report of nbp numl
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CHAPTER 1
INTRODUCTION TO REPORT
This study has been conducted as a result of an internship assignment. Internship
is considered an integral part of BBA (HONS) (inance) courses in N!"# $esha%ar
&us. The students are gi'en the opportunity to spend at least %ees in an
organi*ation to get e+posure in the real organi*ational lifestyle.
The basic aim of this internship program is the practical application of the bacground
no%ledge, to obser'e the %oring condition of different departments, and also
application of their managerial sills in real organi*ational life. The collected
information-s placed into a report, based on any of the aspects as financial, mareting,
human resource etc.
To fulfill this academic reuirement and being a student of BBA (HONS) (inance), I did
my internship in National Ban of Aora /hattaBranch.National ban of $aistan is
one of the leading and first go'ernment bans In $aistan, NB$ %as established in No',
0121.
There are certain characteristics, %hich set NB$ apart from other nationali*ed
commercial bans. These characteristics are the reasons of the de'elopment of NB$. The
most important characteristic of NB$ is that, it %ors, as an agent to the State Ban,
3here State Ban does not ha'e a branch of its o%n. The NB$ also acts as a trustee to
the National In'estment Trust (NIT), %hich is one of the premier financial institutions of
the country. It is gi'en the responsibility of mobili*ing small sa'ings. The establishment
of NB$ thus signaled the achie'ement of another milestone in the de'elopment of the
baning industry in $aistan.
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2. PURPOSE OF THE STUDYThe purpose of the study is to get an o'erall idea about the general practice of the
ban and analy*ing its acti'ities. As the branch day to day acti'ities are different so the
analysis %as taen on long term. To sho% the earning capacity as %ell as financial
position, financial statements of different years ha'e been analy*ed.
3. SCOPE OF THE STUDY
The study con'eys the description of the 'arious departmental functions at the
branch, and the analysis is done from both management and operational perspecti'e.
S3OT analysis has been conducted based on both internal and e+ternal en'ironment.
4. RESEARCH METHODOLOGY
The study conducted deals %ith both managerial and financial aspects of the
Ban. The follo%ing t%o sources ha'e been used for the collection of information.
4.1 PRIMARY SOURCES
1 $ersonal obser'ations
2 &ustomer trends.
3 Briefing by manager
4.2 SECONDARY SOURCES
1 "anuals 4 Brochures.
2 5eference boos.
3 &irculars and NB$ ne%s letters.
4 Annual reports.
4.3 LIMITATIONS:
1 "ost of the data %as of confidential nature.
2 6ue to the ban7s busy schedule, complete information %as not pro'ided.
3 No such clear comparison could be made as due to difference in theory and
practice.
5. SCHEME OF THE STUDY
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The seuence of the report if follo%ed %ith four parts. 8ach part defines its
contents, systematically9
&ontains the introduction to the study conducted. :i'ing the purpose and
methodology for the study undertaen
&arries the re'ie% of the entire NATIONA# BAN/ O $A/ISTAN, its history
and basic ob;ecti'e, for %hich it is %oring.
6escribes the organi*ational structure of the NB$ and its departments and their
functions in detail.
:i'es out the analysis taing its all aspects and defining their policies stating the
critical recommendations based on the S3OT analysis, and finally deals %ith
conclusion.
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CHAPTER-2
INTRODUCTION TO NBP
NB$ is pro'iding all types of baning ser'ices of mercantile and commercial baningpermitted in the country, %hich includes9
1 Handing of treasury transactions for the :o'ernment of $aistan as an agent to
the State Ban of $aistan.
2 $ro'iding ser'ices under a Trust 6eed as Trustee to the National In'estment Trust
(NIT) including safe custody of securities on behalf of NIT.
3 Accepting of deposits of money against current, sa'ing, term deposit and profit
and loss sharing accounts.
4 Borro%ing money and arranging finances from other bans.
5 Ad'ancing and lending money to its clients.
6 inancing of pro;ects, including technical assistance, pro;ect appraisal through
long
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STATUS AND NATURE OF BUSINESS
National Ban of $aistan (the ban) %as established under the National Ban of
$aistan Ordinance, 0121 and is listed on all the stoc e+changes. It-s registered and head
office is in /arachi. The ban is engaged in commercial baning and related ser'ices in
$aistan and o'erseas. The ban also handles treasury transactions for the :o'ernment of
$aistan (:O$) and also pro'ides ser'ices as trustee to National In'estment Trust (NIT)
including safe custody of securities on behalf of NIT.
ROLE OF NATIONAL BANK OF PAKISTAN IN ECONOMIC
DEVELOPMENT
Bans play significant role in promoting the economic acti'ities and economic
de'elopment of a country. Industry, agriculture, trade, commerce and many other
economic acti'ities are highly dependant on bans. Bans help in mobili*ation of money.
They also help in promoting the gro%th of internal resources for de'elopment by
attracting deposits into producti'e loan and in'estment. Bans not only collects the
sa'ings of the people but also gi'e loans for the de'elopment of industry, trade and
commerce.
NB$ has been playing a ma;or role in financing and de'elopmental acti'ities in $aistan.
It helps in the gro%th of economy in all spheres of our national life. It has contributed
significantly to economic gro%th of the country and has ser'ed to trade and industry in a
%ide sphere of operations.
The NB$ %as the first ban to introduce scheme of credit to small borro%ers lie farmers
etc, for the promotion of agriculture. The ban ad'ances liberal credit for rural and
agricultural de'elopment. Small short
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contribution to%ard building up of a de'eloping nation. The NB$ also helps to promote
the establishment of ne% companies by under%riting their shares. The ban also
contributes to%ards the earning of foreign e+change though its foreign e+change business
in $aistan and abroad.
MISSION
@To be recogni*ed in the maret place by institutionali*ing a merit and performance
culture, creating a po%erful and distincti'e brand identity. Achie'ing top C tier
financial performance, and adopting and li'ing out our core 'alues.
VISION
@To be the pre
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NBP AIMS1 :athering its employees and %oring together as a team to bring the future bright
altogether.
2 :oing into 5etail Baning, the ban circles to inno'ate and bring ne% and
compatible products to its customers.
3 or high uality performance the ban aims at re%ards and appreciation.
4 To pro'ide clear and open channel communication channel to facilitate its
customers.
5 The ban recogni*es the 'alue and creditability of its customers and bases their
decisions on merit.
MANAGERIAL OBECTIVES: To pro'ide the shareholders the greatest possible euity ratio.
&ontrolling the staff at highest managerial criteria and selecting them of a
standard caliber.
To gain the confidence of the customers and satisfy the staff to reduce the
opportunity cost.
To tae the staff as a team, in taing decisions related to management, %oring
en'ironment, and pro'iding facilities to get things done at ease,
To facilitate the departments to operate under full super'ision and control.
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REFERENCES
1. Siddiui, Asrar. H. (011). $ractice and #a% of Baning in $aistan. /arachi9 6ecent
$rint 8nterprises.0D
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CHAPTER-3
ORGANI!ATIONAL STRUCTURE
Organi*ational structure is the frame%or that defines the boundaries of the formal
organi*ation and %ith %hich the organi*ation operates. A suitable organi*ational structure
for the nature of the organi*ation leads to better performance.
The organi*ational structure of the ban constitutes a board of directors and an e+ecuti'e
committee as the go'erning bodies. The National Ban of $aistan (NB$) has 001
branches all o'er the country, 0? o'erseas branches 4 2 subsidiaries. The head office is
operationally in charge of central affairs including the delegation of po%er and authority
to the regional headuarters all o'er the country. These regional headuarters direct the
function of the 0> corporate branches. The NB$ has >1 regions (circles) in four pro'inces
as gi'en belo%9
T"#$% &' NBP P(&)*+,*"$ H%"/"(0%( N&. &' R%*&+
$ro'incial Headuarters No Of 5egions
Sindh ?
Baluchistan >
$un;ab 02
N3$ D
A*ad /ashmir >Total >1
Source9 %%%.nbp.p
3.1 HEAD OFFICE
The NB$ has its o%n organi*ational structure and its Head Office is situated at /arachi.
All branches, regional offices and corporate branches %or according to the rules and
regulations issued by the Head Office from time to time. The Head Office of National
Ban of $aistan, %hich is primarily responsible for maing policies and e+ecution of
policy decision include,
a) Board of 6irectors
b) 8+ecuti'e &ommittee
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c) 6i'isional head offices and pro'incial headuarters
The Head Office has nine di'isions, %hich are further di'ided into different %ings. It is
operationally in charge of central affairs including the delegation of po%ers and authority
to the >1 5egional Headuarters all o'er the country. These 5egional Headuarters directthe functions of the t%el'e corporate branches.
3.2 BOARD OF DIRECTORS
The Board of 6irectors nominates the e+ecuti'e committee, %hich nominatesdi'isional heads. It consists of president, si+ directors %oring under president and
one Secretary. $resident is the go'erning body and other si+ directors and one
Secretary 3or %ith him in a systematic %ay.
The Board of 6irectors of National Ban of $aistan NB$ has one $resident and si+
members as gi'en belo%9
T"#$% NBP BOARD OF DIRECTORS STRENGTH
$resident of the ban 0
S8$s of the ban
5epresentati'e of the $B& 0
5epresentati'e of go'ernment 0
Outsiders 0
Total E
3.3 EECUTIVE COMMITTEE
8+ecuti'e &ommittee consists of one $resident and nine members and among these nine
members, one member perform functions of both member and Secretary. Board of
6irectors nominates e+ecuti'e committee and e+ecuti'e committee nominates the
di'isional heads. NB$ has an e+ecuti'e committee %ith $resident as its chairman fi'e
S8$s are its members and president-s ad'isor as an obser'er. This body monitors the
day
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3.4 DIVISIONAL CHIEFS
In order to impro'e the management and operation of a ban, it has been split up into a
number of di'isions. 8ach di'ision of a ban is placed under the super'ision and control
of 6i'isional &hief or Senior 8+ecuti'e ice $resident (S8$) or 8+ecuti'e ice
$resident (8$). The Head Office management controls all the di'isions. The nine
di'isions of NB$ are as follo%s9
1 "anagement Support 6i'ision
2 Audit and Inspection 6i'ision
3 Treasury "anagement 6i'ision
4 &redit $olicy "anagement 6i'ision
5 "areting and 6e'elopment 6i'ision
6 O'erseas Baning 6i'ision
7 Special Assets "anagement 6i'ision
8 Ban Secretary 6i'ision.
3.5 PROVINCIAL CHIEFS
In order to impro'e the performance of the baning system, each ban has
$ro'incial &hief %ho has the po%er for sanctioning finance and other credit
facilities. The head uarters of the chiefs are situated in #ahore, /arachi, $esha%ar
and Guetta. The National Ban has >1 regions (circles) in four pro'inces and A*ad
/ashmir.
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3. REGIONS OF NBP
On "ay 0, >FFF a circular %as issued in %hich *ones %ere abolished and the %hole
country and A*ad /ashmir %as di'ided into >1 regions. The changeo'er process started
from 0st August >FFF and %as completed by 0st August >FFF. The ne% setup %as madefully functional by 0Dth September.
5egional "anagement &ommittee
A regional management committee controls all regions. 5egional management consists of
1 5egional Business &hief
2 5egional Operations &hief
3 5is management &hief
4 &ompliance &hief
T6% N"7% &' 06% R%*&+ "(%:
S.No. 5egion S.No. 5egion
0 /arachi South > /arachi &entral
ederal &apital 2 /arachi 3est
D 5a%alpindi ? #ahore 8astE aisalabad :u;ran%ala
1 $esha%ar 0F "irpur A./.
00 "ultan 0> :u;rat
0 Sialot 02 Hyderabad
0D Abbotabad 0? Sargodha
0E "ardan 0 Jhelum
01 Guetta >F Sahi%aal
>0 Bha%alpur >> 6era :ha*i /han
> 6era Ismail /han >2 Jhang
>D "u*affarabad A./. >? Sahar
>E #arana > :a%adar
>1 :ilgit KKKK KKKK
3.1 CORPORATE BRANCHES
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&orporate branches play an important role in the setup of National Ban of $aistan, to
ser'e the businessmen and the corporate sector of $aistan. There are t%el'e corporate
branches, present in the follo%ing cities.
TABLE 3.4 CORPORATE BRANCHES OF NBP
&ity No Of &orporate Branches
/arachi
#ahore
Islamabad 0
5a%alpindi 0
Guetta 0
$esha%ar 0
"irpur (AJ/) 0
aisalabad 0
Total 0>
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0.> OVERSEAS BRANCHES
NBP 6" 1 &)%(%" #("+,6%8 *+ 06% '&$$&9*+ 11 ,&/+0(*%.
T"#$% NBP FOREIGN BRANCHES
S.No. &ountry S.No. &ountry
0 !SA > rance
:ermany 2 !nited /ingdom
D 8gypt ? $eoples 5epublic Of &hina
E /orea Africa 4 "iddle 8ast 5egion
1 Bangladesh 0F &entral Asia States
00 Hong /ong 00 Afghanistan
NBP 6" '&/( (%(%%+0"0*)% &''*,% *+ 06% '&$$&9*+ ,&/+0(*%:
S.No. &ountry S.No. &ountry
0 !SA > $eoples 5epublic Of &hina
!*beistan 2 A*erbai;an
NBP 6" " /#**"(; *0/"0% *+ K"FFF. It is located in the commercial
heart of $esha%ar. Its main customer is :o'ernment of $aistan. It is also called @"ain
branch $esha%ar. It-s a large branch and has been ser'ing both ci'il and military
personnel. All the cheues dra%n on or by the ban are pooled here and then taen to
SB$ for clearance. It-s one of the most profitable branches of NB$ in $esha%ar.
3.3.1 S%0 /
1 /eeping in 'ie% the si*e of the branch the Operation manager %ill tae direct
responsibilities for some of the operation functions depending on the nature of
acti'ities in the branch and %ill act as &ompliance officer also.
2 The Operations area %ould comprise of &ash &ounter Ser'ices and &ustomer
Ser'ices.
3 The branch manager %ith the relationship officer(s), (if reuired) %ill concentrate and
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fully de'ote to credit mareting and business=deposit de'elopment.
4 Operations manager %ill report directly to the regional chief operations %ith dotted
line reporting to the branch manager.
3.3.2 BRANCH MANGER RESPONSIBILITIES
1 O'erall affairs of the branch.
2 &hecing and ensure effecti'eness of control system and %oring procedures.
3 "eeting e+isting and Ne% &ustomers.
4 "areting business=deposit de'elopment and public relations.
5 Assignments of accounts to relationship manger=officer.
6 Income and business budget.
7 $erformance e'aluation of reporting staff.
8 6e'elop ob;ecti'es for reporting staff.
9 5e'ie% of reports.
10 &onduct periodical meeting of the staff.
11 #iaison %ith controlling offices.
12 Appro'al of credit proposal %ith
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3 &reate cordial and customer friendly atmosphere in branch.
4 8nsure continuous satisfactory ser'ice to the customers.
5 5e'ie% of daily acti'ity reports.
6 8nsure compliance of ban=SB$ and local regulations.
7 Appro'al of opening of ne% accounts.
8 Appro'al of e+penses %ith in delegated authority
9 $reparation of e+penses budget.
10 6e'elop duty list for all branch operation staff
11 6e'elop ob;ecti'es for operation staff
12 $erformance e'aluation of reporting staff.
13 &ross
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4. International 6i'ision.
5. &redit 6i'ision.
6. 8lectronic Technology 6i'ision.
7. Treasury 6i'ision.
8. System 4 Operation 6i'ision.
9. In'estment $roduct !nit.
10. Asset $roduct !nit.
1. H/7"+ R%&/(,% D*)**&+:
Strategically, perhaps the most important 6i'ision at the Head Office is
responsible for human resource management, including recruitment, staff training and
e'aluation.
2. A/*0 D*)**&+:
The di'ision performs the o'erall screening of the functions formed during the
year. 6ifferent conflicts are sorted out and are sol'ed according to la%.
3. I+0%(+"0*&+"$ D*)**&+:
6ealing %ith matter regarding international trac, lie the imports and e+ports.
And also managing the foreign currency circulation.
4. T(%"/(; D*)**&+:
5esponsible for managing ban7s liuidity and foreign e+change transactions, the
treasury is one of the marets. Through repo transactions, purchase of :o'ernment paper
and foreign e+change trading, the 6i'ision adds sustainability to Ban7s sustained
earnings.
5. C(%*0 D*)**&+:
6eal in the reco'ery of loans from public. 5egular checs and balances in the
ad'ancement of loans.
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. E$%,0(&+*, T%,6+&$&; D*)**&+:
This di'ision operates as the bacbone for all operational functions in the
baning. Technology de'elopment and its enhancement is the basic function of the
di'ision. &omputer net%oring is to be arranged dealing %ith the financial transactions
and other matters.
>. C&(&("0% "+ M%(,6"+0 B"+=*+ D*)**&+:
This 6i'ision is engaged in the pro'ision of financing facilities to large corporate
clients including multinationals.
?. S;0%7 "+ O%("0*&+ D*)**&+:
This 6i'ision has been instrumental in de'elopment of procedures and manuals
for 'arious operating reuirements of the ban. The di'ision is acti'e in pro'iding
euipment procurement support and de'elopment of ne% branches. The protection of
fi+ed assets of the ban is also managed by this di'ision, as a direct ;unction.
@ F*+"+,% D*)**&+:
inance 6i'ision is 5esponsible for boo
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&ash department mainly deal %ith receipt and payment of cash. Thus in this
department there are basically t%o main functions9
* CASH RECEIPT:
&ash that comes into the ban is recorded on a credit cash 'oucher. The contra for
this 'oucher is cash. This cash is recorded on the credit side of the cashier #ong Boo.
The cash 'oucher is filled by the client himself. The officer dealing %ith the client then
signs it and then stamps it the cash is then credited to the account of the client by the
ledger eeper officer.
In case the cash is recei'ed to mae an ad;ustment that is 6emand 6raft, $ay
Order and so forth, the officer %ill recei'e cash and mae a credit 'oucher of the said
amount. The officer %ill also mae the reuired instrument %hose counter folio is gi'en
to the customer.
** CASH PAYMENT:
3hen a person comes %ith a cheues or claim on the ban through any
instrument, the Ban %ill honor his claims. 3ithdra%als from the A=c or other payments
are recorded in the cash payment register by the cashier, before maing genuineness of
the payment. After the closing of the normal baning transaction the cash is balanced and
stored in the strong room.
Lesterday7s &ash M Today7s receiptstoday7s payment cash in hand.
" CHEUE:
!nder the definition of cheues as Pa %ritten order of a depositor upon the ban to
pay to or the orders of a designated party or to a bearer, a specified sum of money on
demands.P
T;% &' C6%/%:
The cash department has to deal in 'arious inds of cheues referred in after
no%ing their functions these cheues are then handled as9
* OPEN CHEUES:
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&heues %hich are paid across the counter in cash. These are of t%o types
** B%"(%( C6%/%:
Here the order is that the payment can be made to the person carrying the
cheues. It is that the stated sum of money is paid to the bearer and is thus called bearer
cheues.
*** O(%( C6%/%:
The cheues tae into account those orders, in the name of %hich the order has
been placed. Thus such cheues are restricted to that particular person in fa'or of %hom,
the cheues has been dra%n in. This cheues is paid after the full satisfaction about the
identity of the payee. This is done either by the confirmation through signatures and
thumbprints or through the I6 card.
*) C(&% C6%/%:
The other form of cheues is the crossed cheues. It is done through dra%ing t%o
parallel lines across the face of the cheues, %ith or %ithout %ords &o or A=c payee only,
it is called a crossed cheues. The payment on this cheues is mae through account and
not through counter of the dra%er ban. In fact it is deposited in the account of the person
in %hose order or fa'or of %hom it is dra%n in.
# CHEUE CARRYING PARTIES:
0. The person %ho dra%s the cheues is called dra%er.
>. The ban on %hich the cheues is dra%n is dra%ee.
. The person to %hom the payment is to be made is called payee.
, C6%/% V"$**0;:
&heue is 'alid under its stated conditions. That is
0. No o'er %riting is done.
>. It is to be dra%n on the particular branch.
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. Orders of the &heue are straight 4 clear and in proper form.
2. Signatures are 'alid and satisfactory.
D. unds are to be sufficient in the deposit.
?. &heue should not be post
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>.1.2. DEPOSITS DEPARTMENT
This department deals %ith the retail baning, i. e. customer7s account. Accounts
are opened here and maintained by them. The main functions of the deposits department
include9
o Opening of an account
o Issuance of &heue boos
o Issuance of ban statement
o &losing of an account
o Assistance in clearing procedure.
o #ocers.
>.3 ACCOUNT OPENING FUNCTION:
The opening of an account is establishment of customer
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for it.
II. S"'%/"( ""*+0 U+*+0%+% O)%(("'0:
By mistae, accounts may be o'erdra%n. It can happen either by a ledger eeper
misreading the balance and honors a &heue for an amount larger than the balance or
simply by the crediting of another customers account by mistae. So, in such situation
only a trust %orthy and respectable customer can reali*e and point out the mistae
himself to the baner.
III. N%$*%+,%:
A baner has to mae sure he is not negligent in any case other%ise he may be
depri'ed of the statutory protection.
IV. I+/*(%:
It is necessary for a baner to respond to inuiries from other bans about his
consumer7s financial position.
>.5 SPECIMEN SIGNATURES
The specimen signatures of a customer are taen on a card called Pspecimen
&ardP. The baner %ill eep this card in the files and only honor the customer7 cheuesha'ing the same signatures. The customer has to %rite his full name and account number.
In case the baner is doubtful about the signatures he can return the cheue %ith
the remar Psignature differenceP.
Pernacular formP is a form filled by customers %ho ha'e the follo%ing
characteristics
1 &ustomers sign in any other language other than 8nglish.
2 &ustomer %ho uses his thumb impression instead of a signature
3 Shay signature.
4 Signature that can be easily copied.
The baner taes e+tra precautions %ith such type of customers and on the
computers a remar Ppersonally %ithdra%nP is indicated. So these customers ha'e to
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present the &heue themsel'es for collection. A ban must obtain > or passport si*e
photographs of the customer. One is attached to the account opening form and the other
copies are attached to the specimen signature cards. Incase a thumb impression is needed
for illiterate customers then the baner must mae sure that the left hand thumb
impression is for males and the right hand thumb impression is for females. These
impressions are not only for the specimen cards but for the account opening form too, but
a baner must attest them.
>. MARRIEDPARDANASH1N OMEN:
A married %oman is allo%ed to open an account. But the only thing that has to be
taen care of is that in case the married %omen reuests for a loan, she must pro'ide only
her o%n property as security not her husband to inuire about his %i'es balance in the
account or 'ice 'ersa. Incase of pardanashin %omen, she is allo%ed to open an account as
long as she can sign %ith her thumb impression. Incase difference occurs in 'erification
she has to gi'e her photographs. If she is reluctant to gi'e her photographs, then the
baners usually suggests opening a ;oint account for them.
>.> MINOR ACCOUNT:
A minor is a person belo% the age of P0P years. Such customers are allo%ed toopen an account to inculcate the habit of sa'ing. It is necessary that the account is opened
in the name of the minor and a guardian. A minor attains ma;ority at the age of >0 but can
only operate the account until and unless the guardian specifies. In case the minor %ants
to enter a partnership, he %ill be allo%ed but %ill not be liable for any debts. If he
%ithdra%s from the partnership contract %ithin ? months after attained ma;ority then he
is liable as a full partner for all the debts. After considering all these points, the baner
may proceed by helping the desirable customer in filling the form.
>.? FILLING THE ACCOUNT OPENING FORM:
The account opening form is easy to fill. It reuires the name, father7s name, and
profession, telephone No., NI& No. Nationality, Address, currency of account, initial
deposit etc. The person %ho introduced the customer must also sign the account opening
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form. The ban in return sends a Pa letter of thansP to the introducer. One copy of the
letter is attached to the account opening form %hile the other is sent to the introducer. An
introducer is usually a baner or one old reliable customer of the ban. There is a list of
types of accounts, %hich the customer tics according to his reuirements. The list is as
follo%9
>.@ TYPES OF LOCAL CURRENCY ACCOUNTS
>.@.1 C/((%+0 A,,&/+0
A current account is a running account, %hich is continuously in operation. NB$ current
account allo%s customers to deposit and %ithdra% cash at their o%n con'enience. The
customer can %ithdra% the current deposits anytime, %ithout
Any pre'ious notice to the ban. The ban has to honor the cheues to the e+tent of credit
balance in the account. No profit=interest is paid to the customer on these deposits, but the
customer is reuired to maintain a minimum balance in the account. The initial amount
reuired for opening of such an account is, 5s. 0FF. The current account is opened and
operated by traders, business companies, public ser'ice bodies, industrialists etc.
>.@.2 PLS S")*+ A,,&/+0
Sa'ing deposits or profit and loss sharing ($#S) are those accounts on %hich ban offers
a relati'ely lo%er rates of interest. $#S sa'ing account can be opened %ith an initial
deposit of not less than 5s. DFF.
$#S Sa'ing Account may be opened in the name of an indi'idual or ;ointly in the
name of t%o or more persons. &haritable institutions, companies, Associations,
Societies, 8ducational institutions, firms etc, may also open these accounts.
"inors and illiterates are also eligible for opening sa'ing accounts. Ho%e'er
illiterate customer must present themsel'es in person for %ithdra%als. The bandetermines the rate of profit or loss on $#S sa'ing account.
>.@.3 T%(7 D%&*0 A,,&/+0
These are the deposits than can be %ithdra%n after a certain specified period of time. The
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period of time 'aries from three months to fi'e years. On these deposits return=interest
'aries %ith the duration for %hich the amount is ept %ith the ban. The rate of
interest=return on term deposit is higher than that of a sa'ing deposit. Its interest=return is
unaffected for the duration of the deposit irrespecti'e of maret fluctuations.
Term deposit is best suited for short.@.4 F*+"+,% F",*$*0;
Ban also e+tends finance facility to clients against sa'ing and fi+ed term deposits on
comparati'ely lo% marup rate. The deposit is ept under lien, ho%e'er the customer
may %ithdra% the profit amount credited to his account
>.1 ACCOUNTS TERMS AND CONDITIONS
Against the submission of the ban-s prescribed application form, duly introduced in the
manner pro'ided and on supply of documents reuired, the account is made fully
functional under certain conditions. In case of account on $#S basis, ban in'est the
amount in any manner it considers under $#S system.
>.11 D%&*0
All money to be deposited to the credit of an account is accompanied by pay
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>.13 STATEMENT OF ACCOUNT
Account statement is pro'ided to the customer by the ban. In these statements the ban
assures that all debit entries are correct. In case of error, the ban passes an ad;usting
entry to rectify the error.
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&5. 6epositor7s Account.
?.2. T("+'%( D%$*)%(;:
All &heue and other instruments, recei'ed for collection %hich ha'e been dra%n
on other local branches of NB$, their proceeds are collected through the system called
PTransfer 6eli'ery.P
?.3. C$%"(*+:
As collection of payments on behalf of their customers direct from the counters of
the dra%ee ban is uite cumbersome, risy and costly such proceeds are, therefore
collected through the "echanism of P&learing House.P The $rocedure presenting a
cheue as other instrument for payment by the payee7s ban to the dra%er7s ban through
the &learing House is called PP&learing.P
All local scheduled bans including those created by charter of the :o't. are
members of the local &learing House, %hich functions under the super'ision of the SB$
as NB$ %here branch of SB$ does not e+ist.
?.4. PROVIDING LOCKERS
Another function of the deposit department is allotting locers to the customers.
?.4.1. 1.TYPE OF LOCKERS
B"*,"$$; 06%(% "(% 06(%% 0;% &' $&,=%(. T6%% "(%: T"#$% N&. 3.3
SIQ8 &HA5:8S $A 58!N6AB#8
0. Small 0FFF DFF
>. "edium 0DFF DFF
. #arge >DFF DFF
The person %ho is eligible for ha'ing a locer is an account holder ha'ing a
minimum balance of 5s. 0F,FFF=< in his account. 3hen the account holder doesn7t %ant
to use the locer, he can simply return the ey and the money is then refunded. Actually
there are t%o eys.
i). "aster /ey
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ii). &ustomer /ey
The locer first opens by the master ey then by the customer7s ey only. Its o%n
account holder can operate the locer or some body authori*ed by the account holder. or
this a form and a card ha'e to be filled.
?.5. BILL REMITTANCE DEPARTMENT
5emittance of funds through bans has become the most popular, safe, sensible,
and acceptable medium of settlement of payments, as physical mo'ement of cash is 'ery
risy and costly no% a days. 5emittance department acts as an agent on behalf of the
customer in safe transferring of their money to different cities and countries.
This department performs the follo%ing functions9
1 Out%ard Bills for &ollection (OB&) In%ard Bills< for &ollection (IB&).
2 6emand 6raft.
3 Telegraphic Transfer.
4 $ay Orders.
5 $ay Slips.
6 &all 6eposits or S65.
7 &rossed &heues.
?.5.1. OBC
Out%ard Bills for &ollection is a facility pro'ided by nbp to customer under
%hich certain cheues dra%n on other bans are recei'ed by the national Ban on behalf
of customer and are sent to the other branch of the ban along %ith an OB& schedule
%here they are presented in clearing and after reali*ation of cheue the ban %ill credit
that particular customer account %hile debiting the ban on %hich the particular cheue
%as dra%n.
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?.5.2. DEMAND DRAFT
These are receipts ;ust lie cheue by %hich money can be safely transferred or
taen %ith. An application is filled and amounts %ith ser'ice charges are deposited on
that form. In application the customer states the name of beneficiary, the amount and the
name of the city or place on %hich the draft is dra%n. 6emand 6raft is the safe %ay of
transferring money, because the payee ban has to mae immediate payments after the
presentation of 6emand 6raft. &ities %here NB$ has no branch, the "uslim &ommercial
Ban acts as an agent for NB$.
?.5.3. TELEGRAPHIC TRANSFER TT
TT is the uicest and fast mode of transferring money, this type in'ol'es
transferring of funds to other cities %ith telegraphic message. After filling an applicationform, the concerned officer fills the telegraphic form and the message fa+ed to the
reuired ban and on the reception of the message the other ban maes the immediate
payment to the customer. In the telegraphic message the customer mention the name of
the beneficiary, his account number or N.I.6 and number, amount etc.
?.5.4. PAY ORDER
$ay Order means transfer of money from one person to another at local station.
$ay Order is usually, used to a'oid the ris of accepting a cheue %ith no amount
a'ailable in the account. or the remo'al of this ris, people prefer pay order instead of
cheue. $ay Order and draft are same in nature but $ay Order is made at local station, the
draft is made for the transfer of money from one station to other station e.g. $esha%ar to
/arachi.
?.5.5. PAY SLIP
The ban for the settlement of its o%n payments issues pays Slips.
?.5. CALL DEPOSIT OR SDR
&all 6eposits are used for the transfer of funds in'ol'ing go'ernment institutions.
These are dra%n on go'ernment departments etc. This deposit is a ban guarantee on
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behalf of the depositor. No cheue boo is issued in this case only ban receipt is gi'en.
?.5.> CROSSED CHEUES
&heues %hose payment is not to be made on counter. or &rossed &heues, t%o
$arallel lines are dra%n on the face of the &heue. And the payment is to be made
through account. The follo%ing persons as under tae the &rossing of the cheue.
i. The dra%er of a cheue can cross the cheue.
ii. In case of an open cheue, any holder of it can cross the cheue generally or
special one or add PNon NegotiableP.
iii. Only the dra%er %ithdra%s crossing.
?.. ADVANCES DEPARTMENT
Ban is a profit seeing institution. It attracts surplus balances from the customers at a
lo% rate of profit and maes ad'ances=finances to indi'idual and business firms at higher
rate of mar
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?..2. DEMAND FINANCE
It is a facility in %hich it is obligatory on customer to %ithdra% the entire amount. In
demand finance, full amount of loan is ad'anced to the customer on the day the loan is
sanctioned. 3hen this type of ad'ance is gi'en to the borro%er, the ban gi'es grace
period after charging installments and marup. Ho%e'er, the customer pays installments
monthly.
?..3 PERSONAL LOANS
&ustomers %hose salary account is maintained by ban are eligible for this type of loan.
It is up to three basic salaries of employees of go'ernment organi*ation. The ob;ecti'e of
this type of loan is to impro'e the life style of customers.
?..4. STAFF LOANS
These types of loans include house loans, car loan etc. They are long
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performing of loans. (The ris of unFFF %ith a %ide range purpose and all branches %ere granted %ith adeuate
discretionary po%ers.
Ad'ance salary is a modified form of running finance. It initially offered three months
ad'ance salary to salaried class customers of any go't., non
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3. #egal status of party-s business (indi'idual consumer, indi'idual business, firm,
limited company).
4. &opy of National Identity &ard.
5. Security (T65, 6S&, 5I& etc).
6. &onsent= !ndertaing if security o%ned by some one other than the borro%er.
7. #ien mared certificate (for National &enter Securities).
8. Borro%ers- basic fact sheet.
9. Office note for appro'al %ith detailed terms and conditions.
10. Sanction ad'ice (Acceptance of terms and conditions by borro%ers).
Against Hypothecation of :oods and "achinery %ith Additional &ollateral of
"ortgage of $roperty
1. Account (&=A or $#S).
2. $arty-s reuest.
3. Statement of stoc of hypothecated duly 'erified.
4. Statement of account.
5. aluation certificate from ban-s engineer or appro'ed 'alue, as the case may be.
6. Ban-s legal ad'isor-s certificate.
7. Title documents of the property to be mortgaged. Title deed mutation, As Sha;ra,
Nasha Tas'eeri, ard Number, appro'ed site plan.
8. Non encumbrance certificate (not more than three months old).
9. $ersonal guarantee (if property o%ned by someone other than the borro%er).
10. Borro%er-s basic fact sheet.
11. &opy of National Identity &ard.
12. inancial Statement (as per SB$ prudential regulations).
13. &IB report (as per SB$ prudential regulations).
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14. Office note for appro'al %ith detailed terms and conditions.
15. Sanction ad'ice (acceptance of terms and conditions by the borro%er).
Against mortgage of $roperty Including i+ed Assets of Industry for Industry only
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REFERENCES
2. Inter'ie% %ith O.: Ad'ances 6epartment NB$Nodeh Branch Toru "ardan
3. Nasir, ". Saeed. (011). Baning &urrency and inance. $aistan /itab
4. "ara* 2.
5. Inter'ie% %ith O:FFF). "oney and Baning. $aistan /itab "ara*.0E
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CHAPTER 4
FOREIGN ECHANGE DEPARTMENT
In modern baning system, oreign 8+change department plays 'ery important role frome'ery aspect. It is parallel baning to the general baning %ith additional functions of
imports and e+ports business. oreign e+change is controlled by State Ban of $aistan.
5ules and regulations are framed by SB$. NB$ also carries the international baning
through its oreign 8+change 6epartment. All the transactions are carried at the rate
authori*ed by SB$. or this purpose !S dollar has been fi+ed by SB$ and the rate of
other currencies are calculated in accordance %ith the formula appro'ed by SB$ and as
published daily by oreign 8+change 5ate &ommittee in /arachi. NB$ Head Office
ensures that the branches recei'e the rates published by oreign e+change rate &ommittee
on the same day.
The oreign 8+change 6epartment pro'ides the follo%ing ser'ices
1 oreign &urrency Accounts.
2 oreign 8+change 5emittance acility.
3 Import Ad'ances to Importer.
4 8+port Ad'ances to 8+porters.
5.1. FOREIGN CURRENCY ACCOUNTS:
NB$ as an authori*ed commercial ban offers the facility of oreign &urrency Account in
four currencies, %hich are !S 6ollars, Japanese Len, :erman "ar, and !/ $ound
Sterling. Top management of NB$ has authori*ed a fe% selected branches for dealing in
foreign currency accounts.
The foreign currency account facility by NB$ is a'ailable both for $aistani &iti*ens and
foreigners. The procedure for opening foreign currency account is similar to opening of
local currency accounts, e+cept that in case of foreigners, the ban reuires photo copy of
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the applicant-s passport. The account may be an indi'idual or ;oint account.
The customer may open oreign &urrency Account in any of the mentioned oreign
&urrencies. 3ithdra%al and deposits are to be made in the same currency. Similarly
interest on the account %ill also be calculated in the currency in %hich the account is
maintained.
Broadly there are t%o types of foreign currency accounts.
1 &urrent Account
2 Sa'ing Account
5.1.1. C/((%+0 A,,&/+0:
Just lie local currency current account holder, no interest is gi'en to the oreign
&urrency account holder. oreign &urrency accounts are also e+empted from Qaat,
Income Ta+, %ealth Ta+. The account holder can shift his money abroad through foreign
e+change remittance ser'ices.
5.1.2. S")*+ A,,&/+0:
NB$ offers a rate of return on foreign currency sa'ing accounts. The profit is paid in thecurrency in %hich the account is opened. This account is also e+empted from Qaat,
Income Ta+ and 3ealth Ta+. The facility of in%ard and out%ard remittances is granted to
the customer.
oreign currency department of NB$ also has a 'ery e+tensi'e system for the purchase
and sale of foreign currencies. NB$ is an authori*ed dealer in the foreign currency, gi'en
the authority by the SB$. NB$ deals in the buying and selling of oreign &urrency notes
only i.e. dealing in coins is a'oided.
Head Office of NB$ determines the ma+imum foreign &urrency balances that can be ept
in e'ery branch authori*ed to deal in oreign &urrencies. Those branches of NB$ %hich
are authori*ed to deal in oreign &urrencies must submit the follo%ing reports about
foreign e+change,
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1 5eport to :eneral "anger Office
2 Business 5eport to SB$ ("onthly Basis)
3 "onthly 5eport to Head Office
5.2. FOREIGN ECHANGE REMITTANCES
The currency of one country is legal tender only in the same country and not in other
countries. So %hat should the businessmen do %hile doing international business. To
o'ercome such difficulty of businessmen the business is done through oreign 8+change.
The importer %ill need the currency of the e+porting country. The international business
is carried out by transferring credit from debtor-s country to the creditor-s country.
oreign remittances can be done in the follo%ing %ays9
1 Telegraphic Transfer(T.T)
2 "ail Transfer (".T)
3 oreign 6emand 6raft (.6.6
5.3. IMPORT EPORT LC
No%
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It is the ban, %hich opens #=& and then sends to the country from %here imports are to
be made. The issuing ban may send this #=& to one of its branch if present there, if not,
then to some other ban located in the e+porter-s country
5.3.2 A)**+ B"+=
This ban informs the e+porter that an #=& has been recei'ed and also acts as an agent of
the e+porter.
5.3.3 N%&0*"0*+ B"+=
Negotiating ban carries out the negotiation %ith the importer on behalf of the e+porter. It
may or may or may not be the ad'ising ban. The 'arious credentials related to #=& are
settled as per agreed terms of #=&.
5.4. TYPES OF LC
ollo%ing are the important types of #etter of credit
5.4.1. C&+'*(7% L%00%( O' C(%*0
It is a %ritten agreement in %hich the ban gi'e the guarantee that if the goods %ill be of
the standard and fulfilling the conditions of #=&, and then the e+porter (after presentingthe #=& to the ban) %ill get the payment from the ban. The characteristic of this ind of
#=& is that, it can-t be cancelled after issuance and the payment %ill be must.
5.4.2. U+-C&+'*(7% L%00%( O' C(%*0
In this ind of %ritten document the ban taes the responsibilities of recei'ing the bills
of e+porter. But it doesn-t gi'e the guarantee of paying these bills. !nconfirmed #=& can
be cancelled. The importer can cancel it and after cancellation the ban don-t gi'e the
guarantee of payment of #=&. It is a ind of conditional #=& i.e. the guarantee can be
gi'en in the case %hen the importer didn-t cancel it.
5.4.3. R%)&,"#$% L%00%( O' C(%*0
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This ind of #=& can be cancelled by the ban or by the reuest of the importer. In this
ind of #=& the chances of cancellation are at e'ery moment. So it is not dealt %idely and
the importance of this #=& is 'ery little.
5.4.4. I((%)&,"#$% L%00%( O' C(%*0
This ind of #=& is issued for foreign payments. They could not be cancelled until the
gi'en conditions are not broen. So %ith this ind of #=& the e+porter has the guarantee
of payment.
5.4.5. F*% L%00%( O' C(%*0
Those drafts or #=&, the amount of %hich is %hen paid once then it comes to an end, are
called fi+ed letter of credit.
5.4.. C*(,/$"( L%00%( O' C(%*0
This ind of #=& can be used for more than one time, e.g. if one #=& is of rupees >F lac
and the e+porter pro'ides the goods in installments, it has e+ported the goods %orth
rupees 0F lac. The remaining goods %orth rupees 0F lacs ha'e to be e+ported. And if
he (e+porter) pays rupees 0F lacs to the issuer (ban) so the #=& of rupees >F lac can be
rene%ed.
5.4.>. D&,/7%+0"(; L%00%( O' C(%*0
3hen %e enclose important documents %ith the #=& then it becomes a documentary #=&,
i.e. insurance, in'oice, post or draft, clearing certificates, etc
5.5. THE MECHANISM OF OPENING AN LC:
or buying any commodity from foreign country the buyer %ill reach the seller (e+porter)
for the purchase of particular commodity of goods. After the preliminary settling of
agreement bet%een the t%o parties, the importer %ill then apply to his ban for the
issuance of an #=&. The ban then ass the Importer to fill the #=& application form. This
form contains all the details discussed and agreed upon by the t%o parties.
Besides containing information lie description of merchandi*e, port of shipment and
unloading, it also mention the documents necessary for the honoring of draft dra%n upon
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the issuing ban by the importer.
!sually the follo%ing documents are attached %ith #=&.
1 Application for #=&
2 "embership &ertificate of &hamber of &ommerce or Association
3 Insurance &ertificate
4 IB& charge form
5.5.1. NEGOTIATION OF LC DOCUMENTS
The process of Negotiation starts %hen the e+porter reaches the ban for honoring the
draft dra%n on it by the importer. The e+porter sends the documents e'idencing the
shipment of goods to the ban %here the credit is a'ailable and is accompanied by a draft
dra%n on the issuing ban by the importer.
After complete scrutiny, if the documents meet the reuired terms and conditions, the
ban they may negotiate the draft. This negotiation by the ban %ill be %ith recourse to
the seller. Then this ban sends bac the documents to the issuing ban for
reimbursement and is obtained in the pre
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5.1 FOREIGN REMITTANCES
To facilitate its customers in the area of Home 5emittances, National Ban of $aistan
has taen a number of measures to9
a. Increase home remittances through the baning system.
b. "eet the SB$ directi'es= instructions for timely and prompt deli'ery of
remittances to the beneficiary.
5.1.1. N%9 F%"0/(%
The e+isting system of home remittances has been re'ised significantly impro'ed and
%ell< trained field functionaries are posted to pro'ide efficient and reliable homeremittance ser'ices to nonresident $aistani at 0? o'erseas branches of the Ban besides
$aistan International Ban (!/) #td, and Ban A#
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A(*,/$0/(% F*+"+,% S%()*,%
@I eed the 3orld program, a ne% product, is introduced by NB$ %ith the aim to help
farmers ma+imi*e the per acre production %ith minimum of reuired input. Select farms
%ill be made role models for other farms and farmers to follo%, thus helping farmers
across $aistan to increase production.
A(*,/$0/(% C(%*0
The agriculture financing strategy of NB$ is aimed at three main ob;ecti'es9
1. $ro'iding reliable infrastructure for agriculture customers.
2. Help farmers utili*e funds efficiency to further de'elop and achie'e better
production.
3. $ro'ide farmers as integrated pacage of credit %ith supplies of essential inputs,
technical no%ledge, and super'ision of farming.
Agriculture &redit ("edium To%n)
1 $roduction and de'elopment.
2 3ater course impro'ement.
3 3ells.
4 arm po%er.
5 6e'elopment loans for tea plantation.
6 encing.
7 Solar energy.
8 8uipment for sprinlers.
F"(7 C(%*0
NB$ also pro'ides the follo%ing subsidi*ed %ith the range of months to 0 year on a
rene%al basis.
NBP KISAN DOST
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1 #oans a'ailable for the farmers for production, de'elopment purposes, for purchases
of tractors, for installation of tube %ells, for purchase of agricultural Implements,
micro loans, for godo%n construction, for construction of fish pond, for li'e stoc
farming, for mil processing, for cold storage, bio< gas plants etc.
2 "ar
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National Ban of $aistan is all the fore front of international baning in $aistan %hich
is pro'en by the fact that NB$ has its branches in all of the ma;or financial capitals of the
%orld.
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REFERENCES
0. Inter'ie%s %ith @"r. Jehangir han, "r. Baseer, and "r. Tari, Incharge
and assistants, oreign 8+change department NB$.
>. Nasir, ". Saeed. (011). Baning &urrency and inance. $aistan /itab
"ara*.2.
. Ibid, D.
2. Siddii, Asrar. H. (011). $ractice and #a% of Baning in $aistan.
/arachi9 6ecent $rint 8nterprises.
D. %%%.nbp.net.com=p
?. %%%.nbp.ceo.com=p
E. 8conomic Bulletin ol. 0, No . Addition ("ay. June)
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CHAPTER
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FINANCIAL ANALYSIS
1.1 LIUIDITY RATIOS
#iuidity ratios are used to ;udge a firm-s ability to meet short term obligations. It sho%s
the cash sol'ency of a firm and its ability to remain sol'ent in the e'ent of ad'ersities.
1.1.1 CURRENT RATIO
This ratio sho%s a firm ability to co'er its short< term liabilities through short term assets.
The three year comparison of NB$ is gi'en belo%9
&!558NT 5ATIO
L8A5S &urrent Assets = &urrent#iabilities
&!558NT 5ATIO
>FF? ?DD = >F1F 0.0F
>FFE >1 = 20?D 0.0F
>FF >E11D2 = 20EDDE2> F.?E
CURRENT RATIO
20072006 20082004.5
2005
2005.5
2006
2006.52007
2007.5
2008
2008.5
2009
CURRENT RATIO
YEARS
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1.1.3 CASH RATIO
Sometimes it needs to 'ie% the liuidity of the firm from an e+tremely conser'ati'e point
of 'ie%, for e+ample the company may ha'e pledged its recei'ables and in'entories. In
such type of situations, the best indicator of the firm of the short< term liuidity may be
the cash ratio.
&ASH 5ATIO
L8A5S &ash = &urrent #iabilities &ASH 5ATIO
>FF? 2D1 = >F1F F.>D
>FFE ?D>D = 20?D F.0
>FF D12>FDF> = 20EDDE2> F.02
CASH RATIO
20072006 20082004.5
2005
2005.5
2006
2006.5
2007
2007.5
2008
2008.5
CASH RATIO
YEARS
INTERPRETATION:
The three year comparison sho%s the smaller cash ratio in >FF?, it is clear that probably
NB$ carried less cash in >FFE as compared to >FF.
1.1.4 OPERATING CAH FLOS TO CURRENT LIABILITIES RATIO
Operating cash flo% to current liability ratio compares cash flo% to current liabilities of a
firm and indicates the funds flo% per unit of current liability.
O$85ATIN: &ASH #O3 TO &!558NT #IABI#ITI8S 5ATIO
L8A5S Operating cash flo% =
&urrent #iabilities
&!558NT 5ATIO
>FF? ?E11 = >F1F F.>
>FFE 2>??0 = 20?D F.0>
>FF 02?1?> = 20EDDE2> F.FD
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OPERATING CASH FLOW TO CURRENT
LIABILITIES RATIO
20072006 20082004.5
2005
2005.5
2006
2006.5
2007
2007.5
2008
2008.5
CURRENT RATIO
YEARS
INTERPRETATION:
NB$ has impro'ed its operating cash flo% to current liability ratio. The increase is
attributed to the operating cash flo%s, %hich has increased more then ? times.
1.2 ACTIVITY RATIOS
Acti'ity 5atios are also no%n as efficiency or turno'er ratio it measures ho% effecti'ely
the firm is using its assets.
1.2.1 RECEIAVABLES TURNOVER ADVANCES TURNOVER
5ecei'ables turno'er or Ad'ances turno'er pro'ides insight into the uality of the firm
recei'ables or ad'ances and ho% successful the firm is in its collection.
58&8IAB#8 T!5NO85 5ATIO
L8A5S "arup= Interest 8arned =Ad'ances
5ecei'able Turno'er
>FF? 0>1FD2 = 02FD2EE2 F.>>
>FFE >E0>?1 = 02FD2EE2 F.01
>FF
012D>0E = 0?F11F>?D F.0>
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RECEIVABLE TURNOVER RATIO
2008200720062004.5
2005
2005.5
2006
2006.5
2007
2007.5
2008
2008.5
Receivabe T!"#$ve"
YEARS
INTERPRETATION:
The ban has better Ad'ances turno'er ratio in the year >FF compared to the year >FF?
and better in >FFE as %ell.
1.2.2 DEPOSITS TURNOVER RATIO
This ratio compares the "arup e+pense that the ban pays on deposits to the deposits of
the ban.
68$OSIT T!5NO85 5ATIO
L8A5S &urrent Assets = &urrent
#iabilities
6eposit Turno'er
>FF? 0EE>2E = 21?0EF? F.FD
>FFE 02?1DFE = ?>?D?E F.F2F
>FF
?EDDE1 = 1DD?21F F.F0E
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DEPOSIT TURNOVER RATIO
2006 2007 20082004.5
2005
2005.5
2006
2006.5
2007
2007.5
2008
2008.5
De%$&i' T!"#$ve"
YEARS
INTERPRETATION:
The 6TO for the year >FFF has declined. It is F.F2 and F.FD for the year >FFE and >FF?
respecti'ely. It sho%s that for each rupees deposit by the customer it pays F.F? as interest
e+pense. In >FF it is F.F0E, %hich sho%s the lo%er interest.
1.2.3 TOTAL ASSET TURNOVER
:enerally the total assets turno'er measures the acti'ity of the assets and the ability of
the firm to generate sales through the use of the asset.
TOTA# ASS8T T!5NO85 5ATIO
L8A5S "arup, Interest 8arned =
Total Assets
TST
>FF? 0>1FD2 = 0ED0F2E 0.E
>FFE >E0>?1 = >1?>? 0.0
>FF
012D>0E = >ED2F02 F.EFD
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TOTAL ASSET TURNOVER RATIO
20072006 20082004.5
2005
2005.5
2006
2006.5
2007
2007.5
2008
2008.5
2009
TST
YEARS
INTERPRETATION:
The Assets efficiency of the NB$ has reduced for the year >FF to 0.0R compared to
>FF? %hich %as 0.ER. In other %ords %e can say that each dollar in'estment in total
assets produces ? cents as marup. The decline in ratio is mainly because of decrease in
Total "arup = Interest 8arned amount in >FF. .
1.2.4 FIED ASSETS TURNOVER
Sometimes it is needed to find the efficiency of fi+ed assets to generate interest re'enue
or sales. i+ed assets turno'er is a tool to find ho% efficiency one the firm-s fi+ed assets
to produce "arup = Interest re'enue.
I86 ASS8TS 5ATIO
L8A5S "arup or Interest 8arned =
i+ed Assets
i+ed Asset Turno'er
>FF? 012D>0E = >0D2>??1 F.F1
>FFE >E0>?1 = 0E?0D0D>? F.0D
>FF
0>1FD2 = 2>D22?11 F.FE
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FIXED ASSETS RATIO
20072006 20082004.5
2005
2005.5
2006
2006.5
2007
2007.5
2008
2008.5
(i)e* A&&e' T!"#$ve"
YEARS
INTERPRETATION:The three year comparison of fi+ed asset turno'er for NB$ sho%s that the ratio has
increased for the year >FFE. The decrease in total amount of "arup = Interest 8arned and
increase in fi+ed assets has brought this ratio do%n. Ho%e'er it decreases in >FF
increase in fi+ed assets and marup cause this.
1.3 PROFITABILITY RATIOS
These ratios indicate the firm-s o'erall effecti'eness of the operations.
1.3.1 NET PROFIT MARGINS
This is the conser'ati'e method of sales profitability. This ratio gi'es a measure of Net
Income in dollars generated by each dollar of sales.
N8T $5OIT "A5:IN 5ATIO
L8A5S Net Income = "arup or
Interest 8arned
Net $rofit "argin
>FF? ED>>>? = 0ED0F2E F.F2>FFE 2F2D1 = >1?>? F.02
>FF
D1E0? = >ED2F02 F.>0
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NET PROFIT MARGIN RATIO
20072006 20082004.5
2005
2005.5
2006
2006.5
2007
2007.5
2008
2008.5
Ne' +"$, i' -a"i#
YEARS
INTERPRETATION:
The ban has considerably impro'ed the Net $rofit "argin. In >FFE it %as earning 0F
paisa per rupee marup %hile pre'ious year >FF? comparisons sho% 2 cents per dollar
marup or return. And a ER increase in >FF.
1.3.2 GROSS PROFIT MARGIN
This ratio sho%s the profit of the firm relati'e to the sales. It is a measure of efficiency of
the firms operations as %ell as an indication of ho% product or ser'ices of the firm arepro'ided.
:5OSS $5OIT "A5:IN 5ATIO
L8A5S Net "arup or Interest
8+pense = "arup or
Interest 8arned
:$"
>FF? 0EE>2E = 0>1FD2 F.?F
>FFE 02?1DFE = >E0>?1 F.D2
>FF
?EDDE1 = 012D>0E F.2
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GROSS PROFIT MARGIN RATIO
2008200720062004.5
2005
2005.5
2006
2006.5
2007
2007.5
2008
2008.5
2009
/+-
YEARS
INTERPRETATION:
NB$ bas a better :ross $rofit "argin for the year >FF? compared to the year >FFE. It
sho%s that NB$ has become more effecti'e in producing the ser'ices reasonably abo'e
cost and charging for them. 3hile in >FF it again decreases that-s sho%s its good sign.
1.3.4 RETURN ON INVESTMENT
The return on the In'estment measures the firm-s ability to utili*e its assets to create
profits by comparing profits %ith the assets that generate the profits from du pont
approach.
58T!5N ON IN8ST"8NT
L8A5S Net $rofit "argin K Total
Asset Turno'er
5OI
>FF? F.?2 K 0.E 0.01
>FFE F.02K 0.0 F.0D
>FFF.>0K F.EFD F.0DF
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RETURN ON INVESTMENTS
20042003 2005200.5
2002
2002.5
2001
2001.5
2004
2004.52005
2005.5
ROI
YEARS
INTERPRETATION:
NB$ sho%s a lo% 5OI in the year >FF compares to the year >FF? 4>FFE. Its 5OI has
decreased from, in the year >FFE, F.0D to .0D in >FF. The assets turno'er though
reduced still the impro'ement in NB$ %ill bring this ratio up.
1.3.5 RETURN ON EUITY
This ratio compares Net $rofit after Ta+es to the euity that the share holders ha'e
in'ested in the firm. A high return on euity reflects the firm acceptance of strong
in'estment opportunities and effecti'e e+pense management.
58T!5N ON 8G!ITL 5ATIO
L8A5S Net $rofit "argin K Asset
Turno'er K 8uity
5O8
>FF? F.?2 K 0.E K 001D 0?0.
>FFE F.02K 0.0 K 02>E >>D.E
>FF
F.>0K F.EFD K 00 >E>.>
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RETURN ON EQUITY RATIO
20072006 20080
500
000
500
2000
2500
1000
1500
4000
ROE
YEARS
INTERPRETATION:
It is clear from the abo'e ratio comparison that the 5O8 ratio for the year >FF has
increased to >E>.> from >>D in the year >FFE. There is a decrease in euity multiplier and
asset turno'er but still the impro'ement in Net $rofit "argin in the year >FF has
fa'orable effect on 5O8 ratio.
1.3. ADVANCES TO DEPOSITS RATIOS
The firm compares the ad'ances to deposits and sees the comparisons of different years
A6AN&8S TO 68$OSITS 5ATIOS 5ATIO
L8A5S Ad'ances = 6eposits 8uals
>FF? 0EF01F1? = 21?0EF? F.2E
>FFE 02FD2EE2 = ?>?FD?E F.E
>FF 0?F11F>?D = 1DD?21F F.2F?
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ADVANCES TO DEPOSITS RATIOS RATIO
20072006 20082004.5
2005
2005.5
2006
2006.5
2007
2007.5
2008
2008.5
2009
E!a&
YEARS
INTERPRETATION:
It sho%s that in >FF there is an increase both in the deposits as %ell as in the ad'ances,
%hich sho%s a good sign for the ban. Although it is decrease as compare to >FF?.
1.3.> INVESTMENT TO DEPOSITS RATIOS
The firm compares the in'estments to deposits and sees the comparisons of different
years.
IN8ST"8NT TO 68$OSITS 5ATIOSL8A5S In'estments = 6eposits 8uals
>FF? E0ED1221 = 21?0EF? F.>FD
>FFE 02D>21E0 = ?>?FD?E F.1D
>FF
0??01D?01 = 1DD?21F F.2>F
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IN3EST-ENT TO DE+OSIT RATIO
20072006 20082004.5
2005
2005.5
2006
2006.5
2007
2007.5
2008
2008.5
2009
E!a&
YEARS
INTERPRETATION:
It sho%s that ban has done a good in'estment that increases its total in >FF, as compare
to >FFE 4 >FF?. It-s a good sign for the ban more cash is generated in this %ay.
1.3.? EUITY MULTIPLIER
8uity multiplier compares the assets of the firm to the share holder euity.
8G!ITL "!TI$#I85
L8A5S Total Assets = 8uity 8uity "ultiplier
>FF? 0ED0F2E = 001D?E F.1?
>FFE >1?>? = 02>E1F F.0?
>FF
>ED2F02 = 001E 0.D>
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EQUITY MUTIPLIER
200520042001200
2002
2001
2004
2005
2006
2007
E!i' -!'i%ie"
YEARS
INTERPRETATION:
The euity multiplier has also been reduced from in the year >FFF. The main factor here
again is that the amount of euity has considerably increased. But increase in the year
>FFF, %ith increase both in the assets and euity.
FIVE YEAR PERFORMANCE AT A GLANCE
(5s. In millions)
Lears Total Assets 6eposits Ad'ances In'estments Shareholder
8uity
011 >D,FDE >E,10 0F1,D>2 0F>,1?1 1,1E
0111 DF,2F? >12,ED2 0>>,DD1 10,2? 0F,D
>FFF E0,?? 0?,21 02F,0 E>,?F1 00,E
>FF? 20D,F1 21,?0E 0EF,01 E0,ED1 00,1D1
>FFE 2>,F ?>,?? 02F,D2E 02,D>D 02,>E1
>FF 2E0,?F 1D,D? 0?F,11F 0??,01? 0,02
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Tota A!!" t!
0
00000
200000
100000
400000
500000
2 1 4 5 6
Y"a#!
RS.
$%&$$o%!
T$'a A&&e'&
Yea"&
DEPOSITS
0
50000
00000
50000
200000
250000
100000
150000
400000
450000
2 1 4 5 6
YEARS
R!.
$%&$$o%!
De%$&i'&
Yea"&
S&/(,%: A++/"$ R%&(0 2?
ADVANCES
0
50000
00000
50000
200000
2 1 4 5 6
YEARS
R!$%&$$o%!
A*va#ce&
Yea"&
Source9 Annual 5eport >FF
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I%'"!t&"%t!
0
50000
00000
50000
200000
2 1 4 5 6
Y"a#!
R!.$%
&$$o%!
I#ve&'e#'&
Yea"&
Source9 Annual 5eport >FF
S(a#" (o)"# E*+$t,
0
5000
0000
5000
20000
25000
2 1 4 5 6
Y"a#!
R!.
$%&$$o%
!
Sa"e$*e" E!i'
Yea"&
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Source9 Annual 5eport >FF
FIVE YEAR PERFORMANCE AT A GLANCE
(5s. In millions )
Lears $re,0D DF 0,22 0D,ED
>FF2D>F 0 0,20 0D,D20
>FFD0,F> 2?0 0,2> 0D,D0
>FF?,F0? 0,021 0,>2D 0D,0?
>FFE?,F2D >,>D 0,>F2 0>,01D
>FF1,FF1 2,01 0011 0>E>
Source9 Annual 5eport >FF
FIVE YEAR PERFORMANCE AT A GLANCE
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FINANCIAL HIGHLIGHTS
5s. In "illions
Authori*ed &apital D,FFF
$aid up &apital 2,0F
Shareholder 8uity 4 5eser'es >E,D2
6eposits 1D,D?
Ad'ances CNet 0?F,11F
In'estment Net 0??,01?
Total Assets 2E0,?F
$re
Source9 Annual 5eport >FF
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2 The customers- relations of the NB$ staff are much %eaer as compared to other
pri'ate bans.
3 #ong term contacts are not maintained %ith customers.
4 "ost of the staff is from families %ith strong political bacground so it is 'ery
difficult to remo'e them or punish their negati'e beha'ior.
5 The technical training of the staff is negligible e.g. in case of absence of the
computer operator there is no alternate trained person %ho can record the daily
transactions.
6 The organi*ation is 'ery much mechanistic and pro'ides no fle+ibility to
encourage creati'ity.
7 The lo%er staff is non
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11 "uch time is %asted %hile searching for e'en a %ee old document.
12 The staff spends more time in collections than reuired. The ban collections are
usually late because of the non
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7 #easing business.
8 Hiring the ne% BBA (HONS)-s, ne% talent %hich can control the administrati'e
e+penses.
1.4 THREATS
1 The biggest threat to the operational success is the better competitors- ser'ices.
"any pri'ate sector bans are offering higher rates of return to customers than
NB$.
2 The bans in the neighborhood of NB$ ha'e become online e.g. !nion Ban,
Habib Ban, "uslim &ommercial Ban and Standard &hartered Ban, %hile it
lacs this.
3 &annibali*ation of profits is yet another threat to the success of NB$. The
branches of NB$ are located 'ery close to each other. All these branches are
taing a%ay each other-s customers.
4 One of the biggest threats to the NB$ is the increasing rate of dissatisfied
customers. "ost of these customers %ere obser'ed to be dissatisfied %ith the
delays in their ser'ices.
5 The greatest threat to the performance of NB$ is the decreasing morale of
employees. They feel that they are not pro'ided %ith bonuses, they are not gi'en
proper attention to ha'e a say in the meetings.
6 High
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REFERENCES
0. an Horne, James &. (011D). inancial "anagement and $olicy.
>. $andey, ".I. inancial "anagement. Ahmedabad9 ias $ublishing
House.
. an, Horne, James. &. (011) undamentals of inancial "anagement.
!SA9 $rentice Hall Inc.0>?.
2. :ibson H. &harles (>FFF). inancial Statements Analysis.
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CHAPTER ->
FINDINGS AND RECOMMENDATIONS
There is al%ays a better %ay of doing things so some of recommendations suggested for
the ban in accordance to the critical analysis.
>.1 IMPROVE UALIFICATION OF THE STAFF
Academically staff is uite ualified but most of the staff lacs professional ualification
i.e. they should do diploma in baning. It %ill help them a lot in baning and also in their
promotions. The cost of diploma in baning is lo%. It has three stages and the cost per
stage is < 5s.>, FFF.
>.2 STAFF SHOULD BE TRAINED
$roper training should be gi'en to the staff of the branch. Staff college people should
come and train the staff because some times it is difficult for staff to 'isit Staff &ollage
$esha%ar to get the reuired training. The cost estimates for the Staff &ollege employees
to come to the branch and gi'e them training %ill be lie 5s.0, FFF per Staff &ollege
8mployee for one day. So if t%o people come for t%o days after si+ months then the cost
%ill be 5s., FFF per year, %hich is negligible.
>.3 IMPROVE TECHNOLOGY
This branch has fa+, telephones and computers. It is suggested that there should be on
line baning facility and AT" (Auto Teller "achine) facility. The e+isting computers
should be interconnected by net%oring, %hich %ill cost only 5s.0F, FFF for only one
time. The benefit of Net%oring %ill be that the different departments %ill be able to
%or and easily, efficiently and %ith least %astage of time.
>.4 RANK INFLUENCE SHOULD BE AVOIDED
Some times high ran officers come and %ant themsel'es to be gi'en priority. In these
cases ban should strictly follo% the rule of first come first ser'e-. This %ill maintain the
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trust of other customers that they are not neglected ;ust because they ha'e no ran.
>.5 SECRECY MEASURES MUST BE MAINTAINED
The branch must maintain the secrecy of its customer-s account especially %hen the ban
is ased on telephone to tell about the financial standing and balance in the account.
>. GOLD LOAN AND LOCKER FACILITY
Ban should utili*e its deposits by e+tending gold loans and all other ind of loans to
attract the potential customers to utili*e their full capacity. This %ill increase their
business circle, and %ill increase profits by decreasing per unit costs.
>.> MOTIVITATE THE EMPLOYEES
The staff of the NB$ Aora /hattaBranch, especially the lo%er staff is found 'ery
much demoti'ated. They are dissatisfied %ith the performance appraisal system of the
ban. They also complain about the nepotism of the upper management. The Branch
manager should establish a systematic and efficient appraisal system to o'er come the
demoti'ation and dissatisfaction of the employees.
>.? CUSTOMER ORIENTATION
8'ery leading organi*ation considers its customers as the ings. So the ban manager
needs to eep in close contact %ith the e+isting and the potential customers. He should
inform them about ne% products of the ban. The customers should be ased about the
ban-s ser'ices from time to time. And the deficiencies pointed out by the customers
should be remo'ed. The customer and staff relationship should be made mild, soft,
courteous, cooperati'e, and caring, %hich is not lie this in NB$ no% a days, as
compared to other pri'ate bans.
>.@ OB ROTATION
The employees should be rotated through different seats of different departments, so that
each and e'ery employee is a%are of the %hole baning system. It %ill benefit in the
absence of employees.
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>.@ DECISION OF GOVERNMENT
The go'ernment is sending the salaries of some of the departments of the NB$, %hich
creates a lot of rush and 'oice in the ban, at the end of each month the NB$ should ha'e
to appeal to the go'ernment to retae this order and send their salaries to each department
independently. The NB$ is getting nothing out of it e+cept disaster in the ban.
>.@ DRESS CODE
6ress taes a great role in presenting somebody-s personality. 8specially for baners,dress code should come in a 'ery formal dress and thus they can sho% their customers
about their seriousness to%ards %or.
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LIST OF PERSONS INTERVIEED
1 Operation "anager Aora /hatta Branch
2 O.:
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1 6ecen*o, 6a'id. A and 5obbins, Stephen. $. (0112). Human 5esource
"anagement. !SA John 3iley and Sons Inc.
2 6urrani, Imran (>FFF). Internship report on NB$ submitted to Institute of
"anagement Studies.
3 Hassan, "umta* (011). The story of NB$, /arachi.
4 Harold, /oont* and Hei* 3eihrich (012). "anagement. "c:ra% hill, th
edition.
5 http9==%%%.nbp.com.p
6 /id, 3ell, 6a'id, $eterson, 5ichard and Blac 3ell. (011). inancial Institution,
"arets and "oney. !SA the 6yden $ress Harcourt Brace Jo'ano'ich &ollege
$ublisher.
7 /oont*, Harold and Hein* 3eihrich. (011). "anagement. 0Fth 8dition.
Singapore9 "c:ra% Hill.
8 Nasir, ". Saeed. (011). Baning &urrency and inance. $aistan /itab "ara*.
9 Nasir, ". Saeed. (011). 8conomic Theory. IImi /itab /hana.
10 National Ban of $aistan, (>FFF). Annual 5eport >FFF. /arachi.
11 National Ban of $aistan, 8conomic Bulletin of NB$, /arachi.
12 National Ban of $aistan, Statements of #iabilities and Assets, Statements of
$rofit and #oss (>FFF, >FFF, >FFF).
13 NB$, BBI. (011E0, &ircular No. 0=>FFF. Head Office National Ban of
$aistan, /arachi.
15 $resident Office "ays 0, &ircular No. 00=>FFF. Head Office. National Ban of
$aistan, /arachi.
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16 5ue, #eslie. 3 and #loyd #. Byers. (011>). "anagement. Boston9 6onnelley and
Sons &ompany.
17 Siddii, Asrar. H. (011). $ractice and #a% of Baning in $aistan. /arachi9
6ecent $rint 8nterprises.
18 %%%.nbp.com.p
19 %%%.sbp.org.com
20 %%%.;anggroup.com
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