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									National Bank Of Pakistan

 Banking And Finance

Assignment of Banking and Finance        Page 1
National Bank Of Pakistan

                                    Presented to
                      “Prof. Riaz Ahmad Mian”

Assignment of Banking and Finance                  Page 2
National Bank Of Pakistan


 Sr. No.Title                                                       page no.

 1. Title page-----------------------------------------------------------01

 2. Acknowledgement------------------------------------------------06

 3. Executive Summary----------------------------------------------07

 4. Introduction-------------------------------------------------------08

 5. Vision --------------------------------------------------------------09

 6. Mission-------------------------------------------------------------09

 7. Core Values-------------------------------------------------------10

 8. Goals -------------------------------------------------------------10

 9. NBP Corporate banking----------------------------------------11

 10. Board of directors---------------------------------------------12

 11. Management and organization of bank-------------------13

Assignment of Banking and Finance                                              Page 3
National Bank Of Pakistan

 12. Heirarchy-------------------------------------------------------13

 13. Services----------------------------------------------------------14

 14. Deposits----------------------------------------------------------16

 15. Types of accounts----------------------------------------------16

 16. Zakat treatment on all account------------------------------20

 17. Account opening deptt.---------------------------------------20

 18. Credit department---------------------------------------------26

 19. Administrative department----------------------------------29

 20. Aims & objectives in this organization--------------------29

 21. Products---------------------------------------------------------31

 22. Analysis---------------------------------------------------------41

 23. Conclusion------------------------------------------------------58

 24. Recommendations---------------------------------------------59

 25. References------------------------------------------------------62

Assignment of Banking and Finance                                           Page 4
National Bank Of Pakistan


              “Prof. Riaz Ahmad Mian”

    Who had given us a memorable &
  unforgettable teaching with love, and
 heavy weight of love provides us security
   and enhance us inspiration & vision

Assignment of Banking and Finance       Page 5
National Bank Of Pakistan


This report is required by IBP. The purpose of report is to write down the entire major activities

that I performed in that particular branch during my internship training. It Comprises of,

Four logical stages:

1. Planning and Framing issues

2. Gathering and recording data and information

3. Analyzing the information

4. Writing and Sharing

The four stages include the description of the following,

a. Organization’s Profile

b. Aims & objectives in this organization

c. Discussion

d. Limitations

Assignment of Banking and Finance                                                            Page 6
National Bank Of 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.

       A bank is an organization whose principal operations are concerned with the
       accumulation of the temporarily idle money of the general public for the purpose of
       advancing it to others for expenditure.
                                                                            (Professor Kent)

       The word “Bank” itself is derived from the words “Bancus” which means a bench. The
       early bankers, the Jews in Lombardy transacted their business at benches in the market
       A bank is an institution for the custody, loan or exchange of money for sanctioning
       Credit, for transferring funds by domestic foreign bills of exchange. It is a pipeline
       through which currency moves into and out of circulation.
       As it is clear from the definition of banking, the main activity or function of banking is
       borrowing and lending of money with a margin of gain. However, as far as the present
       day banking is concerned, there are a number of different banks, set up under specific
       different objectives, performing various functions.

Assignment of Banking and Finance                                                           Page 7
National Bank Of Pakistan

                                    To be recognized as a leader
                                    and a brand synonymous with
                                    trust, highest standards of
                                    service quality, international
                                    best practices and social

Assignment of Banking and Finance                             Page 8
National Bank Of Pakistan

                                              • Highest standards of Integrity
                                              • Institutionalizing team work and performance
                                              • Excellence in service
                                              • Advancement of skills for tomorrow’s
                                              • Awareness of social and community
                                              • Value creation for all stakeholders

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

Assignment of Banking and Finance                                                      Page 9
National Bank Of Pakistan

                                    NBP further consolidated its position as one of the top
                                    players in corporate and investment banking of the
                                    country in 2010 and has built a strong customer
                                    relationship with the premier corporate clients.

                                                                          Corporate Branches

Assignment of Banking and Finance                                                      Page 10
National Bank Of Pakistan

                            Board Of Directors
                    Qamar Hussain
                    Chairman Board, President , NBP

                    Mr. Qamar Hussain is the President of National Bank of Pakistan (NBP), the largest
                    Commercial Bank of the country. He holds an MBA degree in International Business
                    & Finance from Mcgill University, Montreal, Canada and has undergone extensive
                    training in business leadership abroad.
                    Mr. Hussain started his banking career from Bank of America N.T. & S.A., Pakistan in
                    the year 1981. Prior to joining NBP in 2009, he has worked with American Express
                    Bank Limited as Senior Director Global Credit, New York and earlier as Senior
                    Director Country Manager, Bangladesh. He had also been associated with
                    the CHASE MANHATTAN BANK in Pakistan and USA.

                    Mr. Tariq Kirmani

                    Soon after completing his Masters in Business Administration (MBA) Mr. Kirmani
                    embarked upon a rewarding career, starting with a multi-national Oil Company
                    (Caltex later Chevron Pakistan) in 1969 and worked for seven years in the United
                    States of America, United Arab Emirates and Australia in different senior
                    management positions in Marketing, Operations and Finance. In 1991, Mr. Kirmani
                    became the first Pakistani to be elected as a Company Director of the mentioned
                    multi-national company.

                    Mrs. Haniya Shahid Naseem

                    Mrs. Haniya Shahid Naseem has done her Masters in Business Administration with
                    honors in 1995. She is a certified director from the Pakistan Institute of Corporate
                    Governance and has also done various short courses in management and banking.
                    Mrs. Haniya Shahid has more than 15 years of diversified experience in the
                    education, agriculture and corporate sectors. She is currently looking after her own
                    chain of schools and is also an avid agriculturist who is actively involved in
                    progressive farming, dairy and livestock. Previously she has also worked in her family
                    companies in the textile and energy sector.

                    Ms. Nazrat Bashir

                    Ms. Nazrat Bashir belongs to District Management Group of Civil Service of
                    Pakistan. She is Masters in Economics from New York University, New York, USA
                    and Masters in Psychology from Peshawar University, Peshawar.
                    She has extensively traveled abroad and has attended various international Seminars
                    and Courses including Executive Program from Kennedy School, Harvard,
                    Consolidated Supervision of Banks, Dealing with Banking Crises, Commercialization
                    of Micro Finance, Anti Money Laundering, Instruments of Financial Markets etc.

Assignment of Banking and Finance                                                                      Page 11
National Bank Of Pakistan

                                  Domestically too she has attended various programs in some of very prestigious
                                  institutions of Pakistan.

                     Management And Organization Of Bank


                                                MEMBER BOARD

                                       SENIOR EXECTIVE VICE-PRESIDENT

                                          EXECUTIVE VICE PRESIDENT

                                            SENIOR VICE PRESIDENT

                                                                 VICE PRESIDENT

                                                           ASSISTANT VICE PRESIDENT

                                                            OFFICER GRADE               I

                                                           OFFICER GRADE                2
               BRANCH HIERARCHY

                                                           OFFICER GRADE                3


Assignment of Banking and Finance                                                                                  Page 12
National Bank Of Pakistan


       1) Retail Banking.
       The Retail Banking network is the core strength of NBP. The network provides NBP with
       the largest diversified low cost deposit base of any bank in Pakistan, and forms the basis
       for many of our other business lines: corporate and investment banking and treasury
       activities. The network provides NBP with the largest diversified low cost deposit base
       of any bank in Pakistan, and forms the basis for many of our other business lines:
       corporate and investment banking and treasury activities.

        Payment of cheques.
          Cheques drawn against various deposits are honored and paid in cash.

        Payment of pensions.

          This function is performed by NBP as a govt. treasurer all the pensions of federal
          govt. provincial government and semi government employees is paid by NBP.

        Salary management of different governmental institutions.

Assignment of Banking and Finance                                                        Page 13
National Bank Of Pakistan

           The salary of govt. and semi government employees is first credited to the account of
           NBP and is then credited to their personal accounts.

        Issuing of traveler’s cheques.

           The traveler’s cheques are issued by NBP for secure transfer of money from one
           place to another.

        Collection and sale of prize bonds.

           The national prize bonds are purchased and sold at the branches of the NBP according
           to the rules formulated by the SBP.

        Collection of fees and money from people proceeding on Hajj

           National Bank collects the fee from the people proceeding for hajj and act as there

        Collection of Chelan’s.

           Various Govt. revenues are collected by NBP in the form of chalans.

       2) Commercial Banking.

       We target mid-size companies. We have the expertise, resources to meet the needs of
       your business with proactive relationship managers who understand your business. Our
       aim is to invigorate growth by fulfilling the role of financial advisors by offering best
       solutions that meet the client requirements. Our relationship management team has
       industry and sector specific expertise, hence making them well equipped to handle
       your financing needs. We offer the following financing solutions:

          Working Capital
          Receivables
          Procurement of Inventory
          Procurement of Machinery
          Expansion of production facilities
          Import of raw materials

Assignment of Banking and Finance                                                       Page 14
National Bank Of Pakistan

           Exports
           Guarantees
           Seasonal Financing (Rice, Wheat, Cotton)

       3) Corporate banking.
      NBP further consolidated its position as one of the top players in corporate and
      investment banking of the country in 2010 and has built a strong customer relationship
      with the premier corporate clients.

       Bank deals in money and they are merely mobilizing funds within the economy. They
       borrow from one person and lend to another, the difference between the rate of borrowing
       lending forms their spread or gross profit. Therefore we can rightly state that deposits are
       the blood of the bank which causes the body of an institution to get to work. These
       deposits are liability of the bank so from point of view of bank we can refer to them as

                      TYPES OF ACCOUNTS:


Assignment of Banking and Finance                                                          Page 15
National Bank Of Pakistan

       In this type of accounts the client is allowed to deposit or withdraw money as and when
       he likes. He may, thus, deposits or withdraws money several times in a day if he likes.
       There is also no restriction of amount to be deposited or withdrawn. However, there is
       requirement of minimum balance maintenance of Rs.5000/-. Usually this type of account
       is opened by the businessmen. No profit is paid by the bank and no service charges are
       deducted by the bank on current deposits account.

       i.    All     Pakistani’s  Resident/Non-Resident,       Individuals    (Single-Jointly)
             Companies/Firms etc. can open and operate the Account but he should be a
             corporate customer.
      ii.    Any Foreign National Individuals (Single-Jointly) having valid Resident Pakistan
             VISA/Work Permit can open and operate the Account.

       Requirements for opening of Account are:

        Duly filled prescribed A/C opening FORM.
        Attested photocopy of N.I.C./Passport of Account Holder(s), Proprietor, Partners,
         directors and office Bearers as the case may be.
        Certified true copy of the certificate of incorporation or registration (in case of limited
         companies & registered bodies only).
        Certified true copy of the certificate of commencement of business (in case of public
         limited companies only).
        Certified true copy of the memorandum and articles of association (in case of limited
        Certified true copy of rules and regulations or By-Laws (in case of association etc.).
        Certified true copy of the resolution of the Board of Directors/Managing
        Committee/Governing Body regarding conduct of the account.


           Account can be OPENED with Minimum Balance Rs.1000/- with no maximum limit.

Assignment of Banking and Finance                                                           Page 16
National Bank Of Pakistan

            Checking balance at any time during banking hours.
            No profit is paid.
            Statement of Account dispatched on request letter.
            There is no restriction for withdrawals of amount and number of cheque


          This type of account is for those persons who want to make small savings'. This type of
          account is opened with a minimum deposit of Rs. 1000/- or the amount prescribed from
          time to time. The profit is paid on these accounts on the minimum balance during a
          month for the whole of that month. Zakat & other taxes are deducted as per rules of the

          The requirements for this account is duly filled prescribed A/C opening FORM, Photo
          Copy of National Identity Card (Resident Pakistani), two Passport size photographs with
          signatures/thumb Impression (Resident Pakistani), Photo copy of Passport with Page
          bearing Resident Visa of the Country where Pakistani Residing, two Passport size
          photographs and signatures on A/C Opening Form for Non-Resident Pakistani with
          signatures/thumb Impression etc.


           Account can be OPENED with Minimum Balance Rs.1000/- or prescribed limit that is
            announced time to time with no maximum limit.
           Profit is payable at monthly subject to adjustment on deceleration of actual profit rate
            declared every half year.
           Profit is calculated on monthly products
           Zakat will be deducted on valuation dates of account.

Assignment of Banking and Finance                                                           Page 17
National Bank Of Pakistan

         Profit is Paid/Credited in Account on half yearly basis in case of six monthly PLS
          saving accounts.
         Statement of Account dispatched on half yearly basis after posting of profit.
         There is no restriction for withdrawals of amount and numbers of cheque. 3) PLS
          special notice deposit:


       A type of term deposit, in which a receipt is issued for varying tenors ranging of deposit.
       It is in the form of receipts and profit on these receipts is paid biannually. These receipts
       are en-cashable after expiry of the period for which they were issued. Different profit
       rates are applied to different type of term deposit. It has no maximum limit but not less
       than 1 month. Account opening rate is 1000 and the zakat is deducted on the rules and


        All         Pakistani’s    Resident/Non-Resident       individuals,     Firms/Companies,
          government/Semi govt. Departments can purchase the TD.
        Any Foreign National having valid Resident Pakistan VISA can purchase TD.
          Requirements for Purchase of TD:
        Duly filled prescribed FORM.
        Photo Copy of National Identity Card (Resident Pakistani).
        Two Passport size photographs with Signatures/Thumb Impression (Resident
        Photo copy of Passport with Page bearing Resident Visa of the Country where
          Pakistani is residing.

Assignment of Banking and Finance                                                           Page 18
National Bank Of Pakistan

        Two Passport size photographs and signatures on A/C Opening Form for Non-
           Resident Pakistani with Signatures/Thumb Impression.
        Photo Copy of Passport with Page bearing Resident Visa of Pakistan (Foreign


          Profit is payable at yearly rate declared every half year.
          Profit is Paid/Credited in Account on half yearly basis.

       Zakat will be deducted on all accounts except the followings:
          FiqahGafreia account.
          Non Muslim’s account.
          Trust account.
          Government account.
          Provident fund.
          Defense account.
          Non Pakistani’s account.

       In this account department I gain the particle knowledge about opening. This department
       deals with opening account and saving account for its customer and all matters regarding
       there off. The customer opening account/saving accounts can be categorized as

Assignment of Banking and Finance                                                      Page 19
National Bank Of Pakistan

       1) individual
       2) firm
       3) company
       4) trust
       5) staff
       6) others

                   OPENING AN ACCOUNT:
       In order to open an account first of all the customer has to fill a form prescribed by the
       bank. The person is required to bring some reference or introduction for opening the
       account. Introducer may be a person who has an account with NBP.Some important
       information regarding introducer e.g. the name and account number of the introducer is
       written on the space provided on the specimen signature cards. Then in order to find out
       whether he is a true introducer or not a letter is sent to him thanking him for this
       introduction, so that anything wrong may come into notice.There are different
       requirement for different types of accounts and account holders.

       An important thing is that the customer should have a corporate customer. The corporate
       customer limit is 40 million and this branch always deals the corporate customer.General
       rules for opening an account:

          One person can open only one account in the same branch with the same category.
          In the event of death of an account holder the credit balance will be transfer to the
           heirs of the diseased individual account.

Assignment of Banking and Finance                                                        Page 20
National Bank Of Pakistan

          Services charges will be deducted periodically as prescribed from time to time on the
           accounts that are under the limit of specific account.
          Services charges are not applicable on that accounts that are prescribed as exempted.
          A distinctive number will be allotted to the each account.
          The bank can close those accounts that are under the minimum limit of the bank.
          Any sum to be deposited in the account should be accompanied by paying in slip
           showing the party account number and the name.
          Account holder can only withdraw the sum of money by his own account by cheque.
          Cheque should be signed by the account holder by the specimen given by the bank.
          Post dated and defective cheque is not accepted.
          If statement of account spoiled a new will be issued on cost.

       The SWIFT system (Society for Worldwide Inter-bank Financial Telecommunication)
       has been introduced for speedy services in the area of home remittances. The system has
       built-in features of computerized test keys, which eliminates the manual application of
       tests that often cause delay in the payment of home remittances. The SWIFT Center is
       operational at National Bank of Pakistan with a universal access number NBP-
       APKKA. All NBP overseas branches and overseas correspondents (over 450) are
       drawing remittances through SWIFT.

       Using the NBP network of branches, you can safely and speedily transfer money for your
       business and personal needs

          Society for worldwide inter-bank financial telecommunication.[SWIFT]
          Only for banks
          Telecommunication not transition
          Head office in Belgium
          Run by different country members
          Lease lining by head office

Assignment of Banking and Finance                                                        Page 21
National Bank Of Pakistan

          Started in Pakistan 1995-96
          Awareness seminars start in 1997
          Work through coding &decoding
          Swift provide to members an id &password for connect
          Charges from customers depend on message size
          Authentic mode, people satisfied
          Less chances of fraud
          Centralized system( send message to different countries at once)

       I work in this department for one week; this department deals in transfer of money from

       one place to another or country by:

        Demand draft

        Mail transfer

        Telegraphic transfer

       In this department internees are advised to observe the working of transfer of money from

       one place to another place or country by the above mode of transferring money. During

       my stay in this department I observed that how demands draft be issued.

       The procedure is as follows:

Assignment of Banking and Finance                                                       Page 22
National Bank Of Pakistan

       First a bank receives a request from the customer to issue a bank draft. The written

       request is either in a banks standard from or separate paper signed by the applicant with

       cash or cheque covering the amount of the draft and other charges of the bank.While

       issuing a bank draft it is necessary that they should be free from alternations. All the

       details must be written clearly in ink. After issuing a demand draft it is handed over to the

       applicant and it advice containing the particulars of the draft is sent to drawer branch with

       it is necessary information and payment of the draft is made on its presentation or

       according to the terms and condition of the mode of transfer.

                            DEMAND DRAFT:
       Demand draft is a written order drawn by a branch of a bank upon the branch of same or
       any other bank to pay certain sum of money to or to the order of specified person. It can
       be issued to the customers as well as non-customer against cash cheque and letter of

       Demand draft is negotiable instruments that can be negotiating at any time before its
       Cancellation. Its Legal provisions are same as that of cheque.

       Following parties are involved in demand draft:

        Applicant

        Issuing branch

        Drawee branch

        Beneficiary

Assignment of Banking and Finance                                                           Page 23
National Bank Of Pakistan

       A demand draft may be issued against the written request of the customer before issuing
       it must be seen that the demand draft is in order.

       The DD application must be scrutinized by the counter clerk in respect of following

          There should be branch where payment is to be made.

          Full name of payer should be mentioned.

          Amount in words and figures must be same

          The applicant on two places should sign application.

                 TELEGRAPHIC TRANSFER:
      Telegraphic transfer means the transfer of funds from one branch to another branch of the
      same bank or upon other bank under special arrangements just like a telegram.
      Telegraphic transfer is not negotiable and the funds are not payable to bearer. Minor
      cannot avail this facility. In telegraphic transfer the bankers use secret codes. One code is
      with issuing person and the second is with another person. When they combine the codes
      it’s become an amount that is called check. The payment is made after the confirmation
      of the check.

       Following parties are involved in TT

          Applicant
          Drawing branch
          Drawee branch
          Beneficiary

       Following important things should be included in TT:

          Full name of the beneficiary or account number should be mentioned in the
          Application form.
          Instruction regarding mode of payment should be obtained.
Assignment of Banking and Finance                                                          Page 24
National Bank Of Pakistan

          A record in the remittance outward register should be maintained.
          All the remittance must be controlled through number or codes.

                                     PAY ORDER:
      Pay order is an instrument through which payment can be made from one bank to another
      bank. Pay order is meant for bank own payment but in practice they are also issued to

       Following parties are involved in pay order:

          Applicant
          Issuing branch
          Payee MAIL TRANSFER:

                        TRAVALAR’S CHEQUE:
       When a traveler proceeds from one place to another he needs money at different places.
       The remittances explained so far will be available to the beneficiary only at a particular
       place, and that too all in one time; whereas the requirement of a traveler may be

                        CREDIT DEPARTMENT:
       I spent one week in credit department and learnt the following,
        Analysis of the letter to the General Manager Credit.
        Implementation of quarterly reporting chart of accounts.
        SME borrowers wise data on particular date on revised date.
        Summary sheet of advances.

        Credit analysis of a client namely Mr. Fargham who requested the credit of 5

Assignment of Banking and Finance                                                        Page 25
National Bank Of Pakistan

            The financial analysis is as follows.

        Partners’ Overview :
         Mr. Fargham Enterprises is consisting of 3 partners.

           Cash Finance (Pledge) is for PKR 5.00 million.
           Markup.
           Running finance for PKR 5.00 million:

            Running finance facility will be utilized to finance cost of work in process, Stores
            and Spares and other daily expenses. The facility will be secured through our Charge
            on Current as well as Fixed Assets of the Company including personal guarantees of


           PRIMARY SOURCE

            Through sales proceed i.e. internal cash flows of the companyoperating funds.
             SECONDARY SOURCE
         First charge on all current assets of worth PKR 5.00 million.

            Financial analysis is carried out with the help of the following.

           SALES ANALSIS
           NET MARGIN
           BALANCE SHEET
           CURRENT RATIO

Assignment of Banking and Finance                                                       Page 26
National Bank Of Pakistan

        QUICK RATIO
        LEVERAGE

       5) LIQUIDITY:

            The increase in current assets is mainly associated with substantial rise in cash &
            marketable securities and inventory. Cash and marketable securities were built to
            accommodate banks for their June closing figures.


          Critical Success Factors:
        1- Lower Costs (economies of large scale).
        2- Access to required Working Capital Lines.
        3- Long experience.
        4- Efficiency of Operations.
        5- High Capacity Utilization.

          Critical Risk Factors:
        1. Inflation
        2. Government Policies.
        3. Deterioration in Law & Order in the country.
        4. Foreign Competition in wake of WTO.

            The sponsors enjoy excellent relationship with banks and are highly regarded for their
            reputation of meeting their financial obligations.
            Others factors include,
            MAJOR BUYERS

Assignment of Banking and Finance                                                         Page 27
National Bank Of Pakistan

            MANAGEMENT

       In this way, Mr. Fargham’s creditability in his business was evaluated. It may be
       improved the net return on funded facilities from the relationship by rationalizing the
       credit portfolio in accordance with their financial requirements as proposed. In view of
       the above, they recommend the proposal for approval.

       I worked in administration department for one week. I learnt following.
            The entry of eid advance granted to the staff of NBP.
            The making of debit vouchers and entry for medical expense of staff reimbursed
             by NBP.
            The analysis of summary of accounting data of NBP.


          To understand the various operations.
          To equip with practical knowledge of operations in NBP.

Assignment of Banking and Finance                                                      Page 28
National Bank Of Pakistan

          To be recognized in the market place by institutionalizing a merit and performance
             culture, creating a powerful and distinctive brand, identity, achieving top-tier
             financial performance, and adopting and living out our core values.
          All the objectives of the National Bank of Pakistan were compatible to the mission
           statement of the bank. As a business organization, its main objective was profit
           maximization, the only yard of performance.
          NBP tries to maximize its profits by its two basic functions i.e. deposits and
          Due to the tough competition faced in every field, banking has no competition
           from this category. Whether the bank is Pakistani, Foreign, and private or
           nationalized, competition is there. In the competition NBP has the goal to achieve
           the greatest possible amounts of deposits. The tool used by the bank in order to
           increase its deposits was to provide the best of facilities to their customers.
          By the increase in profits of bank mean that bank becomes capable of lending
             more loans to the clients and hence earning profit from them. In simple terms,
             holding greater deposits results in greater income of the bank, and the profit
             maximization occurs and that is achievement of the banks’ objectives. In this
             regard, the bank’s favorite account was PLS saving account because in the main
             city branch    Peshawar there was small savings with the general public. Current
             account was also popular in the bank because the bank does not have to pay any
             interest to the customers and hence banks can save some money, although some
             facilities are provided to the customers.

          The profitability of the bank depends upon the amount of loan sanctioned or given
             to the people. The credits afforded by the bank depends greatly on one factor and
             that is the credit along with the interest payable should be secure, and that in turn
             depends upon the type of people, the bank is sanctioning loans.
          Banking history is full of incidences where people were offered huge loans and
             they wrote off their loans by means of political influence.

Assignment of Banking and Finance                                                         Page 29
National Bank Of Pakistan

          It was very important issue for NBP to secure its loans and the interest as well.
             Therefore NBP was very selective in sanctioning loans to the people in those days.
             NBP preferred loans to bigger and reliable parties, after securing the collateral.
             NBP also provides loans to small businesses but mostly the loans were provided to
             the industrial sector of Sindh and Punjab.
          The loans provided by the NBP constitute the major portion of the profit of the
             bank. The markup charged by the bank varies with the type of loan issued to the
             customer; the terms and the conditions of the loans were also negotiable depending
             upon the relationship between the customer and the bank. NBP has an extremely
             well organized credit section.
          The staff is trained and educated and competent. They carry out complete financial
             analysis and different ratios are also calculated. The bank specially emphasized a
             sound quick ratio that shows the current cashable assets and could be relied upon
             to provide the cover for the loan.


Assignment of Banking and Finance                                                      Page 30
National Bank Of Pakistan

                •   Earn up to 12.25% p.a. +
                •   Minimum deposit of Rs. 20,000/- with maximum balance of Rs. 10 million for 5
                •   Free Demand Draft, Pay Order and Cheque Book*
                •   Convenience of NBP online Aasan Banking (for online banking customers)
                •   Free NBP Cash Card (ATM+Debit)
                •   Running finance facility up to 90%
                •   Profit paid every month as follows


Assignment of Banking and Finance                                                        Page 31
National Bank Of Pakistan

PLS Saving Account

      Earn up to 8.50% p.a. +.

      Minimum saving balance of Rs. 20,001/- & a maximum balance of Rs. 1 million*.

      Free NBP Cash Card (ATM + Debit).

      Convenience of NBP Online Aasan Banking (for online banking customers).

      Two debit withdrawals allowed in a month & no limit on number of deposit transactions

      Profit calculated on monthly and paid on half yearly basis.

Assignment of Banking and Finance                                                              Page 32
National Bank Of Pakistan

Home Financing

      Home Purchase

      Home Construction

      Home Renovation

      Purchase of Land + Construction

      Balance Transfer Facility (BTF)


Assignment of Banking and Finance        Page 33
National Bank Of Pakistan

Personal Loan

• Easy installments of 1 to 60 months at your choice.
• No minimum income, collateral & insurance charges required.
• Quick processing and fastest disbursement.
• For permanent employees of Government, Semi Government and Autonomous bodies
receiving salaries through NBP.


Assignment of Banking and Finance                                            Page 34
National Bank Of Pakistan

ATM + Debit Card:

      Use it as an ATM in any of the ATM’s in Pakistan

      Use it as Debit Card in any of the outlets with ORIX POS machine across nationwide.

      Cash withdrawal up to Rs. 20,000/- per day

      Account Balance Enquiry

      Mini Statement (Only at NBP ATM)

      PIN Change facility (Only at NBP ATM)


Assignment of Banking and Finance                                                            Page 35
National Bank Of Pakistan

Financing Facility for Stock Investors

      Comfortable environment for trading

      No security requirement, except for the customer’s equity

      Customer’s equity freely available for investment

      Equity acceptable in cash or approved shares


Assignment of Banking and Finance                                  Page 36
National Bank Of Pakistan

Ready Cash Against Gold

      Facility of Rs. 35,000/- against each 10 gms of net weight of Gold Ornaments

      No maximum limit of cash

      Repayment after one year

      Roll over facility

      No penalty for each repayment


Assignment of Banking and Finance                                                     Page 37
National Bank Of Pakistan

Agriculture Farming Program

      Competitive mark-up rate.
      Quick & easy processing.
      Provision of technical guidance to farmers.
      Wide range of financing schemes for farmers.
      Finance facility up to Rs. 100,000/- for landless
      Financing available against Pass Book, Residential / Commercial property, Gold ornaments and
       paper security.
      Loan facility on revolving basis for three years (renewable on yearly basis without obtention of
       fresh documentation and approval).


Assignment of Banking and Finance                                                             Page 38
National Bank Of Pakistan


Remitters in USA can log on to our user friendly website, and easily remit funds to
Pakistan from the comfort of their homes, in a matter of minutes.

The service is fully secure with advance encryption application and is available for use 24 hours a day, 7
days a week. Fees and exchange rate have been set at competitive levels and the remitters have the
ability to track delivery of funds as well.


       Remitters log on to and after completing the registration process, are able to
        remit funds. The whole process takes a few minutes.
       Funds in Pak Rupees can be sent to beneficiaries, having an account with any bank in Pakistan,
        including NBP. While funds are credited directly to beneficiaries maintaining accounts with NBP,
        a pay order or demand draft is couriered to other banks for their customers. Pay order or demand
        draft can also be couriered directly to the beneficiary’s office or home, if requested by the

Assignment of Banking and Finance                                                                  Page 39
National Bank Of Pakistan

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

Assignment of Banking and Finance                                Page 40
National Bank Of Pakistan


Ratio analysis is powerful tool of financial analysis. A ratio is defined as “the quotient of two
mathematical expression” and as “the relationship between two or more things”. In financial
ratio analysis, a ratio is used as benchmark for evaluating the financial position and performance
of a firm.

                            Standards of Comparison

The ratio analysis involves comparison for a useful interpretation of the financial statements. A
single ratio “1” itself does not indicate favorable or unfavorable condition.         It should be
compared with some standards.        Standards of comparison of Ratio may consist of:

       Past ratio: ratio calculated from the past financial statements of the same firm.
       Competitor’s ratio: Ratios of some selected firm especially the most progressive and
        successful competitors at the same point in time.
       Industry ratios: Ratio of the industry to which firm belongs.
       Projected ratios: ratios developed using the projected or Perform a financial statements
        of the same firm.

Assignment of Banking and Finance                                                           Page 41
National Bank Of Pakistan

                                    Current Ratio:

It shows the relationship between current assets and current liabilities. It is widely used to make
the analysis for a short –term financial position or liquidity of a firm. This ratio is expressed in
   Current Ratio =current assets / current liabilities

   For 2009                      265424444 /182224697 = 1.4 times

   For 2010                        315288622 / 174089037 = 1.8 times

   For 2011                      425660500/ 202710020 = 2.10 times

   Analysis: The Current Ratio of NBP is improved from 1.4 in the year 2009 to 1.8 in the year
   2010, which further improved to 2.10 in the year 2011, which means that the liquidity of the
   bank is improved. This comparison of current ratio for the bank signifies a strong measure of
   short-term debts paying ability in the year 2009 as compare to the previous year under study.

                                       Currrent Ratio





                          2009                   2010                   2011

Assignment of Banking and Finance                                                           Page 42
National Bank Of Pakistan

                         Gross Profit Margin:

Gross Profit Margin is the ratio of gross profit to net sales expressed as a percentage. It
expresses the relationship between gross profit and net sales.

   Gross Profit Margin = Gross Profit / Net Sales x 100

   For 2009                  =11172207/8821045 x 100 = 126.65%

   For 2010                  =14774278/1241337 x 100 = 119.01%

   For 2011                  =16025000/11527400 x 100 = 139.01%

Analysis: The Gross Profit Margin is decreased to 119.01% in the year 2010 as compare to
126.65% in the year 2009, which increased again in 2010 up-to 139.01%, so the ratio measure of
the profitability of the firm that the bank earns has more Gross.

                                     Gross Profit








                            2009               2010                 2011

Assignment of Banking and Finance                                                     Page 43
National Bank Of Pakistan

                               Net Profit Margin:

This is ratio of net profit after taxes to net sales. It is also expressed as a percentage.

Net Profit Margin = Net Income / Net Sales x 100

For 2009                        = 461227 / 8821045 x 100 = 5.22%

For 2010                        =1148529 / 1241337 x 100 = 92.5%

For 2011                       = 11052000/11527400 x 100 = 95.87%

Analysis: Net Profit Margin in the year 2011 is 95.87%, while 92.5% in the year 2010 and
5.22% in the year 2009. Because of the low payment for administrative expenses, financial
expenses and also making less provision for taxation in the year 2011 as compared to year 2010
& 2009.

Assignment of Banking and Finance                                                             Page 44
National Bank Of Pakistan

                  Return on Capital Employed:

   The primary objective of making investments in any business is to obtain satisfactory return
   on capital invested. Hence, the return on capital employed is used as a measure of success of
   a business in realizing this objective.       Return on capital employed establishes the
   relationship between profit and capital employed. It indicates the percentage of return on the
   capital employed in the business and it can be used to show the overall profitability and
   efficiency of the business.

                      Return of Gross Capital Employed:

Gross Capital Employed means the Total Assets including fixed as well as current, used in the

Return on Gross Capital Employed=Income before taxes / Gross capital Employed x 100

   For 2009           =1032400/371635738 x 100 = 0.27%

   For 2010           =3015629/415088990 x 100 = 0.72%

   For 2011           = 16015200/950000000 x 100 = 1.68%

Analysis: The Return of Gross Capital Employed is increased to 1.68% in the year 2011 as
compared to 0.72 in 2010 & 0.27% in the year 2009.

Assignment of Banking and Finance                                                        Page 45
National Bank Of Pakistan

              Return on Net Capital Employed:

By deducting Current Liabilities from the Total Assets we will get the Net Capital employed.

Return on Net Capital Employed= Net Income before Taxes / Net Capital Employed x 100

   For 2009            =1032400 / 16982917 x 100 = 6.07%

   For 2010            =3015629 / 117510437 x 100=17.22%

   For 2011 = 16015200/80200000 x 100 = 19.96%

Analysis: Return on Capital employed shows that how well the management has used the
investment made by inside sources and outside sources. Higher the return on capital employed,
the more efficient the firm is using the funds. This ratio for bank is increased to 19.96% in the
year 2011 from 17.22% in the year 2010 & 6.07% in the year 2009.

                                 Debt to Equity Ratio:
It indicates the extent to which debt financing is used relative to equity financing.

Debt to Equity Ratio = Total Debts / Owners equity

    For 2009           =354652821 / 11192679 = 31.6 times

    For 2010           =397578553 / 11206447 = 35.5 times

    For 2011                = 456500000/ 11540000 = 39.55 times

Analysis: from this analysis we came to know that the bank relies more on equity financing
rather than on debt financing.

Assignment of Banking and Finance                                                        Page 46
National Bank Of Pakistan

                            Debt to Assets Ratio:

It shows the relationship between total debts and total asset

Debt of Assets = Total Debts / Total Assets.

     For 2009                 =354652821 / 371635738 = 0.95 times

     For 2010                 =397578553 / 415088990 = 0.96 times

     For 2011                 = 456500000/ 950000000 = 0.48 times

Analysis: This analysis shows that the firm is not relying on borrowed money because the ratio
is consistently decreasing.

Assignment of Banking and Finance                                                     Page 47
National Bank Of Pakistan

National Bank of Pakistan maintained its position as a Pakistan’s largest bank in 2007. A 31%
increase in total revenue was achieved in the year, while operating profit (before provision and
amortization) increased by 69% to Rs.8.1 billion from Rs. 4.8 billion and pre tax profit went up
193% to Rs.3.02 billion from Rs.1.03 billion. Total assets increased to Rs.415 billion from
Rs.372 billion, while deposit grew by over 10% to Rs.349 billion from Rs.316 billion. As a
consequence all financial and operating ratios improved. Cost to income ratio was 0.52, the pre
tax return on equity was 25% and capital adequacy ratio was around 11%.The non-performing
loan (NPL) portfolio of the bank is adequately covered through a combination of cash provision
(60%) and forced sale value (FSV) of securities. The cash provisioning is the highest in our peer
group. The focus on managing the NPL is on restructuring as opposed to litigation.

Currency in                               Dec 31      Dec 31     Dec 31         Dec 31      4
Millions of Pakistan                      2008        2009       2010           2011        Year
                                          Restated    Restated   Reclassified   PKR         Trend
                                          PKR         PKR        PKR
total revenues                            41,953.1    45,002.0   51,678.7       57,485.9
cost of goods sold                        261.8       330.3      --             --
gross profit                              41,691.3    44,671.7   51,678.7       57,485.9
selling general & admin                   18,101.5    22,486.4   26,732.0       30,760.8
expenses, total
ebt, excluding unusual items              22,261.3    21,198.8   24,714.9       26,116.0
impairment of goodwill                    --          --         -92.6          --
other unusual items                       988.0       --         --             --
income tax expense                        7,565.2     3,749.8    6,883.9        8,406.8
minority interest in earnings             -3.0        1.8        70.9           2.6
earnings from continuing                  15,684.1    17,449.0   17,738.4       17,709.2
net income                                15,681.1    17,450.8   17,809.3       17,711.8
net income to common including            15,681.1    17,450.8   17,809.3       17,711.8
extra items

Assignment of Banking and Finance                                                          Page 48
National Bank Of Pakistan


                            Total Revenues







              2008             2009      2010   2011


                         Cost of Goods Sold







            2008              2009      2010    2011


Assignment of Banking and Finance                      Page 49
National Bank Of Pakistan

                               Gross Profit







              2008             2009            2010   2011









              2008              2009           2010   2011


Assignment of Banking and Finance                            Page 50
National Bank Of Pakistan

               Total ebt, excluding unusual items






            Category 1        Category 2   Category 3   Category 4


                         Impairement of Goodwill
  -10        2008              2009          2010         2011



Assignment of Banking and Finance                                    Page 51
National Bank Of Pakistan

                            Other Unsual Items






              2008              2009                  2010       2011


                         Income Tax Expenses
                                    Income Tax Expenses

              2008              2009                      2010   2011


Assignment of Banking and Finance                                       Page 52
National Bank Of Pakistan

                            Minority Interest



 50                                                                   2008
 40                                                                   2009
 30                                                                   2010

 20                                                                   2011


           2008             2009          2010          2011









               2008                2009          2010          2010

Assignment of Banking and Finance                                            Page 53
National Bank Of Pakistan

                               NET INCOME

                                    Net Income







                2008                2009         2010   2011

Assignment of Banking and Finance                              Page 54
National Bank Of Pakistan

                            SWOT ANALYSIS
   Public confidence
   Sound financial strength
   Highest profitability
   Vast operational network
   Role in economic development
   Utility bills collections
   Corporate branches
   Evening banking
   Efficient home remittance
   Recognition of hard work of staff
   Internet access (
   Pension & salaries payments
   Online city branch

   Lack of good delegation
   Inadequate, poorly placed network technology
   Complex MIS
   Deep rooted bureaucratic approval

Assignment of Banking and Finance                  Page 55
National Bank Of Pakistan

   Lack of long term & short term plans
   Less share in import & export business
   Poor resource utilization
   Need better service policy
   Frequent change in senior management

 New style management
 Introduction of new products and services
 Introduction of new technology & electronic banking
 Capital management & equity financing
 Secondary market operations
 New deposit scheme

 Establishment of new private financial institutions & expansion
 Govt. sponsored schemes
 Political pressure
 Reducing branch network
 New products form private Pakistan Establishment of new private financial institutions &
 New products form private Pakistani & foreign banks
 Non-banking institutions
 Inability to change
 Inability to change
 Stakeholders interests

Assignment of Banking and Finance                                                     Page 56
National Bank Of Pakistan

                              PEST ANALYSIS
   Privatization policy and deregulation.
   Impact of subsidized credit affecting and Silkbank’s.
   Employment practices, Unions, Associations.
   Political Interference and harassment.
   Incidents of high taxation on banking industry.

   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.

   Inadequate communication infrastructure.
   Inadequate computer facilities.
   Inadequate IT training.

Assignment of Banking and Finance                                         Page 57
National Bank Of Pakistan

A detailed study of the organization made it to conclude that in era of decomposition and de-

formalization, the survival of an organization is now multidimensional. Today’s organization is

not related to managing things but now it is moving towards the creation if opportunities is the

main purpose of the manger. Every manger can be seen in the roll of a leader. The era of

restricted and bureaucratic environment has gone. Now the manager is more realistic for problem

& the use of computerized network is necessary to survive.

       It is observed that National bank of Pakistan, as a purely financial institution has its own

cultural environment and the functions of the bank run according to this environment but the

changing environment demands for a change, a change which is unique in nature. No doubt the

National bank of Pakistan is one of the successful banks in the Pakistan, but still some

alternatives are required for a pace to the change. As advance use of information technology and

informational change will bring a roll of performance to bank.

The executive class and the upper management of the bank are highly trained and well

experienced as for as the operational area of the bank are concerned. But unfortunately they are

operational where existence of regulation is stresses. This is era of deregulation, but they simply

ignore the reality. The management should change them with the changing environment. The

awareness of staff from the goals of the organization is extremely important and they require a

roll in the setting of regulation and implementation of rules.

Assignment of Banking and Finance                                                          Page 58
National Bank Of Pakistan

    Market Driven Strategies
       Keeping in view the long term goals and objectives of any financial institutions, NBP
       will has to focus on the achievement of the market driven strategies. It has to focus the
       challenges and avail the opportunities to get the maximization of goals. And then the
       people working in the organization in order to make the process of achieving the
       objectives easier must understand these goals of the organization. For the purpose a
       written copy of goals should be provided to the bank employees in which each and every
       aspect of strategies, consequences, responsibilities, and ultimate objectives are explained
       in a comprehensive and clear wording.

    Better Communication
       Communication is the backbone of any organization to run. For satisfactory function it is
       necessary that the orders and demands should be properly communicated to the
       concerned subordinates. National bank of Pakistan is very weak in communication skills.
       Although it is now preparing itself information technology and video conferencing but
       still it is too late. It should be implementing immediately.
    Modernization Of The Technology
       Although national bank of Pakistan is one of the leading banks of the country still it
       requires some way to modernize the bank’s operations. The installation of computerized
       information system is necessity of the bank to compete the private banks of the country.
       Communication means among the branches should be modified with installation of
       computerized networking all over the network of branches in the world. This will save
       time of the organization but also money of the bank. All private banks have networking
       of this type, which makes available the records of all the customers throughout the
       country, hence the customer incase his cheque from any branch of the bank without any

Assignment of Banking and Finance                                                         Page 59
National Bank Of Pakistan

       inconvenience. If national bank of Pakistan will provide this facility, it will play a roll of
       milestone to the up heights.
       The culture of ATM cards has already been established in the major cities but still lacks
       in the other areas. This system should be given wide ranges that will not only help in
       minimizing the main staff of the bank but it will also generate a customer satisfaction.

    Implementation Of Personal Policies
       As far as the personal problems of enrollment, promotion, transfer, and training etc are
       concerned; the only bone of connection is violation of rules, Nepotism, favoritism, and
       barbarism are the catalysts of the evil, which is now-a-days common in all government
       controlled organizations without any exception. This is only possible if all the employees
       joint their hands for eradication of these evils. There should be a proper checking system
       in the organization to avoid the embazerment of other.
       The bank needs to adopt the scientific tools of the personal management like job
       description and job analysis which will help in the justified promotion and reward
       system. This will also prevent the exploitation of the staff.
       Salary is the most important thing for staff. The salary packages of the bank should be
       make compatible with the packages offered by private banks otherwise bank will loose its
       highly qualified staff and creative minds as they may accept the other offer of other banks
       for better package.
    Liberalization
       The age of bureaucracy has gone. Every organization in this modern world is looking for
       free and liberal management system where workers and staff members are given their due
       part in the decision making of the organization regarding strategies, goals, and functions
       of the organization. National bank of Pakistan, if want to meet the challenges of the
       modern world must decentralized and deregulate its system and let the staff to participate
       in the affairs of the bank. This will produce the environment of the friendship in the bank
       and will bring loyalty to the organization.

Assignment of Banking and Finance                                                           Page 60
National Bank Of Pakistan

       The unnecessary rule other Head Quarter should be minimized as much as possible. The
       branch manager and working staff should be given the authority, which is necessary for
       their successful performance, which will bring innovation in the functional area, as many
       minds can think more.

    Regular Market Research
       It has been suggested that the bank should establish a systematic research system in the
       research centers of the bank. Research is required to meet the challenges of newly
       emerging environment of competition in the financial market. There is a lot of
       uncertainty of future in the world market that can only be handled with efficiency of the
       bank continues research of its market.

    Minimization Of Losses
       The branches running in losses have been closed but still there are few branches still
       running in losses. These branches are mostly in the remote areas of the country and
       should be closed down. As a business concern the main objective of the bank is to
       minimize the losses and maximize the profits if the bank is successful in doing so it will
       be a liability to the bank. The staff working in the braches where the workload is greater
       than the staff strength, the staff should be well utilized. The bank should also emphasize
       on the establishment of newly emerging industrial areas.

    Marketing Strategies
       National bank of Pakistan has failed to propagate its services property. It is suggested that
       it should apply the strategies where every staff member of the bank is part of the
       marketing activities. The same strategy is used in Union Bank where every person is
       given the advantage of the bank is part of the marketing activities. The same strategy is
       used in Union Bank where is given the advantage of the deposits he introduced. In this
       way every person tries his best to elaborate the bank in front of customers and they also
       courteous to the customer. The staff should also be given proper training for the purpose.

Assignment of Banking and Finance                                                           Page 61
National Bank Of Pakistan

       Another weak point is that does not have any broacher or pamphlet. Marketing material
       like this should be kept at a very branch of the bank including the introductory notes of
       the new offers and investment packages. The bank should also involve itself in different
       Societal marketing is also the most popular and result oriented style of marketing. Every
       business organization seems to be the part of this type of marketing but National Bank of
       Pakistan does not have any such activities. It is suggested that NBP should perform
       society factor in its marketing.
       National bank of Pakistan has the advantage of being as government controlled bank and
       the common people trust in more than any other private or multinational bank but the
       only grievance is that of customer service which if eliminated can do a lot for the bank in
       terms of its reputation as well as in terms of money.

    Need To Be Specialized
       Up-till now the bank is working in the environment of general banking which limited the
       scope of operation of the bank. Now it is needed to be converted into a specialized
       financial institution. It should deal with the various moods if financial matters. It should
       offer special scheme of investment for public and it should apply now means of


          The first important thing is the discussions with the staff of the bank.
          Mr. Arshad O.G III
          Mr. Yousaf AVP
          Miss Maham O.G.II
          MBA (IRM) by
          Surfing the website of the National Bank of Pakistan. (
          Reading the annual reports of the bank.

Assignment of Banking and Finance                                                          Page 62

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