Report on National Bank of Pakistan
Sir Amin Rajani
Muhammad Umair Sheikh Nida Azhar
This humble effort is dedicated to our beloved parents, whose love and efforts can never be forgotten.
We are highly grateful to almighty Allah who gave us the power to complete this report. We are also highly thankful to our honorable teacher Sir Amin Rajani for his support and guidance. Our Special thanks to Mrs. Hina Tariq (Operation Manager of National Bank Of Pakistan,North Karachi Branch) for her all help and support to us.And the respected HR Manager and all other employees of the branch for their cooperation.
The National Bank of Pakistan is a Commercial Bank and transacts all types of Banking Business. The National Bank of Pakistan was established on November 29, 1949 as a semi public commercial bank.The Bank has the distinction of acting agent of the State Bank of Pakistan and operates treasuries where the State Bank of Pakistan does not have any office.The Head Office of the Bank is at Karachi. Ever since its establishment in 1949 it has been leading Commercial Bank of the nation, sole agent of the Government of Pakistan’s batter trade with countries and of State Bank of Pakistan for the Government Treasury.It has offices at all the major financial centers of the including at pride places likes 100 wall streets, New York and United nations Plaza. Its International net-work includes Branches at Bahrain, Cairo, Paris, Frankfurt, Hong Kong, London, Washington D. C of shore banking unit at export processing zone. Karachi and representative offices functioning at Beijing and Seoul. In Pakistan, the bank provides complete bank facilities to the people at over 1436 Branches operating even at the far lug Northern Areas. National Bank of Pakistan is the first bank in the country to introduce and implement supervised Ruler Credit Programmed help small farmer to obtain loans at his doorsteps on easy terms and conditions. It has also played a pioneering role in introduction of profit and loss sharing System (PLS) as a major towards Islamization of economy.In addition to the normal business operations the bank provides special loan facilities for higher education for studies abroad and Qarz-eHasna to deserving poor students of Medical and Engineering Colleges in Pakistan. The well equipped research department to work on the cdeveloping tredns of finance and banking, besides a very well managed library at the Head Office. The banks carry on its business through a wide network of branches locally and internationally. These branches execute their function under the supervision of local Regional Offices and regional offices are supervised by the Head Office located a magnificent building in the heart of Karachi’s center.In the forty five years that have followed the bank has made remarkable progress testifying to several things.It is now extending the operations of the Bank to all branches to Banking, to commerce, to industry to trustee services as well as to agriculture and to the need of the small or big businessman. It has rapidly advanced from an institution with restricted power to the biggest commercial banks in the country it also shows it soundness of the policies that the bank has pursued in the execution its tasks.The National Bank has lead the trial in this respect, other banks have followed it. The National Bank has great contribution towards building wide Banking structure in Pakistan and serving all aspects of the National life and all classes of society.
HISTORY OF NATIONAL BANK OF PAKISTAN
The normal procedure of establishing a banking company under the Companies Law was set aside and the Bank was established through the promulgation of an Ordinance due to the crisis situation that had developed with regard to financing of jute Trade. The Bank commenced its operations from November 20, 1949 at six important jute centers in the then east Pakistan and directed its resources in financing of jute crop. The Bank’s Karachi and Lahore offices were subsequently opened in December 1949. State bank of Pakistan after its formation demanded from the Indian Reserve Bank the assets against the Indian currency retired from Pakistan territory. Government of India refused to hand over the assets worth about five hundred million rupees. The dispute is still unsettled and these assets are still not delivered to Pakistan. Until June 1950, the Bank was engaged exclusively on jute operation. Thereafter, it was felt that it could expand its business to include other commodities as well. Bank took a big stride in 1952, when it replaced the Imperial Bank of India, as an agent of State Bank of Pakistan. With the passage of time its functioning diversified as they take over the function of different institution with the passage of time like in past they took over the function of Imperial bank of India and now of NDFC (national development finance corporation)It is working as the agent of the state bank of Pakistan and performs its functions wherever state bank of Pakistan is not present. The government floated its 10 % of the shares in the open market in past and the ratio became 60: 40 and in future they trying to make it 55: 45. In 1999 national bank celebrated its golden jubilee during the last fifty years bank has made substantial strides in the financial services industry in Pakistan.In 1999 its market share was around 22% and it remains the largest financial institution in Pakistan.
OBJECTIVES OF NATIONAL BANK OF PAKISTAN
The main objective of National Bank of Pakistan has been to include and spread banking habits among the people mobilize their savings and thus make and ever increasing contribution to the economic development of the country. It has all along pursued a policy of rapid development extending, its facilities to almost every center of economic potential in the country. Its services have been increasing continuously and are being brought within an easy reach of the ever-growing number of people. To day it provides the largest network of offices in the country, 1436. Being in Pakistan and 22 aboard. It offers remittance facilities to almost every important center in the country to provide facilities to the traveling public the bank has introduced its own traveler’s cheque which are en cashable at a branch of the bank in Pakistan.
NBP BRANCHES NETWORK
Oversea Branches Domestic Branches
15 Overseas Branches 4 Represative Offices 1 Subsidiary 1 Joint Venture
29 Regional Offices 1,189 Branches 4 Subsidairies
NBP has an extensive domestic branch network of over 1500 branches located all over Pakistan. The Bank also has a presence in 24 international locations including the USA, United Kingdom, Europe and the Far East.
BRANCHES ALL OVER THE COUNTRY
Regional Chief / EVP
Zonal Chief / SVP
Assistant Vice President
Clerical and non-clerical staff
NBP is 100% owned by the Government of Pakistan (GoP).
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. As of December 2001 NBP had a paid-up capital of PKR1.46 billion divided into 146 million shares of 10 rupees each. Total shareholders' equity was PKR10 billion, however, revaluation reserve has increased shareholders' funds to PKR16 billion. NBP has, however, increased its paid up capital from PKR Rs. 1.46 billion to Rs. 3.73 billion through issuance of bonus shares (subject to corporate and shareholder approvals).
NBP's total assets stood at PKR350 billion on December 2001. This included total earning assets of about PKR268 billion with gross loan portfolio of PKR140 billion. The bank also has an investment portfolio of PKR91 billion, which comprises treasury securities, corporate bonds, shares and other securities.
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 integrity 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 caters to the needs of the trade, industry & agriculture, both in private & public sectors. 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.
Maximization of profit. Customer satisfaction. Excellence in service.
AWARDS & RECOGNITION
Bank of the year-2001,2002,2004 and 2005 by The Banker magazine, London. Best Bank-Pakistan 2005,Global Finance. One of the best banks in the Emerging Markets,Global Finance,May 2003. Kissan Time Awards–2005 for NBP’s Services in the Agricultural Sector. 10th best bank in terms of profit on capital in the world,The Banker,July 2005.
• • • • • In 2003 In 2004 In 2005 In 2006 In 2007 --------------------------------------------------(Rs Bn) 4.2 6.2 12.71 17.02 19.03
VISION – VALUES
To be recognized as a leader and a brand synonymous with trust ,highest standards of service quality,international best practices and social responsibility.
NBP will aspire to the values that make NBP truly the Nation’s Bank,by: Institutionalising a merit and performance culture. Creating a distinctive brand identity by providing the highest standards of services. Maximizing stakeholders value. Adopting the best international management practices. Discharging our responsibility as a good corporate citizen of Pakistan and in countries where we operate.
Highest standards of integrity. Institutionalising 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.
SENSE OF PURPOSE AND DIRECTION
NBP worked within the framework or instructions provided to them through directives procedures and systems. State Bank provides potential regulations and directions time by time NBP worked in it.
• • • • • Corporate hierarchy is vertical in NBP,down to top. NBP identifying core market values among the employees,communicate and motivate them to remove the diversity. NBP organizing training camps and training programs for their employees. NBP has no gap in communication process. NBP compensate assignments through circulars.
To handle the language barrier issue,after a meetings Manager oraly convey to the employees so that everyone can understand it easily. Relationship exists between the leaders and the followers is coperative and strong.
NBP face both cultural and ethnic issues. Working with people from different cultures. Managing workforce diversity. Helping employees balance work-life conflicts. Upgradation of employees according to the environment.
EMPLOYEES OF NBP
• • • Training provided to un-skilled persons to remove the shortage of skilled employees. NBP identify and address labor needs through communication,employees feedback and meetings. NBP managed their employees through communicating and encouraging them.
BENEFITS & INCENTIVES
Medical facility. House and car loans. Yearly 3 bonuses. Performance award in cash.
POLICIES AND REWARDS
• • • • • • • • Provide job satisfaction to their employees. Allow employees to participate in decisions that affect them. Good performance reward is also in the form of Hajj and Umrah package. Use goals and feedbacks. Developing a benefits package. HR policies are in the form of circulars and instructions for the employees. Organizing 6 weeks Internship for the students. NBP has no gender bias. There is a free-lancing.
• • • • NBP adopted and learned best practices through their good faith, assignments, directions and well-defined structure. NBP is properly networked. Fraud and forgeries exist where they fall neglegency between systems and employees. Employee development program is organized through training and motivating them.
Manager of NBP handle conflicts with the help of interacting staff members and meetings. NBP has a strong and coperative kind of leadership and they influence their subordinates through motivation factor from the top management.
FACTORS AT THE TIME OF SELECTION
Qualification. Experience. Intelligence. Personality. Communication skills.
IMPROVE ETHICAL BEHAVIOR
• • • • • • Measuring job satisfaction. Giving them a questionaire. Performance recognition and evaluation. Reward systems. Increase in communication. NBP also provides Stress management program.
Five-year Strategic Plan 2007-2011
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
Year to December
Total Deposits Total Assets Total Equity Total Loans Total Investments Net Profit
Amounts in Million 1998 1999 2000
235,932 274,117 9,035 85,854 108,207 (795) 254,863 310,599 12,232 105,597 106,449 62 273,391 325,320 15,411 109,524 102,969 529
294,754 349,932 15,962 122,294 91,277 (178)
NBP Organizing training camps to increase the skills of their employees. Job rotation is very important. NBP has flexi timing. The employees feel proud working with NBP. NBP involve their employees in participative decision making and giving self respect. NBP encourage their employees to exercise their own initiative by motivation.
NBP manage change with survey feedback, technology in the workplace, sources of innovation and establish a strategy. Globalization impact is very vast in NBP with the help of information technology.
An employees attitudes are measured by questionnaire. Salary structure is known to everyone but its depending on the length of service. In temporariness, there is fear factor of termination between employees. In NBP, there is a deposit and profit target but employees do not cut corners to meet the targets and deadlines. NBP cater absenteeism and turnover by giving warning and memorandum to the employees but after crossing the third time warning NBP oust them. NBP handle emotion and moods of the employees by giving them support and motivation. NBP identify issues down the line through feedback and communication. NBP has political influence by State Bank of Pakistan (SBP) and Central Bank of Pakistan (CBP). NBP employees show respect to each other. NBP employees feel their job is a desirable. More experience members of the NBP take time to help new members. Executives of NBP lead by example through rational decision making.
OUR ASSESSMENT ON NBP
NBP is fully aware of the developments taking place in the world as well as the changes occur in the economic and social condition with in the country. The bank is determined to meet new challenges by redefining its goals and strategy as well as by the adjustment of its operational policies.