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National Bank Of Pakistan

DEDICATION

This Report is dedicated to My Dear Parents My Dear Friends & My Honorable Teachers Whose Guidance is Always With me.

An Internship Report

National Bank Of Pakistan

ACKNOWLEDGE
My report will remain incomplete if I do not mention the efforts of those people who helped me in completing this work. First of all I will thank to Ch. Nazir Ahmad Principal of Hailey College who gave me opportunity to work in such a prestigious organization which are well known in the country. I also tribute to my all teachers who able me to work with experienced persons and enable me to work very efficiently throughout the period of Internship. The administration department of NBP prepared my internship program. Administration officer Mr. Ehtesham with special attention prepared this program. The program was organized in such a way that sufficient time was given to each department according to its importance. I am really thankful for his cooperation during the internship. At last, I would like to thank all those persons who helped me in completing this report.

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M.Com

An Internship Report

National Bank Of Pakistan

CONTENTS
CHAPTER:1 BANKS AND SCOPE OF BANKING What is Bank? Banking in Developing Societies New Challenges of Contemporary CHAPTER:2 INTRODUCTION OF NATIONAL BANK Present Status and History Management Mission/Objectives Services Provided by NBP Organizational Chart CHAPTER:3 PROSUCT / SERVICES MIX OF NBP Product/ Service Mix Deposits Advances Foreign Services CHAPTER:4 ACCOUNT OPENING AND CLOSING DEPARTMENT Account opening and closing Department Types of Account How to open an Account Document Required Deposit Deportment Terms and Conditions CHAPTER:5 CASH DEALING DEPARTMENT Cash Dealing Department Cash Receipt Information Required Acceptance of Cheque Payment of Cash An Internship Report

National Bank Of Pakistan

CHAPTER:6 CLEARING DEPARTMENT Clearing Department Clearing Types of Clearing Items to be Checked on Clearing House Cheque Returned CHAPTER:7 REMITTANCE DEPARTMENT Remittance Department Local Remittances Foreign Remittance CHAPTER:8 ACCOUNTS DEPARTMENT Accounts Department Functions of Accounts Department Types of Vouchers Accounting Procedure in NBP CHAPTER 9 MY INTERSHIP PROGRAMME Work Done by Me at the Branch CHAPTER:10 MANAGEMENT OF ORGANIZATION Management of Organization Other Information about Branch

CHAPTER:10 FINANCIAL ANALYSIS Horizontal Analysis Vertical Analysis Ratio Analysis Comments on Ratio Analysis CHAPTER:11 RECOMMENDATIOS Recommendations An Internship Report

National Bank Of Pakistan

CHAPTER # 1

BANKS AND SCOPE OF BANKING


WHAT IS BANK? A bank is an institution for the custody, loan or exchange of money for sanctioning credit, for transferring funds by domestic foreign bills of exchange. It is a pipeline through which currency moves into and out of circulation. As it is clear from the definition of banking, the main activity or function of banking is borrowing and lending of money with a margin of gain. However, as far as the present day banking is concerned, there are a number of different banks, set up under specific different objectives, performing various functions. BANKING IN DEVELOPING SOCIETIES. In the developed societies, the banks do not have to make many efforts in mobilizing savings, as it has become a second habit with the people. The commercial banks are financing the short and long term capital needs of the business. The loans and discounts of commercial banks include real state mortgages and long term loans, which extend to as long a period as ten years. These banks also administer estates, acts as insurance agents and underwriters, provide brokerage services and implement domestic as well as foreign economic polices of the government. Commercial banks in developing countries have to make vigorous efforts of resource mobilization at all levels. However, with the passage of time the commercial banking operations are under going remarkable qualitative change. In Pakistan for instance, banking facilities are being extended to the un-banked places. Planned efforts are

An Internship Report

National Bank Of Pakistan

being made to enhance the supply of bank advances to the new priority sectors in consonance with the present day socio-economic needs. A special scheme to induct commercial banks in the field of agricultural credit was introduced in December 1972. The scheme provides for short and medium term loans to farmers under a much simplified procedure. State Banks measures aimed at increasing the flow of credit to the small man in business and industry as well as to housing and nontraditional exports have also yielded positive results. The large risk to the commercial banks in the sphere of agricultural finance and small loans are being covered to a reasonable extent by the Credit Guarantee Scheme. Mandatory targets for small loan credit to the agriculture sector and for housing have been prescribed and are being enforced. Corporate banking is also being reorganized and reactivated on a more viable fines.

NEW CHALLENGES OF CONTEMPORARY AGE


Banks play a vital role in the economic development of country. They accumulate the idle savings of the people and makes them available for investment. They also create new demand deposits in the process of granting loans and purchasing investment securities. They facilitate trade both inside and outside the country by accepting and discounting of bills of exchange. Banks also increase the mobility of capital. They provide a variety of facilities for remitting a large amount of money from one place to another by the transfer of a small slip of paper. In a country like Pakistan, which is still in the initial stages of economic development, and well organized banking system is the need of the day. There is acute shortage of capital in Pakistan. The banks have to play an important role in promoting capital formation, in controlling speculation in maintaining a balance between requirements and availability and in direction physical resources in to desired channels. In advanced countries of the world like America, Japan, Germany, the rate of capital formation ranges from 12% to 25% of their Gross National Product. Whereas in Pakistan An Internship Report

National Bank Of Pakistan

the rate of saving has varied from 5% to 8% only. In order to accelerate the rate of economic development the Government has been acquiring foreign capital. The banks by launching a vigorous campaign both in the villages and cities can mobilize the idle savings and can increase the rate of investment. The country thus becomes independent of foreign capital, which in fact has let us down on almost all the crucial happenings in the country. This deficiency of capital accumulation is due to so many reasons like, lower per capital income, disparity of wealth, unorganized banking system, ineffective fiscal measures etc. One reason of this capital deficiency is the non-adoption of modern marketing tools, such as market research, sales organization, sales training, sales management, advertising etc. for attracting deposits. So these are the new challenges for banks which are to be achieved for the betterment of the economy.

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CHAPTER # 2

INTRODUCTION OF NATIONAL BANK


PRESENT STATUS AND HISTORY National Bank of Pakistan maintain its position as Pakistanis premier Bank determined to set higher standards of achievements. It is the major business partner for the government of Pakistan with special emphasis on fostering Pakistanis economic growth through aggressive and balanced lending policies, technologically oriented branches. The National Bank of Pakistan came into existence on 20 th November 1949 under the National Bank of Pakistan Ordinance No.21 of 1949.It is a semipublic bank and functions like other commercial banks. Therefore it receives funds from the depositors and provides loans/credit facilities in all sectors including trade, industry and agriculture. It also functions as an agent of the Central Bank and operates the treasuries at places where no branch of State Bank of Pakistan exists. The National Bank of Pakistan was also nationalized, along with other banks, in January 1974. The Bank of Bahawalpur was also merged into this Bank. MANAGEMENT An Executive Board composed of six Senior Executives of the Bank and the President who is also the Chief Executive supervises the affairs and business of the Bank. CAPITAL The authorized capital of the Bank is Rs.2500 million divided into 100 million ordinary shares of Rs.10 each. After nationalization, all the shares held by persons other than the Federal Government or Corporations i.e, owned and controlled by the Federal Government were considered as transferred and vested in the Government.

BRANCHES An Internship Report

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The Bank had a network of 1531branches in the country and 28 branches in foreign countries. These countries are as follows: 1)- United States of America 2)- United Kingdom 3)- France 4)- Germany 5)- Africa, Middle East Region 6)- Bahrain Obu 7)- Asia Pacific Region 8)- Japan 9)- Republic of Korea 10)- Central Asian States 11)- Bangladesh 12)-Peoples Republic of China 13)-Pakistan. ACTIVITIES AND ACHIEVEMENTS FOREIGN EXCHANGE The branches of the Bank in foreign countries handled the export business and import business. National Bank of Pakistan started a joint venture in collaboration with the Bank of Al-Jazira. Its head office is at Jeddah and also includes twelve other branches. National Bank of Pakistan as a trustee of the National Investment Trust Limited, and also operates a subsidiary for the promotion of agricultural production named the National Agriculture Limited.

MISSION/OBJECTIVES OF NATIONAL BANK OF PAKISTAN An Internship Report

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MISSION STATEMENT To make the Bank comparable and competitive with all International standards in performing, quality of operations, quality of staff, quality of financial strength and quality of products and services. Objectives & missions are the means to reach some beneficial end. No one can achieve any target before setting it firstly. So in the same way National Bank has some objectives, which it is trying to achieve. Following are some of them: 1)_ To maximize profit 2)_ To provide all sort of banking services. 3)_ To serve the humanity in all parts of the world through its network of branches world. throughout the

4)_ To satisfy customers beyond their expectations by providing personalized effective & efficient services in best & possible manner. 5)_ To serve Pakistan better in order to give socio-economic uplift. 6)_ To provide the maximum profit to depositors by achieving sound profitable growth. 7)_ To develop & enhance its system & technology. 8)_ To train its staff. 9)_ Providing information & advice to its customers. 10)_ Providing facilities of foreign currency accounts. SERVICES PROVIDED NATIONAL BANK OF PAKISTAN National Bank of Pakistan provides following main services to its customers: It acts like a financial intermediary between importers and exporters. It provides services in share of deposits, advances guarantees etc. Full and efficient services of foreign trade. Better computer system through which statement of accounts of a client could be made rapidly. An Internship Report

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ORGANIZATION CHART OF NATIONAL BANK OF PAKISTAN DESIGNATIONS FO HIGHER LEVEL OFFICERS PRESIDENT

SENIOR EXECUTIVE VICE PRESIDENT GRADE 22

EXECUTIVE VICE PRESIDENT GRADE 21

VICE PRESIDENT GRADE 20 ASSISTANT VICE PRESIDENT GRADE 19

GRADE I OFFICER GRADE 18

GRADE II OFFICER GRADE 17

GRADE III OFFICER (GRADE 16)

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CHAPTER # 3

PRODUCT / SERVICE MIX OF NATIONAL BANK


Product of a bank include all those services, which a customer can use effectively in has general and business live. NBP Main Branch, Lahore offer a wide range of banking services to public and private sector corporations, partnership, individuals and others. However, there are some basic services which NBP at present offered to his customers include: Receipts f customer deposits. Collection of his cheques drawn on other banks. Making payments through cheques drawn on it. Making remittances Foreign trade services.

At present NBP offering the following financial services and investments options to customers. 1- Deposits 2- Advances 3- Foreign Services DEPOSITS To receive deposits is a basic function of all commercial banks. Commercial banks do not receive these deposits for save keeping purpose only. But they accept deposits as debts. When a bank receives a deposit from a customer becomes the creditor and the bank a debtor. When the bank receives the amount of deposit as a debtor, it becomes the owner of it. It may, therefore, use it as it deems appropriate. But there is an implicit agreement that the amount owned would be paid back by the bank to depositor n demand or often a specified time. Deposits are the lifeblood of a bank and their classification is based on the duration and purpose for which the deposits are to be kept at the bank before the depositors can withdraw them. At present NBP accepts deposits in bother local & foreign

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currencies and provides a variety of accounts where these sums are put in at the desire of the customers. LOCAL CURRENCY DEPOSITS In local currency (PkR) the following type of accounts are available at the bank 1-Cruuent Account 2-Saving A/c 3-Short term deposits 4-Fixed deposit receipts A brief explanation of the above stated accounts is given below: CURRENT ACCOUNT These are payable to the customer whenever they are demanded. The bank treats these deposits as current liabilities. No profit is given on these accounts and there is no restriction of minimum balance to be kept in these accounts. SAVING ACCOUNT In such types of account, the depositors are normally allowed to withdraw a limited amount of money only twice a week. FIXED DEPOSIT RECEIPTS In these accounts the amounts are deposited for fixed period which may be 1 month, 3 months,6 months and 1 year. SHORT TERM DEPOSITS In these accounts the amounts are deposited for fixed period but shorter than that of fixed deposit receipts, which may be 7 days ,and 30 days.

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FOREIGN CURRENCY DEPOSITS At present NBP Main Branch accepts US$, GBR, YEN and DM in shape of foreign currency deposits. For these foreign currency deposits bank has offered the following accounts. 1-Foreign Currency Accounts. 2-Foreign Currency Saving Accounts. A brief description of above stated accounts is given under. i- FOREIGN CURRENCY CURRENT ACCOUNTS In these accounts depositors can deposit a sum of money in any of the above mentioned currencies. The depositor can also withdraw any amount subject to he availability of the amount. No profit is given on these accounts and no restriction as per the minimum balance required. ii-FOREIGN CURRENCY SAVING ACCOUNTS NBP pays the interest that is earned on the sums available in the accounts by making investments. ADVANCES Advances are the major source of earning income for commercial banks; it is the interest charged on the money lend to customers. Bank advances to customers are made either by way of loan or by overdraft on current account. At present NBP provides short term loans as well as long term loans.

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FOREIGN SERVICES Following is the list of major foreign services provided by NBP to its customers :e .g: a- Documentary Letter of Credit b- Bills of Negotiation c- Foreign Services d- Bills for collection A brief description on of above stated services is given under; DOCUMENTARY LETTER OF CREDIT A documentary letter of credit may be defined as an authority issued by the opening bank on behalf of the importer in favor of the exporter with the stipulation that the drafts drawn there under will be duly honored provided that the terms and conditions as mentioned there in are duly compiled with . With respect to the documentary credit the following types of documentary letter of credit are offered by NBP; Revocable LC Irrevocable LC Confirmed LC Transferable LC Back to back LC Stand by LC Sight LC Usance LC

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BILLS FOR NEGOTIATION In some cases the exporter is not willing to wait for the proceeds of collection to be remitted. In such cases exporter requests the Bank to negotiate the bills i.e. he sends the documents to Bank. In this case Bank examines the documents and arranges them with the requirements mentioned in the Letter of Credit. When bank satisfied it pays to the exporter. Now Bank has the right to collect the proceeds on his own behalf from the importers Bank NBP performs the functions of both the exporters and the importers Bank as per its customers status. BILLS FOR COLLECTION The exporters and bank receives the documents from the exporter, examines and dispatches them to the importer,s bank. The importer, s bank confirms these, as per the requirements stated in the letter of credit. If founds correct gets the amount from the customer, advice the exporter ,s bank about the receipt of payment and in the end makes the payment to the exporters bank. REMITTANCE It includes local and foreign currency fund transfer. NBP also provide the facility to its customers in remitting funds from one place to another place. The remittance (between two countries). At present bank provides the following instrument facilitates the transfer of funds. TT ( telegraphic Transfer) DD (Demand Draft) PO (Pay Order) These will be discussed in detail in the remittance department. that

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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. Agent of the State Bank Of Pakistan handling Treasury Functions, receipts of Taxes & other Revenues. Handling of salaries and pensions of federal/ provincial employees and defence personnel. Utility Bills collections. Haj arrangements. Sale and encashment of Prize Bonds through its 266 authorized branches. Sale and encashment of Defence Savings and Special Savings Certificates. Safe Deposit Lockers for customers. Rational Human Resource Management. CASH LINK NBP ATM SERVICES FOR YOUR CONVENIENCE SERVICES AVAILABLE ON NBP ATMS Cash withdrawal according to your cyclic limit. Transfer of funds between PLS Savings Account and Current Account of the same customer through the same ATM Card. Account Balance Inquiry. Instant mini- statement of account listing the last 15 transactions in account. Request for a new Cheque book which might be collected by the customer from the branch. An Internship Report

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HOW MUCH CASH CAN BE WITHDRAWN There is a 24 hours cyclic cash withdrawal limit imposed on all ATM cards. Withdrawal limits depend on the type of customers. PIN (PERSONAL IDENTIFICATION NUMBER) MAILER A pin mailer issued to the ATM card holders carries the PIN number in a sealed envelope. Card holder is required to keep the PIN number in a safe place as all the operation on the ATM are carried out through the same.

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CHAPTER # 4

ACCOUNT OPENING AND CLOSING DEPARTMENT


Basically function of A/c opening & closing in NBP is performed under Accounts department but I am discussing it with separate heading for better understanding. Firstly all types of Accounts which can be opened in NBP has been described: TYPES OF ACCOUNTS I) II) Current account Saving account Brief explanation of these accounts is as follows: CURRENT ACCOUNTS Current A/c is basically used to meet the daily transactions. Current account provides safety to the customers money, gives the advantage for paying debts by the convenient and safe means of sending cheques through the post thus avoiding the trouble and loss that units in PKR, Us$ GBP and DM. SAVING ACCOUNT In case of saving accounts, account holder gets profit. There is a time limit for drawing cash; customer cannot draw money before a certain time. In NBP saving a/c is used as current a/c & there is no main difference between current & saving account except profit. This account can be opened by limited company, partnership company ,club societies & associations, joint & sole proprietorship. An Internship Report

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HOW TO OPEN AN ACCOUNT (GENERAL) When a person intend to open account. A card is filled & signed by customer. This card contain: i)- Six boxes for name. ii)- Opening date iii)-Special instructions iv)-Space for first a/c No. v)-Space for other accounts. Following points are considered by the bank in this regard. 1)- Another account holder of the bank should properly introduce the new customer. 2)- The account holder should sign the account opening form in the presence of bank officer and the signature is duly verified. 3)- A copy of identity Card is required by Bank. 4)- Against submission of the Banks prescribed application form, duly introduced in the manner provided and on supplying such document, as may be required and account may be opened. The Bank reserves to itself the right to refuse to open and account without assigning any reason. 5)- Each account shall be allotted a distinct number that is to be quoted in all correspondence with the bank relation to the account. 6)- Minimum amount for opening and continued maintenance of various types of accounts is as follows: Rs. Current Saving 2000 500 US$ 2000 500

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The bank reserves the right to change the above mentioned minimum balance requirement at any time without any notice. PROCEDURE TO OPEN AN ACCOUNT When a customer wants to open an account, the bank officer gives application form to him. All information, which is necessary to be known by the bank, is requirements of the application form. From also requires the essential documents to be attached by the customer. Following persons can open an account: 1)-Sole proprietors 2)-Private accounts (individual A/Cs) 3)-Joint account 4)-Limited Company 5)-Partnership Company 6)-Club, Society & Association Basically following information is required:

Name Address Telephone no. Currency of account Nature of Business Residential status Special instruction regarding the account Signature of the applicant

DOCUMENTS TO BE ATTACHED Documents required to be attached are different for different categories. 1)- SOLE PROPRIETORS ACCOUNT An Internship Report

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They have to submit their business registration certificate number. 2)- PRIVATE ACCOUNTS For individual or private accounts following documents & information has to be given: Name Residence address Mail address Foreign address office address & office ph. No. position to title passport or identification No/ matrimonial status Date and place of birth Nationality Residence visa No. Name and address of other Banks in Pakistan 3)- JOINT ACCOUNT If some one wants to open joint account the following information is needed: Full name - Address - Specimen of signatures of the joint account holders 4)- JOINT COMPANY In this case following information & documents are required: Certified true copy of the Memorandum and Articles of Association of the company. An Internship Report

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Certified true copy of the resolution of the board of directors / managing committee / governing body regarding conduct of the account. Certified list containing names and signatures of the directors / office bearers. Certified true copy of the certificate of incorporation or registration. Certified true copy of the certificate of commencement of business ( in case of public limited companies). I.D. Card copy of each director Original is also enclosed for inspection and return List of persons authorized to operate on the account.

5)- PARTNERSHIP COMPANY ACCOUNT Documents required in this case are as follows: Full Names Address Specimen of signatures of the partners Certified true copy of partnership deed

6)- SOCIETIES / CLUBS AND ASSOCIATION ACCOUNT Documents required in this case are as follows: Copy of the rules certified by the president and the secretary. Certified copy of a resolution of the committee and the specimen signatures of the persons authorized to sign. OTHER FORMALITIES The majority of the new customers are introduced either by an existing customer or by bank staff. When the concerned officer is satisfied then he opens the account and gives an account number that will be used in all communications with the bank in regard to the account and when making deposits and withdrawal. An Internship Report

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Bank has a right not to open and account without assigning any reason or to close the account, if it is not operated in a satisfactory manner by the head office instructions. So, opening questionnaire for companies & business accounts includes: Company name Address Mail address Telephone, Cable & Telex Nature of Company Business registration certificate number Date of incorporation Nature of Business Names of main managers & director
Names & address of parent companies Names & address of other banks And, introducers declaration

And opening questionnaire for private accounts includes: Name Residence address Mail address Residence telephones No. Foreign address Office address Office Telephone No. Position or Title Passport or identification cards No. An Internship Report

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Matrimonial status Nationality Residence Visa No. Name & address of other banks in Pakistan Name & address of other banks in abroad & Their account No. & Introducers declaration ISSUANCE OF CHEQUE BOOK When a customer opens an account with the bank, he is provided with cheque book for withdrawals of account. However, the first cheque book is given to the customer only when all the required documents are checked. A cheque book contains twenty five, fifty or hundred leaves. The cheque book also carries a requisition slip for the issuance of the new cheque book. This slip is duly filled and singed by the customer. The signature of the customer is verified by the bank and new cheque book is issued to the customer and serial numbers of the cheque are duly entered in the book of the bank. Along with the signature, person should also write his full name & address. Usually only one cheque book is issued at a time, however big concerns who need a number of cheque books at a time, may ask the bank to stock as number of cheque books in their name and to point their name on these cheque books. Bank debits the clients account for excise duty of Rs.2.50/- per cheque and keeps the cheque book ready for the customer, as on his advice. The officer keeps and maintains the cheque book register Cheque book inventory and cheque books issued are recorded in this register. The account number for which the cheque book is issued and the number of leaves are also recorded in this register when the cheque book issued an entry is passed in the cheque book issue register. THE REQUISITES OF A CHEQUE An Internship Report

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There is no prescribed form of words or design of a cheque but in order to fulfil the requirements the cheque must have the following: It must be in writing It must contain an order to pay and addressed a specified bank. The order must be unconditional The order must direct to pay on demand The sum ordered to be paid must be certain. The payment should be ordered to be paid to a certain person or to his order or the bearer. CHECKING AND PAYMENT OF CHEQUES It is the primary function of the bank to repay the money received from his customers account usually by honouring his cheques. It is a contractual obligation of a banker to honour his customers cheque, if he has checked the following on a cheque: Name of the Bank & branch Amount in figure and words Signature of the Drawer (verification) Posting mark by the computer operator Cancellation by the authorized Cheque should not be damaged Funds must be sufficiently available No legal bar prohibiting payment. STOPPING THE PAYMENT OF CASH ON PRESENTATION OF CHEQUE The payment of cheque is stopped dishonored on the following grounds: Effects not yet cleared ,then request to present again.

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Drawers signatures differ Payees endorsement requires banks guarantee Alteration requires full signatures Cheque is post dated Cheque is without date Amount in figures and word differs Crossed cheque must be presented through the bank Payment stopped by the drawer. HOW TO CLOSE AN ACCOUNT The account can be closed by the customer. The customer is required to submit and application for closing the account. Then the account is closed out and his balance is paid to him. Cheque book is returned back to bank and the officer cancel and the remaining cheques in cheque book.

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CHAPTER # 5

CASH DEALING DEPARTMENT


Cash department of NBP is given the complete responsibility of handling all receipts & disbursement of cash. As a result of transaction in both local & foreign currencies & near cash items such as traveler cheque etc ( when they are issued against cash). As a consequence it is also responsible for the book keeping of these transactions & the safe custody of cash & near cash securities of NBP. a)- Cash receipts for receive deposits. b)- Encashment of cheque Cash department of NBP is a separate close part covered with glasses. No one other than cash departments employee is allowed to enter into that area. CASH RECEIPT The depositor uses cheque deposit slip (or cash deposit slip) for depositing the amount. There are two types of cash deposit slip: a)- One for current account holders & b)- Other for saving account holders. Both are in different colors for clear identification. There are two parts of cash deposits slips: An Internship Report

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a)- Counter foil b)- Adjacent credit voucher. ACCEPTANCE OF CHEQUE The cash is paid against the cheque of the client. The following points are kept in mind while receiving the cheque from the client. Cheque should be drawn on NBP. It should not be post dated. It should be bearer cheque so the word bearer should not be crossed. Payment is not stopped by the drawer. Amount in words & figure should be same. Alternation in date / figure / word require drawers full signature with signature on the cheque.

AFFIRMATION OF SIGNATURES After receiving the cheque the officer verifies the signature of the account holder with the signature on the cheque. It signatures are not the same then it is returned back otherwise forwarded to computer terminal. COMPUTER TERMINAL PROCESS The cheque is received in computer terminal, where the computer operator checks the balance of the account holder. The operator also sees whether the stop payment instructions are received from account holder or not. After considering these two points computer operator posts the cheque in account holder ledger & returns the cheque back to the officer. PAYMENT OF CASH An Internship Report

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The cheque is cancelled after posting & is returned to cashier. The cashier enters the cheque in cash paid register & pays against the second signature of the receiver on the back of the cheque.

CHAPTER # 6

CLEARING DEPARTMENT
Nearly all the banks provide a wide variety of services to their depositors. One valuable service provided is that of clearing. Clearing department also plays an important role in performing the activities of the bank. The basic function of clearing department is to provide services to customers in collection of their cheques of other banks, whether they are in city or outside the city. The customer can get the money in his account at NBP from the cheques drawn on another bank. The bank accepts the cheque in the clearing which it is drawn through the clearing house i.e, State Bank of Pakistan. CLEARING We can define clearing as, the transfer of funds from one branch of bank to the other branch of the same bank or the other bank on which the instrument is drawn, without involving cash through State Banks clearing house or we can say in other that cheques which can not be cashed at the ash counter of the bank. CLEARING HOUSE An Internship Report

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It is of the service provided by central bank i.e, State Bank of Pakistan to the other commercial banks. SBP acts as a clearing house. A representative of each bank represents his bank in the clearing house. A clearing house is an association of commercial banks set up in a given locality for the purpose of interchange & settlement of credit claims. The SBP maintains the accounts of the NBP like other scheduled banks and debits the account of the drawee bank and credits the presented bank which is NBP in that case. TYPES OF CHEQUE Some specific types of cheque are being entertained in the clearing department of NBP Main Branch, Lahore. These types of cheque are: 1)- Local cheque 2)- Out station cheque 3)- In house cheque 1)- LOCAL CHEQUE By local cheque we mean collection of cheque from the banks which are the members of the clearing house and which are located within the city. 2)- OUT STATION CHEQUE By out station cheque we mean collection of cheque from the banks which are situated outside the city. It means that presenting bank and the bank on which the cheque is drawn are not situated in the same city. 3)- IN HOUSE CHEQUE In house cheque are drawn on one branch of NBP and presented to another branch of NBP such cheques are marked with transfer stamp. An Internship Report

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TYPES OF CLEARING Clearing department deals with the two type of the clearance. These are stated below: 1)- Inward clearance 2)- Outward clearance

INWARD CLEARANCE Cheque drawn on NBP and presented to other Banks or handed over to NBP agent in clearing house. That is inward clearance for NBP. So inward clearing results in outflow of funds to collecting bands reducing the balance in the clearing account. OUTWARD CLEARANCE Similarly cheque which are drawn on other bank and presented to NB Main branch, Lahore are known as outward clearance for NBP Main Branch. So outward clearing results in inflow of funds from paying bank into the clearing account maintained with clearing house increasing the balance in the clearing account. Outward clearing thus may be: Local clearing Outstation clearing Excess of outward clearing over inward clearing produces a net increase in the clearing account balance. Excess of inward clearing over outward. Clearing produces a net decrease in the clearing account balance. The first case is referred to as favorable clearing & the second case as unfavorable clearing.

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CHAPTER # 7

REMITTANCE DEPARTMENT

Remittance is the monitory transfer from one place to another place or from one country to another country to fulfill the requirements of the customers by the order of the customer. Remittance Department at NBP Main Branch Lahore can be divided into two sections due to its activities. 1)- Local Remittance 2)- Foreign Remittance 1)- LOCAL REMITTANCE Local remittance section deals with remittance ( incoming and outgoing but only in local i.e, Pakistan rupee and within Pakistan. Local remittance include the following eight functions in NBP: a)- Transfer through pay order b)- Transfer through demand draft An Internship Report

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c)- Telegraphic transfer d)- Issuing of SBP cheques e)- Mail transfer f)- Local / internal transfer
g)- Preparation of balance certificates.

Chapter - 8

ACCOUNT DEPARTMENT
The main function of the accounts department of NBP is to maintain general ledger accounts and after the business hours the function of the accounts officer is to close books. FUNCTIONS There are many other important functions performed by accounts department of NBP. So I ma going to discuss these functions in three steps: -General Ledger; -Voucher system; -Types of voucher used. GENERAL LEDGER: It is the prime record of the branch reflecting its assets and liabilities and serves as the master control of accounting system of the branch. It consists of only those accounts, which are authorized by the head office. VOUCHER SYSTEM: An Internship Report

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Voucher is a written authorization sued in approving a transaction for recording and payment. Voucher is a system, which is generally designed to provide strong internal control over the transaction, which take place during the business hours. Whenever a transaction takes place in any department of the bank. One debit and one credit voucher is prepared. At the end of the day, these vouchers are collected and recorded i.e., Debit vouchers are used in two cases: When ever any expense is incurred. When a depositor withdraws some amount from his account The account of the customer is debited with the amount and debit voucher is prepared. The format of the debit voucher includes: -Name of branch -Date -Branch No. -Account No. -Transaction Code -Amount and other details (Narration) CREDIT VOUCHERS: There are two types of transaction in which credit vouchers are used. An Internship Report

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When a depositor deposits any amount in his account because the liability of bank. Any income received by the bank e.g. bank draft. Different types of credit vouchers are used. Now in second set these three important functions of Account department of NBP are described briefly. 1. All expenses vouchers are routed ask through Accounts Department. 2. Preparation of various statements. 3. Preparation daily activity report at the end of each day. EXPENSE VOUCHER: All the expense vouchers passed by each department are routed through accounts department. These expenses include: a) b) c) d) e) f) g) h) i) An Internship Report Salaries given to all employees of the bank Wages Rent Lease installments Insurance - vehicle Insurance - cash Utility Bills Medical allowances (reimbursed) Cash carrying charges etc.

SALARY STRUCTURE:

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Salary included Bonuses These bonuses are credited after every six months i.e. June and December. These are first and second profit bonuses and are equal to one month's basic salary. Allowances: Allowances included house allowances, transport allowance and utility allowance. Provident Fund: Provident fund is provided to each employee on his retirement. Contribution by employer and employee is 8.3%. Preparation of statements: Second major functions of accounts department are the preparation of various statements. These statements are: 1)- Weekly Statements: These weekly statements are sent at first to NBP head office Karachi. 2)- Monthly Statements:

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These monthly statements are sent at first to NBP head office Karachi and then these statements are sent to head office affairs in consolidated form. All vouchers and statements signed and approved by manager accounts or who has authority to sign on behalf of the bank and whose signatures appear in one of the banks book of specimen signatures or a person who has authority to sign internal vouchers and records extent of its authority will be made by the country manager.

3)- Preparation of Daily Activity Reports: It is also duty of accounts department to prepare daily activity report at the end of each day. It includes the details of the following: A)- loans transactions B)- general Ledger transactions C)- Foreign currency related transactions D)- fixed deposits transactions All vouchers prepared by different relative departments on computer. In third and last step the following functions of accounts department of NBP are described as follows: Approval of daily expenses voucher SBP balance Tax returns Budgeting An Internship Report

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Forward Cover Fee Debit Balance Calculation Pay order/telegraphic commission transfer Deposit entry Depreciation Result/budget Head office report Trial balance / Fx position Commitment return Sources and uses Activity report Statistics of activity Monthly assets and liability Liquidity 1, 2, 3, 4, 5 years Excise duty balancing EOM/EOY Print files floppy Customer's/internal A/c statements Computer complete back up Quarterly statements size wise FCY interest reporting FCY interest checking Service Charges A/c to be dormant Letters to customers Classification of deposits List of deposits A/c opening and closing An Internship Report

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Staff loans A/c blocked and unblocked Monthly resident and non resident Zakat Calculations. ACCOUNTING PROCEDURE IN NBP: 1. Various departments use debit and credit voucher for recording the transactions. 2. Accounting department receives the departmental journal from the departments to gather with all the vouchers. 3. Verify correction of total of all into departmental entries in departmental journals. 4. Sort vouchers into general ledger a/c order debit separately from debit for each account. 5. From departmental journals add all debits and all credits for each general ledger account and write total for each account in relative account and extend new balances. 6. Prove debit and credit totals to department journal total. up data balances. 7. Date and sign general ledger and obtain signature of an officer. 8. Place general ledger includes leaf binder in chronological order. Write total obtained from machines list for each contingent accident in general ledger and

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CHAPTER # 9

MY INTERNSHIP PROGRAMME
WORK DONE BY ME AT THE BRANCH Major activities performed during my internship program are as follows; ACCOUNT OPENNING DEPARTMENT: In this department, I gain the practical knowledge about opening account. This department deals with opening current and saving account for its customers and all matters regarding thereof. The customers opening current and saving accounts can be categorized as following. -Individual -Firm -Company An Internship Report

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-Trust -Staff -Others OPENING AN ACCOUNTS: In order to open an account, first of all the customers have to fill a form prescribed by the bank. The person is required to bring some reference or introduction for opening the account. Introducer may be the person who has any account with NBP. Some important information regarding introducer e.g. the name and account number of the introducer is written on the space provided on the specimen signature card. Then in order to find out whether he is a true introducer or not, a letter is sent to him thanking him for this introduction so that anything wrong may come into notice. There are different requirements for different types of accounts and accountholders. DEPOSITS: The procedure undertaken upon receiving deposits from the customers is as follows: Examining the deposit slip to ensure that the name and the account numbers are clearly deposit slip. indicated. Counting the cash and cheques and agree the total with the amount on the

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After that the pay in slip is validated for cash transaction and transfer and clearing transfer as appropriate before the counterfoil is handed over to the customer. Cheques signed by directors, partners or employees of a company, drawn in favor of them and credited in their account in the bank are to be scrutinized. WITHDRAWALS: Cheques can withdraw amount. The withdrawals can be made only at the branch where the account is maintained. The officer under his full signature authorizes all cash withdrawals. No third party withdrawal is permitted. In current account, the bank does not offer any interest. We can deposit or withdraw any amount during banking hours. ISSUANCE OF CHEQUE BOOK: The accountholders request for the new chequebook by presenting the requisition slips along with the authority letter to the concerned office. His signatures are verified before giving him a new chequebook. The presence of the accountholders is compulsory to get a new chequebook. But if he sends a third person to get his chequebook then the procedure is as follows; An authority letter is given to the third party by the accountholders. The accountholders verify the signature of the third person on that authority same to whom the accountholder has sent. The bank issues the new cheques book and authority letter is kept buy the bank. CLEARING DEPARTMENT: An Internship Report letter.

The bank officer gets the signature of that third person to confirm whether he is the

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In this department, I have worked for two weeks. Main branch receives the cheques from all of its branches and makes the lots of these cheques again. Main branch sends these cheques to the state bank of Pakistan where a clearinghouse exits. In this clearinghouse the representatives receive their cheques and go back to their bank's main branch. Then the main branch sends these cheques to their relevant branches where the validity of these cheques is verified and the accounts of the relevant clients are affected. The statement of clearing was submitted before 1.00 P.M. daily. The whole procedure of clearing is completed within two days. REMITTANCES DEPARTMENT: I worked in this department for one week. This department deals in transfer of money from one place to another or country by: -Demand drafts -Mail transfer -Telegraphic transfer In this department internees are advised only to observe the working of transfer of money from one place to another place of the country by the above modes of transferring money. During my stay in this department I observed that how demands draft be issued. The procedure is as follows. First the bank receives a written request from the customer to issue a bank draft. The written request is either in banks standard form or separate paper signed by the applicant enclosed with cash or cheques covering the amount of the draft and other charges of the bank. An Internship Report

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While issuing a bank draft it is necessary that the draft should be free from alternations. All the details must be written clearly in ink. After issuance a demand draft it is handed over to the applicant and its advice containing the particulars of the draft is sent to drawer branch with its necessary information and payment of the draft is make on its presentation. BILLS COLLECTION DEPARTMENT: I spent one week of my training in bills collection department. Here I collected utility bills like gas, electricity, water and telephone etc.

DETAIL OF BRACH DEPOSITS

NO. HAVE PLS SAVING ACCOUNT HOLDERS NO. OF CURRENT ACCOUNT HOLDERS NO. OF FIXED DEPOSIT ACCOUNT HOLDERS NO. OF FOREIGN CURRENCY ACCOUNT HOLDERS RECOVERY OF LOAN ( STUCK UP LOAN

26527 5773 9800 3050 242517 MILLION 800 MILLION

GROWTH OF BRANCES BY NBP YEAR An Internship Report TOTAL (CORES)

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1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1991 1995 1997 1998 1999 2000 GROWTH OF DEPOSITS MOBILIZED BY NBP YEAR An Internship Report TOTAL (CORES)

17 29 40 52 65 67 73 85 105 129 156 194 239 330 450 519 618 1421 1537 1468 1434 0000 0000 0000

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1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1991 1995 1997 1998 1999 2000

1.51 5.58 17.36 27.90 29.27 33.03 40.19 48.58 58.04 67.50 83.54 88.51 104.60 124.72 157.53 191.44 198.88 227.31 10574.8 20828.3 25486.2 27339.0 0000 0000

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Ratio Analysis
1- Return on shareholders Investment = Net Profit(after tax) x100 Shareholders Equity 1999 = 31316 x100 =0.30% 10357847 = 461227 x100=4.05% 11377527

2000

2- Return on Equity Capital

= Net Profit(after tax) x100 Paid up Capital = 31316 x100 =2.14% 1463880 = 461227 x100=31.51% 1463880

1999

2000

3- Equity per share 1999

= Net Profit(after tax) No. of Equity Shares = 31316 =Rs.0.21per share 146388 = 461227 146388 =Rs.3.15per share

2000

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4- Current Ratio

= Current Assets Current Liabilities

1999 2000

=202926341 191551291 = 328968829 208991751

= 1.58:1 =1.57:1

5- Working Capital 1999 2000

= Current Assets Current Liabilities = 202926341-191551291 = Rs.111375050 = 328968829 208991751=Rs.119977078

6- Debt- Equity Ratio 1999 2000 7- Equity Ratio 1999 2000

= Out Siders Fund Shareholders Equity = 191551291 10357847 = 208991751 11377527 = 18.49:1 = 18.37:1

= Shareholders Fund Total Assets

x100

= 10357847 x100 = 2.96% 350406373 = 11377527 x100=3.06% 370747280 =Current Assets Shareholders Fund =29.24:1

8- Current Assets to Proprietors fund 1999 An Internship Report

=302946341 10357847

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2000

=328968829 11377527

=28.91:1

9- Return on Assets

=Net profit (after Tax) x 100 Total Assets = 31316 x100 =0.009% 350406373 = 461227 x100=0.12% 370747280 =Total income Total Assets =35291180 350406373 =33732443 370747280 =0.10:1

1999

2000 10- Assets Turn over Ratio

1999

2000

=0.09:1

11- Return on Deposits

=Net Profit after Tax Total Deposits = 31316 294754493 = 461227 316493342 =0.0001:1 =0.0014:1

1999 2000

12- Advance to Total Deposits An Internship Report

= Advances

x 100

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Total Deposits 1999 2000 = 122559342 x 100 294754493 =140325289 316493342 x 100 =41.58% =44.34%

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CHAPTER # 11

SUGGESTIONS & RECOMMENDATIONS

Although NBP is included in ten top most banks of the world equity as well as assets wise, but for the further improvement in various sectors may recommendations to the bank would be as follows: PLANNED AND HEALTHY COMPETITIONS: NBP should become very specific about its competitors, so that it can understand who is its competitor in the first degree and who is in the second degree. Then the first-degree competitors should be watched closely. FORMATION OF A RESEARCH CELL: A research cell should continuously try to gather information about the present action so its competitors and expected future actions. So in this way more effective strategies can be formulated. REWARD SYSTEM: The performance reward linkage should be make strong as it is said, "A happy employee delivers more than he receives from the organization." The NBP should also try to make its employees happier. An Internship Report

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There is immediate need, to reconstruct the personnel policies. Selection should be through newspaper advertisements. In this way more intelligent, efficient and qualified staff can be formulated.

It is strongly recommended that N.B.P. should go for computerization rather than manual work, which is very slow and time, consuming process. In this age N.B.P. even does not have a partially computerized system where as other new competitor banks are now going towards on-line banking services. Govt. should take keen interest to recover its bad debts, which can improve its financial position. In case of giving the loans, it is necessary to check the repute of customer towards loan repayment. Bank shouldnt advance the money to those people who are addict of rescheduling of loans due to their political influences. Instead providing loans to these persons, loans must be advanced to the well-reputed businesses and industries having good record of loan repayment. Along with the officers, the training must also be given to the clerical staff. Because of N.B.P. are running on manual system and the training of its staff directly improving their efficiency of work. Present training program for its officers is need to be improved, as this program instead of improving the efficiency of officers is merely a burden for the bank in the form of heavy T.A. , D.A. and cost.

Working conditions must be improved for the employees. Bank will definitely get more benefits after some expenditure on the working conditions as it improves efficiency and productivity of the employees. An Internship Report

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N.B.P. should flourish certain marketing plans to attract the customers by giving them certain incentives and beneficial schemes to the customers as other competitor banks are doing so. There is also a need of proper recruitment and selection program. New young talent should be introduced to inject the new ideas. Deterioration in efficiency is mostly due to promotion without merit. So promotions must be awarded on merit and also when due. Special attention should be given to the behavior of the employees towards the customers, as customer is the most important person for any bank. There are many employees who are working on ad-hoc basis creating dissatisfaction. The deserved should be made permanent employees. Political influences in the bank should be eliminated. To motivate the employees of the bank, regular bonuses and incentives should be given to them. There must be a friendly environment among all the employees as it enhances the trust and sincerity. NBP should be focus its attention towards the share of traveler cheque. Branch manager should be trained in the field of selling to serve better according to the expectation of customers. The recruitment policy should be fair and transparent. Management should increase the branch limit of expenditure to fulfill the necessary expenditure of personnel relation.

An Internship Report