National bank of pakistan analysis report

NATIONAL BANK OF PAKISTAN

ANALYSIS REPORT OF

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JINNAH UNIVERSITY FOR WOMEN

GROUP MEMBER’S NAME:
SAMREEN LODHI
SHAHZADI NEELOFER
SAHAR KHAN
HIRA SHAHID KHAN
CLASS: BBA IV
SUBJECT: COMMERCIAL
BANKING

SUBMITTED TO:
MRS, ADIYA QURESHI

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ACKNOWLEDGEMENT
C K N O W L E D G E M E N T

We thank Allah for guiding us through the phases of
compiling this report and helping us out in all the difficulties.
We would like to take this opportunity to thank MRS,
ADIYA QURESHI our teacher for the course of
“COMMERCIAL BANKING” at JINNAH UNIVERSITY
FOR WOMEN, for her valuable support and encouragement,
which she has offered.
This report is a joint effort of all the group members
SAHAR KHAN, SHAHZADI NEELOFER, HIRA SHAHID
KHAN and our group leader SAMREEN LODHI and we
could not have been made possible without the immense help
and cooperation of our family members. Without their support
and the amount of time that they gave us, this report would not
have existed.

Thanks a lot.

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X E C U T I V E M

EXECUTIVE S UMMARY
U M A R Y

To interpret our skills and educational knowledge of Finance we make report on
National Bank of Pakistan.

The objective of this report was to explore the issues relating to Finance and to
find out problems regarding the theoretical concepts with practical experience
working in an organization and study the system of National Bank of Pakistan.
There are many possible improvements, which we can make positive changes in
the system.

The report summarizes the National bank of Pakistan with its working divided
into two parts first part deals with the description of the NBP the second part
covers the theory and practices adopted by NBP and at the end concluding
remarks and suggestions are given for improvements. It was too much difficult
for us to describe the functioning of such a vast organization within the limits. In
spite of this we tried best to describe.

Finally, for any all too fallible errors, omissions and shortcomings in the writing of
the report only we responsible for whom I hope that all concerning regards of
this report will forgive us.

SAMREEN LODHI
SAHAR KHAN
SHAHZADI NEELOFER
HIRA SHAHID KHAN
BBA IV

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b r i e f c o n t e n t s

BRIEF CONTENTS
INTRODUCTION OF NATIONAL BANK OF PAKISTAN 1-2
 Introduction 1
 Overview of Organization 2

ORGANIZATIONAL STRUCTURE AND NETWORK 3-5
 Organizational structure 3-4
 Organizational network
Branch network 5

DEPARTMENTS 6-32
 Departmentalization in NBP 6
 General Banking Department 6
Deposit Section 6-9
Account opening Section 10-13
Locker Service Section 13-14
Cash Dealing Section 14-15
Clearing Section 15-16
Remittance Section 17-18
 Credit and Advances Department 18-21
 Accounts department 21-23
 Billing and Government Receipt/ Payment Department 23-25
 Foreign Exchange Department 25-26
 Commercial and Retailing Department 26
Premium Aamdani Scheme 27
Premium Saver Scheme 27
Saiban scheme 27-28
President’s Rozgar Scheme 28
Advance Salary Scheme 28-29
Cash card Scheme 29
Investors Advantage Scheme 29-30
Cash n Gold Scheme 30
Kisan Dost 30-31
Kisan Taqat 31

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Pak Remit 31
NBP Protection Shield 32
NBP Student Loan Scheme 32

ANALYSIS
 SWOT analysis 33-34

FINDINGS AND CONCLUSIONS
 Dilemmas faced by organization 35-36
 Recommendation 37-38
 Conclusions 39

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INTRODUCTION
(Incorporated under the National Bank of Pakistan Ordinance, 1949)

National Bank of Pakistan is the largest commercial bank operating in
Pakistan National Bank of Pakistan was incorporated in Pakistan under the
National Bank of Pakistan Ordinance, 1949 and is listed on all the stock
exchanges in Pakistan. It's registered and head office is situated in Karachi.
The bank is engaged in providing commercial banking and related services in Pakistan and
overseas. The Bank's services are available to individuals, corporate entities and government.
While it continues to act as trustee of public funds and as the agent to the State Bank of Pakistan
it has diversified its business portfolio and is today a major lead player in the debt equity market,
corporate investment banking, retail and consumer banking, agricultural financing, treasury
services and is showing growing interest in promoting and developing the country's small and
medium enterprises and at the same time fulfilling its social responsibilities.
NBP headquarters in Karachi, Pakistan with over 1,254 branches country wide. In today's
competitive business environment, NBP needed to redefine its role and shed the public sector
bank image, for a modern commercial bank. It has offloaded 23.2 percent share in the stock
market, and while it has not been completely privatized like the other three public sector banks,
partial privatization has taken place. It is now listed on the Karachi Stock Exchange.
• Handling of treasury transactions for the Government of Pakistan as agent to the State
Bank of Pakistan.
• Accepting of deposits of money on current, fixed, saving, term deposit and profit and loss
sharing accounts.
• Borrowing money and arranging finance from other banks and advancing and lending
money to its clients.
• Buying, selling, dealing, including entering into forward contracts of foreign exchange.
• Financing of seasonal crops like cotton, wheat, rice, sugar cane, tobacco, etc.
• Carrying on agency business of any description other than managing agent, on behalf of
clients including Government and local authorities.
• Generating, undertaking, promoting, etc. of issue of shares and, bonds, etc.
• Joint venturing with foreign dealers, agents and companies for its representation abroad.
• Participating in "World Bank" and "Asian Development Bank's" lines of credit.
• Transacting guarantee and indemnity business.

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OVERVIEW OF THE ORGANIZATION
VISION:
"To be recognized as a leader and a brand synonymous with trust, highest standards of service
quality, international best practices and social responsibility."

MISSION:
NBP will aspire to the values that make NBP truly the Nation’s Bank, by:
 Institutionalizing a merit and performance culture.
 Creating a distinctive brand identity by providing the highest standards of services
 Adopting the best international management practices.
 Maximizing stakeholder’s value.
 Discharging our responsibility as a good corporate citizen of Pakistan and in countries
where we operate.

CORE VALUES:
 Highest standards of Integrity.
 Institutionalizing teamwork and performance culture.
 Excellence in service.
 Advancement of skills for tomorrow’s challenges.
 Awareness of social and community responsibility.
 Value creation for all stakeholders.

GOALS:
To enhance profitability and maximization of NBP share
through increasing leverage of existing customer base and
diversified range of products.

Excellence in Direction
Excellence in Growth

Excellence in Performance

Excellence in Management

Excellence in Achievement

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ORGANIZATIONAL STRUCTURE
In National Bank of Pakistan, the head is called “Chairman” or “President” of the Bank. And
after President there is Five Broad of Directors. National Bank of Pakistan has eleven Groups
which control the working of the Divisions, Wing, Department, Section and Regional of the
national bank of Pakistan. In NBP, “Department” is called “Wings”.

CHAIRMAN &
PRESIDENT

BOARD OF
DIRECTOR
PRESIDENT’S
SECRETARIAT
SECRETARY BOARD
OF DIRECTOR

CORPORATE & CREDIT AUDIT & COMPLIANCE
INVESTMENT MANAGEMENT INSPECTION GROUP GROUP
BANKING GROUP GROUP

HRM & OPERATION COMMERCIAL & TREASURY
ADMINSTRATION GROUP RETAIL BANKING MANGEMENT
GROUP GROUP GROUP

SPECIAL ASSET OVERSEAS
MANAGEMENT MAMGEMENT I.T. GROUP
GROUP GROUP

National Bank of Pakistan (NBP) provides Services through more than 1200 branches in
Pakistan and 22 branches in overseas. And there are 29 Regions. All Branches of National Bank
of Pakistan report to five Head of RMT Members. And these five members reported to regional
Offices. Regional Offices report to the Group Chief of the Groups. All the process is working
very quickly and it not consume more time. And the Group Chief of each Group Report to the

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President of the National Bank of Pakistan. All the data were proceed to the President of the
bank.

CHAIRMAN &
PRESIDENT

OPERATION HRM GROUP AUDIT & INSPECTION COMPLIANCE
GROUP CHIEF CHIEF GROUP CHIEF GROUP CHIEF

SOUTH REGION NORTH REGION WEST REGION EAST REGION OVERSEA REGION

HEAD 1 HEAD 2 HEAD 3 HEAD 4 HEAD 5

BRANCH 1 BRANCH 2 BRANCH 3 BRANCH 4 BRANCH 5

National Bank of Pakistan is having Decentralization in the Bank. And give the authority of
Decision Making to their Group Chief of every Group, to take decision, which is benefit for the
Organization. National Bank of Pakistan provides facility of making decision to their Senior
Vice President as well as Vice President of the every Group.

PRESIDENT (NBP)

GROUP CHIEF (GROUP)

SVP OR VP (GROUP)

AVP (GROUP)

GRADE OFFICERS (GROUP)

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ORGANIZATIONAL NETWORK
BRANCH NETWORK:-
Presently the Bank is divided into 10 Groups headed by
SEVPs/EVPs. 9 Regions reporting to as many Regional Chiefs and
15 Single Branch Zones headed by Zonal Chiefs; 12 corporate
branches and 1,254 domestic branches headed by Branch Managers
control its field operations.
Bank maintains its presence in all the major financial centers of the
world through its 21overseas branches and 4 representative offices.
Of these, three representative offices have recently been set up.
Apart from having a vast branch network, Bank is at the forefront in
the acquisition and application of new technologies in every aspect of its banking facilities. It has
acquired leased telephone lines for on-line banking. The Bank has 12 Regional Computer
Centers to cover various on-line and batch system requirements of branches and controlling
offices. Bank has also a presence on the Internet. It has modernized its services by installing
Automated Teller Machines (ATMs) called "CASH LINK" at selected branches and presently 17
ATMs are operational in major cities.

GLOBAL NETWORK:-
 18 Oversea Branches
 5 Representative Offices
 1 overseas Subsidiaries
 Joint Venture.
DOMESTIC NETWORK:-
 1254 Domestic Branches
 6 domestic Subsidiaries
 29 domestic regional offices

 DOMESTIC SUBSDIARIES:
 NBP Capital Ltd.
 Taurus Securities Ltd.
 NBP Exchange Company Ltd
 National Bank Modaraba Management
Co.
 National Agricultural and Storage company Ltd.
 Cast – N- Link Products Ltd

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DEPARTMENTALIZATION
Dividing an organization into different parts according to the functions is called
departmentalization. NBP branches offer a wide range of banking services to public and Private
Sector Corporation, partnership, individual and others.
The National Bank of Pakistan has various departments.

NBP DEPARTMENTS

GENERAL BANKING CREDIT AND ADVANCE
DEPARTMENT DEPARTMENT

COMMERCIAL ACCOUNTS GOVERNMENT FOREIGN
& RETAILING DEPARTMENT DEPARTMENT EXCHANGE
DEPARTMENT DEPARTMENT

GENERAL BANKING DEPARTMENT

General banking department involves the following sections .
GENERAL BANKING DEPT

DEPOSIT SECTION ACCOUNTS OPENING
SECTION

CASH DEALING CLEARANCE REMITTANCE LOCKERS
SECTION SECTION SECTION HANDLING
SECTION

1. DEPOSIT SECTION:-
Deposits are the lifeblood of commercial banks. The main function of a commercial bank is to
mobilize deposits of money from the savers and lend into for most profitable purposes.

Commercial banks donor receive these deposits for safe keeping purpose only .but they accept
deposits as debts. When a bank receives a deposit from a customer becomes a creditor and the
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bank a debtor. When the bank receives the amount of deposits as a debtor, it becomes the owner
of it but there is an implicit agreement that the amount owned would be paid back by the bank to
depositor on demand or often at specified time.
The classification is based on duration and purpose for which the deposits are to be kept at the
bank before the depositor can withdraw them. Deposits can be divided into two categories.

DEPOSIT

Checking Non-Checking

DDDDEPOSIT Accounts
PLS Saving PLS TDR’s
Accounts
Account
Special Notice
Current Deposit
Deposit Accounts
Accounts

Foreign Currency NIDA
Accounts

CATEGORIES OF DEPOSIT:-
There are two broad categories of deposits. These are

TIME DEPOSIT DEMAND DEPOSIT

These are payable on maturity These are not payable of maturity
Receive profit with respect to time but on demand
period No profit is given on demand
All TDRs, saving accounts and deposits
other profit bearing accounts are They include current accounts
included. and call deposits etc.

TYPES OF ACCOUNT/ DEPOSIT:-
Following types of accounts are open in NBP
1. Current or demand account

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2. Saving account
3. Fixed account
4. Call Deposit Accounts
5. Foreign Currency Accounts

1. CURRENT OR DEMAND ACCOUNT:

This account is also known as running balance account. Simply we can say “A bank account
which may be used to lodge payments or to withdraw money on demand.”Its main purpose is to
serve the businessman.
Its main features are: -
 Minimum amount for opening this account is Rs.500
 Any person can open the account with the bank
 According to inter banks agreement interest is not paid on current account.
 Bank act as custodian of money
 Over draft facility is provided to the customers
 Customer can withdraw money through cheque supplied by bank
 No limitation to the number of withdrawal
 No zakat is deducted on current account.

Basic Bank Account (BBA)

BBA’s are opened on proper introduction and submission of required documents.
 BBA’s are opened for individuals single or joint only.
 Free ATM issuance.
 Minimum balance is 1000/-.
 In BBA’s maximum two deposits transactions and two chequeing withdrawals are
allowed free of charge through cash/clearing in a month.
 Nil accounts are closed after 3 months.

2. SAVING ACCOUNT:
This type of account is designed to encourage the saving habit of the customer and lead to a
long-term banking or investment relationship.

NBP offered the two types of saving accounts
a. Profit and Loss Sharing/Saving Account (PLS Acc)
b. National Income Daily Account (NIDA account)

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a. Profit and Loss Sharing/Saving Account (PLS Acc)
In general it is also called saving account .To provides interest free banking facilities in Pakistan.

The main features of this account are: -
 Instead of having fixed return in the form of interest the deposited money will be shared
in profit and loss of the bank.
 One can open the account by depositing minimum Rs.100
 The bank is authorized to deduct service charges on half yearly basis.
 Profit on PLS Saving Account is calculated on minimum monthly basis and is paid half
yearly basis announced by the Head Office after June 30 and December 31.
 Zakat at the rate 2.50% is deducted from the PLS Saving Accounts.
 No limit of withdrawals

b. National Income Daily Account (NIDA account)
 This scheme did not gain popularity so NBP close this scheme.

3. CALL DEPOSIT:
Call deposits are the sorts of deposits, which are deposited in the bank against any tender.
This is without interest deposit and may be with interest provided. The depositor has agreed
to keep this amount with the bank for some fixed period.

4. FIXED ACCOUNT:
This account is the major source of funds for the banks. This account is best for people who have
surplus money and don’t need such funds in nearer future.
Main features of this account are: -
 Fixed amount is deposited for fixed period.
 Amount of profit can be obtained after each six months.
 Higher will be the time period, higher will be the rate of profit, and vice versa.
 A receipt is used for the amount deposited called fixed deposit receipt.
 Period of deposit can vary from 3 months to 5 years depending upon the nature of scheme
offered by bank.

5. FOREIGN CURRENCY ACCOUNTS:
These are the accounts in US $, Pound, Euro, yen etc. of different account holders and either
saving or current accounts. The transactions in these accounts are translated into Pak. Rupees at
the exchange rate prevailing on the date of transaction.

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2. ACCOUNT OPENING SECTION:-
Account opening section of the bank can be considered the most important department because
banking starts with the account opening. Every customer of the bank either he is of credit section
or foreign section or any other department must have his account in order to get benefit and
transaction with the bank. Account opening officer take special consideration for the proper
recognition of the customers.
This section performs the following functions:
Opening of Accounts
Issuance of cheque books
Closing of accounts

OPENING OF ACCOUNTS:
The opening of an account is the establishment of banker customer relationship. Before a banker
opens a new account, the banker should determine the prospective customer’s integrity,
respectability, occupation and the nature of business by the introductory references given at the
time of account opening. Preliminary investigation is necessary because of the following reasons.
 Avoiding frauds, Safe guard against unintended over draft, Negligence and
inquiries about clients.

i. TERMS AND CONDITION:
There are certain formalities, which are to be observed for opening an account with a bank.
 Formal Application
 Verification of customer's CNIC through the NADRA
 Copy of NIC of the customer
 Specimen Signature
 Minimum Initial Deposit

ii. QUALIFICATION OF CUSTOMER:
The relation of the banker and the customer is purely a contractual one, however, he must have
the following basic qualifications.
 He must be of the age of majority.
 He must be of sound mind.
 Law must not disqualify him.
 The agreement should be made for lawful object, which create legal relationship
 Not expressly declared void.

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iii. STEPS FOR OPENING OF ACCOUNT:
After entering into bank premises the person goes through the following steps for opening an
account in the bank and for becoming a bank customer.
1. VERIFICATION:
The first important step to take place in bank is to get satisfactory verification of the person, who
wants to become bank’s customer. This verification is made through the NADRA.

2. ACCOUNT OPENING FORM AND SPECIMEN CARD:
Now the person is provided with an application form known as Account Opening Form (AOF).

SPECIMEN SIGNATURE CARD (SS CARD):
Specimen of signatures will be obtained from depositor at the time of opening his account. A
specially designed card is used for this purpose; the card must be countersigned by an official of
the bank not below the rank of an officer.

3. ACCOUNT OPENING REGISTER:

Now the name of the customer is recorded in account opening register, and from here the
account no. of the customer will be written on (top most corners) account opening form and on
specimen signature card.

4. LETTER OF THANKS:

Letter of thanks is the latter issued by the bank to the customer for two purposes
 1st purpose is to say thanks to the customer for opening the account in their bank
 2nd purpose is to confirm the address provided by the customer while opening the
account.

5. ISSUANCE OF CHEQUE BOOK:

The cheque book will ordinarily be issued to all customers desiring to have chequeing facility.
First Cheque book is issued to the customer after sending the letter of thanks when the customer
comes with the latter of thanks and requests for the issuance of the cheque book.

A Cheque book consists of
 PLS 25 leaves or pages per order, CD 50 leaves or pages per order
100 leaves or pages per order, CD 50 leaves or pages per bearer
100 leaves or pages per bearer

Order- if a person appears himself for new cheque book or who is the holder of
account
Bearer- if the person other than account holder appears then he is bearer

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6. RECORDING INTO GENERAL LEDGER:
The concerned officer records the name and amount deposited with the bank in to general ledger.
Separate ledgers are maintained for different types of accounts e.g.
 Current Account Ledger
 Saving Account Ledger
 Fixed Deposit Account Ledger
 Call Deposit Account Ledger

iv. DOCUMENTS ENCLOSED BY CUSTOMER:
Documents required to be attached by the customer are different for different accounts.

Documentation In case of Individuals accounts.
Documentation In case of Private/ Public limited company accounts.
Documentation In case of Partnership account.
Documentation In case of Club, Society, Association or Trust.
Documentation in case of agents Account.
Documentation in case of trust Account.

v. STAMPING AND SCRUTINIZING:
After the fulfillment of all the necessary terms and conditions and checking of the form the
relevant officer of Account Opening then affixed stamps on the AOF for the sake of completion
of all the formal rules and regulations. He affixed two types of stamps on the form.

Affixed stamps:
 National Bank of Pakistan Stamp, Authorized Stamp and
Personal Visit Stamp---in case of illiterate person or the person not having
specific sign.
Affixed Documents:
 Know Your Customer Form (KYC) --- Summarizing the context of AOF
briefly
 Signature Card --- For identification and verification of signatures

vi. LOOSSE CHEQUE:
If any customer forgets or leaves his cheque book at his home, which is far away from the bank
or whatever the case may be, the customer applies with the bank for the issuance of loose cheque
by the bank as he does not has his cheque book with him and the money is urgently required, the
this cheque is called the loose cheque.

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CHEQUE BOOK ISSUANCE:
All subsequent cheque books to be issued against the requisition cheque extracted from the
previous cheque book. This slip is duly filled and signed 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 cheques are duly entered in the book of the bank. Along with the signature, the
person should also write his full name and address.

CLOSING OF ACCOUNTS:
ACCOUNT CLOSING BY CUSTOMER:-
The customer can close the account. Customer is required to submit an application for closing
the account. Then the account is closed out and his balance is paid to him after deducting the
closing charges, i.e., Rs. 200 and the application is filed in Account Closing File.

ACCOUNT CLOSING BY BANK:-

i. DORMANT ACCOUNT
All current accounts which have not been operated for six months or all saving accounts which
have not been operated upon for one year classify as dormant account.

ii. INOPERATIVE ACCOUNT
All the current accounts which have not been operated upon for 2 years or all saving accounts
which have not been operated since 3 years are classified under inoperative accounts.

iii. TREATMENT OF DEPOSIT DECLARED UNCLAIMED

UNCLAIMED DEPOSIT:

A debt payable owing by bank due to the reason of deposit in respect of which no transaction has
taken place and no statement of account has been requested by the creditor during a period of ten
years are classified under unclaimed deposit.

3. LOCKER SERVICE SECTION:-
National bank of Pakistan also provides lockers facility in the country. It means a box operate by
a customer of holder on permanent basis. Locker operation account is allowed for an account
holder, Non-account holder not able to operate it.

There are four types of locker depending upon the size of lockers operate in banks.
Small size locker
Medium size locker
Large size locker
Extra large size locker

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An application form is necessary for customer with desire documents and approval made by the
head of department. Lien is placed on the account of a locker holder on drawing of amount.
Entries are made on “Locker Register” as well as on the system.

4. CASH DEALING SECTION:-
Cash department of NBP is given the complete responsibility of handling all receipts &
disbursements of cash as a result of transaction in both local and foreign currencies & near cash
items such as traveler's cheque etc.

Cash department performs the following functions.
 Cash receipts for receive deposits.
 Cash payment for encashment of cheques.
Receipt
The money, which either comes or goes out from the bank, its record should be kept. Cash
department performs this function. The deposits of all customers of the bank are controlled by
means of ledger accounts.
Payments
It is a banker’s primary contract to repay money received for this customer’s account usually by
honoring his cheques.

CASH RECEIPTS:
The depositor uses pay-in-slip for depositing the amount in their account. There are two types of
pay-in-slip. Both are in different colors for clear identification.

i. Cash Pay-in-Slip
It is used whenever the account holder deposit cash in his account.

ii. Cheque Pay-in-Slip
It is used whenever the account holder deposit amount in his account by the cross cheques.

CASH PAYMENT:
It is the primary function of bank to repay the money received from his customer’s account
usually by honoring the cheques. It is the contractual obligation of a banker to honor his
customer’s cheque. Bankers in Pakistan deal with three types of cheques.

TYPES OF CHEQUE:
BEARER CHEQUES:
Bearer cheques are cashable at the counter of the bank. These can also be collected through
clearing.

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ORDER CHEQUES:
These types of cheques are also cashable on the counter but its holder must satisfy the banker
that he is the proper man to collect the payment of the cheque and he has to show his
identification. It can also be collected through clearing.
CROSSED CHEQUES:
These cheques are not payable in cash at the counters of a banker. It can only be credited to the
payee’s account.

CASH LINK:
NBP ATM SERVICES FOR CONVENIENCE
 Cash withdrawal according to your cycle limit.
 Transfer of funds between PLS saving account and current account of the same customer
through the same ATM card
 Account balance inquiry.
 Instant mini statements of accounts listing the last 15 transactions in account. Request for
a new cheque book, which might be collected by the customer from the branch.

5. CLEARING SECTION:-
CLEARING:
"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 bank’s clearing
house "

CLEARING DEPARTMENT:
The major function of Clearing Department is to receive the cheques, which are drawn on some
other bank. The customer can get the money in his account at NBP, from the cheques drawn on
another bank. The bank accepts these cheques and collects the amount from that bank on which
cheque is drawn through the Clearing House. Bank charges some commission for this function.

TYPES OF THE CROSS CHEQUES:
Some specific types of cheques are being entertained in the clearing department of NBP are:
i. LOCAL CHEQUES:
By local cheques we mean collection of cheques from the banks which are located within the
city. It means the presenting bank and the bank on which the cheques is drawn are situated in the
same city.
ii. IN HOUSE CHEQUES:
In house cheques are drawn on one branch of NBP and presented to another branch of NBP such
cheques are marked with the transfer stamp.

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iii. OUTSTATION CHEQUES:
By outstation cheques we mean collection of cheques from the bank, which are situated outside
the city. It means the presenting bank and the bank on which the cheques is drawn are not
situated in the same city.

TYPES OF CLEARING:
Local Clearing, Short Credit Service, Local Short Credit and Inter City

i. LOCAL CLEARING:
All cheques and other Negotiable Instruments payable locally is presented through the local
clearing system. NIFT provides the local and intercity services. Cheques deposited at branch
counters presented for clearing on the same day.

ii. SHORT CREDIT SERVICES(SC):
For small cities where there are no NIFT services then branch bank clears the cheque either
through mail/ TCS or bank can own provide service and charge commission for providing
services. Bank give credit to the customer's account on the day when clearing settlement takes
place.

iii. LOCAL SHORT CREDIT (LSC):
This arrangement has been set up if the customer wants amount in his account on urgent basis.
Bank then provide service to its customer for those in house cheques when presented and draw
on NBP. Both can be of different branches of the bank but must be located within the city.

iv. INTER CITY:

NIFT is responsible for the clearance of the outstation cheques. Cheques drawn on bank's own
branches at outstation centers or outstation other banks both are collected using the inter city
arrangements maintain by NIFT network. Its offices are present in all the large cities of Pakistan.

CLEARING PROCESS:
The process of clearing is carried in two categories.

i. Inward Clearing
Cheque received of other parties after clearing are lodged in the system by vouching date,
signature, documents numbers is noted. The cheque without sufficient balance, changing in
amount, signature and verifying other formalities returned to the customer by attaching return
memo explaining the cause of cheque return.

ii. Outward Clearing
These are the cross cheques deposited by the customers for credit the same amount to its
account.

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6. REMITTANCE SECTION:-
Remittance means a sum of money sent in payment for something. This department deals with
either the transfer of money from one bank to other bank or from one branch to another branch
for their customers. NBP offers the following forms of remittances.
Main modes of remittance are:
Pay Order
Mail Transfer
Demand Draft
Telegraphic Transfer

PAY ORDER:
Pay order issued from one branch is only payable from the same branch. It is issued for payment
in the same city.

MAIL TRANSFER:
The same application form is used for draft and mail transfers generally in NBP.The mail
transfer is not delivered to purchaser but instead the issuing office to beneficiary’s branch on its
own risk and responsibility sends it. This type of remittance facility is provided only when the
beneficiary happens to be customer of the bank.
 It is the quick and safe mode of transfer of funds.
 Application form submission is same as DD.
 In MT funds are transfer through system within seconds if 2nd branch is online.
 Funds transfer only same branch of the banks.
 It is necessary that the customer must have the Branch Code of the host branch, account
number of a drawer, name of place, etc.
DEMAND DRAFT:
A method used by individuals to make transfer payments from one bank account to another.
Demand drafts are marketed as a relatively secure method for cashing checks. It is made for both
account holders and non account holders.

TYPES OF DEMAND DRAFT:

JUNIOR DRAFT:
For 1 to 1000/- Rs. junior draft is made.
SENIOR DRAFT:
For 1000 to 10 million Rs. senior drafts is made.
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TELEGRAPHIC TRANSFER:
It is the message, which is sent from one branch to another on the order of payer to payee
through wire. It is one of the quickest means to transfer fund through the use of
Telex/fax/internet or cable. It is quickest way of transfer funds from one branch to another of the
same bank through telephone, fax/telex.

ADVANCE DEPARTMENT
Advances department is one of the most sensitive and important departments of the bank. The
major portion of the profit is earned through this department. As we known bank is a profit
seeking institution. It attracts surplus balances from the customers at low rate of interest and
makes advances at a higher rate of interest to the individuals and business firms. However, at the
same time, it is a very risky task and the risk cannot be completely eliminated but could be
minimized largely with certain techniques.

PRINCIPLES OF LENDING:-
i. CHARACTER:
It is based on the borrower willingness to repay the obligation. The loan officer sees the family
background mode of living, business nature, habits, moral reputation and etc. before giving the
loan.
ii. CAPACITY:
The ability of borrower to repay the loan when due. The borrower ability to repay the loan is
assessed by the office so that he will be able to repay the loan in future.
iii. CAPITAL:
The officer assesses the capital of the borrower. If assets held by the borrower are liquid, they
can be easily convertible in cash; but if non liquid is used then it is risky to given loan.
iv. COLLATERAL:
It is collateral security. It may consists of stocks bonds , bill of exchange, bills of lading, etc. the
bank has protect himself from any discrepancy in the future. They increase the ability of the
borrower to obtain the funds from the bank.

v. CONDITION:
The economic condition of the borrower is determined. The economic conditions of the borrower
in and outside the country effect the repayment of loan. If condition is favorable then loan is
given otherwise vice versa

TYPES OF ADVANCES:
1. DEMAND FINANCE:
One time disbursement of the whole amount sanctioned, as the limit for the credit allows.
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Any person, individual, group, company, firm and all others can achieve this Mode of financing.
The mark-up or interest is calculated on the total amount disbursed and requires to be paid before
the date of final adjustment. Regarding the amount, limit and period, it depends on the nature of
the case in review.

2. CASH FINANCE:
In this mode of financing the borrower is allowed to make withdrawals of funds as he requires,
but the total amount outstanding cannot exceed the limit sanctioned. The mark-up/interest is
calculated on the amount outstanding on his account.
This finance if normally borrowed by small traders or individuals for their petty matters
involving cash transactions up to rupees three hundred thousand maximum.

3. RUNNING FINANCE:
To assist a large-scale business operator to carry on his day to day requirements of liquid funds,
this account is opened is made operation in his favor. Running finance is provided where the
amount goes beyond rupees three hundred thousand. The mark-up/interest is calculated the same
way as in case of cash finance.

4. LOANS:
When a customer borrows a fixed amount from a banker repayable either in periodic installments
or in lump sum at a fixed future time, it is called a "loan". When bankers allow loan to their
customers against collateral securities they are called secured loan and when no collateral;
security is taken it is called "clean loans"
TYPES OF LOAN:
The credit department of NBP has providing the following types of loans
a. Short term loans
b. Long term loans
c. Working capital loan
d. Syndicate (project) loan

CRITERIA CHECKED FOR LOANS
Major areas requiring focused attention of the analyst are:
FINANCIAL CONDITION:
Which is reflected in the trends of?

Net sales, Gross sales, Operating profits and Net profits (at least for the last 3 years)
STRUCTURAL LIQUIDITY:
It refers to the extent of liquidity usually available in the business, or which is the routine
requirement of the borrower based on the nature of his periodically maturing liabilities.

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INDUSTRY/BUSINESS OF OPERATION:
The banker has to check that in which industry or segment of market the loan is being given this
is important because if there were a recession in that industry for decades then it would not be
feasible to invest in such a business.

DEBT EQUITY MANAGEMENT:
Excessive reliance on debt, rather than plough back of profits or injection of fresh equity, to
maintain a healthy combination of debt and equity is thought with danger because ultimately the
debt servicing requirements place a heavy burden on its liquidity thereby its survival.

ASSET MANAGEMENT:
Asset management involves the analysis of how productively the assets of the company are being
used. Sales and profitability can be measured with this.

BORROWER’S CREDIT WORTHINESS:
In order to get a complete picture of the borrower’s credit worthiness, inquiries will have to be
made about:

His business, Trade experience, Assets and liabilities, His account with bank or with
other banks, His financial statements and income tax returns and an interview with
him will be necessary to elucidate or supplement the information that may have been
collected.

MANAGEMENT:
Before giving loan NBP also checks whether the management have the depth, skill and
experience. If the management is aggressive and adoptive to the new changes then it is most
likely that the banker may receive the loan back on due date.

SECURITIES:
In case the borrower is not in a position to meet his obligations, there must be something else to
call back upon. So bankers take securities to have a resource to them to guard liquidity, that is,
security is an insurance against calamities.

The bank provides the following securities to the customers.

MORTGAGE:
Transfer of interest in movable property for securing the payment of money lends on existing or
future liability. The bank provides the following two types of mortgage.
 Registered mortgage:
Registered mortgage is provided on the residential property, commercial industrial property,
raw plot, etc.

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 Equitable mortgage:
Equitable mortgage is provided on the residential property, commercial industrial property,
raw plot, etc.

PLEDGE:
A pledge is an “a class security given to customers for stocks ware house, customs, and etc. it is
defined as actual delivery of movable property to lender as security for a loan. When the
Customer makes the payment of the loan in full he can back his mortgage property from the bank
i.e. when full payment is made the stock is released.

ACCOUNTS DEPARTMENT
The main function of account department of NBP is to maintain general ledger accounts and
after the business hours the function of the account officer is to close books. There are many
other important functions performed by accounts department of NBP so broadly they can be
categorized in four heads.

1. ROUTING OF EXPENSE VOUCHERS:-
Vouchers of all expenses and material purchases are routed out through this department. As far
as the expenses are concerned, they include the
 Heads of salaries paid to confirmed employees of bank
 Wages paid to employees that are on contractual basis
 Rent of the building
 Lease installment
 Insurance premium paid to insurance company for the insurance of vehicles and cash in
safe and counter.
 Utility bill, which consists of courier, electricity, water and gas bills
 Medical expenses (reimbursed)

VOUCHER SYSTEM:
Voucher is 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 takes place during the business hours. It is prepared 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,
In bank two vouchers are used
1. Debit voucher
2. Credit voucher
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1. DEBIT VOUCHER:
Different types of debit vouchers are used by the bank as an evidence of the transaction.
Debit vouchers are used in three cases:
 Whenever any expense is incurred
 For the preparation of two negotiable instruments i.e.; MT, DD.
 When Account holder transfer money in his account then bank deduct charges on
intercity and SC clearing. The account of the customer is debited with the amount
deducted for services and debit voucher is prepared.
2. CREDIT VOUCHER:
Different types of credit vouchers having different colors and format are used by the bank. There
are three types transaction in which credit vouchers are used.
 When a depositor deposits any amount in his account because it is the liability of the
bank therefore credit voucher is prepared.
 Any income received by the bank e.g. Bank draft.
 For the preparation of PO

2. PREPARATION OF DAILY ACTIVITY REPORTS:-
The main function of this department is to check daily transactions whether cash, transfer of
payments, billing, and clearing of all the departments. It includes the details of the following:
 Loan transactions.
 general ledger transactions
 Foreign currency related transactions.
 Fixed deposits transactions.

3. PREPARATION OF WEEKLY AND MONTHLY STATEMENTS:
Second major function of accounts department is the preparation of various statements. These
statements are:

WEEKLY STATEMENTS:
These weekly statements are sent first to NBP head office Karachi. These statements are
generated on weekly basis for the purpose of sending it to Head Office. These also include:
 Statement of affair and Deposit and advances position of the bank.

MONTHLY STATEMENTS:
These monthly statements are sent first to NBP head office Karachi and then these statements are
sent to head office in consolidated form. All vouchers and statements signed and approved by
manager accounts.

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These statements are prepared on monthly basis. These include:
 Provisional statement of income and expenses.
 This statement adjusted for accruals and pre-payments, Monthly Balance
Sheet and Income Statement
 Comparative Statement.

4. PREPARATION OF TAX PURPOSE STATEMENTS:
The department also prepares two statements for the purpose of paying tax on monthly and
annual basis. These statements are generated for the purpose of submitting to Central Board of
Revenue. These are:
 Statement of deduction of income chargeable under the head salary under Section 53
(Tax deducted at source)
 Withholding Tax from the payments made to vendors, suppliers and other parties
providing various services.

BILLING & GOVERNMENT RECEIPT/ PAYMENT
DEPARTMENT
In this department all types of Government receipts i.e. Revenues, Taxes, Agriculture Tax,
Government Fees, EOBI Funds and Utility Bills are deposited. This way NBP is serving great
job of revenue collection and charges commission for providing services. This department is
performing following functions
Payment of Provident Fund
Payment of Benevolent Fund
Payment of pension
Collection of utility bills, property taxes, Challans and dues of educational
institution.
Payment of salaries
Payment of zakat
1. PAYMENT OF PROVIDENT FUND:-
Provident fund are maintained by many organizations for the benefit of their employees. There
are three types of provident fund granted by the organizations.
 GOVERNMENT PROVIDENT FUND: fund maintained by government institutions.
 RECOGNIZED PROVIDENT FUND: fund maintained by private organizations fulfils
the conditions maintained by law.
 UNRECOGNIZED PROVIDENT FUND: fund maintained by private organization
which has not been granted recognition by law.
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2. PAYMENT OF BENEOVALENT FUND:-
The Funds are utilized for the relief of Government servants and their families by giving
financial assistance to the families of deceased Government servants; to Government servants
invalided out of service.

3. PAYMENT OF PENSION:-
Pension is the Post-retirement benefits that an employee might receive from some employers. It
is a payment, not wages, made regularly to a person who has fulfilled certain conditions of
service, reached a certain age. It can be payable for Life, Death, Remarriage.

TYPES OF PENSION:
i. EMPLOYMENT BASED PENSION:
The GOP has been introduced two types of pension are given to the employees on retirement on
the basis of the services which they have rendered.
 RETIREMENT PENSION: refers to pension granted upon 25 year of services
 SUPERANNUATION PENSION: refers to pension granted upon 30 years of services

ii. STATE PENSION:
Many countries have created funds for their citizens and residents to provide income when they
retire. GOP has been introduced pension for their employees who are working in the State owned
Institutions; e.g. WAPDA, WASA, PIA etc
 PROVINCIAL PENSION: granted to the employees who work under the government of
Punjab.
 CENTRAL PENSION: granted to the employees who are employed under the federal
government.
 DEFENSIVE PENSION: It is given to the employees who work in forces e.g; PIA
employees, Army, Navy, Police
 RAILWAY PENSION: It is given to the employees who work in railway under the three
head:
LHR: Lahore Railway Head, WS: Work Shop Head and RHQ: Railway Head
Quarter

iii. EMPLOYEE OLD AGE BENEFIT:
Non government employees having 5 or more than 5 employees grant EOBI funds to their
employees. The contribution towards the fund by the employee is 5% of the basic pay scale of
employee and by the employer is 1% of the basic pay scale.

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4. COLLECTION OF UTILITY BILLS, TAXES AND CHALLANS:-
NBP as an agent of the SBP collects bills from the general public and charge commission for the
services rendered. The commission on each type of bill is Rs. 8/- per bill. The branches collect
the utility bills and the proceeds are then send to head office through MT.

FOREIGN EXCHAGE DEPARTMENT:-
The foreign exchange department has four main parts on which the national bank works. It
consists of:
1. Imports and Exports.
2. Foreign remittance.

1. IMPORT AND EXPORT:-
National bank acts as an intermediary in the exports and imports between the two parties. It
facilitates the development and fulfillment of contracts and the payment between the importers
and exporters. There are four major types of contracts or term of payment that are being used in
the trade.

OPEN ACCOUNT:
In the type exporter has to ship goods first to the importer and then the payment is received by
the exporter. In this type of contract the exporter is at risk because once the goods are received
the importer might refuse or may not be able to make the payment. These types of contracts
usually take place between parent and their subsidiary companies as the chances of risk of
default there are low.

ADVANCE PAYMENT:
In this type exporter first receives the payment and then the shipment of goods takes place. Here
the importer is at risk as the exporter might default at the payment. This contract take place in
countries where the goods are in demand.

COLLECTION:
It is done for DP (documents against payment) and DA (documents against acceptance). In DP
the documents are received when the payment is done and in DA the documents are released to
the other party on acceptance. All the process is carried out on the basis of what the parties have
agreed upon.

LETTER OF CREDIT:
A standard, commercial letter of credit is a document issued mostly by a financial institution,
used primarily in trade finance, which usually provides an irrevocable payment undertaking. It is
opened by the bank for the importers in which the bank guarantees the payment of the bill of
exchange if the terms and conditions of the contract are met.
There are two main stages of LC:

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OPENING:
In this stage the terms and conditions are setup and then the reimbursement of those terms and
conditions is checked.
LODGING:
In this stage the cash payment is made by the bank to the exporter of goods.
Retirement: In this stage the cash is taken by the bank from the customer who is the importer of
the goods.

2. FOREIGN 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 that facilitates the transfer of
funds.
 TT ( telegraphic Transfer), DD (Demand Draft) and PO (Pay Order)

COMMERCIAL & RETAIL BANKING DEPARTMENT
National Bank of Pakistan serving following product lines:

PREMIUM AAMDANI SCHEME

PREMIUM SAVER SAIBAN SCHEME
SCHEME

ADVANCE PRESIDENT’S ROZGAR
SALARY SCHEME SCHEME

CASH CARD INVESTORS
SCHEME ADVANTAGE CASH N GOLD KISAN DOST
SCHEME SCHEME SCHEME

KISAN TAQAT PAKREMIT PROTECTION STUDENT
SCHEME SCHEME SHIELD SCHEME LOAN SCHEME

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1. PREMIUM AAMDANI SCHEME:- Monthly Income Scheme
Unprecedented Safety - Unprecedented Return

A monthly income scheme introduced by National Bank of Pakistan
for investors as well as for general public. Incentives are available for
investors providing finance facility against these certificates and also
allowed to customers to convert existing deposits into National Bank
Premium Aamdani Certificates.
Earn up to 12.25% p.a.
Minimum deposit of Rs. 20,000/-
Maximum deposit of Rs. 1,000,000/-
Investment period is 5 years.
Free Demand Draft, Pay Order and Cheque Book.
Convenience of NBP online Aasan Banking (for online banking customers).
Free NBP Cash Card (ATM+Debit).
Running finance facility up to 90%.
Profits paid on monthly basis.

2. PREMIUM SAVER SCHEME:-
Yours saving reward (PLS Saving Account)
• Earn up to 8.50% p.a.
• Minimum saving balance of Rs. 20,001/- & a
maximum balance of Rs.1 million.
• Free NBP Cash Card (ATM + Debit).
• Convenience of NBP Online Aasan Banking (for online banking customers).
• Two debit withdrawals allowed in a month & no limit on number of deposit transactions.
• Profit calculated on monthly and paid on half yearly basis.
3. SAIBAN SCHEME:- Open the Door to Your Dream Home
(Home Financing)
National Bank of Pakistan lending for construction of home to general public as well as
employees of government and non-government institutions. Main features of this scheme are as
under.
Finance is available for:

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 Home Purchase
 Home Construction
 Home Renovation
 Purchase of Land + Construction
Period of repayment ranges between 30-20 years.
Loan available up to a maximum of Rs. 15-20
million.
NBP provide markup choices to its consumer i.e.
Variable Discount Rate, Fixed Rate.
Minimum approval and disbursement timing.
Limited to areas where there are no documentations, fee, resale and foreclosure related
issues, so to protect the bank’s interest.

PRESIDENT’S ROZGAR SCHEME:- Mera Apna Karobar
National Bank of Pakistan is providing financing under President
Karobar Scheme with the cooperation of government of Pakistan. The
purpose of this scheme is to reduce unemployment from the country.
Main features are as under

Minimum down payment, 10% of asset price (5% for PCO &
Telecaster)
Tenure of loans 1 to 5 years (for PCO 2 years)
Grace period 3 months
Maximum loan amount Rs. 200,000/-
Age 18-45 years
Mark-up (variable) 1 year KIBOR + 2.00% p.a.
The customer will pay markup @ 6% p.a., rest will be borne by GOP*
Life & disability insurance paid by GOP
NBP’S loan available for:
 Utility Store,
 Transport
 PCO/Tele-centers

4. ADVANCE SALARY SCHEME:- Personal Loan
Take up to 20 times of Your Take Home Salary

34


NBP Advance Salary, the leading personal loan product of the
country, is maintaining its inimitability ever since it was
launched. This was only possible due to its swift growth and
remarkable loan disbursement of over 138 billion.
Employees can avail up to 20 net take home salaries with easy
repayment installments. Its hassle free acquisition with no prior
formalities and easy availability in a short turn round time is
attributed as the most distinguishing features of the product. The product is offered countrywide.
Its salient features are;
Easy installments of 1 to 60 months at your choice.
No minimum income, collateral & insurance charges required.
Quick processing and fastest disbursement.
For permanent employees of Government, Semi Government and Autonomous bodies
receiving salaries through NBP.

5. CASH CARD SCHEME:- one card does it all
ATM + Debit Card
NBP Cash Card is a 24-hour direct access ATM/ Debit card to bank account, which lets pay
directly from the account as an alternative payment method to cash. The transaction is authorized
and processed by entering PIN. The NBP Cash Card holders are able to transact at any of the
4000 + Merchants where Orix logo is displayed and can withdraw cash
from NBP, 1-Link & M-NET ATM’s across the count.
Use it as an ATM in any of the
ATM’s in Pakistan.
Use it as Debit Card in any of
the outlets with ORIX POS machine.
Cash withdrawal up to Rs. 20,000/- per day.
Account Balance Enquiry.
Mini Statement (Only at NBP ATM).
PIN Change facility (Only at NBP ATM).

6. INVESTOR ADVANTAGE SCHEME:- easier financing, profitable trading
Financing Facility for Stock / Retail Investors

Comfortable and secure environment for trading.
NBP financing at very easy terms requiring minimum documentation.

35


Minimum turn around time.
Customer's equity freely available for investment.
No security requirement from the customer except for the
customer's equity.
Equity acceptable in cash or approved share.
Financing amount is up to Rs.50, 000/ - To Rs.10,
000,000/-
Equity requirement is in the Form of Cash or Shares or Both (Currently Minimum Rs.
215,000/- @ 30%).

7. CASH N GOLD SCHEME:- Ancash and meet your needs
Ready Cash against Gold

With NBP's Cash n Gold, provide facility for ready cash against idle
gold jewelry with no minimum limit and provide extra benefit. The
main features are:
Facility of Rs. 35,000/- against
each 10 Gms of net weight of Gold
Ornaments.
No maximum limit of cash.
Repayment after one year.
Roll over facility.
No penalty for each repayment.
Rate of mark-up 15.50%p.a.
Weight and quality of gold to be determined by NBP's appointed schroffs.
Only gold ornaments acceptable.

8. KISAN DOST SCHEME:- Agriculture Made Easy
Agriculture Farming Program
National Bank of Pakistan is lending in agricultural field.
National Bank of Pakistan is lending farmers for development
of agriculture sector of the country under certain terms and
conditions.

NBP provide loan to farmers for production, development
purposes, for purchase of tractors, for installation of tube wells,
for purchase of agricultural instruments, micro loan, for
construction of god won, for construction of fish pond, for

36


development of livestock and farming, for mil processing, for cold
storage, bio-gas plants.
Interest @ 16.5 percent per annum.
Quick & easy processing.
Delivery at the farmer’s doorstep.
Provision of Technical guidance to farmers.
Wide range of financing schemes for farmers.
Finance facility up to Rs. 100,000/- for landless farmers against personal guarantee.
Financing available against pass book, residential/commercial property, gold ornaments
and paper security.
Loan facility on revolving basis for three years (renewable on yearly basis without
documentation and approval).

9. KISAN TAQAT SCHEME:- promise of prosperity
Dairy Farm Scheme

National Bank of Pakistan is providing loans for the dairy farms and
for the development of the livestock and dairy farms.
NBP facilitates with livestock experts
Less documentation and easy to repay.
Available at the next door step.
Scheme is available in more than 50
branches of NBP.

10. PAKREMIT SCHEME:-
NBP's Internet Based Home Remittance Service

Pakremit is an internet based Home Remittance Service. This service is
available to U.S. residents for sending money to their family and friends
in Pakistan. One must have a valid US Dollar account with a U.S. bank
or a US Dollar credit or debit card in order to remit funds through this
channel.
Remitters in USA can log on to our user friendly website,
www.pakremit.com and easily remit funds to Pakistan from the comfort of their homes, in a
matter of minutes. The service is fully secure with advance encryption application and is
available for use 24 hours a day, 7 days a week. Fees and exchange rate have been set at
competitive levels and the remitters have the ability to track delivery of funds as well.

37


11. NBP PROTECTION SHIELD SCHEME:- Life is Precious
Personal Accident Insurance

Insurance Coverage- In case of Accidental Death (Including death
due to Riots, Strikes, Civil commotion, Acts of Terrorism and Natural
Calamities like Flood, Earth Quake, Cyclones etc) provided that the
insured is not directly involved in these activities

Coverage of Rs. 200,000/- for Rs. 20/- per month

FEATURES:
No documentation
No medical required
Premium Auto Debit facility & choice of
deactivation
Coverage includes death due to:
Natural Calamities e.g. Earthquake, Flood,
Cyclone etc.
Accident
Riots
Civil Commotion
Strikes
Acts of Terrorism

12. NBP STUDENT LOAN SCHEME:-
Pursuant to the announcement made by the Federal Finance Minister in his 2001-2002 budget
speech, a STUDENTS LOAN SCHEME (SLS) for Education was launched by the Government
of Pakistan in collaboration with major commercial banks of Pakistan (NBP, HBL, UBL, MCB
and ABL).
Under the Scheme, financial assistance is provided by way of Interest Free Loans to the
meritorious students who have financial constraints for pursuing their studies in Scientific,
Technical and Professional education within Pakistan.

The Scheme is being administered by a high powered committee comprising Deputy Governor,
State Bank of Pakistan, Presidents of the commercial banks and representative of Ministry of
Finance, Government of Pakistan.

38


SOWT ANALYSIS
SWOT analysis is careful evaluation of an organization’s internal strengths and weakness as well
as its environment opportunities and threats. In SWOT analysis the best strategies accomplish an
organization’s mission by:
 Exploiting an organizations opportunities and strength, Neutralizing it threats and
Avoiding or correcting its weakness
STRENGHTS:
 NBP one of the largest financial institutions of Pakistan with eight million of customer base
NBP holds 24.6% share of time and demand deposits in the country. Local currency deposits
comprise 67% of bank's total deposits while foreign currency deposits account for the rest.
 NBP has an extensive domestic branch network of 1254 branches located all over Pakistan.
The Bank also has a presence in 23 international locations including the USA, United
Kingdom, Europe and the Far East.
 NBP's total assets stood at Pak Rs.370 billion on December 2008. This included total earning
assets of about Pak Rs.268 billion with gross loan portfolio of Pak Rs.140 billion. The bank
also has an investment portfolio of Pak Rs.91 billion, which comprises treasury securities,
corporate bonds, shares and other securities.
 NBP is working as right arm government of Pakistan as it is responsible for all claims of
government for recovery as well as payment. All depositor of NBP are in relief that their
money security is guaranteed by government of Pakistan.
 It acts as an agent of the Central Bank wherever the State Bank does not have its own
Branch.
 Performing social responsibilities and claiming “The Nation’s Bank”
 Earning high profit on NBP-Advance Salary Loan Scheme·
 Earning commission from SBP on Government transaction
 Facing never problem of cash/currency being its Chest and Sub-chest
 Holds largest deposit base in the market share in terms of number of accounts
 Leading bank in agriculture financing amongst commercial banks with the market share of
15%.

WEEKNESSES:
 Lowest Internal Control and Compliance System, SBP rated “Marginal” which is alarming
for the Bank.
 Unsatisfactory corporate culture of the Bank.
 Physical environment and atmosphere compare to other banks is not meeting the standard.

39


 Less number of Online Branches.
 Ineffectively use of technologies i.e. Information technology
 Shortage of staff- per employee customer is very high side
 Technical education and training of staff is insufficient The workload in NBP is not evenly
distributed and the workload tends to be more on some employees while others abscond
away from their responsibilities which server as a demotivation factor for employees
performing above average work.

OPPORTUNITIES:
 Being a Government Bank NBP having wide scope in economic market.
 Trust and reliability creates chances to enhance deposit and profitability.
 Its vast network of domestic and overseas branches can help to expand business.
 Bank’s deposit is increasing rapidly so there is a great opportunity to enhance its investment
and financing.
 Being an agent of State Bank of Pakistan it can play vital role in local economy.
 Earning commission/exchange on Government transactions.
 Amongst highest bank is Asia, NBP further expand its services proudest and earn more
profit.
 The bank is reshaping its portfolios by investing into higher area of growth developing core
competing as a result to get maximum return.
 I.T and HR are important factors for development in any organization, NBP continue
struggle to achieve this target

THREATS:
 SBP penalties due to low internal control and compliance.
 Government, SBP and Prudential Rules and Regulations.
 Schedule banks and Multinational/International bank’s profit rates.
 Its staff switching over to other private banks due to more facilities.
 Other bank’s charming atmosphere and relaxation in documentation.
 SBP rated just “Marginal” in respect of System & Control which is alarming for the Bank to
survive its license.
 NBP staff code of ethics and practices.
 High number of complaints regarding staff behavior.
 Payments and FBR Collections create heavy workload.

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DILEMMA FACED BY ORGANIZATION
Rather NBP is a nation's bank but like any other organization NBP also is not free from problems
and crisis. In SWOT analysis we have already discussed the major internal weaknesses and flaws
of the system. In this topic the most important problems are included which are widely present at
the organizational level.

1. Problems at the branches of NBP
2. Functional Problems
3. Administrative Problems.
4. Personal management’s Problems

PROBLEMS AT THE BRANCHES OF NBP:-
Customer Satisfaction:
In NBP customer dealing is will, but during rush hour the customer has to wait for a long
time for their turn. It’s quite hard for a new customer or potential customer to get the
required information.

Poor record management and filing system:
Filing system of branch is not good. When certain record is needed the staff has to
struggle to find it out and a lot of time is wasted.

Unequal distribution of work:
Work is not equally distributed. On one hand some employee have to work all day
without relaxing while some others have nothing to do at all. This not only creates
confusion among employees but also hurting and disturbing for overall setup of the bank.

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

FUNNCTIONAL PROBLEMS:-
Formal Organization:
In NBP, we find a formal organization. In this formal organization of NBP the activities
are carried out in a more formal way. In theoretical terms it provides basis for
communication with one another but in practice it is not exercised properly.

Excessive paper work:
It is notified that due to the lengthy procedure of paper work the bank employee are over
burdened. They are unable to give proper attention to the clients and face difficulties in
getting their job done. One reason for lengthy procedure and excessive paper work in the
bank is the lack of computerized technology.

41


More accounts fewer deposits:
Efficient banking is one which does not emphasize on number of accounts but on greater
amount of deposits. NBP is more interested in increasing its number of account
irrespective to its deposit.

ADMINISTRATIVE PROBLEMS:
Job analysis is not effective:
Only on the basis of job analysis it can be decided how a right person can be hired,
trained, compensated or promoted. Most of the employees are simple graduate and do not
have proper background about their job.

Lack of appreciation:
Another very important thing which is ignored in the bank is appreciation if the employee
on their good performance. If hard work and performance of employees is not recognized
and appreciated they become dishearten which results in decline in performance.

PERSONAL MANAGEMENT PROBLEMS
Need for better training program:
It has been noticed that the training program of NBP is not adequate. Once the candidate
is selected and placed on the respective job. It becomes essential to train him adequately
for the task. They should learn new methods for motivating customers.

Developing Managerial Leadership:
Leadership is a practical term of visible, clear on objective and communicating better
control on financial and administrative matters. Manager is not only responsible for their
own units in business, but also in people terms i.e. training, recruiting, and taking
immediate initiative in crisis situation to take major decision affection the future of the
bank and banking community.

Recruitment policy:
Human resources are the lifeblood of the organization. If the personnel are recruited
carefully they can become asset to the organization. Bank is not following its recruitment
policy properly due to favoritism, nepotism and political pressure.

Promotions:
Promotion in NBP is purely on the basis of seniority, so the new young person having
high qualification remains behind for quite a lot of time. Top management and staff union
put pressure for the promotion of their favorites.

Lack of business communication:
There is no proper way to give information to their customer. To avoid this minor
dissatisfaction and tension in the mind of customer, and deficiency of the service, it is
recommended that the bank should provide brochures etc. Some general information
should be placed in information notice board on the entrance where customer can see it
easily or it should be self-attractive.

42


RECOMMENDATIONS
As analysis shows that NBP is a most growing organization with highest return on capital, the
bank has been able to strategically manage and build on its competitive advantage, by knowing
customer’s requirements, understanding employee’s need, modern technology, to making social
responsibility and looking towards stakeholder’s values. But there is further need for
improvement.
To overcome weaknesses and to maintain its position as an “Asian Tiger” in banking field,
following recommendations are made:

BY SAHAR KHAN:
Staff strength should be enhanced and professional qualified persons should be recruited.
It is recommended that proper training be provided to the staff members that will
ultimately increase the performance of Bank over all.

It is suggested that promotion be given to the staff in due time and on the basis of
performance to provide job satisfaction.
NBP can enhance the volume of advanced especially retail loans.

BY SHAHZADI NEELOFER:
The bank should spend more on renovation of the branches to improve environment and
atmosphere to attract the customers.
E-Commerce (online savings, investment banking, branchless, mobile banking) etc.
The Bank should introduce the computers software to cope the heavy load of work and
better control.
Online system of bank should be faster.

BY SAMREEN LODHI:
Extra counters should be established in order to facilitate during the busy days the
difficulties faced by the bank staff as well as the customers.
All Branches of the Bank must be online.
All the departments should be established separately in every branch.

National bank should also have a trade interest like Army welfare trust. Bank should seek
such project in which they invest its money .so they set more profit by like these projects.

43


BY HIRA SHAHID KHAN:
The Bank should increase profit rate on deposits and saving schemes especially for
pensioners and old age citizens.

For improvement of internal control and system the compliance wing and surprise
inspection system should work more effectively.
ATM machine problems should be solving.

Communication skills should be must improved because due to poor communication skill
banking system is not in position to satisfied customer and competes with others banks.

The bank should use broad casting media for promotion of its products and services and
to further expand its area through more aggressive marketing. Customer services must be
better to improve the efficiency of branch, which results in quality work and causes the
customer attraction that will create lucraturable activities.

The management do considers the policy matter that is not helping the Bank, but are still in
practice due the absence of prudentially regulated system to protect them and the Bank efforts
have been made with serious concern to give NBP a status that it has to maintain by having
practices of:

Right sizing of the employees.

By closing unprofitable branches.

By introducing a merit based selection criteria.

Promotions made conditional with qualification

44


CONCLUSION
This report is all about National Bank of Pakistan, one of the leading banks of Pakistan banking
industry with 1254 nationwide and almost 25 branches operating in other countries including
USA, China, France, Hong Kong, Azerbaijan, Bangladesh, and Hong Kong. It has maximum
coverage with facilities of ATM and online banking throughout Pakistan. National Bank of
Pakistan (NBP) was established under the National Bank of Pakistan Ordinance 1949. The
primary objective of NBP was to purchase jute from the growers in the former East Pakistan and
also to perform the commercial banking functions in the country.

It is a part of State Bank of Pakistan and it is its major strength. It is providing different facilities
to its customers. Inside the bank, in branch banking it has Clearing and Collection Department,
Government Receipts Processing Department, Account Opening Department, Remittance
Department, Customer Services Department Cash Department, Deposit Department, Advances
and Credit Department. These are the most common departments exist in almost each branch. It
is offering different deposit choices, advances, credits and securities etc for its customers.

Its Human Resource is its major strength that is leading this bank in this way but there is much
gap to cover yet. The other strengths this bank has are that it is acting as Agent of State Bank of
Pakistan, providing Agency Arrangements for different government organizations include
WAPDA and PIA, Profitability and a vide coverage throughout Pakistan through its Corporate
Branches. And also it has comprehensive range of products it is offering in market.

The challenge it is facing are currently the lack of implementation of rules and regulations that
may lead to weak organizational culture, old organizational culture, no regular promotions
practices and not much use of IT technology in bank as other are using. There are many workers
and employees’ unions exist in National Bank of Pakistan that use to play organizational politics
instead of doing productive work that leads to wastage of time.

As analysis shows that NBP is a most growing organization with highest return on capital,
largest market share amongst all Pakistani banks and cost to income ratio is the highest in
banking sector. But there is further need for improvement to overcome weaknesses and to
maintain its position as an “Asian Tiger” in banking field.

45

National bank of pakistan analysis report

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