INTERNSHIP REPORT

ON
NATIONAL BANK OF PAKISTAN
TIMERGARAH BRANCH (2010)
BY
IJAZ KHAN

Reg. No. 12-AU-BBA-F-173

BBA (Hons) FINANCE
SESSION: 2012-2016
An internship report submitted to Abdul Wali Khan University Mardan in partial fulfillment of the
requirements for the degree of

BBA (Hons) FINANCE

Department of Management sciences

Timergara Campus
Abdul Wali Khan University Mardan
Session (2012 16

Approval Sheet

Approved By:

_______________________
Name

Internship Supervisor

_______________________
Name

Internship Coordinator

_______________________
Name

BS/BBA Coordinator

_______________________
Name

External Examiner

Department of Mangement sciences

Abdul Wali Khan University Mardan
Session (2012 16)

DEDICATION

I will always be the way I was a couple years ago before anything happened. And
that's to my parents' credit, my amazing parents who have been around me my whole life and
raised me right. I'm very happy with what has happened so far. I must acknowledge as well as
my friends, colleagues, and other librarians who assisted, advised, and supported my
internship and writing efforts over the years.

ii

Executive Summary
Management of the National Bank of Pakistan, Banking Services Corporation (NBPBSC) continued its efforts to transform it into a professional corporate entity capable to fulfill
its responsibilities and meet expectation of its stakeholder to carry its mandate in an effective
manner. Given the size of the corporation, its geographical dispersion and variance of skill set
of its human resources, a lot is yet to be achieved, for which the BSC initiated its change
management process in 2007. In order to pursue the change management plans, the strategies
mainly focused on strengthening currency management and banking operations, which
constitute majority of work undertaken by BSC, consisting of units/division providing
services in respect of saving instruments of NSS including prize bond, refinance operations
etc., though improvement in HR policies that could provide a well-defined career progression
to the capable and deserving employee. Efforts are also underway to develop capacity in our
employees to get maximum benefit of the system support both for executing transaction as
also as a supervisory tool.

iii

ACKNOWLEDGEMENT
All praise is to ALLAH ALMIGHTY, for giving us knowledge, insight, devotion and
strength to accomplish this task. We immensely thankful to all the teachers and friends who
helped me to complete the project. I am grateful to the staff of NBP as well, who supported
me lot during this project and provided comprehensive knowledge of their products and
services and banking practices. Their guidelines have leaded us to display a picture of NBPs
Management in this report. In the end I would like to thank all of my friends and family
members for their support and encouragement.

In the end I would like to thank all of my friends an

\

IJAZ KHANily
members for their

iv

CHAPTER 1
INTRODUCTION OF STUDY
BACKGROUND OF STUDIES

1.1

As part of the academic requirement for completing BBA (Banking and Finance)
Bachelor of Business Administration of the students are required to under go six months of
internship with an organization. The internship is to serve the purpose of acquainting the
students with the practice of knowledge of the discipline of banking administration.
This report is about National Bank Pakistan. NBP was established in 1949 and since then, it
has expended its network, becoming the largest commercial Bank of the country. It offers
different products of services to its customers.

PURPOSE OF THE STUDIES

1.2

The main purpose of the study in hand is together relevant information to compile
internship report on National Bank of Pakistan.
To observe, analyze and interpret the relevant data competently and in a useful manner.

1.3

To work practically in an organization.

To develop interpersonal communication.

SCOPE OF STUDIES
As an internee in National Bank of Pakistan the main focus of my study research was

on general banking procedures in one of the branches of NBP. These operations include
remittances, deposits, advances and foreign exchange.
Similarly different aspects of overall of NBP are also covered in this report.

RESEARCH METHODOLOGY

1.4

The report is based on my two months internship program in National Bank of

Pakistan. The methodology reported for collection of data is primary as well as secondary
data. The biggest source of information is my personal observation while working with staff
and having discussion with them. Formally arranged interviews and discussions also helped
me in this regards.

Primary data:
Personal observation
Interviews of staff

Secondary data:
Manuals
Journals
Magazine
Annual reports
Internet

1.5 Scheme of Study

Chapter 1:
An introductory chapter that discuss the introduction of study of report, its
Background, Purpose, Scope, Methodology, limitations and Scheme of the report

Chapter 2:
This chapter consist Nationalization of banking in Pakistan, History of NBP, mission
statement, its objectives and functions of National Bank of Pakistan.

Chapter 3:
2

In this chapter the services of NBP were discussed.

Chapter 4:
In this chapter the in this section the depart mentation of NBP is explained, and also
NBP Hayatabad township branch.

Chapter 5:
It tells about Strengths, Weaknesses, Opportunities and Threats of i.e. SWOT analysis
of NBP.

Chapter 6:
It consists of comprehensive performance of NBP through past several years. Ratio
analysis and those parties, which are interested in financial performance of Bank.

Chapter 7:
It covers the critical analysis of the bank. This chapter has been divided into four parts
i.e. Problems at the Branch, Functional analysis, Administrative analysis, and Personal
Management Analysis. SECTION

Chapter 8:
In this chapter recommendation for improvement on all aspects of the Bank are given.

CAHAPTER 2
OVERVIEW OF ORGANIZATION
2.1

History

The banking reforms turned to be transitional and interim step and when they were
hardly eighteen months old the government nationalized the banking systems, with the
following main objectives.
3

To enable the government to use the capital concentrated in the hands of a few rich bankers
for the rapid economic development of the country and the more urgent social welfare
objectives.
To distribute equitably credit too different classes sectors and regions.
To coordinate the banking policies in various area of feasible joint activity without
eliminating healthy competition among banks.
The act passed for the nationalization of banks is known as the banks Nationalization Act
1974.
Thus under this act the state bank of Pakistan and all the commercial banks incorporated in
Pakistan and carrying business in or outside the country were brought under government
ownership with effect from Jan 1, 1974. The ownership, management and control of all
Pakistani banks stood transferred to and vested in the Federal government. The shareholders
were provided compensation in the form of federal government bonds redeemable at par
anytime within the period of fifteen years. Under the Nationalization act, the Chairman,
Directors and Executives of various banks, other than those appointed by federal government
were removed from their offices and the central boards of the banks and all local bodies were
dissolved. Pakistan banking council was established to coordinate the activities of the
Nationalized Commercial banks. At the time of Nationalization on December31, 1973 there
were following 14 Pakistani commercial banks with 3323 offices allover Pakistan and 74
offices in foreign countries:

2.2 Islamization of Banking

Another major development in the history of Pakistan Banking System was the
introduced of interest free banking in selected Commercial Banks with effect form Jan1,
1981. This followed the effort to eliminated interest from the operation of Nation investment
trust, the House Building Finance Corporation of Pakistan. Certain amendments were made
in banking and other laws with the object of ushering in a new system of banking, which
would confirm of Sharia. A new law Modaraba Companies Ordinance 1980 was promulgated.
4

Separate interest free counters began to operate in all the nationalized commercial banks free
counters began to operate in all the nationalized commercial banks. The state bank provides
finance against participation term certificate and also against promissory notes supported by
Modaraba certificate.
In order to cover interest free transactions certain banking definitions such as creditors,
debtor, and advances credits and deposits were revised. Stipulations concerning form of
business in which banking companies may engage may also have been modified schemes
were introduced to provide interest free loans to formers and deserving students.
A private Limited Company named as Bankers Equity limited was incorporated in 1979 to
provide financial assistance to the industrial sector primarily on interest free basis.
A scheme to extend interest free productive loans to farmers and fisherman has also been
introduced. Instead of interest, a system based on mark-up in price, exchange rate differential,
and profit and loss sharing accounts were introduced.
Different financial schemes introduced in the Islamization process are: 2
Musharika Financing.
Hire Purchase Financing.
Modaraba Financing.
Specific Purpose Modaraba.

2.3 Dis-Investment and Deregulation of Banking 1991

When it was realized that the role of public sector in the economy is over extended
and the banking sector has more earning potential in the private sector the process of
privatization banking sector restarted in 1991 by the Muslim League Government. Muslim
Commercial Bank was Dis-invested in to two phases while ABL was sold to its employees.
Since then allot of investment is being made in the banking sector and several new banks
were established and still the process is going on. Now only NBP is government bank other
than SBP. The performance of this bank will be analyzed and judged in the following
chapters.
5

2.4 Interest Free Banking

A new concept of interest free banking was introduced in 1981 and by now it has been
established on sound footing and new trends and techniques are being implemented to make
this system result oriented. New products and their systematic consumption are making
Pakistani banking comparable to their several modern counterparts anywhere in the
developed world.

2.5

History Of NBP
The NBP was established vide NBP Ordinance No. XIX of November 9. 1949.

British Govt. devalued its currency in September 1949, India devalued its rupees but
Pakistan did not. It led to a crisis in trading between the two countries and India refused to lift
the Pakistan Jute. To solve this problem i.e. to export jute NBP was established through an
Ordinance of GOP. National Bank of Pakistan maintains its position as Pakistan's premier
bank determined to set higher standards of achievements. It is the major business partner for
the Government of Pakistan with special emphasis on fostering Pakistan's economic growth
through aggressive and balanced lending policies, technologically oriented products and
services offered through its large network of branches locally, internationally and
representative offices.
The Bank in 1950 had one subsidiary The Bank of Bahawalpur on December4, 1947 by the
former Bahawalpur State.
NBP was undertaking Treasury Operations and Managing Currency Chests or Sub Chests at
57 of its offices where the turnover of the business under the head amounted to Rs.2460
million.
i)

Deposits held by NBP constituted about 3.1% of total deposits of all

Pakistani Banks in 1949, which rose to 38% in 1952.

ii)

Growth in Deposits was accompanied by increase in Bank portfolio in

advances.

NBP lent out to Textile, Yarn, Iron and Steel and played a pioneer role in support of
agriculture and commerce.

iii)

NBP advances reached Rs.554.4 million by December 1959, which was one third of
the total schedule bank credit.

2.5.1 MISSION STATEMENT

To make the Bank complete and competitive with all international
Standard in performing, quality of, operations, staff, financial strength. And products and
services To develop a culture of excellence in every spare of activity of the bank..
2.5.2 GOALS AND OBJICTIVES
An organizational objective is the intended goal that prescribes definite scope and
suggests direction to the panning efforts of a organization.

2.5.3 GOALS AND OBJICTIVES NBP

To be the pre-eminent financial institution in Pakistan and achieve market
recognition both in the quality and delivery of service as well as the range of product
offerings.7
2.5.4 BOARD OF DIRECTORS
Table 1
NAME

DISIGNATION

Ali Raza

Chairman & President

Dr Waqar Masood

Director

Ifthikhar Ali Malik

Director

Syed Shafqat Ali Shah Jamoti

Director

M Zubair Motiwala

Director

Sikandar Hayat Jamali

Director

M. Khalid Malik

Director
7

S.M. Rafique

SEVP & Sectorary to BD

(Source Annual report 2014)

2.6

MANAGEMENT
Management is a distinct process consisting of activities of planning, organizing,

actuating and controlling performed to determine and accomplish stated objectives with the
use of human being and other resources.8
The management has two types.
1 Centralized.
2 Decentralized.
Centralized Management tends to concentrate decision making at the top of the
Organization .
Decentralized disperses decision making and authority throughout and further down the
organizational hierarchy.9
NBP have a centralized type of management because all the decisions are taken by the top
management.

2.6.1 SENIOR MANAGEMENT OF NBP.

Table 2
SEVP & Group Chief, Corporate &
Masood Karim Sheikh

Investment Banking Group and Chief

Financial Officer

S. M. Rafique
Derick Cyprian

Imam Bakhsh Baloch

Shahid Anwar Khan

Nadeem A. Dogar

Muhammad Sardar Khawaja

Dr. Asif A. Brohi
Javed Mehmood

Muhammad Nusrat Vohra

Amim Akhtar
Dr. Mirza Abrar Baig

Uzma Bashir

SEVP & Secretary Board of Directors

SEVP & Group Chief, Special Assets &
Remedial Management Group
SEVP & Group Chief, Compliance
Group
EVP & Group Chief, Commercial &
Retail Banking Group
EVP & Group Chief, Information
Technology Group
EVP

&

Group

Chief,

Audit

&

Inspection Group
EVP & Group Chief, Operations Group
EVP & Group Chief, Risk Management
Group
EVP

&

Group

Chief,

Treasury

Management Group
EVP & PSO to the President
Group

Chief,

Human

Resources

Management & Administration Group

Group

Chief,

Organization

D&T

Group

(Source www.nbp.com.pk)

2.7

Net Work of Branches:

NBP have wide range of branches inside the country and outside the country.
10

In Pakistan it has 29 regional offices, 1189 Branches and 4 Subsidiaries.

In overseas it has 16 overseas branches, 6 other branches.10

2.8

Objectives of NBP
National bank of Pakistan is also a commercial organization and its main objective is

profit maximization. This is achieved in two ways:

1. By increasing deposits.
2. By charging interest on loans provided to the private sector and business community.
These are explained as:
2.8.1 Increase in deposits:
Competition in banking is intense and every bank whether it is Pakistani, foreign,
private or nationalized tries to increase its deposits by providing better facilities to its
customers. By increasing its deposits a bank can extend greater amount of loan and hence
achieves higher profit. NBP is also improving its facilities and services to attract customers
with higher volume of deposits. There are two main factors involved in increasing the
deposits. These factors are improving the services and courtesy. NBP is continuously working
on these two factors to increase its deposits.
2.8.2

Extension of loans:
The profitability of a bank largely depends on the amount given to people as loan and

the type of people to whom credit is given i.e. the credit worthiness of the borrowers. This
strategy has worked quite well for NBP. Deposits are collected from the people and invested
in different projects. NBP prefers to give loans to financially sound and reliable parties, after
securing the collators. NBP has an extremely well organized section. The staff is adequately
trained, and educated and competent. They carry out extensive financial analysis before
deciding on the loan. Interest charged on the loans potentially contributes to higher profits.
Some of the other objectives of NBP are:
i. Improve customer services.
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ii. Quick disposal of credit cases.

iii. Efficient operation of the branches.
iv. Better Public Relations.
v. Operational and advisory services for foreign exchange accounts activities

2.9

Functions of NBP
Since NBP is a commercial bank, it performs a variety of functions.

Like other commercial banks, NBP is engaged in financing international trade.

Its other

major functions include receiving deposits, advancing loans and discounting of exchange.
The functions performed by NBP are:
2.9.1 Accepting Deposits
This function is important because banks largely depend on the funds deposited with
them by its customers. Deposits are of many types:

i.

Current deposits
Current deposits are also called demand liability on current deposits. NBP pays

practically no interest on current deposits. Businessmen usually open current accounts. In

NBP current account can be opened with a minimum amount of Rs.500/-.
ii.

PLS saving deposit

Profit and loss sharing deposits (PLS) are also called checking accounts. One can

deposit and draw money easily. Profit on PLS is calculated every month but paid after six
months. PLS account can be opened with a minimum amount of Rs.500/iii.

PLS term deposits

Fixed term deposits are deposits with the bank for certain fixed period before the

expiry of which they cannot be withdrawn unless giving due notice. In this case the rates of
profit will be different depending upon the time period.
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2.9.2

Discounting bills of exchange

Discounting of bill is practically speaking lending for exchange at their market rate

i.e. it pays to holder of the bill an amount equal to the face value after deducting interest at
the current market rate for the period. This bill has to be mature. This is the common way
used for keeping a part of assets of the bank in a liquid form.
2.9.3

Agency service

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

Collection of dividends

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

ii.

Collection of Cheques

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

Acting as an agent
NBP also acts as an agent correspondent or representative for its customer at home or

abroad.
iv. General utility services:
Utilities provided by NBP are as follows:
a.

Clearance of utility bills

NBP provides the service of clearing the utility bills i.e. electricity, gas and telephone

bills of its customers. For this purpose it also provides evening banking services.
b. Lockers facility

13

National bank of Pakistan also provides locker facilities to its customers to keep their
valuable assets in it. The charges of different size of lockers are different.
c. Acts as a referee
NBP provides useful services to its customers by acting as a referee to their credit
worthiness.
d. Supply of information
NBP provides operational and advisory service for foreign exchange accounts/activities.

2.10 Unmatched Banking Facilities

Deposit security, Guaranteed by Government of Pakistan.

Highest rates of return to attract the savings.
Lowest rates on exports and other borrowings.
Largest contribution towards Government and

requirements.
Agents of the SBP handling Treasury Functions, receipts of Taxes & other

Revenues.
Handling of salaries & pensions of federal/provincial/defense personnel.
Utility Bills collections.
Hajj arrangements.
Sale and encashment of prize Bonds.
Sale and encashment of Defense Savings and Special Savings Certificates.
Safe Deposit Lockers for customers.
Rational Human Resource Management.

Semi-Government

The prestigious periodical The Banker UK recognized NBP as the best bank for 2012-2013
and NBP is the bank of the year for 2014-2004 of Pakistan.
i. AAA rating awarded JCR-VIS Credit co. Ltd and affiliated of Japan Credit Rating
Agency for 2012.

14

ii. AAA+1 rating awarded JCR-VIS Credit Co.Ltd and affiliated of Japan Credit Rating
Agency for 2013

CHAPTER # 3
SERVICES OF NBP
3.1

SERVICES
Services are he outputs of the firm which are in intangible form.

NBP offers the following services to the people.

3.1.1

DEMAND DRAFTS

If you are looking for a safe, speedy and reliable way to transfer money, you can now
purchase NBPs Demand Drafts at very reasonable rates. Any person whether an account
holder of the bank or not, can purchase a Demand Draft from a bank branch.
3.1.2

SWIFT SYSTEM
The SWIFT system (Society for Worldwide Interbank Financial Telecommunication)

has been introduced for speedy services in the area of home remittances. The system has
built-in features of computerized test keys, which eliminates the manual application of tests
that often cause delay in the payment of home remittances. The SWIFT Center is operational
at National Bank of Pakistan with a universal access number NBP-APKKA. All NBP
overseas branches and overseas correspondents (over 450) are drawing remittances through
SWIFT.

15

Using the NBP network of branches, you can safely and speedily transfer money for our
business and personal needs.

3.2

LETTERS OF CREDIT
NBP is committed to offering its business customers the widest range of options in the

area of money transfer. If you are a commercial enterprise then our Letter of Credit service is
just what you are looking for. With competitive rates, security, and ease of transaction, NBP
Letters of Credit are the best way to do your business transactions.

3.3 TRAVELERS CHEQUES

Travelers cheques are negotiable instruments, and there is no restriction on the period of
validity of the cheques. Rupee travelers cheque is available at all 700 branches of NBP. This
can be encashed in all 400 branches of NBP. There is no limit on purchase of this cheque. It is
one of the safest ways for carrying money.

3.4 PAY ORDER

NBP provides another reason to transfer your money using our facilities. NBP pay orders
are a secure and easy way to move your money from one place to another. And, as usual,
NBP charges for this service are extremely competitive. The charges of NBP are very low all
over the Pakistan. It charges Rs50/- for NBP account holders on issuing one payment order.
And charges Rs100/- for NBP non-account holders on issuing one payment order. It charges
Rs25/- for students on payment of fees of educational institutions. If someone want a
duplicate of payment order they charges Rs100/- for NBP account holders and Rs150/- for
non-account holders.

3.5 MAIL TRANSFERS

Move your money safely and quickly using NBP Mail Transfer service. And NBP also
offer the most competitive rates in the market. They charges Rs50/- exchange rate and RS
75/- postage charges on issuing mail transfer.

3.6 FOREIGN REMITTANCES:

16

To facilitate its customers in the area of Home Remittances, National Bank of Pakistan
has taken a number of measures to:

Increase home remittances through the banking system

Meet the SBP directives/instructions for timely and prompt delivery of remittances to
the beneficiaries.

3.6.1

New Features:

The existing system of home remittances has been revised/significantly improved and
well-trained field functionaries are posted to provide efficient and reliable home remittance
services to nonresident Pakistanis at 15 overseas branches of the Bank besides Pakistan
International Bank (UK) Ltd., and Bank Al-Jazira, Saudi Arabia.

Zero Tariffs: NBP is providing home remittance services without any charges.

Strict monitoring of the system is done to ensure the highest possible security.

Special courier services are hired for expeditious delivery of home remittances to the
beneficiaries.

3.6.2 SHORT TERM INVESTMENTS

NBP now offers excellent rates of profit on all its short term investment accounts.
Whether you are looking to invest for 3 months or 1 year, NBPs rates of profit are extremely
attractive, along with the security and service only NBP can provide.

3.7 National Income Daily Account (NIDA)

The scheme was launched in December 2006 to attract corporate customers. It is a
current account scheme and is part of the profit and loss system of accounts in operation
throughout the country.

17

3.7.1 Salient Features:

Rs 2-million is required to open an account and there is no maximum limit.

Profit is paid on half yearly basis on monthly balances.

The rates of profit vary according to the slabs of deposit. On Deposits of Rs.2 million
to 2,000 million, the rate fluctuates from 1.4 to 1.75

It is a checking account and there is no limit of withdrawals.

3.7.2 Rates on NIDA

From Rs2/- million to Rs50/- the rate is 1.4%.

From Rs50/- million but less than Rs500/-million, the rate is 1.5%.

From Rs500/- million but below Rs1000/- the rate is 1.6%.

From Rs1000/- and above the rate is 1.75%.

3.8

QUITY INVESTMENTS

NBP has accelerated its activities in the stock market to improve its economic base and
restore investor confidence. The bank is now regarded as the most active and dominant
player in the development of the stock market.
3.8.1 NBP is involved in the following:

Investment into the capital market

Introduction of capital market accounts (under process)

18

NBPs involvement in capital markets is expected to increase its earnings, which would result
in better returns offered to account holders.

3.9

COMMERCIAL FINANCE

NBP dedicated team of professionals truly understands the needs of professionals,

agriculturists, large and small business and other segments of the economy. They are the
customers best resource in making NBPs products and services work for them.

3.10 RADE FINANCE OTHER BUSINESS LOANS

There are two types of trade finance.
3.10.1 AGRICULTURAL FINANCE
NBP provides Agricultural Finance to solidify faith, commitment and pride of farmers
who produce some of the best agricultural products in the World.
3.10.2 Agricultural Finance Services:
I Feed the World program, a new product, is introduced by NBP with the aim to
help farmers maximize the per acre production with minimum of required input. Select farms
will be made role models for other farms and farmers to follow, thus helping farmers across
Pakistan to increase production.
3.10.3 Agricultural Credit:
The agricultural financing strategy of NBP is aimed at three main objectives:

Providing reliable infrastructure for agricultural customers

Help farmers utilize funds efficiently to further develop and achieve better production

Provide farmers an integrated package of credit with supplies of essential inputs,

technical knowledge, and supervision of farming.

19

3.10.4 Agricultural Credit (Medium Term):

Production and development

Watercourse improvement

Wells

Farm power

Development loans for tea plantation

Fencing

Solar energy

Equipment for sprinklers

3.10.5 Farm Credit:

NBP also provides the following subsidized with ranges of 3 months to 1 year on a
renewal basis.

Operating loans

Land improvement loans

Equipment loans for purchase of tractors, farm implements or any other equipment

Livestock loans for the purchase, care, and feeding of livestock.

3.10.6 Production Loans:
Production loans are meant for basic inputs of the farm and are short term in nature.
Seeds, fertilizers, sprayers, etc are all covered under this scheme.
If you require any further information, please do not hesitate to e-mail us.

20

3.11 CORPORATE FINANCE

3.11.1 Working Capital and Short Term Loans:
NBP specializes in providing Project Finance Export Refinance to exporters Preshipment and Post-shipment financing to exporters Running finance Cash Finance
Small Finance Discounting & Bills Purchased Export Bills Purchased / Pre-shipment /
Post Shipment Agricultural Production Loans
3.11.2

Medium term loans and Capital Expenditure Financing:

NBP provides financing for its clients capital expenditure and other long-term

investment needs. By sharing the risk associated with such long-term investments, NBP
expedites clients attempt to upgrade and expand their operation thereby making possible the
fulfillment of our clients vision. This type of long term financing proves the banks belief in
its client's capabilities, and its commitment to the country.
3.11.3

Loan Structuring and Syndication:

National Banks leadership in loan syndicating stems from ability to forge strong

relationships not only with borrowers but also with bank investors. Because we understand
our syndicate partners asset criteria, we help borrowers meet substantial financing needs by
enabling them to reach the banks most interested in lending to their particular industry,
geographic location and structure through syndicated debt offerings. Our syndication
capabilities are complemented by our own capital strength and by industry teams, who bring
specialized knowledge to the structure of a transaction.
3.11.4 Cash Management Services:
With National Banks Cash Management Services (in process of being set up), the
customers sales collection will be channeled through vast network of NBP branched spread
across the country. This will enable the customer to manage their companys total financial
position right from your desktop computer. They will also be able to take advantage of our
outstanding range of payment, ejection, liquidity and investment services. In fact, with NBP,
youll be provided everything, which takes to manage your cash flow more accurately

21

3.12

INTERNATIONAL BANKING

National Bank of Pakistan is at the forefront of international banking in Pakistan which is

proven by the fact that NBP has its branches in all of the major financial capitals of the
world. Additionally, we have recently set up the Financial Institution Wing, which is placed
under the Risk Management Group. The role of the Financial Institution Wing is:

To effectively manage NBPs exposure to foreign and domestic correspondence

Manage the monetary aspect of NBPs relationship with the correspondents to support
trade, treasury and other key business areas, thereby contributing to the banks
profitability

Generation of incremental trade-finance business and revenues

3.13 NBP offers:

The lowest rates on exports and other international banking products

Access to different local commercial banks in international banking

3.14 Cash and Gold Finance.

Cash and Gold finance means that loan is given against the gold. The gold is mortgaged
with the bank and loan is taken. It is the area of consumer finance. And borrower can take
loan for common use.

3.15 Advance salary loan:

This loan is given to those people who are govt servants. They can get a loan up to the
salary of fifteen months.

CHAPTER # 4
DEPARTMENTALIZATION

22

Dividing an organization into different parts according to the functions is called depart
mentation. So NBP Hayatabad township branch is divided into two main parts.

4.1 CASH DEPARTMENT

Cash department performs the following functions
4.1.1) Receipt
The money, which either comes or goes out from the bank, its record should be kept.
Cash department performs this function. The deposits of all customers of the bank are
controlled by means of ledger accounts. Every customer has its own ledger account and has
separate ledger cards.
4.1.2) Payments
It is a bankers primary contract to repay money received for this customers account
usually by honoring his cheques.
4.1.3) Cheques and their Payment
The Negotiable Instruments. Act, 1881,
Cheque is a bill of exchange drawn on a specified banker and not expressed to be payable
otherwise than on demand2.
Since a Cheque has been declared to be a bill of exchange, it must have all its characteristics
as mentioned in Section 5 of the Negotiable Instruments Act, 1881. Therefore, one can say
that a Cheque can be defined as an:
An unconditional order in writing drawn on a specified banker, signed by the drawer,
requiring the banker to pay on demand a sum certain in money to, or to the order of, a
specified person or to the bearer, and which does not order any act to be done in addition to
the payment of money3. (Law of Banking by Dr. Hart, p.327).
4.1.4) the Requisites of Cheque
There is no prescribed form of words or design of a Cheque, but in order to fulfill the
requirements mentioned in Section 6 above the Cheque must have the following.
23

a)

It should be in writing

b)

The unconditional order

c)

Drawn on specific banker only

d)

Payment on Demand

e)

Sum Certain in money

f)

Payable to a specific person

g)

Signed by the drawer

4.1.5) Parties to Cheque

The normal Cheque is one in which there is a drawer, a drawee banker and a payee, or no
payee but bearer.
a)

The Drawer

b)

The Drawee

c)

The Payee

4.1.6) Types of Cheques

Bankers in Pakistan deal with three types of cheques
a) Bearer Cheques
Bearer cheques are cashable at the counter of the bank. These can also be collected
through clearing.4
b) Order cheque

24

These types of cheques are also cashable on the counter but its holder must satisfy the banker
that he is the proper man to collect the payment of the cheque and he has to show his
identification. It can also be collected through clearing.
c) Crossed Cheque
These cheques are not payable in cash at the counters of a banker. It can only be credited to
the payees account. If there are two persons having accounts at the same bank, one of the
account holder issues a cross-cheque in favour of the other account holder. Then the cheque
will be credited to the account of the person to whom the cheque was issued and debited from
the account of the person who has actually issued the cheque.
4.1.7) Payment of Cheques
It is a bankers primary contract to repay money received for his customers account usually
by honouring his cheques. Payment of money deposited by the customer is one of the root
functions of banking. The acid test of banking is the receipt of money etc. from the
depositors, and repayment to them. This paying function is one, which is the distinguishing
mark of a banker and differentiates him from other institutions, which receive money from
the public. However the bankers legal protection is only when payment is in Due Course.
The payment in due course means payment in accordance with the apparent tenor of the
instrument, in good faith and without negligence to any person in possession thereof under
circumstances, which do not afford a reasonable ground of believing that he is not entitled to
receive payment of the amount therein mentioned. It is a contractual obligation of a banker to
honor his customers cheques if the following essentials are fulfilled.
a)

Cheques should be in a proper form:

b)

Cheque should not be crossed:

c)

Cheque should be drawn on the particular bank:

d)

Cheque should not mutilated:

e)

Funds must be sufficient and available:

f)

The Cheque should not be post dated or stale:

25

g)

Cheque should be presented during banking hours:

4.2 CLEARANCE DEPARTMENT

A clearinghouse is an association of commercial banks set up in given locality for the purpose
of interchange and settlement of credit claims. The function of clearinghouse is performed by
the central bank of a country by tradition or by law. In Pakistan, the clearing system is
operated by the SBP. If SBP has no office at a place, then NBP, as a representative of SBP act
as a clearinghouse.
After the World War II, a rapid growth in banking institutions has taken place. The use of
cheques in making payments has also widely increased. The collection as settlement of
mutual obligations in the form of cheques is now a big task for all the commercial bank.
When Cheque is drawn on one bank and the holder (payee) deposits the same in his account
at the bank of the drawer, the mutual obligation are settled by the internal bank administration
and there arises no inter bank debits from the use of cheques. The total assets and total
liabilities of the bank remain unchanged.
In practice, the person receiving a Cheque as rarely a depositor of the cheque at the same
bank as the drawer. He deposits the cheque with his bank other than of payer for the
collection of the amount. Now the bank in which the cheque has been deposited becomes a
creditor of the drawers bank. The depositor bank will pay his amount of the cheque by
transferring it from cash reserves if there are no offsetting transactions. The banks on which
the cheques are drawn become in debt to the bank in which the cheques are deposited. At the
same time, the creditors banks receive large amounts of cheques drawn on other banks
giving claims of payment by them.
The easy, safe and most efficient way is to offset the reciprocal claims against the other and
receive only the net amount owned by them. This facility of net inter bank payment is
provided by the clearinghouse.
The representatives of the local commercial banks meet at a fixed time on all the business
days of the week. The meeting is held in the office of the bank that officially performs the
duties of clearinghouse. The representatives of the commercial banks deliver the cheques
payable at other local banks and receive the cheques drawn on their bank. The cheques are
then sorted according to the bank on which they are drawn. A summary sheet is prepared
26

which shows the names of the banks, the total number of cheques delivered and received by
them. Totals are also made of all the cheques presented by or to each bank. The difference
between the total represents the amount to be paid by a particular bank and the amount to be
received by it. Each bank then receives the net amount due to it or pays the net amount owed
by it.
4.2.1) In-Word Clearing Books
The bank uses this book for the purpose of recording all the cheques that are being
received by the bank in the first clearing. All details of the cheques are recorded in this book.
4.2.2) Out-Word Clearing Book:
The bank uses outward clearing register for the purpose of recording all the details of the
cheques that the bank has delivered to other banks.

4.3 ADVANCES DEPARTMENT

Advances department is one of the most sensitive and important departments of the bank.
The major portion of the profit is earned through this department. The job of this department
is to make proposals about the loans. The Credit Management Division of Head Office
directly controls all the advances. As we known bank is a profit seeking institution. It attracts
surplus balances from the customers at low rate of interest and makes advances at a higher
rate of interest to the individuals and business firms. Credit extensions are the most important
activity of all financial institutions, because it is the main source of earning. However, at the
same time, it is a very risky task and the risk cannot be completely eliminated but could be
minimized largely with certain techniques.
Any individual or company, who wants loan from NBP, first of all has to undergo the
filling of a prescribed form, which provides the following information to the banker.
4.3.1) Name and address of the borrower.
27

a)

Existing financial position of a borrower at a particular branch.

b)

Accounts details of other banks (if any).

c)

Security against loan.

d)

Exiting financial position of the company. (Balance Sheet & Income Statement).

e)

Signing a promissory note is also a requirement of lending, through this note borrower
promise that he will be responsible to pay the certain amount of money with interest.

4.3.2) Principles of Advances

There are five principles, which must be duly observed while advancing money to the
borrowers.
Safety
Liquidity
Dispersal
Remuneration
Suitability
a. Safety
Bankers funds comprise mainly of money borrowed from numerous customers on
various accounts such as Current Account, Savings Bank Account, Call Deposit Account,
Special Notice Account and Fixed Deposit Account. It indicates that whatever money the
banker holds is that of his customers who have entrusted the banker with it only because they
have full confidence in the expert handling of money by their banker. Therefore, the banker
28

must be very careful and ensure that his depositors money is advanced to safe hands where
the risk of loss does not exist. The elements of character, capacity and capital can help a
banker in arriving at a conclusion regarding the safety of advances allowed by him.
b.

Character
It is the most important factor in determining the safety of advance, for there is no

substitute for character. A borrowers character can indicate his intention to repay the advance
since his honesty and integrity is of primary importance. If the past record of the borrower
shows that his integrity has been questionable, the banker should avoid him, especially when
the securities offered by him are inadequate in covering the full amount of advance.
It is obligation on the banker to ensure that his borrower is a person of character and has
capacity enough to repay the money borrowed including the interest thereon.
c.

Capacity

This is the management ability factor, which tells how successful a business has been in
the past and what the future possibilities are. A businessman may not have vast financial
resources, but with sound management abilities, including the insight into a specific business,
he may make his business very profitable. On the other hand if a person has no insight into
the particular business for which he wants to borrow funds from the banker, there are more
chances of loss to the banker.
d.

Capital

This is the monetary base because the money invested by the proprietors represents their
faith in the business and its future. The role of commercial banks is to provide short-term
capital for commerce and industry, yet some borrowers would insist that their bankers
provide most of the capital required. This makes the banker a partner. As such the banker
must consider whether the amount requested for is reasonable to the borrowers own resources
or investment.
e.

Liquidity

Liquidity means the possibilities of recovering the advances in emergency, because all the
money borrowed by the customer is repayable in lump sum on demand. Generally the
29

borrowers repay their loans steadily, and the funds thus released can be used to allow fresh
loans to other borrowers. Nevertheless, the banker must ensure that the money he is lending
is not blocked for an undue long time, and that the borrowers are in such a financial position
as to pay back the entire amount outstanding against them on a short notice. In such a
situation, it is very important for a banker to study his borrowers assets to liquidity, because
he would prefer to lend only for a short period in order to meet the shortfalls in the wording
capital. If the borrower asks for an advance for the purchase of fixed assets the banker should
refuse because it shall not be possible for him to repay when the banker wants his customer to
repay the amount. Hence, the baker must adhere to the consideration of the principles of
liquidity very careful.

f.

Dispersal

The dispersal of the amount of advance should be broadly based so that large number of
borrowing customer may benefit from the bankers funds. The banker must ensure that his
funds are not invested in specific sectors like textile industry, heavy engineering or
agriculture. He must see that from his available funds he advances them to a wide range of
sector like commerce, industry, farming, agriculture, small business, housing projects and
various other financial concerns in order of priorities.
Dispersal of advances is very necessary from the point of security as well, because it reduces
the risk of recovery when something goes wrong in one particular sector or in one field.
g.

Remuneration

A major portion of the bankers earnings comes form the interest charged on the money
borrowed by the customers. The banker needs sufficient earnings to meet the following:
a)

Interest payable to the money deposited with him.

b)

Salaries and fringe benefits payable to the staff members.

c)

Overhead expense and depreciation and maintenance of the fixed assets of the bank.

30

d)

An adequate sum to meet possible losses.

e)

Provisions for a reserve fund to meet unforeseen contingencies.

f)

Payment of dividends to the shareholders.

h.

Suitability

The word suitability is not to be taken in its usual literary sense but in the broader sense
of purport. It means that advance should be allowed not only to the carefully selected and
suitable borrowers but also in keeping with the overall national development plans chalked
out by the authorities concerned. Before accommodating a borrower the banker should ensure
that the lending is for a purpose in conformity with the current national credit policy laid
down by the central bank of the country.
4.3.3 Forms of Loans
In addition to purchase and discounting of bills, bankers in Pakistan generally lend in the
form of cash finance, overdrafts and loans. NBP provides advances to different people in
different ways as the case demand.
a) Cash Finance
This is a very common form of borrowing by commercial and industrial concerns and is
made available either against pledge or hypothecation of goods, produce or merchandise. In
cash finance a borrower is allowed to borrow money from the banker up to a certain limit,
either at once or as and when required. The borrower prefers this form of lending due to the
facility of paying markup/services charges only on the amount he actually utilizes.
If the borrower does not utilize the full limit, the banker has to lose return on the un-utilized
amount. In order to offset this loss, the banker may provide for a suitable clause in the cash
finance agreement, according to which the borrower has to pay markup/service charges on at
least on self or one quarter of the amount of cash finance limit allowed to him even when he
does not utilize that amount.
b) Overdraft/Running Finance

31

This is the most common form of bank lending. When a borrower requires temporary
accommodation his banker allows withdrawals on his account in excess of the balance which
the borrowing customer has in credit, and an overdraft thus occurs. This accommodation is
generally allowed against collateral securities. When it is against collateral securities it is
called Secured Overdraft and when the borrowing customer cannot offer any collateral
security except his personal security, the accommodation is called a Clean Overdraft. The
borrowing customer is in an advantageous position in an overdraft, because he has to pay
service charges only on the balance outstanding against him. The main difference between a
cash finance and overdraft lies in the fact that cash finance is a bank finance used for long
term by commercial and industrial concern on regular basis, while an overdraft is a temporary
accommodation occasionally resorted to.
c) Demand Financing/Loans
When a customer borrows from a banker a fixed amount repayable either in periodic
installments or in lump sum at a fixed future time, it is called a loan. When bankers allow
loans to their customers against collateral securities they are called secured loans and when
no collateral security is taken they are called clean loans.
The amount of loan is placed at the borrowers disposal in lump sum for the period agreed
upon, and the borrowing customer has to pay interest on the entire amount. Thus the
borrower gets a fixed amount of money for his use, while the banker feels satisfied in lending
money in fixed amounts for definite short periods against a satisfactory security

4.4 REMITTANCE DEPARTMENT

Remittance means a sum of money sent in payment for something. This department
deals with either the transfer of money from one bank to other bank or from one branch to
another branch for their customers. NBP offers the following forms of remittances.
a)

Demand Draft

b)

Telegraphic Transfer

c)

Pay Order

d)

Mail Transfer
32

4.4.1) Demand Draft

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

Open DD:

Where direct payment is made.

b)

Cross DD:

Where payment is made though account.

NBP CHARGES FOR DD5

I.

Up to Rs.50,000/- is Rs50/- only

II.

Over Rs.50,000/- is 0.1%

4.4.2) Pay Order
Pay order is made for local transfer of money. Pay order is the most convenient, simple

and secure way of transfer of money. NBP takes fixed commission of Rs. 25 per pay order
from the account holder and Rs.100 from a non-account holder.
4.4.3) Telegraphic Transfer
Telegraphic transfer or cable transfer is the quickest method of making remittances.
Telegraphic transfer is an order by telegram to a bank to pay a specified sum of money to the
specified person. The customer for requesting TT fills an application form. Vouchers are
prepared and sent by ordinary mail to keep the record. TT charges are taken from the
customer. No excise duty is charged on TT. The TT charges are:
Telegram/ Fax Charges on TT = Actual-minimum Rs.125.

33

Cable telegram transfer costs more as compared to other title of money. In cable transfer the
bank uses a secret system of private code, which is known to the person concerned with this
department and branch manager.

4.4.4) Mail Transfer

When the money is not required immediately, the remittances can also be made by mail
transfer (MT). Here the selling office of the bank sends instructions in writing by mail to the
paying bank for the payment of a specified amount of money. Debiting to the buyers account
at the selling office and crediting to the recipients account at the paying bank make the
payment under this transfer. NBP taxes mail charges from the applicant where no excise duty
is charged. Postage charges on mail transfer are actual minimum Rs. 40/- if sent by registered
post locally Rs.40/- if sent by registered post inland on partys request.

4.5 HUMAN RESOURCE MANAGEMENT

Human Resource plays a vital role in the success of every service organization. They
interact between man and machine. Their attitude can win or loose the customer. The positive
attitude could only be created in a conducive environment, which can make the staff
dedicated towards the organization and its objectives. In reality the man is more important
than machine as it is the human which could get maximum out of machine to keep a happy
customer. However, most organizations give little importance to this very important asset.
Various aspects related to human resource of National Bank of Pakistan are critically
examined in the following text:
4.5.1) Selection & Recruitment
Although the Bank believes in merit but in practice the selection of employees is not
done on merit. Most of the employees are low educated. This shows that candidates with
some strong family background or political pressure are given preference in recruitment and
qualified candidates are sometimes left behind.
4.5.2) Job for Life
34

Like the employee of public sector organizations in Pakistan, the employees of NBP
also enjoy their job for life. Since there is no risk of early retirement or redundancy in rank,
they do not perform with their full potentials. This is one redundancy in rank, they do not
perform with their full potentials, and this is one of the reasons responsible for the low
productivity of the employees of the Bank.
4.5.3) Performance Appraisal
The performance of employees of the Bank are appraised though their annual
confidential reports at the end of each year. This has become an outdated method of
performance appraisal and no longer used due to the following reasons:
1.

The performance of employees is evaluated after quite a long time.

2.

Element of subjectivity is involved in this method.

3.

Employees participation is not ensured in the process of evaluation.

4.

Objectives of employees are not quantified.

4.5.4) Inter Personal Relationship

Modern management acknowledges human resources as one of the most mportant assets
of an organization. But by their very nature, human beings are also the most unpredictable.
Where a number of persons work together, interactions among them, of necessity, will lead to
conflicts and NBP is no exception. Most interpersonal conflicts in NBP can be traced back to
the following major heads.
Lack of Communication
Lack of communication is for the biggest reason for conflicts. Not only it is due to the
failure to send a massage but to an interpretation given to the massage by the receiver is
different from that intended.

35

4.5.5) Diversity in Values

Diversity in values, perceptions, cultural background and life-style is another reason
responsible for inter personal conflicts in NBP. Different values and perceptions about the
same issue, event or personality hinder understanding. When things come to such a
pavement, therefore, interpersonal conflicts are generated.
The dominant trend in all modern industrial societies of the world is merit and expertise,
which helps promote cohesion and reduce conflicts. But the feudalistic mindset is still very
strong in our set up and there is no tradition of tolerance for differing viewpoints. Hence,
interpersonal conflicts are generated.
4.5.6) Corruption
Our social acceptance of corruption gives rise to corruption at every level of social
and organizational set up. Corruption involves financial embezzlement, favoritism, nepotism,
cronyism and other number of such practices. All these cause resentment that keep building
up and lead to conflict sooner or later.
In the past few years, some cases of frauds have happened in different branches. The reasons
can be linked with the employee dissatisfaction of NBP.
4.5.7) Discipline & Authority
Maintaining discipline and implementation of authority (tables) in letter and spirit is
the key to success of any organization. In NBP, The authority tables are not strictly
maintained. Line managers are not fully equipped with the authority with no vertical or
horizontal interference.

4.6

DEPOSIT DEPARTMENT: 36

It controls the following activities:

a)

A/C opening.

b)

Issuance of cheque book.

c)

Current a/c

d)

Saving a/c

e)

Cheque cancellation

f)

Cash

4.6.1 Account opening

The opening of an account is the establishment of banker customer relationship. Before a
banker opens a new account, the banker should determine the prospective customers
integrity, respectability, occupation and the nature of business by the introductory references
given at the time of account opening. Preliminary investigation is necessary because of the
following reasons.
i.

Avoiding frauds

ii.

Safe guard against unintended over draft.

iii.

Negligence.

iv.

Inquiries about clients.

There are certain formalities, which are to be observed for opening an account with a bank.

Formal Application

Introduction

Specimen Signature

Minimum Initial Deposit

37

Operating the Account

1.

Pay-In-Slip Book

2.

Pass Book

3.

Issuing Cheque Book

a) Qualification of Customer
The relation of the banker and the customer is purely a contractual one, however, he must
have the following basic qualifications.

He must be of the age of majority.

He must be of sound mind.

Law must not disqualify him.

The agreement should be made for lawful object, which create legal relationship

Not expressly declared void.

b) Types of Accounts
Following are the main types of accounts
1)

Individual Account

2)

Joint Account

3)

Accounts of Special Types

Partnership account
Joint stock company account
Accounts of clubs, societies and associations
Agents account
Trust account
Executors and administrators accounts
Pak rupee non-resident accounts
Foreign currency accounts
38

4.6.2 Issuing of cheque book:

This deptt issue cheque books to account holders.
Requirements for issuing cheque book
a) The account holder must sign the requisition slip
b) Entry should be made in the cheque book issuing book
c) three rupees Per cheque should be recovered from a/c holder if not then debit his/her
account.
4.6.3 Current account
These are payable to the customer whenever they are demanded. When a banker
accepts a demand deposit, he incurs the obligation of paying all cheques etc. drawn against
him to the extent of the balance in the account. Because of their nature, these deposits are
treated as current liabilities by the banks. Bankers in Pakistan do not allow any profit on these
deposits, and customers are required to maintain a minimum balance, failing which incidental
charges are deducted from such accounts. This is because the depositors may withdraw
Current Account at any time, and as such the bank is not entirely free to employ such
deposits.
Until a few decades back, the proportion of Current Deposits in relation to Fixed Deposits
was very small. In recent years, however, the position has changed remarkably. Now, the
Current Deposits have become more important; but still the proportion of Current Deposits
and Fixed Deposits varies from bank to bank, branch to branch, and from time to time.

4.6.4 Saving account

Savings Deposits account can be opened with very small amount of money, and the
depositor is issued a cheque book for withdrawals. Profit is paid at a flexible rate calculated
on six-month basis under the Interest-Free Banking System. There is no restriction on the
withdrawals from the deposit accounts but the amount of money withdrawn is deleted from
39

the amount to be taken for calculation of products for assessment of profit to be paid to the
account holder. It discourages unnecessary withdrawals from the deposits.
In order to popularize this scheme the State Bank of Pakistan has allowed the Savings
Scheme for school and college students and industrial labor also. The purpose of these
accounts is to inculcate the habit of savings in the constituents. As such, the initial deposit
required for opening these accounts is very nominal.
4.6.5 Cheque cancellation:
This dept. can cancel a cheque on the basis of;
a) Post dated cheque
b) Stale cheque
c) Warn out cheque
d) Wrong sign etc.
4.6.6 Cash
This dept. also deals with cash. Payment of cheques, deposits of cheques etc.

4.7 FOREIGN EXCHANGE/DEPARTMENT:

This dept. mainly deals with the foreign business. The main functions of this deptt are:
a) L/C dealing.
b) Foreign currency accounts dealing.
c) Foreign Remittance dealing.
40

4.7.1 L/C dealing

NBP is committed to offering its business customers the widest range of options in the
area of money transfer. If you are a commercial enterprise then our Letter of Credit service is
just what you are looking for. With competitive rates, security, and ease of transaction, NBP
Letters of Credit are the best way to do your business transactions.
4.7.2 Foreign currency account dealing:
This department deals with the foreign currency accounts which mainly include dollar
account, euro account etc.
4.7.3 Foreign Remittance dealing.
This is very important function of this department.

CHAPTER #5
STRATEGIC ANALYSIS
SWOT analysis is an acronym that stands for strengths, weakness, opportunities, and
threats SWOT analysis is careful evaluation of an organizations internal strengths and
weakness as well as its environment opportunities and threats.
SWOT analysis is a situational which includes strengths, weaknesses, opportunities and
threats that affect organizational performance.1

41

The overall evaluation of a company strengths, weaknesses, opportunities and threats is

called SWOT analysis.
In SWOT analysis the best strategies accomplish an organizations mission by:
1. Exploiting an organizations opportunities and strength.
2. Neutralizing it threats.
3. Avoiding or correcting its weakness.
SWOT analysis is one of the most important steps in formulating strategy using the
organization mission as a context, managers assess internal strengths distinctive competencies
and weakness and external opportunities and threats. The goal is to then develop good
strategies and exploit opportunities and strengths neutralize threats and avoid weaknesses.

5.1 STRENGTHS:
5.1.1 OLDEST INSTITUTION:
NBP is one of the oldest bank of Pakistan and first nationalized bank Hence its
customer base is strength from this plus point as customers have more confidence in the bank.
The additional value services as the privilege for the bank.
5.1.2 ALTERNATE DUTIES IN SBP ABSENCE
The NBP performs additional services for its customers as well as the other bank
customer in the absence of SBP.
5.1.3 MORE DEPOSITS THAN OTHER BANK
42

NBP has the relative competence in having more deposits than the other bank. This is
because of the confidence the customer have in the bank. The bank being the privileged and
oldest bank in banking sector of Pakistan enjoys this edge over all others, lacking it.
5.1.4 EMPLOYEE BENEFITS
The employers at NBP are offered reasonable monetary benefit. Normally two
bonuses are given Eid-Ul-Fitar & Eid-Ul-Azha. This serves as an additional benefit and
competency for the bank and a source of motivation for the employees.
5.1.5 BROAD NETWORK
The bank has another competency i.e. it has broad-basses network of branches
throughout the country also more than one branch in high productive cities. The customers
are provided services at their nearest possible place to confirm customer satisfied.

5.2 WEAKNESSES
5.2.1 LACK OF MARKETING EFFORT:
The bank does not promote its corporate image, services, etc on a competitive way.
Hence lacks far behind in marketing effort .A need for aggressive marketing in there in the
era marketing in now becoming a part of every organization.
5.2.2 NBP UNDER POLITICAL PRESSURE
The strong political hold of some parties and government and their dominance is
affecting the bank in a negative way. They sometime have to provide loan under the pressure,
which leads to uneven and adjusted feeling in the bank employees.

43

5.2.3 FAVORITISM AND NEPOTISM

The promotions and bonuses etc in the bank are often powered by seniors favoritism
or depends upon their wills and decision. This adds to the negative factors, which denominate
the employees thus resulting in affecting their performance negatively.
5.2.4 LACK OF FINACIAL PRODUCT
The bank falls far behind when the innovative and new schemes are considered. It
has not been involved in the tug of war between the competitors to the accounts and
strengthens the existing customer base. This stands out to be the major incompetence and
weakness of the banks.

5.3 OPPORTUNITIES
5.3.1 ELECTRONIC BANKING
The world today has become a global village because of advancement in the
technologies, especially in communication sector. More emphasis is now given to avail the
modern technologies to better the performances. NBP can utilize the electronic banking
opportunity to ensure on line banking 24 hours a day. This would give a competitive edge
over others.

44

5.3.2 MICRO FINANCING

Because of the need for micro financing in the market, there are lot of opportunities in
this regard. Other banks have already initiated, now the time has arrived when the NBP must
realize it and take on step to cater an ongoing demand.

5.4 THREATS
5.4.1 EMERGENCE OF NEW COMPETITORS
The bank is facing threats with the emergence of new competitors especially in terms
of foreign banks. These foreign banks are equipped with heavy financial power with
excellent and

innovative ways of promoting and performing their services. The bank has to

take initiative in this regard or will find itself far back in competition.
6.4.2 POLITICAL PRESSURE BY ELECTED GOVERNMENT
The ongoing shift in power in political arena in the country effects the performance of
the bank has to forward loans to politically powerful persons which create a sense of
insecurity and demoralization in the customer as well as employees.
5.4.3 DOWNSIZING
The bank is currently acting upon the policy of downsizing which threaten the environment
of the bank Employees feel insecurity in doing their jobs and work, hence affecting the over
all performance of employees negatively.
5.4.4 CUSTOMERS COMPLAINTS
There exists no regular and specific system of the removal of customer complaints.
Now a day a need for total customer satisfaction is emerging and in their demanding
consequences customer's complaints are ignored

5.5 COMPETITIVE ANALYSIS

Porters five forces model:
This approach is widely used for competitive analysis. It is because of the high
intensity of competition among companies there five main competitive forces.
45

5.5.1 Rivalry among competitive firms:

It is a very powerful force among the competitive forces the strategies pursued by one
firm can be successful only to extent that they provide competitive advantages over the
competitor. These competitive strategies may be lowering prices, best quality series. The
NBP offering very low charges an demand draft, telegraphy transfer, mail transfer and
give other additional services to the customers and to the Nation. Because NBP is a
Nations Bank.
5.5.2 Potential entry of new competitors:
Whenever new firms ca easily enters a particular industry, the competition increases.
The gout restriction, tariffs, patents etc can stop new firm to enter into the business as per
Banking industry is concerned this market is already very situated in Pakistan and there
are banks with quality services and low charges. So there is no threat to NBP from
potential entry and NBP is also a public sector bank because of that no other new bank
not takes over it.
5.5.3Potential Development of substitute products:
This is the third factor affecting the competitions. There may be some other product
can be substitute the product of that industry. For example banks offering sawing schemes
in Pakistan and these schemes are also offered by GPOs in Pakistan so they must compete
them in this field. If they offer low rates than GPOs so people will go to deposit in GPOs.
People concentration high rates so thats why sawing PLS accounts are more then current
accounts. The next examples will ATM which substitute presenting cheques at counter
and encash it. The NBP is lacking in this field. It must improve in this field to compete
the competitors.
5.5.4

Bargaining Power of Suppliers:

The bargaining power of supplier affects the intensity of competition, especially when
there are a large number of suppliers. In case of banks the suppliers are customers they
supply the money to banks. Now they must offer good services, quality, and safety. Low
charges etc to customers. In this field NBP is very good. B/C at offers good quality

46

services to customers. They charge low charges on remittances. So thats it is

competitions other banks.
5.5.5

Bargaining Power of Consumers:

When customers are concentrated or large, or buy in volume, their bargaining power
represents a major force affecting intensity of competition. Now the number customers in
Pakistan for banks are very high. Banks offering variety of products and services to their
customers. NBP have a large number of customs. Now it must offer good services and
products to their customers to attract them to come to NBP.

47

CHAPTER #6
FINANCIAL ANALYSIS
Financial analysis, though varying according to the particular interests of the analyst,
always involves the use of various financial statement primarily the balance sheet and income
statement. The balance sheet summarizes the assets, liabilities, and owners equity of a
business at a point in time, and thee income statement summarizes revenues and expenses of
the over a particular period f time. A conceptual framework for financial analysis provides the
analyst with an interlocking means for structuring the financing.
6.1 National Bank of Pakistan Ten Years Performance at glance
2014

2013

2012

2011

2010

2009

2008

2007

Total

47186

43280

41508

37163

35040

41768

40089

36923

assets

39556

36286

34961

31649

29475

27339

25486

23503

16099

14054

17031

14031

12255

10935

10559

85854

81528

62548

Advances

Investme

16619

14352

10235

10948

10820

95649

85094

nt

6
7046

7842

7233

(1260)

3081

2799

--------

------

-------

-------

-----

-------

--------

------

-----

Years
Items

Deposits

71759

72609

91486

S,s holder
equity

18134

14279

11959

11378

10358

9987

9009

6045

3016

1023

520

2135

4198

2253

1149

461

31

10.23

Return on 2%

5.49

3.08

1.24

0.21

1.40%

0.80%

0.30%

0.20%

0.00%

48

9
17047
6

Earnings
per share

208283

27177

996

After tax
profit

320180

2005

9203

pretax
profit

2006

assets
No

-of

Branches
No

1189

1204

1245

1428

1431

1434

1555

1537

1463

23730

21549

20667

1468

of

Emplo1ye
es

13272

12195

15163

15351

15541

15785

18096

(Source Annual reports 2009, 2011, 2013, 2014)

From the above table it is very much clear that the NBP performance is going higher and
higher total assets are at the crest in 2014. If we draw a graph this will shows that the graph is
upward trend. Profit is increasing from year to year. NBP decrease the number of its branches
and employees because of automation and large networks of other banks. But this bank can
compete and now NBP is the best bank of year.

6.2 RATIO ANALYSIS

Financial analysis is the process of identifying the financial strengths and weakness of
the firm by properly establishing relationship between the items of balance sheet and profit
and loss account, in order to make rational decision in keeping with the objective of the
organization, for that purpose the management use analytical tools. To evaluate the financial
condition and performance of the business entity, the financial analyst needs to perform
"checkups" on various aspects of the business financial health.
A tools frequently used during these checkups is a financial ratio analysis, which relates two
piece of financial data by dividing one quantity by the other we calculate ratios because in
this way we get a comparison that may prove more useful than the raw number by
themselves. The business itself and outside providers of capital (creditors and investors) all
undertake financial statement analysis. The type of analysis varies according to the specific
interest party involved. The nature of analysis is depending at the purpose of analyst.

6.3 Parties interested in ratio analysis

6.3.1 Trade creditors

49

Trade creditors are interested in firm's ability to meet their claims over a very short
period of time. Their analysis will, therefore confine to the evaluation of the firm's liquidity
positions.
.6.3.2 Suppliers of long-term debt
Suppliers of long-term debt on the other hand are concerned with firm's long-term
solvency and survival. They analysis the firms profitability over time, its ability to generate
cash to be able to pay interest and repay interest and repay principal and the relationship
between various source of funds. (Capital structure relationship).
Long-term creditors do analyses the historical financial statements but they place more
emphasis on the firm's projected financial statement to make analysis about its future
solvency and profitability.
6.3.3 Investors
Investors who have invested their money in the firms share are most concerned about
the firm steady growth in earning. As such, they concentrate on the analysis of the firm's
present and future profitability. They are also interested in the firms financial structure of the
extent it influence the firms earning ability and risk.

6.3.4 Management.
An organization would be interested in every aspect of the financial analysis. It is
their overall responsibility to see that the resources of the firm are used most effectively and
efficiently and that the firm's financial condition is sound.
So thus management employee financial analysis for the purpose of internal control and to
better provide what capital supplier seeks in financial condition and performance from the
business and from an internal control standpoint, management needs to take financial analysis
in order to plan and control effectively.
50

6.4 Ratio analysis

Ratio is the comparison between two figures of balance sheet and income statement.
7.4.1

Cash Ratio:

This ration is obtained by dividing cash by current liabilities / liabilities.

This ratio shows that the cash is enough for payment of current liabilities or not.
It is calculated as cash Ratio=Cash/current liabilities
Table 3
Year

2008

2009

2010

2011

2012

2013

2014

0.118

0.169

0.19

0.21

0.22

0.15

0.134

Cash
Ratio

Graph 1

51

It means that how much cash is available for payment its current liabilities. This ratio of NBP
shows a downward trend. Because of high advances cash is less to cover its current liabilities.
6.4.2

Gross Profit Margin Ratio:

This ratio shows the profit margin in sales/ revenue.

This is calculated as.
Gross profit/ interest earned
Table 4
Year
Gross
margin%

2008

2009

2010

2011

2012

2013

2014

24.8

27.7

28.9

29.59

39.67

46.6

51.9

profit

Graph2

52

G. profit margin relates profit of the organization to its sales (interest earned in case of Bank).
From calculation it is very much clear that the gross profit margin ration have upward trend
which shows that how much they using their deposits to earn interest. This show the profit of
the firm relative to its revenue. It is a measure of the efficiency of the firms operations too.
As it is clear that the ratio gong high this is the indication of good performance.
6.4.3

Net Profit Margin:

This ratio measure the firms profitability of sales/ interest earned after taking account

of all expenses and income taxes.

This ratio can be calculated as:
Net profit margin ration = Net Profit after taxes / interest earned

Table5
Year
Net

2008
profit 0.2

2009

2010

2011

2012

2013

2014

1.6

1.7

1.55

3.67

3.18

21.6

53

Margin %
Graph3

Explanation: from the calculation and graph it is very much clear that the performance of
NBP is very good. And the trend is upward. It tells us a firms net income per rupee of
revenue. As the trend is upward it shows the high profits in revenue per rupee in case of NBP.
It is because of high advances the NBP has given to the people.

6.4.4

Return on Equity:
Dividing profit after taxation by shareholders equity. ROE compares net profit after

taxes to the Shareholders Equity.

This ratio is calculated as:
ROE=Profit after taxes/Shareholders Equity
Table6
Year
Return

2008
on 0.67

2009

2010

2011

2012

2013

2014

5.3

0.2

2.7

6.55

9.4

23.1

54

Equity
Graph4

Explanation: from the calculation it is clear that the ROE Ratio have an upward trend of NBP.
It is because of high net profit they have earned. It tells us the earning power on the
shareholders investments. It is because of high investments by NBP and effective expense
management.
6.4.5 Return On Assets:
This ratio shows the efficiency of organization that how efficiently utilizes their
assets. This ratio relates profits to assets.
It is calculated as:
Profit after Tax/Total Assets
Table7
Year

2008

2009

2010

2011

2012

2013

2014

Return on assets 0.01

0.16

0.008

0.124

0.225

0.52

0.9

Graph5

55

From calculation it is clear that this ration of NBP is going high and high. It shows that NBP
using its assets very efficiently. That is why they are earning very high profits. This shows
that how efficiently they investing the assets thats why they are earning high profits.
6.4.6

Investment deposit Ratio:

This ratio shows the comparison of investments and deposits. This is calculated as.

Investment deposit Ratio=Investment/deposits

Table8
Year
Investment
ratio

2008

2009

2010

2011

2012

2013

2014

42.9

37.7

31.03

22.94

20.54

39.66

42.01

Deposit

Graph6

56

Explanation: From above table and graph it is very much clear that NBP are using their
deposit very efficiently and earning high profits. The ratio has an upward trend, which shows
the performance of NBP is very good. Now it is the retraction from top management to invest
30% of its deposits. This may reduce its profits. But can be fruitful in long term.
6.4.7

Debit to Equity Ratio:

This ration shows the amount contributed by creditors and shareholders. It shows to

what extent the firm is using borrowed money. It is computed simply dividing the total debt
of the fire by its shareholders equity.
This calculated as.
Total debt/shareholders equity
Table9
Year

2008

2009

2010

2011

2012

2013

2014

32.42

31.4

30.4

20.9

22.7

28.6

24.5

Debt to equity
ratio

Graph7

57

From the table and graph it is clear that this ratio is decreasing which show the high
efficiency of NBP. In 2013 it was high but in 2014 it decreases to 24.5 from 28.6 which is a
good sign. Here the creditors are interested in low ratio. The lower the ratio the high the level
of the fires financing that is being provided by the shareholders.
6.4.8

Debt to assets ratio:

This ratio shows that to which extent the organization assets are financed by debit. It

is calculated as.
Total debt/total asset
Table1
Year

2008

2009

2010

2011

2012

2013

2014

0.94

0.944

0.957

0.954

0.92

0.954

0.961

Debt to asset
ratio

Graph8

58

This ration is directly related to risk high ratio means high risk and low ratio means low risk.
From calculation it is clear that the ratio is decreasing which show low risk. This ratio serves
the similar purpose to the debt to equity ratio. This ratio is high because of more deposits in
the bank, and deposits are the liability of customer on bank
6.4.9

Advances deposit Ratio:

This ratio show that how much efficiently the bank advances the deposits of their

customer to borrower.
It is calculated as.
Advances deposit ratio = Advances/ deposit
Table11
Year

2008

2009

2010

2011

2012

2013

2014

0.414

0.399

0.416

0.443

0.487

0.387

0.406

Advances
deposits ratio

Graph9

59

From above table and graph it is clear that the ratio is going high. Which means the efficiency
on NBP is good and they use their deposits efficiently in advancing to borrowers. Here high
ratio is required. The next side of the picture is that the people will think that is risky to
deposit the money in the bank.
6.4.10 Assets Turnover Ratio:
The relationship of net sales /revenue to total assets is known as the total asset
turnover ratio. It is calculated as.
Total revenue / total assets
Table12
Year

2008

2009

2010

2011

2012

2013

2014

Assets turnover ratio

0.099

0.097

0.093

0.079

0.075

0.079

1.07

Graph10

60

Explanation: This ratio shows us the relative efficiency with which a firm utilizes its total
assets to generate revenue. We can see that the ratio is going high and which is a good sign
and shows that NBP is utilizing its assets efficiently.
7.4.10 Price to earnings Ratio:
This ratio shows the relationship b/w face price per share and earning per share. This
ratio is calculated as:
Price to earnings ratio= face price of share/earning per share

Table13
Year
Price

2008

2009

2010

2011

2012

2013

2014

2.7

47.62

3.17

3.25

1.6

0.97

to

earnings Ratio 2.4

Graph11

61

As from the above calculations it is clear that the ratio decreased tremendously in 2014, it is
because of the reason that earning per share increased resulting in decreasing price to
earnings ratio.
From calculation it is clear that it have a downward slope. It is b/c of increase in earnings per
share.

6.4.12 Dividend yield:

Anticipated annual dividend divided by the market price of the stock.
It is calculated as.
Dividend yield =Total dividend/ market price
Table14
Year

2008

2009

2010

2011

2012

2013

2014

0.2

0.1

2.3

3.32

1.63

2.45

0.23

Dividend
Yield

Graph12
62

Year 2011 was best as far as dividend yield is concerned; it was mainly due to the decreased
amount of number of shares outstanding. In year 2012 increase in outstanding shares
decreased dividend yield, but due to increase in total dividend in 2013 it has recovered to
2.45.
From the above table it is clear that the dividend is increasing but in 2014 it is low. It is
because of high market price and low dividend.
6.4.13 Deposit growth Ratio:
This ratio shows the growth rate of deposits.
This is calculated as
Current year deposits- previous year deposits /previous year deposit
Table15
Year

2008

2009

2010

2011

2012

2013

2014

0.08

0.07

0.08

0.07

0.1

0.037

0.09

Deposit
growth ratio

Graph13

63

Explanation: This ratio shows an excellent move from 2008 to 2014. It upward slope which
shows that the people trust NBP and its management that our money is in safe hands. The
reason for this good move is only Government support to this bank.
6.4.14 Advances Growth Ratio:
This ratio shows the growth rate of advances. This is calculated as
Current year advances- previous year advances / previous year advances.
Table16
Year

2008

2009

2010

2011

2012

2013

2014

0.23

0.04

0.12

0.14

0.21

-0.17

0.15

Advances
Growth
ratio
Graph14

64

Explanation: from calculation and graph it is clear that NBP show a good growth rate in
respect of advances. Only in 2013 it is negative b/c of high advances in 2012 and low
advances in 2013. This shows that NBP is utilizing the deposits efficiently.
The overall performance of NBP is very good. Thats why it is declare the best bank of the
year 2014.
6.5 Predicting failure:
Where one wants to lend money to a company that is about to fail. The ability to
predict corporate failure before the event has been the holy grail of financial analysis for
more than 50 years. The collapse comes much unsaddled. One a company will be successful
and next year it will be fail. For this a tool is used which is
Z=0.012A+ 0.014B + 0.033C + 0.006D = 0.010E
Where A = net current assets total assets.
B = Retained earnings total assets.
C = Profit before interest and tax total assets
D = capitulation total debt
E = Sales total assets

65

Now Z score blow 1.8 was an indicator of probable failure, and a score of over 3 was seen as
a clean bill of health the advantage of this approach is that using a combination of several
financial ratios makes it less likely that the result will be affected by manipulation of financial
statements.
If the portion of current asset is greater compared with total assets the healthier is short term
position.
If the retained earnings is greater the greater is the extent of the companys self-financing.
The profit before tax and interest in the third ratio indicates the contribution of a companys
profitability toward the end index score. In fourth ratio the investors view of the further
potential of the company is set against total debt. The last ratio shows the ability of the
company to use its assets to generate revere.
Predicting failure of NBP - 2009.
Z = 0.012(.86) + 0.014(0.026) + 0.033(0.014) + 0.006(0.13) +0.010 (0.11)
= 0.010 + 0.0004 + 0.0005 + 0.0008 + 0.001 = 0.0129
This shows that the calculation is below 1.8 and it is an indicator of failure

CHAPTER # 7
GENERAL OBSERVATION
I have divided general observation in four parts. Which are as under. This analysis is
mainly based on my general observation.

Problems at the branch.

Function analysis.

Administrative analysis.
66

Personal managements analysis.

7.1 PROBLEMS AT THE BRANCH

7.1.1 Customer Satisfaction
In NBP customer dealing is will, but during rush hour the customer has to wait for a
long time for their turn. Its quite hard for a new customer or potential customer to get the
required information.
7.1.2 Poor record management and filing system
During my internship I observed that filing system of branch is not good. When
certain record is needed the staff has to struggle to find it out and a lot of time is wasted.
7.1.3 Unequal distribution of work
Work is not equally distributed. On one hand some employee have to work all day
without relaxing while some others have nothing to do at all. This not only creates confusion
among employees but also hurting and disturbing for overall setup of the bank. And above all
it results in dissatisfaction among customers as well.

7.1.4 Marketing visits

A useful mode of contact is through personal marketing visits. Such visits are
important in informing and perusing the existing and potential customers about the products
and creating a sense of belongingness with them.

7.2 FUNCTIONAL ANALYSIS

7.2.1 Formal Organization
Formal organization includes the activities of two or more person, which are
cautiously determined groups and coordinated towards a given objective. It provides base
when people are able to communicate with other, when they have common purpose and they
are willing to work.

67

In NBP, we find a formal organization. Bernard referred to an organization as a formal when

the activities of two or more persons are coordinated towards a given objective. The formal
organization comes into being when people are able to communicate with one another or
willing to act and share a purpose.
In this formal organization of NBP the activities are carried out in a more formal way. In
theoretical terms it provides basis for communication with one another but in practice it is not
exercised because an employee at high level cannot get straight away to manager or SVP and
ask him about of his problem faced by him, because first he has to talk to his immediate
superior and follow a proper channel of communication.
7.2.2 Difference between theory and practice
A vast difference exists between theory and practice and NBP has written procedure
but practical work done by employees is a bit different from written procedures.
7.2.3 Bank duty to maintain secrecy.
They dont care about maintaining secrecy, especially during the rush hours. They
speak loudly about the account position and while getting clearance of cheque the person can
easily get the whole information from the ledge. The deposit clerk must be careful while
passing any cheque. In this regard another shortfall is in giving the information about the
balance on telephone.
7.2.4 Excessive paper work
It is notified that due to the lengthy procedure of paper work the bank employee are
overburdened. They are unable to give proper attention to the clients and face difficulties in
getting their job done. One reason for lengthy procedure and excessive paper work in the
bank is the lack of computerized technology.
7.2.5 More accounts fewer deposits.
Efficient banking is one which does not emphasize on number of accounts but on
greater amount of deposits. NBP is more interested in increasing its number of account
irrespective to its deposit. The main reason behind it is that bank does not provide personalize
service to all the account holders and does not improve its quality and services
68

7.2.6 Delegation of authority

Manager has very limited authority; he has to take the approval from his management
authority i-e. In case of advance he has to take the approval of general and regional manager.
The other problem is created, when the manager is not present in his office, the customer
have to wait for hours. This discourages both customer and officers because they have to
suffer a lot

7.3 ADMINISTRATIVE ANALYSIS

7.3.1 Job analysis is not effective
Only on the basis of job analysis it can be decided how a right person can be hired,
trained, compensated or promoted. It is very important for an organization that nature of the
job is described and job specifications are mentioned. Most of the employees are simple
graduate and do not have proper background about their job. This creates problems both for
organization and for the employees. In NBP salaries are given according to the seniority and
grades. People with simple or complex responsibility are getting the same salary and
facilities. This creates dissatisfaction among employees.
7.3.2 Carelessness in opening of account
When customer comes to open an account, the staff does not bother to check his/her
place

phone number and permanent address. It is important because in case of overdraft by

mistake or anything which places his account in debit it will be difficult to trace him. On the
other hand he may be involved in any fraudulent activities against the bank. In this case the
bank will be in awkward position.
7.3.3 Lack of specialized training
NBP does not provide adequate facility of specialized training to their staff. Training
is generalized rather than specialized. As the worker finishes his training, he is inducted into a
specific field without having great deal of knowledge about the field.
In the Hayatabad branch the newly recruited employee training was not imparted, they all
learned things on the job.

69

7.3.4 Low Profit Rates

Most of the customers shifted their account to the National Saving Center because of
the low rates of saving deposit discourages the customers. Bank should increase their profit
rates to attract customers.
7.3.5 Poor job rotation.
There is absence of job rotation in NBP Hayatabad branch. A person placed in one
department remains their forever. It reduces career opportunities as well boredom and in the
end results in career plaguing. Job rotation is very important for employee especially for
those who are newly recruited. The newly recruit should be rated in all department of the
banking in order to get familiar with working of different departments so that when they get a
responsible position they have known how of the whole system.
7.3.6 Delays in Loan Advancement
It has been observed that there are delays in sanctioning of cases form the head office,
which results in customer dissatisfaction.
7.3.7 Lack of appreciation
Another very important thing which is ignored in the bank is appreciation if the
employee on their good performance. If hard work and performance of employees is not
recognized and appreciated they become dishearten which results in decline in performance.

7.4 PERSONAL MANAGEMENT ANALYSIS

7.4.1 Need for better training program
Need of training is greatly emphasized all around the world. Training of the personnel
is part of human resource management. It has been noticed that the training program of NBP
is not adequate.
Once the candidate is selected and placed on the respective job. It becomes essential to train
him adequately for the task. They should learn new methods for motivating customers. The
training programmed of the bank should include scientific techniques to improve the decision

70

making and interpersonal as will individual needs of the employee both specialized to fresh
as well as on job to maintain the high standards of service.
7.4.2 Developing Managerial Leadership
Leadership is a practical term of visible, clear on objective and communicating better
control on financial and administrative matters. Manager is not only responsible for their own
units in business, but also in people terms i.e. training, recruiting, grievance handling and
taking immediate initiative in crisis situation to take major decision affection the future of the
bank and banking community.

7.4.3 Recruitment policy

Human resources are the lifeblood of the organization. If the personnel are recruited
carefully they can become asset to the organization in the case of carelessness a liability on
the organization. Bank is not following its recruitment policy properly due to favoritism,
nepotism and political pressure. Both the top authority and staff union tries their best recruit
their favorites, indulgence of political pressure add salt to the wounds. The persons selected
through these channels are infantile and do not work for the betterment for the bank.
7.4.4 Promotions
Promotion in NBP is purely on the basis of seniority, so the new young person having
high qualification remains behind for quite a lot of time. Top management and staff union put
pressure for the promotion of their favorites, which gives a sense of deprivation to the
deserving employee and their efficiency is affected. As the concept of promotion is attached
with better in terms of greater responsibility, more prestige, greater skills and increased rate
of salary. Thus a better and impartial policy of promotion needs to be followed.
7.4.5 Transfer
Transfer means when a person is shifted from one place to another place. It is done
either that person is needed more on the other branch or for improving his skill variety. It is
the policy of the Bank to transfer each employee 3 to 4 years.
71

7.4.6 Marketing at desk

Bank employee come in daily contact with many people who happen to deal with the
casual remittance, travelers cheques, safe custody, pensioners, depositing license fee and
variety of other functions and variety of other people with whom the Bank has no account or
regular business relationship. The Bank employees are doing very little on their own to
explore the possibilities of selling banking services to them as a marketing contributor. The
entire Bank community should make a conscious effort in addition to their normal work to
explore the possibilities of selling banking services to them. The market opportunities are
hidden in every dealing a banker handles; the question is that if he has the art and urge to
seize such opportunities.
7.4.7 Lack of business communication
There is no proper way to give information to their customer. To avoid this minor
dissatisfaction and tension in the mind of customer, and deficiency of the service, it is
recommended that the bank should provide brochures etc. containing information in details.
Some general information should be placed in information notice board on the entrance
where customer can see it easily or it should be self-attractive.

72

REFERENCES:
1. Block, Stanley B and Hirt Geoffrey A (2005). Foundations Of Financial
Management 7th edition USA: Michael W Junior, p121-148
2. Meigs Financial Accounting 11th edition.
3. National Bank of Pakistan (2011, 2014) Annual Report
4. R.B Hisrich and Peter P Michael Entrepreneurship 5th edition.
5. Simons Harry and Smith J.M Intermediate Accounting 5th edition.
6. Sober P Parey Advance accounting 2nd edition

7. Tarry Franklin Principles of Management 8th edition

8. Van Horne James C and JR Wachowicz M. Jhon Financial management 11
editions
9. Vause Bob The Economist Guide to analyzing companies. 3rd edition.
10. Watson James Fundamentals of Accounting 7th edition.
11. www.onlinewbc.gov/docs/finance/fs.ratio/. Html

73