My report is comprised upon four section 1st section denote the introduction of internship, and purpose of purpose, and 2nd is over all role and functioning of bank (Highlights the operations and functions of bank) and 3rd one is about NBP history, introduction, performance, etc and 4th section denote that policies and strategies of NBP and success. 5th is about SWOT analysis, pest analysis, ratios analysis and chapter 6th consist on some recommendations and suggestion. Banks acts as financial agents to their customer; in return they get reward for their services.
Banks play important role in development of society. A strong economy must have a good banking system. National Bank of Pakistan is one of the leading banks in Pakistan. According to international standards of banking system it is one of the best banks in South Asian region as well as the bank, which is, come the top ten in the world. This report explains how different functions of NBP works and what are their services. Introduction denotes that what is the purpose of my internship. After that how banking enter in the Pakistan. What is its working structure?
It is review and organizational structure. ACKNOWLEDGEMENT For the completion of our report I am indebted to plenty of people for their very sincere cooperation that they extended to me at various stages. First and foremost problem that every student faces is the selection of a Report. I am very thankful to my friend Sara for helping me out in time of confusion. During our course and the execution of my report, I had a real chance to learn from his vast experience and immense knowledge. I am very thankful to staff members of National Bank of Pakistan Karianwala Branch, Gujrat.
That they have guide and provide me valuable information regarding my report. Finally I am thankful to the most merciful and Almighty Allah who gives me the strength that I fulfill my task. With efficiently. Table of contents Executive Summary VI Acknowledgement VII CHAPTER NO. 01 Introduction of Internship Report
Introduction: As part of the academic requirement for completing MBA (Finance) Master of Business Administration, The students are required to undergo for six weeks of internship with an organization. The internship is to serve the purpose of acquainting the students with the practice of knowledge of the discipline of banking administration. This report is about National Bank of Pakistan. NBP was established in 1949 and since then, it has expended its network, becoming the largest commercial Bank of the country. It offers different products of services to its customers. 1. Background of study: The internship requirement in the degree of Master in Business Administration (Finance) led me to experience an exciting and professional exposure to NBP as an intern. 1. 2 Purpose: The main purpose of the study in hand is together relevant information to compile internship report on National Bank of Pakistan. To observe, analyze and interpret the relevant data competently and in a useful manner. ? To work practically in an organization. ? To improve report writing skills. ? To develop interpersonal communication. 1. 3 Scope:
As an internee in National Bank of Pakistan the main focus of my study research was on general banking procedures in one of the branches of NBP. These operations include remittances, deposits, advances and foreign exchange. Similarly different aspects of overall of NBP are also covered in this report. 1. 4 Objective: The primary purpose of this study is to fulfillment of the requirements for the degree of MBA (Finance). For this connection each student of this particular course is required to undertake training in a relevant organization selected by them, for a period of 5-7 weeks.
The secondary purpose of this internship is to understand how the theoretical knowledge can be applied to the practical situations and examine an organization’s financial issues and identify its opportunities/ problems and also suggest corrective measures. This internship is also very necessary to gain confidence and become aware of the mechanism of an organization. As an internee I want to achieve following objectives during my internship and organization study: ? To familiarize with a business organization. ? To familiarize with the different departments in the organization and their functioning. To enable myself to understand how the key business process are carried out in organization. ? To understand how information is used in an organization for decision making at various levels. ? I want to develop my skills in the application of theory to practical work situations. ? To develop my attitude conducive to effective interpersonal relationships. ? To acquire good work habits and sense of responsibility. 1. 5 Methodology: The report is based on my two months internship program in National Bank of Pakistan. The methodology reported for collection of data is primary as well as secondary data.
The biggest source of information is my personal observation while working with staff and having discussion with them. Formally arranged interviews and discussions also helped me in this regards. Primary data: Primary data include, Personal observation and Interviews of The Staff Members Secondary data: Secondary data consist of Manuals, Journals, magazines, Annual Reports and Internet. 1. 6 Organization: The NBP was established vide NBP Ordinance No. XIX of November 9. 1949. British Govt. devalued its currency in September 1949, India devalued its rupees but Pakistan did not.
It led to a crisis in trading between the two countries and India refused to lift the Pakistan Jute. To solve this problem i. e. to export jute NBP was established through an Ordinance of GOP. National Bank of Pakistan maintains its position as Pakistan’s premier bank determined to set higher standards of achievements. It is the major business partner for the Government of Pakistan with special emphasis on fostering Pakistan’s economic growth through aggressive and balanced lending policies, technologically oriented products andservices offered through its large network of branches locally, internationally and representative offices.
National Bank of Pakistan is a Govt. bank. It has its head office in Karachi. It has over 1,232 branches in Pakistan & 18 abroad. National Bank of Pakistan maintains its position as Pakistan’s premier bank determined to set higher standards of achievements. It is the major business partner for the Government of Pakistan with special emphasis on fostering Pakistan’s economic growth through aggressive and balanced lending policies, technologically oriented products and services offered through its large network of branches locally, internationally and representative offices.
We aim to be an organization that is founded on… •Growth through creation of sustainable relationships with our customers. •Prudence to guide our business conduct. •A national presence with a history of contribution to our communities. •Reward entrepreneurial efforts. •Create value for all stakeholders. We aim to be peopling who…•Care about relationships. •Lead through the strength of our commitment and willingness to excel. •Practice integrity, honesty and hard work. We believe that these are measures of true success. We have confidence that tomorrow we will be…•Leaders in our industry. An organization maintaining the trust of stakeholders. 1. 7 Summary: In this chapter, I concluded that internship is a best way of analyzing and understanding the market before the entrance in market, during internship we see practically implementations of our knowledge so we can say that internship program is a good fortune for all of the students during their studies. Because it’s a initial plate form during our study to analyze the market situations. Although there were some restrictions during but I tried my best to full fill the purpose and objective of the study. CHAPTER # 02
NBP AND ITS ROLES & FUNCTIONS Introduction: In this chapter we will discuss about organization and also about its performance, its roles in development of Pakistan mean how much part of organization in development that is it participative or not? We will also discuss function of organization in Pakistan. 2. 1 overall respective sectors in Pakistan National Bank of Pakistan is the largest commercial bank operating in Pakistan. Its balance sheet size surpasses that of any of the other banks functioning locally. It has redefined its role and has moved from a public sector organization into a modern commercial bank.
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 (in places where SBP does not have a presence) 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, as a corporate citizen. | | | National Bank of Pakistan is today a progressive, efficient, and customer focused institution. It has developed a wide range of consumer products, to enhance business and cater to the different segments of society. Some schemes have been specifically designed for the low to middle income segments of the population. These include NBP Karobar, NBP Advance Salary, NBP Saiban, NBP Kisan Dost, NBP Cash and Gold. | It has implemented special credit schemes like small finance for agriculture, business and industries, administrator to Qarz-e-Hasna loans to students, self employment scheme for unemployed persons, public transport scheme.
The Bank has expanded its range of products and services to include Shariah Compliant Islamic Banking products. For the promotion of literature, NBP recently initiated the Annual Awards for Excellence in Literature. NBP will confer annual awards to the best books in Urdu and in all prominent regional languages published during the defined period. Patronage from NBP would help creative work in the field of literature. The Bank is also the largest sponsor of sports in Pakistan. It has provided generously to philanthropic causes whenever the need arose.
It has taken various measures to facilitate overseas Pakistanis to send their remittances in a convenient and efficient manner. In 2002 the Bank signed an agreement with Western Union for expanding the base for documented remittances. More recently it has started Electronic Home Remittances Project. This project introduces technology based system to handle inward remittances efficiently, by ensuring that the Bank’s branches keep a track of the remittance received from abroad till its final receipt.
A number of initiatives have been taken, in terms of institutional restructuring, changes in the field structure, in policies and procedures, in internal control systems with special emphasis on corporate governance, adoption of Capital Adequacy Standards under Basel II framework, in the upgradation of the IT infrastructure and developing the human resources. National Bank of Pakistan has built an extensive branch network with 1250 branches in Pakistan and operates in major business centre abroad. The Bank has representative offices in Beijing, Tashkent and Toront. It has agency arrangements with more than 3000 correspondent banks worldwide.
The Bank’s financial performance has been remarkable. In 2006, total assets are estimated at Rs635 billion, while deposits have grown to nearly Rs502 billion. Pre-tax profit rose to Rs26 billion. Earnings per share have jumped to Rs24. 01 in 2006. The increase in profit was achieved through strong growth in core banking income. Interest income increased by Rs10 billion through growth in the loan portfolio as well as increase in spreads. Advances increased by Rs48 billion to Rs316 billion. The Bank maintains a sound loan portfolio diversified in nature to counter the risk of credit concentration.
It ranges from providing credit to the un-banked market segment under NBP Karobar, to small and medium enterprises, to agricultural loans, to corporate customers. National Bank has earned recognition and numerous awards internationally. It has been the recipient of The Bank of the Year 2001, 2002, 2004 and 2005 Award by The Banker Magazine, the Best Foreign Exchange Bank –– Pakistan for 2004, 2005, 2006 and 2007, Global Finance, Best Emerging Market Bank from Pakistan for the year 2005, Global Finance, Kissan Time Awards – 2005 for NBP’s services in the agriculture field.
It is listed amongst the Region’s largest banks and also amongst the largest banks in South Asia 2005, The Asian Banker. It has also been presented a Recognition Award –– 2004 for having a Gender Sensitive Management by WEBCOP AASHA besides other awards. | | 2. 2 Role of the organization in Pakistan NBP is playing a vital role in development of Pakistan; NBP is making a pioneer role in development of agriculture sector, which is the main production sector in Pakistan. As we all knows that agriculture sector is major part of our exports e. g. otton, sugar, rice, wheat etc. so its helps to earn major part of foreign exchange through our exports. The nature of responsibilities of the Bank is different and unique from other banks/financial institutions. The bank also handles treasury transactions for the Government of Pakistan as an agent to the State Bank of Pakistan for handling provincial/Federal Government receipts and payments on their behalf. The National Bank of Pakistan has also played an important role in financing the country’s growing trade, which has expanded through the years as diversification.
Products of NBP: Unprecedented Safety – Unprecedented Return| Premium Aamdani Home Page| Unprecedented Safety – Unprecedented Return| Premium Saver Home Page| President’s Rozgar Scheme – Easy financing for self employment| Karobar Home Page| Affordable, Flexible & Convenient home financing for all| Saibaan Home Page| Take upto 20 Advance Salaries – Affordable Installations from 1 – 60 months| Advance Salary Home Page| One Card does it all – ATM plus Debit Card in one| Cash Card Home Page| Invest with Confidence – Marginal Finance Facility|
Investor Advantage Home Page| Meet your need for ready cash against your idle gold jewelry with no minimum limits| Cash n Gold Home Page| NBP KISAN Taqat| Kisan Taqat Home Page| NBP’s affordable agricultural program offers you a wide range of financing| Kisan Dost Home Page| NBP’s Internet Based Home Remittence Service| Pak Remit Home Page| 2. 3 Overall organization & functions of organization in Pakistan Basically NBP is surviving as a major shareholder of financial sector in Pakistan. NBP is in the top ten financial institutions in Asia.
NBP is surviving in less human force with modern IT equipment to meet all challenges of the time and it is the biggest financial earning unit in Pakistan. Its profitability is higher than other banks. Basically NBP is the institution of lower middle class and middle class of the country. People feel quite relax while dealing with it. Functions of National Bank of Pakistan The National Bank of Pakistan a commercial bank generally makes advances for a period not exceeding one year, except in case of small and medium industries for which advance may be made for a maximum period of five years.
The bank makes not only against the security of stocks and goods hypothecated or pledged to the bank, but also against documents of goods and properly, shares are various joint stock companies, Government securities, Insurance policies deposits receipts, etc. The margin and rate of interest are determined by several factors including the type of security the size of loan and the honor of the party. The Bank is authorized to carry on kinds of banking business and is empowered to make loans. It has also undertaken special financing operations connected with Government prices support scheme.
The bank also gives advances loans, especially for agricultural products, such as cotton etc. It also safeguards the valuable articles of people. It also arranges training programs for Bank officials. It participates in procurement of seasonal crops e. g. wheat, rice, cotton, sugar cane, etc. It also provides credit facilities to small industrial units agriculture sectors as per credit mandatory targets fixed by the State bank of Pakistan. Sometimes NBP is performing as State Bank of Pakistan in the Dist. Where State Bank of Pakistan is not situated.
It acts as treasury office & serve as Govt. collateral & Govt. disbursements. It deals as right hand in all kind of Govt. Financial activities; no any other can perform these activities. Services are outputs of the firm/organization, which are in intangible form & which are the backbones of any organization to earn profit? NBP offers the following services to the people as a representative of “STATE BANK OF PAKISTAN”. ? Collection of cheques and bill of exchange for its customers. ? Paying insurance premium, rent or other obligations of the customers. Collecting interests due, dividend, pensions and other sums due to customers. ? Transferring of money from place to place. ? Acting executors, trustees for the customers. ? Providing safe custody and jewelry, documents or securities. ? Issuing of travelers cheques and letter of credit to give credit facilities for travel. ? Purchasing shares for the customers. ? Accepting bills of exchange on behalf of customers. ? Undertaking foreign exchange business. ? Furnishing trade information and tendering advice to customers. ? Formulating operation policy guidelines for the banks. Laying down performance criteria for banks and taking steps for ensuring their observance. ? Evaluating the performance of the banks in the context of operational guidelines issued to the banks. ? Determining the areas of coordination of the banks. ? Formulating schemes under section of the act. ? Making recommendations to the federal government for the appointment of the president and members of the executive board. ? Analyzing and appraising financial statement including balance sheets and profit and loss accounts of banks and appointment of auditors of the bank. Conducting such surveys, inquiries and appraisals as may be necessary for the purpose of this act. ? Exercising and performing such powers and functions of the federal government under the act and such other functions as the federal government may assign to it. ? Establishing a research department or conduct banking research and in particular study overseas banking operation and problems of the agricultural financing. ? Establishing a central training institution for improving bank services. Coordinating the planning of the operations of nationalized commercial banks, and exercising general overall checks on the cost of their operations. ? Appointing lead banks and to apportion share of advance among the banks in respect of consortium loans financed by the nationalized commercial banks only, in accordance with resource availability of each bank. ? Watching the progress of the implementation of the rulings made in State Bank Annual Inspection Reports and the remedial and corrective measures taken by the banks with a view of removing imbalances 2. Organization Office In Which You Are Working Branch Details| | Branch Name| Village Karianwal| Branch Code| 2025| Address| Village Karianwala,Tehsil & District Gujrat| Phone| 053-3580787| Fax| —| Tehsil| Gujrat| District| Gujrat| Province| PUNJAB| SWIFT Code| —| Status| Offline| Email| [email protected] com. pk , [email protected] com. pk| I have completed internship in NBP Karianwala branch coded (2025). It was established 02 September, 2007. In this short period of time bank grow up to required level. In July 2009 NBP (2025) get best performance award in the area.
While it’s a small branch in Karianwala, but they are providing quality services to their customers, there are number of competitors in this area but it is the bank of Govt. and also due to its management performance, it is a well known branch in this local area. They are providing different services to their customer to attract them and to gain their trust and to build long term relationship with them. To fully satisfy their customer, and for efficient working, they assign different services to different departments. ? Cash Department ? Clearance Department ? Advance Department Remittance Department ? Western Union Department 2. 5 Summary Banking started in Pakistan after the courageous and developing decision of formulation of State Bank of Pakistan on July 30, 1948. Thereafter this sector has witnessed enormous growth. In 1974 banks were nationalized, in the hope that new era of growth could be achieved through it. However the process is reverse since 1991, up till now MCB, ABL, and UBL have been privatized and HBL is in the process of its privatization and NBP is a just bank in banking industry which is under regulation of Govt.
Banks acts as financial agents to their customer; in return they get reward for their services. Banks play important role in development of society. A strong economy must have a good banking system. In this chapter we seen NBP importance and functioning through which I concluded that it is playing a vital role in development of banking sector in Pakistan as well as in country. CHAPTER # 03 INTRODUCTION OF NBP Introduction: In this Chapter I am going to clarify the analysis of the organization that contains brief history of NBP, what is the management structure of NBP, how many departments are there, and their working.
Current staff members of the branch, their qualification and experience, salary structure, and promotion strategy. What are the responsibilities of their employees, incentives and motivation methods. Working hours of the organization, physical facilities (working environment) provided to the employees. How they communicated with in the organization. A critical analysis of the branch, its performance in terms of customer satisfaction, and at the end latest budget review of the branch. 3. 1. 1 Brief history of the organization:
The NBP was established vide NBP Ordinance No. XIX of November 9. 1949. British Govt. devalued its currency in September 1949, India devalued its rupees but Pakistan did not. It led to a crisis in trading between the two countries and India refused to lift the Pakistan Jute. To solve this problem i. e. to export jute NBP was established through an Ordinance of GOP. National Bank of Pakistan maintains its position as Pakistan’s premier bank determined to set higher standards of achievements.
It is the major business partner for the Government of Pakistan with special emphasis on fostering Pakistan’s economic growth through aggressive and balanced lending policies, technologically oriented products and services offered through its large network of branches locally, internationally and representative offices. National Bank of Pakistan is the largest commercial bank operating in Pakistan. Its balance sheet size surpasses that of any of the other banks functioning locally. It has redefined its role and has moved from a public sector organization into a modern commercial bank.
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 (in places where SBP does not have a presence) 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, as a corporate citizen.
National Bank of Pakistan has built an extensive branch network with 1250 branches in Pakistan and operates in major business centre abroad. The Bank has representative offices in Beijing, Tashkent, Chicago and Toronto. It has agency arrangements with more than 3000 correspondent banks worldwide. Its subsidiaries are Taurus Securities Ltd, NBP Exchange Company Ltd, NBP Capital Ltd, NBP Modaraba Management Company Ltd, and CJSC Bank, Almaty,Kazakhstan .
The Bank’s joint ventures are, United National Bank (UK), First Investment Bank and NAFA, an Asset Management Company (a joint venture with NIB Bank & Fullerton Fund Management of Singapore). The Bank’s financial performance has been remarkable. In 2006, total assets are estimated at Rs635 billion, while deposits have grown to nearly Rs502 billion. Pre-tax profit rose to Rs26 billion. Earnings per share have jumped to Rs24. 01 in 2006. The increase in profit was achieved through strong growth in core banking income. Interest income increased by Rs10 billion through growth in the loan portfolio as well as increase in spreads.
Advances increased by Rs48 billion to Rs316 billion. The Bank maintains a sound loan portfolio diversified in nature to counter the risk of credit concentration. It ranges from providing credit to the un-banked market segment under NBP Karobar, to small and medium enterprises, to agricultural loans, to large corporate customers. The Bank has also played an important role in financing the country’s growing trade, which has expended through the years as diversification took place. Today the Bank finances import/export business to the tune of Rs. 62. 17billion, whereas in 1960 financing under this head was only Rs. 1. 4billion. The field is being de-layered to improve customer services and enable faster decision making. As a result of this de-layering zones have been eliminated and the numbers of regions have been increased. Organizational hierarchy at the regional level has been restructured and operational and business activities have been completely separated. This separation will improve communication, decision making and promote teamwork. For the third consecutive year, the Bank is recognized as the best Bank in Pakistan for the year 2004 by the prestigious periodical. “The Banker” UK (a subsidiary of Financial Times Group).
VISION To be the pre-eminent financial institution in Pakistan and Achieve market recognition both in the quality and delivery of service as well as the range of product offering. MISSION STATEMENT 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 stakeholders value • Discharging our responsibility as a good corporate citizen of Pakistan and in countries where we operate.
VALUES NBP aim to be an organization that is founded on… ? Growth through creation of sustainable relationships with our customers. ? Prudence to guide our business conduct. ? A national presence with a history of contribution to our communities. ? NBP shall work to… ? Meet expectations through Market-based solutions and products. ? Reward entrepreneurial efforts. ? Create value for all stakeholders. NBP aim to be peopling who… ? Care about relationships. ? Lead through the strength of our commitment and willingness to excel. Practice integrity, honesty and hard work. We believe that these are measures of true success. NBP have confidence that tomorrow we will be… ? Leaders in our industry. ? An organization maintaining the trust of stakeholders. ? An innovative, creative and dynamic institution responding to the changing needs of the internal and external environment OBJECTIVES Strong emphasis has been laid upon training of branch officers to better equip them for marketing of retail banking products. Initiatives on similar lines are being launched for the SME sector.
In future NBP is going to introduce modern banking services to keep pace with the competition and more important our customer needs. These are as follows: ? Debit cards ? Internet banking ? Call centers ? Mobile banking MILESTONES ? “Best Emerging Market Bank from Pakistan” for the year 2005 ‘Global Finance’ USA, May 2005 ? NBP is one of the “Top 100 Banks of Asia” ‘Euro money’ UK, March 2005 ? Bank of the year 2001, 2003&2004 for Pakistan ‘The Banker’ financial times Group UK. ? Best Foreign Exchange Bank in Pakistan ‘global Finance’ USA, March 2004 BOARD OF DIRECTORS
NBP, Board of Directors list consist the following members and their designation. NAME| DISIGNATION| Ali Raza| Chairman & President| Mian Kausar Hameed| Director| Mr. Ibrar A. Mumtaz| Director| Mr. Tariq Kirmani| Director| Mrs. Haniya Shahid Naseem| Director| Ms. Nazrat Bashir| Director| Mr. Ekhlaq Ahmed| Director| During my stay in National Bank of Pakistan, I found it as among one of the best banks in Pakistan. As an internee, I enjoy working there . NBP has a very cooperative staff . I worked there in very congenial and supportive environment. The staff over there is always being ready to guide about bank and its systems.
According to its financial statements it is on a way to progress. It announces 12 billion profits for the year of 2004. Due to its miraculous working government bestowed its president Syed Ali Raza with “sitara-e-imtiaz”in august2005. Moreover according to Euro money magazine the leading journal of UK in the month of March 05 declared: “NBP is the only Pakistani bank which has been Ranked among the top100 banks of Asia” ORGANIZATIONAL CHART OF NBP DESIGNATIONS FO HIGHER LEVEL OFFICE: PRESIDENT SENIOR EXECUTIVE VICE PRESIDENT GRADE 22 EXECUTIVE VICE PRESIDENT GRADE 21 VICE PRESIDENT GRADE 20
ASSISTANT VICE PRESIDENT GRADE 19 GRADE I OFFICER GRADE 18 GRADE II OFFICER GRADE 17 GRADE III OFFICER GRADE 16 3. 1. 2 Relationship of head office to the branch offices: Relationship of head office with branch is linked through regional head quarter. If branch face any difficulty or require any thing which it needed they communicate to regional head quarter and then regional head quarter communicates with head office. 3. 1. 3 DEPARTMENTATION OF NBP The Departments functioning at NBP as briefed by its concerned officers during the internship are: Cash Department ? Clearance Department. ? Remittance Department. ? Advances Department. CASH DEPARTMENT Cash department performs the following functions Receipt The money, which either comes or goes out from the bank, its record should be kept. Cash department performs this function. The deposits of all customers of the bank are controlled by means of ledger accounts. Every customer has its own ledger account and has separate ledger cards. Payments It is a banker’s primary contract to repay money received for this customer’s account usually by honoring his cheques. Cheques and their Payment The Negotiable Instruments.
Act, 1881 “Cheque is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand”. Since a Cheque has been declared to be a bill of exchange, it must have all its characteristics as mentioned in Section 5 of the Negotiable Instruments Act, 1881. Therefore, one can say that a Cheque can be defined as an: “An unconditional order in writing drawn on a specified banker, signed by the drawer, requiring the banker to pay on demand a sum certain in money to, or to the order of, a specified person or to the bearer, and which does not order any act to be done in addition to the payment of money”.
CLEARANCE DEPARTMENT A clearinghouse is an association of commercial banks set up in given locality for the purpose of interchange and settlement of credit claims. The function of clearinghouse is performed by the central bank of a country by tradition or by law. In Pakistan, the clearing system is operated by the SBP. If SBP has no office at a place, then NBP, as a representative of SBP act as a clearinghouse. After the World War II, a rapid growth in banking institutions has taken place. The use of cheques in making payments has also widely increased.
The collection as settlement of mutual obligations in the form of cheques is now a big task for all the commercial bank. When Cheque is drawn on one bank and the holder (payee) deposits the same in his account at the bank of the drawer, the mutual obligation are settled by the internal bank administration and there arises no interbank debits from the use of cheques. The total assets and total liabilities of the bank remain unchanged. In practice, the person receiving a Cheque as rarely a depositor of the cheque at the same bank as the drawer.
He deposits the cheque with his bank other than of payer for the collection of the amount. Now the bank in which the cheque has been deposited becomes a creditor of the drawer’s bank. The depositor bank will pay his amount of the cheque by transferring it from cash reserves if there are no offsetting transactions. The banks on which the cheques are drawn become in debt to the bank in which the cheques are deposited. At the same time, the creditors’ banks receive large amounts of cheques drawn on other banks giving claims of payment by them.
The easy, safe and most efficient way is to offset the reciprocal claims against the other and receive only the net amount owned by them. This facility of net interbank payment is provided by the clearinghouse. The representatives of the local commercial banks meet at a fixed time on all the business days of the week. The meeting is held in the office of the bank that officially performs the duties of clearinghouse. The representatives of the commercial banks deliver the cheques payable at other local banks and receive the cheques drawn on their bank.
The cheques are then sorted according to the bank on which they are drawn. A summary sheet is prepared which shows the names of the banks, the total number of cheques delivered and received by them. Totals are also made of all the cheques presented by or to each bank. The difference between the total represents the amount to be paid by a particular bank and the amount to be received by it. Each bank then receives the net amount due to it or pays the net amount owed by it. In-Word Clearing Books The bank uses this book for the purpose of recording all the cheques that are being received by the bank in the first clearing.
All details of the cheques are recorded in this book. Out-Word Clearing Book: The bank uses outward clearing register for the purpose of recording all the details of the cheques that the bank has delivered to other banks. ADVANCES DEPARTMENT Advances department is one of the most sensitive and important departments of the bank. The major portion of the profit is earned through this department. The job of this department is to make proposals about the loans. The Credit Management Division of Head Office directly controls all the advances. As we known bank is a profit seeking institution.
It attracts surplus balances from the customers at low rate of interest and makes advances at a higher rate of interest to the individuals and business firms. Credit extensions are the most important activity of all financial institutions, because it is the main source of earning. However, at the same time, it is a very risky task and the risk cannot be completely eliminated but could be minimized largely with certain techniques. Any individual or company, who wants loan from NBP, first of all has to undergo the filling of a prescribed form, which provides the following information to the banker.
Name and address of the borrower. a) Existing financial position of a borrower at a particular branch. b) Accounts details of other banks (if any). c) Security against loan. d) Exiting financial position of the company. And Signing a promissory note is also a requirement of lending, through this note borrower promise that he will be responsible to pay the certain amount of money with interest. Principles of Advances There are five principles, which must be duly observed while advancing money to the borrowers. a. Safety b. Liquidity . Dispersal d. Remuneration e. Suitability Forms of Loans In addition to purchase and discounting of bills, bankers in Pakistan generally lend in the form of cash finance, overdrafts and loans. NBP provides advances to different people in different ways as the case demand. a) Cash Finance This is a very common form of borrowing by commercial and industrial concerns and is made available either against pledge or hypothecation of goods, produce or merchandise. In cash finance a borrower is allowed to borrow money from the banker up to a certain limit, either at once or as and when required.
The borrower prefers this form of lending due to the facility of paying markup/services charges only on the amount he actually utilizes. If the borrower does not utilize the full limit, the banker has to lose return on the un-utilized amount. In order to offset this loss, the banker may provide for a suitable clause in the cash finance agreement, according to which the borrower has to pay markup/service charges on at least on self or one quarter of the amount of cash finance limit allowed to him even when he does not utilize that amount. b) Overdraft/Running Finance This is the most common form of bank lending.
When a borrower requires temporary accommodation his banker allows withdrawals on his account in excess of the balance, which the borrowing customer has in credit, and an overdraft thus occurs. This accommodation is generally allowed against collateral securities. When it is against collateral securities it is called “Secured Overdraft” and when the borrowing customer cannot offer any collateral security except his personal security, the accommodation is called a “Clean Overdraft”. The borrowing customer is in an advantageous position in an overdraft, because he has to pay service charges only on the balance outstanding against him.
The main difference between a cash finance and overdraft lies in the fact that cash finance is a bank finance used for long term by commercial and industrial concern on regular basis, while an overdraft is a temporary accommodation occasionally resorted to. c) Demand Financing/Loans When a customer borrows from a banker a fixed amount repayable either in periodic installments or in lump sum at a fixed future time, it is called a “loan”. When bankers allow loans to their customers against collateral securities they are called “secured loans” and when no collateral security is taken they are called “clean loans”.
The amount of loan is placed at the borrower’s disposal in lump sum for the period agreed upon, and the borrowing customer has to pay interest on the entire amount. Thus the borrower gets a fixed amount of money for his use, while the banker feels satisfied in lending money in fixed amounts for definite short periods against a satisfactory security. REMITTANCE DEPARTMENT Remittance means a sum of money sent in payment for something. This department deals with either the transfer of money from one bank to other bank or from one branch to another branch for their customers.
NBP offers the following forms of remittances. a) Demand Draft b) Pay Order c) Mail Transfer Demand Draft Demand draft is a popular mode of transfer. The customer fills the application form. Application form includes the beneficiary name, account number and a sender’s name. The customer deposits the amount of DD in the branch. After the payment the DD is prepared and given to the customer. NBP officials note the transaction in issuance register on the page of that branch of NBP on which DD is drawn and will prepare the advice to send to that branch.
The account of the customer is credited when the DD advice from originating branch comes to the responding branch and the account is debited when DD comes for clearance. DD are of two types. a) Open DD: Where direct payment is made. b) Cross DD: Where payment is made though account. NBP CHARGES FOR DD I. Up to Rs. 50,000/- is Rs 50/- only II. Over Rs. 50,000/- is 0. 1% Pay Order www. qundeel. com Pay order is made for local transfer of money. Pay order is the most convenient, simple and secure way of transfer of money.
NBP takes fixed commission of Rs. 25 per pay order from the account holder and Rs. 100 from a non-account holder. Mail Transfer When the money is not required immediately, the remittances can also be made by mail transfer (MT). Here the selling office of the bank sends instructions in writing by mail to the paying bank for the payment of a specified amount of money. Debiting to the buyer’s account at the selling office and crediting to the recipient’s account at the paying bank make the payment under this transfer. NBP taxes mail charges from the applicant where no excise duty is charged.
Postage charges on mail transfer are actual minimum Rs. 40/- if sent by registered post locally Rs. 40/- if sent by registered post inland on party’s request. GENERAL BANKING General banking section consists of following sub sections: ? Inquiry section ? Inland Remittances ? Deposits ? Cash Department ? Utility Bills INQUIRY SECTION ? Account opening ? Issuing Cheque Book ? Term Deposits ? Travelers Cheque (TC) 3. 1. 4 Offices or field offices: NBP karianwala (2025) is a small branch working under regional office. There is no any branch working under NBP.
But NBP facilitating their customers through offering different services like hajj application, advancing loans at lower rate of returns etc. Branch Network of National Bank of Pakistan With the geographical development of its branches, the National Bank of Pakistan has been able to extend its services to a much larger number of Pakistanis all over the country. Today the Bank has more than 8. 8 million accounts & Bank maintains its presence in all the major financial centers of the world through its 22 (2008) overseas branches and 5 representative offices.
Bank’s role 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. Presently the National Bank of Pakistan is divided into various Groups headed by SEVPs/EVPs. Its field operations are controlled by 29 regions ( Annexed II) reporting to as many Regional chiefs, who control 40 zones and 15 single Branch zones headed by Zonal Chiefs; 12 orporate branches and 1249 domestic branches headed by Branch Managers. The bank has 12 SWIFT local centers. 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. Bank has also a presence on the internet. The National Bank of Pakistan has 156 online branches throughout the country. It has modernized its services by installing Automated Teller Machines (ATMs) called “CASH LINK” at selected branches.
The Head Office formulates and implements the strategic, management and operational policies. The Branch network of National Bank of Pakistan is divided into following categories: ? ATM network ( Total ATMs 101 & Total ATMs machines 104) ? Domestic network ( 1249 Branches) ? Islamic network ( 5 Branches) ? Online network ( 156 Branches) ? Overseas network ( 29 Branches) ? Swift network ( 12 Branches) ? Customer Facilitation Centers (6 Customer Facilitation Centers) ? Agriculture branches ( 825 Branches) TYPES OF BRANCHES
There are a lot of different branches of National Bank of Pakistan. We explain them one by one. ? There are main branches in every city. In one city there is only one main branch, it is directly under the zonal office. ? Then there are commercial branches. These are the ordinary branches and are in the commercial areas such as the Mall Road Branch. ? The Industrial Branches are exclusively in industrial zones. ? There are also Residential Branches. These are exclusively in residential colonies. ? Another type is the Mixed Branch such as civil secretariat branch. Every kind of work is done. There are also Project Branches created for specific purposes i-e the project and are at the site. ? Another unique type is the Model Branch. No other bank in Pakistan has these. In these branches all the work is done by the officers. Even the officers sit on the counters. Model Branches are in Karachi, Lahore and Islamabad. 3. 2 Current staff: The branch staff is consisting of 6 members. Which include manager, cashier, and four security guards. Staff of bank is too much cooperative with each other as well as with customers. They try their best to provide best services to their customers according to customer’s requirements. . 2. 1 Current staff of branch according to qualification and experience Current staff of the branch is not well educated but they have no. of year’s experience which help them to achieve their targets effectively and efficiently. Manager qualification is B. Sc in Math, Stats, and Economics with experience of 14 years. Cashier qualification is B. A with 19 years experience. And in guards one’s qualification is metric and remaining is under metric. 3. 2. 2 Training Received By No. Employees National bank of Pakistan has its national and development centers and 4 staff collages at: – 1. Karachi 2. Lahore 3. Peshawar 4.
Islamabad In these centers and staff colleges, the banking training is provided to the officers, managers, and to potential managers. It arranges courses and seminars for middle and higher management in all. Each year almost 1500 persons receive training over there. Each employee of NBP before starting its work practically in bank and after selection as employee in bank get training and then come on job properly. 3. 2. 3 Workload Workloads means how many hours they work in bank or facilitate the customers on daily basis . Here as we are concerned with National bank of Pakistan, they facilitate their customers 9am to 1. 0pm and done their work 7hours according to official requirement which includes done post pone work, closings and adjusting balances etc. 3. 2. 4 Salary structure Salary structure includes performance bonuses, incentives and basic salary. The salary structure of NBP is based on seniority plus performance base. Employees get their fixed salary plus additional bonuses and incentives according to their performance. 3. 2. 5 Promotion system NBP promotion system based on performance and experience of employees. Manager promoted by his/her performance and through increase in sales.
While lower management promotion system differ than higher management. Promotion system of NBP varies with the designations or level of employees jobs. As in Karianwala (2025) if the manager perform well on continuous basis that is terms of sales and deposits then he will be promoted. But when we talk about the promotion of lower level staff then they promoted on their deposits plus operational performance, that how well they manage their daily operational activities. 3. 2. 6 Incentives & motivation If the employees take deposit for the bank, they will be given incentives in the percentage of amount taken as deposit.
For instance, if Saving Officers or any other employees bring deposit, they are given incentives of some % of the total amount which is given to them with monthly income; these are the motivational factors for the employees as well as incentive. If loan officers perform well their duties means that screening of clients in well and efficient manner, they are appreciated by the Branch Manager and by completion of screening, every incentive is added in their monthly salary, so these are also the motivational factors for the employees working in NBP. 3. 2. 7 Responsibilities
Manager operational is responsible for all affairs of branch. He is answerable for all assign tasks and he is totally answerable as internal controller of the branch. He is responsible to take duty from all employees any lapses, causes is negligence. 3. 3 Critical analysis of the branch NBP Karianwala branch It is true that bank is trying to adopting computerized system but their most of staff is unable to use computerized system or not familiar with computer. There are no proper facilities in bank for customer. No proper facilities for old age people, they face so many problems in bank.
There is no any shop for bank staff so that they can bring something for themselves or their guests in break time. Their all system is manual so much time waste in different process. There is also an electricity problem in this bank. There is reduction of staff in some departments, so they complete almost their work from internees. There is reduction of law & order, so sometimes branch faces so many problems especially in the dates of pensions. All types of pensioners are treated same day that’s why this creates problems. 3. 3. 1 Communication
Communication system between branch employees is very good and admiring. They easily communicate their problems with each other The employees of NBP (2025) are all linked with each other from top to lower management. So when any problem arises in branch they just discuss with each and solve it in few minutes. We can say that there is open and simple communication system within branch. But there is one flaw that there is high communication gap between head office and branches because it take a lot time to reach in head office and in taken approval. 3. . 2 Hiring system The hiring system of employees is conduct by two ways; firstly, the employee is interviewed by the branch manager and then his/ her CV is transferred to the head office and he is again interviewed and give test to the Human Resource Manager of head office or regional office and after fulfilling the whole requirements of policies given by the Head Office, he or she is selected as an employee for the branch where he or she is needed. 3. 3. 3 Morale of staff There is a good morale in staff of the whole branch, the staff covenant with ne another in a good way and there is no concept of jealousy and leg pulling among staff. They behave with each other and also with me in a good way during the period of my internship and there is just like a family atmosphere. 3. 3. 4 Physical facilities The NBP branch of Karianwala is not well established, no air conditioning facility is available in the whole branch but there are separate rooms for officers. Cash officers do not have Computer system on their tables, there is also shortage of office equipment on their tables, he has just calculator as helping material for huge amount of calculations. 3. 4 Performances:
There are two types of performance measurement one of them is customer satisfaction and other is in terms of sales (number of account averagely open in a month). In term of quality First I am going to focusing on customer satisfaction, in NBP (2025) all employees were very experienced people so, they always deal the customer politely and in very impressive way. That’s why they can easily attracting and retaining the customer in this competitive environment. Only due to customer satisfaction and trust on bank products NBP (2025) achieve very best performance with respect to its operational time or activation time.
In term of quality Secondly sales or no. of Accounts is based on the how much a banker can satisfy and attract the customer. In NBP in which I done my internship its age is 2 years but its customer volume spreads to 1300, which is remarkable according to budget point of view. Bank not just achieved its budgeted target fixed by higher management but also extend them up to 65% of fixed earning targets. 3. 5 Latest budget review Deposit target has been increase up to 63% of the base (last financial year date) & advances target has been fixed 45% of the base.
Earning target has been increase fixed up to 35% of the base. 3. 6 Summary During my stay in National Bank of Pakistan, I found it as among one of the best banks in Pakistan. As an internee, I enjoy working there. NBP has a very cooperative staff . I worked there in very congenial and supportive environment. According to Euro money magazine the leading journal of UK in the month of March 05 declared: “NBP is the only Pakistani bank which has been Ranked among the top100 banks of Asia” It offers very good package of salary and benefits to its employees. Management is trying to regulate a system for promotions.
It has both contract as well as regular employees as it beliefs on the use of strangeness for the cross fertilization of ideas. It has unlimited offers for its employees in the areas of economic well being &development. National bank of Pakistan gives many benefits and allowances to their employees (executives, officers, clerical & non clerical staff). CHAPTER # 04 NBP POLICIES & STRATEGIES Introduction This chapter include the polices and strategies of NBP, that how they work and what are the basic rules for the accounting record assigned by SBP.
The last part of the chapter consisted on success of NBP through its policies and strategies. 4. 1 Policies Policy is a projected programme consisting of desired objectives and the means to achieve them. Following are some policies implemented by NBP. ? Provide job satisfaction to their employees. ? Allow the employees to participate in the decisions that affect them. ? Good performance reward is also in the form of hajj and umrah package. ? Use goals and feedback. ? Developing a benefit package. ? HR policies are in the form of circulars and instruction forms. Organizing 6 weeks internship for the students. ? NBP has no gender bias. 4. 2 Strategies Five year plan approved by BOD is hollow and does not address any serious thinking on: 1. Development required for serving major sectors of the economy 2. Productivity improvement and benchmarking with the competition 3. Bringing the institution on international banking landscape in the coming five years, not to speak of the seven years which the current management has already served. 4. Inducting and leveraging specialized human capital 5. Infrastructure to support planned growth and vision
Even this plan is not cascaded down the line to align the annual performance, targets and resultantly actions and tasks with the grand plan. Now in its second year, this plan. 4. 3 Successes After effectively implementing the policies and strategies NBP had achieve its goals efficiently and effectively in previous year performance. In below there are number of successes which has been achieve by NBP. “Best Foreign Exchange Bank 2008” awarded by world’s leading financial journal “Global Finance. ” Stable AAA/A-1+(Triple A/A-One Plus) rating (Standalone Basis) by JCR-VIS (July 2007) Best Return on Capital for 2006 amongst all Banks in Asia . “ Banker Magazine” in July 2007 World’s leading financial journal, “Global Finance” has named NBP as the Best Emerging Market Bank from Pakistan for the year 2006 . “Best Foreign Exchange Bank – Pakistan” award for the year 2006 by world’s leading financial journal “Global Finance ”. Due to consistent improvement in NBP’s Core Profitability , Asset Quality and Economic Capitalization in recent years ,Moody’s Investors Service upgraded the Financial Strength Rating (FSR) rom E+ to D-, in November 2005 . “ Best Foreign Exchange Bank – Pakistan” award for the year 2005 by world’s leading financial journal “Global Finance ”. Best Bank – Pakistan” award for the year 2005 by world’s leading financial journal “Global Finance ”. The Asian Banker, a reputable financial journal, has published the report of its research project on the ranking of 300 of Asia ‘s Strongest Banks based on a 11-Dimensional Dynamic Scoring Criteria has adjudged National Bank of Pakistan as the Strongest Bank in Pakistan . On the basis of overall financial performance during 2004, NBP has been listed “Amongst top 1000 banks in the world” and “ Number 1 Bank in Pakistan” by the prestigious “Banker Magazine” in its issue of July 2005 .
The “Banker Magazine” in July 2005 recognized NBP as the 10th Best Bank in terms of ‘Profit on Capital’ in the world . “ Bank of the Year” awarded for the year 2005 by the world renowned “The Banker” magazine owned by the Financial Times Group, London. On an all Pakistan basis National Bank of Pakistan was awarded the “Kissan Times Award” for the year 2005 by the Prime Minister , Mr. Shaukat Aziz, for its services in the Agriculture Sector . World’s leading financial journal, “Global” “ Bank of the Year” award for the year 2004 by the world renowned “ The Banker” magazine owned by the Financial Times Group , London . Euromoney” Magazine, a leading and prestigious journal, published from London , UK , in its issue of March 2005 has published Moody’s Investors Service rankings in which NBP is the only Pakistani bank which has been ranked among the Top 100 banks of Asia for it performance in the fiscal year 2003 WEBCOP-AASHA, an alliance against gender discrimination at workplace, presented aRecognition Award to National Bank of Pakistan on December 18, 2004 for having a Gender Sensitive Management .
In May 2004, NBP’s standalone long-term rating was upgraded by JCR-VIS Credit Rating Agency to AA (double A) from AA -( double A minus) with “stable outlook”, while standalone short-term rating was maintained at A-1+(A one plus). This is now the best rating for a local commercial bank in Pakistan The “Banker Magazine” in July 2003 recognized NBP as thebank with the highest return on capital in Asia and No. 8 in the world. President’s Awards: 1) Mr. S.
Ali Raza, Chairman & President, NBP was awarded “The Asian Banker Leadership Achievement Award 2007” by Asian Banker ( an internationally reputed Financial Journal) in its issue of June 2007 2) Mr. S. Ali Raza Chairman & President, NBP, was conferred Sitara-i-Imtiaz by the President of Pakistan , General Pervaiz Musharraf on August 14, 2005 3) “ Business Week” of “The McGraw Hill Companies” in its July 11,2005 edition has adjudged Mr. S. Ali Raza, Chairman President, NBP as one of the twenty five Leaders of Asia at the & Forefront of Change and has identified them as Stars of Asia including the President of Indonesia. 4. Summary As NBP is enjoying the highest rating of ‘AAA’ in the industry assigned by M/s JCR-VIS Credit Rating Company Limited on a standalone basis i. e. without the benefit of the 75% government ownership. In addition to the highest credit rating in the banking sector NBP has received several awards from both local and foreign institutions of repute during 2008 including ‘Bank of the Year’ award given by the ‘The Banker’ magazine and the ’Best Foreign Exchange Bank in Pakistan’ awarded by ‘Global Finance’. NBP has a strong commitment towards the betterment of society and is fully aware of its social obligations and responsibilities.
NBP has always shown great generosity in times when a natural calamity strikes like the 2008 devastating earthquake in Balochistan or when it comes to rural development, children education and promotion of Sports. In 2008 NBP inaugurated its own built Sports club at Clifton NBP remains committed to the interest of all stake holders including its employees, owners, regulators and Pakistani nation. NBP has well defined strategy on where and how we want to proceed in the years to come. With the implementation of the new ‘Core Banking Package’, NBP will completely automate its functions which in turn will appreciably enhance work efficiency.
CHAPTER # 05 DIFFERENT ANALYSIS OF ORGANIZATION Introduction: This chapter consisted on different analysis of NBP. In this chapter I will analyze NBP through different perspectives, I will conduct different analysis to realize the actual financial position of NBP. 5. 1 SWOT ANALYSIS SWOT Analysis is a strategic planning method used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business venture. It involves specifying the objective of the business venture or project and identifying the internal and external factors that are favorable and unfavorable to achieving that objective.
If SWOT analysis does not start with defining a desired end state or objective, it runs the risk of being useless. A SWOT analysis may be incorporated into the strategic planning model. An example of a strategic planning technique that incorporates an objective-driven SWOT analysis is SCAN analysis. Strategic Planning, including SWOT and SCAN analysis, has been the subject of much research. ? Strengths: Attributes of the organization that is helpful to achieving the objective. ? Weaknesses: Attributes of the organization that is harmful to achieving the objective. Opportunities: External conditions that is helpful to achieving the objective. ? Threats: External conditions which could do damage to the business’s performance. Strengths: ? Advance salary product: ? It exists in the list of top 10 banks in the ASIA. ? It has the highest profit among the largest banks of the ASIA. ? Its paid-up capital is very high ? Very less uncertainty because of a Govt. bank ? High confidence due to higher capital investment. ? LC (letter of credit) is acceptable all over the world. ? Chest branches can supply cash on the behalf of state bank. Chest loans can be used for limited time ? Stake holder is Govt. of Pakistan. ? It holds the Govt. treasury. ? The biggest customer of NBP is Govt. of Pakistan. ? Work as corresponding of ASKARI bank ? Provide High packages to employees. ? Provide high staff benefits. ? Recruitment occurs after every year. ? MTO’s selection is planned till 2010. Weaknesses: ? The Major problem with NBP is its image as it is a Govt. bank so the vision of the customer is not positive about it. ? People think it will not provide them satisfactory services. In many branches management is not up to date. ? In small area’s branches employees have less education. ? Award and promotion policies are not implemented in all branches. ? There is no concept of job rotation ? Employees have low coordination level among each other. Opportunities: ? Advance salary for employees ? Employee benefits ? Pensions ? Award for employee performance ? Promotions ? Corporate planning learning. Threats: ? Turn out of employee ? Job security and Strugglers ? At a time do no. of jobs due to competitor. NBP have to do those jobs which have no loss and no profit because of their competition ? Customer dissatisfaction ? Slow actions on complains ? Political environment. 4. 2 PEST ANALYSIS It is very important that an organization considers its environment before beginning the marketing process. In fact, environmental analysis should be continuous and feed all aspects of planning. The organization’s marketing environment is made up of: 1. The internal environment e. g. staff (or internal customers), office technology, wages and finance, etc. 2. The micro-environment e. g. ur external customers, agents and distributors, suppliers, our competitors, etc. 3. The macro-environment e. g. Political (and legal) forces, Economic forces, Sociocultural forces, and Technological forces. These are known as PEST factors. Political: ? Privatization policy and deregulation. ? Impact of subsidized credit affecting and NCB’s. ? Employment practices, Unions, Associations. ? Political Interference and harassment. ? Incidents of high taxation on banking industry. Economical: ? Constraints in mobilization of public savings because of inflation. ? Staff cost. Operating cost. ? Bad debts Social & Cultural: ? Inadequate human resources. ? Cultural strain to savings. ? Defaulter’s lobby. ? Declining education and work ethics. ? Inadequate accountability. ? Adequate empowerment. Technological: ? Inadequate communication infrastructure. ? Inadequate computer facilities. ? Inadequate IT training 5. 3 Ratios analysis: Ratio Analysis enables the business owner/manager to spot trends in a business and to compare its performance and condition with the average performance of similar businesses in the same industry. To do this compare our ratios with the average of businesses similar to yours and compare your own ratios for several successive years, watching especially for any unfavorable trends that may be starting. Ratio analysis may provide the all-important early warning indications that allow you to solve your business problems before your business is destroyed by them. Ratio means “one number expressed in term of another a ratio is statistical yardstick by mean of which relationship between two or various figures can be compared or measured. Here we are going to explain the ratio analysis of NBP (bank) which is little bit different from other organizations.
Profitability Ratios: Profitability means “Measure of the ability of business to generate returns for the business or for the owner” or “Overall effectiveness of the management is known as profitability” Here we will calculate Solvency ratios of NBP to evaluate its financial position. To calculate this ratios we needed these items Operating profit, net profit, operating fixed assets, total assets, total investments with in business, operating fixed assets. Earnings Ratios| 2007| 2008| 2009| ROA| 2. 72%| 1. 96%| 2. 07%| ROE| 19. 20%| 14. 13%| 16. 41%| ROD| 3. 48%| 2. 54%| 2. 70%| Critical Analysis:
The earnings ratios of NBP were higher in 2007 but due to economic crisis return decreases but now the economic activities are accelerating that’s why the NBP returns also increases that Is the good symbol for the future of NBP Debt Management. Debt Management| 2007| 2008| 2009| Debt to Equity| 6. 05| 6. 22| 6. 94| Debt to Assets| 0. 86| 0. 86| 0. 87| Deposits times Capital| 5. 52| 5. 56| 6. 09| Critical Analysis These above ratios of NBP have no effect of recession and bank maintained as well as improves the above ratios that show the efficiency of the NBP activities. Liquidity Ratios Liquidity Ratios| 2007| 2008| 2009|
Earning Assets To Assets| 0. 75| 0. 74| 0. 75| Advance to Deposits| 0. 60| 0. 62| 0. 66| Critical Analysis Earning assets of the NBP almost have no effect of the world recession but the improvement in advances against the deposit reflects that the people of Pakistan have less money to deposit and they are encourage to get loan from the bank. Growth Rates Growth Rates| 2007| 2008| 2009| Profits After Tax| 11. 82%| -18. 78%| 17. 81%| Return on Assets| -2. 95%| -28. 71%| 5. 64%| Net Interest income(before provision)| 11. 53%| 10. 20%| 3. 78%| Critical Analysis This table of ratios is telling about the future of banking sector in Pakistan.
In 2007 all the world was under the recession and it also affects the economy of Pakistan. Banks are the industry that was hardly hit by this recession and the profits of all banks convert into negatives but in 2009 hope for bright future arises because now the NBP come back on the track and generating the profit. Market Value Ratio Market Value Ratio| 2007| 2008| 2009| Average Share Price for the Year| 251. 46| 174. 76| 72. 60| Analysis As the above data shows the average price of shares of NBP is very high in 2007 but later it trend to decline and in 2009 the price of share is less than three times as compare to the 2007.
It is due to the economic recession that effect badly to the banking sector. Solvency Ratios: Solvency Ratios| 2007| 2008| 2009| Equity to Assets| 14. 19%| 13. 85%| 12. 60%| Equity to Deposits| 18. 13%| 17. 98%| 16. 43%| Earning Assets to Deposits| 0. 96| 0. 96| 0. 97| Critical Analysis Due to the recession the equity to assets and to deposits ratios of the NBP are declining over the period but the earning assets to deposits ratio was maintained by the bank and in 2009 it is rising. Composition of Earning Assets| 2007| 2008| 2009| Lending to Financial Institutions| 4. 23%| 3. 29%| 2. 80%| Investments| 33. 4%| 32. 51%| 29. 58%| Advances| 62. 43%| 64. 20%| 67. 63%| Critical Analysis This section of NBP ratios explains the portfolio of the NBP, explaining that NBP portion of advances in the portfolio has increases and others have the decreasing trend. 5. 4 Summary The summary of is SWOT Analysis, PEST Analysis and ratios Analysis of NBP. To know how NBP can compete well and how to maintain its position in the market as a best services organization. In conclusion we can say that the global economic environment has changed, creating challenges and opportunities for the world’s policy makers.
The privatization drive has emerged as a strong tool of transformation, which is being recognized as an essential ingredient for the economic wellbeing. Now there is a greater awareness that in an interdependent world all countries gain individually, these countries should be a positive contributor to world economic growth as whole. Banks are playing very important role in the economic growth of the countries. N. B. P no doubts a positive contributor in this respect but I think there are certain points by adopting which can serve more effectively and efficiently. Those points are discussed in next chapter. CHAPTER # 6
RECOMMENDATIONS & SUGGETIONS INTRODUCTION NBP is an effectively operating and profit making organization and carrying out its activities under a specified system of procedure. The main regulatory body is State Bank of Pakistan, which provides policy guidelines and ensures that the money market operates on sound professional basis. While the head office specifies the whole procedure of function and operations. This procedure has been modernized with the passage of time with a view to streamline the approach and underlying procedure for effective overhauling of its own capabilities so as to bring them at par with international practices.
Here I am giving some suggestions, which in my view can add some input for efficiency and better performance of NBP as an organization in general and City branch in particular. The recommendations are as follows: ? Professional training NBP staff lacks professionalism. They lack the necessary training to do the job efficiently and properly. Although staff colleges in all major cities but they are not performing well. For this purpose these staff colleges should be reorganized and their syllabus should be made in such a way to help the employee understand the ever-changing global economic scenario.
Banking council of Pakistan should also initiate some programs to equip the staff with much needed professional training. ? Delegation of authority Employees of the bank should be given a task and authority and they should be asked for their responsibility. ? Performance Appraisal The manager should strictly monitor the performance of every staff member. All of them should be awarded according to their performance and result in the shape of bonuses to motivated and incite them to work more efficiently. ? Transfer Transfer is not properly carried out.
Some of the employees are continually serving at the same post. They are simply rotated at the same branch. Therefore it is recommended that evenly rotation of every employee should take place after every three years in different branches of the bank. ? Changes in Policies There should not be any abrupt policies change by the upper management, as this practice hurts the customer confidences in the bank. Government should make long-term policies ? Need of Qualified Staff Required, qualified staff should be provided to branch in order to improve the functioning of the branch.
Especially a telephone operator should be appointed. ? Utility Bill Charges Bank gets Rs. 10 to processes a utility bill, and it is very tire, tough and hard job. These charges should be increased to RS 15 per bill to enable the branch to cover their handling costs and make some profit. ? Link with the Head Quarter 100 major branches of NBP should established a direct link with the, head quarter In Karachi, through Internet or Intranet. This will make the functions and decision making of the management easier and convenient. ? Credit Card
National bank of Pakistan should start its operation in credit card. These cards are very helpful for the ordinary customer in general and the business people in particular. To make it more secure and to eliminate the misuse of it, the management is required to keep proper security against the card. ? Installing Validator and ATM Validator machine is used to count the currency notes and its installation will help to eliminate to counting errors and will save time. This branch is situated in the City, which is supported to be the hub of business activates.
In this area an auto teller machine (ATM) is the need of the hour businessmen can easily check their balance in the bank and also with draw their money conveniently. ? Clean Loans Clean loan or clean overdraft is the credit facility extended to the customers to the customers without any security. These types of small term loans should not be extended to anybody, because sometime these loans are provided to blue-eyed people of the management and they become a part of bad debts. ? Cash Financing In this mode of financing the amount of credit not utilized by the borrower is remained tax-free.
It is recommended that a small amount of interest should be charge on this amount as well because the bank gas kept-aside the amount for that borrower and cannot advance it anywhere.. ? Needs to be Flexible in credit Policy As mentioned earlier, NBP is very conservative in advances and loans policy. It reduces the investment opportunities. Also loans should be given to the small businessmen and the agriculture sector at the low markup rate. It should adopt flexible credit policy while giving credit to the agriculture sector. ? Technological Advancement
I would like to suggest that at least all the main branches of NBP should be fully computerized in order to expedite the dealing process among bankers and their customers. Every department should be provided a computer with adequate training (especially Advances, Deposits and Foreign Exchange departments). Daily records should be entered directly into these computers, (instead entering the overall daily transactions after the banking hours). It will not only reduce transaction time, will increase accuracy but will also be efficient as well. Not only it will be economical but will also reduce the extra burden of work of the bank.
It will also help in reducing the use of excessive paper work. ? Improper Distribution of Work Proper distribution work leads to success in every organization. Proper distribution of work prevents the employee from over and under work situation. So for a smooth running of an organization proper distribution of work is the hint to be followed. During my internship I observed that there was no proper distribution of work in the bank. I saw that some of the employee worked like ants other sat idle starting here and there. So this created a lot of over work situation for while relaxation for other. Favoritism and nepotism In the City branch during my internship I saw that when some of the employees are transfer to other places, due to their relation with influential people and with top management they can cancel their transfer in few weeks, when they are unsatisfied at that place. So I suggest that in the organization there should be no favoritism, nepotism and politics and their transfer and promotion should be made on merit and according to the rules and regulations of the bank and provided favorable environment to the employee to show their performances. Inter Departmental Transfer I watched during my internship that, there is number of employee who have worked on one seat for many a year. It can have negative effects motivation of employee who is hard working and intelligent. Take the example of advances section. In advance section if the employee is transfer after sixth month or seven month, how can he be able to show his performances and how can he be able to know the bank customer in a short period of time. ? Marketing Policy The branch should adopt various marketing strategy and promotion strategy to promote the bank and its product.
The most important in my opinion is personal marketing; it is the most effective of all when you think in term of branch level. But on the whole organization level, they should arrange the seminar within the bank and outside the bank. They should introduce various prizing schemes just like Allied Bank. Karamad Scheme, Bank Al-Falah (monthly income earning scheme) and various others. They should do more advertising through newspaper and media and through channel of personal contacts. ? Complaints of Customer There should be an information desk to provide the information and to receive the complaints of the customer in the bank.
There is no complaint box available in the branch and not any person appointed to hear the complaints. Every person cannot go to the manager for the complaint because most of the people are hesitant. So I suggest management to install a compliant box in the branch, and recruit a special person for that guidance of the customer when they are unable to manage some difficulties in banking matters. ? Analysis of the Business: Proper analysis of the business reports should be conducted before extending any type of loan. For this purpose professional training of the stuff member is required. ? Organizational Commitment
It is suggested that employees working on daily wages basis should be given some benefits, which the other employees are getting. Their salaries must increase according to efficiency, performance and service. ? Managerial Leadership In the analysis, we have discussed the difficulties of the assistant in taking any initiative; therefore it is recommended that the assistants should he given special training to make them ready for the leadership. ? Credit Monitoring The credit department of the bank should carries out vigilant credit monitoring. They should ensure the proper payment of installments and the mark-up by the borrower.
The staff members who have done all the paper work of the loan extension should perform the monitoring, as he/she will be having more information about the borrower. ? Extended Banking Hours The banking hours may be extended up to six, as being practiced by HBL opposite to it. Some of the business community due to law and order situation are now reluctant to keep the fund in their premises and would want to depart with it. Therefore, City Branch may extend the night banking to cater to demand of this business community. The branch could also be opened to cater the requirements of this business community ?
Limited staff: Staff of NBP in village branches is limited, they face much difficulty to perform their task efficiently. So I recommended that staff should increase in those branches for better development of resources. On other hand I observed that many branches of NBP are overcrowded. Less people can work which extra people perform. Number of employees should decrease or new branches should opens for the adjustment of these extra employees. So there should be effective distribution of human resource achieve goals effectively and efficiently. ? Housing and House Hold Goods loans
Bank should initiate these loans because most of bank’s customers are middle class and they cannot afford to buy house or household goods at once by their own. 6. 3 Summary: We discussed in this chapter about the recommendation and suggestion for NBP as an organization in general and NBP, Karianwala Branch, Gujrat in particular. Banks are playing very important role in the economic growth of the countries. N. B. P no doubts a positive contributor in this respect but I think if NBP impose some policies related to above recommendations and there are certain points by which adopting NBP can serve more effectively and efficiently.