CHAPTER 1 INTRODUCTION
1.1 BACKGROUND OF STUDY
Financial institutions operating in country are the strength of the economic growth of the country. The Banking sector is one of the exampled of financial institution, which can play a very vital role in the development of the over all economy of a country. Banking sector has now become a very challenging field with the advent of modern technology of in creased competition. The role of banking sector is very important for the development of the country but as for as Peshawar is concerned, the Banking sector has been very advantageous to it, because of the huge amount of remittances from abroad and other parts of the country. This report attempts to present the study of National Bank focusing its Peshawar city Branch. It is based my 06-weeks internship.
1.2 PURPOSE OF STUDY
The purpose of the study is to work in real life situation and learn banking practice by doing. In this context its objectives are: 1. To analyze banking operations i.e. operational analysis, financial analysis.
2. To develop concrete and feasible recommendations .
1.3 SCOPE OF WORK
The scope of this particular report confined to the National Bank NLI Market Peshawar city Branch.This report may help students to understand the banking activities 2 of NBP in our country and to evaluate the overall performance of NBP through detail analysis of daily activities.
I worked in different departments of NBP but my main focus was on Cash department. This department deals with the acceptance of utility bills, payment of cash, acceptance of treasury receipts and receipts of cash deposits etc.
During internship one needs to collect quality information about the organization as much as possible. Following are the main sources from where I collected the data.
1.4.1 Primary Data:
Data that have been originally collected and have not undergone any statistical analysis I collected primary data for the report 1. Through personal observation 2. Through discussion with managers of different departments of Bank .
1.4.2 Secondary Data:
Data that have been undergone any statistical analysis and collected from some previous data 1. Manual 2. Annual report 3. Internet 4. Documents published by the bank
1.5 SCHEME OF THE REPORT
I have divided my report into relevant chapters. Chapter No 1: It includes background of study, purpose, scope of work, which methodology is used for the collection of the data Chapter No 2: It includes overview of the organization
Chapter No 3: It’s about the organizational structure Chapter No 4: it includes critical analysis Chapter No 5: consist of SWOT Analysis. Chapter No 6: consist of the conclusion and recommendations based on findings from the study.
HISTORY OF NATIONAL BANK OF PAKISTAN
CHAPTER 2 HISTORY OF NATIONAL BANK OF PAKISTAN
2.1 Brief History
National Bank of Pakistan (the bank) was established under the National Bank of Pakistan Ordinance 1949 and is listed on all the stock exchanges in Pakistan. It’s registered and head office is situated at I.I.Chundrigar road, Karachi. The bank is engaged in providing commercial banking and related services in Pakistan (GOP) as agent to State Bank of Pakistan (SBP). The bank operates 1,219 branches in Pakistan and 19 overseas branches. Under a Trust Deed, the bank also provides services as trustee to National Bank of Pakistan investment Trust (NIT) including safe custody of securities on behalf of NIT. At the time of independence in 1947, Government of Pakistan decided that Reserve Bank of India would act as the common monetary authority of both countries up to September 1948. But this arrangement did not worked due to certain reasons. In October 1947, there was fighting in Kashmir and India refused to pay the share of Pakistan amounting Rs.550 million. Due to Indian government attitude and role of Reserve Bank of India in creating problems to cater to the banking needs of Pakistan. Government of Pakistan established its own central bank “SBP” on 1st July 1948. Soon after independence of Pakistan, most of our foreign trade was with India and Britain. Britain and other countries of Commonwealth devaluated their currencies. India also followed Britain and devalued her currency. They were also compelling Pakistan to do so. Stocks of jute in East Pakistan and that of cotton in West Pakistan were accumulating. At that time to rescue the economy of the country, the Government of Pakistan established National Bank of Pakistan under National Bank of Pakistan Ordinance 1949. NBP acted promptly and advanced loans to the farmers. National Bank of Pakistan was set up with authorized and paid-up share capital of Rs.30 (M).
The government held 75% of shareholding and remaining 25% of the share capital was held by the private sector. In 1952 NBP replaced Imperial Bank of India. Mr. Mumtaz Hassan as Acting Governor of SBP negotiated this arrangement. In 1962 when Mr. Mumtaz Hassan became MD (He had already served NBP for 10 years as its Chairman or Government Director), at that time NBP’s branches were increased from 6 to 239 and deposits from Rs.5 core (50million) to 106 core (1 billion & 60 million), profit from 0.3 million (3 lack) to 21 million (2.1 core) and the staff increased from 380 to 7091 as compared to year 1949-50. In December, 1966 its 600th branches was opened raising the Deposits to 2.31 billion and staff to 14, 963. Up to 1965, the shareholders had received 225% of their original investment. In 1974 during the era of nationalization, different small banks including Bank of Bahavelpure were merged in National Bank of Pakistan. In addition to this Bank of Mehran and NDFC were merged in it. 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.
2.2 NATURE OF ORGANIZATION
NBP is a financial sector of economy. It provides credit lines for project financing like LMM and ISDA etc. it invest in government securities and bonds. It keeps the deposits of the people and provides lockers and agency services. It acts as an agent of the SBP. NBP performs some general functions on behalf of the Government of Pakistan like distribution of salaries to the government servants and payment of pensions to hundreds of thousand of pensioners across the country.
2.3. BUSINESS VOLUME
Assets Bank paid up capital Net assets Share capital Reserves Earning per share is Amount Rs8969 millions Rs102459218 Rs8154319 Rs15772124 Rs23.3
2.4 Products Line 2.4.1 Domestic Remittance Products 18.104.22.168 Demand Drafts
NBP offers safe, speedy and reliable way to transfer money through Demand Drafts at very reasonable rates. Any person whether an account holder of the bank or not, Can purchase a Demand Draft from a bank branch. Amount is credited by bank in the account only when the Demand Draft is crossed. The bank charges for Demand Draft are given in the NBP Tariff circulated bi-annually.
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22.214.171.124 Traveler’s Cheques
Negotiability: Validity: Availability: Encashment: Limitation: Safety: Pak Rupees Traveler’s Cheques are a negotiable Instrument. There is no restriction on the period of validity. At 700 branches of NBP all over the country. At all 400 branches of NBP No limit on purchase NBP Traveler’s Cheques are the safest way to Carry our money.
126.96.36.199 Pay Order
For transferring money within the City, NBP provides another product “Pay Order” which is a secure and easy way to move money. And, as usual, NBP’s charges for this service are extremely competitive.
188.8.131.52 Mail Transfers
Move your money safely and quickly using NBP Mail Transfer service. And we also offer the most competitive rates in the market. One of the requirements to affect remittance through Mail Transfer is that the customer should be an Account Holder. WAPDA is only one company in Pakistan which is exempted from any bank charges on Mail Transfer of money. circular bi-annually. Otherwise, Bank charges a certain amount on for effecting remittance through Mail Transfer. Bank Charges are announced through a
184.108.40.206 Foreign Remittances
To facilitate its customers in the area of Home Remittances, National Bank of Pakistan has taken a number of measures to: 1. Increase home remittances through the banking system
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2. Meet the SBP directives/instructions for timely and prompt delivery of remittances to the beneficiaries.
220.127.116.11.1 New Features:
The existing system of home remittances has been revised/significantly improved and well-trained field functionaries are posted to provide efficient and reliable home remittance services to nonresident Pakistanis at 15 overseas branches of the Bank besides Pakistan International Bank (UK) Ltd., and Bank Al-Jazira, Saudi Arabia. 1. Zero Tariffs: NBP is providing home remittances services without any charges. 2. Strict monitoring of the system is done to ensure the highest possible security. 3. Special courier services are hired for expeditious delivery of home remittances to the beneficiaries.
2.4.2 RETAIL BANKING PRODUCTS
18.104.22.168 NBP SAIBAAN: HOUSING FINANCE
In line with vision of President NBP, the Commercial & Retail Banking Group at NBP has recently launched a housing finance scheme under the brand name of “NBP – SAIBAN” This scheme covers all sections of the society with monthly income starting from as low as Rs.5000/- per month *(Conditions apply) This retail/consumer financing product is branded as ‘NBP Saibaan’ (Housing for all), the scheme offers a maximum loan of Rs.10 million in accordance with the debt burden criterion. Loans are available 1. Home Construction,
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2. Home Purchase 3. And Home improvement. For Home improvement Loans the maximum amount is Rs.2.00 Million. Home Construction and Home Purchase loans can be repaid over a period of 20 years, whereas the repayment period for Home Improvement loan is 15 years.
22.214.171.124 What Is NBP Saibaan?
NBP Saibaan is the most affordable House Financing Scheme. You can avail now and repay over a 3 to 20 years period. Home purchase loans up to 10 million 1. Home reconstruction loans up to 10 million 2. Home improvement loans up to 2.0 million 3 to 15 years)
1. Mark-up choices 2. Grace period option 3. Convenient 4. Structured and programmed 5. Minimum approval and Disbursement timing
126.96.36.199 Required Documents
Applications Form along with 1. Two attested passport size Photographs 2. Two attested copies of your National Identity Card 3. Cheque for the processing charges
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188.8.131.52 Property Documents
Any title document available (other documents may be required) and for Salaried Persons, Whose Salaries Are Disbursed Through NBP Branch 184.108.40.206.1 Employer Undertaking for remittance of salary at relevant NBP branch for credit to customer’s account ( to be provided at a later stage, format available at relevant branch) 1. Employee ID Copy attested by NBP Branch (where applicable) 2. Attested copies of last three (3) months salary slips 3. Attested copies of last three (3) months bank statements.
220.127.116.11.2 For Salaried Persons of MNCs and NBP Approved Companies
1. Employer Undertaking duly attested by relevant NBP Branch, where applicable (to be provided at a later stage, format available at relevant Branch) 2. Attested copies of last three (3) months Salary Slips 3. Letter of Verification of Employment on Company 4. Letterhead mentioning the date of joining. 5. Attested copies of last three (3) months bank statements.
18.104.22.168.3 For Other Salaried Persons
1. Letter of Verification of Employment on Company Letterhead mentioning the date of joining 2. Attested copies of last three (3) months Salary Slips 3. Attested copies of last twelve (12) months bank statement. 4. Attested copies of last three (3) months paid bills for electricity and telephone. 5. OR Copies of last (12) Twelve months credit card bills (which ever is available)
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22.214.171.124.4 For Business Persons
1. Bank Certificate stating applicant maintaining Business Account and the date of account opening. 2. Attested copy of latest Form 29 in case of Private or Public Limited Company.
3. Attested copy of Partnership Deed (where applicable )
126.96.36.199.5 For Self- Employed Persons
1. Attested copy of current membership/practicing certificate. professional association
2. Adequate proof of professional engagement like bank certificates 3. Attested copy of Partnership Deed (where applicable 4. Any other document may be required on case to case basis by the bank. 188.8.131.52 Mark Up Rates
184.108.40.206.1 Fixed Rate Option
1. Priced at 10 years PIB rates plus 3.5% with re-pricing after 10 years 2. (Subject to a minimum floor)
220.127.116.11.2 Variable Rate Option:1. SBP Discount Rate with 12 months re-pricing (subject to a minimum floor)
18.104.22.168.3 Processing Fee
1. For government employees including NBP employees irrespective of the finance amount Rs.500/ 2. For Others 3. Financing below Rs.1 million: Rs.1000/4. Financing between Rs. 1 to 4 million: Rs.3000/5. Financing above Rs. 4 million: Rs.6000/-
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22.214.171.124 Who Can Apply
1. You are a Resident Pakistani national 2. You are aged between 21 and 62 years at the time of application/disbursement of loan 3. You are a salaried person, self-employed professional or business person. 4. You have a Net Take Home income not less than Rs.5000/- per month (Govt. and related organization employees) and Rs.10,000/per month (for other salaried class) Rs.15,000/- per month (for business persons and self employed) 5. Your property is located in NBP approved localities 6. Your duration of service is: Two years for salaried and three years for Self-Employed/Business Persons.
2.4.3 NBP ADVNANCE SALARY
National Bank of Pakistan is offering another Retail Banking product under the brand name of “NBP Advance Salary”. NBP posted an exceptional growth in NBP Advance Salary. Presently there are Over 500,000 customers of this product. NBP is maintaining approximately 1.7 million salary accounts of government/semi-government employees. To tap these potential borrowers, NBP introduced this product .
This product is for NBP account holders who are permanent employees of the Federal, Provincial government, semi-government, autonomous, semiautonomous, local bodies and other government corporations including NBP whose salaries are disbursed through NBP.
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The documentation is minimal and documentation formalities can be easily fulfilled. The prospective customer has to submit following documents/information before sanction/approval of loan:1. Loan Application Form 2. Attested copy of NIC 3. Two References (preferably account holder of the bank)
126.96.36.199 Maximum Amount of Advance
The maximum limit under NBP Advance Salary Scheme is 15 net take home salaries or Rs 490,000/- whichever is lower.
Repayment period is up to 5 years. Repayment under this scheme is only by debit of the salary account (through direct debit system) i.e. the facility will be repaid from the employee’s salary each month.
188.8.131.52 Sanction Power
Branch Managers can approve, sanction and disburse strictly in compliance with the parameter of the scheme. Approval of higher amounts will be strictly in compliance with business discretionary powers.
Whenever customer requests for enhancement in the limit then a fresh application form and new documentation are required. 184.108.40.206 Other Features 1. Rate of mark-up is 13% 2. Minimum net take home salary of Rs 5,000 per month is required 3. Debt burden requirement is 33% 4. No processing charges, no collaterals, no guarantees, no insurance
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2.4.4 AGRICULTURAL FINANCE
NBP provides Agricultural Finance to solidify faith commitment and pride of farmers who produce some of the best agricultural products in the World .
220.127.116.11 Agricultural Finance Services
I Feed the World” program, a new product, is introduced by NBP with the aim to help farmers maximize the per acre production with minimum of required input. Select farms will be made role models for other farms and farmers to follow, thus helping farmers across Pakistan to increase production .
18.104.22.168 Agricultural Credit
The agricultural financing strategy of NBP is aimed at three main objectives:1. Providing reliable infrastructure for agricultural customers. 2. Help farmers utilize funds efficiently to further develop and achieve better production. 3. Provide farmers an integrated package of credit with supplies of essential inputs, technical knowledge, and supervision of farming.
2.4.5 NBP KISAN DOST
The salient features of NBP Kisan Dost are as follows:1. Loan available for the farmers for production, development purposes 2. Loans are also available for purchase of tractors, for installation of tube wells, for purchase of agricultural implements, micro loans, for godown construction, for construction of fish pond, for livestock farming, for milk processing, for cold storage, bio-gas plants etc 3. Mark-up rate is 11 % per annum 4. Loans available at the farmer’s doorsteps
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5. Agriculture experts to guide farmers
2.4.6 Foreign Trade and Foreign Exchange 22.214.171.124 Letters of Credit
NBP is committed to offering its business customers the widest range of options in the area of money transfer. If you are a commercial enterprise then our Letter of Credit Service is just what you are looking for. With competitive rates, security, and ease of transaction, NBP Letters of Credit are the best way to do your business transactions.
126.96.36.199 Foreign Currency Accounts
NBP is facilitating its customers who are either sending remittances from abroad or their near ones send money in foreign currency by opening foreign currency accounts in US$, Pound Sterling etc.
2.4.7 General Banking
188.8.131.52 Short Term Investments NBP now offers excellent rates of profit on all its short term investment accounts. Whether you are looking to invest for 3 months or 1 year, NBP’s rates of profit are extremely attractive, along with the security and service only NBP can provide.
184.108.40.206 National Income Daily Account (NIDA)
The scheme was launched in December 1995 to attract corporate customers. It is a current account scheme and is part of the profit and loss system of accounts in operation throughout the country.
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2.4.8 Corporate/Commercial Finance 220.127.116.11 WORKING CAPITAL AND SHORT TERM LOANS
NBP specializes in providing 1. Project Finance – 2. Export Refinance to exporters 3. Pre-shipment and Post-shipment financing to exporters 4. Running finance 5. Cash Finance 6. Small Finance 7. Discounting & Bills Purchased 8. Export Bills Purchased/Pre-shipment/Post Shipment Agricultural Production Loans.
2.4.9 MEDIUM TERM LOANS AND CAPITAL EXPENDITURE FINANCING
NBP provides financing for its clients’ capital expenditure and other long-term investment needs. By sharing the risk associated with such long-term investments, NBP expedites clients’ attempt to upgrade and expand their operation thereby making possible the fulfillment of our clients’ vision.
18.104.22.168 International Banking
National Bank of Pakistan is at the forefront of international banking in Pakistan which is proven by the fact that NBP has its branches in all of the major financial capitals of the world. Additionally, we have recently set up the financial institution Wing, which is placed under the Risk Management Group. The role of the Financial Institution Wing is:To effectively manage NBP’s exposure to foreign and domestic
correspondence manage the monetary aspect of NBP’s relationship with the correspondents to support trade, treasury and other key business areas, thereby contributing to the bank’s profitability .
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Generation of incremental trade-finance business and revenues
22.214.171.124 NBP offers:
1. The lowest rates on exports and other international banking products 2. Access to different local commercial banks in international banking
2.4.10 Student Loan Scheme
NBP is offering student loan which is interest free for financial assistance of needy students who have good educational record. launched in pursuance of announcement made by the Federal Finance Minister in his budget speech for 2001-2002 in collaboration with Government of Pakistan and major commercial banks including NBP. Under the scheme, financial assistance is provided by way of interest free loans to meritorious students who have financial constraints for pursuing their studies in scientific, technical and professional education within Pakistan. The scheme is being administered by a high powered committee comprising Deputy Governor, State Bank of Pakistan, Presidents of Commercial banks and Deputy Secretary, Ministry of Finance, Government of Pakistan . The scheme was
Under the scheme the students are eligible to apply for loans provided:1. He/She has obtained admission on merit in the approved
Universities/colleges of the public sector. 2. He/She falls at the time of admission with the age bracket of 3. For Graduation (Not exceeding 20 years) 4. For Post-Graduation (Not exceeding 30 years) 5. For Ph. D (Not exceeding 35 years) 6. He/She has secured 70% marks in the last public examination 7. He/She has undertaken the study of the approved subject.
8. He/She is unable to pursue studies due to financial constraints .
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126.96.36.199 Types of Loan
The loan facility will be available for the entire duration of the study for:1. Schedule Fee (Paid directly to the university/college). 2. Boarding Expenses excluding meal charges (paid directly to the university/college).
3. Procurement of textbooks-disbursed directly to the student .
The maximum period of repayment of loan is 10-years from the date of disbursement of first installment. The borrower shall repay the loan in monthly installment after six months from the date of first employment or one year from the date of completion of studies, which ever is earlier.
2.4.11 Employees Services Safety, Health and Welfare
National Bank of Pakistan is not only a commercial institution but also a welfare institution, who always strive for the well being and welfare of the employees and in this regard offers following benefits to its employees.
1. Pension, insurance, gratuity and provident fund facility 2. Free medical facility for self, family and parents. 3. Scholarships for children. 4. Housing facility in the shape of housing colony in the big cities. 5. School fees for the children. 6. Car loan, Computer loan and House loan facility at easy Installments. 7. Five bonuses and awards to all employees every year. 8. Market based salary structure and increase in the salary every year. 9. Establishment of NBP Staff Welfare Trust.
188.8.131.52 Staff Loan
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To motivate employees of the bank, NBP is offering different loan facilities at subsidized rates. Following loan facilities are offered by the bank:1. Computer Loan 2. Motorcycle Loan 3. Motorcar Loan 4. House Building Loan 5. Clean Running Finance
2.4.12 Motorcar Loan 184.108.40.206 Eligibility
All confirmed employees having service of 3 years can avail this loan facility .
Loan is repayable in 10 years with equal monthly installments .
2.4.13 House Building Loan 220.127.116.11 Eligibility
All confirmed employees having service of 5 years can avail this loan facility .
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clerical/non-clerical staff having basic pay of above Rs 10,000/- then can avail facility up to 100 basic pays. 2. 100 basic pays for all officers.
18.104.22.168 Rate of Interest
Loan amount upto Rs 600,000/- is interest free for all officers, and for loan amount above Rs 600,000/- rate of mark-up is 3% per annum. Repayment Loan is repayable in 20 years with equal monthly installments .
The competitors of the National Bank of Pakistan are as follows: 1. Askari Bank 2. Habib Bank Limited 3. United Bank Limited 4. First Woman Bank 5. Muslim Commercial Bank 6. Bank of Punjab 7. Dubai Islamic Bank 8. National Savings 9. Allied Bank Limited 10. Saudi Pak Commercial Bank etc.
2.6 Work done by me in National Bank of Pakistan Peshawar city Branch
There are 14 branches in Peshawar region and all the transactions of these branches are handled by main branch. All the branches send there transaction summaries to main branch on daily basis and main branch transfer these transactions into relevant heads and send all government receipt and payments to state bank of Pakistan and relevant departments of the government .
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2.7 Mission Statement
“To be recognized as a leader and brand synonymous with trust, highest standards of services, quality, international best practices and social responsibility’’.
2.8 Vision Statement
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.
2.9 Core Values
NBP aims to be an organization that is founded on: Growth through creation of sustainable relationship with its customers. 1. Prudence to guide its business conduct. 2. A national presence with a history of contribution to its communities 2.9.1 NBP Shall Work to: Meet expectations through market-based solutions and products. Reward entrepreneurial efforts 1. Create values for all stakeholders. We aim to be people who 2. Care about relationships 3. Lead through the strength of its commitment and willingness to excel. Practice integrity, honesty and hard work. measures of true success. We have confidence that tomorrow we will be an organization maintaining the trust of its stakeholders. An innovative, creative and dynamic institution responding to the needs of the internal and external Leaders in its industry environment . We believe that these are
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2.9.2 Code of Ethics and Practices
NBP is cognizant of the importance of code of ethics to deliver best services to its customers and introduced Code of Ethics which lays down fundamental principles of personal and professional conduct for all employees of NBP. These principles are as follows:1. Integrity 2. Confidentiality 3. Professionalism 4. Compliance
Employees are required to behave with integrity and honesty in their dealings with customers and other parties with whom they interact and in respect of all internal matters.
All employees have a duty to safeguard confidential information obtained in the normal course of business and respect for customers’ private affairs which requires the same care as does the protection of the bank’s funds or other interests.
All employees should carry out their duties in a professional and courteous manner. Financial matters should be conducted in a prudent manner and maintain maximum level of dignity when interacting with employees of opposite sex.
All employees should be fully committed that all business decisions and actions comply with all applicable laws and regulations.
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ORGANIZATIONAL STRUCTURE 3.1 Organizational Structure of NBP Organizational Chart
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)
3.2. NUMBER OF EMPLOYEES:
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Table # 3.1
PERMANENT TEMPERORY /CONTRACTUAL BASIS BANK OWN STAFF STRENGTH OUT SOURCED TOTAL STAFFF STRENGTH NUMBER OF EMPLOYEES IN PESHAWAR CITY BRANCH NUMBER OF EMPLOYEES IN PESHAWAR CITY BRANCH 18 1327 842 1479 2350 16429 85
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Chief Operation Manager (CRA)
Manager Credit Processing
Manager Credit Operation
[Sections] FEX Export Import Remittance F/C A/C
[Sections] Reconciliation Dispatch Dead Stock Security Staff Welfare Audit /Inspection To sign all Br. Returns Money Laundering .etc
3.3. MAIN OFFICES
The Head Office of the National Bank of Pakistan is at Karachi. NBP carries on its business all the way through a wide set up of branches those are situated in the country and out of the country very professionally and in point of fact. All branches execute their functions under the rule of local Regional Offices and regional offices are proscribed by the Head Office situated a superb building in the heart of Karachi’s center. NBP has a wide domestic and overseas branches.
3.4 Departments in a Branch of NBP
3.4.1 Cash Department
A department that deals with the real payment and receipts of cash is called cash department. This department is headed by a Head Cashier and is responsible for the following duties. 1. Acceptance of utility bills. 2. Payment of cash. 3. Receipt of cash deposits. 4. Acceptance of Treasury receipts. 5. Custodian of Gold ornaments. 6. Custodian of Cash. 7. Custodian of all the Security Documents of the Branch. 8. Custodian of all the keys of the Bank Branch Office. 9. Liaising with the Passing Officers of both Current and PLS account section of the branch. 10. Liaising with the Branch Manager and Operations Manager for the availability of cash in the Branch.
3.4.2 Deposit Department
1. Current account section 2. PLS account section 3. MIS account section
4. TDR account section.
22.214.171.124 Current Account Section
1. Cheques are presented to the Posting Clerk on the counter .
2. He enters the cheques in the ledger and hand over the ledger to the Passing Officer. 3. The Passing Officer passes the cheques and authenticates the balances in the ledger. 4. Then enter the cheques in the payment side of his scroll and hand over the cheques to the Cash department for payment.
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126.96.36.199 PLS Account Section
The PLS Section performs the same function as Current account Section but separate scrolls are used by each section.
188.8.131.52 MIS Account Section
MIS stands for Monthly Income Scheme. This section performs the following functions. 1. Offering a wide range of products for various time periods i.e. Ten years, Five years, Four years, Three years, Two years, one year, Six months, Three months, one months etc. 2. Procurement of deposit at different differential rates of profit and issuance of MIS certificate 3. Encashment of MIS Certificates on eve of maturity. 4. Application of profit on monthly basis and crediting of profit to the respective accounts of the MIS holders.
184.108.40.206 TDR Account Section.
TDR stands Term Deposit Receipt: this section performs the following job. 1. Offer various time based profit payment services to the purchasers of the Term Deposit Receipts. 2. Application of profit on the various TDR instruments 3. Encashment of TDRs on the maturities of the instruments.
3.4.3 Bills and Remittance Department
1. Issuance of Mail Transfer (MT) 2. Issuance of Telegraphic Transfer(TT) 3. Issuance of Demand Draft (DD) 4. Issuance of Term Deposit Receipt (TDR) 5. Issuance of Payment Orders (PO) 6. Issuance of Call Deposit Receipt (CDR) 7. Payment of Demand Draft 8. Payment of Mail transfer 9. Payment of Telegraphic Transfer
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3.4.4 Clearing/Collection Department
This department is headed by an officer in charge of the bank and has the following functions. 1. Receipt of cheques for inward and outward clearing 2. Entry of cheques on the Transfer credit slips. 3. Signing of concerned officer on the Transfer credit slips and handing over a subjoined of the slip to the customer. 4. Entry of cheques received for clearing in the subsidiary day book. 5. Stamping on the face and back of the cheques along with stamping on the transfer credit slips 6. Endorsement signatures on the back of the cheques received for clearing. 7. Entry of all the cheques (Bank vise) in the Clearing Register and preparation of summary along with the total amount of cheques to be sent for clearing. 8. Preparation of clearing sheets with the signatures of the authorized officer. 9. Putting of all the cheques in a bag with a seal. 10. Handing over the bag to the representative of the Clearing House.\
3.4.5 Credit/Advances Department
This department offers the following products: 1. House purchase/renovation/construction loans. 2. Fifteen advance salaries to the Govt. employees. 3. Demand Finance 4. Running Finance 5. Demand Loan 6. Small Finance 7. Small Loan 8. L.M.M.(locally Manufactured Machinery) loan 9. I.D.A Loan 10. Mortgage Loan 11. Cash Finance 12. Student Loan 13. Marketing of Financial products of the bank.
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14. Liaising with the businessmen and industry. 15. Documentation of the pledged assets and Creation of charge 16. Disbursement of loans. 17. Application of mark-up 18. Recovery of loans. 19. Visit to the borrowers and checking of hypothecated stocks.
20. Preparation of State Bank of Pakistan Statements .
3.4.6 COMPLIANCE DEPARTMENT
This department is supervised by a Compliance Officer and has the following duties. 1. Assuring of foolproof banking system. 2. Implementing an effective internal control within the branch. 3. Surprise checking of various jobs of the bank. 4. Coordination with the internal audit of the bank. 5. Coordination with the SBP audit. 6. Preparation of Remarks Sheets. 7. Preparation of Clearance Certificates. 8. Preparations of Daily Review Sheet.
9. (KYC) Know your customer implementation. Inspection of Branch
3.4.7 Branch Operation 220.127.116.11 NBP General Account 18.104.22.168.1 Deposit Accounts
Under this heading we are describing the types of accounts in which the bank receives money from general public at different rates of interest and different terms and conditions. Now NBP has set a limit of amount that should be in every account which is Rs.5000/-. By Discussion, we came to know that NBP has made a rule to deduct Rs.50/- per month if the balance in an account is less than Rs.5000/-. But, in case of students, widows, pensioners, and salaried persons, there is no such deduction on balance. Following are the most common types of deposit accounts opened in a branch of NBP. 1. Current Account
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2. Perpetual Income Deposit Account. 3. PLS Term Deposit Account. 4. Monthly Income Scheme (MIS). 5. National Income Daily Account. (NIDA) 6. Call Deposit Account. 7. PLS Saving Account.
22.214.171.124.4 Bills Discounted and Purchased
1. Demand Drafts Purchased Account. 2. Protested Bill Account. 3. Home Remittances Payable Account. 4. Pak Traveler’s Cheque (TC) Purchased A/C. 5. Inland Bills Discounted. 6. Acceptance for Constituent Liability A/C.
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CHAPTER 4 CRITICAL ANALYSIS
4.1 Financial Analysis
The strength of any organization can be better judged by analyzing its balance sheet and its other statements of accounts. The financial statement of any organization shows the results of its operation and its position in business.
National Bank of Pakistan Condensed Interim Statement of Financial Position As at March 31, 2011
(Un-Audited) (Audited) (Audited) March 31 2010 Note----------------- (Rupees in '000) ---------------ASSETS Cash and balances with treasury banks Balances with other banks Landings to financial institutions Investments Advances Operating fixed assets Deferred tax assets - Other assets 993,784,513 1,035,024,680 LIABILITIES Bills payable Borrowings Deposits and other accounts Sub-ordinated loans - Liabilities against assets subject to finance lease Deferred tax liabilities - net Other liabilities
111,863,187 22,237,036 5, 588,765 270,490,544 484,545,988 27,353,035 7, 004,667 64,701,291 115,442,360 30,389,664 23,025,156 301,323,804 477,506,564 26,888,226 6,952,666 53,496,240
REPRESENTED BY Share capital 13,454,628 13,454,628 Reserves 28,269,208 24,450,244 Unappropriate profit 56,228,928 65,857,438 97,952,764 103,762,310
Surplus on revaluation of assets - net of tax 24,573,888 24,733,518 122,526,652 128,495,828
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The data of balance sheet and income statement give idea about firm position but it is better judged by analysis. By comparing of degree of changes in different items .the comparison shows the fluctuation in assets and liabilities of business. The financial statements of organization usually includes following: 1. 2. 3. 4. Balance Sheet Profit & Loss Account Cash Flow Statement Statement of Changes in Equity
These statements can be suitable to make an idea about business performance. These statements have analyze two ways 1. 2. Horizontal Analysis Vertical Analysis
Through this analysis we can check that what are changes with in years in the items of balance sheet and profit and loss account. Last year become base for next year. And change can be easily analyzed .
In this analysis the percentage of each item of statement is calculated to total and then the change in the percentages is checked with in year
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Balance Sheet As on 31st March
Table # 4.1 31stMarch 2011 Assets Cash and balance with treasury 13.72% banks Balances with other banks 3.36% Lending to financial institutions Investments Advances Other assets Operating fixed assets Deferred tax assets Total Assets Bills payable Borrowings from financial institutions Deposits and other accounts Liabilities against assets Other liabilities Deferred tax liabilities Total Liabilities Net Assets Represented By Share capital Reserves Unappropriated profit Owners equity Surplus on revaluation of assets 1.28% 2.67% 7.27% 11.23% 14.16% 1.23% 2.24% 7.21% 11.19% 14.096% Good Good Good good Good 2.32% 25.79% 56.32% 7.02% 3.00% 0.36% 112.89% 1.26% 5.37% 86.084% 0.005% 5.008% _ 97.722% 14.16 31st December 2010 14.66% 5.28% 2.36 23.50 56.82% 6.13 3.33% 0.44% 112.50% 1.41 5.57% 85.98% 0.003% 5.46% _ 98.41% 14.096 Evaluation 2010-2011
Worse Worse Worse Good Worse Good Worse Worse Good Good Good Good Worse Good same Good Good
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Condensed Interim Profit & Loss Account - (Un-Audited) For the Three Months Ended March 31, 2011 Table # 4.2 31stMarch 31st 2011 Decemb er 2010 Mark-up/return/interest earned 8.91% 8.38% Mark-up/return/interest expensed 4.67% 3.29% Net mark-up/interest income 5.057% 5.098% Provision against non-performing 1.31% 1.46% advances Provision for diminution in the value 0.071% 0.051% of investment Bad debts written off directly _ _ Net mark-up/interest income after 3.75% 1.51% provision Non Mark-Up/Interest Income Fee, commission and brokerage 1.18% 1.10% income Dividend income 0.23% 0.40% Income from dealing in foreign 0.48% 0.55% currency Other income 0.066% 0.17% Total non mark-up/interest 2.34% 2.26% income Non Mark-Up/Interest Expenses Administrative expenses 2.7% 2.5% Other provision/write offs 0.13% 0.10% Other charges 0.038% 0.080% Total non mark-up/interest 2.78% 2.73% expenses Extra ordinary items Profit before tax Taxation –current -prior year(s) -Deferred Profit after tax Unappropriated profit brought forward Profit available for appropriation Earning per share _ 2.64% 1.12% (0.0059%) 0.48% 2.15% 6.22% 8.48% 16.92% _ 3.16% 1.60% _ 1.03% 2.13% 6.23% 8.34% 14.36%
Evaluation 2010-2011 Good Worse Worse Worse Good Same Good Worse Worse Worse Worse Worse Worse Worse Good Worse same Worse Good Worse Good Good Worse Good Good
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Balance Sheet As on 31st March
31stMarch 2011 Assets Cash and balance with treasury 100% banks Balances with other banks 100% Lending to financial institutions Investments Advances Other assets Operating fixed assets Total Assets 100% 100% 100% 100% 100% 100% 31stDecemb er 2010 108.75% 74% 114% 127% 115% 133% 103.8% 115% 104% 119% 116% 167% 106% _ 115% 117% 120% 117% 114% 117% 117% Evaluation 2010-2011 Increase 8.75% Decrease 26% Increase 14% Increase 27% Increase 15% Increase 33% Increase 3.8% Increase 15% by by by by by by by by
Liabilities Bills payable 100% Borrowings from financial 100% institutions Deposits and other accounts 100% Liabilities against subject to lease23068314 Other liabilities Deferred tax liabilities Total Liabilities Net Assets Represented By Share capital Unappropriated profit Reserves Surplus assets Total on revaluation assets 100% finance 100% _ 100% 100% 100% 100% 100% of 100% 100%
Increase by 4% Increase by 19% Decrease by 16% Decrease by 67% Increase by 6% Same Increase by 15% Increase by 17% Increase 20% Increase 17% Increase 14% Increase 17% Increase 17% by by by by by
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Condensed Interim Profit & Loss Account - (Un-Audited) For the Three Months Ended March 31, 2011 Table # 4.4 31stMarch 31stDecembe Evaluation 2011 r 2010-2011 2010 Mark-up/return/interest earned 100% 127.90% Increase by 27.906% Mark-up/return/interest 100% 165.33% Increase by expensed 65.33% Net mark-up/interest income 100% 103.77% Increase by 3.77% Provision against non100% 104.24% Increase by performing advances 4.24% Provision for diminution in the 100% 162.258% Increase by value of investment 62.258% Provision against off balance 100% 505.925% Increase by sheet obligations 405.925% Bad debts written off directly Decrease by 77.09% Net mark-up/interest income 100% 102.68% Increase by after provision 2.68% Non Mark-Up/Interest Income Fee, commission and 100% 112.68% Increase by brokerage income 12.68% Dividend income 100% 66.70% Decrease by 33.30% Income from dealing in foreign 100% 76.29% Decrease by currency 23.71% Other income 100% 44.34% Decrease by 55.66% Total non mark-up/interest 100% 115.90% Increase by income 15.90% Non Mark-Up/Interest Expenses Administrative expenses 100% 124.21% Increase by 24.21% Other provision/write offs 100% 83.04% Decrease by 16.96% Other charges 100% 55.13% Decrease by 44.87% Total non mark-up/interest 100% 120.57% Increase by expenses 20.57% Extra ordinary items Profit before tax 100% 96.95% Decrease by 3.05%% Taxation –current 100% 78.39% Decrease by
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-prior year(s) -Deferred Profit after tax Unappropriated profit brought forward Profit available for appropriation Earning per share
100% 100% 100% 100% 16.92%
(23.69%) 117.8% 115.68% 116.18% 14.36%
21.61% same Decrease by 76.31% Increase by 17.8% Increase by 15.68% Increase by 16.18% Increase by 2.56%
4.2 Ratio Analysis
Ratio analysis includes method of interpreting financial ratios to access the performance of any organization. The basic input to ratio analysis is profit and loss account and balance sheet. Ration analysis of any organization is in interest of its creditors, employees, shareholders and of its management as well. Both existing and prospective customer are interested in the ratio analysis of organization Ratio analysis is a valuable aid to management in the discharge of its basic functions such as planning, forecasting, control etc. these ratios describe the relationship with the functioning of the business and helpful for controlling cost of goods manufactured. The great advantage of ratio analysis is that it reduces raw data of widely varying magnitude to a common comparative basis..
1. Net Interest Income to Gross Income:
It is the comparison of Net Interest income earned & the gross income by the bank. Net mark-up/ interest income /Gross Income X 100 Net mark-up/ interest income Gross income Net interest income to gross income 31ist March Year 2011 9,275,015 12932348 71.72% 31ist December Year 2010 8,112,709 12113184 66.97%
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Gross Income = Net interest income + Non- mark-up income 2011 9,275,015+3,657,333=12932348 2010 Comments: The Net interest income to gross income is bad due to decrease in Income. 8,112,709+4,000,475=12113184
2. Risk Asset Turnover Ratio:
It is a comparison of Net Mark-up/ Interest after provisions & Risk assets (Advances) of the bank. Net mark-up/ interest after provisions / Risk assets (Advances) Table # 4.6 31ist December Year 2010 Net mark-up / interest after provisions Risk assets Risk asset turnover ratio 9,275,015 1,389,285 6.67 times 31ist March Year 2011 8,112,709 1,942,426 4.17 times
The Risk Asset Turnover Ratio of 2011is bad as compared to2010 due to decrease in markup. Percentage of decrease in markup is more than risk asset
3 .Operating profit Ratio
This ratio is a comparison of Operating Profit to markup/ Interest of the Bank
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Operating Profit / Markup Earned X 100 Table # 4.7 31ist December Year 2010 37058030 Operating Profit 21,036,290 Markup/ interest Earned 23,170,457 31ist March Year 2011 38458048
Operating Profit Ratio
The operating Profit Ratio of 2011is bad as compared to that of 2010 this may be due to decrease in operating profit,
4. Net Profit Ratio before Tax:
Net profit before tax/Interest Earned X 100 Table # 4.8 31ist December Year 2010 Net profit before tax 6,303,579 Interest Earned 21,036,290
Net Profit Ratio before Tax 29.96%
31ist March Year 2011 6,352,686
In years 2011 it has decrease up to 27.41%from 29.96%in year 2010. This decrease in profit shows the satisfied performance of the bank.
5 Net Profit Ratios after Tax
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Net profit after tax/Interest Earned X 100 31ist December Year 2010 Net profit after tax 4,215,767 Interest Earned Return on assts 21,036,290 20.04% 23,170,457 18.21% 4,220,174 31ist March Year 2011
This ratio also decreased up to a great extent so it shows than an organization is expenses on its assets after meeting all expenses and obligations.
6. Return on Total Assets
Net Profit after Tax/total assets X 100 31ist December Year 2010 Net Profit after Tax Total assets Return on Total Assets 4,215,767 1,035,024,680 0.40% 4,220,174 993,784,513 0.42% 31ist March Year 2011
This ratio also increased up to a great extent so it shows that an organization is earning on its assets after meeting all the expenses and obligations .
7 Returns on Share Capital:
Net profit after tax/Share Capital X 100 31ist December Year 2010 Net profit after tax Share Capital Return on Share Capital Comments: 4,215,767 13,454,628 31.33% 4,220,174 13,454,628 31.36% 31ist March Year 2011
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The ratio has decreased in year 2011 which shows that NBP has negative trend of earning on share capital.
8. Return on Deposit:
Net profit after tax/Deposits X 100 31ist December Year 2010 Net profit after tax Deposits Return on Deposits Comments: By analyzing, I analyze that the ratio has increased in Year 2011 which shows that bank is in good position. 4,215,767 832,151,888 0.50% 4,220,174 758,995,303 0.55% 31ist March Year 2011
9. Solvency Ratio:
Total Assets/Total Liabilities-Issued Capital 31ist December Year 2010 1,035,024,680 906,528,85213,454,628 893074224 1.15 times 31ist March Year 2011 993,784,513 871,257,86113,454,628 857803233 1.16 times
Total assets Total Liabilities-Issued Capital Solvency ratio
This ratio shows that the asset of bank has increased as compared to liabilities of bank. This shows the better position of the business.
10. Advances to Deposits ratio:
Total advances/total Deposits X 100
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Total advances Total Deposits Total advances/total Deposits X 100
31ist December Year 2010 477,506,564 832,151,888 57.38%
31ist March Year 2011 484,545,988 758,995,303 63.84%
The NBP has ratio of 63.84%in year 2011 as compare to 57.38%in year 2010. The increase in ratio is due to increase in promotion of short term as well as long term advances
11. Deposits to Capital:
Total Deposits/Share Capital 31ist December Year 2010 Total Deposits Share Capital Total Deposits/Share Capital 832,151,888 13,454,628 61.84% 31ist March Year 2011 758,995,303 13,454,628 56.41%
I analyze that NBP has negative trend of deposits to capital ratio from year 2010 to year 2011.
12. Total debts to Total Assets ratio:
Total debts/Total assets X 100 31ist December Year 2010 20,103,591 1,035,024,680 1.94% 31ist March Year 2011 50,857,244 993,784,513 5.11%
Total debts Total assets Total debts/Total assets X 100
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Chapter 5 SWOT ANALYSIS 5.1 STRENGTH
The main strength of NBP is that it is a government owned institution and enjoys the following edges over other banks.
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1. Custodian of government treasury 2. Working as agent of SBP 3. Job security for employees 4. Main custodian of public money 5. Government business owner 6. Lender to the government agencies 7. Blind limitation of public over NBP as government bank(PUCCA BANK) 8. Negotiator with the international institution on behalf of government 9. World wide network of branches
10. Lender to the public based projects.
Beside a public bank it has the following weaknesses. 1. The general outlook and interior layout of branches are not as required according to modern banking. 2. NBP has not fast service to the clients. 3. Lethargic and rude attitude of employees towards customers. 4. Less marketing expedition 5. No innovation and new products 6. Worst conditions of branches.
But the NBP has the following opportunities. 1. Can launch a marketing strategy to capture the business from its peer banks. 2. Can be number one in Pakistan 3. Can offer new and innovative products to compete rest of the banks. 4. With proper planning can hunt more and more business from the public and private sector as people still trust over it.
Less qualified staff in NBP 1. Not fully computerized and on line banking facilities 2. Competition with foreign banks 3. Not following modern banking system
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4. Growth of mushroom banks. 5. Awareness of the public with the newly established banks. 6. Less participation in capital market activities 7. Use of traditional system of banking like ledgers and book keeping etc. 8. Political influence.
From this SWOT Analysis we can conclude that beside the fact that National Bank of Pakistan is a government based institution but in these days of cutthroat competition it is not easy to survive without adopting modern techniques and latest tools of sophisticated technology. Although National Bank of Pakistan is a Government Institution, but in the modern era it has achieved a destination where other competitive modern banks can simply reach. From year 2001, The Bank has made a Hat Trick in winning International Awards. That is why people have more trust in NBP and they are willingly depositing their money in it without any threat. In last, National Bank of Pakistan is a Government Institution, but in the modern era it has achieved a destination where other competitive modern banks can simply reach. NBP is providing high standard and quality of services. They also take part in social activities such as student loans, payment of pension to pensioners, payment of salaries to government employees, advance salary to their employees, agricultural finance to help farmers.
1. This is a computer era. With the use of computer we can increase our efficiency N.B.P should computerize all its branches. By the use of computer properly these branches can increase there working efficiency. 2. N.B.P. as public service oriented institution has to create business opportunities for themselves. Now a day there is a competition between the banks.
3. Central Asian Republics have great opportunities of new business so
N.B.P should open new branches in these Republic . 4. Model Banks like City Bank M.C.B. are using media very effectively to increase the business of banks. So N.B.P should use electronic media for its business developments. 5. The interference of union in banking business should be minimized as it decreases the working efficiency of the employee as well as the bank.
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6. The working of the Lahore Cantt. Branch Lahore is satisfactory but still these working efficiencies are for from the standard of modern banking system. 7. The bank should finance its loans in those projects, which are meeting the required standard and should avoid the political pressure 8. The bank should bring forward the new talent as fresh knowledge and education is considered very important to increase the efficiency and production. 9. Keeping in view the hard work by the staff members at all levels of management, staff should be given bonus and increment every year. 10. CREDIT CARDS are issued by the different banks like MCB, ABP and City Bank etc. but NBP don’t issued this type of finance scheme, there is a place for this type of scheme in this bank.
1. NBP (2010-2011), Annual Report. 2. Siddiqui, M.A 1995a, credit distribution & agricultural development in Pakistan:
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3. 27 (3): A problem of across to credit. Journal of Rural Development & administration 4. Siddiqui, M.A. 1996. “Alternative credit policies for agricultural development: Case for participatory investment”. Journal of Rural Development & administration 28 (2): page 112. 5. www.nbp.com.pk 6. Zahid Elahi 2003, major work on acts. economic development & employment. Attached with the Association for creation of employment