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TABLE OF CONTENTS
Table of Contents........................................................................................................................................ 1
Objectives of Studying the Organization...................................................................................................... 5
Brief istory of !ational Ban" of Pa"istan................................................................................................... #
!ature of !ational Ban" of Pa"istan............................................................................................................ $
Business volu%e of !ational Ban" of Pa"istan.......................................................................................... 11
Branch !et&or" of !ational Ban" of Pa"istan........................................................................................... 15
!u%ber of '%(loyees of !ational Ban" of Pa"istan..................................................................................1)
Product *ines............................................................................................................................................. 1+
1.,e(osits.............................................................................................................................................. 1$
a-Current ,e(osits.............................................................................................................................. 1$
b-P*S Saving ,e(osits....................................................................................................................... ./
c-0i1ed ,e(osit 2ccount 3Ti%e ,e(osits-........................................................................................... .1
d-0oreign Currency 2ccount............................................................................................................... .1
e-!BP Pre%iu% 2a%dani................................................................................................................... ..
g-!ational 4nco%e ,aily 2ccount 3!4,2-............................................................................................ ..
..2dvances............................................................................................................................................ .5
a-!BP Saibaan................................................................................................................................... .5
b-!BP 2dvance Salary....................................................................................................................... .5
c-!BP Cash 6 7old............................................................................................................................ .)
d-Students *oan Sche%e................................................................................................................... .)
e-!BP 8arobar9 President:s ;ozgar Sche%e..................................................................................... .)
<.Cor(orate 2dvances............................................................................................................................ <1
a-Cash 0inance.................................................................................................................................. <1
b-;unning 0inance= Overdraft............................................................................................................. <1
c-,e%and 0inance............................................................................................................................. <1
5.;e%ittances........................................................................................................................................ <.
a-,e%and ,rafts................................................................................................................................ <.
b-Travelers Che>ues.......................................................................................................................... <<
c-*etter Of Credit ............................................................................................................................... <<
d-0oreign ;e%ittances ...................................................................................................................... <5
e-S&ift Syste%.................................................................................................................................... <5
f-?ail Transfer..................................................................................................................................... <5
g-Telegra(hic Transfer....................................................................................................................... <5
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h-Pay Order........................................................................................................................................ <5
5.?iscellaneous...................................................................................................................................... <#
a-*oc"ers............................................................................................................................................ <#
b-!BP Cash Card............................................................................................................................... <#
c-4nternational Ban"ing....................................................................................................................... <)
Organizational Structure of !ational Ban" of Pa"istan..............................................................................<+
Board of ,irectors.................................................................................................................................. <$
Senior ?anage%ent............................................................................................................................... 51
1.Cor(orate 6 4nvest%ent Ban"ing 7rou(.......................................................................................... 5<
..Co%(liance 7rou(........................................................................................................................... 55
<.4sla%ic Ban"ing 7rou(..................................................................................................................... 5#
5.Treasury ?anage%ent 7rou(.......................................................................................................... 5)
5.Credit ?anage%ent 7rou(.............................................................................................................. 5$
#.2udit 6 4ns(ection 7rou(................................................................................................................. 5/
).u%an ;esource ?anage%ent 6 2d%inistration 7rou(.................................................................5.
+.4nfor%ation technology grou(.......................................................................................................... 5<
$.0inancial control ,ivision................................................................................................................. 55
1/.Overseas Coordination 6 ?anage%ent 7rou(..............................................................................55
11.Co%%ercial 6 ;etail Ban"ing 7rou( ........................................................................................... 5)
1..S(ecial 2ssets ?anage%ent 7rou(.............................................................................................. 5+
1<.'%(loyee Benefits@ ,isburse%ents 6 Trustee ,ivision.................................................................5+
15.Core Ban"ing 2((lication.............................................................................................................. #/
15.O(erations 7rou(.......................................................................................................................... #.
Provincial 6 ;egional ?anage%ent....................................................................................................... #.
Branch ?anage%ent.............................................................................................................................. #<
Organizational 3?anage%ent- levels at !BP............................................................................................. #<
To( ?anagers........................................................................................................................................ #5
?iddle ?anagers.................................................................................................................................... #5
0irst *ine ?anagers or *o&er *evel ?anage%ent.................................................................................#5
!on ?anagerial '%(loyees................................................................................................................... #5
ierarchy of !ational Ban" of Pa"istan...................................................................................................... #5
Organization Structure of the Branch......................................................................................................... ##
a-Centralized ,ecision ?a"ing............................................................................................................... #)
b-,o&n&ard Co%%unication................................................................................................................. #+
c-Chain of Co%%and............................................................................................................................. #+
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d-2uthority and ;es(onsibility................................................................................................................ #$
e-,elegation........................................................................................................................................... #$
............................................................................................................................................................... #$
,e(art%ents of the Branch........................................................................................................................ )/
1.Clearing ouse ,e(art%ent................................................................................................................ )/
..;e%ittance ,e(art%ent...................................................................................................................... )5
<.2ccount O(ening ,e(art%ent............................................................................................................. ))
5.Cash ,e(art%ent................................................................................................................................ )+
5.,e(osits ,e(art%ent........................................................................................................................... +/
#.2dvances ,e(art%ent......................................................................................................................... +/
).Co%(uter ,e(art%ent......................................................................................................................... +.
a-Online branches.............................................................................................................................. +.
b-Batch Branches............................................................................................................................... +.
c-?anual Branches............................................................................................................................. +<
+.Pension ,isburse%ent ,e(art%ent..................................................................................................... +5
$.2ccounts ,e(art%ent.......................................................................................................................... +5
Structure of Branch:s 2ccounts ,e(art%ent.............................................................................................. +)
Ban" 2ccounting O(erations..................................................................................................................... $1
;ole Of C0O 3Chief 0inancial Officer-........................................................................................................ $<
Ase of 'lectronic ,ata in ,ecision ?a"ing................................................................................................ $)
4nfor%ation Syste% ;esources of !BP.................................................................................................. $+
a-Peo(le ;esources........................................................................................................................... $+
b-ard&are ;esources....................................................................................................................... $+
c-Soft&are ;esources........................................................................................................................ $$
d-,ata ;esources............................................................................................................................... $$
e-!et&or" ;esources......................................................................................................................... $$
Sources of 0unds..................................................................................................................................... 1//
7eneration of funds................................................................................................................................. 1/<
2llocation of 0unds.................................................................................................................................. 1/)
Critical 2nalysis 3Theory vs Practical- ..................................................................................................... 111
Balance Sheet......................................................................................................................................... 11<
4nco%e State%ent.................................................................................................................................... 115
0inancial State%ents 2nalysis................................................................................................................. 115
;atio 2nalysis...................................................................................................................................... 11#
a-Profitability ;atios.......................................................................................................................... 11)
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b-*i>uidity ;atios.............................................................................................................................. 1..
c-,ebt ;atios.................................................................................................................................... 1.)
d-Ca(ital 2de>uacy ;atios............................................................................................................... 1</
e-O(erating Perfor%ance ;atios...................................................................................................... 1<1
orizontal 2nalysis............................................................................................................................... 1<5
orizontal 2nalysis of Balance Sheet................................................................................................... 1<5
orizontal 2nalysis of 4nco%e State%ent............................................................................................. 155
............................................................................................................................................................. 155
............................................................................................................................................................. 15#
Bertical 2nalysis................................................................................................................................... 15<
Bertical 2nalysis of Balance Sheet....................................................................................................... 155
Bertical 2nalysis of 4nco%e State%ent................................................................................................. 1#<
................................................................................................................................................................. 1#5
Ban" 2nalysis &ith refernce to co%%ercial Ban"s listed on stoc" e1change...........................................1)1
0uture (ros(ects of !ational Ban" of Pa"istan........................................................................................ 1)5
Short falls= Cea"nesses of !ational Ban" of Pa"istan............................................................................. 1)#
Conclusions............................................................................................................................................. 1)$
;eco%%endations................................................................................................................................... 1+/
;eferences.............................................................................................................................................. 1+.
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OBJECTIVES OF STUDYING THE ORGANIZATION
The primary purpose oI this study is to IulIillment oI the requirements Ior the degree oI MBA
(Banking & Finance).For this connection each student oI this particular course is required to
undertake training in a relevant organization selected by them, Ior a period oI 6-8 weeks.
The secondary purpose oI this internship is to understand how the theoretical knowledge can be
applied to the practical situations and examine an organization`s Iinancial issues and identiIy its
opportunities/ problems and also suggest corrective measures. This internship is also very
necessary to gain conIidence and become aware oI the mechanism oI an organization. As an
internee I want to achieve Iollowing objectives during my internship and organization study:
1. To Iamiliarize with a business organization.
2. To Iamiliarize with the diIIerent departments in the organization and their Iunctioning.
3. To enable myselI to understand how the key business process are carried out in
organization.
4. To understand how inIormation is used in an organization Ior decision making at various
levels.
5. To relate theory with practice.
6. I was also keen to gain proIessional experience in an actual testing environment.
7. I want to develop my skills in the application oI theory to practical work situations.
8. To develop my attitude conducive to eIIective interpersonal relationships.
9. To acquire good work habits and sense oI responsibility.
10. To enhance my learning experience by application oI Iundamental concepts previously
learned.
11. To observe, analyze and interpret the relevant data competently and in a useIul manner.
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12. To develop my interpersonal communication.
13. I want to enhance my knowledge oI the discipline oI banking administration.
BRIEF HISTORY OF NATIONAL BANK OF PAKISTAN
The history oI National Bank oI Pakistan is part oI Pakistan`s struggle Ior economic
independence. National Bank oI Pakistan was established on November 9, 1949 under the
National Bank oI Pakistan Ordinance, 1949 in order to cope with the crisis conditions which
were developed aIter trade deadlock with India and devaluation oI Indian Rupee in 1949.
Initially the Bank was established with the objective to extend credit to the agriculture sector.
The normal procedure oI establishing a banking company under the Companies Law was set
aside and the Bank was established through the promulgation oI an Ordinance, due to the crisis
situation that had developed with regard to Iinancing oI jute trade. The Bank commenced its
operations Irom November 20, 1949 at six important jute centers in the then, East Pakistan and
directed its resources in Iinancing oI jute crop. The Bank`s Karachi and Lahore oIIices were
subsequently opened in December 1949. The National Bank oI Pakistan came Iorward to
establish its oIIices in the Cotton growing areas and extended credit Iacilities liberally in order to
restore stability to the market. In 1951, the country was once again Iaced with a crisis in the
cotton trade when prices was crashed and touched the lowest level since independence Iollowing
the cessation oI hostilities in Korea. The bank in collaboration with the cotton board provided the
necessary Credit Iacilities to the trade and the crisis was tided over. The nature oI
responsibilities oI the Bank is diIIerent and unique Irom other banks/Iinancial institutions. The
Bank acts as the agent to the State Bank oI Pakistan Ior handling Provincial/Federal Government
Receipts and Payments on their behalI. The Bank has also played an important role in Iinancing
the country`s growing trade, which has expanded through the years as diversiIication took place.
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The National Bank oI Pakistan has its headquarters in Karachi, Pakistan. The bank operates
1249(2008) branches in Pakistan and 22(2008) overseas branches. Under a trust Deed, the bank
also provides services as trustee to National Investment Trust (NIT) including saIe custody oI
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securities on behalI oI NIT. The National Bank oI Pakistan has assets worth Rupees 737976.44
million on September 30, 2008.
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National Bank oI Pakistan is today a progressive, eIIicient, and customer Iocused institution. It
has developed a wide range oI consumer products, to enhance business and cater to the diIIerent
segments oI society. Some schemes have been speciIically designed Ior the low to middle
income segments oI the population. These include NBP Karobar, NBP Advance Salary, NBP
Saibaan, NBP Kisan Dost, and NBP Cash n Gold.
The National Bank oI Pakistan has implemented special credit schemes like small Iinance Ior
agriculture, business and industries, administrator to Qarz-e-Hasna loans to students, selI
employment scheme Ior unemployed persons, public transport scheme. The Bank has expanded
its range oI products and services to include Shariah Compliant Islamic Banking products. For
the promotion oI literature, NBP recently initiated the Annual Awards Ior Excellence in
Literature. NBP will conIer annual awards to the best books in Urdu and in all prominent
regional languages published during the deIined period. Patronage Irom NBP would help
creative work in the Iield oI literature. The Bank is also the largest sponsor oI sports in Pakistan.
It has provided generously to philanthropic causes whenever the need arose.
It has taken various measures to Iacilitate overseas Pakistanis to send their remittances in a
convenient and eIIicient manner. In 2002 the Bank signed an agreement with Western Union Ior
expanding the base Ior documented remittances. More recently it has started Electronic Home
Remittances Project. This project introduces technology based system to handle inward
remittances eIIiciently, by ensuring that the Bank's branches keep a track oI the remittance
received Irom abroad till its Iinal receipt.
A number oI initiatives have been taken, in terms oI institutional restructuring, changes in the
Iield structure, in policies and procedures, in internal control systems with special emphasis on
corporate governance, adoption oI Capital Adequacy Standards under Basel II Iramework, in the
up gradation oI the IT inIrastructure and developing the human resources.
National Bank has earned recognition and numerous awards internationally. It has been the
recipient oI The Bank oI the Year 2001, 2002, 2004 and 2005 Award by The Banker Magazine,
the Best Foreign Exchange Bank Pakistan Ior 2004, 2005, 2006 and 2007, Global Finance,
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Best Emerging Market Bank Irom Pakistan Ior the year 2005, Global Finance, Kisan Time
Awards 2005 Ior NBP's services in the agriculture Iield. It is listed amongst the Region's
largest banks and also amongst the largest banks in South Asia 2005, The Asian Banker. It has
also been presented a Recognition Award 2004 Ior having a Gender Sensitive Management
by WEBCOP AASHA besides other awards.
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The precise summary oI National Bank oI Pakistan regarding its countrywide and overseas
operations is as Iallows:
1949 National Bank oI Pakistan (NBP) was established under the National Bank oI
Pakistan Ordinance 1949 and was 100 govt.-owned. NBP acted as an agent oI the
Central Bank wherever the State Bank did not have its own Branch. It also undertook
Government Treasury operations. Its Iirst branches were in jute growing areas in East
Pakistan. OIIices in Karachi and Lahore Iollowed.
1950 NBP established a branch in Jeddah, Saudi Arabia.
The Bank in 1950 had one subsidiary The Bank oI Bahawalpur` on December4, 1947 by
the Iormer Bahawalpur State
1955 By this time NBP had branches in London and Calcutta.
1957 NBP established a branch in Baghdad, Iraq.
1962 NBP established a branch in Dar-es-Salaam, Tanganyika.
1964 The Iraqi government nationalized NBP's Baghdad branch.
1965 The Indian government seized the Calcutta branch on the outbreak oI hostilities
between India and Pakistan.
1967 The Tanzanian government nationalized the Dar-Es-Salaam branch.
1971 NBP acquired Bank oI China's two branches, one in Karachi and one at Chittagong.
At separation oI East Pakistan NBP lost its branches there. NBP merged with Eastern
Mercantile Bank and with Eastern Bank Corporation.
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1974 The government oI Pakistan nationalized NBP. As part oI the concomitant
consolidation oI the banking sector, NBP acquired Bank oI Bahawalpur (est. 1947).
1977 NBP opened an oIIshore brain Cairo.
1994 NBP amalgamated Mehran Bank (est. 1991).
1997 NBP's branch in Ashgabat, Turkmenistan commenced operations.
2000 NBP opened a representative oIIice in Almaty, Kazakhstan.
2001 State Bank oI Pakistan and Bank oI England agree to allow only 2 Pakistani banks
to operate in the UK. NBP and United Bank agreed to merge their operations to Iorm
Pakistan International Bank, oI which NBP would own 45 and United Bank 55.
2003 NBP received permission to open a branch in AIghanistan.
2005 NBP closed its oIIshore branch in Cairo.
NATURE OF NATIONAL BANK OF PAKISTAN
National Bank oI Pakistan was incorporated in Pakistan under the National Bank oI Pakistan
Ordinance, 1949 and is listed on all the stock exchanges in Pakistan. The bank is engaged in
providing commercial banking and related services in Pakistan and overseas. The bank operates
1,249 (2007:1,232) branches in Pakistan and 22 (2007:18) overseas branches (including the
Export Processing Zone branch, Karachi). Under a Trust Deed, the bank also provides services
as trustee to National investment Trust (NIT) including saIe custody oI securities on behalI oI
NIT.
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The nature oI responsibilities oI the Bank is diIIerent and unique Irom other banks/Iinancial
institutions. The bank also handles treasury transactions Ior the Government oI Pakistan as an
agent to the State Bank oI Pakistan Ior handling provincial/Federal Government receipts and
payments on their behalI. The National Bank oI Pakistan has also played an important role in
Iinancing the country`s growing trade, which has expanded through the years as diversiIication
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took place. The bank is providing all banking services oI mercantile and commercial banking
permissible in the country, which include:
Accepting oI deposits oI money on current, Iixed, saving, term deposit and proIit and loss
sharing accounts.
Borrowing money and arranging Iinance Irom other banks.
Advancing and lending money to its clients.
Financing oI projects, including technical assistance, project appraisal through long term/
short term loans, term Iinance and musharika certiIicates, etc.
Buying, selling, dealing, including entering into Iorward contracts oI Ioreign exchange.
Financing oI seasonal crops like cotton, wheat, rice, sugar cane, tobacco, etc.
Receiving oI bonds, valuables, etc. Ior saIe custody.
Carrying on agency business Ior any description other than managing agent, on behalI oI
clients including Government and local authorities.
Generating, undertaking, promoting, etc. oI issue oI shares and, bonds etc.
Transacting guarantee and indemnity business.
Undertaking and executing trusts.
Joint venturing with Ioreign dealers, agents and companies Ior its representation abroad.
Participating in 'World Bank and 'Asian Development Bank`s lines oI credit.
Providing personalized Hajj services to intending Hajjis.
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BUSINESS VOLUME OF NATIONAL BANK OF PAKISTAN
Rupees in
Millions
Year 2004 2005 2006 2007 2008
Total Assets 55<@.<1@5#) 5))@)1$@115 #55@1<.@)11 )#.@1$<@5$< +1)@)5+@<.#
Deposits 5#5@5)1@)1) 5#<@5.#@#/. 5/1@+).@.5< 5$1@$/)@5<5 #.5@$<$@/1#
Advances ../@)$5@/)5 .#+@+<+@))$ <1#@11/@5/# <5/@#))@1// 51.@$+#@+#5
Reserves 1/@+1<@$15 1<@5<#@/51 1<@+)$@.#/ 15@)).@1.5 1$@$51@/5)
Investments 15$@<5/@/$# 15#@$+5@#+# 1<$@$5#@$$5 .1/@)+)@+#+
1)/@+..@5$
1

Horizontal
Analysis ()
Total Assets 1// 1/5 11) 1<+ 15+
Deposits 1// 1// 1/+ 1.) 1<5
Advances 1// 1.. 15< 155 1+)
Reserves 1// 1.5 1.+ 15# 1+5
Investments 1// 1/5 $5 151 115
The business volume oI National Bank oI Pakistan is stated in terms oI total assets, deposits,
advances, reserves and investments. To analyze the trend in these items the Horizontal analysis
oI each item is calculated.
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ANALYSIS
The Total Assets oI National Bank oI Pakistan Iluctuates during all years as they show an
increasing trend. The total assets are increased 4 in 2005 and 17 in 2006. The year 2007
represents second highest percentage on account oI total assets as it was increased to 38. There
was an increase oI 48 in 2008 as compare to base year and 10 as compare to 2007.
ANALYSIS
The deposits and other accounts oI National Bank oI Pakistan show a mixed trend during all
years. In the year 2005, the deposits were increased very marginally, with the year 2006
represents an increase oI 8. The deposits are increased 27 & 34 in the years 2007 and 2008
respectively.
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ANALYSIS
The advances made by National Bank oI Pakistan shows an increasing trend in all years as
compare to base year. This implies that National Bank oI Pakistan is keener to advance money to
lenders. The advances were increased 22 in the year 2005 and 43 in 2006 as compare to
base year. The year 2007 represents an increase oI 54 and 2008 represents highest percentage
among all years that is 87 as compare to base year.
ANALYSIS
The Banks` reserves are banks' holdings oI deposits in accounts with their central bank plus
currency that is physically held in bank vaults (vault cash). The reserves oI National Bank oI
Pakistan Iluctuate during all years as they show an increasing trend. The reserves are increased
25 , 28 & 46 in the years 2005, 2006 & 2007 respectively. The year 2008 represents
highest increasing percentage oI 84 as compare to base and previous years.
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ANALYSIS
The investments made by National Bank oI Pakistan Iluctuate during all years. There was an
increase oI 5 in 2005. The year 2006 indicates a decrease oI 6 in investments. The year 2007
represents an increase oI 41 , highest among all years. The investments are increased 14 in
2008 as compare to base year; however investments are decreased 27 as compare to the year
2007.
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BRANCH NETWORK OF NATIONAL BANK OF PAKISTAN
With the geographical development oI its branches, the National Bank oI Pakistan has been able
to extend its services to a much larger number oI Pakistanis all over the country. Today the Bank
has more than 8.8 million accounts & Bank maintains its presence in all the major Iinancial
centers oI the world through its 22 (2008) overseas branches and 5 representative oIIices. OI
these, three representative oIIices have recently been set up at Tashkent (Uzbekistan), Baku
(Azerbaijan) and Almaty (Kazakhstan) to take advantage oI the emerging opportunities in CIS
countries. Bank`s role Apart Irom having a vast branch network, Bank is at the IoreIront in the
acquisition and application oI new technologies in every aspect oI its banking Iacilities. It has
acquired leased telephone lines Ior on-line banking. The Bank has 12 Regional Computer
Centers to cover various on-line and batch system requirements oI branches and controlling
oIIices.
Presently the National Bank oI Pakistan is divided into various Groups headed by SEVPs/EVPs.
Its Iield operations are controlled by 29 regions ( Annexed II) reporting to as many Regional
chieIs, who control 40 zones and 15 single Branch zones headed by Zonal ChieIs; 12 corporate
branches and 1249 domestic branches headed by Branch Managers. The bank has 12 SWIFT
local centers.
Apart Irom having a vast branch network, Bank is at the IoreIront in the acquisition and
application oI new technologies in every aspect oI its banking Iacilities. It has acquired leased
telephone lines Ior on-line banking. Bank has also a presence on the internet. The National Bank
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oI Pakistan has 156 online branches throughout the country. It has modernized its services by
installing Automated Teller Machines (ATMs) called 'CASH LINK at selected branches.
The Bank's organizational structure reIlects the three levels at which it operates: international,
national and local. The Head OIIice Iormulates and implements the strategic, management and
operational policies.
The Bank's geographical organization consists oI branches located in the regional capitals and in
some provincial capitals. The branches' activities relate to the State treasury service, payment
system services, currency circulation, banking and Iinancial supervision, and the analysis oI
economic and Iinancial developments at the local level.
The Bank has representative oIIices abroad, in London, New York and Tokyo; a number oI
oIIicers are seconded as Iinancial experts to Italian embassies and consulates. The Bank has
representative oIIices in Beijing, Tashkent, Chicago and Toronto. It has agency arrangements
with more than 3000 correspondent banks worldwide. Its subsidiaries are Taurus Securities Ltd,
NBP Exchange Company Ltd, NBP Capital Ltd, NBP Modaraba Management Company Ltd,
and CJSC Bank, Almaty, Kazakhstan. The Bank's joint ventures are, United National Bank
(UK), First Investment Bank and NAFA, an Asset Management Company (a joint venture with
NIB Bank & Fullerton Fund Management oI Singapore).
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The Branch network oI National Bank oI Pakistan is divided into Iollowing categories
ATM network ( Total ATMs 101 & Total ATMs machines 104)
Domestic network ( 1249 Branches)
Islamic network ( 5 Branches)
Online network ( 156 Branches)
Overseas network ( 29 Branches)
SwiIt network ( 12 Branches)
Customer Facilitation Centers (6 Customer Facilitation Centers)
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Agriculture branches ( 825 Branches)
NUMBER OF EMPLOYEES OF NATIONAL BANK OF PAKISTAN
Permanent 13237
Temporary/ On Contractual basis 842
Bank's own staff strength at the end of the year 14079
Outsourced 2350
Total Staff Strength 16429
An employee may be deIined as: "A person in the service oI another under any contract oI 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 oI how the work is to be perIormed."
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An employee
contributes labor and expertise to an endeavor. Employees perIorm the discrete activity oI
economic production. OI the three Iactors oI production, employees usually provide the labour.
SpeciIically, an employee is any person hired by an employer to do a speciIic "job". In most
modern economies, the term employee reIers to a speciIic deIined relationship between an
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individual and a corporation, which diIIers Irom those oI customer, or client. The relationship
between National Bank oI Pakistan and its employees is usually handled through the Human
Resource Management & Administration Group & Employees beneIit disbursement & trustee
division. These groups handle the incorporation oI new hires, and the disbursement oI any
beneIits which the employee may be entitled, or any grievances that employee may have.
There are diIIering classiIications oI workers within National Bank oI Pakistan, these are:
Permanent
Temporary / On Contractual
Outsourced
The Employees oI National Bank oI Pakistan are organizing into trade unions, which represent
most oI the available work Iorce in National Bank oI Pakistan. These trade Unions utilize their
representative power to collectively bargain with the management oI bank in order to advance
concerns and demands oI their membership.
PRODUCT LINES
The most precise deIinition oI product is anything capable oI satisIying needs, including tangible
items, services and ideas. In marketing, a product is anything that can be oIIered to a market that
might satisIy a want or need.
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Since 1575, the word "product" has reIerred to anything produced.
Since 1695, the word has reIerred to "thing or things produced. The economic or commercial
meaning oI product was Iirst used by political economist Adam Smith. In general usage, product
may reIer to a single item or unit, a group oI equivalent products, a grouping oI goods or
services, or an industrial classiIication Ior the goods or services. The consumer banking products
include personal accounts, credit cards, loans, investment products, treasury products and many
more. The National Bank oI Pakistan oIIering Ior sale several related products individually,
which is commonly known as product lining. A product line is deIined as 'A group oI products
that are closely related because they Iunction in a similar manner, are sold to the same customer
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groups, are marketed through same types oI outlets, or Iall within the given price ranges.
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The
Iollowings are the main consumer banking products oI NBP.
1. DEPOSITS
The National Bank oI Pakistan oIIers to their clients a variety oI Deposit Schemes with
personalized services at competitive rates oI interest. Any Pakistani citizen can open his/her
account Ior any deposit scheme at any oI its Branches strategically located throughout Pakistan.
The Bank with its huge network oI 1243 branches garners savings Irom both the rich and the
poor in urban as well as rural areas. Even a poor Iarmer in a remote village, with his meager
annual income, Ieels secure to saIe keep his minuscule savings in National Bank oI Pakistan,
Because National Bank oI Pakistan has a long heritage oI trust and proIessional commitment.
A) CURRENT DEPOSITS
These are payable to the customer when ever they are demanded. When a banker accepts a
demand deposit, he incurs the obligation oI paying all cheques etc, drawn against him to the
extent oI the balance in the account. Because oI their nature, these deposits are treated as current
liabilities by the banks. Bankers in Pakistan do not allow nay proIit on these deposits, and
customers are required to maintain a minimum balance, Iailing which incidental charges are
deducted Irom such accounts. This is because Current Deposits may be withdrawn by the
depositors at any time, and as such the bank is not entirely Iree to employ such deposits.
9
Current
Accounts/ Basic Banking accounts are opened, on proper introduction and submission oI
required documents along with initial deposit prescribed Irom time to time. Basic banking
accounts are opened Ior an individuals (single or joint) only whereas current accounts are opened
Ior individuals (single or joint) Charitable institution, provident and other Iunds oI benevolent
nature oI local bodies, autonomous corporations, companies, associations, educational
institutions, Iirms etc. and in all other cases where the accounts are to opened under the order oI
a competent court oI law. No proIit is paid on the balances oI current/basic banking accounts.
The bank is authorized to deduct service charges (incidental charges) on current accounts levied
through its halI yearly schedule oI charges, in case the average balance Ialls below the minimum
balance as prescribed by the bank. No balance maintenance condition is applied on basic banking
account.
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B) PLS SAVING DEPOSITS
In Pakistan a Savings Deposits Account can be opened with a very small amount oI money, and
the depositor is issued a cheque book Ior withdrawals. ProIit is paid at a Ilexible rate calculated
on six monthly basis under the Interest Free Banking System. There is no restriction on the
withdrawals Irom the deposit accounts but the amount oI money withdraw is deleted Irom the
amount to be taken Ior calculation oI products Ior assessment oI proIit to be paid to the account
holder. It discourages unnecessary withdrawals Irom the deposits. In order to popularize the
scheme the SBP has allowed the Savings Scheme Ior school and college students and industrial
labour also. The purpose oI these accounts is to inculcate the habit oI savings in the constituents.
As such, the initial deposits required Ior opening these accounts are very nominal.
10
NBP charge
Rs.500 Ior opening oI PLS Savings deposits.
The silent Ieatures oI proIit and loss sharing and saving accounts oI NBP are as Iallows
1. These accounts can be opened by individuals in their own single or joint name. The PLS
savings account can also be opened Ior provident Iund or other benevolent Iunds oI
companies, Iirms, organizations, NGO`s and educational institutions.
2. PLS saving account can be opened with a minimum amount oI Rs.500/- only
3. To share in the proIit a minimum balance oI Rs.500/- must be maintained in the account.
The minimum balance on sixth and last oI month will qualiIy Ior the proIits. The proIits
will be calculated on the basis oI monthly minimum balance Ior the periods oI six months
i.e. Irom January to June and July to December
4. The head oIIice oI NBP determines the proIit or loss on PLS saving deposits and advice
its branches the rate and time oI distribution oI these proIits.
5. There shall be no restrictions on maintaining the maximum balance in PLS saving
account.
6. On the Iirst day oI Ramzan each year the Zakat at the rate oI 2.5 will be deducted Irom
these deposits on the balance oI that day. But iI depositors aIIix an aIIidavit oI Zakat
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deduction along with account opening Iorm or he is a non-Muslim, no Zakat will be
deducted Irom his account.
C) FIXED DEPOSIT ACCOUNT (TIME DEPOSITS)
The deposits that can be withdrawn aIter a speciIied period oI time are reIerred to as Fixed or
Term Deposits. The period Ior which these deposits are kept by the bank ordinarily varies Irom
three months to Iive years in accordance with the agreement made between the customer and the
banker. ProIit/Return is paid to the depositors on all Iixed or Time deposits, and the rate oI
proIit/Return varies with the duration Ior which the amount is kept with the banker. By lending
out or investing these Iunds, the bank earns more than the ProIit/Return that it has to pay on them
to the depositors.
11
By giving an advance notice to the bank the deposit can be withdraw Irom
the bank beIore the expiry oI the period. Fixed deposit accounts have higher rate oI interest as
compare to other accounts. The rate oI interest rises with the length oI period and the amount oI
deposit. The bank grants to the depositor a Iix deposit (FDR) which is not transIerable to any
other person. The silent Ieatures oI Iixed deposit account oI NBP are as Iallows
1. The PLS term deposit are opened Ior individuals in their own single or joint names,
companies Iirms and other organizations.
2. The PLS term deposit receipt are issued Ior any amount. There is minimum or maximum
limit or deposits in a single term deposit account.
3. PLS term depositors may be allowed some Iacilities against the security oI these receipt
credits, aIter making 'Lien on the relevant receipt and subject to recovery oI service
charges.
4. Under term deposit scheme the depositors not cease to earn the proIit immediately, aIter
the respective maturity date.
D) FOREIGN CURRENCY ACCOUNT
Government oI Pakistan has introduced many important reIorms in Foreign Exchange Control in
the country since February, 1990, Ior the purpose oI strengthening the Foreign Exchange
Reserves. One oI these reIorms relates to Ioreign currency accounts, which can be opened in
United States Dollars, Pound Sterling, Euro and Japanese Yen in any oI the authorized branches
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oI commercial banks throughout the country.
12
Foreign currency accounts are opened, on proper
introduction and submission oI required documents along with an initial deposit prescribed Irom
time to time. Rates oI return on Ioreign currency deposits are subject to Iluctuation as determined
in accordance with State Bank oI Pakistan directives and will be paid on six monthly basis
whereas the return on term deposit/SNTD will be paid on maturity or as prescribed by SBP. The
bank shall have no responsibility Ior or liability to the account holders Ior any diminution due to
taxes imposed or depreciation in the value oI Iunds credited to the account whether due to
devaluation or Iluctuation in the exchange rate or other wise.
E) NBP PREMIUM AAMDANI
NBP Premium aamdani is a retail product oI the bank. The amount oI investment required Ior
this account is Rs. 20,000/-to Rs. 5,000,000.The investment period is 5 years. Zakat and
withholding tax will be deducted as per rules. In NBP premium aamdani, the account holders
have beneIit oI Iree demand draIt, pay order; Iree cheque book and NBP cash card
(ATMDebit). The Financing Iacility is available up to 90 oI the deposit value.
13
ProIit paid
every period as Iollows:
Period Profit Rates
1st year 7.50
nd years 8.50
!rd years 9.50
"th years 10.50
#th years 11
I) NBP Premium Saver
NBP Premium saver is a retail product oI the bank. The minimum saving balance oI Rs. 20,001
and a maximum balance oI Rs. 300,000 are required Ior opening a premium saver account. Two
debit withdrawals allowed in a month and no limit on number oI deposit transactions. The proIit
is calculated monthly and Paid on halI yearly basis. Free NBP Cash Card (ATM Debit) Iacility
is available to account holder.
14
G) NATIONAL INCOME DAILY ACCOUNT (NIDA)
The scheme oI National income daily account was launched in December 1995 to attract
corporate customers. It is a current account scheme and is part oI the proIit and loss system oI
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accounts in operation throughout the country. Deposits in the NIDA accepted on the condition
that the depositor shall always maintain a minimum balance as prescribed by the bank in his
account. In the event however, that any depositor wishes to withdraw the amount and the balance
in his account is less than the required amount, the account will be converted to the ordinary PLS
SB account Ior the purpose oI calculating proIit. An example oI how the NIDA accounts are
maintained is shown on the next page.
RATES ON NATIONAL INCOME DAILY ACCOUNT
From Rs 2/- million to Rs 50/- the rate is 1.4.
From Rs50/- million but less than Rs 500/-million, the rate is 1.5.
From Rs 500/- million but below Rs 1000/- the rate is 1.6.
From Rs 1000/- and above the rate is 1.75.
SALIENT FEATURES
Rs 2-million is required to open an account and there is no maximum limit.
ProIit is paid on halI yearly basis on monthly balances.
The rates oI proIit vary according to the slabs oI deposit. On Deposits oI Rs.2 million to
2,000 million, the rate Iluctuates Irom 1.4 to 1.75
It is a checking account and there is no limit oI withdrawals.
N$%A 1
%ate %es&ri'tion of Transa&tion C %e(it )*+ Credit ),+ Balan&e %ays Prod-&ts
01/05/2008 Balance 10,000,000 10,000,000
05/05/2008 Cash 500,000 9,500,000 4 38000000
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08/05/2008 Cash 100,000 9,600,000 3 28800000
11/05/2008 TransIer 75,000,000 84,600,000 3 253800000
15/05/2008 Cash 3,000,000 81,600,000 4 326400000
18/05/2008 Cash 78,600,000 160,200,000 3 480600000
20/05/2008 Cash 1,000,000 159,200,000 2 318400000
22/05/2008 Cash 5,000,000 164,200,000 2 328400000
23/05/2008 Cash 700,000 163,500,000 1 163500000
25/05/2008 Cash 10,000 163,510,000 2 327020000
27/05/2008 Cash 300 163,509,700 2 327019400
31/05/2008 TransIer 500,000 164,009,700 4 656038800
01/06/2008 Cash 2,100,000 161,909,700 1 161909700
06/06/2008 TransIer 36,000,000 197,909,700 5 989548500
10/06/2008 Cash 9,870,000 188,039,700 4 752158800
2. ADVANCES
National Bank oI Pakistan plays a pivotal role in translating the government's development plans
in terms oI growth in industrial, commercial and agricultural sectors in Pakistan. Accordingly the
Bank has Iormulated its Credit Policy under the guidelines oI SBP-the Central Bank oI Pakistan.
A) NBP SAIBAAN
The NBP Saibaan is retail product oI the bank. It has diIIerent product items which are home
purchase, home construction, home renovation and purchase oI land plus construction. II anyone
has a Home Finance Facility outstanding with another bank he can have it transIerred to NBP
through a hassle-Iree process.
15
A brieI description oI these products is as Iallows
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TYPE OF
ADVANCE
Financing
Amount
Financing
Period
Det to e!uit"
#atio
$ome Purc%a&e '$ou&e or
A(artment)
;s. <5 ?illion < to ./ years +5D15
3%a1i%u%-
$ome
Con&truction
;s. <5 ?illion < to ./ years +5D15
3%a1i%u%-
$ome
#eno*ation
;s. 15 ?illion < to 15 years +/D./
3%a1i%u%-
Purc%a&e o+ ,and P,u&
Con&truction
;s.<5 ?illion < to ./ years +/D./
3%a1i%u%-
B) NBP ADVANCE SALARY
The NBP Advance salary has been the Ilag-ship product Ior NBP. NBP Advance Salary, the
leading personal loan product oI the country, is maintaining its inimitability ever since it was
launched. This was only possible due to its swiIt growth and remarkable loan disbursement oI
over 118 billion.
16
You can avail up to 20 net take home salaries with easy repayment
installments. Its hassle Iree acquisition with no prior Iormalities and easy availability in a short
turn around time is attributed as the most distinguishing Ieatures oI the product. The product is
oIIered countrywide. The terms and conditions oI NBP Advance salary is shown on next page:
TERMS & CONDITIONS
Eligi(ility Per.anent E.'loyees of /o0t12 Se.i*/o0t12
A-tono.o-s2 Se.i A-tono.o-s2 Lo&al 3 other (odies
who are .aintaining their Salary A4Cs at NBP1
Re'ay.ent Direct deduction Irom Salary A/C
5a6i.-. Loan
A.o-nt
Rs. 490,000/-
Se&-rity Employer will provide undertaking that borrower`s Salary
and end oI service beneIits will route through his/her
Salary A/C maintained at NBP during the tenure oI the loan
and his/her end oI service beneIits are at least equal to the
amount oI Advance Salary required.
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Hypothecation oI Consumer durables owned by the
borrower.
Three (3) Undated Cheques
5a61 Re'ay.ent
Period
5 years (60 months)
Ad0an&e in ter.s of 7
of net take ho.e
salaries
Up to 20 net take home salaries
5ark-' Rate 15
(Based on diminishing balance method)
Pro&essing Fee 1 oI Loan Amount
8erifi&ation Charges Rs 500/-
Life $ns-ran&e No Insurance oI any kind.
%o&-.entation
Charges
at actual
Conta&t Your Salary disbursing NBP Branch.
Re.aining Ser0i&e
Age
At the time oI approval and disbursement the applicant`s
remaining service age should be 6 months aIter maturity oI
the loan
%e(t B-rden 50
5ini.-. net take
ho.e salary
no minimum take home requirement
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C) NBP CASH & GOLD
With NBP`s Cash & Gold, the customers meet their need Ior ready cash against their idle gold
jewelry. The rate oI mark up is 13 p.a. This product has Iollowing Ieatures
17
Facility oI Rs. 7,000 against each 10 grams oI net contents oI gold
No maximum limits oI cash
Repayment aIter one year
Only gold ornaments acceptable
Weight and quality oI gold to be determined by NBP's appointed schroIIs
No penalty Ior early repayment
D) STUDENTS LOAN SCHEME
Pursuant to the announcement made by the Federal Finance Minister in his 2001-2002 budget
speech, a Student Loan Scheme (SLS) Ior Education was launched by the Government oI
Pakistan in collaboration with major commercial banks oI Pakistan (NBP, HBL, UBL, MCB and
ABL). Under the Scheme, Iinancial assistance is provided by way oI Interest Free Loans to the
meritorious students who have Iinancial constraints Ior pursuing their studies in ScientiIic,
Technical and ProIessional education within Pakistan. The Scheme is being administered by a
high powered committee comprising Deputy Governor, State Bank oI Pakistan, Presidents oI the
commercial banks and representative oI Ministry oI Finance, Government oI Pakistan.
18
E) NBP KAROBAR- PRESIDENT`S ROZGAR SCHEME
The solution oI Pakistan`s major socio-economic problems primarily lies in the development and
growth oI small & micro businesses. These will not only provide employment opportunities to
ever-growing population demand but will also become the catalyst Ior breaking the vicious circle
oI poverty. In this regard, NBP has developed a Iull range oI Products under the President`s
Rozgar Scheme with a brand name oI 'NBP KAROBAR. The scheme will be oIIered to eligible
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young and literate citizens oI Pakistan, Ialling within an age group oI 18-40 years having a
minimum qualiIication oI Matriculation (except Ior Iemales in the PCO/Tele-center product).
The eligible borrowers will be required to make a down payment oI 15. Asset and LiIe &
Disability insurances will be mandatory under this scheme. The 15 down payment will include
1st year`s asset insurance premium. However, the cost oI liIe and disability insurance will be
borne by GOP. The mark-up rate Ior the 1st year will be 12 and Ior the subsequent years it will
be 1 year KIBOR 2. FiIty percent (50) oI this rate will be paid by the customer i.e. 6 and
the balance oI 6 will be borne by GOP. Additionally, Iirst 10 oI the losses under the scheme
will be taken-up by GOP. Initially, under the President`s Rozgar scheme, NBP will oIIer
Iollowing products:
a) NBP Karobar Utility Store (under a Franchise with Utility Stores Corporation)
b) NBP Karobar Mobile General Store (without USC Franchise)
c) NBP Karobar Transport
d) NBP Karobar PCO
e) NBP Karobar Tele-center
A) NBP KAROBAR UTILITY STORE
The product has been designed in collaboration with 'UTILITY STORES CORPORATION OF
PAKISTAN (USC) to provide Iinancing Iacility oI an average amount oI Rs.100, 000/- Ior a
maximum period oI Iive years with grace period oI three months. This is available to all eligible
citizens oI Pakistan Ior setting-up small-scale Retail Outlet or Mobile Utility Store. The USC
will give its Iranchise to qualiIying Pakistani citizens. Following two Iinancing options are
available under this product:
1. NBP KAROBAR Utility Store (Shop)
The Financing Iacility is available to set-up a small scale Retail Outlet (Utility Store in a shop)
Ior purchase oI Iurniture & Iixtures. This is also applicable on payment oI security deposit /
advance rent under Iranchise Irom the USC. However, stocks will be purchased by the customer.
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2. NBP KAROBAR Mobile Utility Store
Financing Iacility available to purchase a 2/3 wheeler, 4 stroke Petrol/CNG/LPG Vehicle (Auto
Scooter / Motorcycle Rickshaw) with attached Loader body (Thehla type) under Iranchise Irom
the USC to carry utility goods Ior retail sale ideally in areas where accessibility to conventional
utility stores is diIIicult.
B) NBP KAROBAR MOBILE GENERAL STORE (WITHOUT USC FRANCHISE )
This Iinancing program has been designed on the similar pattern oI Mobile Utility Store. The
only diIIerence is that the borrower will have the liberty oI procuring stock/supplies/grocery
items Irom open market. Under this product the average loan size oI Rs.100, 000/- will be given
Ior a maximum period oI Iive years with a grace period oI three months.
C) NBP KAROBAR TRANSPORT
The NBP Karobar Transport is designed to Iinance 2/3 wheeler, 4 stroke Petrol/CNG/LPG
Vehicle (Auto Scooter / Motorcycle Rickshaw) to the eligible citizens oI Pakistan Ior providing
less expensive environment Iriendly transport Iacility. Under this product average loan size oI
Rs.100, 000/- will be provided Ior a maximum period oI Iive years with a grace period oI three
months.
D) NBP KAROBAR PCO
This product is designed to Iinance setting-up a PCO. NBP will be providing Iinancing Ior the
purchase oI Mobile/Wireless Telephone Set with connection, Credit Balance. The average
amount oI Iinancing under this product will be Rs.5, 000/- Ior a maximum period oI two years
with a grace period oI three months.
E) NBP KAROBAR TELE-CENTER
This product is specially designed to Iinance setting-up a Tele-center. NBP will be providing
Iinancing Ior the purchase oI Mobile/Wireless Telephone Set with connection, Computer, Printer
and Fax machine cum Photocopier etc. to establish tele-center on a rented shop or owned
premises. The average amount oI Iinancing under this product will be Rs.50, 000/- Ior a
maximum period oI two years with a grace period oI three months.
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3. CORPORATE ADVANCES
A) CASH FINANCE
This is a very common Iorm oI borrowing by commercial and industrial concerns and is made
available either against pledge or hypothecation oI goods, produce or merchandise. In cash
Iinance, a borrower is allowed to borrow money Irom the banker up to a certain limit, either at
once or as and when required. The borrower preIers this Iorm oI lending due to the Iacility oI
paying markup/services charges only on the amount he actually utilizes. II the borrower does not
utilize the Iull limit, the banker has to lose return on the un-utilized amount. In order to oIIset
this loss, the banker may provide Ior a suitable clause in the cash Iinance agreement, according
to which the borrower has to pay markup/service charges on at least on selI or one quarter oI the
amount oI cash Iinance limit allowed to him even when he does not utilize that amount.
B) RUNNING FINANCE/ OVERDRAFT
This is the most common Iorm oI bank lending. When a borrower requires temporary
accommodation his banker allows withdrawals on his account in excess oI the balance which the
borrowing customer has in credit, and an overdraIt thus occurs. This accommodation is generally
allowed against collateral securities. When it is against collateral securities it is called 'Secured
OverdraIt and when the borrowing customer cannot oIIer any collateral security except his
personal security, the accommodation is called a 'Clean OverdraIt. The borrowing customer is
in an advantageous position in an overdraIt, because he has to pay service charges only on the
balance outstanding against him. The main diIIerence between a cash Iinance and overdraIt lies
in the Iact that cash Iinance is a bank Iinance used Ior long term by commercial and industrial
concern on regular basis, while an overdraIt is a temporary accommodation occasionally resorted
to.
C) DEMAND FINANCE
When a customer borrows Irom a banker a Iixed amount repayable either in periodic installments
or in lump sum at a Iixed Iuture time, it is called a 'loan. When bankers allow loans to their
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customers against collateral securities they are called 'secured loans and when no collateral
security is taken they are called 'clean loans.
The amount oI loan is placed at the borrower`s disposal in lump sum Ior the period agreed upon,
and the borrowing customer has to pay interest on the entire amount. Thus the borrower gets a
Iixed amount oI money Ior his use, while the banker Ieels satisIied in lending money in Iixed
amounts Ior deIinite short periods against a satisIactory security.
4. REMITTANCES
A) DEMAND DRAFTS
DraIts drawn by one branch on another branch or on the Head OIIice oI same bank or vice versa,
are not cheques or bills, as these have no distinct drawer and drawee. Section 85-A reads:
' Where any draIt, that is, an order to pay money, drawn by one oIIice oI bank upon another
oIIice oI the same bank Ior a sum oI money payable to order on demand, purports to be issued by
or on behalI oI the payee, the bank is discharged by payment in due course.
Banker`s draIts payable to order on demand are within the protection oI Sections 10 and 131-A
oI the Negotiable Instruments Act. However, iI a demand draIt drawn on a bank by its own
branch bears a Iorged endorsement, the person in possession oI it cannot compel that bank to pay
it. As Iar as possible the banker`s draIt should be crossed and it should never be drawn payable
to bearer.
When a person requires a draIt he should be asked to complete the prescribed application Iorm in
which he should state the amount oI the draIt, the name oI the payee, and the place oI payment.
This application Iorm should be signed by the purchaser or by those persons who have been duly
authorized to act on his behalI. When a customer requests his banker to provide him with a
banker`s draIt, the amount oI which is to be debited to his account, he should enclose with his
written request a cheque covering the amount oI the required draIt and other charges etc. payable
to banker.
19

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The National Bank oI Pakistan provides demand draIts at very reasonable rates with saIety,
speedy and reliable way to transIer money. Any person whether an account holder oI the bank or
not, can purchase a Demand DraIt Iorm a bank.
B) TRAVELERS CHEQUES
They are generally issued Ior the convenience oI person travelling abroad, but some Pakistani
banks issue them in Pakistan currency also Ior use within the country as well. BeIore issuing, the
bankers receive an amount equal to the Iace value oI the cheques, and also charge a small
commission. The travelers` cheques are Ior Iixed amount and are treated as Order cheques
payable only to the purchaser whose specimen signature appears on each traveler`s cheque itselI.
Foreign currency travelers cheques are issued and encashed in accordance with the provisions oI
the Exchange Control Regulation Act, 1947. While making payment, the paying banker must
insist that the holder signs in his presence.
20

The National Bank oI Pakistan provides their services Ior traveler`s cheque at very reasonable
and competitive rates. It has Iollowing Ieatures
Negotia(ility Pak R-'ees Tra0eler9s Che:-es are a negotia(le
instr-.ent

8alidity There is no restriction on the period oI validity
A0aila(ility At 700 branches oI NBP all over the country
En&ash.ent At all 400 branches oI NBP
Li.itation No limit on purchase
Safety NBP Traveler`s Cheques are the saIest way to carry our money
C) LETTER OF CREDIT
Letters oI credit are very useIul instruments in Iacilitating commercial relations between
businessmen at various places. Letter oI credit state the limit oI the credit and the time during
which it is held at the disposal oI the grantee, but they are neither negotiable nor transIerable.
Letter oI credit may be revocable. There are many kinds oI letter oI credit such as Revolving
credit, Back to Back credit, Claused credit etc.
21
NBP is committed to oIIering its business
customers the widest range oI options in the area oI money transIer. II you are a commercial
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enterprise then our Letter oI Credit service is just what you are looking Ior. With competitive
rates, security, and ease oI transaction, NBP Letters oI Credit are the best way to do your
business transactions.
D) FOREIGN REMITTANCES
To Iacilitate its customers in the area oI Home Remittances, National Bank oI Pakistan has taken
a number oI measures to:
Increase home remittances through the banking system.
Meet the SBP directives/instructions Ior timely and prompt delivery oI remittances to the
beneIiciaries.
The new Ieatures oI NBP Ioreign remittances include:
The existing system oI home remittances has been revised/signiIicantly improved and
well-trained Iield Iunctionaries are posted to provide eIIicient and reliable home
remittance services to nonresident Pakistanis at 15 overseas branches oI the Bank besides
United National Bank (the joint venture between NBP and UBL in UK)., and Bank Al-
Jazira, Saudi Arabia.
Zero TariIIs: NBP is providing home remittance services without any charges.
Strict monitoring oI the system is done to ensure the highest possible security.
Special courier services are hired Ior expeditious delivery oI home remittances to the
beneIiciaries.
E) SWIFT SYSTEM
The SWIFT system (Society Ior Worldwide Inter bank Financial Telecommunication) has been
introduced Ior speedy services in the area oI home remittances. The system has built-in Ieatures
oI computerized test keys, which eliminates the manual application oI tests that oIten cause delay
in the payment oI home remittances. The SWIFT Center is operational at National Bank oI
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Pakistan with a universal access number NBP-PKKA. All NBP overseas branches and overseas
correspondents (over 450) are drawing remittances through SWIFT. Using the NBP network oI
branches, we can saIely and speedily transIer money Ior our business and personal needs.
F) MAIL TRANSFER
A Mail TransIer is a Iorm oI remittance in which the amount remitted by a customer or a non-
customer is directly credited to the account oI the beneIiciary with another branch. Move your
money saIely and quickly using NBP Mail TransIer service. And NBP also oIIer the most
competitive rates in the market. They charges Rs 50/- exchange rate and RS 75/- postage charges
on issuing mail transIer. When the money is not required immediately, the remittances can also
be made by mail transIer (MT). Here the selling oIIice oI the bank sends instructions in writing
by mail to the paying bank Ior the payment oI a speciIied amount oI money. Debiting to the
buyer`s account at the selling oIIice and crediting to the recipient`s account at the paying bank
make the payment under this transIer. NBP taxes mail charges Irom the applicant where no
excise duty is charged. Postage charges on mail transIer are actual minimum Rs. 40/- iI sent by
registered post locally Rs.40/- iI sent by registered post inland on party`s request.
G) TELEGRAPHIC TRANSFER
Telegraphic TransIer is a Iorm oI remittance, which is advised by telegram, telex or Iax
machines. The Iundamental principles oI such transIer are otherwise identical with the Mail
TransIer. It is the message, which is sent Irom one branch to another on the order oI payer to
payee through wire. It is one oI the quickest means to transIer Iund through the use oI
telex/Iax/internet or cable. Payment to the beneIiciary is aIIected directly by the drawee oIIice
upon identiIication or through credit into beneIiciary`s bank account. As such remitting oIIice is
not required to issue any instrument payment to the remitter Ior delivery to the beneIiciary.
H) PAY ORDER
NBP provides another reason to transIer your money using our Iacilities. NBP pay orders are a
secure and easy way to move your money Irom one place to another. And, as usual, NBP
charges Ior this service are extremely competitive. The charges oI NBP are very low all over the
Pakistan. It charges Rs 50/- Ior NBP account holders on issuing one payment order, and charges
Rs 100/- Ior NBP non-account holders on issuing one payment order. It charges Rs 25/- Ior
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students on payment oI Iees oI educational institutions. II some one want a duplicate oI payment
order they charges Rs 100/- Ior NBP account holders and Rs 150/- Ior non account holders.
5. MISCELLANEOUS
A) LOCKERS
National oI Pakistan also provides lockers Iacility in the country. The lockers issued only to the
depositors. No lockers are issued to any unknown person. The dual control system is used Ior
lockers. The oIIicer has master key to apply on the locker but he cannot open the locker oI any
person. The locker holder provides the bank has specimen signature. Whenever the locker
holders come to open the locker, his signatures are veriIied by the oIIicer and then will be able to
open his locker. II the key oI the locker is lost company providing these lockers breaks the locker
and new lock is Iitted in its locker and lock is destroyed in the presence oI the locker holder and
bank charges RS 1200 Ior that. In case the locker holder dies, the court opens his locker in the
presence oI his heir as mentioned in his will or and his belongings are given to them and the
locker is closed.
B) NBP CASH CARD
NBP Cash Card is a 24-hour direct access ATM/Debit card to your bank account, which lets you
pay directly Irom your account as an alternative payment method to cash. The transaction is
authorized and processed by entering PIN. The NBP Cash Card holders are able to transact at
any oI the 4000 Merchants where Orix logo is displayed and can withdraw cash Irom NBP, 1-
Link & M-NET ATM`s across the country. The Iollowings are the main Ieatures oI this product:
You won't need to carry a lot oI cash with you every time you go out.
Secure and SaIe transaction.
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Account InIormation on tips (like: Mini Statement, Balance Inquiry, Utility Bill Payment
etc.)
Enable To Withdraw Cash From 1-Link ATMs / MNET ATMs.
Enable to Make Purchases Irom Around 4000 POS (Merchants) Countrywide including
2500 POS in Karachi.
No Card Issuance Fee Ior Iirst 12 Months
C) INTERNATIONAL BANKING
National Bank oI Pakistan is at the IoreIront oI international banking in Pakistan which is proven
by the Iact that NBP has its branches in all oI the major Iinancial capitals oI the world.
Additionally, the Bank has recently set up the Financial Institution Wing, which is placed under
the Risk Management Group. The role oI the Financial Institution Wing is:-
To eIIectively manage NBP's exposure to Ioreign and domestic correspondence
Manage the monetary aspect oI NBP's relationship with the correspondents to support
trade, treasury and other key business areas, thereby contributing to the bank's
proIitability
Generation oI incremental trade-Iinance business and revenues
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ORGANIZATIONAL STRUCTURE OF NATIONAL BANK OF
PAKISTAN
A well-developed and properly coordinate structure is an important requirement Ior the success
oI any organization. It provides the basic Iramework within which Iunctions and procedures are
perIormed. Any organization needs a structure, which provides a Iramework Ior successIul
operations. The operation oI an organization involves a number oI activities, which are related to
decision making, and communication oI these decisions. These activities must be well
coordinated so that the goals oI the organization are achieved successIully.
The Organization Structure (Annexed I) shows the internal operations and reporting lines oI the
National Bank oI Pakistan. The bank has clearly deIined organizational structure, which supports
clear lines oI communications and reporting relationships. There exists a properly deIined
Iinancial and administrative power oI various committees and key management personnel, which
supports delegations oI authority and accountability.
The internal operations oI the Bank are organized into 15 main departments and divisions
headed by senior management oI the bank and are report directly to the Board oI Directors. The
organizational structure oI National Bank oI Pakistan is centralized because all the decisions oI
the bank are taken by the top Management. The National Bank oI Pakistan`s Departmental key
roles and Iunctions are as Iollows:
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BOARD OF DIRECTORS
Pursuant to Section 11 oI The Banks` (Nationalization) Act, 1974, the number oI Directors oI
the Bank shall not be less than 5 and not more than 7, excluding the President. The Federal
Government may, iI deems necessary, appoint a Chairman oI the Board in respect oI the Bank.
At present National Bank oI Pakistan`s Board oI Directors consist oI 6 Directors and a President
who is the ChieI Executive oI the Bank and presides over the meetings oI the Board. The
responsibilities oI Directors include the Iollowings:
22
1. The Board oI Directors shall assume its role independent oI the inIluence oI the
Management and should know its responsibilities and powers in clear terms. it should be
ensured that the Board oI Directors Iocus on policy making and general direction,
oversight and supervision oI the aIIairs and business oI the Bank and does not play any
role in the day-to-day operations, as that is the role oI the Management.
2. The Board shall approve and monitor the objectives, strategies and overall business plans
oI the institution and shall oversee that the aIIairs oI the institution are carried out
prudently within the Iramework oI existing laws & regulations and high business ethics.
3. All the members oI the Board should undertake and IulIill their duties & responsibilities
keeping in view their legal obligations under all the applicable laws and regulations.
4. The Board shall clearly deIine the authorities and key responsibilities oI both the
Directors and the Senior Management without delegating its policy-making powers to
the Management and shall ensure that the Management is in the hands oI qualiIied
personnel.
5. The Board shall approve and ensure implementation oI policies, including but not limited
to, in areas oI Risk Management, Credit, Treasury & Investment, Internal Control
System and Audit, IT Security, Human Resource, Expenditure, Accounting &
Disclosure, and any other operational area which the Board may deem appropriate Irom
time to time. The Board shall also be responsible to review and update policies
periodically and whenever circumstances justiIy.
6. As regards Internal Audit or Internal Control, a separate department shall be created
which shall be manned preIerably by proIessionals responsible to conduct audit oI the
Bank, Various Divisions, OIIices, and Units Branches etc. The Head oI this department
will report directly to the BOD or Board Committee on Internal Audit.
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7. The business conditions and markets are ever changing and so are their requirements.
The Board, thereIore, is required to ensure existence oI an eIIective Management
InIormation system` to remain Iully inIormed oI the activities, operating perIormance
and Iinancial condition oI the institution, the environment in which it operates, the
various risks it is exposed to and to evaluate perIormance oI the Management at regular
intervals.
8. The Board should meet Irequently (preIerably on monthly basis, but in any event, not
less than once every quarter) and the individual directors oI an institution should attend
at least halI oI the meetings held in a Iinancial year. The Board should ensure that it
receives suIIicient inIormation Irom Management on the agenda items well in advance oI
each meeting to enable it to eIIectively participate in and contribute to each meeting.
9. The Board should carry out its responsibilities in such a way that the external auditors
and supervisors can see and Iorm judgment on the quality oI Board`s work and its
contributions through proper and detailed minutes oI the deliberations held and decisions
taken during the Board meetings.
10. To share the load oI activities, the Board may Iorm specialized committees with well-
deIined objectives, authorities and tenure. These committees, preIerably comprising oI
Non- Executive` Board members, shall oversee areas like audit, risk management,
credit, recruitment, compensation etc. these committees oI the Board should neither
indulge in day-to-day aIIairs/operations oI the bank and enjoy any credit approval
authority Ior transaction/limits. These committees should apprise the Board oI their
activities and achievements on regular basis.
11. The Board should ensure that it receives management letter Irom the external auditors
without delay. It should also be ensured that appropriate action is taken in consultation
with the Audit Committee oI the Board to deal with control or other weaknesses
identiIied in the management letter. A copy oI that letter should be submitted to the State
Bank oI Pakistan so that it can monitor Iollow-up actions.
The Following table mentioned the names & designation oI Board oI Directors oI
National Bank oI Pakistan:
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Na.e %esignation
Syed Ali Raza Chairman & President
Mr. Sikandar Hayat Jamali Director
Mian Kausar Hameed Director
Mr. Ibrar A. Mumtaz Director
Mr. Tariq
Kirmani Director
Mr. Muhammad Arshad Chaudhry Director
Mr. Mohammad Ayub Khan Tarin Director
Mr. Ekhlaq
Ahmed
Secretary Board oI
Directors
SENIOR MANAGEMENT
The senior management oI National Bank oI Pakistan is consists oI Group chieIs, who report
directly to the Directors oI Bank. The whole Iunctions oI National Bank oI Pakistan are
perIormed under these Groups. The National Bank oI Pakistan has Iollowing groups and
divisions:
Corporate and investment Banking Group
Operations Group
Credit Management Group
Audit & Inspection Group
Compliance Group
HRM & Administration Group
Commercial & Retail Banking Group
Treasury Management Group
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Special Assets Management Group
Employees beneIit & Disbursements Group
Overseas & Coordination Group
Islamic Banking
Core Banking Application, PMO
Financial Control Division
InIormation Technology Group
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1. CORPORATE & INVESTMENT BANKING GROUP
The corporate & investment banking group is headed by Mr. Masood Karim Shaikh. This group
perIorms its Iunction through its Iollowing two units:
Corporate Banking
Investment Banking
The corporate and investment banking will continue to play a major role in loan syndications,
structured Iinancing and debt / capital raising transactions with the objective oI providing entire
range oI corporate and investment banking solutions to its valued clients under one umbrella.
The Corporate Banking Group achieved excellent results in 2007 with a number oI landmark
transactions in cement, energy, communication and Iertilizer sectors. In addition to the Iunded
income, our corporate and investment banking has substantially increased its Iee base income
this year by being the lead advisor in a number oI transactions in the corporate world oI Pakistan
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Na.e /ro-' Na.e 3 %esignation
Masood Karim Shaikh SEVP & Group ChieI, Corporate & Investment Banking Group
Shahid Anwar Khan SEVP & Group ChieI, Credit Management Group
Dr. AsiI A. Brohi SEVP & Group ChieI, Operations Group
Imam Bakhsh Baloch SEVP & Group ChieI, Audit & Inspection Group
Ziaullah Khan SEVP & Group ChieI, Compliance Group
Dr. Mirza Abrar Baig SEVP & Group ChieI, Human Resources Management & Administration Group
Amer Siddiqui SEVP & Group ChieI, Commercial & Retail Banking Group
Muhammad Nusrat
Vohra SEVP & Group ChieI, Treasury Management Group
Amim Akhtar EVP & PSO to the President
Ekhlaq Ahmed EVP & Secretary Board oI Directors
Tajammal Hussain Bokharee EVP/Divisional Head, Special Assets Management Group
Mrs. Khurshid Maqsood Ali EVP & Divisional Head Employee BeneIits, Disbursements & Trustee Division
Tahir Yaqoob EVP & Group ChieI, Overseas Coordination & Management Group
Anwar Ahmed Meenai EVP & Divisional Head, Islamic Banking
Naeem
Syed EVP & Head, Core Banking Application, PMO
Aamir
Sattar
Financial Controller & Divisional Head, Financial Control
Division
AtiI Hassan Khan Group ChieI (A), InIormation Technology Group
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The challenges to corporate business in year 2007 were maniIold including reduction in Private
Credit Investment as a result oI slowing down oI economy as well as rising interest rates. The
increasing pressure on the textile industry reduced the lending to this sector. In addition the
bank's corporate loans yields also Iaced pressure as substitute Iorm oI Iunding sources are
available in the market in Iorm oI Islamic Iinancing, mutual Iunds, issuance oI debt instruments
like TFCs and Bonds and the Capital markets.
Despite these threats and challenges at NBP, our corporate team not only increased the volume
as well as the yield oI the loans they also maintained a strong Iranchise with the leading
Pakistani corporate so as to ensure that NBP not only maintains its market share but is in a
position to meet any challenges in Iuture. NBP during the year also participated in a number oI
TFC issues and mutual Iunds subscriptions thereby increasing the overall yield on investment
portIolio.
NBP has the largest equity portIolio in the banking sector primarily due to 27 holding in NIT
units, the largest mutual Iund in Pakistan. During the year 2008 the bank redeemed 10 oI its
NIT holding covered under LoC, which resulted in capital gain oI Rs. 1.8 billion in 2008.
The National Bank oI Pakistan has initiated a structured approach to corporate banking by
introducing a single point oI contact through Relationship Managers. For this purpose, new
Relationship Managers as well as team leaders has been inducted to expedite this process. The
Area Managers oI National Bank oI Pakistan are appointed to manage relationships and to better
service the needs oI multinationals and large local corporate. An investment banking team has
also been Iormed by National Bank oI Pakistan to oIIer specialized services to major
relationships including advisory and debt syndications. The National Bank o Pakistan have
special Iocus on Corporate Banking with a presence in all major locations through out the
country, oIIering Iull range oI Banking products / services and one window interIace through
designated Relationship Managers. Corporate Banking oIIers tailor made products / solutions as
required by corporate customers which includes:
The key Ieatures oI corporate Banking includes:
Funded Iacilities, ranging Irom short to medium and long term lending
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Trade related Iinancing.
Foreign currency Iinancing.
All sorts oI non-Iunded Iacilities / services which include Cash receipts / payments,
Remittances, Collections, guarantees, letter oI credit etc.
Customized products / solutions
2. COMPLIANCE GROUP
The Compliance Group oI National Bank oI Pakistan is headed by Mr. Ziaullah Khan and is
report directly to the President/ ChieI executive oI NBP. In order to keep the working oI Audit
Department aligned with the best international practices 'Compliance Group` has been created.
This group is responsible Ior monitoring compliance oI various administrative / operative
instructions, rules, and regulations by constantly reviewing and reporting status oI compliance
and non-compliance. The Compliance Group oI NBP is set to ensure that all relevant laws are
complied with, in letter and spirit, and, thus, minimize legal and regulatory risks. The
Compliance oIIicers will primarily be responsible Ior Bank`s eIIective compliance relating to:
Relevant provisions oI existing laws and regulations.
Guidelines Ior KYC.
Anti money laundering laws and regulations.
Timely submission oI accurate data / returns to regulator and other agencies.
Monitor and report suspicious transactions to President / ChieI Executive OIIicer oI the
bank and other related agencies.
The Compliance OIIicers will serve as a contact point between President /ChieI executive
oIIicers and senior management, with regard to Iunctioning oI compliance program
provide assistance in this area to branches and other departments oI the bank, and act as
liaison with State Bank oI Pakistan concerning the issues related to compliance.
The Iunctions oI compliance group oI National Bank oI Pakistan are as Iallows:
Study and emphasize compliance oI best international practices in audit oI various
Iunctions oI NBP.
Monitor compliance oI Administrative/Operational Instructions, Rules, Regulations
issued Irom time to time by the Management.
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Review over the compliance carried out by the audit departments.
Prepare and put up a consolidated Report to the Directors oI National Bank oI Pakistan
regarding the status oI compliance and non-compliance oI the recommendations agreed
by the Departmental Management.
3. ISLAMIC BANKING GROUP
The divisional head oI Islamic Banking group is Mr. Anwar Ahmed Meenai. Islamic Banking is
one oI the emerging Iield in global Iinancial market, having tremendous potential and growing at
a very Iast pace all around the world. Al-Hamdulillah, the progress oI Islamic Banking in
Pakistan has also been commendable during the last Five years. The year 2007 marked the Iirst
year oI Islamic Banking operations. 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. NBP's plans Ior the year 2008 include opening oI Faisalabad and
Rawalpindi branches with the Iocus on growing organically by opening more standalone Islamic
Banking branches, utilizing NBP's existing branch network oI 1,200 plus conventional branches
and looking into strategic acquisitions Ior expansion in this Iield. The products & services being
oIIered by National Bank oI Pakistan`s Islamic Banking are Iully Shariah Compliant and have
been certiIied by NBP`s Shariah Advisor. Deposit Schemes being oIIered by NBP`s Islamic
Banking Branches include the Iollowing:
a) Current Deposit Scheme
b) ProIit & Loss Sharing (PLS) Deposit Scheme
Commercial and Corporate customers requiring Iinancing will have the Iollowing Iinancing
Iacilities available to them to meet their requirements:
a) Murabaha
b) Murabaha Facility
c) Ijarah (Leasing)
In addition to Shariah acceptable standard general banking services, Iollowing services are also
being oIIered at the Islamic Banking Branches:
Letter oI Credit Facility
Handling oI Remittances
Issuance oI Bank DraIts and Pay Orders.
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Collection oI Export Bills.
Collection oI Local Bills.
Government Collections
Utility Bills Collection
4. TREASURY MANAGEMENT GROUP
The group chieI oI Treasury management group oI National Bank oI Pakistan is Mr. Muhammad
Nusrat Vohra. The NBP treasury and capital market group has developed a reputation oI being
the market leader in coming up with customized solutions Ior a large and varied client base that
is spread virtually all across the country. The client base does not consist oI only blue chips ones
but encompasses public sector clients, retail sector, multinationals, local conglomerates as well
as individuals.
National bank treasury is currently regarded as a market leader in both Ioreign exchange and
rupee denominated products because oI its emphasis on service quality. The Treasury
management group oI National Bank oI Pakistan`s oIIer:
23
Narrowest bid / oIIer spread and quickest on line quotes
Customized solutions to minimize risk and optimize returns as per the needs and
circumstances oI the clients
Focus on building sustained and long term relationship with institutional, corporate and
retail clients.
Local presence across the nation as well as internationally.
Currently the National Bank oI Pakistan oIIer Iollowing Treasury Products:
24
A) PLAIN VANILLA FX PRODUCTS
NBP Treasury Management Group is a market price maker and trend setter in the plain vanilla
Foreign Exchange products. Its ability to oIIer tight prices, coupled with timely and accurate
research making it a bank oI choice Ior clients seeking to Iavorably position their currency risk
As a result, National bank has one oI the largest FX book in the country.
B) PAKISTAN INVESTMENT BONDS
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Pakistan Investment Bonds issued by Government oI Pakistan are a preIerred means Ior a
majority oI institutional investors to invest their surplus Iunds Ior a longer time horizon. This
way they are able to lock a higher yield Ior a relatively long term rather than take the risk oI re-
pricing aIter relatively shorter time periods. Furthermore, PIBs are highly secured and risk Iree
as they are guaranteed by the government oI Pakistan.
NBP is the leading Primary Dealer Ior PIBs primarily because oI its inventory size and the
appetite Ior such a long-term instrument given its deposit base. While most Ioreign / private
banks would have to go to the secondary market in order to satisIy a large order Irom an
institutional investor, NBP can execute such large orders through its own book. This means that
it can oIIer tight prices Ior large amounts even under volatile market conditions.
C) DERIVATIVES PRODUCTS
NBP treasury Management group has been at the IoreIront in developing the derivatives market
in Pakistan and has contributed both individually and Irom the FMA (Financial Market
Association) Iront as well. The Iirst ever Derivative transaction oI the Pakistani banking sector
was done by NBP. Some oI the more common derivative structures being oIIered include:
1) CURRENCY OPTIONS
An option gives the buyer the right but not the obligation to buy or sell an asset at a pre-speciIied
date and price. So the upside proIit potential is unlimited whereas the downside loss is protected
at a pre determined level. Various structures oI currency options are available including
Knock-ins / Knock outs
Participating Forwards
2) INTEREST RATE SWAPS AND FRAS
A client can convert a Iix rate loan into Iloating rate one or vice versa by using these derivative
instruments. This allows the clients to develop and implement their views about the evolving
interest rate scenario. For example, iI the borrower Ieels that the interest rate might go up in the
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Iuture, than he may choose to enter into a Pay Fixed Received Floating swap with its bank to
eIIectively hedge its Iloating rate loans.
3) CROSS CURRENCY SWAPS
This product allows a client to convert its rupee based loans into a dollar based loan. The client`s
exposure is shiIted Irom PKR KIBOR to USD LIBOR.
The Iunctions oI Treasury management group include:
The Management oI National Bank oI Pakistan`s holdings in and trading in government
and corporate bonds, currencies, Iinancial Iutures, options and derivatives, payment
systems and the associated Iinancial risk management.
The management oI cash Ilows, banking, money-market and capital-market transactions;
the eIIective control oI the risks associated with those activities; and the pursuit oI
optimum perIormance consistent with those risks.
Presentations oI inIormation on which treasury-management decisions are to be taken
reIlect the principles oI trustworthiness, honesty, truthIulness and objectivity.
Employing National Bank oI Pakistan`s treasury-management policies and practices
accurately reIlect the legal and regulatory regimes under which the Bank operates.
Review oI National Bank oI Pakistan`s treasury-management policies and practices on a
regular basis with a view to identiIying ways oI minimizing the risks oI losses through
improved checks and saIeguards and through clarity and segregation oI responsibilities
and dealing procedure.
5. CREDIT MANAGEMENT GROUP
The group chieI oI Credit Management Group is Mr. Shahid Anwar Khan. This group usually
deals with Bank`s allocations oI payments or cash application, internal Iund movements,
reconciliations and also maintaining positive working relationships with customer during the
debt collection or credit review and approval process, screening oI customers and only those who
is credit worthy are allowed to do business. The divisions oI this group are distributed according
to diIIerent areas which are:
1) NWFP Azad Kashmir Sind & Balochistan area wing
2) Karachi area wing
3) Special Credit Cell & Punjab area Wing
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The Iunctions oI this department include:
EnIorcing the State Policies, Iinancial regulations, and credit rules oI the bank
Framing credit policies and regulations; supervising the staII to execute orders
Putting Iorward the proposal oI credit management and development; guiding and
supervising the branch-banks to deal with credit business
Managing the authorized business; dealing with the legal aIIairs consulted and
coordinated
Establishing development rules on credit; dealing with the acceptance draIt; estimating
the loaning accounts
Responsible Ior reporting the credit statistic statement
Responsible Ior training client managers
Responsible Ior dealing with other work according to the directors oI the bank
Responsible Ior the credit-registered consulting system; regulating the Iive-graded loans
6. AUDIT & INSPECTION GROUP
The group chieI oI National Bank oI Pakistan`s Audit & inspection group is Mr. Imam Bakhsh
Baloch. It is one oI the core departments at NBP. Its mission is to strive Ior soundness & stability
oI the Iinancial system and saIeguard interest oI stakeholders through proactive inspection,
compatible with best international practices. This group plays a vital role in meeting NBP`s main
responsibility oI supervising the bank`s soundness oI the system and protection oI the interest oI
depositors, thereby ensuring public conIidence in the system. In order to assess the branches,
Audit & inspection group conducts regular audit & inspection oI branches. Bank's management
has established and is managing an adequate and eIIective system oI internal control which
encompasses the policies, procedures, processes and tasks as approved by the Board oI Directors
that Iacilitate eIIective and eIIicient operations. The management and the employees at all levels
within the Bank are required to perIorm as per these approved Internal Control System
components. The Internal Control System ensures quality oI external and internal reporting,
maintenance oI proper records and processes, compliance with applicable laws and regulations
and internal policies with respect to conduct oI business. The management ensures that an
eIIicient and eIIective Internal Control System is in place by identiIying control objectives,
reviewing existing procedures and policies and ensuing that control procedure and policies are
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amended Ior time to time wherever required. However, Internal Control System is designed to
manage rather than eliminate the risk oI Iailure to achieve objectives and provide reasonable but
not absolute assurance against material misstatement or loss.
25
The audit system oI National
Bank oI Pakistan consists oI Iollowing:
a) Internal Audit
b) External Audit
c) Statutory Audit
A) INTERNAL AUDIT
The Bank has an independent Internal Audit Group that conducts audit oI all Branches, Regions
and Groups at Head OIIice on an on-going basis to evaluate the eIIiciency and eIIectiveness oI
Internal Control System. In addition to that, Compliance Group is also in place with independent
Compliance OIIicer in 119 Branches and 29 Regional Compliance ChieIs with supporting staII
to take care oI compliance related issues to strengthen the control environment.
26

For the purpose oI inspection the National Bank oI Pakistan inspects its branches through
inspectors. Inspections are conducted on regular basis in the branches. The current chairmen oI
audit committee oI NBP are Azam Faruque, Ibrar. A. Mumtaz & Mian Kausar Hameed. The
State Bank oI Pakistan conducts the regular Iull scope examination oI banks pursuant to an
inspection schedule; however, Ilexibility exists in policy Ior Irequency oI inspections depending
upon the need to maintain saIety & soundness. The CAMELS (Capital, Asset Quality,
Management, Earnings, Liquidity, Sensitivity and System & Controls) rating is a criteria to
determine the Irequency oI inspection oI banks as weak institutions are given greater attention.
Special investigations (targeted inspections) are also conducted as and when circumstances so
warrant on the basis oI complaints or market reports about speciIic institution.
B) EXTERNAL AUDIT
The Board oI Directors on the recommendations oI Audit Committee has also recommended
name oI Messer`s Ford Rhodes Sidat Hyder, Chartered Accountants and YousaI Adil Saleem &
Co. as auditors oI National Bank oI Pakistan.
C) STATUTORY AUDIT
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The statutory audit oI National Bank oI Pakistan is conducted to meet the particular requirements
oI State Bank oI Pakistan. The scope and audit programs are set by the State Bank oI Pakistan.
The National Bank oI Pakistan has to pay a penalty oI Rs.20000 Ior each mistake in the Books
and procedures as prescribed by the law plus surcharge oI per day Irom the date oI mistake to the
date oI statutory audit.
The Iunctions oI Audit & inspection group oI National Bank oI Pakistan are as Iallows:
Examine and evaluate adequacy and eIIectiveness oI the internal control systems in the
Bank.
Review the applications and eIIectiveness oI risk management procedures and risk
assessment methodologies in Iinancial, operational and Corporate Governance aspects oI
the Bank`s activities.
Review Iinancial, automation technology and MIS.
Review and ensure accuracy and reliability oI accounting records and Iinancial reports.
PerIorm testing oI both transactions and Iunctioning oI speciIic internal control
procedures.
Evaluate and ensure that approved policies and procedures meet legal and regulatory
requirements.
Examine and evaluate eIIectiveness oI existing policies, procedures and give
recommendations Ior improvements.
IdentiIy opportunities Ior cost savings in Bank operations and make recommendations.
Examining those resources are acquired economically, used eIIiciently and saIeguarded
adequately.
Review various reports oI Bank`s subsidiaries, recommend improvements and provide
policy guideline
7. HUMAN RESOURCE MANAGEMENT & ADMINISTRATION GROUP
The group chieI oI Human resource management & administration group is Mr. Dr. Mirza Abrar
Baig. This Division is responsible Ior Iresh induction oI employees and other proIessionals
through a rigorous induction process in order to ensure presence oI quality proIessionals.
Following units and areas oI work are the part oI this division. This group is responsible to
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develop annual manpower plan Ior National Bank oI Pakistan, conduct job analysis, prepare job
descriptions, and conduct job evaluation process. The other Iunctions oI this group include
attracting, selecting and recruiting the right people Irom the market. The group Iirmly works on
adopting latest organizational theories & change management processes to bring in eIIiciency.
This group also perIorms Iollowing Iunctions:
Deals Irom placing job advertisements to timely recruitment oI competent personnel by
using modern selection techniques.
Systematically observes & measures employee`s/candidate`s perIormance Ior the purpose
oI recruitment, selection and promotions.
Facilitates in establishing successIul productive working relationships through eIIectively
orienting new employees to their respective departments/divisions and to their positions.
Encourages employees to seek promotion/transIers to Iill internal openings and meet
employees` personal objectives.
Foster a culture oI acknowledgement and appreciation amongst employees Ior
introducing innovative business practices, showing extra ordinary eIIorts Ior achievement
oI goals and enhancing Bank`s corporate image uses various methods oI recognition
ranging Irom simple 'Thank you letters to elaborate celebrations and monetary rewards.
Conducting motivation surveys and developing market based employee satisIaction &
retention strategies.
Conduction oI evaluation oI positions and grades to ascertain employees` position in the
grade structure.
This Group supervises all the staII colleges, at Karachi, Islamabad, Lahore and Peshawar.
8. INFORMATION TECHNOLOGY GROUP
The group chieI oI InIormation technology group is Mr. AtiI Hassan Khan. This group is Iormed
to implement latest technology to keep National Bank oI Pakistan online with the domestic and
international Iinancial industry, and other stakeholders in order to promote eIIiciency and
stability in the Iinancial market. The group`s objective is to provide appropriate technical
solutions to business requirements and develop state oI the art integrated system that will
Iacilitate internal and external stakeholders to acquire accurate inIormation in the most eIIective
manner. The National Bank oI Pakistan with its capabilities, methodologies and experience aims
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at technological advancement in bank, Iocusing on solutions that intend to reduce operating
costs, improves end user perIormance, and meet overall business goal.
The group provides services and solutions to improve and strengthen NBP`s technology portIolio
and identiIy Iuture requirements. Besides providing these useIul resources, IT group Iocuses on
saIeguarding the inIormation assets and relevant systems, critical to NBP, through its Security
plans and policies. The inIormation technology group has Iollowing divisions:
In-house Development
SoItware development
Web development
Central Server
System Admin UNIX
System Admin Windows
Customer Support
Database Management
Network Management
Production Support
Administration
Director Section
9. FINANCIAL CONTROL DIVISION
This division is headed by Mr. AtiI Hassan Khan, who is also Iinancial controller oI National
Bank oI Pakistan. The Iinancial control division is responsible to perIorm and manage Iollowing
Iunctions:
Maintenance oI books oI accounts and preparation oI Iinancial statements oI the Bank in
accordance with the IAS, as adopted by the Bank.
Coordination and Iacilitation Ior Business planning and budgeting Iunction in the Bank
and periodic reporting to the management and to the Board.
Preparation oI Annual Financial Statements Accounting Policies Ior the bank.
Quarterly proIit updates to the Board oI Directors.
Consolidation oI Departmental Budgets.
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Maintenance oI Federal & Provincial Government Account on the basis oI receipt and
payments.
Monthly Abstract, Daily Reserves and Weekly review reporting.
Short/Medium term investment and Swap deposits and maintenance oI Foreign Currency
accounts and revaluation oI Foreign Currency Assets & Liabilities.
Making oI payments to external suppliers and employees oI the Bank aIter independent
veriIication oI transaction documents on the basis oI bills/ invoices/claims approved by
the processing units.
Checking and veriIying the selected Iinancial transactions to ensure accuracy and
compliance to respective rules and regulations.
Assets capitalization, assets transIers and overall responsibility to manage and maintain
assets physical inventory, keeping track oI physical location oI assets.
To ensure the smooth and unhampered running oI the Fixed Assets Management
Iunction.
To record all the expenses regarding repair/ maintenance and rent taxes Ior NBP
buildings and equipments.
To deal with various administrative matters arising in the Finance Department.
To respond to various queries rose Irom various internal and external sources.
10. OVERSEAS COORDINATION & MANAGEMENT GROUP
The group chieI oI NBP`s overseas coordination & management group is Mr. Tahir Yaqoob.
This department is in charge oI the management and operation oI Ioreign exchange business
including marketing and operating oI the Iinancial products and trade Iinancing oI Ioreign
exchange in the light oI National Ioreign exchange management policy, and is the governing
department oI Ioreign exchange. The Iunctions oI this group are as Iollows:
Establishing marketing strategy, policy and management system oI Ioreign exchange.
Making annual operating and working plan.
Selecting and opening overseas account under supervision, and establishing and
harmonizing the business among agent banks.
Corresponding and dealing with Ioreign exchange business among branches.
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Showing business requirement oI costumers and development oI new products;
publicizing Ioreign exchange business; training managers oI customer-service Ior Ioreign
exchange business.
Managing and operating Ioreign Iund oI the whole bank.
Making deposit and loan rate oI each wholesale Ioreign exchange according to
management and market situation oI deposit and loan rate oI Ioreign exchange
Focusing on direct marketing oI VIP customers and overall plans to put all resources
together so as to provide one-stop service.
Examining and approving international business Iinancing(import & export bill purchase,
Ioreign exchange bill discount, acceptance, documentary credit, stand-by L/C,
international non-Iinancing guarantee and so on) .
Auditing Ioreign exchange business.
Management and operation oI researching credit, and consult and testimony business.
Managing turnover position oI exchange settlement and sales.
Declaring international balance, register Ioreign loans and manage Ioreign exchange
account.
Supervising wholesale Ioreign exchange deposit and payment to deIend money
laundering and bank swindle.
Managing and operating SWIFT system and Ioreign exchange system.
Organizing international business research and statistic; establishing and improving
Ioreign exchange Iiles; making accounting report Iorms and business report Iorms.
Regularly examining the executive results oI all system oI Ioreign exchange and renovate
all the problems.
Contacting and corresponding with National Ioreign trade department, customs, industry
governing department and Ioreign exchange department.
Examining and approving the branches launching Ioreign exchange business, applying
Ior new Ioreign business category to the People`s Bank oI China according to current
Ioreign exchange policy.
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The National Bank oI Pakistan is shiIting Iocusing on expanding its market share in trade
Iinance, home remittance and Ioreign investments. The Bank is setting high-speed satellite link
along with the extension oI S.W.IF.T service to large domestic and international branches.
11. COMMERCIAL & RETAIL BANKING GROUP
The group chieI oI National Bank oI Pakistan`s commercial & retail Banking group is Mr. Amer
Siddiqui. Retail banking includes retail lending and deposits, banking services, trust and estates,
private lending and deposits, banking service, trust and estates investment advice, merchant /
commercial / corporate cards and private labels and retail.
27
Commercial banking includes
project Iinance, real estate, export Iinance, trade Iinance, Iactoring, lending, guarantees, bills oI
exchange and deposits.
This group is responsible Ior serving the needs oI the retail and commercial market, Iocusing on
individual consumers and small and medium size enterprises. This group is responsible Ior
developing and managing brands which serve the investment needs oI the consumer market, and
Iocuses on deposit mobilization, provision oI value added services based on modern technology
and undertaking the centralized marketing and advertising Ior the Bank. This group is engaged in
the development and management oI retail credit schemes. The consumer market in Pakistan has
not only grows exponentially over the last decade or so, but the needs oI this segment have
become extremely diverse. In order to sustain competition, it is but imperative to continue
oIIering innovative consumer credit schemes.
The National Bank oI Pakistan plan to establish commercial centers across the country looking at
the business potential in the area, size oI the branch and its capabilities to deliver the desired
service in order to attract quality customers. The objective is to target the untapped sectors and
provide them proIessional quality service, through one window operations and Relationship
Managers stationed at those centers. We expect and hope to reduce the turn around time and
become more competitive and market oriented. Further this customer Iriendly and dedicated set
up at convenient locations would help in improving the image oI the Bank as well. These Centers
would work in conjunction with the existing setup oI Commercial Lending done throughout the
NBP branch network. The main purpose oI these centers is to generate ancillary business in
addition to Iunded and non-Iunded Iacilities, with quick turn around time in decisions Ior
customer satisIaction.
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12. SPECIAL ASSETS MANAGEMENT GROUP
The group chieI oI Special assets management group is Mr. Tajammal Hussain Bokharee. The
Special Asset Management Group (SAMG) is a group oI people with specialized skills in
managing the "stressed" assets oI National Bank oI Pakistan. The group was created with a view
to enable restructuring and recoveries through various initiatives like innovative work-outs,
merger & acquisition strategies, asset stripping, security enhancements and structured sell-
downs. The group has also been working with / advising various governmental and regulatory
bodies in evolving a Iramework Ior implementing international best practices like asset
reconstruction companies in the country.
With provision coverage oI 84 we believe that going Iorward our Special Assets Management
Group will make major contribution towards the Bank's proIitability through recoveries and
reversal oI provision charge as a result oI declassiIication / rescheduling. We have revamped our
special assets management business and have coordinated our eIIorts to expedite recoveries and
settlements.
13. EMPLOYEE BENEFITS, DISBURSEMENTS & TRUSTEE DIVISION
The divisional head oI this division is Mr. Mrs. Khurshid Maqsood Ali. The Iunction oI the
National Bank oI Pakistan`s Employee beneIits, disbursement & trustee division is to handle the
administration oI trust Iunds, provide estate planning support, and in some cases see to the
disposition oI the estate oI a deceased customer. One oI the Iactors that make the use oI this
department so attractive is that it tends to be somewhat conservative with their management
approach. This means that this department is likely to take time to evaluate all options when
involved in settling estates, establishing guardianships, or administering trusts that have been set
up Ior the survivors oI a major depositor. This methodical approach is oIten in line with the
motivation Ior establishing the asset in the Iirst place, which was to provide a source oI Iinancial
support Ior loved ones, even aIter a parent or signiIicant other has died.
Along with estate settlement, this department also provides a number oI other agency services,
such as Iunctioning as the trustee oI record Ior corporate bonds or administering a pension or
proIit sharing plan. As a means oI ensuring that the resources oI the bank saIely protect the
investments involved, the department makes it relatively easy Ior the client to deal with other
matters. Thus, the investor can Iocus more on Iamily or other business matters, and be less
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involved in the task oI protecting assets that are already established and set on a path oI
consistent growth.
EMPLOYEE BENEFITS OF NATIONAL BANK OF PAKISTAN
DEFINED BENEFIT PLANS
1. PENSION SCHEME
The bank operates deIined beneIit approved Iunded pension scheme Ior its eligible employees.
The bank`s costs are determined based on actuarial valuation carried out using Projected Unit
Credit Method. Net cumulative un-recognized actuarial gains/losses relating to previous
reporting period in excess oI the highest oI 10 oI present value oI deIined beneIit obligation or
10 oI the Iair value oI plan assets are recognized as income or expense over the estimated
working lives oI the employees. Where the Iair value oI plan assets exceeds the present value oI
deIined beneIit obligation together with unrecognized actuarial gains or losses and unrecognized
past service cost, the bank reduces the resulting asset to an amount equal to the total oI present
value oI any economic beneIit in the Iorm oI reduction in Iuture contributions to the plan and
unrecognized actuarial losses and past service costs.
2. POST RETIREMENT MEDICAL BENEFITS
The bank operates an un-Iunded deIined post retirement medical beneIits scheme Ior all oI its
employees. Provision is made in the Iinancial statements Ior the beneIit based on actuarial
valuation carried out using the Projected Unit Credit Method. Actuarial gains/losses are
accounted Ior in a manner similar to the pension scheme.
3. BENEVOLENT SCHEME
The bank also operates an un-Iunded deIined beneIit benevolent scheme Ior its eligible
employees. Provision is made in the Iinancial statements based on the actuarial valuation using
the Projected Unit Credit Method. Actuarial gains/losses are recognized in the period in which
they arise.
4. GRATUITY SCHEME
The bank also operates an un-Iunded deIined beneIit gratuity scheme Ior its eligible contractual
employees. Provision is made in the Iinancial statements based on the actuarial valuation using
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the Projected Unit Credit Method. Actuarial gains/losses are accounted Ior in a manner similar to
pension scheme.
OTHER EMPLOYEE BENEFITS
1. EMPLOYEES' COMPENSATED ABSENCES
The bank accounts Ior all accumulating compensated absences when employees render service
that increases their entitlement to Iuture compensated absences. The liability is determined based
on actuarial valuation carried out using the Projected Unit Credit Method.
TRUST ACTIVITIES OF NATIONAL BANK OF PAKISTAN
A) NATIONAL INVESTMENT TRUST (NIT)
Under a trust deed, the bank provides services, as a trustee to NIT and is perIorming Iunctions oI
sale/purchase oI NIT units, saIe custody and maintaining unit holder`s accounts.
B) LONG-TERM CREDIT FUND (LTCF)
Consequent upon the NDFC amalgamation, the bank manages on behalI oI the Government oI
Pakistan, LTCF established Irom the proceeds oI loans disbursed by various international
Iunding agencies Ior Iinancing private sector energy development projects. The National Bank oI
Pakistan is in process oI negotiating the charge oI Iee in consideration oI administrative services
to the LTCF.
C) QARZ-E-HASNA FUND
The work relating to Qarz-e-Hasna Scheme was attended by Pakistan Banking Council (PBC)
since inception. PBC was dissolved in January 1997. In order to Iill the void created by the
dissolution oI PBC and in order to continue the scheme, SBP decided to entrust all Iunds and
transIer all record relating to Qarz-e-Hasna scheme Ior education to the bank with the
instructions to perIorm all work relating to the Fund.
14. CORE BANKING APPLICATION
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The head oI core banking application is Mr. Naeem Syed. The core banking application is an
integrated application that supports real time, multi banking and multi channel strategies. The
single biggest achievement oI implementing the Core Banking Solution is that each customer is
truly the customer oI the Bank and not just the customer oI the Branch, where his/her account is
maintained. The customer can go to a branch anywhere in the country and perIorm a transaction.
This is possible as the entire Customer Database is centrally located at the central Data Centre
and can be accessed throughout the network oI branches. Business processes in all the branches
oI National Bank oI Pakistan update a common database in a central server located at data
centre, which gives a consolidated view oI bank`s operations.
Key features of the Core banking application of NBP
";< Banking
As a result oI implementing Core Banking, most oI the Iacilities being oIIered by bank are
available to Customers 24 hours a day, 7 days a week. The transactions are perIormed using
multiple channels such as ATMs, Internet Banking, Phone Banking and Mobile Banking.
Anywhere Banking
Customers can avail oI banking services across the branch and Channel network irrespective oI
location where their account is maintained.
$ntegration with strategi& se&tors
Core Banking integrates all strategic sectors oI Banking such as Trade Finance, Treasury, Asset-
Liability Management and Corporate Balance Sheet. As a result, the inIormation related to these
areas is centrally available Ior use or reIerence.
Strengthening 5$S2 %SS and E$S
Core banking application is more than just a transaction processing system. It provides updated
data Ior generating various reports Ior Management inIormation system (MIS), and will Iacilitate
Decision Support System (DSS) and Executive InIormation System (EIS). As data is located on
CDC, branches and administrative oIIices can concurrently avail updated data when required.
B-siness Pro&ess Re*engineering
Core Banking would enable implementation oI BPR initiatives oI a Bank and Iacilitate
centralized handling oI various processes. Branches would do less and less back oIIice work and
would be able to Iocus on marketing, customer relationship management and cross selling.
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15. OPERATIONS GROUP
The group chieI oI National Bank oI Pakistan`s Operation group is Mr. Dr. AsiI A. Brohi. This
group is being created to eIIiciently collect and utilize the Ieedback Irom the branches to support
product development and enhance the quality oI service. The National Bank oI Pakistan is
currently improving the service orientation at its branches, as these constitute the 'Iront line oI
the Bank in terms oI contact with its customers. The operations group is in the process oI
introducing E-Commerce initiatives based on customer Iriendly technologies. The group creates
products to utilize the beneIits oI E-Commerce Ior its customers.
We are committed and Iocused towards good quality customer service and in 2007 with the
motto oI 'Putting a smile on our Customer's Iace. We made concerted eIIorts and took a
number oI initiatives. Workshops and seminars were conducted to disseminate the very
important message oI 'Excellent Customer Service. We are transIorming our branches to give a
modern look and convenience. A number oI branches have been shiIted to prominent and
spacious locations. We also have established specialized customer Iacilitation centers to
exclusively cater to pension payments, utility and government collections. These are expected to
reduce counter traIIic at our branches and will increase our distribution channels Ior better and
convenient services. Business hours have been extended with establishment oI customer
Iacilitation oIIices at the regional levels to help on the spot resolution oI customer complaints.
PROVINCIAL & REGIONAL MANAGEMENT
There are Iour executives oI National Bank oI Pakistan to supervise the Bank`s maters oI every
province, as they are called Provincial ChieIs. These provincial chieIs are responsible Ior the
entire banking operations in their respective provinces. The provincial management includes:
The Provincial ChieI Punjab
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The Provincial ChieI Sind
The Provincial ChieI Baluchistan
The Provincial ChieI N.W.FP & Kashmir
These provinces are sub-divided into regions, the regions are controlled and manage by Regional
heads, which are responsible Ior the supervision in their circles and deal with the problems oI
their respective Regions. The regional management oI National Bank oI Pakistan is divided into
two areas which are:
Overseas
Countrywide
The overseas regions include Middle East, Far East, Europe & USA, and Central Asia. The
country has been divided into 29 regions by National Bank oI Pakistan to Iacilitate its Iunctions.
The detail about National Bank oI Pakistan`s regions is shown as Annexed-II at the end oI the
report. These regions are sub divided into Zones, the in charge oI a Zone is called Zonal ChieI.
BRANCH MANAGEMENT
The National Bank oI Pakistan, in order to Iacilitate its Iunctions on branch level appoints
Branch Managers & other staII according to branch`s activities and volume oI business. The
branch managers are responsible Ior all Iunctions and staII within the branch oIIice. The job oI
branch managers is to take charge oI the entire operation oI his branch, making sure that
everything runs smoothly. The other Iunctions involves scheduling oI employee work hours,
overseeing training, hiring and Iiring, assuring that proper procedures are Iollowed, and reporting
to upper management any problems or providing reports and updates as required by bank`s
protocol.
ORGANIZATIONAL (MANAGEMENT) LEVELS AT NBP
SuccessIul and proIitable banking management deepens upon two principal Iactors:
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a) The manner in which the Iunction oI banking, that is, the acquiring oI deposits, the
investing or converting such deposits into earning assets, and the servicing oI each
deposits, are perIormed.
b) The degree to which oIIicers and employees contribute their talents to the progress and
welIare oI the bank in discharging duties and responsibilities.
Management is a distinct process consisting oI activities oI planning, organizing, actuating and
controlling perIormed to determine and accomplish stated objectives with the use oI human
being and other resources.
28
The management has two types i.e..,
a) Centralized (Centralized Management tends to concentrate decision making at the top oI
the organization)
b) Decentralized (Decentralized disperses decision making and authority throughout and
Iurther down the organizational hierarchy)
National Bank oI Pakistan has a centralized type oI management because all the decisions are
taken by the top management. The National Bank oI Pakistan has Iour types oI management
levels which are as Iallows:
TOP MANAGERS
Top managers are responsible Ior making organization-wide decisions and establishing the plans
and goals that aIIect the entire organization. These individuals typically have titles such as
executive vice president, president, managing director, chieI operating oIIicer, chieI executive
oIIicer or chairman oI the board. The NBP have its top management in their head oIIice at
Karachi. They are responsible Ior making the plans and establishing goals the run their business
smoothly all over Pakistan & around the globe. Among seven member oI group ChieI Executive
is called the president. The bank has directors Ior superintendence and direction oI its business.
The Government appoints six directors as members and one president. These members are also
responsible Ior making the policy oI the bank.
MIDDLE MANAGERS
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Middle managers include all levels oI management between the Iirst line level and the top level
oI the organization. These managers manage the work oI Iirst line managers and may have titles
such as department head, project leader, plant manager or division manager.
.$
NBP divided his
management into various regions such as Rawalpindi region, Gujranwala region etc. In NBP,
regional management Ialls under this category. They are responsible Ior the planning,
organizing, leading and controlling oI the resources and staII oI the whole region.
FIRST LINE MANAGERS OR LOWER LEVEL MANAGEMENT
First level managers are the lowest level oI management and manage the work oI non-managerial
individuals who are involved with the production or creation oI the organizations products. The
branch managers oI NBP Iall under this category. These managers are responsible Ior planning,
organizing, leading and controlling the staII and all aIIairs oI the branch.
NON MANAGERIAL EMPLOYEES
Non managerial employees are not concerned with any decision making. They are normally
specialized in their work. The nature oI their job is repetitive & clerical as they do same work
again & again. The non managerial employees oI NBP consist oI OG-II, OG III and clerical
staII.
HIERARCHY OF NATIONAL BANK OF PAKISTAN
The Hierarchy (An arrangement oI objects, people, elements, values, grades, orders, classes etc.,
any system oI persons or things ranked one above another) oI National Bank oI Pakistan is
shown as Annexed III at the end oI this report. The hierarchy may include:
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Categorization oI a group oI people according to ability or status.
A body oI clergy organized into successive ranks or grades with each level subordinate to
the one above.
A series in which each element is graded or ranked
A body oI oIIicials disposed organically in ranks and orders each subordinate to the one
above it; a body oI ecclesiastical rulers.
An organization with Iew things, or one thing, at the top and with several things below
each other thing.
The President oI National Bank oI Pakistan is ranked Top at the hierarchy. The other six
directors oI National Bank oI Pakistan are ranked second in the hierarchy. The Provisional,
Regional & Zonal chieIs are ranked 3
rd,
4
th
& 5
th
respectively. The vice President & assistant vice
Presidents oI National Bank oI Pakistan are ranked 6
th
& 7
th
respectively. The OIIicers Grade I, II
& III are ranked 8
th
at the hierarchy oI National Bank oI Pakistan. The lower level oI National
Bank oI Pakistan is consist oI Clerical & non- clerical staII.
ORGANIZATION STRUCTURE OF THE BRANCH
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A well-developed and properly coordinate structure is an important requirement Ior the success
oI any organization. It provides the basic Iramework within which Iunctions and procedures are
perIormed. Any organization needs a structure, which provides a Iramework Ior successIul
operations. The operation oI an organization involves a number oI activities, which are related to
decision making, and communication oI these decisions. These activities must be well
coordinated so that the goals oI the organization are achieved successIully.
The organization chart & Organogram oI National Bank oI Pakistan Rawat Branch is shown on
Annexed IV & Annexed V at the end oI this report. This chart deIines the line oI authority in the
branch and its departments. It is a sort oI visual presentation oI the organizational structure. It
speciIies the duties and responsibilities oI the personnel or staII oI the branch. The purpose oI an
organizational structure is to help in creating an environment Ior human perIormance. Although
the structure must deIine the task to be done, the rules so established must also be designed in the
light oI abilities and motivation oI the human recourse available. By analyzing the organization
structure oI the branch Iollowing elements can be Iound in the structure.
A) CENTRALIZED DECISION MAKING
The Branch Manager oI National Bank oI Pakistan is responsible Ior all the aIIairs oI the Bank.
All the decisions relating to Branch are made by him and the subordinates have to obey these
decisions. All the employees oI the Bank are report directly to the Branch Manager. The branch
has two operation Managers. Operation Manager I controls Clearing house & Remittance
Department and Operation Manager II controls Deposits, Advance & Branch accounts
department. Both oI them are report directly to the Manager regarding aIIairs oI their
departments. The ChieI Accountant controls Accounts department & is report directly to branch
Manager. The branch also has two cashiers responsible Ior cash & Pension disbursement
department reports directly to branch Manger. The BBO (Branch Back OIIice System) Operator
controls computer department oI the branch and is report directly to Operation Manager I and
Branch Manager.
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B) DOWNWARD COMMUNICATION
Communication is the process by which inIormation is exchanged and understood by two or
more people, usually with the interest to motivate or inIluence the behavior oI others in the
organization. Downward communication is the message and inIormation sent Irom top
management to subordinates in a downward direction. The same pattern is Iollowed at National
Bank oI Pakistan Rawat branch, the Manager oI the branch sent orders, inIormation & messages
to Iollowing subordinates
Operation Manager I
Operation Manager II
BBO ( Branch Back OIIice System) Operator
ChieI Accountant
Cashier I
Cashier II
Clerk I
Clerk II
Non Clerical StaII
C) CHAIN OF COMMAND
The chain oI command is an unbroken line oI authority that links all persons in an organization
and shows who reports to whom. By analyzing the organizational structure oI the National Bank
oI Pakistan Rawat branch it can be Iound that there is a scalar principle Iollowed with in the
branch because each and every employee oI the branch knows to whom they can report. The
authority and responsibility Ior diIIerent tasks and duties are diIIerent, as well as every one
knows the successive levels oI management all the way to the top.
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D) AUTHORITY AND RESPONSIBILITY
The chain oI command illustrates the authority structure oI National Bank oI Pakistan Rawat
Branch. Authority is the Iormal and legitimate right oI the manger to make decisions, issues
orders and allocates resources to achieve organizational desired outcomes. By analyzing the
chain oI command oI NBP, one can come to the conclusion that, as there is scalar pattern
Iollowed at the organizational setup oI NBP, thereIore it is implied that everyone in his position
knows that what is one`s authority and what is the responsibility and the authority it allocated.
E) DELEGATION
Delegation is the process, which managers use to transIer the authority and responsibility to
position below in the hierarchy. Most organizations today encourage managers to delegate
authority to the lowest possible level to provide maximum Ilexibility to meet customer needs and
adapts to the environment. At National Bank oI Pakistan Rawat branch Operation Managers have
some authority & responsibility relating to aIIairs oI the Branch.
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DEPARTMENTS OF THE BRANCH
Banking procedures are divided between various departments. DiIIerent departments do their
jobs in occurrence with the bank policies. In National Bank oI Pakistan each branch is divided
into various departments depending on their size and volume oI business. Head oI department
manages each department & oIIicials oI the branch Iollow procedures. The departments working
within National Bank oI Pakistan Rawat branch are as under:
1. Clearing House Department
2. Remittance Department
3. Computer Department
4. Deposits Department
5. Advances Department
6. Account Opening Department
7. Accounts Department
8. Cash Department
9. Pension Disbursement Department
1. CLEARING HOUSE DEPARTMENT
As part oI their daily business activity, banks receive cheques and other Iinancial instruments
Irom their customers drawn on other banks, to be collected and credited to their accounts.
Similarly, banks receive cheques/instruments Irom other banks, deposited by customers oI the
banks drawn on the customers oI the drawee banks. ThereIore, the banks act as Collecting Banks
when they send cheques/instruments Ior collection and as paying Banks, when they receive
cheques/instruments Ior collection Irom other banks. Since each bank receive and sends
cheques/instruments Ior collection to and Irom an number oI banks, the process oI settlement
would clearly be very cumbersome and time consuming iI every cheques/instrument had to be
sent by the collection bank to each oI the drawee banks or branch upon which diIIerent collection
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items are drawn and to individually pay the proceeds to each oI the bank sending
cheques/instrument in Ior collection. ThereIore, the banks have evolved what is called the
Bankers Clearing arrangement.
The Clearing System enables cheques to be paid or cleared centrally and settlement made Ior
receivables and payables between the banks. The SBP co-ordinates clearing activity through its
oIIices, called the Clearing Houses, set up in big cities and towns. Where SBP does not maintain
its own oIIice, some other bank, usually National Bank oI Pakistan (NBP) perIorms this
Iunction. But the clearing house Iacility is available only Ior cheques/instruments drawn on
banks situated within the same city/clearing house area.
WORKING OF THE CLEARING PROCESS
Under the clearing arrangements, the State Bank oI Pakistan (SBP) oIIers a Clearing House or a
centralized exchange Iacility, which works on the Iollowing general lines:
All the banks operating in a city who are members oI the Clearing House maintain an account
with the SBP`s Clearing House.
Every day representatives oI all the banks in every city meet the Clearing House, Iirst meeting in
the morning, at an appointed time, Ior the purpose oI depositing their own customers ,
cheques/instruments to be collected Irom other banks and receiving cheques/instrument drawn
on their account holders Irom the others banks.
At the Clearing House accounts oI all the banks are debited by the total amount oI
cheques/instruments drawn on their customer`s accounts and credited with the amount oI their
customer`s cheques/instruments drawn on other banks, as per the list oI cheques submitted by
each bank.
The cheques/instruments received, also called Inward Clearing, and are taking back by each bank
to its bank/branch. The amounts oI each cheques/instrument is debited or recovered Irom each
drawee customers` account and credited to the Clearing House account. Similarly, against the
amount credited by the Clearing House as Outward Clearing, the appropriate customers`
accounts are credited and clearing House account is debited.
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Any cheques/instruments received by a bank that cannot be paid, due to insuIIicient balance in
its customer`s account or Ior any other reason, are returned back to the Clearing House and a
credit is claimed and obtained there against.
RULES & REGULATIONS OF CLEARING HOUSE
Timing:(Monday to Saturday)
i. 1st Clearing at 10:00 a.m.
ii. 2nd Clearing at 2.30 p.m.
Each bank will send competent representative to exchange the cheques.
Each bank is required to insure that all cheques and other negotiable instruments are
properly stamped and suitably discharged
An objection memo must accompany each and every cheque when return unpaid duly
initialed.
Each bank is required to maintain suIIicient Iunds in the principal account with SBP to
meet the payment obligations.
The State Bank oI Pakistan debit the account oI each member oI the clearinghouse with
the proportionate working expenses incurred on the operation oI clearing house. These
expenses are very nominal.
OUTWARD CLEARING AT THE BRANCH
The Iollowing points are to be taken into consideration while an instrument is accepted at the
counter to be presented in outward clearing:
The name oI the branch appears on its Iace where it is drawn o.
It should not stale or post dated or without date.
Amount in words and Iigures does not diIIer.
Signature oI the drawer appears on the Iace oI the instrument.
Instrument is not mutilated.
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There should be no material alteration, iI so, it should be properly authenticated.
II order instrument suitably indorsed and the last endorsee`s account being credited.
Endorsement is in accordance with the crossing iI any.
The amount oI the instrument is same as mentioned on the paying-in-slip and
counterIoil.
The title oI the account on the paying-in-slip is that oI payee or endorsee (with the
exception oI bearer cheque).
II an instrument received other than National Bank oI Pakistan then special crossing
stamp is aIIixed across the Iace oI the instrument. Clearing stamp is aIIixed on the
Iace oI the instruments, paying-in-slip and counterIoil (The stamp is aIIixed in such a
manner that halI appears on counterIoil and paying-in-slip). The instrument is
suitably discharged, where a bearer cheque does not require any discharge and also an
instrument in Iavor a bank not need be discharged.
The instrument along with pay-in-slip is retained while the counterIoil is given to the customer
duly signed. Then the Iollowing steps are to be taken:
1. The particulars oI the instrument and the pay-in-slip or credit voucher are entered in the
outward clearing register.
2. Serial no is given to each voucher.
3. The register is balanced; the credit vouchers are balanced Irom the instruments and are
released to the respective departments against acknowledgement in the register.
4. The instruments are arranged bank wise.
5. The schedules are prepared in triplicate, two copies which are attached with the relevant
instrument and the third is kept as oIIice copy.
6. The house page is prepared Irom schedules in triplicate.
7. The schedules and house pages are signed by the house in charge with branch stamp.
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8. The grand total oI the house page is taken and agreed with that oI the outward clearing
register.
9. The instrument along with duplicate schedule and house page are sent to the main oIIice.
10. The entry oI the instrument returned unpaid is made in Cheques returned Register. II the
instrument is not to be presented again in clearing then a covering memo is prepared. The
covering memo along with returned instrument and objection memo is sent to the
customer who sent the same to his account.
INWARD CLEARING OF THE BRANCH
1. The particulars oI the instruments are compared with the list.
2. The instruments are detached and sort out department wise.
3. The entry is made in the inward clearing register (serial no. Instrument no. Account No)
4. The instruments are sent top the respective departments
5. The instruments are scrutinized in each respect beIore honoring the same.
SPECIAL CLEARING
In addition to the normal clearing Iunction at Clearing house it is mutually agreed to hold an
extra clearing at the clearing house on the particular day and time which is known as 'special
clearing it is arranged due to the rush oI work arising out oI say, more Holidays declared by the
Central Govt. at a time, but normally special clearing is held on last working day oI halI yearly
and yearly closing i.e. 30th June and 31st Dec. every year.
2. REMITTANCE DEPARTMENT
The Remittance department deals with the transIer oI money Irom one place to another. Funds
transIer Iacility or remittance oI Iunds is on oI the key Iunctions oI the banks all over the world.
Remittances through banking channels save time, costs less and eliminate the risks involved in
physical transportation oI money Irom one place to another. National Bank oI Pakistan transIers
money in the Iollowing ways.
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Pay Order
Demand DraIt
Mail TransIer
Telegraphic TransIer
Pay Slip
Call Deposit Receipt
Letter oI Credit
Traveler`s Cheque
The Job responsibilities & requirements oI remittance department include:
Responsible Ior money transIers, issuance oI pay-orders & draIts, collection items,
maintenance oI cheque books & ATM cards and all other counter speciIic products and
services
Ensure highest level oI customer service in a proIessional and competent manner
Must ensure that the activities are carried out strictly in accordance with the laid down
procedures/processes, and SBP/Compliance guidelines
Responsible Ior Cash, Clearing, Inland remittances including Demand DraIts and Pay
Orders
Ensure high standards oI customer services within the assigned turn around time
Ensure compliance with SBP's regulations and internal controls
handling cash, clearing, local remittances, and other related activities at branch level
PARTIES INVOLVED IN REMITTANCES
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There are Iour parties involved in Remittance, which are
Remitter
Remittee
Issuing Bank
paying Bank
REMITTER
One who initiates, or requests Ior a remittance. The remitter comes to the issuing or originating
branch, asks Ior a remittance to be made, and deposits the money to be remitted. The bank
charges him a commission Ior this service. He may or may not be the branch`s customer.
REMITTEE
A Remittee is also called the beneIiciary, or the payee. The person in whose name the remittance
is made. A Remittee is also the one who receive the payment.
ISSUING BANK
The bank that sends or aIIects the remittance through demand draIts, telegraphic transIers, Mail
TransIers, Pay order etc
PAYING BANK
Paying Bank also knows as the drawee branch, the branch on which the instrument is drawn. It
has to make the payment (usually located in a diIIerent city or country).
KINDS OF REMITTANCES
TransIer within the branch
TransIer Irom one branch to another
TransIer Irom one bank to another bank in the same city
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TransIers Irom one bank to another bank in two cities.
3. ACCOUNT OPENING DEPARTMENT
The opening oI an account is the establishment oI banker-customer relationship. This department
perIorms the duty oI opening accounts Ior customers. It also issues checkbooks to customers. A
person who wishes to open an account with the bank has to Iill an account opening Iorm
obtained Irom any branch oI National Bank oI Pakistan. The bank oIIicer tactIully obtains
inIormation about character, integrity, responsibility, occupation and the nature oI business oI
the perspective customer. Any individual, who has attained the age oI majority and is oI sound
mind can open and maintain his/her account. Two or more individuals may open an account
jointly. Similarly, business organizations such as sole proprietary concerns, partnership Iirms,
and limited liability companies as well as non-proIit organizations like clubs, trusts, societies,
associations and NGO`s etc, may open their accounts. The documents required Ior National
Bank oI Pakistan`s Account opening are showed as Annexed VII at the end oI this report.
The Iollowing requirements are necessary Ior opening an account.
IdentiIication oI the new customer.
Ascertaining the genuineness oI the stated occupation business oI the customer.
Determining the correct residential and permanent address.
Completion oI all relevant columns oI the Account opening Iorm.
Proper completion oI documentation.
FUNCTIONS OF ACCOUNT OPENING DEPARTMENT
Providing account opening Iorm according to the customer's requirements,
Guide the customer about the requirements oI the account opening and Iorm Iilling,
Check the Iorms whether they are correctly completed or not,
Preparing checklist,
Stamping on the Iorm,
Maintaining account opening register,
Pasting oI Iorms in register aIter release Irom general banking in charge,
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Issuance oI cheque books,
Issuance oI accounts maintenance certiIicate,
Closure oI account
VeriIication oI signature in case oI cheque presented beIore releasing oI account opening
Irom SS card is not yet scanned
4. CASH DEPARTMENT
All physical movement oI cash in the bank is made through the cash department. As bank is
borrowing and lending institution, thereIore cash is the top most priority oI Bank. Another aspect
is that cash department is Ior the security purpose, security in a sense that there should be no
embezzlement oI Iunds or in money leaded to bank by any party or person. The eIIiciency oI
bank is also related to this department the more eIIicient the bank is the stronger and busy is the
cash department. Cash department perIorm Iollowing Iunctions
Cash department owes its important to the Iact that it is a major point oI contract between the
bank and the customer, the bank`s most valued relationships. This department is the showcase oI
the bank and conveys the Iirst impressions about the bank`s commitment to proIessionalism in its
systems and procedures and to courteous and eIIicient customer service.
Normally cash department perIorms Iollowing Iunctions
Collection oI Iunds
Acceptance oI deposits
Collection oI utility bills
Payment oI checks
Remittances
Act according to any standing instructions
TransIer oI Iunds Irom one account to another
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VeriIication oI signatures
Posting
Handling oI Prize bond
The two main activities oI cash department are as Iallows:
DEPOSIT CASH IN CUSTOMER`S ACCOUNT
When the customer want to deposit amount in his account at opening oI account or aIter that then
he has to Iill a deposit slip that shows the amount and the account in which the cash will be
deposited. Then teller will receive amount and credit the customer`s account that shows increase
in customer`s bank account.
MAKE PAYMENTS FROM CUSTOMER`S ACCOUNT
When the customer draws a cheque on the bank to pay a certain amount then BBO Operator will
debit the customer`s account that shows reduction in his account balance.
CHEQUE ENCASHMENT PROCEDURE
RECEIVING OF CHEQUES
The cash is paid against the cheques oI the client. The Iollowing points are important1
Cheque is drawn on same branch
Cheque is not post dated.
Amount in words and Iigure are same.
It should be bearer cheques so the word bearer should not cross.
VERIFICATION OF SIGNATURE
AIter receiving the cheques the cheques the operation manager veriIy the signature oI the
account holder and the signature on the cheques. II the signature is not same it is returned back
otherwise Iorward to BBO Operator Ior posting.
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COMPUTER TERMINAL PROCESS
The cheque is received in computer terminal, where BBO operator checks the balance oI the
account holder. The BBO operator also sees the stop payment instructions, whether received
Irom account holder or not. AIter considering these points BBO Operator post the cheque in
BBO (Branch back oIIice system) and Iorward to operation manager.
PAYMENT OF CASH
AIter posting the cheque the operation manager cancelled the cheque and returned back to
cashier. The cashier enters the cheque in cash paid registered and pays against the second
signature oI receiver on the back oI the cheque.
5. DEPOSITS DEPARTMENT
The primary Iunction oI National Bank oI Pakistan is to accept and receive surplus money Irom
the people, which they willingly deposit with the Bank. Like all other Banks, National Bank oI
Pakistan also take incitation to attract as much depositor`s as it can. The deposit department
accepts/collects deposit Irom accountholders.
The National Bank oI Pakistan oIIer diIIerent deposit schemes to its customers, which includes
the Iollowing:
Current Deposits
PLS Saving Deposits
Fixed Deposit Account ( Time Deposits)
Foreign Currency Account
NBP Premium Aamdani
Foreign Currency Account
National Income Daily Account (NIDA)
6. ADVANCES DEPARTMENT
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The bank is proIit seeking institution. It attracts surplus balance Irom the customer at low rate oI
interest and makes advances at a higher rate oI interest to the individuals and business Iirms.
Credit extensions are the most important activity oI all the Iinancial institutions, because it is the
main source oI earnings. Advances department is one oI the most sensitive and important
department oI the bank. The major portion oI the proIit is usually earned through this
department. The job oI this department is to make proposals about the loans; the credit
management division oI head oIIice directly controls all the advances.
The advances Department receive application Irom intending borrowers. AIter receiving
application the advance department processes it Iurther. AIter analyzing and detailed
investigation, they decide whether to approve the loan or not. Some loan approvals are made by
the Manager oI the branch within his powers as prescribed by the bank`s higher authorities,
while some loan applications are submit to higher authorities Ior their approval. Some advances
are oI the Iollowing nature
Loan against Gold
Agriculture advance to Iarmers
Medium term advance Ior working capital
Long term advance Ior setting industry
Short term advance to businessman
The National Bank oI Pakistan oIIer Iollowing products (Advances) to its customers
NBP Saibaan
NBP Advance Salary
NBP Cash & Gold
Students Loan Scheme
NBP Karobar
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The Advances department deals in Iollowing transactions:
1. Preparation and submission oI proposals oI Running Iinance, Cash Iinance, Demand
Iinance, Export Iinance, StaII Iinance, Finance against imported merchandise etc Ior
sanction oI Iinance limit Irom the hire authority.
2. Preparation and posting oI vouchering oI all type oI Iinance.
3. Accruals & recovering oI Markup on Iinances on periodical basis.
4. Approval oI transIer oI Iunds through DD-TT, PO, MT, IBCO etc to various branches by
debiting the limits.
5. Preparation oI weekly, monthly, quarterly, and annually statement to the hire authority.
6. TransIer oI Iunds Irom one account to another account oI the party taking the authority
letter.
7. Preparation oI advances record.
8. Timely submission oI returns/reports, daily, weekly, monthly & quarterly.
9. Checking oI computer outputs oI the department on daily basis.
10. Balancing oI all Iinancing heads.
7. COMPUTER DEPARTMENT
This department is playing a very important role in making the banking procedures Iaster and
helping the bank Ior providing better services to its customers. The National Bank oI Pakistan
has three types oI branches in all over Pakistan, these included
2- Online branches
The branches, which are directly, link with central computer AS-400, through wide area
networking through Iiber optics. These branches have dumb terminal directly linked with central
computer.
B) BATCH BRANCHES
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The branches where all transactions are carried out with the computer base system but these
branches are not connected to the central computer with wide area net working. Batch branches
are using three type oI system, Branch Back OIIice (BBO) based on FoxPro, Branch Automated
System based (BAS) on UNIX, Branch Integrated System (BIS) based on FoxPro in Karachi
mostly branches are Iacing this problem. BAS was establish in the beginning while BBO is
currently implemented now eIIorts are under way to convert all branches into Electronic Banking
System (EBS) which is used by online branches as this system does not require a person to
remain sitting till the branch closed its daily operation but the system automatically close it selI
when the branch timing is over. The database in head oIIice is also based on this system.
C) MANUAL BRANCHES
The branches where all transactions are carried out manually and records are maintained on
registers usually stored in big wardrobes. Manual branches reports Regional head oIIice
regarding their daily transactions. In Regional head oIIice through On Line, terminal data goes to
head oIIice central computer; Except Ior branches those are On Line as they transIer there daily
data directly through there own terminal. As day-to-day, activities oI all branches are recorded in
a central computer.
EVENING DATA RECEIVING CENTER
Data Iorm batch branches reach the main branch in Iloppy diskettes while Iorm manual branches
it is in Iorm oI hard copy. Data comprises oI transactions in proIit loss account, current account,
advances etc termed as 'Daily Transaction Report. Clerk in charge register all diskettes and
manual in registers called 'job booking register one Ior each oI two type oI data. These Iloppies
and manual are bring in by riders. There are Iourteen riders in total who bring inIormation Iorm
all branches located in Karachi region.
DATA ENTRY DEPARTMENT
The next task aIter receiving the data is to enter that data in to a computer. The Iloppy disk is
directly inserted in the computer. The program in used is based on 'COBOL language. This
program is designed in away that it demand 'Hash Value value beIore opening the Iloppy Ior
Iurther action this value serve the purpose oI password or pin code send by the branch on
entering that value the data enter in to the computer. This computer is attached with the terminal
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oI central computer. The operator oI that terminal takes the data Irom the computer and
converted it in to a text Iile through that terminal the data Iinally goes to the central computer.
DEFECTS AND ERROR HANDLING
Errors oI diIIerent origin occur when the data goes to central computer. Sometime retrieving data
Irom the system (BAS, BBO, and BIS), other than used in HO (EBS) also caused errors. Other
errors include Unmatched (This error occurs when document no matched with the previous one
exists), no master (when opening oI new account is not mentioned), Date in Valid, duplicate
cheques (this error occur when the last objection is not removed). These and other such errors are
seen by the person in charge. In the end oI day print out oI the data enter in central computer is
taken. Any Incomplete inIormation Ior any branch and any inIormation require by that particular
branch is sent to that branch. More over material is used to make a WST which is sent to State
Bank oI Pakistan.
8. PENSION DISBURSEMENT DEPARTMENT
The National Bank oI Pakistan was Pakistan`s leading institution which perIorms the Iunction oI
pension payments or disbursements to pensioners. The pension disbursement department is
responsible Ior making pension payments to Government Pensioners. The person who wants to
receive his/her pension Irom National Bank oI Pakistan can open an account with any branch oI
National Bank oI Pakistan. The bank perIorms this Iunction through Demand DraIt Purchase or
simply called DD Purchase. This department perIorms Iollowing Iunctions:
Making Pension Payments
Opening oI Account oI Pensioner
Entry oI amount paid to pensioner in Government Pensioners Register
VeriIications oI Signatures oI Pensioners
Making Demand DraIt Purchase Register
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9. ACCOUNTS DEPARTMENT
Accounts Department oI the bank can be considered the most important department. This
department is basically concerned with processes and activities oI recovering, sorting,
summarizing and reporting data resulting Irom the whole day transactions oI all the departments.
Actually the process oI this activity starts Irom the preparation oI all the required vouchers by
diIIerent related departments. When these vouchers are prepared, these are posted into respective
computer terminals by the relevant departments. BeIore merging, a batch list is printed out by
Computer Department and duly checked by the respective departments. AIter this, merging stage
comes, aIter which a prooI list is printed out. This is the stage, where Accounts Department
starts perIorming its Iunction. ProoI list is checked by the Accounts Department. The account
department prepare Iollowing vouchers and reports
Monthly ProIit & Loss account- F48
General Ledger
General Ledger- Abstract
Check Book Issue Register
Western Union payments Register
Demand Notices
Miscellaneous Book
Bank TransIer scroll
Posting NBP Advance Salary
Daily Statement- F21
General Ledger- Head wise
Hash Value Register
End oI Day register
Posting National Income Daily Account (NIDA)
Monthly return register
Charges A/c register
P-L-S ProIit list
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Weekly Telegram
Mail TransIer Register
Government Scroll
Provident Iile
Government Scroll Debit & Credit
TransIer Responding Advice Dispatched Register-F15
Cash Remittance IN
Cash Remittance OUT
NBP General Account
Utilities register
Statement oI aIIairs
Closing entries
Daily activity checking
Minor expense recording
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STRUCTURE OF BRANCH`S ACCOUNTS DEPARTMENT
The structure oI National Bank oI Pakistan`s Accounts department is shown as Annexed VI at
the end oI this report. The Accounts department oI the branch is controlled by the ChieI
Accountant under direct supervision oI Branch Manager. The Branch has one cashier & two
clerks Ior assistance and help oI ChieI Accountant. The BBO (Branch Back OIIice system)
Operator has also assist ChieI Accountant in various tasks.
The head oI branch`s Accounts department is called ChieI Accountant, who perIorms his
Iunctions under direct supervision oI Branch Manager. The ChieI Accountant is responsible Ior
the central accounting records and controls over all Iinancial transactions oI the Branch. He also
directs a wide variety oI accounting activities and meets important deadlines & analyzes and
interprets accounting data oI the branch. The other responsibilities oI ChieI Accountant include:
Plans and directs the activities oI Cashier, BBO Operator and clerical employees oI the
branch engaged in the maintenance oI a variety oI accounting records.
Directs and participates in the development and revision oI procedures in order to meet
requirements oI law, provide services to Branch Manager, improve eIIiciency in branch
activities, and coordinate branch activities with those oI other departments.
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Directs and reviews the preparation oI periodic and special Iinancial statements, reports,
projections, and recommendations, on which important administrative decisions are
based.
Directs and reviews the study oI new and revised laws, rules, and programs aIIecting the
central accounting system and records and installs or recommends changes as
appropriate.
Designing and operating a system to capture, record, process, and store all relevant
documents and inIormation about the Iinancial activities oI the branch.
Ensuring the integrity and reliability oI the inIormation system, and preventing Iraud
Irom inside and outside the branch.
Preparing Iinancial statements that are reported to Regional Management oI National
Bank oI Pakistan.
Preparing Iinancial statements and accounting reports Ior distribution to the branch
Manager Ior their planning, control, and decision-making needs.
The ChieI Accountant with the help oI branch`s clerical staII is preparing Iollowing
reports:
o Monthly ProIit & Loss account- F48
o Daily Statement- F21
o General Ledger
o General Ledger Abstract
o General Ledger head wise
o Bank transIer Scroll
o Posting NBP Advance Salary
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o Misc Book
o Posting National Income Daily Account (NIDA)
o Monthly return Iile
o Charger List
o PLS ProIit list
o Weekly Telegram
o Government Scroll
o Government Scroll Dr & Cr
o TransIer Responding Advice Dispatched Register- F15
o Cash Remittance In
o Cash Remittance Out
o NBP General Account
o Clearing register
o Debit & Credit supplementary
Debit supplementary is used Ior debit voucher and credit supplementary is used Ior credit
voucher books and register maintained by bank are as Iallows
General ledger included:
Statement oI daily aIIairs
Cash book or cash cum day book
TransIer book
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Income & expenditure ledger
Income & expenditure includes:
1. Discount
2. Service charges
3. Commission Irom utility services
4. Salaries allowances & provident Iund
5. Rent taxes insurance lighting
6. ProIit paid on deposits and borrowings
7. Auditor`s Iee & legal charges
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BANK ACCOUNTING OPERATIONS
The National Bank oI Pakistan`s accounting consists in making computerized, written and
permanent records oI every transaction. For Computerized recording oI transactions the bank
used soItware called BBO (Branch Back OIIice). BBO enable Bank to record a variety oI
transactions. The most common part oI BBO which is operating by the BBO Operator is
Individual Ledgers. Individual Ledgers are the accounts in which accounts with depositors are
kept. They are kept so that the balance oI each depositor's account may at any time be readily
seen, and they should be Irequently balanced to veriIy their correctness. The three column Iorm
oI individual ledger is used because it has a column Ior checks paid or other debit entries, one Ior
deposits or other items credited, and a third Ior showing the balance aIter each entry or the day's
entries are made in the account. The BBO enlist Chart oI Accounts oI the Bank shown in
Annexed VIII. All the accounts shown in Annexed are opened and managed through BBO. All
the Remittances oI the bank are recorded managed and control through BBO. The 'End oI the
Day report is also generated through BBO.
The most important record keeping and report generated by Bank`s Accounts Department is
Statement oI the Bank. The statement oI the bank shows the general, or control, accounts oI the
bank, and the various books oI the bank show the detail oI these items. It would not be
impossible, but it would be entirely impractical, to enter every Iigure directly on the statement oI
condition. Instead oI total deposits, the balance oI each depositor would appear opposite his
name. On the other side, instead oI loans and discounts, there would be an itemized list oI the
loans with the names oI the borrowers. The Iirst principle in bank accounting, as in all other
bookkeeping, is that Ior every debit there must be a credit, and vice-versa. In accordance with
this Iundamental theory the books are maintained. With respect to the statement, every Rupee oI
liabilities is accounted Ior by another Rupee oI resources. Similarly each accounts at the end oI
the day Ior each item oI cash is balanced. Each bank employee has had the experience oI
remaining at his desk until a late hour at night checking up his day's work searching Ior a
diIIerence oI a Iew cents. OIten they become embittered at what seems to them a tyranny when
the small sum oI money involved is considered. The reason they must settle, however, is not on
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account oI the possible loss oI ten cents, but because the most important principle in bank
accounting is involved. "Accuracy Iirst" is a motto that should be Iramed, Iiguratively at least,
upon the wall oI every banking room.
The books used by National Bank oI Pakistan are oI various kinds and their purpose is indicated
by name. A ledger is a book used to keep a record oI balances. To "post" means to enter in the
proper columns either the debits or credits on the ledger, and the diIIerence between them
represents the balance either due by or to the bank. Another important book which is used by the
National Bank oI Pakistan is journal, a book in which daily transactions are listed in regular
order as to accounts, and the total debit or credit is then posted on the ledgers. All other books,
cards and sheets used by bank oI whatever nature is a part or subdivisions oI these books. OIten
they become known among the clerks by some other name descriptive oI their general
appearance. For instance, the general ledger scratcher in one bank is known as the "red book,"
while the collection scratcher is the "black book."
The records made by one clerk upon one set oI books go to check the records oI another clerk
upon a diIIerent set oI books. For instance, the paying teller and the receiving teller will each
keep a record oI checks cashed or deposited payable within the bank. The debit postings oI the
individual bookkeeper would agree with the teller's Iigures. SkillIul accounting lies in making
the Iullest possible use oI original entries, at the same time having a check on all Iigures to guard
against either error or Iraud.
Every transaction ultimately aIIects the bank's statement oI condition by debit or credit. For
example, a deposit oI Rs.1000 is made, consisting oI Rs.200 cash and checks as Iollows: Rs.200
on the bank itselI and Rs. 600 payable in another city. At the end oI the day (assuming this to be
the only deposit), on the liabilities side there is an increase oI Rs 800 all oI which appears in the
item "deposits" being the total Rs.1000, less the check Ior Rs 200 which is charged to the
account oI the drawer. On the resource side, then, a corresponding increase oI Rs.800 and this is
made up by an increase in the cash oI Rs 200 and an increase oI Rs.600 in the item "due Irom
banks." Or a transaction may appear on one side oI the statement only. The bank has sold Rs.5,
000.00 oI the bonds it owns.
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ROLE OF CFO (CHIEF FINANCIAL OFFICER)
The perIormance oI any organization is reIlected by the Iinancial statements, any ambiguity iI
remains there, makes the reIlection oI the perIormance doubtIul. ThereIore, the role oI CFO
becomes very important as he controls the reIlection oI perIormance, which is reported to
diIIerent authorities and the organization is assessed by them, and they must perIorm their job
with proIessional competency and integrity, so that the Iinancial statements give credible
inIormation to its users. The code oI corporate governance provides the guidelines and
opportunity to do this.
The ChieI Financial OIIicers oI National Bank oI Pakistan used to perIorm several tasks which
were preparing accounts, preparing budgets, operational reporting and interpreting, evaluating
operating results, preparing income tax returns, establishing internal control procedures to saIe-
guard the companies assets.
Due to increased governance requirement there arises a need to empower the chieI accountant
and to make him responsible by requiring him to sign the accounts. There comes the code oI
corporate governance, which makes the chieI accountant powerIul and more responsible. With
the new role, ChieI Accountant becomes ChieI Financial OIIicer (CFO). The appointment,
removal and remuneration terms and conditions oI employment oI the chieI Iinancial oIIicer oI a
listed company shell are determined by the ChieI Executive OIIicer with the approval oI the
Board oI Directors.
QUALIFICATION REQUIREMENT
The qualiIication requirement is deIined under the code oI corporate governance that is the
person appointed as the ChieI Financial OIIicer must be
Member oI recognized body oI proIessional accountants or
A graduate Irom a recognized university or equivalent, having at least 5 years experience
in handling Iinancial and corporate aIIairs oI a listed company.
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RESPONSIBILITIES OF CFO
The new responsibilities apply to all ChieI Financial OIIicers oI Listed Companies, Insurance
Companies, Banks and DFIs. Mostly the CFO presents the Iinancial position relating to the
period which has been over, and the period which has to come that is the Iinancial position
attained and the Iinancial projection i.e. where the organization will be.
RESPONSIBILITIES TOWARDS BOARD OF DIRECTORS
The ChieI Financial OIIicer is required to Iurnish necessary and classiIied inIormation to the
board oI directors along with his analysis and suggestions as the ChieI Financial OIIicer attends
the board meetings, any issue with Iinancial implications is being discussed, the person likely to
be most in command oI these implication is on the spot and immediately available Ior questions.
In order to strengthen and Iormalize corporate decision-making process, signiIicant issues are
required to be placed Ior the inIormation, consideration and decision oI the boards oI directors by
the CFO. These are:
Annual business planes, cash Ilow projection, Iorecasts and long term planes.
Budgets include capital, manpower and overhead budgets along with variance
analyses.
Quarterly operating results oI the company as a whole and in terms oI its operating
divisions or business segments.
Details oI joint ventures or collaboration agreements or agreements with distributors,
agents, etc.
DeIault in payment oI principal and/or interest, including penalties on late payments
and other dues, to a creditor, bank or Iinancial institution, or deIault in payment oI
public deposit.
Failure to recover material amounts oI loans, advances, and deposits made by the
company, including trade debts and inter-corporate Iinances.
SigniIicant public or product liability claims likely to be made against the company,
including any adverse judgment or order made on the conduct oI the company.
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RESPONSIBILITIES TOWARDS SHAREHOLDERS
The ChieI Financial OIIicer is required to provide all the necessary data to be presented in the
'Director`s Report. For this purpose ChieI Financial OIIicer must ensure the Iollowing.
The Iinancial statement, prepared by the management oI company, present Iairly its states
oI aIIairs, the results oI its operation, cash Ilows and changes in equities.
Proper books oI accounts oI the company have been maintained
Appropriate accounting policies have been consistently applied in preparation in Iinancial
statements and accounting estimates are based on reasonable and prudent judgment.
International accounting standards, as applicable in Pakistan, have been Iollowed in
preparation oI Iinancial statements and any departure there Irom has been adequately
disclosed.
The system oI internal control is sound in design and has been eIIectively implemented
and monitored.
There are no signiIicant doubts upon the companies` ability to continue as going concern.
There has been no material departure Irom the best practice oI corporate governance as
detailed in the listing regulations.
INTERNAL AND EXTERNAL REPORTING
ChieI Financial OIIicer now has extensive responsibilities Ior internal and external reporting. All
the inIormation required Ior decision-making by the Board oI Directors and ChieI Executive is
processed and Iurnished by the ChieI Financial OIIicer. Apart Irom this, external reporting
requirement is IulIilled by ChieI Financial OIIicer, the accounts and Iinancial statements are
signed by the ChieI Financial OIIicer beIore they are sent to concerned authorities.CCG requires
that the listed companies submit their quarterly accounts to the shareholders within one month oI
the close oI the Iirst and third quarter oI year oI account. The CCG does not prescribe the time
Ior submitting halI yearly accounts to the shareholders. Here we can reIer to section 245 oI
companies` ordinance 1984 Ior this purpose, which requires halI yearly accounts to be submitted
within two months oI the close oI Iirst halI. The CCG requires a limited review oI halI yearly
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accounts by external auditor. Annual audited accounts are now required to be submitted within
Iour months oI the close oI Iinancial year.
The Securities and Exchange Commission oI Pakistan is exercising strict vigilance to ensure
compliance oI 4
th
and 5
th
schedule oI the Companies Ordinance, 1984 and timely submission oI
accounts by companies. It has recently imposed penalties on Directors oI nine listed companies
who Iailed to prepare and circulate the quarterly accounts. Furthermore, Iines have been imposed
on chieI executives.
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USE OF ELECTRONIC DATA IN DECISION MAKING
The technological development in the Iield oI inIormation systems make it possible Ior
management to use electronic data in decision making. An understanding oI the eIIective and
responsible use and management oI inIormation systems and technologies is important Ior
managers, business proIessionals, and other knowledge workers in today`s internetworked
enterprises. InIormation systems play a vital role in the e-business and e-commerce operations,
enterprise collaboration and management, and strategic success oI businesses that must operate
in an internetworked global environment. Thus, the Iield oI inIormation systems has become a
major Iunctional area oI business administration. The management oI a business can use
inIormation systems in their decision making process. BeIore proceeds it`s important to discuss
precisely about decision making.
Decision making can be regarded as an outcome oI mental processes leading to the selection oI a
course oI action among several alternatives. Every decision making process produces a Iinal
choice.
30
The output can be an action or an opinion oI choice. A signiIicant part oI decision
making skills is in knowing and practicing good decision making techniques. One oI the most
practical decision making techniques can be summarized in Iollowing simple decision making
steps:
1. $dentify the '-r'ose of yo-r de&ision1 What is exactly the problem to be solved? Why it
should be solved?
2. /ather infor.ation1 What Iactors does the problem involve?
3. $dentify the 'rin&i'les to =-dge the alternati0es1 What standards and judgment criteria
should the solution meet?
4. Brainstor. and list different 'ossi(le &hoi&es1 Generate ideas Ior possible solutions.
See more on extending your options Ior your decisions on my brainstorming tips page.
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5. E0al-ate ea&h &hoi&e in ter.s of its &onse:-en&es1 Use your standards and judgment
criteria to determine the cons and pros oI each alternative.
6. %eter.ine the (est alternati0e1 This is much easier aIter you go through the above
preparation steps.
7. P-t the de&ision into a&tion1 TransIorm your decision into speciIic plan oI action steps.
Execute your plan.
8. E0al-ate the o-t&o.e of yo-r de&ision and a&tion ste's1 What lessons can be learnt?
This is an important step Ior Iurther development oI your decision making skills and
judgment.
The decision making oI Management oI National Bank oI Pakistan rely on inIormation system
resources which includes people and a variety oI hardware, soItware, data, and communications
network technologies as resources to collect, transIorm, and disseminate inIormation in Bank.
INFORMATION SYSTEM RESOURCES OF NBP
A) PEOPLE RESOURCES
People are required Ior the operation oI all inIormation systems. These people resources include
end users and InIormation system Specialists. The Management and employees oI National Bank
oI Pakistan are end users and Knowledge workers oI inIormation system. These are the
employees oI the Bank who spend most oI their time communicating and collaborating in teams
and workgroups and creating, using and distributing inIormation.
The InIormation systems Specialist are people who develop and operate inIormation systems.
They include System analysts, soItware developers, system operators, and other managerial,
technical, and clerical IS personnel oI National Bank oI Pakistan. The system analysts oI
National Bank oI Pakistan design inIormation systems oI the Bank based on the inIormation
requirements oI the end users. The soItware developers create computer programs based on the
speciIication oI system analysts oI National Bank oI Pakistan.
B) HARDWARE RESOURCES
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The Hardware resources oI National Bank oI Pakistan include all physical devices and materials
used in inIormation processing. SpeciIically, it includes not only machines, such as computers
and other equipments, but also all data media, that is, tangible objects on which data are
recorded, Irom sheets oI paper to magnetic or optical disks.
C) SOFTWARE RESOURCES
The soItware resources oI National Bank oI Pakistan include all sets oI inIormation processing
instructions. It also includes sets oI operating instructions called programs, which direct and
control computer hardware. The Iollowings are the examples oI National Bank oI Pakistan`s
soItware resources:
Syste. Software> The National Bank oI Pakistan uses Windows Operating Systems Ior
controls and supports the operations oI a computer system.
A''li&ation Software> These are the programs that direct processing Ior a particular use
oI computers by employees oI the Bank. Bank uses BBO system, MicrosoIt OIIice suit as
application soItware.
D) DATA RESOURCES
The data resources oI National Bank oI Pakistan are typically organized, stored, and accessed by
a variety oI data resource management technologies. The data about Branch transactions is
accumulated, processed, and stored in a BBO system that can be accessed by Manager Ior an
analysis and decision making.
E) NETWORK RESOURCES
The network resources oI National Bank oI Pakistan include:
Co..-ni&ation 5edia: The Bank`s communication media include cellular and
landline.
Network S-''ort: The Bank uses hardware, soItware, and data technologies which are
needed to support the operation and use oI a communication network. The Bank uses
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communication processers such as Modems and internetwork processors, and
communication control soItware such as network operating systems and Internet Browser
packages (Opera).
SOURCES OF FUNDS
Rupees in Millions
?ear 2004 2005 2006 2007 2008
Share Capital 5@$.5@1/# 5@$/+@$.) )@/$/@)1. +@155@<1$ +@$#$@)51
Reserves 1/@+1<@$15 1<@5<#@/51 1<@+)$@.#/ 15@)).@1.5 1$@$51@/5)
Borrowings 11@/+5@)$/ +@)5#@+5) 11@)/5@/)$ 1/@++#@/#< 5/@55+@$.#
Deposits
5#5@5)1@)1
)
5#<@5.#@#/
.
5/1@+).@.5
<
5$1@$/)@5<
5
#.5@$<$@/1
#
Other Liabilities .<@/#+@<15 .5@$)5@55/ .#@5$#@<// </@+#$@155 <$@#5#@+<1
Horizontal Analysis ()
Share Capital 1// 1./ 155 1## 1+.
Reserves 1// 1.5 1.+ 15# 1+5
Borrowings 1// )$ 1/# $+ <#5
Deposits 1// 1// 1/+ 1.) 1<5
Other Liabilities 1// 1/+ 115 1<5 1).
The National Bank oI Pakistan`s sources oI Iunds includes share capital, reserves, borrowings,
deposits and other liabilities etc. To analyze trend, Horizontal analysis oI each item is calculated.
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ANALYSIS
The Share capital reIers to the portion oI a Bank's equity that has been obtained by trading stock
to a shareholder Ior cash or an equivalent item oI capital value. The share capital oI National
Bank oI Pakistan shows an increasing trend in all years as compare to base year. The increase in
share capital during all years indicates share holder`s concern toward National Bank oI Pakistan
and eIIicient bank`s Management policies.

ANALYSIS
The Banks` reserves are banks' holdings oI deposits in accounts with their central bank plus
currency that is physically held in bank vaults (vault cash). The reserves oI National Bank oI
Pakistan Iluctuate during all years as they show an increasing trend. The reserves are increased
25 , 28 & 46 in the years 2005, 2006 & 2007 respectively. The year 2008 represents
highest increasing percentage oI 84 as compare to base and previous years.
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ANALYSIS
The National Bank oI Pakistan`s borrowings Iluctuates during all years and shows a mixed trend.
The borrowings were decreased 21 in 2005; however same are increased 6 in 2006 as
compare to base year. There was a marginal decrease oI 2 in bank`s borrowings in the year
2007. The year 2008 represents highest percentage oI borrowings as these were increased to 265
comparing with base year and are increased 267 as compare to 2007.
ANALYSIS
The deposits and other accounts oI National Bank oI Pakistan show a mixed trend during all
years. In the year 2005 the deposits were increased very marginally, with the year 2006
represents an increase oI 8 as compare to base year. The year 2007 represents second highest
percentage as deposits are increased to 27. The year 2008 indicates an increase oI 34, highest
among all years.
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ANALYSIS
The other liabilities oI National Bank oI Pakistan are Iluctuating during all years and show an
increasing trend. The year 2005 indicates an increase oI 8 and 2006 indicates an increase oI
15. The other liabilities in the year 2007 represent an increase oI 34. The other liabilities
were on their peak percentage in 2008 as the shows an increase oI 72.
GENERATION OF FUNDS
Rupees in
Millions
?ear 2004 2005 2006 2007 2008
Markup/return/interest earned
./@$5)@<<
<
<<@#$.@##
5
55@1//@$<
5
5/@5#$@5+
1
#/@$5.@)$
+
Net markup/interest income
15@<+)@$<
5
.<@<)/@+$
)
</@15<@)1
#
<<@#.$@5)
/
<)@/5+@/<
/
Net markup/interest income aIter provisions
1.@#<$@))
/
.1@15#@$)
/
.)@)+.@1)
/
.+@$/#@)<
5
.#@/+)@.1
#
Total non-markup/ Interest income +@</5@)1# $@<$.@<51
1.@1#.@+$
.
1<@555@+5
5
1#@515@+#
.
Total income ( Interest non-Interest)
./@$55@5+
#
</@5<$@<.
1
<$@$55@/#
.
5.@551@5+
/
5.@5/<@/)
+
PROFIT BEFORE TAXATION
11@$))@#/
1
1$@/5#@/.
+
.#@<1/@5)
)
.+@/#/@5/
1
.<@///@$$
+
Horizontal Analysis ()
Markup/return/interest earned 1// 1#1 .11 .51 .$1
Net markup/interest income 1// 1#. .1/ .<5 .5+
Net markup/interest income aIter provisions 1// 1#) ../ ..$ ./#
Total non-markup/ Interest income 1// 11< 15# 1#< 1$+
Total income ( Interest non-Interest) 1// 15# 1$1 ./< ./<
PROFIT BEFORE TAXATION 1// 15$ ../ .<5 1$.
The National Bank oI Pakistan`s generation oI Iunds include
Interest earned
Net interest income
Net interest income aIter provisions
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Total non markup interest income
Total income ( Interest plus non- Interest)
ProIit beIore Taxation
ANALYSIS
The interest earned by National Bank oI Pakistan Iluctuates during all years, as it was increased
during all years as compare to base year. The interest earned is increased 61 in 2005 and 111
in 2006. The year 2007 represents second highest percentage on account oI interest earned as it
was increase 141 . The year 2008 represents peak percentage oI 191 as compare to all years.
ANALYSIS
The net markup/ Interest income oI National Bank oI Pakistan Iluctuates during all years as it
shows an increasing trend. It was increased 62 in 2005 and 110 in 2006 as compare to base
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year. The year 2007 represents second highest percentage on account oI Net markup/ Interest
income as it was increased to 134, comparing with base year. The percentage is increased 158
in 2008, highest among all years.
ANALYSIS
The net markup/ interest income aIter provisions Iluctuates and shows a mixed trend during all
years. It was increased 67 (2005), 120 (2006) and 129 in 2007. The income is increased
106 as compare to base year but the same was decreased by 23 as compare to 2007.
ANALYSIS
The Total non- markup/ Interest income oI National Bank oI Pakistan shows an increasing trend
during all years. It was increased 13 in 2005 and 46 in 2006. The income is increased 63
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in 2007, second highest among all years. There was an increase oI 98 in 2008, highest among
all years.
ANALYSIS
The total income oI National Bank oI Pakistan shows an increasing trend. It was increased 46
in 2005 and 91 in 2006. The total income is increased 103 in 2007 and also increase very
marginally in 2008.
ANALYSIS
The proIit beIore taxation oI National Bank oI Pakistan Iluctuates and shows a mixed trend
during all years. It was increased 59 in 2005 and 120 in 2006. The year 2007 represents
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highest percentage on account oI proIit beIore taxation as it was increased to 134. The year
2008 indicates an increase oI 92 as compare with base year but it was decreased in 2008 by
42 as compare to 2007.
ALLOCATION OF FUNDS
Rupees in
Millions
?ear 2004 2005 2006 2007 2008
Lending`s to Financial Institutions 1/@511@<.. 1#@.+.@$5. .<@/1.@)<. .1@5#5@#// 1)@1.+@/<.
Investments
15$@<5/@/$
#
15#@$+5@#+
#
1<$@$5#@$$
5
.1/@)+)@+#
+
1)/@+..@5$
1
Advances
../@)$5@/)
5
.#+@+<+@))
$
<1#@11/@5/
#
<5/@#))@1/
/
51.@$+#@+#
5
Operating Fixed Assets $@./.@$#$ $@555@<#5 $@#+1@$)5 .5@$..@$)$ .5@.1)@#55
Other Assets 1$@151@5#$ .<@$51@/5# <)@11<@#$+ </@$$5@$#5 55@55/@<5)
Horizontal Analysis ()
Lending`s to Financial Institutions 1// 155 .1$ ./5 1#<
Investments 1// 1/5 $5 151 115
Advances 1// 1.. 15< 155 1+)
Operating Fixed Assets 1// 1/< 1/5 .+. .#<
Other Assets 1// 1.5 1$5 1#. .<<
AIter the acquisition oI the Iunds their allocation becomes necessary. The Bank seeks the best
way Ior making investment to get more proIit with the maximum security. The Bank has an
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investment portIolio in which it allocate its Iunds Ior crediting to borrowers, investment in the
stock market etc. The National Bank oI Pakistan allocate its Iunds in Lending`s to Iinancial
institutions, investments, advances, operating Iixed assets and other assets etc. To analyze trend
in these items, Horizontal analysis oI each item is calculated.
ANALYSIS
The lending`s to Iinancial institutions by National Bank oI Pakistan Iluctuates during all years.
The lending`s increased by 55 in 2005. The year 2006 represents highest percentage oI 119
among all years on account oI lending`s to Iinancial institutions. The year 2007 also shows an
increase oI 104 as compare to base year. The year 2008 indicates an increase oI 63 as
compare to base year but lending`s decreased by 41 in 2008 as compare to the year 2007.
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ANALYSIS
The investments made by National Bank oI Pakistan Iluctuate during all years. There was an
increase oI 5 in 2005. The year 2006 indicates a decrease oI 6 in investments. The year 2007
represents an increase oI 41 , highest among all years. The investments are increased 14 in
2008 as compare to base year; however investments are decreased 27 as compare to the year
2007.
ANALYSIS
The advances made by National Bank oI Pakistan shows an increasing trend in all years as
compare to base year. This implies that National Bank oI Pakistan is keener to advance money to
lenders. The advances were increased 22 in the year 2005 and 43 in 2006 as compare to
base year. The year 2007 represents an increase oI 54 and 2008 represents highest percentage
among all years that is 87 as compare to base year.
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ANALYSIS
The operating Iixed assets oI National Bank oI Pakistan shows a mixed trend during all years.
There was an increase oI 3 in 2005 & 5 in 2006. There was a very sharp increase in
operating Iixed assets in the year 2007 oI 182 as compare to base year. There was an increase
oI 163 in 2008 as compare to base year but the same was decreased by 19 as compare to
2007.
ANALYSIS
The other assets oI National Bank oI Pakistan are Iluctuating during all years. The other assets
are increased 25 in 2005 and 94 in 2006. The year 2007 indicates an increase oI 62 as
compare to base year. The other assets oI National Bank oI Pakistan are on their peak percentage
oI 133 in 2008 as compare with base year.
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CRITICAL ANALYSIS (THEORY VS PRACTICAL)
During Internship it was my prime objective to Iurnish my knowledge (Theory) to various
practical situations. The practical work presents an analytical problem while relating theory with
practice. As a result, analysis oI practical versus theory requires a distinct approach. This part oI
report is the essence oI the internship, as this will help to better understand the working
environment oI the bank by Iinding the relationship between what is written in the books and
what is actually going on in Iields. The theory written in the books in cases is not implemented
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as it is. In some cases theory is implemented with a little modiIication but in other cases theory
has nothing to do with practice.
In accounting, banks don`t prepare worksheet, but part oI worksheet is prepared like trial
balance. The securities Ior the loans are handled in the same way as theory says like mortgage,
pledge, hypothecation, advances against insurance policies or liquidation procedure is the same.
There is some diIIerence lies in types oI loans in bank that is theory talks about Iour or Iive types
oI loans that is cash Iinance, overdraIt, loans etc., but in practice there are some more types used
by bank like running Iinance, demand Iinance etc. All other concepts oI remittances, bills,
Ioreign exchange deposits, letters oI credit are in accordance with theory almost. A bank's
balance sheet is diIIerent Irom that oI a typical company. You won't Iind inventory, accounts
receivable, or accounts payable. Instead, under assets, you'll see mostly loans and investments,
and on the liabilities side, you'll see deposits and borrowings.
CONCLUSION
To me, Theory gives the direction to understand the processes and the terminologies going
across the World using best business practices in a broader view covering each and every aspect
oI possible business scenarios. On the contrary practical liIe is speciIic, enclosed in a jar.
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BALANCE SHEET
Rupees in Millions
ASSETS
2004 2005 2006 2007 2008
Cash and balances with treasury
banks 94,446,552 71,196,956 78,625,227 94,873,249 106,503,756
Balances with other banks 49,784,884 31,019,330 40,641,679 37,472,832 38,344,608
Lending`s to Iinancial institutions 10,511,322 16,282,942 23,012,732 21,464,600 17,128,032
Investments
149,350,09
6
156,985,68
6
139,946,99
5
210,787,86
8 170,822,491
Advances
220,794,07
5
268,838,77
9
316,110,40
6
340,677,10
0 412,986,865
Other assets 19,141,569 23,941,056 27,113,698 30,994,965 44,550,347
Operating Iixed assets 9,202,969 9,454,365 9,681,974 25,922,979 24,217,655
DeIerred tax assets 3,204,572
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Bills payable 7,214,671 1,741,156 10,605,663 7,061,902 10,219,061
Borrowings Irom Iinancial institutions 11,084,790 8,756,847 11,704,079 10,886,063 40,458,926
Deposits and other accounts
465,571,71
7
463,426,60
2
501,872,24
3
591,907,43
5 624,939,016
Sub-ordinated loans
Liabilities against assets subject to
Iinance lease 17,058 16,629 13,235 33,554 25,274
Other liabilities 23,068,314 24,974,450 26,596,300 30,869,154 39,656,831
DeIerred tax liabilities net 29,185 4,462,718 2,387,073 5,097,831
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NET ASSETS
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REPRESENTE% B?
Share capital 4,924,106 5,908,927 7,090,712 8,154,319 8,969,751
Reserves 10,813,914 13,536,041 13,879,260 15,772,124 19,941,047
Unappropriated ProIit 9,161,747 16,713,506 32,074,677 45,344,188 52,456,204
24,899,7
67 36,158,474 53,044,649 69,270,631 81,367,002
Surplus 21,345,965 38,182,238 28,909,469 47,067,023 21,092,216
Raja Hamza Javed 03335199328
P a g e | 115
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INCOME STATEMENT
Rupees in Millions
2004 2005 2006 2007 2008
?ar"u(=return=interest earned
./@$5)@<<
<
<<@#$.@##
5
55@1//@$<
5
5/@5#$@5+
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1/@<.1@)#
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Net mar-u(.intere&t
income
/40187021
5
210170082
7
100/5107/
6
110622047
0
170058001
0
Provisions against non9(erfor%ing advances 1@515@<55 .@55#@)<$ <@/)5@).< 5@).<@/+5
1/@5$<@5#
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value
of invest%ents 1+5@)/) 9.55@++1 9)/$@5#1 95/@.5+ <)<@.5$
(rovision against off balance sheet obligations 15@.$) !il !il !il 5@///
bad debts &ritten off directly <.@+/) .<@/#$ 5@.+5 <$@+$$ !il
1@)5+@1#5 .@..<@$.) .@<)1@55# 5@)..@)<5
1/@$)/@+1
5
Net mar-u(.intere&t income a+ter (ro*i&ion&
/20612077
0
2/0/46027
0
2707820/7
0
280206071
5
26008702/
6
NON 3A#45P. 6NTE#E7T 6NCO3E
0ee@ Co%%ission 6 bro"erage
inco%e 5@/$$@1$5 5@$.#@#/5 #@155@#.+ #@)+1@#+< )@$.5@<)/
,ividend inco%e 1@.)<@+#< 1@)1+@5)+ .@+$1@)55 <@.#<@.5# .@+)+@$<.
4nco%e for% dealing in foreign currencies 1@//+@$++ 1@./5@#<+ 1@<<<@+5/ 1@/5.@+.) <@$#$@/5)
7ain on sale 6 rede%(tion of securities9net 5)@55) 1@<#5@))1 1@1#$@515 .@<51@#$/ <$5@5.)
4nvest%ents classified as held for trading !il 91@$)$ 95@5#5 9<1@$#5 1@)/)
Other inco%e +)5@11< 1))@+<$ #.)@#1+ 15)@<#< 1@.55@<#$
Tota, non8mar-u(. 6ntere&t income 8010407/6 20122015/
/20/62082
2
/10544084
5
/604/5086
2
Tota, income ' 6ntere&t 9 non8
6ntere&t)
200244048
6
100512012
/
120245006
2
42045/058
0
420501007
8
NON 3A#45P. 6NTE#7ET
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2d%inistration e1(enses +@+)+@+/1
11@..1@)+
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1<@55<@55
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+
Other (rovisions &ritten off <.@.5< 1$+@.$+ 91)@.+< 1#+@/.) )5)@5.1
Other charges +@.+5 #<@./# ./+@<.) 1)@151 5+<@<#1
Tota, non mar-u(. 6ntere&t
e;(en&e& 802/20128
//0481022
1
/10614048
5
/4012/007
2
/20502008
0
P#OF6T <EFO#E //0277060 /20056002 2601/0057 280060050 210000022
Raja Hamza Javed 03335199328
P a g e | 115
TA:AT6ON / 8 7 / 8
Ta1atio
n Current 5@$5/@/// )@155@//. +@#$5@5$+ +@<11@5//
11@)#.@#5
/
Prior years +5)@$5+
9
1@/$+@)/$ 5</@#5. <$1@5$) !il
,eferre
d 915@).$ .$1@.$1 #1@$+1 <.<@)<1
9
5@../@.5.
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P#OF6T AFTE#
TA:AT6ON 60/250172
/20702044
4
/70022014
6
/20011077
1
/50458052
0
Ana((ro(riated Profit brought for&ard 5@+$.@$/. $@1#1@)5)
1$@<).@5.
<
<.@/)5@#)
)
55@<55@1+
+
Transfer fro% sur(lus on revaluation of fi1ed
assets on account of incre%ental de(reciation 55@5$# 5<@..1 51@/#/ <$@//) 1</@55#
Profit available for a((ro(riation
/20/11077
0
2/02/404/
2
160415022
2
5/0/47045
7
600211021
4
FINANCIAL STATEMENTS ANALYSIS
Financial analysis is a process which involves reclassiIication and summarization oI inIormation
through the establishment oI ratios and trends. Financial statement analysis is the process oI
examining relationships among Iinancial statement elements and making comparisons with
relevant inIormation. It is a valuable tool used by investors and creditors, Iinancial analysts, and
others in their decision-making processes related to stocks, bonds, and other Iinancial
instruments. The goal in analyzing Iinancial statements is to assess past perIormance and current
Iinancial position and to make predictions about the Iuture perIormance oI a company. Investors
who buy stock are primarily interested in a company's proIitability and their prospects Ior
earning a return on their investment by receiving dividends and/or increasing the market value oI
their stock holdings. Creditors and investors who buy debt securities, such as bonds, are more
interested in liquidity and solvency: the company's short-and long-run ability to pay its debts.
Financial analysts, who Irequently specialize in Iollowing certain industries, routinely assess the
proIitability, liquidity, and solvency oI companies in order to make recommendations about the
purchase or sale oI securities, such as stocks and bonds.
Raja Hamza Javed 03335199328
P a g e | 11#
The analysis oI Iinancial statement reIers to the examination oI the statements Ior the purpose oI
acquiring additional inIormation regarding the activities oI the business. The users oI the
Iinancial inIormation oIten Iind analysis desirable Ior the interpretation oI the Iirm`s activities.
The overall objective oI Iinancial statement analysis is the examination oI a Iirm`s Iinancial
position and returns in relation to risk. This must be done with a view to Iorecasting the Iirm`s
Iuture prospective.
Analysts can obtain useIul inIormation by comparing a company's most recent Iinancial
statements with its results in previous years and with the results oI other companies in the same
industry. Three primary types oI Iinancial statement analysis are commonly known as horizontal
analysis, vertical analysis, and ratio analysis.
RATIO ANALYSIS
Ratio analysis enables the analyst to compare items on a single Iinancial statement or to examine
the relationships between items on two Iinancial statements. AIter calculating ratios Ior each
year's Iinancial data, the analyst can then examine trends Ior the company across years. Since
ratios adjust Ior size, using this analytical tool Iacilitates intercompany as well as intercompany
comparisons. Ratios are oIten classiIied using the Iollowing terms: proIitability ratios (also
known as operating ratios), liquidity ratios, and solvency ratios. ProIitability ratios are gauges oI
the company's operating success Ior a given period oI time. Liquidity ratios are measures oI the
short-term ability oI the company to pay its debts when they come due and to meet unexpected
needs Ior cash. Solvency ratios indicate the ability oI the company to meet its long-term
obligations on a continuing basis and thus to survive over a long period oI time. Financial ratios
allow Ior comparison:
Between companies
Between industries
Raja Hamza Javed 03335199328
P a g e | 11)
Between diIIerent time periods Ior one company
Between a single company and its industry average
A) PROFITABILITY RATIOS
The continued viability oI any bank depends on its ability to earn an appropriate return on its
assets and capital. Good earning perIormance enables a bank to Iund its operations, remain
competitive in the market and increase or decrease in market Iunds. ProIitability ratios relate
proIit to sales and investments. These ratios indicate the Iirm`s overall eIIectiveness oI
operations and give us idea how well Iirm utilized its resources in generating proIit and
shareholder value.
GROSS PROFIT MARGIN RATIO
Gross proIit margin ratio is used to assess the proIitability oI a Bank's core activities. Gross
proIit margin indicates the relationship between gross proIit and interest earned. A high gross
proIit margin indicates that a Bank can make a reasonable proIit.
Formula Gross ProIit / Interest earned (Revenue)
ANALYSIS
Raja Hamza Javed 03335199328
?ear 2004 2005 2006 2007 2008
Ratio
D
5).1
)
5#.5
5
5$.#
5
55.5
+
<).)
5
P a g e | 11+
The Year 2006 has been an outstanding year with the bank recording the highest proIit in its
history i.e.., 59.65 .The National Bank oI Pakistan`s wide range oI product oIIering, large
branch network and committed workIorce are some oI Iundamental strengths that enabled NBP
to achieve exceptional in a very competitive market. The gross proIit is 37.74 in 2008. The
lowest percentage among all years.
NET PROFIT MARGIN RATIO
Net proIit margin measures the percentage oI revenue remaining aIter all cost and expenses,
including interest and taxes have been deducted.
Formula Net ProIit aIter Taxes / Interest earned
?ear 2004 2005 2006 2007 2008
Ratio
D
.$.5
)
<).)
.
<+.5
$
<).#
<
.5.<
#
ANALYSIS
Net proIit margin shows positive trend till 2006 and was the highest in the same year as it was
38.59, the percentage is decreased in 2007 as it was 37.63. The net proIit margin is on its
lowest level at the end oI 2008 as it indicates a percentage oI 25.63. The primary reason oI this
decline is current global economic conditions and current political crisis in Pakistan.
ASSETS TURNOVER
Raja Hamza Javed 03335199328
P a g e | 11$
This ratio is useIul to determine the amount oI revenue that is generated Irom each Rupee oI
assets. The Banks with low proIit margins tend to have high asset turnover, those with high proIit
margins have low asset turnover.
Formula Revenue/ Total Assets
?ear 200
4
200
5
200
6
200
7
200
8
Rati
o
/./< /./5 /./# /./5 /./5
ANALYSIS
The year 2004 represents a ratio oI 0.03, lowest among all years. The years 2005, 2007 and 2008
indicates almost same percentage oI 0.05 on account oI bank`s assets turnover. The National
Bank oI Pakistan`s assets turnover in 2006 is 0.06, peak ratio among all years.
RETURN ON CAPITAL FUND
This ratio relates the net proIits to the amount oI capital Iunds that have been employed in
making that proIit.
Formula Net markup received / Capital Funds
?ear 200
4
200
5
200
6
200
7

2008
Ratio ..$. <.$5 5..5 5.1. 5.1<
Raja Hamza Javed 03335199328
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ANALYSIS
The above given ratios suggest that the proIitability oI the bank has a mixed trend during Iive
years. The Iirst three years 2004 (2.92), 2005 (3.95), 2006 (4.95) shows an increasing trend,
indicating more proIitable operations oI the bank. It was decreased in the year 2007 (4.12) and
has increased in 2008 as the ratio was 4.13.
RETURN ON INVESTMENT
This ratio indicates the proIit earned by the bank on the resources employed.
Formula Net income aIter taxes / Total Assets
?ear 2004 2005 2006 2007
2008
Rati
o
/./1
1
/./.
1
/./.
#
/./.
5
/./1+
ANALYSIS
Raja Hamza Javed 03335199328
P a g e | 1.1
There was an increase in the utilization oI the resources till 2006 i.e.., 0.011(2004), 0.021 (2005)
and 0.026 (2007). The ratio was decreased to 0.024 (2007) and 0.018 (2008).
RETURN ON DEPOSITS
This ratio indicates to what extent deposits which represent Iunds mobilization on the part oI the
bank contribute towards income generation.
Formula Net income beIore taxes / Total Deposits
?ear 2004 2005 2006 2007
2008
Rati
o
/./.
5
/./5
1
/./5
.
/./5
)
/./<#
ANALYSIS
During all Iive years the return on deposits ratio oI National Bank oI Pakistan shows a mix trend.
The year 2006 (0.052) was the best year Ior bank in terms oI its Iunds mobilization. Although the
ratio was decreasing in 2008 (0.036), indicating Bank is more keen to kept deposits and a change
in policy oI the Bank regarding its Iunds mobilization.
EFFECTIVE TAX RATE
This ratio is a measurement oI a company's tax rate, which is calculated by comparing its income
tax expense to its pretax income. This amount will oIten diIIer Irom the company's stated
Raja Hamza Javed 03335199328
P a g e | 1..
jurisdictional rate due to many accounting Iactors, including Ioreign exchange provisions. This
eIIective tax rate gives a good understanding oI the tax rate the company Iaces.
Formula Income Tax expense/ Pretax Income
?ear 200
4
200
5
200
6
200
7
200
8
Ratio
D
/.5+ /.<< /.<5 /.<. /.<.
ANALYSIS
The eIIective tax rate oI National Bank oI Pakistan was highest in the year 2004 (0.48).
However bank is able to reduce its tax burden because the Bank is able to adopt Tax
management techniques to lessen the tax burden. A relatively stable eIIective tax rate percentage,
and resulting net proIit margin, would seem to indicate that the Bank's operational managers are
more responsible Ior a company's proIitability than the company's tax accountants.
B) LIQUIDITY RATIOS
The liquidity position oI a bank is like a reservoir. It may be adequate, although nearly depleted,
just beIore the start oI the rainy season. Or it may be inadequate, although three quarters Iull just
beIore the summer drought.
Liquidity can be deIined as:
Raja Hamza Javed 03335199328
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'The bank`s ability not only to meet possible deposit withdrawals but also to provide Ior the
legitimate needs oI the economy as well
CURRENT RATIO
Current ratio is a measure oI the current adequacy oI company's current assets to meet its current
obligations. It must be greater than 1. II it is less than 1, liabilities exceed current assets. For
every Rs.1 oI liabilities, the company has a ratio amount oI current assets available. The concept
behind this ratio is to ascertain whether a company's short-term assets (cash, cash equivalents,
marketable securities, receivables and inventory) are readily available to pay oII its short-term
liabilities (notes payable, current portion oI term debt, payables, accrued expenses and taxes). In
theory, the higher the current ratio, the better.
Formula Current Assets / Current Liabilities
Yea
r
200
4
200
5
200
6
200
7

2008
#atio /.+< /.$# 1./. 1.// 1.1.
ANALYSIS
The year 2004 (0.83) and 2005 (0.96) were not satisIied Ior bank as current assets are less than
current liabilities. However, in 2006 (1.02) the management oI National Bank oI Pakistan is able
to overcome this problem. The year 2007 (1.00) is also good Ior bank as per standards oI this
ratio. Again in the year 2008 (1.12) the management oI bank is able to increase its current ratio.
Raja Hamza Javed 03335199328
P a g e | 1.5
CASH RATIO
This ratio shows that the cash is enough Ior payment oI current liabilities or not. This ratio is
obtained by dividing cash by current liabilities. For a bank this is the cash held by the bank as a
proportion oI deposits in the bank.
Formula Cash / Current Liabilities
?ear 200
4
200
5
200
6
200
7
200
8
Ratio 5./$ ..+5 ..$# <./) ..#$
ANALYSIS
The cash ratio oI National Bank oI Pakistan shows a mixed trend during Iive years oI operations.
During all years, the ratio is satisIactory as per standards oI this ratio. The year 2004 (4.09),
representing highest and 2005 (2.85) & 2008 (2.69), representing lowest ratio in all Iive years.
ADVANCES TO DEPOSIT RATIO
It demonstrate the degree to which bank has already used up its available resources to
accommodate the credit needs oI its customers.
Formula Advances / Total Deposits
?ear 2004 2005 2006 2007
2008
RatioD 5).5
.
5+./
1
#..$
$
5).5
#
##./+
Raja Hamza Javed 03335199328
P a g e | 1.5
ANALYSIS
This ratio, a comparison oI Iunds generation and its Iunds mobilization, indicates the total loans
sanctioned by the bank in relation to total amount oI money deposited with the bank, stands
highest in 2008 ( 66.08) as compared with the previous year Iigures. This shows that the bank
has greater potential to advance additional loans. During all other years the ratio is quiet
satisIactory representing National Bank oI Pakistan`s credit management decisions.
DUE FROM BANKS TO TOTAL ASSETS
It is an indication oI Bank`s Iunds management policies.
Formula Due Irom banks / Total Assets
?ear 2004 2005 2006 2007
2008
Ratio /./1
$
/./.
+
/./<
#
/./.
+
/./.1
ANALYSIS
Raja Hamza Javed 03335199328
P a g e | 1.#
The National Bank oI Pakistan`s due Irom banks to total assets ratio is Iluctuating and indicates a
mixed trend during all years. The ratio is 0.019 in 2004 and 0.028 in the year 2005. The year
2006 represents highest ratio oI 0.036 among all years. There was a decrease in ratio at the end
oI Iinancial year 2007 that is 0.028. The year 2008 represents a decrease in ratio (0.021) on
account oI due Irom banks to total assets.
DUE FROM BANKS TO DUE TO BANKS
It shows the relationship between what the bank owes Irom other banks and what is due to it.
Formula Due Irom banks / Due to banks
?ear 2004 2005 2006 2007
2008
Ratio
D
$5.+
<
1+5.$
5
1$#.#
.
1$).1
+
5..<<
ANALYSIS
The ratio indicates an increasing trend till 2007 that is 94.83 (2004), 185.95 (2005), 196.62
(2006) and 197.18 in 2007. The year 2008 represents the lowest percentage oI 42.33 on account
oI due Irom banks to due to banks.
DUE TO BANKS TO TOTAL DEPOSITS
This ratio is an indicative oI the proportion oI the lending Irom the Iinancial institutions in
relation to the total Iunds raised by the bank in the Iorm oI deposits.
Raja Hamza Javed 03335199328
P a g e | 1.)
Formula Due to banks / Total Deposits
?ear 2004 2005 2006 2007
2008
Rati
o
/./.
5
/./1
$
/./.
<
/./1
+
/./#5
ANALYSIS
The due to banks to total deposits ratio oI National Bank oI Pakistan is Iluctuating and indicates
a mixed trend during all years. The ratio is 0.024 in 2004 and decreased to 0.019 in 2005. The
ratio is increased in 2006 as the ratio is 0.023. The year 2007 represents the lowest percentage oI
0.018 and the year 2008 represents the peak percentage oI 0.065.
C) DEBT RATIOS
These ratios give users a general idea oI the company's overall debt load as well as its mix oI
equity and debt. Debt ratios can be used to determine the overall level oI Iinancial risk a
company and its shareholders Iace. In general, the greater the amount oI debt held by a company
the greater the Iinancial risk oI bankruptcy.
THE DEBT TO EQUITY RATIO
The debt-equity ratio compares a company's total liabilities to its total shareholders' equity. This
is a measurement oI how much suppliers, lenders, creditors and obligors have committed to the
company versus what the shareholders have committed.
Raja Hamza Javed 03335199328
P a g e | 1.+
To a large degree, the debt-equity ratio provides another vantage point on a company's leverage
position, in this case, comparing total liabilities to shareholders' equity, as opposed to total assets
in the debt ratio. Similar to the debt ratio, a lower the percentage means that a company is using
less leverage and has a stronger equity position.
Formula Total Liabilities/ Total Shareholder`s equity
?ear 2004 2005 2006 2007 2008
Rati
o
11..<
5
$).)
)
+$.5
)
$<.5
)
$1.1
)
ANALYSIS
The debt to equity ratio oI National Bank oI Pakistan shows a ratio oI 112.35 in 2004. The
ratio is decreased to 97.77 in the year 2005. The ratio is Iurther decreased in 2006 as it shows a
percentage oI 89.57. There was an increase in the ratio as it shows a percentage oI 93.47.
The year 2008 represents the ratio oI 91.17 .
INTEREST COVERAGE RATIO
It shows whether the bank is earning enough proIit beIore mark up charges to be paid to the
Iinanciers and the taxation obligations due to the government in order to remain solvent. The
interest coverage ratio is used to determine how easily a company can pay interest expenses on
outstanding debt. The ratio is calculated by dividing a company's earnings beIore interest and
taxes (EBIT) by the company's interest expenses Ior the same period. The lower the ratio, the
Raja Hamza Javed 03335199328
P a g e | 1.$
more the company is burdened by debt expense. When a company's interest coverage ratio is
only 1.5 or lower, its ability to meet interest expenses may be questionable.
Formula Earnings beIore interest & Taxes / Interest expense
?ear 2004 2005 2006 2007 2008
Ratio 1.+<
ti%es
1.+5
ti%es
1.+$
ti%es
1.##
ti%es
/.$)
ti%es
ANALYSIS
The amount oI interest a Bank pays in relation to its revenue and earnings is tremendously
important. The National Bank oI Pakistan`s interest coverage ratio is 1.83 times in the year 2005.
The ratio was increased in the years 2005 and 2006 as it was 1.85 times & 1.89 times
respectively. There sudden decrease oI 1.66 times is observed in 2007. The ratio is Iurther
decrease to 0.97 times in 2008, representing the lowest ratio among all years.
LOAN LOSS COVERAGE RATIO
Banks use the loan-loss coverage ratio to deIine the quality oI its assets and how well it protects
itselI Irom losses caused by problematic loans. The higher this ratio is, the better the bank is
handling itselI in regards to loans.
Formula Provision against non-perIormance loans & advances/ ProIit or loss beIore taxation
Raja Hamza Javed 03335199328
P a g e | 1</

?ear 200
4
200
5
200
6
200
7
200
8
Rati
o
/.1< /.1< /.1. /.1) /.5)
ANALYSIS
The loan loss coverage ratio oI National Bank oI Pakistan is almost same in the years 2004 and
2005 as it was 0.13 in both years. There was a slight decrease in this ratio as it was 0.12 in 2006.
The year 2006 shows an increase in loan loss coverage ratio as it was 0.17. The year 2008
represents highest ratio oI 0.47 on account oI loan loss coverage, as compare to all years.
D) CAPITAL ADEQUACY RATIOS
CAPITAL FUNDS TO TOTAL ASSETS
This ratio indicates the extent oI the Iunds employed by the bank in the total resources as shown
in the balance sheet.
Formula Capital Funds / Total Assets
?ear 200
4
200
5
200
6
200
7

2008
Ratio
D
/.+$ 1./. 1.1/ 1./) 1./$
Raja Hamza Javed 03335199328
P a g e | 1<1
ANALYSIS
The National Bank oI Pakistan`s Capital Iunds to Total Assets ratio is increased during all years.
The ratio is 0.89 in 2004, representing lowest ratio in all years. The ratio is increased in 2005,
2006 and 2007 as the graph shows ratios oI 1.02, 1.10 & 1.07 respectively. The ratio is keeping
its trend and also increases in the year 2008 as it was 1.09.
E) OPERATING PERFORMANCE RATIOS
Each oI these ratios have diIIering inputs and measure diIIerent segments oI a company's overall
operational perIormance, but the ratios do give users insight into the company's perIormance and
management during the period being measured.
These ratios look at how well a company turns its assets into revenue as well as how eIIiciently a
company converts its sales into cash. Basically, these ratios look at how eIIiciently and
eIIectively a company is using its resources to generate sales and increase shareholder value. In
general, the better these ratios are, the better it is Ior shareholders.
In this section, we'll look at the Iixed-asset turnover ratio and the sales/revenue per employee
ratio, which look at how well the company uses its Iixed assets and employees to generate sales.
FIXED ASSETS TURNOVER
This ratio is a rough measure oI the productivity oI a company's Iixed assets (property, plant and
equipment etc) with respect to generating revenue. For most companies, their investment in Iixed
assets represents the single largest component oI their total assets. This annual turnover ratio is
designed to reIlect a company's eIIiciency in managing these signiIicant assets.
Formula Revenue/ Operating Fixed Assets
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?ear 200
4
200
5
200
6
200
7
200
8
Ratio
D
...+ <..< 5.1< 1.#5 1.)#
ANALYSIS
The Iixed assets turnover ratio oI National Bank oI Pakistan has an increasing trend till 2006.
The ratio increases 2.28 (2004) to 3.23 (2005). The year 2006 represents highest Iixed assets
turnover ratio Ior National Bank oI Pakistan i.e.., 4.13. The bank`s eIIiciency to utilize these
assets has been decreased to 1.64 in the year 2007 however it was increased in 2008 as the ratio
is 1.76.
SALES OR REVENUE PER EMPLOYEE
As a gauge oI personnel productivity, this indicator simply measures the amount oI Rupees sales
or revenue, generated per employee. The higher the Rupee Iigures the better.
Formula Revenue/ Number oI Employees
?ear 2004 2005 2006 2007 2008
Rati
o
1.)5.+
5
1+5+.+
)
.5<1.<
+
.5+<.$
5
.5+)./
+
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ANALYSIS
The ratio has been showing an increasing trend till 2007 i.e.., 1274.85 (2004), 1858.87 (2005),
2431.38 (2006) and 2583.94 (2007). There was a marginal increase in the year in the year 2008
i.e.., 2587.08, representing the peak percentage in all years.
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HORIZONTAL ANALYSIS
This technique is also known as comparative analysis. It is conducted by setting consecutive
balance sheet, income statement or statement oI cash Ilow side-by-side and reviewing changes in
individual categories on a year-to-year or multiyear basis. The most important item revealed by
comparative Iinancial statement analysis is trend. A comparison oI statements over several years
reveals direction, speed and extent oI a trend(s). The horizontal Iinancial statements analysis is
done by restating amount oI each item or group oI items as a percentage. Such percentages are
calculated by selecting a base year and assign a weight oI 100 to the amount oI each item in the
base year statement. ThereaIter, the amounts oI similar items or groups oI items in prior or
subsequent Iinancial statements are expressed as a percentage oI the base year amount. The
resulting Iigures are called index numbers or trend ratios.
Formula Current Year amount / Base Year amount * 100
Horizontal analysis, whilst simple to execute and useIul to a certain extent, has its limitations.
These limitations include:
Being highly dependent on the selection oI base year and the period under examination in
the Iinancial model.
Horizontal analysis provides little insight into why the trend occurred in a Iinancial
model.
Horizontal analysis does not provide insight into whether the trend in the Iinancial model
results was superior/inIerior to some benchmark.
Horizontal analysis does not address the challenge oI negative numbers.
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HORIZONTAL ANALYSIS OF BALANCE SHEET

Horizontal Analysis
()
ASSETS 2004 2005 2006 2007 2008
Cash 1// )5 +< 1// 11<
Balances with other banks 1// #. +. )5 ))
Lending`s to Iin. institutions 1// 155 .1$ ./5 1#<
Investments 1// 1/5 $5 151 115
Advances 1// 1.. 15< 155 1+)
Operating Iixed assets 1// 1/< 1/5 .+. .#<
Other assets 1// 1.5 1$5 1#. .<<
Total
Assets 1// 1/5 11) 1<+ 15+
L$AB$L$T$ES 2004 2005 2006 2007 2008
Share Capital 1// 1./ 155 1## 1+.
Reserves 1// 1.5 1.+ 15# 1+5
Unappropriated proIit 1// 1+. <5/ 5$5 5)<
Surplus On Reval. oI assets 1// 1)$ 1<5 ..1 $$
Bills payable 1// .5 15) $+ 15.
Borrowings 1// )$ 1/# $+ <#5
Deposits and other accounts 1// 1// 1/+ 1.) 1<5
Liabilities against assets 1// $) )+ 1$) 15+
subject to Iinance lease
DeIerred tax liabilities net 1// 15.$1 +1)$ 1)5#) !il
Other liabilities 1// 1/+ 115 1<5 1).
Total Lia(ilities 1// 1/5 11) 1<+ 1<<
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ANALYSIS
The National Bank oI Pakistan`s Cash & balance with treasury banks shows a mixed trend
during all years. It was decreased by 25 in 2005 and 17 in 2006. There was a marginal
increase in the year 2007. In 2008 the percentage is increased by 13 as compare to base year.
ANALYSIS
The Balances oI National Bank oI Pakistan with other banks shows a decreasing trend as
compare to base year. The year 2005 represents lower percentage (38), while the year 2006
represents highest percentage oI 18.
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ANALYSIS
The lending`s to Iinancial institutions by National Bank oI Pakistan Iluctuates during all years.
The lending`s increased 55 in 2005. The year 2006 represents highest percentage oI 119
among all years on account oI lending`s to Iinancial institutions. The year 2007 also shows an
increase oI 104 as compare to base year. The year 2008 indicates an increase oI 63 as
compare to base year but lending`s decreased by 41 in 2008 as compare to the year 2007.
ANALYSIS
The investments made by National Bank oI Pakistan Iluctuate during all years. There was an
increase oI 5 in 2005. The year 2006 indicates a decrease oI 6 in investments. The year 2007
represents an increase oI 41 , highest among all years. The investments are increased 14 in
2008 as compare to base year; however investments are decreased 27 as compare to the year
2007.
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ANALYSIS
The advances made by National Bank oI Pakistan shows an increasing trend in all years as
compare to base year. This implies that National Bank oI Pakistan is keener to advance money to
lenders. The advances were increased 22 in the year 2005 and 43 in 2006 as compare to
base year. The year 2007 represents an increase oI 54 and 2008 represents highest percentage
among all years that is 87 as compare to base year.
ANALYSIS
The operating Iixed assets oI National Bank oI Pakistan shows a mixed trend during all years.
There was an increase oI 3 in 2005 & 5 in 2006. There was a very sharp increase in
operating Iixed assets in the year 2007 oI 182 as compare to base year. There was an increase
oI 163 in 2008 as compare to base year but the same was decreased by 19 as compare to
2007.
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ANALYSIS
The other assets oI National Bank oI Pakistan are Iluctuating during all years. The other assets
are increased 25 in 2005 and 94 in 2006. The year 2007 indicates an increase oI 62 as
compare to base year. The other assets oI National Bank oI Pakistan are on their peak percentage
oI 133 in 2008 as compare with base year.
ANALYSIS
The Share capital reIers to the portion oI a Bank's equity that has been obtained by trading stock
to a shareholder Ior cash or an equivalent item oI capital value. The share capital oI National
Bank oI Pakistan shows an increasing trend in all years as compare to base year. The increase in
share capital during all years indicates share holder`s concern toward National Bank oI Pakistan
and eIIicient bank`s Management policies.
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ANALYSIS
The Banks` reserves are banks' holdings oI deposits in accounts with their central bank plus
currency that is physically held in bank vaults (vault cash). The reserves oI National Bank oI
Pakistan Iluctuate during all years as they show an increasing trend. The reserves are increased
25 , 28 & 46 in the years 2005, 2006 & 2007 respectively. The year 2008 represents
highest increasing percentage oI 84 as compare to base and previous years.
ANALYSIS
The Unappropriated proIit are Earnings oI National Bank oI Pakistan not paid out as dividends
but instead reinvested in the core business or used to pay oII debt. Unappropriated proIit is part
oI shareholder equity. The bank`s Unappropriated proIit is increasing very sharply during all
years as compare to base year, indicated bank`s strict dividend payout policy and concern
towards reinvestment options.
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ANALYSIS
The National Bank oI Pakistan`s surplus on revaluation oI assets Iluctuates and shows a mixed
trend during all years. It was increased 79 in 2005 and 35 in 2006. The year 2007 represents
highest percentage oI 121. The percentage is decreased by 1 in 2008 as compare to base year
and 122 as compare to 2007.
ANALYSIS
The National Bank oI Pakistan`s bills payable is showing a mix trend during all years. The year
2005 is best Ior bank in terms oI reduction in bills payable. The year 2006 represents a higher
percentage oI bank`s liability as it increase 47 as compare to base year. The year 2008 also
shows an increase in bank`s bills payable as it increases to 42 as compare to base year.
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ANALYSIS
The National Bank oI Pakistan`s borrowings Iluctuates during all years and shows a mixed trend.
The borrowings were decreased 21 in 2005; however same are increased 6 in 2006 as
compare to base year. There was a marginal decrease oI 2 in bank`s borrowings in the year
2007. The year 2008 represents highest percentage oI borrowings as these were increased to 265
comparing with base year and are increased 267 as compare to 2007.
ANALYSIS
The deposits and other accounts oI National Bank oI Pakistan show a mixed trend during all
years. In the year 2005, the deposits were increased very marginally, with the year 2006
represents an increase oI 8. The deposits are increased 27 & 34 in the years 2007 and 2008
respectively
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ANALYSIS
The National Bank oI Pakistan`s Liabilities against assets subject to Iinance lease were Iluctuate
during all years, with the year 2005 (3 decrease) and 2006 (22 decrease) shows a decreasing
trend and the year 2007 (97 increase) & 2008 (48 increase) shows an increasing trend as
compare to base year.
ANALYSIS
The other liabilities oI National Bank oI Pakistan are Iluctuating during all years and show an
increasing trend. The year 2005 indicates an increase oI 8 and 2006 indicates an increase oI
15. The other liabilities in the year 2007 represent an increase oI 34. There was a sharp
increase in 2008 as it indicates a percentage oI 72, highest among all years.
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HORIZONTAL ANALYSIS OF INCOME STATEMENT
Rupees in Millions
2004 2005 2006 2007 2008
?ar"u(=return=interest earned 1// 1#1 .11 .51 .$1
?ar"u(=return=interest e1(ensed 1// 15) .1< .5+ <#5
Net mar-u(.intere&t
income /00 /62 2/0 214 258
Provisions against non9(erfor%ing advances 1// 1#1 ./< <1. #$$
(rovision for=3reversal of- di%inution in the
value
of invest%ents 1// 91<. 9<+. 9.. ./1
(rovision against off balance sheet obligations 1// !il !il !il .+
bad debts &ritten off directly 1// )/ 1# 1.. !il
1// 1.) 1<# .)/ #.+
Net mar-u(.intere&t income a+ter (ro*i&ion& /00 /67 220 222 206
NON 3A#45P. 6NTE#E7T 6NCO3E
0ee@ Co%%ission 6 bro"erage
inco%e 1// $) 1.1 1<< 155
,ividend inco%e 1// 1<5 ..) .5# ..#
4nco%e for% dealing in foreign currencies 1// 11$ 1<. 1/< <$<
7ain on sale 6 rede%(tion of securities9net 1// .@+). .@55$ 5@$.5 +<1
4nvest%ents classified as held for trading !il !il !il !il !il
Other inco%e 1// ./ ). 1) 15.
Tota, non8mar-u(. 6ntere&t income /00 //1 /46 /61 /28
Tota, income ' 6ntere&t 9 non8
6ntere&t) /00 /46 /2/ 201 201
NON 3A#45P. 6NTE#7ET
E:PEN7E7
2d%inistration e1(enses 1// 1.# 151 1#/ ./5
Other (rovisions &ritten off 1// #15 955 5.1 .@<1+
Other charges 1// )#< .@515 ./) )@/5.
Tota, non mar-u(. 6ntere&t
e;(en&e& /00 /22 /51 /6/ 2/2
P#OF6T <EFO#E
TA:AT6ON /00 /52 220 214 /22
Ta1atio
n Current 1// 155 1)# 1#+ .<+
Prior years 1// 91</ #< 5# !il
,eferre
d 1// 91@+5. 9<$5 9.@/5+ .#@+<1
1// 11/ 1#1 15# 1</
P#OF6T AFTE#
TA:AT6ON /00 205 275 107 250
Ana((ro(riated Profit brought for&ard 1// 155 <.$ 555 )#$
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Transfer fro% sur(lus on revaluation of fi1ed
assets on account of incre%ental de(reciation 1// $5 $/ +# .+)
Profit available for a((ro(riation /00 /8/ 100 422 502
ANALYSIS
The interest earned by National Bank oI Pakistan Iluctuates during all years, as it was increased
during all years as compare to base year. The interest earned is increased 61 in 2005 and 111
in 2006. The year 2007 represents second highest percentage on account oI interest earned as it
was increase 141 . The year 2008 represents peak percentage oI 191 as compare to all years.
ANALYSIS
The interest expense oI National Bank oI Pakistan shows an increasing trend in all years, as it
was increased 57 (2005) and 113 (2006). The year 2007 represents second highest
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percentage on account oI interest expensed as it was increases to 158 as compare to base year.
The year 2008 shows an increase oI 264 , highest among all years.
ANALYSIS
The net markup/ Interest income oI National Bank oI Pakistan Iluctuates during all years as it
shows an increasing trend. It was increased 62 in 2005 and 110 in 2006 as compare to base
year. The year 2007 represents second highest percentage on account oI Net markup/ Interest
income as it was increased to 134, comparing with base year. The percentage is increased 158
in 2008, highest among all years.
ANALYSIS
The net markup/ interest income aIter provisions Iluctuates and shows a mixed trend during all
years. It was increased 67 (2005), 120 (2006) and 129 in 2007. The income is increased
106 as compare to base year but the same was decreased by 23 as compare to 2007.
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ANALYSIS
The Fee, Commission and brokerage income oI National Bank oI Pakistan Iluctuates during all
years. It was decreased 3 in the year 2005 and increases 21 in the year 2006. The year 2007
represents an increase oI 33. The year 2008 represents peak percentage oI 55.
ANALYSIS
The dividend income oI National Bank oI Pakistan Iluctuates during all years, as it shows a
mixed trend during all years. The dividend income is increasing 35 in the year 2005 and 127
in 2006. It was increased 156 in 2007, represents higher percentage among all years. The
year 2008 represents an increase oI 126 as compare to base year and a decrease oI 30 as
compare to 2007.
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ANALYSIS
The National Bank oI Pakistan`s income Irom dealing in Ioreign securities Iluctuates during all
years as it shows an increasing trend. It was increased 19 in 2005 and 32 in 2006. The
income has its lowest percentage in 2007 as it was increased 3 . The year 2008 represents
highest percentage on account oI bank`s income Irom dealing in Ioreign securities as it was
increased 293 as compare to base year and 290 as compare to the year 2007.
ANALYSIS
The other income oI National Bank oI Pakistan Iluctuates during all years as it shows a mixed
trend. It was decreased 80 in 2005 and 28 in 2006 as compare to base year. The year 2007
represents the lowest decreasing trend oI 83. There was a sharp increase in National Bank oI
Pakistan`s other income as it was increased to 42 as compare to base year and increased 125
as compare to 2007. to 63, comparing with base year. The percentage is increased 52 in
2008 as compare to base year, but it was decreased 11 as compare to 2007.
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ANALYSIS
The Total non- markup/ Interest income oI National Bank oI Pakistan shows an increasing trend
during all years. It was increased 13 in 2005 and 46 in 2006. The income is increased 63
in 2007, second highest among all years. There was an increase oI 98 in 2008, highest among
all years.
ANALYSIS
The total income oI National Bank oI Pakistan shows an increasing trend. It was increased 46
in 2005 and 91 in 2006. The total income is increased 103 in 2007 and also increase very
marginally in 2008.
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ANALYSIS
The administration expense oI National Bank oI Pakistan is increased 26 in 2005 and 51 in
2006 as compare to base year. The year 2007 represents an increase oI 60. The percentage is
increased 105 in 2008, highest among all years.
ANALYSIS
The Total non markup/ Interest expenses oI National Bank oI Pakistan Iluctuates and shows an
increasing trend as compare to base year. It was increased 29, 53 and 61 in the years 2005,
2006 and 2007 respectively. The year 2008 represents peak percentage oI 119 in 2008.
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ANALYSIS
The proIit beIore taxation oI National Bank oI Pakistan Iluctuates and shows a mixed trend
during all years. It was increased 59 in 2005 and 120 in 2006. The year 2007 represents
highest percentage on account oI proIit beIore taxation as it was increased to 134. The year
2008 indicates an increase oI 92 as compare with base year but it was decreased in 2008 by
42 as compare to 2007.
ANALYSIS
The current taxation oI National Bank oI Pakistan Iluctuates during all years as it was increased
during all years as compare to base year. It was increased 45 in 2005 and 76 in 2006. The
year 2007 and 2008 indicates an increase oI 68 & 138 respectively.
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ANALYSIS
The National Bank oI Pakistan`s ProIit aIter taxation Iluctuates during all years as it was
increased during all years as compare to base year. The proIit aIter taxation is increased 105 in
2005 and 175 in 2006 as compare to base year. The Year 2007 has been an outstanding year
with the National Bank oI Pakistan recording the highest proIit aIter taxation in its history as the
percentage increases to 207 comparing with base year. The year 2008 indicates an increase oI
150 as compare to base year and a decrease oI 57 as compare to 2007.
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VERTICAL ANALYSIS
When using vertical analysis, the analyst calculates each item on a single Iinancial statement as a
percentage oI a total. The term vertical analysis applies because each year's Iigures are listed
vertically on a Iinancial statement. The total used by the analyst on the income statement is net
sales revenue, while on the balance sheet it is total assets. This approach to Iinancial statement
analysis, also known as component percentages, produces common-size Iinancial statements.
Common-size balance sheets and income statements can be more easily compared, whether
across the years Ior a single company or across diIIerent companies.
Vertical analysis is a technique Ior identiIying relationship between items in the same Iinancial
statement by expressing all amounts as the percentage oI the total amount taken as 100. In a
balance sheet, Ior example, cash and other assets are shown as a percentage oI the total assets
and, in an income statement, each expense is shown as a percentage oI the sales revenue.
In Vertical analysis, various components oI the Iinancial statements are standardized by
expressing them as a percentage oI some bases.
Examples oI common-sized statements include:
Components oI the balance sheet expressed as a percentage oI total assets
Components oI the income statement expressed as a percentage oI sales or revenue
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VERTICAL ANALYSIS OF BALANCE SHEET
Vertical Analysis ()
ASSETS 2004 2005 2006 2007 2008
Cash 1)./) 1..<. 1..1$ 1..55 1<./.
Balances with other banks $.// 5.<) #.</ 5.$. 5.#$
Lending`s to Iin. institutions 1.$/ ..+. <.5) ..+. ../$
Investments .).// .).1) .1.#$ .).## ./.++
Advances <$.$1 5#.5< 5$.// 55.)/ 5/.5/
Operating Iixed assets 1.## 1.#5 1.5/ <.5/ ..$#
Other assets <.5# 5.15 5.)5 5./) 5.55
Total /00 /00 /00 /00 /00
L$AB$L$T$ES 2004 2005 2006 2007 2008
Share Capital /.+$ 1./. 1.1/ 1./) 1./$
Reserves 1.$5 ..<5 ..15 ../) ..5<
Unappropriated proIit 1.## ..+$ 5.$) 5.$5 #.51
Surplus On Reval. oI assets <.+# #.#1 5.5+ #.1+ ..5)
Bills payable 1.</ /.</ 1.#5 /.$< 1..5
Borrowings ..// 1.5. 1.+1 1.5< 5.$5
Deposits and other accounts +5.15 +/... )).)$ )).## )#.5.
Liabilities against assets /.//<1 /.//.$ /.//.1 /.//55 /.//</
subject to Iinance lease
DeIerred tax liabilities net /./1 /.)) /.<) /.#) !il
Other liabilities 5.1) 5.<. 5.1. 5./5 5.+5
Total /00 /00 /00 /00 /00
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ANALYSIS
The cash balance oI National Bank oI Pakistan Iluctuates during all years. The year 2004
representing highest percentage oI cash balance among all years that is 17.07. The cash
balance percentage is decreasing in 2005 (12.32 ) and 2006 (12.19). There was a slight
increase in the year 2007 as compare to the years 2005 & 2006, oI 12.45. The year 2008
indicates second highest level oI National bank oI Pakistan`s cash balance as it was 13.02.
ANALYSIS
The National Bank oI Pakistan`s balances with other banks has its peak percentage oI 9 in the
year 2004. The percentage is decreased to 5.37 in 2005 and has increased slightly in 2006,
indicates 6.3. The percentage is again decreased in 2007 with a percentage oI 4.92 and a
percentage oI 4.69 in 2008.
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ANALYSIS
The lending`s to Iinancial institutions by National Bank oI Pakistan shows a mixed trend. In the
year 2004 percentage is 1.90. The year 2005 along with the year 2007 indicates the same
percentage oI 2.82. The year 2006 represents peak percentage oI 3.57 Ior National Bank oI
Pakistan regarding its lending`s to Iinancial institutions. The percentage is decreased in 2008
indicating a percentage oI 2.09, second lowest among all years.
ANALYSIS
The investments made by National Bank oI Pakistan are Iluctuating and showing a mixed trend.
The year 2004 shows a percentage oI 27 and the year 2005 show 27.17. The percentage is
decreased to 21.69 in 2006; however it was increased in 2007 to 27.66 , representing peak
percentage among all years. The percentage is again decreased to 20.88 in the year 2008.
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ANALYSIS
The advances made by National Bank oI Pakistan are Iluctuating and indicates mixed trend in all
years. The Iirst three years oI analysis shows an increasing trend that is 39.91 (2004), 46.53
(2005) and 49 in the year 2006. There was a decrease in bank`s advances to 44.7 in 2007;
however in 2008 the percentage is increased to 50.5, representing peak rate among all previous
years.
ANALYSIS
The operating Iixed assets oI National Bank oI Pakistan shows a percentage oI 1.66 in the year
2004. There was a slight decrease oI 1.64 in 2005 and 1.50 in 2006. The operating Iixed
assets are increased to 3.40 in 2007. The year 2008 indicates a decrease in bank`s operating
Iixed assets as it reduces to 2.96.
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ANALYSIS
The other assets oI National Bank oI Pakistan Iluctuate during all years. The year 2004 has a
percentage oI 3.46, which is increased till 2006 that is 4.14 (2005) and 5.75 (2006). The
percentage oI other assets is decreased to 4.07 in the year 2007; however it was increased to
5.45 in the year 2008.
ANALYSIS
The share capital oI National Bank oI Pakistan shows a mixed trend in all years. It was 0.89 in
2005 and shows an increasing trend oI 1.02 in 2005. The percentage oI share capital is Iurther
increased in 2006 and shows 1.10. There was a slight decrease in 2007 as percentage was
1.07. The year 2008 represents highest percentage oI 1.09 among all years.
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ANALYSIS
The reserves oI National Bank oI Pakistan Iluctuate and indicate a mixed trend. The above graph
shows a percentage oI 1.95 in 2004 with an increasing trend oI 2.34 in the year 2005. The
reserves oI the bank are decreasing in 2006 & 2007, shows a percentage oI 2.15 and 2.07
respectively. Despite the decreasing trend in previous two years, the National Bank oI Pakistan is
being able opt achieve highest percentage oI reserves in 2008 as the percentage increased to
2.43.
ANALYSIS
The Unappropriated proIit oI National Bank oI Pakistan is increased during all years. It shows a
percentage oI 1.66 in 2004, 2.89 in 2005, 4.97 in 2006, 5.95 in 2007 and a peak
percentage oI 6.41 in 2008.
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ANALYSIS
The surplus on revaluation oI assets is Iluctuating and shows a mix trend. It shows a percentage
oI 3.86 in 2004. The year 2005 represents highest percentage oI 6.61, but it was decreased in
2006 as percentage is decline to 4.48. There was a sharp increase in 2007 oI 6.18, however
surplus is again decline in 2008 and shows a percentage oI 2.57, lowest among all years.
ANALYSIS
The bills payable by National Bank oI Pakistan indicates a percentage oI 1.3 in 2004. The
percentage is decline in 2005 as it shows a decrease oI 0.3, lowest percentage in all years.
There was a sharp increase in 2006 oI 1.64 with a decline oI 0.93 in 2007. The percentage is
again increased in 2008 as it shows a percentage oI 1.25.
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ANALYSIS
The Borrowings oI National Bank oI Pakistan shows a mixed trend in all years. The percentage
is 2 in 2004 with a decline in 2005 shows a percentage oI 1.52. The borrowings are increased
in 2006 shows a percentage oI 1.81. The year 2007 represents lowest percentage oI 1.43 oI
bank`s borrowing among all years. There was a sharp increase in bank`s borrowing in the year
2008 as it shows a percentage oI 4.94.
ANALYSIS
The deposits and other accounts oI National Bank oI Pakistan decreased during all years. The
year 2004 represents peak percentage oI 84.15. The deposits are decline to 80.22 in 2005,
77.79 in 2006, 77.66 in 2007 and 76.42 in 2008.
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ANALYSIS
The other liabilities oI National Bank oI Pakistan Iluctuate and show a mix trend in all years. The
percentage oI other liabilities in 2004 is 4.17. The year 2005 represents percentage (4.32) oI
bank`s other liabilities. The other liabilities were decline in 2006 and 2007 shows a percentage oI
4.12 and 4.05 respectively. The National Bank oI Pakistan is not being able to reduce its
other liabilities in 2008 as the graph shows a percentage oI 4.85, highest percentage among all
years.
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VERTICAL ANALYSIS OF INCOME STATEMENT
2004 2005 2006 2007 2008
?ar"u(=return=interest earned 1// 11/ 11/ 11$ 15<
?ar"u(=return=interest e1(ensed <1 <5 <5 5/ 5#
Net mar-u(.intere&t
income 62 77 75 72 87
Provisions against non9(erfor%ing advances ) + + 11 .5
(rovision for=3reversal of- di%inution in the
value
of invest%ents 1 91 9. / 1
(rovision against off balance sheet obligations / !il !il !il /
bad debts &ritten off directly / / / / !il
+ ) # 11 .#
Net mar-u(.intere&t income a+ter (ro*i&ion& 60 62 70 68 6/
NON 3A#45P. 6NTE#E7T 6NCO3E
0ee@ Co%%ission 6 bro"erage
inco%e .5 1# 15 1# 1$
,ividend inco%e # # ) + )
4nco%e for% dealing in foreign currencies 5 5 < . $
7ain on sale 6 rede%(tion of securities9net / 5 < # 1
4nvest%ents classified as held for trading !il / / / /
Other inco%e 5 1 . / <
Tota, non8mar-u(. 6ntere&t income 40 1/ 10 12 12
Tota, income ' 6ntere&t 9 non8
6ntere&t) /00 /00 /00 /00 /00
NON 3A#45P. 6NTE#7ET
E:PEN7E7
2d%inistration e1(enses 5. <) <5 << 5<
Other (rovisions &ritten off / . / 1 5
Other charges / / 1 / 1
Tota, non mar-u(. 6ntere&t
e;(en&e& 41 18 14 14 46
P#OF6T <EFO#E
TA:AT6ON 57 62 66 66 54
Ta1atio
n Current .5 .< .. ./ .+
Prior years 5 95 1 1 !il
,eferre
d / 1 / 1 91/
.+ .1 .< .1 1+
P#OF6T AFTE#
TA:AT6ON 10 42 41 45 16
Ana((ro(riated Profit brought for&ard .+ </ 5+ )# 1/)
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Transfer fro% sur(lus on revaluation of fi1ed
assets on account of incre%ental de(reciation / / / / /
Profit available for a((ro(riation 58 72 2/ /20 /41
ANALYSIS
The interest earned by National Bank oI Pakistan Iluctuates and shows an increasing trend during
all years. The year 2008 is unique in terms oI bank`s interest earned. The bank earned 143
interest in this year. All other years shows an increasing trend that is 100 in 2004, 110 in
2005, 110 in 2006 and 119 in 2007.
ANALYSIS
The interest expense oI National Bank oI Pakistan shows an increasing trend during all years. In
the year 2004, the interest expensed is 31. The interest expense is increase in 2005 as it shows
Raja Hamza Javed 03335199328
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a percentage oI 34. There was a marginal increase in 2006, as interest expanse shows a
percentage oI 35. The year 2007 also shows an increase oI 40. The year 2008 represents a
percentage oI 56, highest among all years.
ANALYSIS
The net markup/ interest income oI National Bank oI Pakistan Iluctuates and shows a mixed
trend during all years. The percentage is 69 in 2004 and shows an increasing trend in 2005 as
percentage is 77. There was a slight decrease in net markup/ Interest income as the percentage
is 75. There was an increase in income in 2007, as the graph indicating a percentage oI 79.
The year 2008 represents peak percentage oI 87 oI net markup/ Interest income.
ANALYSIS
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The net markup/ Interest income aIter provisions Iluctuates and shows a mixed trend. The
percentage is 60 in 2004, lowest among all years. The year 2005 represents an increasing trend
as percentage is 69. There was a marginal increase in 2006 as the percentage is 70. The
banks income is decreasing in 2007 & 2008 as the percentage is 68 and 61 respectively.
ANALYSIS
The Fee, Commission & brokerage income oI National Bank oI Pakistan Iluctuate and show a
mixed trend during all years. The year 2004 represents highest percentage oI 24 on account oI
Iee, commission & brokerage income. The percentage is decreased in 2005 & 2006 as percentage
is 16 & 15 respectively. There was a slight increase in 2007 & 2008 as percentage is 16 &
19 respectively.
ANALYSIS
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The dividend income oI National Bank oI Pakistan is showing a mixed trend during all years.
The year 2004 and 2006 indicates almost same percentage oI 6. The year 2006 & 2008 shows a
percentage oI 7 each. The year 2007 represents a peak percentage oI 8 on account oI
dividend income.
ANALYSIS
The National Bank oI Pakistan`s income Irom dealing in Ioreign securities shows a percentage oI
5 in 2004. The percentage is decreased in 2005, 2006 and 2007 as the percentage in these years
is 4, 3 and 2 respectively. The year 2008 represents highest percentage oI 9 on account
oI income Irom dealing in Ioreign securities.
ANALYSIS
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The Total non markup/ Interest income oI National Bank oI Pakistan Iluctuates and indicates a
mixed trend during all years. The year 2004 represents highest percentage oI 40 among all
years. The percentage is decreased in 2005 as it was 31. There was a slight decrease in 2006 as
percentage is 30. The years 2007 and 2008 indicates an increasing trend as percentage is 32
& 39 respectively.
ANALYSIS
The administrative and operating expenses oI National Bank oI Pakistan are 42 in 2004,
representing second highest percentage among all years. The expenses are decreased in 2005 as
percentage is 37. The year 2006 and 2007 also shows a decreasing trend as percentage is 34
& 33 respectively. The administrative and operating expenses oI bank are increased in the year
2008 as the percentage is 43, highest among all years.
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ANALYSIS
The total non markup/ Interest expenses oI National Bank oI Pakistan are 43 in 2004,
representing second highest percentage among all years. The expense is decreased in 2005 as
percentage is 38. The year 2006 and 2007 also shows a decreasing trend as percentage is 34
in each year. The total interest expense oI bank is increased in the year 2008 as the percentage is
46, highest among all years.
ANALYSIS
The National Bank oI Pakistan`s current taxation Iluctuates and shows a mixed trend in all years.
The percentage is 23 in the year 2004. The years 2005, 2006 and 2007 shows a slight decrease
in bank`s current taxation as percentage in these years is 23, 22 and 20 respectively. The
year 2008 represents peak percentage oI 28 on account oI current taxation.
ANALYSIS
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The National Bank oI Pakistan`s ProIit beIore taxation is 57 in the year 2004.The percentage is
increased in 2005 as it shows a percentage oI 62. The year 2006 and 2007 shows almost same
increasing trend as percentage is 66. There was a decrease in bank`s ProIit beIore taxation as
percentage is reduces to 54, lowest among all years.
ANALYSIS
The National Bank oI Pakistan`s ProIit aIter taxation is 30 in the year 2004, representing the
lowest percentage among all years. The percentage is increased in 2005 as it shows a percentage
oI 42. The year 2006 and 2007 shows a slight increasing trend as percentage is 43 & 45
respectively. There was a decrease in bank`s ProIit beIore taxation as percentage is reduces to
36.
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BANK ANALYSIS WITH REFERNCE TO COMMERCIAL
BANKS LISTED ON STOCK EXCHANGE
Finan&ial Position of Co..er&ial Banks
Registered in Pakistan
Na.e
of As oI June 2008
Co..er&ial Paid up Reserves Assets Deposits Advances ProIit Earnings Branch Credit
Bank Capital (Rs. Bn)
(Rs.
Bn) (Rs. Bn) (Rs. Bn)
AIter
Tax
Per
share Network Rating

(Rs.
Bn)
(Rs.
Bn) (Rs) (Nos)
Habib Bank 7.59 23.6 735.71 584.85 411.36 7.5 9.75 1400 AA

NBP 8.97 18.54 788.12 621.53 173.42 8.1 9.03 1249 AAA
Allied Bank 6.46 5.48 344.7 293.97 168.45 2.51 3.88 757 AA
MCB 6.28 35.88 450.34 350.72 228.98 7.68 12.22 1038 AA

United Bank 10.12 12.82 576.02 465.54 328.55 5.59 5.53 1100 AA

First Women 0.28 0.22 8.04 6.4 3.09 0.05 1.67 38 BBB

Bank oI Punjab 5.29 7.43 217.85 180.82 142.85 -2.63 -4.97 272 AA
-
Soneri Bank 4.11 1.88 81.61 64.73 45.83 0.47 1.13 90 AA
-
Askari Bank 4.06 7.59 194.21 153.32 114.04 0.05 1.01 155 AA
Bank Al- Habib 4.79 2.8 167.36 136.75 93.25 1.25 2.61 203 AA
Bank oI Khyber 4 1.34 34.43 24.4 11.14 0.11 0.27 34 BBB

Bank Al- Falah 8 2.95 333.02 287.77 180.02 1.69 2.12 231 AA
Saudi Pak 5 0.22 50.83 42.35 27.62 -0.81 -1.54 55 A
-
Faysal Bank 5.3 3.57 137.31 99.61 87.61 0.75 1.41 111 AA
KASB Bank 4.02 0.17 53.66 44.33 32.65 0.08 0.39 41 A
Meezan Bank 4.54 0.81 71.74 57.84 38.3 0.44 0.98 111 A
NIB Bank 28.44 8.46 177.98 112.12 85.43 -0.73 0.23 240 AA
-
Mybank 4.24 0.41 45.47 31.96 23.03 0.43 1.02 69 A
Atlas Bank 5.01 0.52 30.7 22.18 17.5 -0.2 -0.39 31 A
-
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Standard
Chartered 38.72 1.95 276.38 173.81 126.27 1.31 0.34 176 AA

JS Bank 5.11 0.01 24.16 14.08 9.57 0.16 -0.31 11 A


-
Habib
Metropolitan 6.02 6.7 192.45 128.97 101.22 1.57 2.6 100 AA

A stock exchange is a corporation or mutual organization which provides "trading" Iacilities Ior
stock brokers and traders, to trade stocks and other securities. The securities traded on a stock
exchange include: shares issued by companies, unit trusts and other pooled investment products
and bonds. To be able to trade a security on a certain stock exchange, it has to be listed there.
The initial oIIering oI stocks and bonds to investors is by deIinition done in the primary market
and subsequent trading is done in the secondary market. In Pakistan securities are traded on three
stock exchanges which are Karachi stock exchange, Lahore stock exchange and Islamabad stock
exchange.
The Iinancial position oI commercial banks registered on stock exchanges in Pakistan, are shown
in preceding page in terms oI their:
Paid-up Capital
Reserves
Assets
Deposits
Advances
ProIit aIter tax
Earnings per share
Credit rating
The best way to analyze these commercial banks is to analyze their credit ratings. The National
Bank oI Pakistan enjoys the highest credit rating amongst Pakistani banks; JCR- VIS Credit
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rating Co. Limited awarded highest standalone credit rating oI AAA to NBP. The JCRVIS Credit
rating Co. comments about NBP say a lot about the bank:
31
'The organization has been able to strategically manage and build on its competitive advantages
which has translated into the strong and well managed improvement in proIitability trend
observed over the last Iew years, a substantial balance sheet oI sound asset quality, and strong
liquidity and capitalization levels
NBP`s key strength remains its extensive outreach and a low cost, stable deposit base. Deposits
are also guaranteed by the Government oI Pakistan under the Banking Nationalization Act, 1974.
There have also been signiIicant improvements in the management practices oI the bank and a
Iocus on enhancement oI systems and controls. In this regard the management has entered into
an agreement Ior the acquisition oI a core banking soItware which is likely to be implemented
over the next Iew years.
JCR-VIS believes that the current economic situation puts certain leading industrial sectors and
the general consumer under Iinancial stress. ThereIore, the second halI oI 2008 and 2009 are
likely to be challenging Ior the banking sector as a whole, in terms oI maintaining growth, asset
quality and proIitability.
32
The JCR-VIS Rating Process include Iollowing steps:
33
1. Signs agreement Ior an initial rating
2. Submits preliminary inIormation materials
3. Conducts a preliminary study
4. Submits a detailed questionnaire to the issuer/client
5. Provides detailed inIormation in response to detailed questionnaire
6. Conducts pre due diligence meeting analysis
7. Conducts due diligence meetings
8. Conducts post due diligence analysis
9. BrieI Ior internal rating committee meetings is prepared
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10. Sub Committee recommends preliminary/initial rating
11. Rating Committee decides the preliminary/initial rating
12. Discusses the rating rationales and rating issues with client
13. NotiIies issuer oI the preliminary/initial rating, deliberates on appeals by client, iI any
14. Consents to release oI preliminary/initial rating to the public in case oI non-mandatory
ratings
15. Releases the preliminary/initial rating to the press
FUTURE PROSPECTS OF NATIONAL BANK OF PAKISTAN
National Bank oI Pakistan maintains its position as Pakistan's premier bank determined to set
higher standards oI achievements. It is the major business partner Ior the Government oI
Pakistan with special emphasis on Iostering Pakistan's economic growth through aggressive and
balanced lending policies, technologically oriented products and services oIIered through its
large network oI branches locally, internationally and representative oIIices. The Iorward-
looking management oI NBP is a Iirm believer in Iocusing on niches where there is critical mass
and to create products that meet that demand.
National Bank oI Pakistan is gearing up to the challenges Iaced by the domestic banking industry
due to innovations and advances in the international banking world, which is the consequence oI
globalization. The bank wishes to eIIectively utilize the Iinancial assistance being extended by
the Government oI Pakistan Ior banking sector reIorms aimed at reducing operating costs and
Raja Hamza Javed 03335199328
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improving proIitability. National Bank oI Pakistan is distinct Irom other banks in that it has a
nonproIit and service oriented motive, which has maniIested itselI in the area oI salary deposits
oI government employees and payment oI utility bills. The bank renders these services across the
country reaching as Iar as the remotest regions; Irom our northern borders to the Arabian Sea.
These services do not contribute towards the earnings oI the bank; rather they put pressure on
bank`s resources. Nevertheless, the bank is committed to serving small savers and the general
public oI the country. National Bank oI Pakistan is everyone`s bank and does not only serve
corporate customers. To extending and targeting research to improve bank earnings, through
customer Iocus oI bank`s commercial and corporate branches, and by enhanced eIIorts towards
the development oI human capital, the bank shall very soon transIorm Irom a bureaucratic
organization to a Iast paced, modern, and competitive bank. In conclusion, the National Bank oI
Pakistan have the vision, which will enable it to achieve even better results, saIeguard the
interest oI their customers and to assist them in their march towards progress and prosperity in
Iuture.
The National Bank oI Pakistan is conIidence that tomorrow we will be.
Leaders in our industry
An organization maintaining the trust oI stakeholders.
An innovative, creative and dynamic institution responding to the changing needs oI the
internal and external environment
NBP`s current management has boarder vision. They have taken steps to improve customer
services, streamline internal procedure and creating a delectating climate Ior technology
initiative.
Reorganizing eIIorts going on in the NBP has open many opportunities Ior NBP to grow. For
instance to achieve objectives NBP have taken Iollowing measures.
Setting oI target Ior oI making at least 300 branches country wide on line.
Closing oI all those branches, which are burden on NBP.
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Management to oIIer specialized services to major corporate including advisory and debt
syndication introduces the concept oI relationship manager.
Comprehensive training programs has been develop to up grade the core banking skills oI the
existing staII as well as integrate high quality hiring.
To improve the motivation oI staII a merit-based culture is being promoted. Through
overhauling the manpower recruitment preservation and perIormance appraisal system.
The actions taken by current management provide a great opportunity Ior NBP Ior making it
Iuture prosper and can make NBP not less than any modern commercialize bank in Pakistan.
The Management oI NBP assess that the Internal Control environment is showing signs oI
improvement as compared to previous years in all areas oI the bank. The bank is endeavoring to
Iurther reIine its internal control design and assessment process as per guidelines issued by the
State Bank oI Pakistan Accordingly, Bank is making all possible eIIort to improve the
proIessional skills and competency level oI the staII through need based training programs and
our valued customers Ior their support and continued conIidence in NBP.
SHORT FALLS/ WEAKNESSES OF NATIONAL BANK OF
PAKISTAN
The National Bank oI Pakistan`s Advance salary, which has long been the Ilag-ship
product Ior NBP, is replete with charges oI corruption, deIault and ineIIiciency.
The National Bank oI Pakistan`s huge number oI borrowers is untraceable or correct
whereabouts are not known.
The housing Iinance product oI NBP lacks proper inIrastructure including database
support even aIter Iive years oI post launch history. The similar products launched by
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other commercial banks are much smaller in size are running on well-articulated systems
and are backed by proper policies and guidelines. The NBP product, despite boasting a
sizeable portIolio built around some reckless selling, is mostly inIected.
The NBP Karobar scheme is designed around President`s Rozgar scheme. The scheme
which had all the potential to become a landmark was so badly mishandled by National
Bank oI Pakistan.
The Quality oI inIrastructure added by National Bank oI Pakistan during the last Iew
years is quite substandard as compared to that oI peer banks.
In NBP`s Iive year strategic plan 2007-2011 approved by board oI directors does not
address any serious thinking on
Productivity improvement and benchmarking with the competition.
Development required Ior serving major sectors oI the economy.
InIrastructure to support planned growth and vision.
Inducting and leveraging specialized human capital.
Bringing the institution on international banking landscape in the coming Iive
years, not to speak oI the seven years which the current management has already
served.
As Ior as public interest is concerned there were no service standards benchmarks and
guidelines available in NBP. There were only old documents that were craIted at least a
decade or more back.
Due to poor planning the bank had book losses oI over 1.2 billion rupees in the Karobar
Scheme.
The National Bank oI Pakistan`s outsourced employees (2350) was obtained Irom a
single source. Most oI these are perIorming the core Iunction oI the bank outside their
assigned duties without any training and supervision.
Raja Hamza Javed 03335199328
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The National Bank oI Pakistan is incurred large expenses in running those branches,
which are not producing any income.
The up gradation oI human resource is very slow in NBP. The branches oI NBP have less
number oI employees as their requirements. The concept oI 'One Man Show is adopted
in many branches to save salary expenditure; even most oI the branches use their security
guards Ior various tasks. The one reason Ior this is that the senior management is able to
decrease salary expenditure oI the bank, which result an increase in the net proIit. For
their perIormance they received handsome amounts oI bonus. But in long run it has a
negative eIIect on bank`s productivity.
The pension`s distribution service or payments to EOBI beneIiciaries, utility payments;
workers remittances are occupied lowest priority level.
In NBP Karobar scheme the product selected by the NBP is oI inIerior quality and
develops Iaults in the Iirst Iew months oI delivery.
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CONCLUSIONS
The National Bank oI Pakistan plays a key role in the strategic national development. The
bank has historically been the Iinancial arm oI the government and has enjoyed the
blessings oI state support in the Iorm oI huge public sector Iunds and deposits.
In contract to other banks populating the FSI sector, NBP is mandated to uphold public
interest. It is critical too as all other banks and NBFIs in public sector have been closed
down or merged with NBP.
In contract to other banks populating the FSI sector, NBP is mandated to uphold public
interest. It is critical too as all other banks and NBFIs in public sector have been closed
down or merged with NBP.
The current management oI National Bank oI Pakistan was hired purely Ior their
international experience, business orientation to turn around a purely public institution
into a sustainable and commercially viable bank serving public interest along the lines oI
a large modern commercial bank.
The National Bank oI Pakistan has eIIective budgeting system in place. Annual budget oI
the bank is approved by the Board and monthly comparisons oI actual results with the
budget are prepared and reviewed by the senior management.
The National Bank oI Pakistan has a comprehensive Iramework oI written policies and
procedures on all major areas oI operations such as Credit, Treasury Operations, Finance,
Internal audit and Compliance approved by the Board.
The National Bank oI Pakistan provides sustainable Iinancing Ior growth oI industries oI
critical national importance such as energy, education, healthcare, transport, shipping,
Research & development.
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RECOMMENDATIONS
The National bank oI Pakistan should be Iully prepared in its management oI Iinancial
crises and its business continuity planning, within the standing committee Iramework,
and should work with others to strengthen national crises management preparations.
The bank should improve the quality oI training oI its employees and the integrity,
controls and eIIiciency oI its systems, processes and Iinancial reporting.
The bank should improve its recruitment, retention and development and to reIorm the
Bank`s pension scheme.
The bank should renegotiate the Bank`s long term Iinancial Iramework and to overhaul
the Bank`s Iinancial system.
The Bank should improve IT capability in the analytical areas and to develop a medium
term strategy Ior banking and market operations.
The National bank oI Pakistan should monitor the impact oI its operations on the
environment, which is mainly through the use oI power and the generation oI waste.
NBP, being the only lending arm to the government Ior public sector development should
design, develop and deliver product and services Ior economic growth.
The bank should provide support to the Micro, Small and Medium enterprises thereby
reducing unemployment and helping to create a more equitable distribution oI wealth.
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The NBP should adopt modern banking tools and techniques. Quality leadership, clear
vision, investment in IT inIrastructure and human resource development.
The bank should develop soItware Ior pension disbursement.
As Ior as Islamic Banking environment is concerned the management and employees oI
NBP should work together Ior basic research Ior discovering their own laws, developing
theories or concepts Ior the better direction oI their own business environment according
to Quran & Sunnah.
The branches should reduce its large expenses in order to increase the value oI the bank.
The NBP should strengthen incentives and accelerate a results-oriented training and
communications programs Ior management and staII.
The National Bank oI Pakistan should implement a Iinancial inclusion program to meet
the needs oI underserved economic subsectors, including outreach programs to meet the
requirements oI the agriculture, housing, SME and microIinance sectors.
The National Bank oI Pakistan should introduce a Iramework Ior consolidated
supervision and reorganize the regulatory architecture to allow better regulation and
supervision oI Iinancial control division oI bank.
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REFERENCES
Raja Hamza Javed 03335199328
1
http://www.nbp.com.pk/EcomomicBulletin/FS-Complete-31-12-2007.pdI
.
NBP Quarterly Report September 2008
<
http://www.nbp.com.pk/nbp/AboutUs/AboutUS.jsp
5
NBP Quarterly Report September 2008
5
http://www.nbp.com.pk/nbp/AboutUs/AboutUS.jsp
#
Black's Law Dictionary page 471 (5th ed)
)
Kotler, P., Armstrong, G., Brown, L., and Adam, S. (2006) Marketing, 7th Ed.
+
Principles oI marketing 8 ED by Kotler & Armstrong G7
$
Practice & Law oI Banking in Pakistan by Dr. Asrar H. Siddiqui 7
th
ed page no 87
1/
Practice & Law oI Banking in Pakistan by Dr. Asrar H. Siddiqui 7
th
ed page no 91
11
Practice & Law oI Banking in Pakistan by Dr. Asrar H. Siddiqui 7
th
ed page no 88
1.
Practice & Law oI Banking in Pakistan by Dr. Asrar H. Siddiqui 7
th
ed
1<
http://www.nbp.com.pk/Aamdani/index.htm
15
http://www.nbp.com.pk/Premium/index.htm
15
http://www.nbp.com.pk/Saibaan/index.htm
1#
http://www.nbp.com.pk/advancesalary/index.htm
1)
http://www.nbp.com.pk/CashnGold/index.htm
1+
http://www.nbp.com.pk/StudentLoan/index.htm
1$
Practice & Law oI Banking in Pakistan by Dr. Asrar H. Siddiqui 7
th
ed page no 221
./
Practice & Law oI Banking in Pakistan by Dr. Asrar H. Siddiqui 7
th
ed page no 228
.1
Practice & Law oI Banking in Pakistan by Dr. Asrar H. Siddiqui 7
th
ed page no 228
..
SBP Prudential Regulations
.<
http://www.nbp.com.pk/nbp/NBPTreasury.jsp
.5
http://www.nbp.com.pk/nbp/TreasuryProducts.jsp
.5
http://www.nbp.com.pk/nbp/AboutUs/DReport3.jsp
.#
http://www.nbp.com.pk/nbp/AboutUs/DReport3.jsp
.)
NBP Annual Report 2007
.+
Terry and Franklin Principles oI Management
.$
Management 7 Ed Robbins & coulter
</
Human error by James Reason
<1
NBP Annual Report 2007
<.
http://www.jcrvis.com.pk
<<
http://www.jcrvis.com.pk/ratingscale/ratingprocess.htm

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