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CHAPTER # 01 INTRODUCTION 1.1 INTRODUCTION OF BANKING

Banking as a system arose simultaneously with the use of notes. A note has come into use in the seventeenth century in England when many people held their wealth in gold. During the civil war, people were frightened of being robbed so they had to look for someone who had a safe vault for his own business and then to ask him to keep their gold in his safe. The obvious choice was the local goldsmith who had a safe vault available in which he kept his gold coins and bullion (bullion is the name of given to un-coined refined gold and sliver, generally, in the shape of bars or bricks). So it came about that goldsmiths took these deposits for safe keeping on charge of a fee and issued a receipt, which acknowledged the deposit of money and incorporated a promise to return it on demand. More and more people came to hold these receipts. Thus, the original purpose of the receipt became obscure as its function as promissory note (a note which promises to pay) became all important. In time, people stopped calling them receipts and began to describe them as notes. Thus, the goldsmiths emerged the first banks. (Practice and law banking by Israr Ahmed Siddiqui, Edition 31 December 1997.The origin of the word bank is not easy to trace. There are different opinions about it. One set of experts believe that it could have came from Italian words bance or bancus meaning bench upon which the early bankers sat to conduct their business. The other experts, however, trace the word to Germanic origin where the word meant joint stock fund. (Banking and Finance, B.A AIOU). Banking is indicated as primitive as human society forever since men came to realize the importance of money as medium of exchange. Today the word bank is used as a comprehensive term for a number of institutions carrying on certain kinds of financial business. In practice the word bank means, which borrow money from one class of people and lends to another class of people for interest. 1.2 AN OVERVIEW OF NATIONAL BANK OF PAKISTAN The history of National Bank of Pakistan is the part of Pakistans struggle for economic independence.

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When, National Bank of Pakistan came into existence on Nov 20th 1949 (source: Banking by Dr.Anwar Ali Shah G. Sayed) the country was facing a severe economic crises, and as a result of deadlock with India and the devaluation of the Indian rupee where Pakistan much to India and British consternation did not follow suit. The objective of establishing the bank was to provide finance to the agriculture sector, particularly to facilitate the badly hit jute trade. The bank then went on to become the sole agent of the SBP for handling provincial and federal Govt receipts and payments. The paid up capital of NBP is 5908.92 million rupees. This is 14% of the combined paid up capital of the 18 listed commercial banks amounting to Rs. 4.272 billion. Such a large paid up capital places National Bank of Pakistan at the number one slot in the entire financial sector. The state Bank of Pakistan has instructed all commercial banks to switch to only one link, which would enhance the availability of numbers of ATM to card holders by many full times. By the end of June 2005, National Bank of Pakistan planned to have a minimum 70 new ATMs at various business centers. Interestingly, 16 of the ATMs are in Islamabad alone, thats more than the no in the rest of the country. NBP was awarded the prestigious Bank of the Year award in Pakistan by the Banker London in 2004. Euro money magazine has listed NBP among the top 100 banks in Asia, being the only Pakistani bank in its edition of March 2005 1.3 HISTORY OF BANKING IN PAKISTAN

According to Meenai(1977) the history of Banking in Pakistan dated back to August 1947, when various banks transferred their Head Offices and funds to areas likely to fall in India. In united India there were 3496 branches of scheduled banks out of which 487 branches located in areas comprising Pakistan. After the partition their number drastically reduced to 195. Two banks having the honor to be the first commercial banks of the Pakistan namely PICIC Bank Limited (which was setup in 1941, with its Head Office in Bombay) and Australasian Bank Limited (established in 1944 with its Head Office in Karachi). According to Meenai (1977) the History of Banking system in Pakistan started with the great contributions of PICIC Bank (which played a vital part in the establishment of monetary system in the newly independent country and extended huge loan to the Government at very nominal rates) till the inauguration of State Bank of Pakistan by Quaid-e-Azam on 1st July 1948, (through an order of Governor General promulgated on 12-05-1948).

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1.4

NBPMISSION AND VISION STATEMENT NBP VISION Our Vision is that we want to be the pre-eminent financial institution in Pakistan and achieve market recognition both in quality and delivery of services as well as the range of product offering NBP MISSION our mission to be recognized in the market place by institutionalizing 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.

1.5

OBJECTIVES OF NBP The main objectives of National Bank of Pakistan has been to include and spread banking facilities among the people, mobilize their savings and thus make ever-increasing contributions to the economic development of the country. It has all along pursued a policy of rapid development extending its facilities to almost every center of economic potential in the country. Its services have been increasing to number of people. Today it provides the largest network of offices in the country, 1514 being in Pakistan and 23 abroad it offers remittances facilities covering almost every important center in the country. The bank has introduced its own travelers Cheque to provide facilities to the traveling public, which are encashable at any branch of the bank of Pakistan. (Source: www.nbp.com.pk)

1.6

FUNCTIONS OF NBP There are many functions performed by NBP Hyderabad. These are as under: 1. Receiving /paying cash dealing, deposits security. 2. Advanced / lowest rates on export and other borrowing. 3. Clearing 4. Safe custody of valuable 5. Transfer of money 6. General utility services

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10.

7. High rates of return to encourage saving 8. Agent of the State Bank of Pakistan for handling for treasury functions 9. Receipts of taxes and other revenues Handling of salaries and pensions of contrarys federal provincial employees and defense personnel. 11.Hajj arrangements

1.7

PURPOSE OF STUDY The main purpose of the business thesis program has been conducted following practical information.

1.8

The main purpose of this study is to fulfill the requisite requirements towards the students undergo practical training related to their future career development. This programs intends to increase the communication skills among students because they have to interact with the different practical oriented professionals during the period of research project The research project report is carried on to familiarized with actual working conditions in any organizations by Physical participations. This program also prepared students for jobs/ It enhances confidence, intelligence and competence of students regarding solving the complex and difficult programs relating to the areas of interest. It provides knowledge for procedural and functional activities performed in various areas of organizations which will certainly prove beneficial for students in their practical life/ It is necessary for bachelor and masters of public administration students that after acquiring superficial knowledge. They should award of themselves with overall practical work for experience, which can only gain through visiting any organization. It plays a significant role in the development of financial and industrial sector of the country.

RESEARCH METHODOLOGY

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During this research project report on NBP internees, use some methods to achieve its study purpose. These methods are: 1. Primary data 2. Secondary data 1. Primary data Primary data, which I have personally collected during my internship period at NBP from sources like interviews and discussions with bank staff and management personnel, personal observation and doing work myself 2. Secondary data This data is collected by annual reports of bank journals and brochures published by NBP. I also collected necessary information from banking related books, magazines, newspapers.

1.9

LIMITATIONS During the internship program internee (I) faced following difficulties:General Manager and other staff members have their own matters of the bank and it was difficult for them to give time to internee o Lack of information from the employees of NBP for maintaining the secrecy. Lack of assess of currant information Lack of accuracy of relevant data Financial problems caused inconvenience during this study The time was very short to see and gain the complete knowledge regarding each division and department of NBP branch

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CHAPTER # 02 ORGANIZATIONAL STRUCTURE 2.1 MANAGEMENT AND ORGANIZATIONAL STRUCTURE The management and organization of National Bank is given following.

2.1.1 Management at Head Office Chief Executive is called the President. The bank also has directors for superintendence and direction of its business. The board of directors consists of president, who is Chief Executive and six other directors appointed by the government. The members of Board are responsible for granting corporate loans of Rs. 100,000 millions and above in the field like agriculture, industry, housing and import/export trade etc. policymaking and providing general guidance in running affairs of the Bank. 2.1.2 Administrative/Organizational Structure National Bank of Pakistan administrative setup shows as under Board of Directors (BOD) Chairman / President : Syed Ali Raza Directors: Qamar Hussain Mr. Tariq Kirmani Mrs. Haniya Shahid Naseem Mrs. Nazrat Bashir Syed Muhammad Ali Zamin Muhammad Khalid Malik Organization and Head Office Management in the National Bank of Pakistans Head Office, there are six separate groups to deal with all field offices and the necessary problems separately. The details about these groups are as under
i.

Overseas Banking Group

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This group is again further sub divided into two divisions; a) Foreign exchange and operation division b) Administration and Credit division Executive Vice Presidents are managing these divisions separately.
ii.

Finance group A senior Executive Vice President is group, which contains two divisions. This group is further segmented into different wings and a senior vice president looks after ever wing. a) b) c) d) e) f) Investment and Resources wing Accounts, Planning and Budgeting wing Govt. Debit Management wing Publicity and Public Relations wing Editorial Board Quomi Banker wing Reconciling wing

iii.

Human Resources and Administration Group It consists of three divisions namely. a) Administration Division This division is also divided into Establishment wing, Staff Relations, Central unit fraud and Forgery and Regulation wing, Personal wing and Personal Career planning wing. b) Information Technology Division The division consists of computer wind and audit, and procedure and administrating wing. c) Human Resource Development This wing supervises all the staff colleges, at Karachi, Islamabad, Lahore and Peshawar. d) Audit and Inspection Group There are two wings working under this group which are; a) Implementing Wing b) Regional Audit Wing This group deals with audit and inspection of sub-ordinate offices

iv.

Special Assets Management Group There are two divisions, which constitute this group; a) Recovery and Litigation Division b) Customer Service Division Credit Processing and Monitoring Group

v.

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This division is distributed according to different areas; a) N.W.F.P and A.K Sindh Balouchistan Area Wing b) Karachi Area Wing c) Special Credit Cell and Punjab Area Wing d) Corporate Credit Division/Credit Policy Wing e) Agriculture Financing Division 2.2 FIELD MANAGEMENT AND ORGANIZATION The field management is divided into nine Regional Head quarters, Which are headed by Regional Chief Executives. These regions are KARACHI (West) BHAWALPUR HYDERABAD DERA GHAZI SUKKUR KHAN LARKANA SAHIWAL QUETT A RAWALPINDI GAWADER GUJRAT LAHORE FEDERAL (central) CAPITAL LAHORE (east) (ISLAMBAD) GUJRANWALA GILGIT SIALKOT PESHAWAR FAISALABAD MARDAN JHANG DERA ISMAIL SARGODHA KHAN MULTAN ABBOTABAD MIRPUR (AJK) MUZZFARABAD 2.3 ORGANIZATIONAL AND REPORTING LINE OF NBP
PRESIDENT

BOARD OF DIRECTORS

GROUP CHIEFS

REGIONAL CHIEFS/EVP

ZONAL CHIEF/SVP MANAGER

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NETWORK OF NATIONAL BANK OF PAKISTAN Regional head quarters:. Domestic branches Overseas branches 29 1428 23

NOTE: National Bank Is Operating In Eighteen Countries Of The World.

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CHAPTER # 03 DEPARTMENTS OF NBP 3.1 FINANCE / ADVANCES DEPARTMENT Finance department receives the applications from intending borrowers and after scrutiny and processing the same application to the higher authorities. The following advances are made at branch level; i. Agriculture advances to farmers ii. Short term advances to business man iii. Long term advances for setting up industries and structural updating iv. Medium term advances for working capital v. Seasonal term advances to cotton ginners, rice mills and sugar mills REMITTANCE DEPARTMENT Bank promotes the facility of remitting the funds within the country and outside country within certain limits. Usually money remitted through Demand Draft, Mail Transfer, Telegraphic Transfer and SWIFT. Now Western Union and NBP together transfer the remittances from any location in the world. This has given advantage to the clients and money is transferred in minutes. The transaction in this department is cleared in five minutes after data is matched. Due to good performance of NBP, the WESTERN UNION has given nine awards to NBP. ACCOUNTS DEPARTMENT Account Department maintains the record of fixed deposit receipts of the depositors. Account department also keeps record of income and expenses incurred at branch level and maintain profit and loss accounts of the branch. Account department prepares the weekly and daily statements of the affairs of the branch. FOREIGN EXCHANGE DEPARTMENT The functions of foreign exchange department are as under;

3.2

3.3

3.4

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i. Imports We sell our foreign exchanges to the other country in return to purchase the foreign goods. Payments for imports are made through Letter of Credit (LC) by the importer. Letter of Credit is an undertaking given by the importer bank to the exporters bank to make payments on receipt of documents evidencing dispatch of goods from exporters country to importers country. ii. Exports We sell our goods at foreign lands and earn foreign exchanges. This whole process is called Export. The bank provides facilities to exporters for export of the commodities. iii. Foreign Remittance The bank provides the foreign remittance facilities to the student studying abroad. Bank also provides foreign exchanges in the shape of travelers cheques to the intended visitors. 3.5 CLEARING HOUSE DEPARTMENT The function of clearing house department of the branch represents other branches of the bank of State Bank of Pakistan for exchange of cheques drawn at bank or otherwise. It subsequently passes on the transactions to other branches where from cheques have been drawn and collected. However, it is worthy to mention that National Bank of Pakistan conducts proceedings of clearing house where the SBP has no branch. Clearing house is usually conducted in big cities with the State Bank of Pakistan. CASH DEPARTMENT Cash department is backbone of the branch. Cash department receives the cash from depositors and other branches of the area. It performs function as the depository branches. It feeds other branches with required cash whenever the branches of area make indent for cash. Similarly, excess cash is also remitted to this branch. MARKETING / BUSINESS DEVELOPMENT DEPARTMENT Marketing department is established in important and corporate branches of the bank. This department is working efficiently in the branch. The main functions of the marketing department are as under; i. Introduce valued clients/depositors to the bank branch. ii. Bring a valuable business for the branch. iii. Provide the financial facilities to the customers. iv. Marketing department plays very vital role in increasing the business and deposits base the branch.

3.6

3.7

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The development of the branch depends upon effective marketing system. CHAPTER # 04

FEATURES OF DIFFERENT TYPES OF ACCOUNTS/DEPOSITS 4.1 CURRENT DEPOSITS The current account is opened in the name of individuals, proprietary firms, partnership firms, and primitive limited companies, clubs, associations, societies and other institutions. The account can be operated by single or two or more persons jointly as the instructions may be given at the time of opening the account. No any profit is given on current account deposits. If the person who wants to open the account is not in a position to sign or his signature is not firm or shaky, the bank requires his photographs and he has to present cheques personally at the counter for withdrawals from his account. The initial amount of deposit with which he can open the account must not be less than Rs. 1000. However, this restriction is not imposed to the accounts of charitable institutions. The silent features of pr PLS SAVING DEPOSIT Profit and loss sharing accounts to be opened in NBP are as under; i. Individual in their own single or joint names can open these accounts. The PLS saving account can also be opened for provident fund or other benevolent funds of companies, firms, organizations of welfare and educational institutions. ii. PLS saving account can be opened with the minimum amount of Rs. 500. iii. Money can be withdrawn from PLS with prior notice if heavy amount is involved. iv. To share in the profit a minimum balance of Rs. 500 must be maintained in account. The minimum balance on sixth and last of month will qualify for the profits. v. The profit will be calculated based on monthly minimum balance for the period of six month i.e. from January to June and July to December.

4.2

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vi. The head office of NBP determines the profit or loss on PLS saving deposits and advises its branches the rate and time of distribution of these profits concerned PLS saving account. vii. Withdrawals from PLS saving accounts are allowed not oftener than 8 times in a calendar month and for a total amount not exceeding Rs. 1500 for withdrawal of a large amount seven days prior notice in writing is required to be given. This notice shall not however affect the monthly withdrawals ordinarily allowed. In the event of contravention of rule, depositors shall forfeit his right to share profit for the notice period shall be deducted from his total profit earning products. viii. There is not restriction on maintaining the maximum balance in PLS saving account ix. On the first of Ramadan, every year the Zakat of 2.5% will be recovered from the deposits on the balance of that day. But if depositors give declaration of Zakat or he is non-Muslim Zakat will not be recovered from him. In the same day Zakat is not recovered from accounts in which the balance is below than prescribed limit as declared by the administrator of Zakat Pakistan. This system of accepting deposits has been started in NBP since 1 January 1981. 4.3 FIXED DEPOSITS ACCOUNT (TERM DEPOSITS) In the case of fixed deposits, account deposit is made for a fixed period and money deposited can be withdrawn after the expiry of period fixed or before giving an advance notice to the bank. Fixed deposit carries a higher rate of interest than the other type of bank deposit account, and the rate of interest rises with the length of the period and the amount of deposit. On opening a fixed deposit account, the bank grants to the depositor a Fixed Deposit Receipt (FDR) that is not transferable to any other person. When the deposit in withdrawn the receipt must be handed back to the bank. The silent features of profit and loss sharing term deposit accepted by NBP are given as under: i. The PLS term deposit are accepted from individuals in their own single or joint names, companies, firms and other organization. ii. The PLS term deposit receipts are issued for any amount. There is no minimum or maximum limit or deposits in a single term deposit account. iii. PLS term deposit may be allowed some facilities against the security of these receipt credits, after making lien on the relevant receipt and subject to recovery of a service charge.

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iv. Under term deposit scheme, the depositors not cease to earn the profit immediately, after the respective maturity date, but they have been afforded a liberal facility. In case the depositors said, to withdraw their term deposits on maturity their funds will remain temporarily in used and out of profit earned a responsible share would occur to such over due PLS term deposit at the rates declared on PLS sharing account. v. The head office of the bank determines the profit or loss on PLS term deposit at by any one interval i.e. the end of June and December each year. In addition, payment of profit to or deduction of loss if any form of PLS term deposit is to be made the deposits for longer period will earn a little more profit than those of shorter period deposits. vi. The total profit up to Rs. 950 is exempted from income tax. vii. In the case of encashment before maturity but after completion of three months profit will be paid for the entire period for which the deposits remained with bank at the rates payable for the respective period to the PLS saving account after deduction of the Zakat if any. viii. In PLS term deposit expired and the depositors request with in one month after the expired date, for investment. The PLS terms deposit will be reinvested for the desire period from the date immediately following the expiring date. ix. Zakat or the face value of PLS term deposit will be recovered as may time as the valuation dates (i.e. 1st Ramadan) falls between the date of issue and the date of expiry of the deposit. 4.4 FOREIGN CURRENCY DEPOSITS i. NBP has also introduced foreign currency accounts for Pakistan and foreign nationalists in Pakistan and abroad. This scheme assures its customers of better profit and superior services. ii. It offers Pakistani or foreign nationalists to operate a foreign currency account with any one of their authorized branches spread all over the country. iii. Deposits of this account will be accepted in all convertible currencies, but accounts will be maintained on the customers choice in US $, British , Japanese and German Mark. iv. Deposits may be made in the forms of remittances in foreign currencies. Travelers cheques on the bank counter will be accepted.

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The customer can make withdrawals and transfers to any where in the world. ii. All the deposits and profits in the customers foreign account are expected from Zakat, income or wealth tax. iii. The customers sources are protected from any scrutiny of concerned authorities. The NBP has over 1226 branches at home and abroad, these more than 100 branches are authorized and fully equipped to deal with all kinds of foreign currency transactions. NBP has worldwide network of branches and it has associates in Saudi Arabia Bank, Al-Jazira (15 branches) and National Exchange company (5 branches) in UAE to Facilitate the customers in Pakistan, Saudi Arabia and UAE. CHAPTER # 05 TRAINING AND FACILITIES TO STAFF 5.1 TRAINING TO STAFF In 1949, the first year of operations, the National Bank Of Pakistan had one hundred employees on its pay toll, but with two years this number had grown to 1505,by 1960, the had ties to 5023 and now it is in the order of about 25000. During the first ten years, the NBP trained its own staff through a series of training programs both for junior officers and clerical staff. By 1958, however it was obvious that something more comprehensive was needed and the bank established a staff college at Karachi, three more colleges at Islamabad, Lahore, and Peshawar. These colleges provide courses of instructions for supervisory, personnel and clerks to meet the banks ever-growing need for trained personnel. This need springs not only from the steady growth of the banks business but also to replace wastage to retirement, resignation, will health or death. The staff college receives junior bank officers for further training in banking, the courses lasting from six to nine weeks with about twenty-five student in each course. The staff college courses are designed not only to impart technical instruction, but also to develop qualities, judgment decision, leadership and management. Since these students are likely to be those who may expect to rise to the senior executive position the bank has to offer. The bank also deputes officers to attend banking seminar both in Pakistan and abroad and it attaches great importance to the exchange of ideas,

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information, and knowledge, which cannot usefully accurse from these gatherings. In its position, the National Bank has considerable responsibility in ensuring the country is well represented at meetings of banking at domestic and international level. 5.2 SALARIES AND FACILITIES TO STAFF As an employer, national bank of Pakistan is also deeply conscious of its responsibilities and, let it be said at the out set, considers itself a good employer, it is scale of pay, terms of services, staff benefits and amenities compare very well with institutions of similar stature in Pakistan. The result is that employment with the bank has some been regarded as something of prize. the scales of pay and allowances for officers and staff are revised from time to time as need grows. In addition, employment with the bank is responsible and bonuses are regularly paid. i. two bonuses are issued one Eid ii. Annual bonuses are issued according to the profit. iii. Medical allowances has been issued annually according to basic pay of complies. iv. Some amount has been issued on the marriage and death of employees. v. loan facilities a) motor cycle loan b) car loan c) house building loan

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CHAPETR # 06 THE PRODUCTS AND SERVICES OFFERED BY THE NBP NBP is providing many products and services to their potential clients. These products and services which National bank of Pakistan is providing are some similar to other banks and some are unique to NBP. But as National Bank provides products services are totally different from other banks and less expensive as compare to other Banks so most people prefer the National Bank of Pakistan. The most common products and services of National Bank of Pakistan are given below; 6.1 PRODUCTS a) DEPOSITS b) LETTER OF CREDIT c) LETTER OF GUARANTEE d) CREDIT e) TRAVELERS CHEQUE f) TRADE FINANCE g) SAIBAN h) KISSAN DOST i) KARSAZ SERVICES a) LOCKERS b) ATMs c) SBP TREASURY OPERATIONS d) PENSION AND SALARIES e) UTILITY BILLS COLLECTIONS f) COLLECTIONS g) CLEARING

6.2

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h) EVENING BANKING i) CASH j) SAVING & INVESTMENT FACILITIES 6.1 PRODUCTS The national Bank of Pakistan is serving its client with many products. Some of them are common to other banks but few are unique which other banks do not offer to their clients. a) DEPOSITS These are saving/money submitted by the people with the bank for fetching some return or for the purpose of safety and security. These are various types of deposits, such as i. Saving Deposit These deposits fetch returns upon them. These are introduced to inculcate habit of saving in the general masses and to invest and reinvest the saved money. These deposits get return on the basis of announced rate for these deposits and that rate is according to the economic activity and net profit earned by the organization. In fact, this is a profit and loss sharing mode, but the history or till the introduction of these deposits, the depositors never share a loss. There are certain rules of the game viz. there are restrictions upon frequency of withdrawal and amount of withdrawal i.e. you can not withdraw more than twice a week and in case of amount more than Rs. 10,000 then you have to submit prior notice. In fact, these are not practiced now because customer does want to bound himself in such things and want to avail of the facilities of the account along with return. These are restrictions of keeping the minimum balance otherwise service charges are imposed. Further, you have to open with at least Rs. 3,000, which is now days relaxed up to Rs. 100 for opening the teachers account. ii. Current Deposit These accounts were basically introduced for the businessmen and firms who frequently use their account and want to avail banking facilities of remittance, collection transfer of funds, safety security etc. these were basically in contrast to the saving accounts, as these did not offer any restriction in terms of withdrawal of amount. These accounts doesnt fetch any return on them because you are allowed to take your money at any time so bank does not get enough time to invest the amount for longer period. More over this account was as mentioned early, was introduced for the executives, and provide them other facilities apart from return, SBP is taking

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steps to make it mandatory to provide upon minimum balance and current account. iii. Fixed or Term Deposits These deposits are saving deposits, meant for inculcating the habit of saving for longer period, and provide chance for the bank to invest in long-term projects or plan. These fetch comparatively higher returns than the other deposit account because of the longer periods. These are available for three or six months, and for one, two, three, four, five or more years. These have a maturity date on which principle and mark up amount is to be provided to the depositor. This also has a slight modification in shape of MIS (Monthly Income Scheme). This is also a term deposit scheme but one can earn profit on monthly basis instead getting the same along with principle amount at maturity. iv. Call Deposit These are purely meant for the business class persons like Govt. contractors they deposit call money or call certificate with Govt. departments as caution money or surety where banks instrument is deposit and the concerned department indirectly gets the bank guarantee for payment. These are issued for short-term and are paid on demand or call hence the name, so these do not fetch any return. v. Cumulative These were the older scheme not being offered a new but is continuing for the payment to the deposit or certificates holders in this cumulative return are to be paid to the depositors it was a high cost scheme hence ceased. b) LETTER OF CREDIT (LC) Letter of credits are promises or guarantee to a sum of the amounts to importers or exporters or to their agents on accomplishment of certain agreement. These are also offered by the NBP is shape of import or export LCs, so as to boost up countrys trade and improve foreign exchange reserves, to enhance countrys exports and to introduce them world wide. c) LETTER OF GUARANTEE One of the outstanding products of the National Bank of Pakistan is to issue the guarantee on behalf of their clients. They issue the letter of guarantee against the hundred % margin of cash and collateral guarantee. These act as the surety on behalf of beneficiary with the demanding department. These are submitted usually to court of law, academic institutions like LUM&HS, MUET, and Sindh University etc. It can also be furnished to the private

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companies and organizations even these are accepted by the institutions abroad as National Bank is one of the listed banks abroad. These term guarantee are continuing one. Term Guarantee; it is issued for a specific period or term after which it has to be renewed again. Continuing Guarantee, it is a guarantee, which did not expire until the accomplishment of the job for which it was acquired, or the beneficiary requests for its discontinuation. d) CREDIT These are the various advances or finance facilities issued to the borrowers to carry on or to meet their business requirements. These are extended in three modes as explained above, which are Short-term, Medium-term and Long-term, which caters the needs of clients according to their requirements. e) TRAVELERS CHEQUE These are modern tools, which enables clients to carry money from one point to another with complete safety and security. These are available in various denominations ranges for Rs. 5000 to 100,000. They provide you guarantee of payments even in case of lost or theft. They are available for inland transfer of money as well as for abroad wherever the branches of NBP are available and at other places through the agency arrangement. f) TRADE FINANCE These are special mode of financing which are available incase of established business working requirement. Various modes are available such as Small finance, Cash Finance etc. for facilitating the borrowers and clients. g) HOUSE FINANCE (SAIBAN). This is product of NBP, which provides funds for homes It is affordable, flexible, and convenient. Home finance for BUY, BUILD, RENOVATE or EVEN REFINANCE. h) KISSAN DOST NBPs affordable agriculture program offers you a wide range of financing. This is really important b/c agriculture is back bone of Pakistan economy, and Any progress in this sector will affect large portion of population. i) KARSAZ Discovers the easy way to grow your small or medium business at NBP

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a) LOCKERS These are one of the services, which NBP provides to its clients for safekeeping of their valuable and documents at cheaper rates. These are available in three sizes at the designated branches. These are small, medium, and large. These are usually used for keeping the Gold, Cash and Documents etc. there are 42561lockers available for clients at NBP Fatima Jinnah road branch. b) ATMs More than 800 auto machines are installed at present at the main business centers like Karachi, Lahore, Islamabad, Hyderabad etc. and 30 more are to be installed shortly at other places for which feasibility reports are prepared. These modern banking tools that provide the unique facility for the clients to withdraw their cash at late hours in case of emergency. c) SBP TREASURY OPERATIONS Being the agent of SBP, NBP performs treasury operations like collection of salaries from the treasury and collection of challans for various taxes and fees on the behalf of Govt. and facilitates clients, which is a unique function of NBP. It receives commission for offering these functions from SBP but these are nominal and are not compatible with the services provided by the NBP. d) PENSION AND SALARIES PAYMENT Both types of pensions that is provincial and federal, are paid to the thousands of pensioners, this is also a unique feature of NBP, which it performs being the agent of SBP. Salary payment is also one of distinct features of NBP that it provides services to the Govt. departments to distribute their salaries every month. The prominent examples are Army, Rangers, Police, Education and Public works etc. e) UTILITY BILLS COLLECTIONS National Bank of Pakistan is providing this facility since long but recently it embark upon it with a new vigor and vitality and extended the range of its utility collections. In this connection National Bank nominated its 148 branches all over the Pakistan to provide utility bill collections facility up to 9: pm instead of normal working hours of 5:pm. It also amended the previous collection timings, which were for 9: am to 1: pm; now all branches collect the utility bills up to 5: pm instead of 1: pm. These amounts to the un-matched and unique services provided only by the NBP. Its utility

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collection ratio is more than 34% of market, which is clear proof of its exclusive services in this respect. f) GOVT. COLLECTIONS & OTHER COLLECTIONS This is another unique feature of NBP that it provides services for collection of various instruments everywhere through out the country without or on the nominal charges. This facility is also provided to the public on the nominal and fair charges not only inland but also across the borders. g) CLEARING This is an extra ordinary banking facility, which is provided to the public in this if they are maintaining an account with the NBP they can lodge cheques of any Bank in Pakistan, which will be collected and credited to their respective accounts through the process of clearing. In this, representatives of various banks are gathered at SBP and exchange the cheques presented to them for debit of the respective accounts and in second round of meeting provide each other the fate of those cheques to be credited to respective accounts. h) EVENING BANKING In order to provide extra banking facilities round the clock and to compete with the contemporaries National Bank embarked upon evening banking facilities. This also improves their image in the general public and corporate circle. This facility at present is undertaken at the selected centers but the management is planning to expand it shortly. i) CASH Being the agent of SBP, it also provides this service to the other commercial banks where branches of SBP are not available. It takes and supplies cash to the other banks and sends or receives the same to the SBP. It receives sold notes from public and banks whenever required or occasions like Eid and other festivals. j) SAVING & INVESTMENT FACILITIES Through these facilities, not only the clients are encouraged to inculcate the habit of saving which not only is beneficial for them but also to their country. As these funds are utilized for the development purpose, secondly they are also provided with the chance of investment to earn the return and multiply their funds. Various schemes as detailed above are in practice and available at NBP.

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CHAPTER # 07 MODERNIZATION & ISLAMIZATION OF PLANS OF NBP

7.1

COMPUTERIZATION AND AUTOMATION With the view to upgrade and streamline the working system of NBP and procedure plans were undertaken by the management to provide microcomputers and electronic ledgers. This program will also be expanded to the other smaller branches in coming years. Utilization of the banks mainframe computer at Head Office and at regions, which is the most, sophisticated amongst all the banks in Pakistan to further upgrade the capacity of NBP in future. REGIONAL COMPUTER CENTERS IN NBP Presently NBP has 12 Regional Computer Centers in the country. 1. Regional Computer Center Karachi 2. Regional Computer Center Hyderabad 3. Regional Computer Center Multan 4. Regional Computer Center Faisalabad 5. Regional Computer Center Lahore 6. Regional Computer Center Gujranawala 7. Regional Computer Center Sialkot 8. Regional Computer Center Islamabad 9. Regional Computer Center Peshawar 10.Regional Computer Center Quetta 11.Regional Computer Center Muzafarabad (AJK) 12.Regional Computer Center Mirpur (AJK) The major function of above centers is to provide the internal facilities to the branches in banking system and external facilities to customers. Following facilities are provided by the Regional Computer Centers to the branches. i. BBO System (Branch Back Office System)

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i. BBO System (Branch Back Office System) The concept of this system is Enter all Voucher and all Books are Prepared Automatically. In this system the all Voucher/Transactions of the branch, which are in the cash or in the transfer mode, are posted in different particular heads, which are opened in the personal computers. And through a system computer bifurcate the vouchers and at the time of closing of business hours the daily cash book, general ledger (including Automated Product Calculation), general Ledger Abstract, voucher register, remittance register, Advices and Fanfold, Charges Registers and other relevant books are printed out. Besides this different Zonal Office and Head Office return such as F-21 (Reconciliation) statement and monthly Expenses Reports (F-312) are also prepared. Then they prepare a Diskette for the transactions of PLS and current accounts to dispatch to the Regional Computer Centers for the parallel posting purpose. ii. Online System This system provides the facility of online transactions through mainframe system, online system is connected with mainframe system, in which the individual accounts are opened and operated directly and accessed from any terminal, which is linked from any city. Therefore, a customer having account of these branches can make transactions from his account from any of the branches, which is interlinked through cheques or through ATM Card. ATM (Auto Teller Machines) ATM means customers are linked with the bank for 24 hours 7days of a week, through an ATM Card. ATM customer can operate his/her bank account at his/her own convenience. Feature of ATM Cash withdrawal; Means customer withdraws a limited amount any time. Bank Statement; Customer gets the statement any time. Account Inquiry; customer can see account inquiry about the transactions in his account. CENTRALIZED NETWORKING SYSTEM The management decided to centralize the business activity interlinked through networking system that may be connected through.

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Fiber Optic Link Fiber Optic Link is use to connect Karachi, Hyderabad, Multan, Faisalabad, Lahore, Sialkot, Gujranawala, Islamabad and Peshawar. VSAT VSAT is used to connect Karachi, Lahore, Islamabad, Peshawar, Sialkot, Quetta, Muzafarabad (AJK), Mirpur (AJK), through satellite. ISDA (Integrated System Dial Network) By this system, Karachi and Hyderabad are connected through telephone lines. iii. Manual System In manual system, above operation are performed manually means by human. 7.2DEREGULATION AND DECENTRALIZATION Under the new policy guidelines, financial powers have been delegated to field functionaries. The banks policy of decentralization of financial sanctioning authority by delegation of powers to Regional and Zonal offices and credit committee has resulted in improving efficiency and prompt attention to the need of the customers. Decisions had been quicker and services to clients are easily and effectively available as a result to this policy. This scheme, which has been well received, by the business community and the various forums will be beneficial in quick disposal of credit facilities at local level and will also help in solving the problems and grievances of the customers more effectively. Services to clients will also be improved. 7.3 FOREIGN TRADE AND OPERATION National Bank of Pakistan has played an active role in handling the countries export and imports. The growth of international business operations depends crucially upon expansion of foreign contacts. The bank already has more than 26 overseas branches in important business locations around the world. The NBP is also looking forward to open some more new branches in foreign countries. Efforts are also under way to strengthen our relationship with the banks in central Asia and to establish joint ventures with the bank of that area as soon as political and financial stability is restored, National Bank will try to establish some branches there. PROCESS IN ISLAMIZATION OF BANKING

7.4

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After the introduction of profit and loss sharing scheme on a limited scale in January 1981, the Federal Govt. in 1984 announced a major policy decision that by the end of June 30, 1985, all the domestic operated banks and financial institutions will be on the Non-Interest Based (NIB) system. This objective has been achieved from 1st July, 1985. All banking operations have been switched over to NIB system. In the final stage for July 1, 1984 saving deposits have also been converted into profit and loss sharing basis and from that date, bank is not accepting fixed deposits on interest basis. It should not be considered the end of the mission as much more remains to be achieved. Until June 1985, NIB investment opportunities were more, while NIB liabilities were comparatively less. Now after complete switch over situation is improving. Further, continue research and dedicated efforts are necessary at national level so that Pakistan may present before the world a system, which is new, dynamic, economic and financial system, based on the tenets and principles of Shariah.

SWOT ANALYSIS
The SWOT analysis is done by the organization for the environmental scanning. The strength and weaknesses and opportunities and threats are analyzed by organization from the external environment. NBP SWOT analysis is given below: STRENGTH A National Bank brand image is its major strength. It has always been considered as the pillar of the country's economic scenario asset wise or balance sheet wise. Its image, work force, network and reputation have created a sentimental and emotional attachment of the people with the bank. Complete computerized networking in another strength of the bank. Now the bank has the ability to compete with any multinational bank as to keep pace with the changing and fast growing world of today computer have become necessities. The reserve funds indicate positive sign as they have increased as compared to the previous years.

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Another competitive edge that the bank has on the rest of the competitors is its expanding business worldwide catering for a large and vast group of customer and maintaining standards of excellence globally and other strength of NBP.

WEAKNESSES National Bank created its own weakness by downsizing. Due to downsizing various experienced and devoted employees were either forced or given the option to leave. Only those people were left who had no organization better to join. Due to right sizing a lot of confusions have taken place as well. For example higherlevel management have come from institution or others organizations where everything is computerized. Whereas have by ten staff members (over staffing) hence, the higher management finds it difficult to get work done. From 1995 onward bank exhibits a downward trend indicating its low performance-showing decline in total assets. Total deposits, saving deposits advances investment and total income. This downward trend can caused a great threat to the bank as its competitors are talking its market share, which can cause ruining the image and reputation of the bank thus posing danger in the long run.

OPPORTUNITIES National Bank has very bright prospects for the future. They plan to region their lost glory not only in terms of profitability but also include latest technology and competent work force. Furthermore, NBP is the only bank which is providing facility of bills collecting from 9 AM. to 5 PM. NBP is considering setting up an exclusive utility bank in collaboration with a private firm, which would provide this service for 12 hours.

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THREATS

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If there is a threat to the whole economy, it will pose a threat for National Bank. National bank does not consider small bank a threat to its existence because the way national bank can accommodation large customer, these small banks cannot. sanctions imposed against Pakistan will affect exchange. Business whereas the freezing of accounts by State Bank of Pakistan have also caused problems for National Bank. But the recent facts and figures indicate that the banks major rivals lime MCB and HBL are causing threats to the bank in the long run thus snatching away the market share by attracting a large number of customer due to the their rising standards giving quality service and value added products.

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FINANCIAL ANALYSIS Financial Highlights 2010 RS In Millions Authorized Capital Paid up Capital Shareholders Equity and Reserve Deposits Advances NET Investment NET Total Assets Pre tax profit After tax profit Number of branches Number of Employees

5000 4924 42936 465572 221444 144736 549741 12025 6243 1226 13745

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CONCLUSIONS A. Work attitude and behavioral approach of employees are devoid of modern commercial and corporate orientation and approach of commercially globalize financial market. B. Proceeding and sanctioning advances at NBP are completed at time consuming exercise. C. It shows there is lack of recovery system. D. It seems that there are great rush days for the customers as well as for the staff members if the o. of counter is limited. E. It appears that large amounts paid on administration cost. F. Intermediation and administrative cost are on high side, which needs rationalization procedures/schedules.

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SUGGESTIONS A. Proper training and orientation should be given to employees through mobile training program conducted. B. Through processing and sectioning procedure have been stream lined in line with modern lines but there is still lot to be done in this direction. C. The NBP should follow advance technology to attract customers such as MIS section should be effective in every branch and all branches are interconnected to each other. D. It is suggested that responsible steps should be taken to recover all absolute advances. E. The establishment of extra counters is NBP will not only reduce the extra pressure of the staff but also save the time of its valuable customers. F. It is consulted that bank should reduce its large expenses in order to increase the value of the bank. G. Intermediation and administration cost should be reduced to minimum level.

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BIBLIOGRAPHY A. NBP information booklet B. Schedule of bank charges and services C. All information collected from NBP officers. D. Newspapers E. Bankers book of instruction. F. Book of Banking (By: Dr. Anwar Ali Shah G. Syed and Ghulam Abbas Sariwal) G. H. Banking and finance(By: Ghulam Abbas Sariwal) National Banks annual report