the torn cheque can, however, he made, if it is confirmed from the drawer or from the payees Banker. 15. Difference in words and Figures:-

If the amount stated in words differ from the amount expressed in figures, the Bank will

64

refer the cheque to the drawer remarking: amount in words and figures differs. 16. Irregular Endorsement:-

If the endorsement on the cheque is irregular, the Bank will not make the payment on the cheque presented to it.

17.

Lost or Stolen Cheque:-

If a cheque is lost or stolen and the drawer informs the Bank well ii. time, the Bank will refuse to honor the cheque if presented after the receipt of the notice. 18. Stop Cheque note:-

If a customer informs the Bank orally or verbally for stopping the payment of the particular cheque, the Bank will obey the instructions and will put "Stop Cheque Notice" in red ink in the account of the drawer. 19. Receipt of Notice of Indemnity:If the Bank comes to know that a particular customer has become insane or is of unsound mind and the Bank is satisfied that hi customer is unable to act rationally, the authority of the Bank to act as agent will then cease. If the Bank receives the lunacy order from the court, the cheques will be returned with the remark "refer to drawer. 20. Joint Account:-

If there is a joint account the Banker will get definite instructions as to how the account is to be operated upon whether all of them shall operate the account or delegate the authority to one. On the death of any party to a joint account, the balance rests in the surveyor or surveyors subject to an expressed authority on the contrary.

65

21.

Partnership Account:-

In case of a partnership firm, every partner can open an account in his name. But the Banker would not allow until and unless it is signed by all partners, giving the manner of operation. The death or retirement of a partner dissolves the partnership then the Bank should not allow any operation on such an account. 22. Company Account:-

If the Company or a corporation wants to open an account with the Bank it would provide a copy of resolution passed by the Board of Directors appointing it as a Banker to the Company, naming the person or persons authorized to operate the account. If any authorized person draws a cheque on behalf of the company, then it would be dishonored. ENDORSEMENT: A cheque or a bill is endorsed when the transfer puts his signature on the back or an along of a cheque and a bill as a part of its negotiation. If the cheque is bearer, it needs no endorsement. However, in our country, the Banker insists on getting the endorsement (signature) on the back of the cheque. If the holder of the cheque does not agree to put his signature, then he shall have to give a properly stamped receipt for the amount paid to him. If the cheque or bill is drawn payable to order, it requires the endorsement of the transferor, so that the payment is made in due course. REQUIREMENTS OF VALID ENDORSEMENT: The requirements of endorsement to be effective are as follows; The endorsement must be on the back or on an along of the cheque or bill. If the

66

endorser simply put down his signature on the back of the cheque, the endorsement is valid. Endorsement may be made in ink, print, pencil or with a rubber stamp. The Bank prefers the endorsement to be wholly in ink as it is not liable to obliteration as well as alteration. The endorsement must be of the entire value of the Cheque and bill. Partial endorsement which may be in the name of one endorsee or more than one endorsees separately is not legally valid. If the number of endorsees or payees is more than one on the bill then all the payees are the endorse unless one endorsee has the authority to endorse on behalf of other payees as it is generally in partnership. Another important requisite of valid endorsement is that the endorsement must correspond with that of the drawing. For instance, if the name of the endorsee is misspells. The payee should also endorser the bill in the misspells version. However, the endorsee can at the proper signature, if he .

so desires. If the names of the payees are two or more than two, the endorsement should also be in the same order, which is penned down on the back of the bill. CLASSIFICATION OF ENDORSEMENT The main classification of endorsement are as follows: 1. Conditional Endorsement:

If the endorsement makes the payment of a bill subject to the fulfillment of a condition or conditions, the endorsement is called conditional endorsement. The Bank or the payer can disregard the conditions and make the payment to the endorsee and the payment will be considered valid.

67

2.

Blank Endorsement:

It the endorser signs his name on the bill but does not give the name of any other person to whom he wishes to transfer the cheque, the endorsement is called blank. When there is no endorsee specified on the bill, it becomes payable to bearer even though it may be originally drawn to order. 3. Special Endorsement:

An endorsement which specifies the name of the transferor for the payment of the bill is called special endorsement. Special endorsement is payable to order. 4. Restrictive Endorsement: -

A restrictive endorsement is one which restricts or prohibits the further negotiation of the bill. For instance, pay to Hamid only signed by Rafique. 5. Partial Endorsement:-

If the bill purports to be endorsed for a part of the amount payable, the endorsement is called partial endorsement is legally in effective. 3.Clearing department National Bank of Pakistan performs the function of paying and collection of cheques drawn on other bank by the customer of the bank with out charging fees. They perform this clearance function for the customers or others bank in their area because National Bank of Pakistan acts on the behalf of the State Bank of Pakistan. Functions of the clearing dept in branch are: To arrange the payment of cheque drawn on the branch and give cheque for collection to any other branch have ABL or any other commercial banks.

68

To collect amounts of cheques drawn on member of local clearinghouse sent for collection by National Bank of Pakistan branches.

4.Western Union NBP offer Cash over the Counter services in alliance with Western Union in order to provide fast and convenient delivery of cash. No matter where you are around the globe, if there is a Western Union in sight, you can most easily transfer funds to your loved ones. This payment can easily be picked up in a matter of moments at dedicated Western Union counters in our branches. No account at NBP is required for this service.I also worked in this department. 5.Remittance department Issuance and Transferring of Demand draft Mail Transfer During my stay in this department, I often made drafts on behalf of customers under instructions of my training officer. The procedure is as follows. First the bank receives a written request from the customer to issue a bank draft. The written request is either in banks standard form or separate paper signed by the applicant enclosed with cash or cheques covering the amount of the draft and other charges of the bank. While issuing a bank draft, it is compulsory that the draft should be free from alternations. All the details must be written clearly in ink. After issuance of demand draft, it is handed over to the applicant. The bank advice containing the particulars of the draft is sent to drawer branch with its necessary information and on its presentation the payment of the draft is made.

69

Documents required: 1- CNIC 2- In case of MT, account number where to transfer the money is required by bank. 6.Bills Collection Department: During my training program I spent two weeks in bills collection department. Here I collected utility bills like gas, electricity, water and telephone etc. Collection of gas, electricity and telephone bills. Making scrolls having the customer number and the amount paid Marking totals Sending in mail 7.Credit or Finance Department In credit department, I was assigned many duties, for example. I used to fulfill forms prescribed for gold loans. I used to take signatures of applicant and branch manager on loan form. I used to calculate amount after including interest charged by bank on that loan. Margin of gold loans is 40% and interest rate is 15.50%. I used to calculate interest amount charged by bank. I used to post in ledger, all the details of applicant, amount of loan, amount of interest, amount, weight and number of tools in gold pledged against loan etc. I used to record all details of applicant and amount of loan in computer. Preparing different kinds of documents required for the completion of procedure. e.g credit voucher, debit voucher and insurance voucher etc.

70

8.Govt. Payments and Receipts I worked much in Pension payment dept. I used to record the amount given on the receipt provided by the customer into pension register. Then after taking signatures of branch manager, affixing the stamp on receipt and signature or thumb impression of receipt holder on pension register, customer is asked to receive the amount from cashier. At the end of the day, I used to make scroll of pension payments also. 6.5Detailed description of the tasks assigned to me.(Details added) I have performed following tasks in various Departments of National Bank of Pakistan during my Internship; 1. Deposit of Current and PLS Saving Account In this department, I just observed how they work. Some tasks assigned to me were as under: I was assigned responsibility to cross check amount in figures and words written on cheques. I used to confirm the signature of account holder. I used to make scroll also for matching the amounts given in BBO and cheques collected in hand. Scroll number provides great relief in case of mistakes committed in recording amounts. For example, if I edited the amount of Rs 1000 instead of 10000 then cash scroll of the branch back office will not match with cash receipt register of

71

cashier at the end of the day. In order to rectify the amount, we will enter the scroll number in REVERSAL column, computer screen will display full record of all cheques and we will find our mistake. 2. Account Opening Department Opening of an account after verification of customer from NADRA database. Recording of account number and name of applicant in account opening register. Issuance of letter of thanks Issuance of cheque book and pass book Recording of first deposit with the bank by customer in general ledger Closing of account after receiving application from customer. 3.Remittance department Issuance and Transferring of Demand draft Mail Transfer During my stay in this department, I often made drafts on behalf of customers under instructions of my training officer. 4.Bills Collection Department: During my training program I spent two weeks in bills collection department. Here I collected utility bills like gas, electricity, water and telephone etc. Collection of gas, electricity and telephone bills. Making scrolls having the customer number and the amount paid Marking totals

72

Sending in mail

5.Credit or Finance Department In credit department, I was assigned many duties, for example. I used to fulfill forms prescribed for gold loans. I used to take signatures of applicant and branch manager on loan form. I used to calculate amount after including interest charged by bank on that loan. I used to calculate interest amount charged by bank. I used to post in ledger, all the details of applicant, amount of loan, amount of interest, amount, weight and number of tools in gold pledged against loan etc. I used to record all details of applicant and amount of loan in computer. Preparing different kinds of documents required for the completion of procedure. e.g credit voucher, debit voucher and insurance voucher etc. 6.Govt. Payments and Receipts I worked much in Pension payment dept. I used to record the amount given on the receipt provided by the customer into pension register. Then after taking signatures of branch manager, affixing the stamp on receipt and signature or thumb impression of receipt holder on pension register, customer is asked to receive the amount from cashier. At the end of the day, I used to make scroll of

73

pension payments also. In advance salary payment, I worked little but I learnt a lot while working in this department. Some features and detail of advance salary is as under: Salary Account must be maintained in the branch at least six months ago by govt. and semi govt. employee only. Following documents are required for getting advance salary: Three Salary Slips Undertaking of Rs.100/- Stamp paper Two reference from work colleagues ( Copy of CNIC) DDO ( Drawing and Disbursing Officer) will sign on: a) Form b) Undertaking c) Three undated cheques, blank from borrower Rate of interest is 17.50% per annum Advance salary is calculated in following way: 20 x 6000 = 120,000 will be financed @ 17.5% p/annum

74

Chapter#1
Summary of learning 7.1Skills and qualifications that I have gained from the internship. During the internship there is practical knowledge acquired about the banking sector. What activities are performed by banks and how to deal with public? Also commitment about work and operations of banks. Financing and credits and other public services are performed by the banks. What are implementations of banking rules in banking sector? And much learn about the various executives experiences and their skills. What is role of higher authority (manager) in decision making and how to solve the problems? How much money or reserves are used to meet the requirements in the branch. What are the duties of operation manager and how to pay cheques and all procedure relating to opening account in the banks? 7.2Responsibilities that I have undertaken during my internship period. During my internship in NBP, they assign me worked in pension department. Pension manager trained me very nicely and I learned lot of things in this department. They give the pension to retired Govt. employees. There are two type of pensions given, 1= Provincial 2= Central These are different according to their PPO numbers

75

For example: Provincial PPO 123456 Central PPO 12345/pak I am full trained now in this particular job and I serve 1000 people here. How to fill farm? How to enter in ledgers and balance account and what is file and book and all other things relating to pension department. I also performed the following activities: I perform the duty on the seat of bills where following work is being done,

Along with this task I also enter the daily post letters in the letter register. This is very busy task is bank. I help the officer in this seat. I also do the work in clearing department.S C is that when cheques are coming from outside city for cash and those cheques which come from branches inside city are sent to clearing house, so I made the statement to clearing house for clearing cheques. In credit department, I was assigned many duties, for example. I used to fulfill forms prescribed for gold loans. I used to take signatures of applicant and branch

76

manager on loan form. I used to calculate amount after including interest charged by bank on that loan.I used to calculate interest amount charged by bank.

Chapter#8
8.1Conclusion
National Bank of Pakistan was established as a semi public commercial bank on November 8,1949. The primary objective of the setting of the bank was to purchase jute form the growers in the former East Pakistan in the country. The bank provides all types of banking services to the government and private sectors. The overseas branches under a trust deed the bank also provides services as trustee to national investment trust including sage custody of securities on behalf of nit in consideration for annual service charge and commission. National Bank of Pakistan is placing high priority on automation and it development. The bank is shifting its focus from routine personnel administration to human resources development, with due emphasis being placed on the optional utilization of existing human resources. Motivating pay structures and performance based on incentives were also introduced enhance the productivity of employees. Additionally, objective appraisal system is being instituted to facilities transparent ratings / promotion. National Bank of Pakistan is working on the restructuring programme to make the bank more attractive with the eventual aim of privatization as the largest bank in the country with a customer bade of 8.5 million. The key components of the restructuring programmers are reduction-operating cost; increased in earnings, decrease in nonperforming loans, effective use of information technology.National Bank of Pakistan brought a great revolution on our banking system by introducing new products, adopting all he new methods and technologies requited for an international bank. National Bank

77

of Pakistan is desired to play a vital role in the development of Pakistan in the 21 st century. Its management and workers must accept the competition and challenge of the new millennium through innovative policies products and untiring application.

SWOT analysis is strategic planning method which identifies the strength,weaknesses, opportunities and threats of an organization. SWOT analysis is conducted by analysts in order to determine internal and external situations of the organization. It identifies the internal and external factors which help in achieving objectives of an organization. NBP also conducts this comprehensive analysis annually for the betterment of organizational growth and market share. According to my point of view, the SWOT analysis of NBP is as follows; Strengths a) NBP is founder of ATM National Bank of Pakistan is founder of ATM facility in Pakistan. In this particular facility, money can be withdrawal from account at any time. b) Governments bank National bank of Pakistan is Governments bank. NBP makes its policies according to the governments rules and regulations. c) Area of services

78

National bank of Pakistan has wide area of services as compare to other commercial banks in Pakistan. NBP is offering services including pension to retired government employees, traffic challans, withholding tax, property tax, fees receiving of AIOU, farms of AIOU, utilities bills, deposits, sales tax , and various loan schemes. d) Western union founder National Bank of Pakistan is first bank who started the facility of Western Union in Pakistan. In this particular scheme money is transferred in Pakistan from abroad in a fastest way. You can receive the money from bank by providing the name, CNIC number and password of recipient client. e) Online banking NBP has 130 online branches. Online banking reduces time and faster the services and helps in checking the balances and daily transactions by just one key press. f) Broad Network National bank of Pakistan has broad-basses network of branches throughout the country. The customers are provided services at their nearest possible place to confirm customer satisfied. g) Employees loyalty: Employees are very much loyal to NBP. Employees turnover is very low in NBP. Very few employees are leaving the jobs in NBP. So it is very big strength that your employees are loyal to your organization.

79

H) Customer satisfaction: Because of governments bank, it is enjoying the customers satisfaction. Customers feels secure their money in NBP. Weakness a) Lack of Quality Public Dealing Public dealing is not very effective in NBP. Employees are not taking care of the customers, especially in pension and bills department. b) Communication Gap During the internship in NBP, I found the problem of lack of communication between the employees and management. They have not very much understanding with each other which adversely affects the performance of employees. c) Poor marketing efforts National bank of Pakistan is not promoting its corporate image and services to the customers in a competitive and effective way. d) Few number of Employees There is shortage of staff in NBP. Staff is not as per requirement. Due to which , NBP is not efficient in its performance and services. e) Favoritism and Nepotism There is favoritism and nepotism of senior employees in regard of promotions and bonuses. Promotions and bonuses etc depend on seniors will and decisions.

80

f) Lack Of Modern Equipment NBP is lacking upgraded and modern equipment. Most of the machines and computers are back dated. Opportunities a) Micro Financing Today, there is need of micro financing in banking sector , other commercial banks have already initiated this regard. NBP should also avail this opportunity and take initiative in micro financing. b) Globally Progress of Banking system Now-a-days banking system is growing quickly so NBP have opportunities to improve the standard and get the more share in the market. c) Electronic Banking Due to fast development of technology, world has become global village especially communication sector. NBP can avail the opportunity of developed technology and online banking system in order to provide 24 hours services to customers. Threats a) Advanced Online Banking Advanced computerized banking is a threat for NBP, which has traditional banking system with back dated equipments and incompetent employees. Broad Network

81

National bank of Pakistan has broad-basses network of branches throughout the country. The customers are provided services at their nearest possible place to confirm customer satisfied. b) Lack of employees loyalty Employees turnover is very low in NBP as compare to other commercial banks.

c) Emergence Of New Competitors NBP is facing the threat of emergence of new competitors in from of foreign banks. These foreign banks are equipped with modern and computerized system and heavy financial power and innovative way of promotions. d) Political instability The frequent and ongoing shifting in political arena affects the performance of NBP adversely. e) Customer Complaints NBP has no specific and regular system in order to remove customer complaints. Today, customer satisfaction is highly demanded. F) Increased number of banks Increase in no. of banks is a threat for National Bank of Pakistan. Numbers of private banks (commercial and private) are operating their business more efficiently and provide the same facilities with more speed and quality.

82

Chapter#8
Recommendations for Improvements
According my evaluation and observation during my internship at NBP, bank can make more progress by implementing following points: Number of professional and well qualified employees should be enhanced. Staff should be trained properly and should be familiar with modern technology in order to enhance the over all performance of NBP. In order to achieve job satisfaction from employees, their promotion should be on merit and on time according to their respective performance instead of seniors own will. There is need of more investment in area of innovation and organizational cultural mprovements in order to improve the environment and corporate culture of bank. It is recommended that there should be specific desk for customers complaints and for their information. Bank needs to improve its sitting arrangement, air conditioning in order to attract new clients and to make their customers feel happy and comfortable. Heavy work load can be coping nicely with the help of modern computers software and better control can be achieved. Online facilities should be enhanced up to 24 hours. Separate departments should be established for all services in every branch. New markets needed to be located for enhancing the area of services and wide range of networking. Interest rate on deposits should be set according to the competitors and should always be as per customers satisfaction and demand.

83

References

Branch Manager Mr. Abdul baqi Mr. Mirza Ansar Mehmood (Operations manager) Managers, Asst. Managers and Officers of other relevant Departments. Operating Procedures and System Files of each department. Auditors Reports and Financial Statements of National Bank of Pakistan. Website of NBP: www.nbp.com.pk

84