CHAPTER # 1

INTRODUCTION TO STUDY

1.1 Introduction

Beginning with the name of Allah, I am going to write my internship report as part of the
academic requirement according to the H.E.C plan for the completion of 16 year’s study
and of two years study in MBA Finance. Therefore we the students of Management
Sciences are required to under go for an internship program for the period of two (2)
months as an internee in an organization. This internship will help us to gain the practical
knowledge of working environment of the banking administration.

This report is about National Bank of Pakistan. Which was established in 1949 and since
still working, 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 Study

The main objective and purpose of the study is to collect the relevant information in order
to compile the internship report on National Bank of Pakistan.

To observe, analyze and interpret the relevant data competently and in a useful manner.

• To work practically in an organization.

• To develop interpersonal communication.

Scope of Study

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

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1.4 Objectives of the Study

 Discuss thorough study of National Bank of Pakistan.

 To understand the various operations and to equip with practical knowledge of the
National bank of Pakistan.

1.5 Limitation of the Study

It is said that some thing is better than nothing. No matter how efficiently a study is
conducted, it may not be perfect in all respects. This study was conducted by keeping in
view the objectives of the study. The study may not include broad explanations of facts
and figures on account of its nature. Secondly, the limitation, which affects the study, is
the restriction on mentioning every fact of the bank due to the problem of secrecy of the
bank. In addition, the availability of required data was a problem as all the documents
and files are kept strictly under lock and key due to their confidentiality in nature.
Thirdly, the problem of short time period also makes the analysis restricted as one cannot
properly understand and thus analyze all the operations of a bank just a very short time of
eight weeks.

1.6 Benefit of the Study

The study will highly beneficial for the students who have finance because the financial
analysis section of this report comprehensively encompasses all respects of financial
analysis. Furthermore, NBP Main Branch, Swabi may also beneficial for the
recommendations made at the end of the report.
1.7 Research Methodology

The report is totally based on my stay in National Bank of Pakistan during in internship.
The methodology used for data collection 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.

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Primary data:

I get primary data from there by using my Personal observation and Interviews of the
Staff Members once and again

Secondary data:

Secondary data consist of Manuals, Journals, magazines, Annual Reports and Internet

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CHAPTER # 2

BANKING
Banking is the business of providing financial services to consumers and businesses.
The basic services a bank provides are checking accounts, which can be used like money
to make payments and purchase goods and services; savings accounts and time deposits
that can be used to save money for future use; loans that consumers and businesses can
use to purchase goods and services; and basic cash management services such as check
cashing and foreign currency exchange. Four types of banks specialize in offering these
basic banking services: commercial banks, savings and loan associations, savings banks,
and credit unions.

2.1 Bank (Definition)

A broader definition of a bank

“A bank is any financial institution that receives, collects, transfers, pays,

exchanges, lends, invests, or safeguards money for its customers”.

This broader definition includes many other financial institutions that are not usually
thought of as banks but which nevertheless provide one or more of these broadly defined
banking services. These institutions include finance companies, investment companies,
investment banks, insurance companies, pension funds, security brokers and dealers,
mortgage companies, and real estate investment trusts.

Banking in a free market economy

Banking services are extremely important in a free market economy such as that found in
Canada and the United States. Banking services serve two primary purposes. First, by
supplying customers with the basic mediums-of-exchange (cash, checking accounts, and
credit cards), banks play a key role in the way goods and services are purchased. Without
these familiar methods of payment, goods could only be exchanged by barter (trading
one good for another), which is extremely time-consuming and inefficient. Second, by

4
accepting money deposits from savers and then lending the money to borrowers, banks
encourage the flow of money to productive use and investments.
Commercial banks
Commercial banks are so named because they specialize in loans to commercial and
industrial businesses. Commercial banks are owned by private investors, called
stockholders, or by companies called bank holding companies. The vast majority of
commercial banks are owned by bank holding companies. (A holding company is a
corporation that exists only to hold shares in another company.) In 1984, 62 percent of
banks were owned by holding companies. In 2000, 76 percent of banks were owned by
holding companies. The bank holding company form of ownership became increasingly
attractive for several reasons. First, holding companies could engage in activities not
permitted in the bank itself for example, offering investment advice, underwriting
securities, and engaging in other investment banking activities. But these activities were
permitted in the bank if the holding company owned separate companies that offer these
services
Commercial banks functions

Commercial banks and thrifts offer various services to their customers. These services
fall into three major categories: deposits, loans, and cash management services.

Deposits

There are four major types of deposits: demand deposits, savings deposits, hybrid
checking/savings deposits, and time deposits. What distinguishes one type from another
are the conditions under which the deposited funds may be withdrawn.

Loans

Banks and thrifts make three types of loans: commercial and industrial loans, consumer
loans, and mortgage loans. Commercial and industrial loans are loans to businesses or
industrial firms. These are primarily short-term working capital loans (loans to finance
the purchase of material or labor) or transaction or longer-term loans (loans to purchase
machines and equipment). Most commercial banks offer a variable rate on these loans,
which means that the interest rate can change over the course of the loan. Whether a bank

5
will make a loan or not depends on the credit and loan history of the borrower, the
borrower’s ability to make scheduled loan payments, the amount of capital the borrower
has invested in the business, the condition of the economy, and the value of the collateral
the borrower pledges to give the bank if the loan payments are not made.

2.2Banking in Pakistan.

2.2.1 Evolution of Banking in Pakistan

In the initial phase of evolution of banking in Pakistan seems to be very difficult time for
the banking sector. Starting virtually from scratch in 1947, the country today possesses a
full range of banking and financial institutions to cope with various needs of the
economy.

The area now constituting Pakistan was, relatively speaking, fairly well provided with
banking facilities in undivided India, in March 1947 there were 3496 offices of Indian
scheduled banks out of which as many as 487 were situated in territories now constituting
Pakistan.The Reserve bank of India was the central banking authority in India. At the
time of partition it was decided that in the interest of smooth transition it should continue
to function in newly emerging state of Pakistan, until 30th Sep.1948.

In 1947 due to uncertainty and unsuitability the banking sector suffer heavy losses.This
resulted in a negative effect on baking service in Pakistan. The banks, which had their
registered offices in Pakistan, transferred them to India. In an effort to bring about the
collapse of the new state by pushing a deliberate policy of withdrawals the Indian bank
offices closed quickly. Those banks, which stayed, operated only in name pending the
winding up of their business. The number of scheduled banks thus declined form 487
branches before independence to only 195 branches by 30th June1948.

2.2.2 Banking Growth during (1948-1970)

In this tense situation, a committee was immediately setup to formulate a scheme of

central banking legislation for Pakistan. Many specialists were of the opinion that in view
of the acute shortage of trained staff, any idea of establishing a central bank was I

6
impractical and the best that could be attempted was the setting up of a currency board
until such times as sufficient staff could be organize to operate a central bank.

The questions as to whether the institution should be only a currency board or a full-
fledged central bank had exercised the mind of the Pakistan government since
independence. Through, it was realized that the shortage of trained personal to run the
central bank would present serious difficulty in view of the tangible advantages that a
central bank enjoyed over currency board, the government ultimately decided to take the
bold step of setting up a full fledged central banking authority. As there was hardly any
time to pass as Act, an order was drafted, known as the state bank of Pakistan order,
which was promulgated by the government of Pakistan on 12th may 1948. The state bank
declared open on July 1, 1948 by the father of the nation.

Accordingly the NATIONAL BANK OF PAKITSN was setup under an ordinance in

November 1949. It started with six offices in the former East Pakistan. In view of the
special role assigned to the new institution, contrary to traditional practices the Governor
of the state bank was appointed to head its Board of Director in 1950. Under the fostering
care of the state bank and the support of the government, the new institution developed
rapidly. By using its special powers, the state bank made liberal advances to the new
bank to help it expand credit facilities in the country. By 1952, the National bank of India
shortly, afterwards, in November 1952, the governor of the state bank ceased to function
as the president of National bank of Pakistan.

.2.2.3 Banking Reforms 1972

After the assumption of office by a new government in 1971, may 1972 different reforms
were introduced to make the banks more responsive to the requirements of economics
growth with social justice. The reforms aimed at bringing about a more purposeful and
equitable distribution of bank credit, improving the soundness and efficiency of the
banks, and securing greater social accountability of the banking system as a whole. The
role of the banking system had been truly spectacular in mobilizing savings of the
community and meeting the credit needs of the economy. But at the same time, the banks
had generally neglected their role in promoting social justice and had failed to play an

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effective role in ensuring a wider and more equitable dispersal of the benefits of
economic growth.

At the same time two financing institutions were established. The people’s Finance
Corporation was designed to provide finance to people of small means while the National
Development Finance Corporation was set up of finance public sector owned and
managed industries and enterprises.

2.2.4 Nationalization of Banks (1974) In Pakistan

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.

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

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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:

National banks of Pakistan , Habib bank limited , Habib bank (overseas) limited,

United bank limited , Muslim commercial bank limited , Commerce bank limited,

Standard bank limited, Australia bank limited, Bank of Bahawalpur limited,

Premium bank limited, Pak Bank limited, Sarhad bank limited,

Lahore commercial limited, Punjab provincial co-operative bank limited

The Pakistan banking council prepared a scheme for the recognition of banks. The bank
(amalgamation) scheme 1974 was notified in April, providing for the amalgamation of
the smaller banks with bigger ones and following the five units in there phases:

National bank limited, Habib bank limited, United bank limited,

Muslim commercial bank limited, Allied bank of Pakistan limited

2.2.5 Islamicization 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. 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.

Different financial schemes introduced in the Islamization process are:

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1)Musharika Financing., 2) Hire Purchase Financing. , 3) Modaraba Financing.

4)Specific Purpose Modaraba.

2.2.6 De-investments 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.

2.2.7 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.

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CHAPTER#3

INTRODUCTION TO NATIONAL BANK

3.1 HISTORY OF NBP

National bank of Pakistan was established on November 9, 1949 under the national
bank ordinance no X1X of 1949 in order to cope with the crisis conditions, which were
developed after trade deadlock with India and devaluation of Indian Rupee in 1949.
Initially the bank was established with the objective to extend credit to the agriculture
sector. The normal procedure of establishing a banking company under the company’s
law was set aside and the bank was established through the promulgation of an ordinance
due to the crises situation that had developed with regard to financing of jute trade. The
bank commenced its operations from November 20th 1949 at six important jute centers in
the East Pakistan and directed its resources in financing of jute crop. Bank’s Karachi and
Lahore offices were subsequently opened in December 1949.
3.2 VISION OF NBP
National bank of Pakistan vision is that we want to be pre-eminent financial institution
in Pakistan and achieve market recognition both in quality and delivery of service as well
as the rang of product offering.
3.3 VALUES DELIVER BY THE NBP
 We aim to be people who:
 Care about relationships.
 Lead through the strength of our commitment and willingness to excel.
 Practice integrity, honesty and hard work. We believe that these are measures
of true success.
 We aim to be an organization that is founded on:
 Growth through creation of sustainable relationships with our customers.
 Prudence to guide our business conduct.
 A national presence with a history of contribution to our communities.
 We shall work to:

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  Meet expectations through market based solutions and products.
 Reward entrepreneurial efforts.
 Create value for our entire stakeholder.
 We have confident that tomorrow we will be:
 Leaders in our industry
 An organization maintaining the trust of our stakeholders.
 An innovative, creative and dynamic institution responding to the changing
needs of the internal and external environment.
3.4 OBJECTIVE OF NBP
The main objective of the national bank is to spread the banking habit among the
people mobilize their saving and thus make an ever increasing contribution to economic
development of Pakistan.
It performed all those function which is performed by the commercial bank i.e.
discounting of bill of exchange, overdraft facility, cash credit facility and other general
utility services etc.
3.5 MISSION STATEMENT OF NBP
Mission of NBP is to be recognized in the market place by institutionalization a
merit and performance culture, creating a powerful and distinctive brand identity,
achieving top-tier financial performance, and adopting and living out our core values

3.6 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.”

Some of the other objectives of NBP are:

• Improve customer services.

• Quick disposal of credit

3.7 MANAGEMENT

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 The most distinctive and essential port of carrying the activities of an organization is the
management who set the strategies that is planning, organizing, staffing, and controlling
in order to determining and accomplishing the goals and objectives . The management is
usually of two types.

a) Centralized. b) Decentralized.

In Centralize course of Management tends to concentrate decision making and authorities

at the top level of thee Organization.

Decentralized disperses decision-making and authority throughout and at the low level
organizational hierarchy.

NBP adopt a centralized course of management because the top management takes all the
decisions.

3.8 Net Work of Branches:

NBP have wide range of branches inside the country and outside the country. In Pakistan
it has 29 regional offices, 1250 Branches and 4 Subsidiaries.In overseas it has 16
overseas branches, 6 other branches.

3.9. 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:

3.9.1 Increase in deposits:

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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.

3.9.2 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 cases.

i Efficient operation of the branches.

ii Better Public Relations .

iii. Operational and advisory services for foreign exchange accounts activities

3.9.3 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:

3.9.4 Accepting Deposits

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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.

3.8.5 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.

3.8.6. 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

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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

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.

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3.9.7 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 Semi-Government

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 and 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.

The prestigious periodical “The Banker” UK recognized NBP as the best bank for 2001-
2002 and NBP is the bank of the year for 2003-2004 of Pakistan.

• AAA rating awarded JCR-VIS Credit co. Ltd and affiliated of Japan
Credit Rating Agency for 2001.

• AAA1 rating awarded JCR-VIS Credit Co.Ltd and affiliated of Japan

Credit Rating Agency for 2002

3.9.8 NBP at the forefront of Pak-Afghan trade

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 i. Booth at dry port Peshawar

ii. Booth at Pak Afghan border (Torkham) NWFP

iii. Booth at Pak Afghan border (Chamman). Baluchistan.

iv. Establishing branch at Kabul.

3.10 BOARD OF DIRECTORS:

Chairman & President S Ali Raza

Directors Dr. Waqar Masood Khan

Iftikhar Ali Malik
Syed Shafaqat Ali
Shah Jamote M. Zubair Motiwala
Sikandar
Hayat Jamali Muhammad
Khallid Malik

AUDIT COMMITTEE:

Chairman Syed Shafaqat Ali Shah Jamote

Members M. Zubair Motiwala

Muhammad Khalid Malik

AUDITORS:

Chartered Accountants Taseer Hadi Khalid & Company

Ford Rhoodes Sidat Hyder &
Co.

LEGAL ADVISORS:

Advocate & Legal Consultants Mandviwala & Zafar

REGISTERED & HEAD OFICE NBP BUILDING:

I.I. Chundrigar Road, Karachi, Pakistan

REGISTRARS & SHARE REGISTRATION OFFICE:

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 THK Associates (Pvt) Ltd.

Shares Department, Ground Floor, Modern motors House,

Beaumont Road, Karachi, Pakistan

3.11 Directors Report

It gives me great pleasure to present on behalf of the Board of
Directors, annual accounts of the bank for the year ended August 31,
2010.NBP continued its journey of success based on our strategy of
serving clients better…. .a company agile enough to take advantage of
its unique domestic and international footprint, capitalizing on the
largest balance sheet and customer base in Pakistan with high cross
sell potential. Our standalone AAA rating(the highest in the industry),
our RoE , which is amongst the highest in the Asian banking industry,
and our comfortable capital adequacy ratios, position us well in front of
our competitors for future growth. Year 2009 has been an outstanding
year with the bank recording the highest profit in its history. Our wide
range of product offering, large branch network and committed
workforce are some of our fundamental strengths that enabled us to
achieve exceptional results in a very competitive market. The pre-tax
profit increased to Rs. 28.06 billion, an increase of 6.6% over last year.
Earning per share jump by over 11.7% from Rs.20.88 in 2008 to Rs.
23.34 in 2009. Pre- tax return on equity stood at45.9percentage,
whereas pre-tax return on assets stands at 4.1% and cost to income
ratio of 0.30 remained one of the highest in the sector. These results
were possible despite the fact that NBP had to make additional
provision of over Rs.3 billion as a result of withdrawal of Forced Sales
Value (FSV).This year NBP also availed the offer to redeem up to 10%
of its holding in NIT Units held by the bank under Letter of

19
Comfort (LoC) arrangement, this sell off resulted in a Capital gain of
Rs. 1.8 billion. Increase in pre-tax profit was achieved through strong
growth in core banking income. Net Interest income increased by Rs.
3.5 billion (11.5%) due to better yields and volume driven growth
spurred by increase in consumer loan portfolio. Dividend income and
Capital Gains also made a healthy contribution as it increased by Rs.
371 million and Rs. 1,145 million over 2008 respectively mainly owing
to higher dividends from NIT Units as well as Capital gains recorded on
sell of 10% NIT Units. Advances increased by Rs. 25 billion due to
impressive contribution by all business units. Deposits increased by a
healthy Rs. 90 billion or 18% over last year. The banks NPL provision
coverage ratio also stands at an impressive 84%.
3.12 AUDITORS’ REPORT;
We have audited the annexed balance sheet of National Bank of Pakistan (the Bank) as
at December 31,2009 and the related profit and loss account, cash flow statement and
statement of changes in equity together with the notes forming part thereof (here-in-after
referred to as the ‘financial statements’) for the year then ended, in which are
incorporated the unaudited certified returns from the branches except for sixty branches
which have been audited by us and twelve branches audited by auditors abroad and we
state that we have obtained all the information and explanations which, to the best of our
knowledge and belief, were necessary for the purposes of our audit. It is the responsibility
of the Bank’s Board of Directors to establish and maintain a system of internal control
,and prepare and present the financial statements in conformity with approved accounting
standards and the requirements of the Banking Companies Ordinance, 1962 (LVII of
1962), and the Companies Ordinance,1984 (XLVII of 1984). Our responsibility is to
express an opinion on these statements based on our audit .We conducted our audit in
accordance with the International Standards on Auditing as applicable in Pakistan .These
standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of any material misstatement. An audit includes
examining, on a test basis ,evidence supporting amounts and disclosures in the financial
statements. An audit also includes assessing the accounting policies and significant

20
estimates made by management, as well as, evaluating the overall presentation of the
financial statements. We believe that our audit provides a reasonable basis for our
opinion and after due verification, which in case of loans and advances covered more
than sixty percent of the total loans and advances of the Bank, we report that:
(a) in our opinion proper books of account have been kept by the Bank as required by the
Companies Ordinance, 1984 (XLVII of 1984) and the returns referred to above received
from the branches have been found adequate for the purposes of our audit;
(b) in our opinion:
(i) the balance sheet and profit and loss account together with the notes thereon have been
drawn up in conformity with the Banking Companies Ordinance, 1962 (LVII of 1962),
and the Companies Ordinance, 1984 (XLVII of 1984), and are in agreement with the
books of account and are further in accordance with accounting policies consistently
applied;
(ii) the expenditure incurred during the year was for the purpose of the Bank’s business;
and
(iii) the business conducted, investments made and the expenditure incurred during the
year were in accordance with the objects of the Bank and the transactions of the Bank
which have come to our notice have been within the powers of the Bank;
(c) in our opinion and to the best of our information and according to the explanations
given to us the balance sheet, profit and loss account, cash flow statement and statement
of changes in equity together with the notes forming part thereof conform with approved
accounting standards as applicable in Pakistan and give the information required by the
Banking Companies Ordinance, 1962(LVII of 1962), and the Companies Ordinance,
1984 (XLVII of 1984), in the manner so required and give a true and fair view of the
state of the Bank’s affairs as at December 31, 2009 and its true balance of the profit, its
cash flows and changes in equity for the year then ended; and Ford Rhodes Sidat Hyder
& Co. M. Yousuf Adil Saleem & Co. Chartered Accountants Chartered Accountants
(d) in our opinion Zakat deductible at source under the Zakat and Ushr Ordinance, 1980
(XVIII of 1980),was deducted by the Bank and deposited in the Central Zakat Fund
established under Section 7 of that Ordinance.

21
FORD RHODES SIDAT HYDER & CO. M. YOUSUF ADIL SALEEM & CO.
Chartered Accountants Chartered Accountants
Karachi Karachi
Date: February 29, 2009
3.13 MAJOR CLIENTS

• Oil and Gas Development Corporation of Pakistan.

• Pakistan Railways.
• WAPDA.
• Pakistan Telecommunication Limited
• Radio Pakistan.
• Navy.
• Air force.
• WASA.
• NLC.
• Karachi Electric Supply.
• In northern areas all Government departments, Schools and Colleges

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CHAPTER # 4

SERVICES OF NBP

4.1 INTRODUCTION

This chapter presents the services of NBP.Services are outputs of the firm, which are in
intangible form. Which are the backbones of any organization to earn profit. NBP offers
the following services to the people.

4.2 DEMAND DRAFTS

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

4.3 SWIFT SYSTEM

The SWIFT system (Society for Worldwide Inter bank Financial Telecommunication)
has been introduced for speedy services in the area of home remittances. The system has
built-in features of computerized test keys, which eliminates the manual application of

23
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.Using the NBP network of branches, you can safely and
speedily transfer money for our business and personal needs.

4.4 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.

4.5 TRAVELER'S CHEQUES

Traveler’s cheques are negotiable instruments, and there is no restriction on the period of
validity of the cheques. Rupee traveler’s 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.

4.6 PAY ORDER

NBP provides another reason to transfer your money using our facilities. NBP pay orders
are a secure and easy way to move your money from one place to another. And, as usual,
NBP charges for this service are extremely competitive. The charges of NBP are very
low all over the Pakistan. It charges Rs 50/- for NBP account holders on issuing one
payment order. And charges Rs 100/- for NBP non-account holders on issuing one
payment order. It charges Rs 25/- for students on payment of fees of educational
institutions. If some one want a duplicate of payment order they charges Rs 100/- for
NBP account holders and Rs 150/- for non account holders.

4.7 AIL TRANSFERS

24
Move your money safely and quickly using NBP Mail Transfer service. And NBP also
offers the most competitive rates in the market. They charges Rs 50/- exchange rate and
RS 75/- postage charges on issuing mail transfer.

4.8 FOREIGN REMITTANCES:

To facilitate its customers in the area of Home Remittances, National Bank of Pakistan
has taken a number of measures to Increase home remittances through the banking
system. Meet the SBP directives/instructions for timely and prompt delivery of
remittances to the beneficiaries

4.8.1 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.

4.9 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, NBP’s rates of profit are
extremely attractive, along with the security and service only NBP can provide

4.10 National Income Daily Account (NIDA)

25
 The scheme was launched in December 1995 to attract corporate customers. It is a
current account scheme and is part of the profit and loss system of accounts in operation
throughout the country.

4.10.1 Salient Features:

• Rs 2-million are 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.

4.10.2 Rates on NIDA

• From Rs 2/- million to Rs 50/- the rate is 1.4%.

• From Rs50/- million but less than Rs 500/-million, the rate is 1.5%.

• From Rs 500/- million but below Rs 1000/- the rate is 1.6%.

• From Rs 1000/- and above the rate is 1.75%.

4.11 EQUITY INVESTMENTS

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

4.11.1 NBP is involved in the following:

• Investment into the capital market

• Introduction of capital market accounts (under process)

26
NBP’s involvement in capital markets is expected to increase its earnings, which would
result in better returns offered to account holders

4.12 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
customer’s best resource in making NBP’s products and services work for them.

4.13 TRADE FINANCE OTHER BUSINESS LOANS

There are two types of trade finance.

4.13.1 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.

4.13.1.1 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.

4.13.1.2 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

27
 • Provide farmers an integrated package of credit with supplies of essential inputs,
technical knowledge, and supervision of farming.

4.13.1.3 Agricultural Credit (Medium Term):

Production and development . , Watercourse improvement ,

Wells , Farm power ,

Development loans for tea plantation , Fencing ,

Solar energy ,and Equipment for sprinklers

4.13.1.4 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.

4.13.1.5 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.

4.13.2 CORPORATE FINANCE

Working Capital and Short Term Loans:

28
NBP specializes in providing Project Finance – Export Refinance to exporters – Pre-
shipment and Post-shipment financing to exporters – Running finance – Cash Finance –
Small Finance – Discounting & Bills Purchased – Export Bills Purchased / Pre-
shipment / Post Shipment Agricultural Production Loans

4.13.2.2 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 bank’s
belief in its client's capabilities, and its commitment to the country.

4.13.2.3 Loan Structuring and Syndication:

National Bank leadership for syndicating systems has the ability to forge strong
relationships not only with borrowers but also with bank investors as well. 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.

4.13.2.4 Cash Management Services:

With National Bank’s Cash Management Services (in process of being set up), the
customer’s sales collection will be channeled through vast network of NBP branched
spread across the country. This will enable the customer to manage their company’s total

financial position right from your desktop computer. They will also be able to take
advantage of our outstanding range of payment, ejection, liquidity and investment
services. In fact, with NBP, you’ll be provided everything, which takes to manage your
cash flow more accurately

29
4.14 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, NBP have recently set up the Financial Institution Wing, which is
placed under the Risk Management Group. The role of the Financial Institution Wing is:
To effectively manage NBP’s exposure to foreign and domestic correspondence

• Manage the monetary aspect of NBP’s relationship with the correspondents to

support trade, treasury and other key business areas, thereby contributing to the
bank’s profitability

• Generation of incremental trade-finance business and revenues

4.14.1 NBP offers:

• The lowest rates on exports and other international banking products

• Access to different local commercial banks in international banking

4.15 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.

4.16 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.

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4.17 Saibaan

National Bank of Pakistan (NBP) has announced the launch of a housing scheme to cover
all sections of the society with monthly income starting from as low as Rs. 5000/- per
month*. *(Conditions apply)

Branded as 'NBP Saibaan' (Housing for all), the scheme offers a maximum loan of Rs 10
million in accordance with the debt burden criterion. Loans are available for Home
Construction, Home Purchase and Home Improvement. For Home Improvement Loans
the maximum amount is Rs. 2.00 Million.Home Construction and Home Purchase loans
can be repaid over a period of 20 years, whereas the repayment period for Home
Improvement loan is 15 years.

The scheme was launched at a function in Karachi presided over by Mr. Shaukat Aziz,
Pakistan's Finance Minister.

What is NBP SAIBAN?

NBP Saibaan is the most affordable House Financing Scheme. You can avail now and
repay over a 3 to 20 years period.

a)Home purchase loans up to 10 million

b)Home reconstruction loans up to 10 million

c)Home improvement loans up to 2.0 million (3 to 15 years)

31
CHAPTER#5
DEPARTMENTALIZATION OF NBP BHERKUND BRANCH

Dividing an organization into different parts according to the functions is called

Departmentations. So NBP Swabi branch, is divided into following main parts

5.1 CASH DEPARTMENT

Cash department performs the following functions

5.1.2 Receipt

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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.

5.1.3 Payments

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

5.1.4 Cheques and their Payment

The Negotiable Instruments. Act, 1881 3

“Cheque is a bill of exchange drawn on a specified banker and not expressed to be

payable otherwise than on demand”. Since a Cheque has been declared to be a bill of
exchange, it must have all its characteristics as mentioned in Section 5 of the Negotiable
Instruments Act, 1881. Therefore, one can say that a Cheque can be defined as an:

“An unconditional order in writing drawn on a specified banker, signed by the drawer,
requiring the banker to pay on demand a sum certain in money to, or to the order of, a
specified person or to the bearer, and which does not order any act to be done in
addition to the payment of money”.

5.1.5 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.

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

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5.1.6 Parties to ChequeThe normal Cheque is one in which there is a drawer, a
drawee banker and a payee, or no payee but bearer.

The Drawer b) The Drawee c) The Payee

5.1.7 Types of Cheques

There are three types of cheques.

a) Bearer Cheques

Bearer cheques are cashable at the counter of the bank. These can also be collected
through clearing.

b) Order cheque

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 payee’s 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.

5.1.8 Payment of Cheques

It is a banker’s primary contract to repay money received for his customer’s account
usually by honoring 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

34
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 customer’s 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:

g) Cheque should be presented during banking hours:

5.2 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

35
account at the bank of the drawer, the mutual obligation are settled by the internal bank
administration and there arises no inter bank debits from the use of cheques. The total
assets and total liabilities of the bank remain unchanged. In practice, the person receiving
a Cheque as rarely a depositor of the cheque at the same bank as the drawer. He deposits
the cheque with his bank other than of payer for the collection of the amount. Now the
bank in which the cheque has been deposited becomes a creditor of the drawer’s bank.
The depositor bank will pay his amount of the cheque by transferring it from cash
reserves if there are no offsetting transactions. The banks on which the cheques are drawn
become in debt to the bank in which the cheques are deposited. At the same time, the
creditors’ banks receive large amounts of cheques drawn on other banks giving claims of
payment by them.

The 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 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.

5.2.1 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.

36
5.2.2 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.

5.3 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.

5.3.1 Name and address of the borrower.

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.

37
 5.3.2 Principles of Advances

There are five principles, which must be duly observed while advancing money to the
borrowers.

a) Safety b) Liquidity

c) Dispersal d)Remuneration e) Suitability

a. Safety

Banker’s 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 must be very careful and ensure that his depositor’s money is advanced to safe
hands where the risk of loss does not exist. The elements of 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 borrower’s 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

38
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
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 borrower’s 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

39
The dispersal of the amount of advance should be broadly based so that large number of
borrowing customer may benefit from the banker’s 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 banker’s 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.

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

40
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.

5.3.3 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

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

41
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 borrower’s disposal in lump sum for the period
agreed upon, and the borrowing customer has to pay interest on the entire amount. Thus
the borrower gets a fixed amount of money for his use, while the banker feels satisfied in
lending money in fixed amounts for definite short periods against a satisfactory security.

5.4 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

5.4.1 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 sender’s name.
The customer deposits the amount of DD in the branch. After the payment the DD is
prepared and given to the customer. NBP officials note the transaction in issuance
register on the page of that branch of NBP on which DD is drawn and will prepare the

42
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 DD

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

II. Over Rs. 50,000/- is 0.1%

5.4.2 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.

5.4.3 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.

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.

5.4.4 Mail Transfer

43
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 buyer’s
account at the selling office and crediting to the recipient’s 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 party’s
request.

5.5 DEPOSIT DEPARTMENT: -

It controls the following activities:

a)A/C opening. , b) Issuance of chequebook. , c) Current a/c

d) Saving a/c e) Cheque cancellation f) Cash

5.5.1 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 customer’s
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.

44
 a)Formal Application b) Introduction c) Specimen Signature

d)Minimum Initial Deposit

Operating the Account

i) Pay-In-Slip Book

ii) Pass Book

iii) 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

4) Partnership account

45
 • 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

5.5.2 Issuing of chequebook:

This deptt issue cheque books to account holders.

• Requirements for issuing chequebook

• The account holder must sign the requisition slip

• Entry should be made in the chequebook-issuing book

• Three rupees per cheque should be recovered from a/c holder if not then debit
his/her account.

5.5.3 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

46
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.

5.5.4 Saving account

Savings Deposits account can be opened with very small amount of money, and the
depositor is issued a chequebook 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 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.

5.5.5 Cheque cancellation:

This deptt can cancel a cheque on the basis of;

a) Post dated cheque b) Stale cheque c) Warn out cheque

d) Wrong sign etc

47
5.5.6 Cash

This deptt also deals with cash. Payment of cheques, deposits of cheques etc.

5.6 Computer Department:

The objective of this Department is to facilitate customers in payment of their cheques.”

The main functions performed by this department are:

• Checking balance.

• Deduction from balance on clearing cheques.

• Issuing bank statements.

• Dealing Western Union.

5.7 Establishment Department:

This department mainly deals with the branch employees. The main objective of this
department is to

“To regulate bank business”.

Main functions of this department are:

• Keeps the record of attendance of employees.

• Employee’s salaries distribution.

• Employee’s bonuses etc.\

5.8 Bherkund Branch Mansehra Hierarchy;

 Branch Manager, Mubarak Ali Shah, OG-I

 Accounts Manager Wajid Ali, OG-2

48
  Cashier Amjid Sultan, OG-3
 Messenger, Jamil Nawaz
 As. Deposit. Obaid Ur Rehman

CHAPTER # 6
SWOT ANALYSIS

6.1 INTRODUCTION

49
In order to carryon the SWOT and Financial Analysis of NBP with the help of
calculating necessary ratios in this section.

SWOT analysis is an acronym that stands for strengths, weakness, opportunities, and
threats SWOT analysis is careful evaluation of an organization’s 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.”

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

called SWOT analysis.”

In SWOT analysis the best strategies accomplish an organization’s 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.

6.2 STRENGTH

6.2.1 OLDEST INSTITUTION:

50
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.

6.2.2 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.

6.2.3 MORE DEPOSITS THAN OTHER BANKS

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.

6.2.4 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.

6.2.5 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.

6.2.6 STRICTLY FOLLOWED RULES & REGULATION

The employees at NBP are strict followers of rule & regulation imposed by bank. The
disciplined environment at NBP bolsters its image and also enhances the over all out put
of the organization.
6.2.7 PROFESSIONAL COMPETENCE

The employees at NBP here have a good hold on their descriptions, as they are highly
skilled Professionals with background in business administration, banking, economics

51
etc. These professional competencies enable the employees to understand and perform
the function and operation in better way.

6.2.8 HEALTHY ENVIROMNMENT

The working condition in the NBP branch here is very conductive and favorable for
better output. The informal environment affects the performance of the employees in a
positive way.

6.2.9 RELATION BETWEEN STAFF AND OTHER EMPLOYESS

The bank enjoys a good plus point when it comes to the employee manager relationship
the hearing as removing of discrepancies if any, between the employees, and between the
manager and employees.

6.3 WEAKNESSES

6.3.1 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.

6.3.2 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.

6.3.3 FAVORITISM

52
The promotions and bonuses etc in the bank are often powered by senior’s favoritism or
depend upon their wills and decision. This adds to the negative factors, which
denominate the employees thus resulting in affecting their performance negatively.

6.3.4 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.

6.3.5 INEFFICIENT COUNTER SERVICES IN THE RUSH HOURS

During the rush hours, the bank is founded out to be a total flop to handle the mob of
people peaking from windows and doors. The bank has deficiency to operate in the stages
of rush hours where the people find them services entangled in a situation of nowhere
because they are not well served.

6.3.6 LACK OF COMPUTERIZED NETWORK

The bank lack the strength of being powered by the network of computers, which have
saved time, energy and would have lessened the mental stress, the employees have
currently. This would add to the strength if it were powered by network of computers.

6.3.7 LACK OF MODERN EQUIPMENT

The bank lacks the modern Equipment that is note counting machine computers. Even if
there is any equipment they lack to fall in the criteria of being rearmed as update and
upgraded

6.3.8 UNEVEN WORK DISTIBUTION.

53
The workload in NBP is not evenly distributed and the workload tends to be more on
some employees while others abscond away from their responsibilities, which server as a
demotivation factor for employees performing above average work.

6.4 OPPORTUNITIES

6.4.1 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.

6.4.2 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.

6.5 THREATS

6.5.1 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.

6.5.2 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.

54
6.5.3 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.

6.5.4 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.

6.6 COMPETITIVE ANALYSIS

Porter’s 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.

6.6.1 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
“Nation’s Bank”.

6.6.2 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

55
potential entry and NBP is also a public sector bank because there are no other new banks
not takes over it.

6.6.3 Potential 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 that’s why sawing PLS accounts are more then current
accounts. The next examples will ATM which substitute presenting cheques at counter
and en-cash it. The NBP is lacking in this field. It must improve in this field to compete
the competitors.

6.6.4 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
charge’s etc for customers. In this field NBP is very good. B/C at offers good quality
services to customers. They charge low charges on remittances. So that’s it is a
competition to other banks.

6.6.5 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. Bank offers a 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.

56
CHAPTER # 7

FINDINGS AND CONCLUSION

7.1 INTRODUCTION

I have divided this section in four parts. Which are as under. These analyses are mainly
based on my practical experience at the NBP.

a)Problems at the branch. ,b) Function analysis. ,c) Administrative analysis.,

d)Personal management’s analysis.

7.2 PROBLEMS AT THE BRANCH

7.2.1 Customer Satisfaction

In NBP customer dealing is will, but during rush hour the customer has to wait for a long
time for their turn. It’s quite hard for a new customer or potential customer to get the
required information.

7.2.2 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.

7.2.3 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.

57
7.2.4 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.

7.3 FUNCTIONAL ANALYSIS

7.3.1 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.

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.

7.3.2 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.

7.3.3 Duty of bank to maintain secrecy.

They don’t 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

58
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.

7.3.4 Excessive paper work

It is notified that due to the lengthy procedure of paper work the bank employee are over
burdened. 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.

7.3.5 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

7.3.6 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 having to wait for hours. This discourages both customer and officers because
they have to suffer a lot

7.4 ADMINISTRATIVE ANALYSIS

7.4.1 Job analysis is not effective

Only on the basis of job analysis it can be decided how a right person could 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

59
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.

7.4.2 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 accounts 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.

7.4.3 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 main
branch, Mansehra the newly recruited employee training was not imparted, they all
learned things on the job.

7.4.4 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.

7.4.5 Poor job rotation.

There is absence of job rotation in NBP Main Branch; Swabi 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 know how of the whole system.

60
7.4.6 Delays in Loan Advancement

It has been observed that there is delays in sanctioning of cases form the head office,
which results in customer dissatisfaction.

7.4.7 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.

7.5 PERSONAL MANAGEMENT ANALYSIS

7.5.1 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-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.

7.5.2 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.

61
7.5.3 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 adds salt to the wounds. The persons selected through
these channels are infantile and do not work for the betterment for the bank.

7.5.4 Promotions

Promotions in NBP are 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.

7.5.5 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.

7.5.6 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

62
work to explore the possibilities of selling banking services to them. The market
opportunities are hidden in various dealing a banker handles; the question is that if he has
the art and urge to seize such opportunities.

7.5.7 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.

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CHAPTER # 8

PROBLEMS AND RECOMMONDATION

8.1 INTRODUCTION
After completion of my internship in NBP I am able to present basic problem
and give recommendation on it for the betterment of the organization.
PROBLEM

POLITICAL INTERFERENCE

Politician interference in the banking operation is a major problem. If any employee

transfers to other places where he does not want to go.

If he had strong political back then he takes support of politician and through politician
transfers to our required area with in a short time.

While if an employee have weak political back then he face this challenge. Some time
politician meets with higher authorities and promotes a person who is not liable for that
job. Consequently the result is very bad and bank bear loss. Some time employees who
have back weak politician interference and stop their promotion. Some time
politician meets with banking staff and take loan and at the time of recovery they are
default.

LACK OF TECHNOLOGY

Now a day’s entire world is a Global village through information technology. In order to
boost of banking requires highly sophisticated technology like ATM and online banking.
While in this branch lack of such facilities due to this reason people open their account in
other banks like UBL and ABL and it show poor performance.

LACK OF SKILLED AND HIGHLY EDUCATED STAFF

Another very important problem in NBP is lack of skilled and highly educated staff while
this is the requirement of modern bank. One thing that I observe during my internship in
NBP is that most of the employees are well experienced but they have not highly
educated.

64
UNEQUAL DISTRIBUTION OF WORK

In this branch assignment of work is not justice some employee done more work and pass
their whole day in this difficulties while other pass their whole day in gossip and reading
newspaper. i.e. currently in clearing department of Swabi branch have only one staff
member while he done all the work of clearing along with posting. He has not time to
drinking water because overload work. While in advance department have nothing to do.

LACK OF STAFF

This branch has less staff member according to meet the need of work. Due to shortage
of staff existing staff cannot make proper record and not give time to their client.

LACK OF TRAINING

Another problem is that I observe that the staff members are not properly trained. Only
manager and accountant got training on some extend.

HEAVY WORK LOAD

The workload in Main Branch is much more as compared to other branches.

BUILDING CONDITION

I observe another very important problem during internship that the building condition of
NBP Bherkund Branch Mansehra is not good. Their rooms are less than according to the
requirement and their building are very old.

LACK OF FACILITIES

This branch has lack of facilities i.e. furniture, Internet, fan etc shortage of these thing
have negatively impact on the performance of employee.

DIFFICULTIES TO IMPLEMENT POLICIES

NBP face another very important problem that is policies implementation. In this bank no
new policies can be implemented. Due to this bank performance not well. i.e. NBP make
a policy of downsizing the employees but it cannot implement because IMF influence
this policy.

65
LACK OF TECHNICAL STAFF

NBP has on one side less staff and on the other side less technical staff. If higher
authorities want to change the technology then the staff ready to strike against the
technological change because they have only knowledge about manual. They are blind
how to use it.

LACK OF MOTIVATION

Another important problem for the downfall of NBP is promotion that is give
on seniority basis instead of performance.

These criteria de-motivate the employee for work and they do not perform well they
know that it cannot matter of whether they perform well or not.

LOW RATE OF INTREST

NBP give low rate of return on deposits of people. Due to this people withdraw their
amount from NBP and deposits it to saving center because they offer high rate of return
than NBP. This left negative impact on the performance of National bank.

USE OF MANUAL SYSTEM

Employees of NBP spent long time through recording the transaction

manually. This takes too much time.

RECOMMENDATIONS

1 ACQUIRE HIGHLY TRAINED, SKILLFUL, EDUCATED AND TECHNICAL

STAFF

National bank acquires trained, skillful and educated staff like M.Com, CA, ICMA and
MBA students who has ability to cope with any situation. And those have some
theoretically knowledge about work. These fresh students are better than the existing old
staf

2. AVOIDE POLITICAL INTERFERENCE

For avoidance of political interference NBP strict the policies, rules and regulations at
higher level. In this way performance increase and earn profit.

66
 3. USED MODERN TECHONOLOGY

National bank provides the facilities of Internet to every branch and

Computerized the system of the bank. In this way costly time is save and expenses should
be reduce.

4. CHANGE IN ENVIORNMENT

It is necessary for National bank to introduce new and attractive scheme to attract the
attention of people toward this and increase rate of profit on the deposits.

5. PROPERLY IMPLEMENT POLICIES

For implementation of policies proper planning is necessary. If policy is made with

appropriate planning then there is less chance of its failure.

6. IMPROVE BUILDING CONDITION

It is recommended to national bank Swabi branch should be shifted in a new building

that have a separate room for separate department for convenience of customer and staff
as well.
7. EQUALL DISTRIBUTION OF WORK
Distribute the work within the employee justice and not make burden on individual
employee.

8. GIVE PROPER TRAINING TO EMPLOYEE

It is recommended that proper training must be given to employee for boost of the
business.

9. MOTIVATE THE EMPLOYEE

Motivation is an important responsibility of the bank management. Due to motivation

they become more devoted and interested in his work and as such they bring out their
capability and competency.

10. EXPENSES DECREASE

It is recommended for NBP decrease the unnecessary expenses

67
11. OPENING OF NEW BRANCHES

Management should open new branch in different areas for the enhancement of their
business.

12. CLOSUER OF UNPROFITABLE BRANCHES

It is recommended that NBP should close such branches, which have causes of loss and
from where no profit gains.

13. FREE FROM GOVENMENT PRESSESURE

NBP make policies on the basis of economics conditions and not accept any pressure
from Govt.

14. LOAN FOR POOR PERSON

NBP should give loan to poor and needy people without any hard rule and regulations.

14. FLOW OF AUTHORITIES

To achieve efficient and effectiveness the staff must be given adequate authority and in
this way they can perform their duties very well.

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CHAPTER # 8
FINACIAL ANALYSIS

9.1) Common Size Analysis;

An analysis of percentage financial statements where total assets divide all balance sheet
items and all income statement items are divided by net sales or revenue.
Formula;
Common Size Analysis of B/S= Each Item of Balance Sheet/Total Assets
Common Size Analysis of I/S=Each Item of Income Statement/Net Sales
Common-size Analysis of B/S (2009)

NATIONAL BANK OF PAKISTAN

BALANCE SHEET

As at 31st December 2009

ASSETS 2009 2008 Common-Size Direc-

(Rs.In“ooo) (Rs.In“ooo”) analysis (%age) tion

2009 2008
(%ge) (%ge)
Cash and balances 94,873,24
78,625,227 12.400 12.370
with treasury banks 9

69
Balances with
37,472,832 40,641,679 4.900 6.400
other banks

Lending to
financial 21,464,600 23,012,732 2.800 3.600 (-)
institution

210,787,86
Investment 139,946,995 27.700 22.500
8
340,677,10
Advances 316,110,406 44.700 49.800 (-)
0
27,113,698
Other assets 30,994,965 4.060 4.300 (-)

Operating fixed
25,922,979 9,681,974 3.400 1.500
assets

Deferred tax assets ---- ---- ---- ----

762,193,59
Total assets 635,132,711 100.000 100.000 -----
3

LIABILITIES
Bills payable 7,061,902 10,605,663 0.930 1.700 (-)
Borrowings 10,886,063 11,704,079 1.430 1.800 (-)
Deposits and other 591,907,43
501,872,243 77.700 79.000 (-)
accounts 5
Sub-ordinated
--- --- ---- --- ----
loans
Liabilities against
assets subject to 33,554 13,235 0.004 0.002
finance lease
Other liabilities 30,869,154 26,596,300 4.100 4.200 (-)
Deferred tax
5,097,831 2,387,073 0.700 0.400
liabilities
Total liabilities 645,855,93
553,178,593 84.800 87.000 (-)
9

70
 SHAREHOLDERS
EQUITIE
S

Share capital 8,154,319 7,090,712 1.100 1.030 (-)

Reserves 15,772,124 13,879,260 2.100 2.200 (-)

Unappropriated 45,344,188 32,074,677 5.600 5.100

profit

Surplus on
revaluatio 47,067,023 28,909,469 6.200 4.600

Total shareholder 116,337,65

81,954,118 15.300 12.900
equities 4

Total shareholder
equities 762,193,59
635,132,711 100.000 100.000 ---
& Total 3

liabilities

Interpretation of Common-Size Analysis Of B/S (2009)

Cash and balances with treasury banks have been increased slightly in2009. Investment
has also increased in 2009 but advances have been reduced slightly. Similarly,
borrowings have been reduced in 2009. Shareholders capital has also increased in 2009
than 2008. All these are showing ive sign of NBP..
Common-size Analysis of I/S (2009)
Formula;
Common-Size Analysis of I/S=Each Item of Income Statement/Net Sales

71
 NATIONAL BANK OF PAKISTAN

PROFIT AND LOSS ACCOUNT

For the year ended 31st December 2009

72
 2009 2008 Common-Size
PARTICULAR Di-
(Rs.In“ooo”) (Rs.In“ooo”)
Analysis
2009 2008

(%age) (%ge)
Markup/ return/interest earned 50,569,481 44,100,934 100.00 100.00

Markup/return/interest expense 16,940,011 13,947,218 33.40 31.60

Net markup interest income 33,629,470 30,153,716 66.50 68.30 (-)

Provision against non performing

4,723084 3,075,723 9.30 6.97
loans and advances

Provision for diminution in the

(40,248) (709,461) 0.07 1.60 (-)
value of investment

Provision against off balance sheet

--- ==== === == ==
obligation

Bed debts written off directly 39,899 5,284 0.08 0.01

4,722,735 2,371,546 9.30 5.37

Net markup/ interest income after

28,906,735 27,782,170 57.10 62.50 (-)
provision

Non markup/interest income

Fee commission and brokerage

6,781,683 6,144,628 13.40 13.90 (-)
income

Dividend income 3,263,246 2,891,755 6.40 6.50 (-)

Income from dealing in foreign

1,042,827 1333,840 2.00 0.30
currencies

73
Gain on sale and redemption of
2,341,690 1,169,515 4.60 2.65
securities

Unrealized loss on revaluation of

investment classified as (31,964) (4464) 0.06 0.02
held-for-trading

Other income 147,363 627,618 0.29 1.40 (-)

13,544,845 12,162,892 26.70 27.50 (-)

Total non markup/interest income 42,451,580 39,945,062 83.90 90.50 (-)

Non markup interest expenses

Administrative expenses 14,205,911 13,443,441 28.00 30.40 (-)

Other provision write off 168,027 (17,283) 0.30 0.04 (-)

Other charges 17,141 208,327 0.03 0.47 (-)

Total non markup/interest

14,391,079 13,634,485 28.40 30.90 (-)
expenses

28,060,501 26,310,577 55.40 59.60 (-)

Extra ordinary items --- ---

Profit before tax 28,060,501 26,310,577 55.40 59.60 (-)

Taxation-current 8,311,500 8,695,598 16.40 19.70 (-)

- Prior years 391,497 530,652 0.77 1.20 (-)

- Deferred 323,731 61,981 0.64 0.14

74
 9,026,728 9,288,231 17.80 21.00 (-)

Profit after tax 19,033,773 17,022,346 37.60 38.50 (-)

Unappropriate profit brought

32,074,677 19,372,523 63.00 43.90
forward

Transfer from surplus on

39,007 41,060 0.07 0.09 (-)
revaluation of fixed assets

Profit available for appropriation 51,147,457 36,435,929 101.10 82.60

Basic Earnings per share 23.34 20.88 ------ ----- ---

Diluted Earnings per share

23.34 20.88 ------- ------ ---
(Rupees)

Interpretations of Common-Size Analysis Of I/S (2009)

Interest expense has been increased slightly and net interest income has been reduced in
2009 than 2008 because of rapid fluctuation in interest rates. Bad debts have also
increased in 2009 to some extent that is not a good sign but total non-mark up
interest income has been increased. Profit before taxation has also increased and so
is the case with profit after taxation in 2009 .and NBP’s earnings per share has also
increased , all these are indicating NBP is doing well in Banking sector but need
more cost effective strategies in future.

9.2) Index Analysis:

An analysis of percentage financial statement where all balance sheet figures for a base
year equal 100.0(percent) and subsequent financial statements items are expressed
as percentage of their values in the base year.

FORMULA;

75
Index Analysis for B/S=Each item of balance sheet of current year/Each item of balance
sheet of Base year

Index Analysis of B/S(2009)

NATIONAL BANK OF PAKISTAN
BALANCE SHEET
As at 31st December 2009
ASSETS 2009 2008 Index Analysis Direc-
(Rs.In“ooo) (Rs.In“ooo”) (%age) tion
2008 2009
(%ge) (%ge)
Cash and balances
94,873,249 78,625,227 100 120.7
with treasury banks

76
Balances with other
37,472,832 40,641,679 100 92.2 (-)
banks

Lending to financial
21,464,600 23,012,732 100 93.2 (-)
institution

210,787,86
Investment 139,946,995 100 150.6
8
340,677,10
Advances 316,110,406 100 107.7
0
27,113,698
Other assets 30,994,965 100 114.5

Operating fixed
25,922,979 9,681,974 100 267.7
assets

Deferred tax assets ---- ---- ---- ------

762,193,59
Total assets 635,132,711 100 120.7
3

LIABILITIES ----- ----

Bills payable 7,061,902 10,605,663 100 66.5 (-)
Borrowings 10,886,063 11,704,079 100 93.6 (-)
Deposits and other 591,907,43
501,872,243 100 117.5
accounts 5
Sub-ordinated loans --- --- ----- ----
Liabilities against
assets subject to 33,554 13,235 100 255.5
finance lease
Other liabilities 30,869,154 26,596,300 100 116.6
Deferred tax
5,097,831 2,387,073 100 213.5
liabilities
Total liabilities 645,855,93
553,178,593 100 116.7
9

77
 SHAREHOLDERS ----- -----
EQUITIES

Share capital 8,154,319 7,090,712 100 115.6

Reserves 15,772,124 13,879,260 100 113.6

Unappropriated profit 45,344,188 32,074,677 100 141.5

Surplus on 47,067,023 28,909,469 100 162.5

revaluation

Total shareholder 116,337,65

81,954,118 100 141.5
equities 4

Total shareholder
equities & 762,193,59
635,132,711 100 120.7
Total 3

liabilities

Interpretations of Index Analysis of B/S(2007)

Cash and balances with treasury banks has increased in 2009,while according to index
analysis balance with other banks has been reduced in 2009. Similarly lending to
financial institutions has also been reduced. While investments, advances, operating fixed
assets and other assets has increased the volume of NBP in 2009. On the liabilities side
borrowings has been reduced little, bills payables has also reduced in 2009, while share
capital., reserves, and unappropriated profit has increased . NBP has tried its best to
borrow minimum in 2009. The overall picture of index is not so bad.
Index Analysis of I/S(2009)
FORMULA;
Index Analysis of I/S=Each Item of income statement of current year/Each item of
income statement of Base year

78
 NATIONAL BANK OF PAKISTAN

PROFIT AND LOSS ACCOUNT

For the year ended 31st December 2009

79
 2009 2008 Index Analysis Di-
PARTICULAR
(Rs.In“ooo”) (Rs.In“ooo”)
(%age) r
2008 2009
e

(%age) (%ge) c
t
-
i
o
n

Markup/ return/interest earned 50,569,481 44,100,934 100 114.6

Markup/return/interest expense 16,940,011 13,947,218 100 121.5

Net markup interest income 33,629,470 30,153,716 100 111.5

Provision against non performing

4,723084 3,075,723 100 153.6
loans and advances

Provision for diminution in the

(40,248) (709,461) 100 5.7 (-)
value of investment

Provision against off balance

--- ==== === ==
sheet obligation

Bed debts written off directly 39,899 5,284 100 755.7

4,722,735 2,371,546 100 199.1

Net markup/ interest income after

28,906,735 27,782,170 100 104.0
provision

Non markup/interest income

80
Fee commission and brokerage
6,781,683 6,144,628 100 110.3
income

Dividend income 3,263,246 2,891,755 100 112.6

Income from dealing in foreign

1,042,827 1333,840 100 78.2 (-)
currencies

Gain on sale and redemption of

2,341,690 1,169,515 100 200.1
securities

Unrealized loss on revaluation of

investment classified as (31,964) (4464) 100 716.6
held-for-trading

Other income 147,363 627,618 100 23.5 (-)

13,544,845 12,162,892 100 111.6

Total non markup/interest

42,451,580 39,945,062 100 315.8
income

Non markup interest expenses

Administrative expenses 14,205,911 13,443,441 100 105.7

Other provision write off 168,027 (17,283) 100 972.0

Other charges 17,141 208,327 100 8.2 (-)

Total non markup/interest

14,391,079 13,634,485 100 105.5
expenses

28,060,501 26,310,577 100 106.6

Extra ordinary items --- --- ---- ----- ---

81
Profit before tax 28,060,501 26,310,577 100 106.6

Taxation-current 8,311,500 8,695,598 100 315.7

- Prior years 391,497 530,652 100 73.8 (-)

- Deferred 323,731 61,981 100 522.3

9,026,728 9,288,231 100 97.1 (-)

Profit after tax 19,033,773 17,022,346 100 204.5

Unappropriate profit brought

32,074,677 19,372,523 100 165.6
forward

Transfer from surplus on

39,007 41,060 100 95.0 (-)
revaluation of fixed assets

Profit available for appropriation 51,147,457 36,435,929 100 140.6

Basic Earnings per share 23.34 20.88 ------ ----- ---

Diluted Earnings per share

23.34 20.88 ------- ------ ---
(Rupees)

Interpretations of Index Analysis of I/S(2007)

According to index analysis of profit and loss statement 2008 and 2009, interest has been
earned more in 2009 than 2008 and interest expenses has also been increased due to rapid
fluctuation in interest rates in banking sector this year. But the interest income has been
increasedin2009. Non-mark up interest income has slightly increased. Profit after taxation
and profit before taxation has also increased in2009. Basic Earnings per share increased
from Rs.20.88 of 2008 toRs.23.34 of 2009. All these are indicating a good performance
of NBP.
9.3) Percentage Analysis;

82
A type of financial index which shows progress of each item of balance sheet and income
statement of current year with respect to previous year in percentage figure, by doing so
we try to squeeze the information in short and quick understandable words.
FORMULA;
%Age Analysis of Balance Sheet =Current Year Value--Previous Year Value/Previous
Year Value

%Age Analysis of Income Statement=Current Year Value--Previous Year

Value/Previous Year Value
Percentage Analysis of B/S(2009);

NATIONAL BANK OF PAKISTAN

BALANCE SHEET

As at 31st December 2009

ASSETS 2009 2008 (%age)

(Rs.In“ooo) (Rs. In“ooo”) Analysis
Cash and balances with treasury 20.7
94,873,249 78,625,227
banks

83
Balances with other banks 37,472,832 40,641,679 (-)7.7

Lending to financial institution 21,464,600 23,012,732 (-)6.8

Investment 210,787,868 139,946,995 50.6

Advances 340,677,100 316,110,406 7.7

27,113,698
Other assets 30,994,965 14.5

Operating fixed assets 25,922,979 9,681,974 167.7

Deferred tax assets ---- ---- --------

Total assets 762,193,593 635,132,711 20.7

LIABILITIES
Bills payable 7,061,902 10,605,663 (-)33.5
Borrowings 10,886,063 11,704,079 (-)6.4
Deposits and other accounts 591,907,435 501,872,243 17.5
Sub-ordinated loans --- --- ----
Liabilities against assets subject
33,554 13,235 155.5
to finance lease
Other liabilities 30,869,154 26,596,300 16.6
Deferred tax liabilities 5,097,831 2,387,073 113.5
Total liabilities 645,855,939 553,178,593 16.7

84
 SHAREHOLDER EQUITIES

Share capital 8,154,319 7,090,712 15.6

Reserves 15,772,124 13,879,260 13.6

Unappropriated profit 45,344,188 32,074,677 41.5

Surplus on revaluation 47,067,023 28,909,469 62.5

Total shareholder equities 116,337,654 81,954,118 51.5

Total shareholder equities & 762,193,593 635,132,711 20.7

Total liabilities

PERCENT ANALYSIS OF BALANCE SHEET (2009);

Through percent analysis of above balance sheet, we know that cash and balance
with treasury banks increased 0.7%.While balances with other banks decreased 7.7%.
Lending to financial institution also decreased 8.6% while investment has been increased
50.6%.Share capital increased 15.6% and reserve increased 13.6 % in financial year
2009.
Percentage Analysis of Income Statement (2007)
Formula;
%Age Analysis of Income Statement
=Current Year Value--Previous Year Value/Previous Year Value

85
NATIONAL BANK OF PAKISTAN

PROFIT AND LOSS ACCOUNT

For the year ended 31st December 2009

86
 2009 2008
PARTICULAR (%age)
(Rs.In“ooo”) (Rs.In“ooo”)

Analysis
Markup return/interest earned 50,569,481 44,100,934 14.7

Markup/return/interest expense 16,940,011 13,947,218 21.5

Net markup interest income 33,629,470 30,153,716 11.5

Provision against non performing loans

4,723084 3,075,723 53.6
and advances

Provision for diminution in the value of

(40,248) (709,461) (-) 94.3
investment

Provision against off balance sheet

--- ==== ===
obligation

Bed debts written off directly 39,899 5,284 655.7

4,722,735 2,371,546 99.1

Net markup/ interest income after

28,906,735 27,782,170 4.0
provision

Non markup/interest income

Fee commission and brokerage income 6,781,683 6,144,628 10.3

Dividend income 3,263,246 2,891,755 12.6

Income from dealing in foreign

1,042,827 1333,840 (-) 21.0
currencies

Gain on sale and redemption of

2,341,690 1,169,515 100.0
securities

87
Unrealized loss on revaluation of
investment classified as held-for- (31,964) (4464) 616.6
trading

Other income 147,363 627,618 (-) 76.5

13,544,845 12,162,892 11.6

Total non markup/interest income

42,451,580 39,945,062 215.8

Non markup interest expenses

Administrative expenses 14,205,911 13,443,441 5.7

Other provision write off

168,027 (17,283) 872

Other charges 17,141 208,327 (-) 91.7

Total non markup/interest expenses 14,391,079 13,634,485 5.5

28,060,501 26,310,577 6.6

Extra ordinary items --- --- -----

Profit before tax 28,060,501 26,310,577 6.6

Taxation-current 8,311,500 8,695,598 215.7

- Prior years 391,497 530,652 (-) 26.2

- Deferred 323,731 61,981 422.3

9,026,728 9,288,231 (-) 2.9

Profit after tax 19,033,773 17,022,346 104.5

88
 Unappropriate profit brought forward 32,074,677 19,372,523 65.6

Transfer from surplus on revaluation of

39,007 41,060 (-) 5.0
fixed assets

Profit available for appropriation 51,147,457 36,435,929 40.6

Basic Earnings per share

23.34 20.88 11.8

Diluted Earnings per share (Rupees)

23.34 20.88 11.8

PERCENT ANALYSIS OF PROFIT AND LOSS(2009);

Through percent analysis, we know that interest earned increased 4.7% while the
interest expenses increased 1.5%. Net mark up increased 1.5% while interest
income after provision increased 4%.Total non-markup interest income increased
15.8%. Profit before tax increased 6.6%. While profit available for appropriation
increased 40.6% .Earnings per share also increased 11.8% in 2009 that show sound
financial position of the NBP the main, reason of its strong position is that its
expenses are low and its income is more.

9.4) RATIO ANALYSIS:

Financial Ratio;
An index that relates two accounting numbers and is obtained by dividing one number by
the other.
Some Glimpses;
1) Return on Investment /Return on assets;
Measures overall effectiveness in generating profits with available assets; earning power
of invested capital.
Return on Investment= Net Profit After Tax/Total assets

2006 2007 2008 2009

0.9% 2.198% 2.7% 2.5%

89
This ratio shows mixed trend.
2) Gross Profit Margin Ratio;
The total Margin available to cover operating expenses and yield a profit.
Gross Profit Margin=Gross profit/Interest earned

2006 2007 2008 2009

51.9% 57.6% 68.4% 66.56%
This ratio shows declining trend, which is not a healthy sign.
3) Total Debt Ratio;
Shows the relative extent to which the firm is using borrowed money.

Debt to total assets=Total debt/Total assets

2006 2007 2008 2009

91.6% 87.1% 87.06% 84.76%
This ratio shows declining trend but is a good sign .because debt has been reduced.
4) Return on Equity;
Measures earning power on shareholders’ book value investment.
ROE=Net profit After Tax/Shareholders Equity

2006 2007 2008 2009

23.1% 27.035% 20.77% 16.36%
This ratio shows declining trend, which is not a positive sign
5) Debt to Equity;
Indicates the extent to which debt financing is used relative to equity financing.
Debt to Equity=Total Debt/Shareholders Equity

2006 2007 2008 2009

10.963% 67.71% 674.6% 555.2%
This ratio shows declining trend but is a good sign .because shareholders equity increased
relative to debt in 2009
6) Total Assets Turnover;
Measures relative efficiency of total assets to generate sales.
Total Assets Turnover=Net Sales/Total Assets

90
2006 2007 2008 2009
3.78% 5.82% 6.94% 6.63%
This ratio shows mixed trend.
7)Net Profit Margin;
After tax profits per dollar of sales

Net Profit margin=Net Income/Sales

2006 2007 2008 2009
29.5% 37.78% 38.55% 37.65%
This ratio shows mixed trend.

8) Earning Per Share;

Earnings available to the owners of common stock.
EPS=Net Income/Number of share of common Stock outstanding

2006 2007 2008 2009

Rs.10.48 Rs.21.51 Rs.20.88 Rs.23.34
This ratio shows up trend and shows the progress of NBP.

91
BIBLOGRAPHY

1. Annual report of National Bank of Pakistan year 2008 and 2009

2. www.nbp.com.pk
3. Banking and finance written by professor M. Saeed Nasir
4. Encorta

92
ACRONYMS
A/C Account
AOF Account Opening Form
ATM Automated Teller Machine
NBP National Bank of Pakistan
BOD’s Board of Directors
CDR Current deposit Register

93
DIABP Diploma Associates of Institute of Banking IN Pakistan
DD Demand Draft
DEG Deutche Investitations-and Entwicklungsgese llschaft
Dept Department
DM Deutsche Mark
FBC Foreign Bills Collection

FC A/C Foreign Currency Account

FDD Foreign Demand Draft
HO Head Office
HRM Human Resource Management
IBC Inward Bills Collection
IBP Institute of Banking in Pakistan
NMS National Monthly Scheme
NRTC National Rupee Travelers Cheque
L/C Latter of Credit
L/G Latter of Guaranty
LBC Local Bills Collection
LTP Long Term Project
MCB Muslim Commercial Bank
MD Managing Director
MT Mail Transfer
MTR Mail Transfer Receipt
MIS Management Information System
N.W.F.P North West Frontier Province

94