nbp main branch khanewal 2003

8/2/2019 NBP Main Branch Khanewal 2003

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Internship Report

On

NATIONAL BANK OF

PAKISTAN

Main Branch, Khanewal

PresentedBy:

Muhammad Usman

MBA(IT) RollNo. 41Session: 2001 2003


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In The Name Of Allah, The Most Beneficial,

The Most Merciful.

All praise Is For Allah, The Lord Of The Universe.

The Most Beneficial, The Most Merciful.

The Master Of The Day Of Judgment.

( al-Fatiha; verse:1-4 )

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WWHOHOAALWAYSLWAYS CCAREARE MMEE

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Page#

1. Preface

10

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2. Acknowledgement ... 14

Section 1: INTRODUCTION TO BANKING

SYSTEM

3. What is Commercial Bank?

16

4. Banker and Customer Relationship

18

Section 2: HISTORY OF BANKING & NBP

5. History of Banking in Pakistan

23

6. Efforts towards Islamic Banking in Pakistan

26

7. National Bank of Pakistan ... 28

Section 3: ORGANIZATIONAL STRUCTURE

8. Management and Organization of a Commercial

Bank

30

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9. Board of Directors

35

10. Senior Management 36

11. Regional Structure

37

12. Branch Structure 38

Section 4: MAJOR OPERATIONS OF NBP

13. Functions of National Bank of Pakistan

40

14. Cash Department

42

15. Deposit Department 44

16. Different Types of Deposits 44

16.1 Current Account

45

16.2 PLS Saving Bank Account 46

16.3 Fixed Deposits 46

16.4 Short Notice Term Deposit 47

16.5 Call Deposit

47

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16.6 Cumulative Deposit Certificate

47

16.7 Monthly Income Scheme 48

16.b Ledgers of Deposit Department

48

17. Clearing Department 49

18. Types of Cheques Collected

50

18.1 Transfer Cheques

50

18.2 Clearing Cheques

50

18.3 Collection Cheques 50

19. Advances and Credit Department

51

20. Securities

51

20.1 Bankers Lien 51

20.2 Guarantees

52

20.3 Mortgage 52

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20.4 Hypothecation 53

20.5 Pledge

53

21. Types of Advances

54

21.1 Demand Finance (Ordinary Loans)

54

21.2 Running Finance (Overdraft)

54

21.3 Cash Finance 55

21.4 Small Finance 56

21.5 Finance against Bills 56

21.6 Agriculture Loans

56

22. Other Services 58

22.1 Utility Bills Collection

58

22.2 NBP Pak Rupee Traveler Cheque

58

22.3 Foreign Currency Accounts

58

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23. Different schemes conducted by NBP

59

23.1 Hajj Mubarak Scheme

59

23.2 NBP Advance Salary Scheme

60

23.3 Fund Management Scheme

60

23.4 LG TV Scheme

61

Section 5: TRAINING SUBSTANCE

24. Work performed by me

63

a. General Banking

63

b. Cheque at Counter

64

c. Cheque Payment procedure

64

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d. Issuance of Demand Draft

65

e. Bills Collections Department

65

f. Bill Remittance Department

66

g. Deposit Department

66

Section 6: FINANCIAL ANALYSIS

25. Profit and Loss Account

69

26. Balance Sheet

70

27. Cash Flow Statement 71

28. Financial Position

72

29. Five Years Performance at a Glance

74

Section 7: SWOT ANALYSIS

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30. Strengths

77

31. Weaknesses

80

32. Opportunities

83

33. Threats

85

Section 8: RECOMMENDATIONS

34. Recommendations

87

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PREFACEBanking sector owes a pivotal importance in

the economy of any country through its vibrant

functions. This is the deep seated motivator that

geared up me to join any bank for internship.

Moreover, the practice and familiarity learned

during this tenure would also attest very helpful

and alleviating in the awaiting proficient life.

This report is an upshot of my six weeks

internship in National Bank of Pakistan, Main

Branch, Ghallamandi, Khanewal. National Bank of

Pakistan posses an imperative and historical

importance in the banking sector of Pakistan. It

always remains the center of hustles in business

activities. It always endows with great covenant

of rally round in terms of funds and services at all

epochs of its dynamism.

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Although, a derisory period of six weeks is

not enough to learn the complex operations of

National Bank of Pakistan yet I made industrious

efforts to converse them comprehensively in this

report. Particularly, I have remunerated more

accents on study of distinguishing features and

services of National Bank of Pakistan. I have

made maximum venture to elaborate this report

with the material read, listened and observed.

I have strong belief that this report will guide

and ease the readers to understand the

operations of banking system and more

prominently have good knowledge about National

Bank of Pakistan, one of the most trusty and

leading banks in Pakistan.

Dear readers, I hope that you will appreciate

my report and sense that reading my report is not

like to waste the time in any respect because of

the four principal reasons as under:

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1 ... ... A conscientious attempt is made to

provide 100 % realistic knowledge of the real

world organization, National Bank of Pakistan.

2 ... ... Almost all the terms are first

explained themselves in a simple and

comprehensive way used in this organization

before bringing them into play in different

dealings so the reader may soundly familiar to

the operations performed in the banks.

3 ... ... No Gup is made from beginning to end

in the report not even of a single word.

4 ... ... Although, it is not a titanic sized

report but the material provided is not a

bogus. Also, this report is wholly up to date,

equipping the information about currently

prevailing functioning and services of the

Banking System of National Bank of Pakistan.

If any reader likes my report and he want to

get a soft copy of the report, so dont worry. You

can get the soft copy of my report very easily.

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What you have to do to get a soft copy of the

report? You have to do only one thing for this

cause. Please address me your request in my

email and I will send a soft copy of my report to

the calling ID or otherwise mentioned. I check my

email account after 10 days. My email address is

as under :

[email protected]

M. Usman Khan

MBA (IT)

Roll No. 41

Session: 2001-2003

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ACKNOWLEDGEMENTI am very gratifying to Almighty Allah who

permitted me to be trained in a real world

organization, NBP, as well as to complete this

report in a very limited time.

My thanks are also due to the young,

dynamic, congenial, and qualified staff of NBP

who never let me alone in different situations

related to my internship. Without their humble

help, it was not easy.

I cannot forget to pay my special thanks to

Mr. Afzaal, Vice President and In charge of

Advances, NBP Regional Office Multan, who

managed the internship permission for me from

the Head Office of NBP Karachi to depute my

internship in NBP Main Branch, Khanewal.

M. Usman Khan

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Section1

INTRODUCTION TO

BANKING SYSTEM

In this section two topics are discussed. They are as

under:

What is Commercial Bank?

Banker and Customer Relationship

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WHAT IS AWHAT IS A

COMMERCIAL BANK?COMMERCIAL BANK?A bank is a financial institution which deals with

money and credit. It accepts deposits from individuals,

firms, and companies at a lower rate of interest and

gives at a higher rate of interest to those who apply for

loan. The difference between the terms at which it

borrows and those at which it lends from the source of

its profit. A bank, thus, is a profit earning institute. Any

bank that performs this functioning is called the

commercial bank.

According to Crowther:

A bank is a firm which collects money from those

who have it spare. It lends money to those who require

it.

According to Banking

Ordinance 1962:

According to Section 5(b) of Banking

Ordinance 1962, meaning of banking is as under:

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Banking company is a company which transacts

the business of banking in Pakistan, mainly of

accepting, for the purpose of lending and and

investments of deposits of money from the public,

repayable on demand or otherwise and withdraw able

by cheque, draft, order, or otherwise

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BANKER AND CUSTOMERBANKER AND CUSTOMER

RELATIONSHIPRELATIONSHIP

The relationship between the banker and the

customer are of utmost importance. Both serve the

society and the economy to expand. Before we discuss

the relationships between the banker and the

customer, it seems necessary that the two terms

banker and customer are made clear.

* Banker

A banker is a dealer in capital or more properly adealer in money. He is an intermediate party between

the lender and the borrower and charges a definite

amount of money which is the profit of his.

* CustomerA customer is a person who maintains a regular

account with the bank, without taking into

consideration the duration and frequency of operation

of his account.

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The relations between the banker and the

customer are generally studied as under:

*Debtor and Creditor

The general relationship between banker and

customer is primarily that of a debtor and creditor.

When customer deposits money with a bank, the bank

then is the debtor and the customer is the creditor. The

customer expects from the bank that (I) his money will

be kept safe by the bank, (II) it will be returned on

demand within business hours. The position is reverse if

the customer is advanced loan i.e. the banker becomes

the creditor and the customer is the debtor.

*Principal and Agent

The special relationship between the customer and

the banker is that of principal and agent. The customer

(principal) deposits cheques, drafts, dividends etc. are

for collection with the bank. He also gives written

instruments to the bank to purchase securities, pay

insurance premium, installments of loans etc on his

behalf. When the bank performs such agency services,

he becomes an agent of his customer.

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*Bailer and Bailment

RelationshipA bailment is the delivery of goods in trust. A

banker may accept the valuables of his customers such

as jewellery, documents, securities etc. for safe

custody. In such a case the customer is the bailer and

the bank is the bailee. It charges a very small amount

of money as service charges for safe custody of

valuables.

*Pledger and Pledgee

When a customer pledges goods and documentswith the bank as security for an advance, he then

becomes the pledger and the bank becomes the

pledgee. The pledged goods are to be returned intact to

the pledger after the debt is repaid by him.

*Mortgager and

Mortgagee

Mortgage is the transfer of an interest in specific

immoveable property for the purpose of securing the

payment of money advanced or to be advanced by way

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of loan. When a customer pledges specific immoveable

property with the bank as security for an advance, the

customer becomes the mortgager and the bank

becomes the mortgagee.

*Bank as a Trustee

The bank acts as a trustee for his customers in

those cases where he accepts other valuables for safe

custody. In such case, the customer continues to be the

owner of the valuables deposited with the bank.

*Executor, Attorney,

Guarantor The bank also acts as executor, attorney, and

generator for his customers.

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Section 2

HISTORY OF

BANKING AND NBP

In this section three topics are discussed. The major topic of

this section is:

History of Banking in Pakistan

Efforts towards Islamic Banking in Pakistan

National Bank of Pakistan

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HISTORY OF BANKINGHISTORY OF BANKING

IN PAKISTANIN PAKISTAN

The partition plan was announced on June 3, 1947

and August 15, 1949 was fixed as the date on which

independence was to take effect. It was decided that

the Reserve bank of India should continue to function in

the dominion of Pakistan until September 30, 1948 due

to administrative and technical difficulties involved in

immediately establishing and operating a Central Bank.

At the time of partition, total number of banks in

Pakistan were 38 out of these the commercial banks in

Pakistan were 2, which were Habib Bank Limited and

Australia Bank of India. The total deposits in Pakistani

banks stood at Rs.880 million whereas the advances

were Rs.198 million. The Governor General of Pakistan,

Muhammad Ali Jinnah issued the order for the

establishment of State Bank of Pakistan on 1st of July

1948.

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In 1949, National Bank of Pakistan was

established. It started with six offices in former East

Pakistan. There were 14 Pakistani scheduled

commercial banks operating in the country on

December 1973, the name of these were:

1. National Bank of Pakistan

2. Habib Bank Limited

3. Habib Bank (Overseas) Limited

4. United Bank Limited5. Muslim Commercial Bank Limited

6. Commerce Bank Limited

7. Australia Bank Limited

8. Standard Bank Limited

9. Bank of Bahawalpur Limited

10. Premier Bank Limited

11. Pak Bank Limited

12. Lahore Commercial Bank Limited

13. Sarhad Bank Limited

14. Punjab Provincial Co-operative Bank Limited

The Pakistan Banking Council prepared banks

amalgamation schemes in 1974 for amalgamation of

smaller banks with the five bigger banks of the country.

These five banks are as under:

1. National Bank of Pakistan

2. Habib Bank Limited

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3. United Bank Limited

4. Muslim Commercial Bank Limited

5. Allied Bank Limited

So, through the Nationalization of Bank Act 1974,

the State Bank of Pakistan, all the commercial banks

incorporated in Pakistan and carrying on business in or

outside the country were brought under the

government ownership with effect from Jan. 1, 1974.The ownership, management, and control of all banks

in Pakistan stood transferred to and vested in the

Federal Government. The Finance Minister announced

plans to start Islamic Banking system in Pakistan in the

budget speech on June 26, 1980, but it could not be

possible till August, 2003.

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EFFORTS TOWARDS ISLAMICEFFORTS TOWARDS ISLAMIC

BANKING IN PAKISTANBANKING IN PAKISTAN

Pakistan was created in the name of Islam on august

14, 1947. But since then, the interest is paying the

cardinal role in resource allocation of the economy. The

banking system in Pakistan based on interest

divergences with Islamic ideology and is forbidden by

Almighty Allah and His Prophet Muhammad (PBUH).

Any government till now in the country except

President Zia-ul-Haq did not dare to change the well-

digged system based on interest in banking in Pakistan.

The only step taken under this direction is starting of

PLS Deposits from January 1, 1982. Only PLS saving

account and PLS term deposits shall be accepted on

profit and loss sharing basis. The banks were allowed to

meet the working capital requirements of their clients

on the basis of Musharika, and Leasing, and Hire

Purchase. Beside it, different efforts are made time by

time in this respect but could not be acted upon at all.

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Recently in June 2002, the Shariah Applet Bench of

Pakistan issued an order to all the banks in Pakistan to

change the interest-based banking system to Islamic

Modes but the lawyer from the government of Pakistan

challenged it by saying that if any affair is in the favor

of the public of the country and is also admired by the

public then it cannot be abandoned by the government.

So this issue is still not resolved.

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NATIONAL BANK OFNATIONAL BANK OFPAKISTANPAKISTAN

National Bank of Pakistan,

the Nations Bank.

National Bank of Pakistan (NBP) was established

under the National Bank of Pakistan Ordinance

1949. The primary objective of NBP was to purchase

jute from the growers in the former East Pakistan and

also to perform the commercial banking functions in the

country.

National Bank of Pakistan is now the biggest

financial institution with assets totaling over Rs.310

billion with 1428 local and 23 foreign branches.

The bank is the higher financer in agriculture andcommodity operation sector.

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Section 3

ORGANIZATIONAL

STRUCTURE

In this section five topics are discussed. The major

topics of this section are:

Management and Organization of a

Commercial Bank

Board of Directors

Senior Management

Regional Structure

Branch Structure

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MANAGEMENTMANAGEMENT

ANDAND

ORGANIZATIONORGANIZATIONOF A COMMERCIALOF A COMMERCIAL

BANKBANK

The ownership, management, and control of all the

commercial banks were taken over by the Government

of Pakistan on January 1st, 1974.

A banking council was formed under the

Nationalization Act 1974. The banking council was

set up for making policy recommendations to the

Federal Government, formulating policy guidelines for

the banks and their reorganization.

The management and organizational structure of

the nationalized banks have uniformity. This

management and organizational structure is briefly

described as under:

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1 ... ... Board of Directors

2 ... ... Executive Board

3 ... ... Chief Executive

4 ... ... Divisional Chiefs5 ... ... Provisional Chiefs

6 ... ... Circle Executive

7 ... ... Zonal Heads

8 ... ... Branch Managers

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1. Board of Directors

In the management of the banks, the board of

directors is at the top of the controlling body. Since

there are no private share holders now, so there is no

general meeting of the share holders and no elected

directors. The BOD consists of a nominated

President, a Secretary, and 9 other members. The

board has limited administrative powers because after

the Nationalization Act 1974, most of powers are

transferred to the Banking Council and Executive

Board.

2. Executive Board

The general direction and supervision of the affairs

of commercial banks lies in their respective Executive

Boards. An EB also consists of a President, a

Secretary, and 9 other members, appointed by the

Federal Government.

3. Chief Executive

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The President of the Executive Board is the Chief

Executive. He is the administrative head of a bank and

presides over the meetings of Executive Board.

4. Divisional Chiefs

In order to improve the management and

operation of a bank, it has been split up into a numbers

of divisions. Each division of a bank is placed under the

supervision and control of Divisional Chief (also called

the Senior Executive Vice President or Executive Vice

President)

5. Provisional ChiefsIn order to improve the performance of banking

system, each bank has a Provisional Chief. PC has the

powers for sanctioning finance and other credit

facilities. Each headquarter is situated in each province

e.g. in Lahore, Peshawar, Quetta, and Karachi.

6. Circle Executive

Each commercial bank has a number of circles

placed directly under the control and supervision of

Chief Executive.

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7. Zonal Heads

Each circle is divided into a number of zones.

These zones are administered by Zonal Heads who hold

the posts of Vice President or Assistant Vice President.

8. Branch Managers

Each zone of commercial bank is divided into several

branches. The control and supervision of each branch is

mostly entrusted to Assistant Vice President or Officer

G-II.

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SENIOR MANAGEMENTSENIOR MANAGEMENT

R. A. Kaleemi SEVP & Group Chief, Operational Group

Masood Karim SEVP & Grp Chf, Co. & Invst Banking Grp & Chf Fncl Officer

S. M. Rafique SEVP & Secretary Board of Directors

Derrick Cyprian SEVP & Group Chief, Special Assets & Remedial Mngt Group

Amin Akhtar EVP & PSO to the President

Farooqul Hassan EVP & Chief Presidents Implementation Secretariat

Shahid Anwar EVP & Group Chief, Commercial & Retail Banking Group

Safdar Khawaja EVP & Group Chief, Audit & Inspection Group

Asif A. Brohi EVP & Group Chief, Strategic Planning & Eco Research Group

Javed Mehmood EVP & Group Chief, Risk Management Group

M. Nusrat Vohra EVP & Group Chief, Treasury Management Group

Nadeem Dogar EVP & Group Chief, IT Planning & Implementation Group

Dr. Abrar Baig Head of Human Resources Management Department

Uzma Bashir Head of Organization Development & Training Department

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REGIONAL

STRUCTURE

REGIONAL CHIEFEXECUTIVE

GENERAL GENERAL GENERALMANAGER MANAGER MANAGERAdvances, Legal Planning, Business Administrativeand Recovery Wing Development Wing

Customer Servicesand Implementationof Audit

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BRANCH STRUCTURE

MANAGER OG-I ADVANCE

OG-II ADMIN

OG-II OG-II OG-II OG-IIISERVICES CASHIER ACCOUNTS

ASSISTANT ASSISTANT ASSISTANT ASSISTANT

GODOWN GODOWN GODOWN GODOWNKEEPER KEEPER KEEPER KEEPER

HEAD MESSANGER

MESSANGER

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Section 4

MAJOROPERATIONSOF THE NBP

In this section a number of topics are discussed. The

major topics of this section are:

Functions of National Bank of Pakistan

Cash Department

Deposit Department

Different Types Deposit Department

Clearing Department

Advances and Credit Department

Securities Types of Advances

Other Services

Different schemes conducted by NBP

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FUNCTIONS OFFUNCTIONS OF

NATIONAL BANK OFNATIONAL BANK OFPAKISTANPAKISTAN

National Bank of Pakistan is a commercial bank, in

modern time it plays a very vital role and its functions

are manifold. The main functions are as under:

(1) Accepting various types of deposits.

(2) Granting loans and advances.

(3) Undertaking of agency services and also general

utility functions, few of these are as under:-

a ... ... Collecting cheques and bills of exchange

for the customers.

b ... ... Collecting interest due, dividend,

pensions, and other sum due to customers.

c ... ... Providing safe custody and facilities to

keep jewellery, documents, and securities etc.

d ... ... Transfer of money from place to place.

e ... ... Acting an executor, trustee or attorney

for the customers.

f ... ... Issuing of travelers cheques and letters

of credit to give credit facilities to travel.

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g ... ... Accepting bills of exchange on behalf of

customers.

h ... ... Purchasing shares for the customers.

i ... ... Undertaking foreign exchange business.

j ... ... Furnishing trade information and

tendering advice to customers.

For proper functioning of all these activities, the

bank has divided its operations into differentdepartments that would be discussed next. These

departments are as under:

(1) Cash Department

(2) Deposit Department

(3) Clearing Department

(4) Advances and Credit Department

(5) Remittance Department

(6) Foreign Exchange Department

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* CASH* CASH

DEPARTMENTDEPARTMENT The following books are maintained in the cash

department:-

1 ... ... Receiving Cashier Books

2 ... ... Token Book

3 ... ... Paying Cashier Book

4 ... ... Scroll Books

5 ... ... Cash Balance Book

When cash is received in counter, it is entered in

the Scroll Book and Receiving Cashier Book. At theclose of the day, these are balanced with each other.

When the cheque or any negotiable instrument is

presented at counter for payment, it is entered in the

Token Book and Token is issued to the customer. The

Token and the cashier make entry in the Payment Book

and the payment is made to payee. At the close of the

day, the Token Book and paying Cashier Book is

balanced. The consolidated figure of receipt and

payment of cash is entered in the Balance Book and

drawn closing balance of cash.

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OPENING BALANCE + RECEIPT PAYMENT =

CLOSING BALANCE

This is very important department because cash is

the most liquid asset and mostly frauds are made inthis department, therefore, extra care sis taken in this

department and no body is allowed to enter or leave

the area freely. Mostly, cash area is grilled and its door

is under the supervision of head of that department.

Officer checks the books maintained in this department.

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** DEPOSITDEPOSIT

DEPARTMETDEPARTMET

IMPORTANCE

Bank deals in money and they are merely

mobilizing funds within the economy. They borrow from

one person and lend to another, the difference between

the rates borrowed and lend from their spread or gross

profit. Therefore, we can rightly state that deposits are

the blood of the banks which cause the body of an

institution to get to work. These deposits are liability of

the bank so from the viewpoint of bank we can refer to

them as liabilities.

TYPES OF DEPOSITSTYPES OF DEPOSITS

Deposits can be segregated on two bases, one isthe duration in which these funds are expected to be

with the bank, and second is the cost of getting these

funds. So we can divide deposits into two classes

according to duration:

1 ... ... Time Deposits

2 ... ... Demand Deposits

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And on the basis of the cost of acquire these

funds, a deposit can be classified as any one of the

following four:

a ... ... High Cost

b ... ... Medium Cost

c ... ... Low Cost

d ... ... No Cost

Bank has different kind of deposit schemes inorder to induce deposits. These schemes are a mixture

of the above mentioned two types of deposits with and

addition of different services and requirements, mode

of transactions, basis for calculation of profit,

deduction, additional benefits, and eligibility for

different groups. In the similar fashion, national Bank of

Pakistan has large variety of deposit schemes and

some of these are as follows:

(1)CURRENT ACCOUNT

In this type of accounts, the client is allowed todeposit or withdraw money as and when he likes, but

there is requirement of maintaining the minimum

balance of Rs.5000/- other wise Rs.50/- will be deducted

every month. Usually the businessmen open this type

of account and the bank pays no profit on it. These

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types of deposits are also exempt from compulsory

deduction of Zakat.

(2)PLS SAVING BANK ACCOUNT

This type of account is for those persons who want to

make small savings. This type of account is opened

with a minimum deposit if Rs.200/- If the balance in the

account falls below the minimum requirement then a

flat charge of Rs.150/- is made in the account once in a

half year. Zakat and other withholding taxes are

deducted as per rules of the government.

(3)FIXED DEPOSITS

In this type of account a certain amount is deposited

for a certain period such as six months, one year, two

year or longer. A fixed deposit receipt is issued in the

name of the depositor. The receipt is signed by the

officer in charge and the bank manager. A notice isgiven to the depositor on a prescribed from two weeks

before the Fixed Deposit Receipt (FDR) falls due,

requesting the depositor to withdraw his money or to

renew his deposits. The interest is allowed on fixed

deposit varies with the period for which the deposit is

made.

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(4)SHORT NOTICE TERM

DEPOSIT

This kind of deposit is for a short period as the name

indicates. The depositor may withdraw his deposit at

any time by giving seven days notice to the banker.

This type of deposit facilitates the trader to withdraw

his amount with interest of the deposited period.

(5)CALL DEPOSIT

Call Deposits are the sorts of deposits, which are

deposited with the banker against any tender. This is

with out interest deposit, this may be with interest

provided with the depositor has agreed to keep this

amount with the banker for some fixed period.

(6)CUMULATIVE DEPOSIT

CERTIFICATE

This is just like of fixed deposit. In this kind of

deposit, the rate of interest is higher as compared to

other kind of deposits, which are mentioned previously.

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The rate of interest rises gradually as the period

extends. Its period ranges from three month to twenty

years.

(7)MONTHLY INCOME SCHEME

National Bank of Pakistan has also introduced

Monthly Income Scheme for the benefits of its

customers. An individual or institution, company,

corporation etc. can take the advantage of this scheme.

LEDGERS OF DEPOSIT

DEPARTMENT

The following types of ledgers are concerned with

deposit department:

1 ... ... Saving Ledgers

2 ... ... Current Ledgers

3 ... ... Profit and Loss Sharing Ledgers

4 ... ... Fixed Deposit Register

5 ... ... Cumulative Deposit Certificate Register

6 ... ... Cash Book

7 ... ... Daily Profit and Loss Summary Book

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8 ... ... Voucher Register

* CLEARING* CLEARING

DEPARTMENTDEPARTMENTEvery banker acts both as a paying as well as a

collecting banker. It is however an important function of

crossed cheques. A large part of this work is carried out

through the bankers clearing house. A clearing house is

a place where representatives of all the banks of a city

get together and settle the receipts and payments ofcheques drawn on each other bank. As the collecting

banker runs the certain risks in receipt of their

ownership, the law has provided certain protections to

the banks.

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TYPES OF CHEQUESTYPES OF CHEQUES

COLLECTEDCOLLECTED

(1)TRANSFER CHEQUES

Transfer cheques are those cheques which are

collected and paid by two different branches of the

same bank situated in the same city.

(2)CLEARING CHEQUESClearing Cheques are those cheques which are

drawn on the branches of some other bank of the same

city or of the same area which covers a particular

clearing house.

(3)COLLECTION CHEQUES

Collection Cheques are those cheques which are

drawn on the branches of either the same bank or of

another bank, but branches are not in the same city or

they are not the members of clearing house.

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**ADVANCES ANDADVANCES AND

CREDIT DEPARTMENTCREDIT DEPARTMENT

The function of Advances and Credit Department is

to lend money in the form of clean advances, against

the promissory note, as well as secured advances

against tangible and marketable securities. The

bankers prefer such securities, which do not run the

risk of general depreciation due to market fluctuations.

Common securities for the bankers advances are asunder:

SECURITIESSECURITIES

(1) BANKERS LIEN

(Moveable property possessed to the lender

cannot be sold in case of default)

Lien is the bankers right to hold the property

until the claim on the property is paid. The bankers

look at their lien as a protection against loss on loan

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or overdraft or any other credit facility. In ordinary

lien, the borrower remains the owner if the property,

but the actual or constructive possession remains

with the creditors, though he has no right to sell it.

(2)GUARANTEES

When an application for an advance can offer

any tangible security, the banker may rely on

personal guarantees to protect himself against loss

on advances or overdraft to the applicant.

(3) MORTGAGE

(Immoveable property possessed to the lender can

be sold in case of default)

A mortgage is the transfer of an interest in

specific immoveable property for the purpose of

securing the payment of money advanced or to be

advanced by way of loan, and existing of future debt,

or the performance of an engagement, which may

rise to a particular liability. The person in whose

interest the property is transfer is called mortgagee.

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(4) HYPOTHICATION

(Immoveable property possessed to the

borrower can be sold in case of default)

When property in the shape of goods is charged

as security for a loan from the bank, the ownership

and possession is with the borrower, the goods are

said to be hypothecated. The essence of

hypothecation is that neither the property in goodsnor the possession of them passes to the lender, but

the security is granted by means of letter of

hypothecation which usually provides for a bankers

charge on the hypothecated goods.

(5)PLEDGE

(Moveable property possessed to the lender can

be sold in case of default)

In a pledge, the ownership remains with pledger

(borrower), but the pledgee has the possession of

property until the advance is repaid in full. While in

case of defaulter, the pledge has the right of sale

after giving due notice.

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TYPES OFTYPES OF

ADVANCESADVANCES1 ... ... Demand Finance(Ordinary Loans)

2 ... ... Running Finance(Overdraft)

3 ... ... Cash Finance

4 ... ... Small Finance

5 ... ... Finance against Bills

6 ... ... Agriculture Loans

(1)DEMAND FINANCE

(ORDINARY LOANS)These are those advances which are allowed in lump

sum for a fixed period and are repayable in lump sum

or gradually in installments.

(2)RUNNING FINANCE

Running finance are advances, which are gradually

given to meet temporary requirements of the

customers. A good customer uses the banks running

finance limit, as a mean of protecting his credit in the

market and as a line of second defense to meet his

commitments. There are two types of running finance:

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1) UN-SECURED

Under this type of overdraft, the bank relies upon the

personal security of the customer or customers

account.

2) SECURED

Under this type of overdraft, the bank allows his

customer to withdraw more than his deposit after

giving security against the amount overdrawn. The

securities against which they are given are as under:

a ... ... Share Certificates

b ... ... Savings Certificates

c ... ... Deposits

d ... ... Mortgage Property

e ... ... Guarantee of a person

(3)CASH FINANCE

These types of loans are given against the following:

1 ... ... Against locally manufactured goods

2 ... ... Cash finance against rice and paddy

3 ... ... Against pledge

4 ... ... Against commodities

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5 ... ... Besides advances against the above

commodities bank may be approached by

parties for advances against other

commodities like tobacco, oil, etc.

6 ... ... Against Trust Receipts

(4)SMALL LOANS

Loans are allowed to contractors clearing and

forwarding agents. These loans are repayable within a

year.

(5)FINANCE AGAINST BILLS

The advances are allowed both on local and foreign

bills such as:

a ... ... Bill of Exchange and Invoices

b ... ... Bill of Landing

(6)AGRICULTURE LOANS

Agriculture loans are given to the farmers with

holding up to 25 acres for meeting their short medium

and long term production requirements such as:

a ... ... Agriculture inputs

b ... ... Tractors instruments

c ... ... Tube wells

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d ... ... Live stock farming

e ... ... Land Improvements

(7)(7)OTHER SERVICESOTHER SERVICES60


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* UTILITY BILLS COLLECTION

For the convenience of the customer, National

Bank of Pakistan also collects different kinds of utility

bills such as:

Electricity Bills, Sui-Gas Bills, Telephone Bills etc.

* NBP PAK RUPEE TRAVELER

CHEQUE

NBP Pak Rupee traveler Cheque is better than

cash, because you get the power to purchase as well

as your money can be refunded in case you would

loss your cheque. It is a safe and convenient way of

purchase.

* FOREIGN CURRENCY

ACCOUNTS

Launched to attract deposits in foreign currencies

like US Dollars, Pound Sterling, Dutch Mark, and

Japanese Yen. Whether you are a resident or a non-

resident of Pakistan, NBP invites all to operate in a

foreign currency account.

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DIFFERENT SCHEMESDIFFERENT SCHEMES

CONDUCTED BY NBPCONDUCTED BY NBP

National Bank of Pakistan always makes efforts to

improve its goodwill in the general public. It introduces

different kind of schemes time to time.

The most popular schemes conducted by NBP are

as under:

1 ... ... Hajj

Mubarak Scheme

2 ... ... NBP

Advance Salary Scheme

3 ... ... Fund

Management Scheme

4 ... ... LG TV

Scheme

(1) HAJJ

MUBARAK SCHEME

For the convenience of a person with a limited

income who desire to perform Hajj, Hajj Mubarak

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Scheme is introduced. Moreover, National Bank of

Pakistan process the Hajj applications of thousands of

people successfully more than any other bank in

Pakistan.

(2) NBP

ADVANCE SALARY SCHEME

Do you need urgent funds? If yes then head toNational Bank of Pakistan and avail NBP Advance

Salary Scheme, which allow you to draw three months

salary in one go. This facility is available to permanent

employees of the:-

1 ... ... Federal and Provincial governments

2 ... ... Semi-governments, autonomous, semi-

autonomous, local bodies, and government

corporations

3 ... ... Other corporations approved by NBP

No guarantee, collaterals, or insurance is required to

avail this scheme. NBP gives the facility to repay the

excessive amount within 1 to 36 months. The

procedure is very easy, just fill the application form and

choice between 1 to 36 months and take your NBP

Advance Salary within 3 days after submitting your

form.

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(3) FUND

MANAGEMENT SCHEME

This scheme is offered to corporate under customer

and is aimed at providing better rate of return up to

15% per annum. One of the objectives of the scheme is

to develop the secondary market for government

securities.

(4) LG TV

SCHEME

It is the most popular of NBP schemes for the year

2003. NBP incorporates with LG Appliances Corporation.

If you want a TV set but have not enough money to

purchase it then head to NBP, fill an application form of

LG TV Scheme. NBP gives you the facility to pay for the

TV set in smaller installments during a time period of 2

years.

Any one can avail this scheme. Two government

employees are required to present the witness to repay

the loan if the applicant is unable to repay the loan or

the applicant should have the Fixed Term Deposit in

NBP more worthily than the amount advanced to the

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applicant and it should have the duration of more than

two years.

Sectio

n 5

TRAININGSUBSTANCE

In this section topic discussed is as under:

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Work performed by me

WORK PERORMEDWORK PERORMED

BY MEBY ME

I joined National Bank of Pakistan, Main Branch

Khanewal on 9th June, 2003. First day, the manager

introduced me about the functioning of the branch and

the staff. The manager told me that Counter is the mostimportant place of the bank. During the six weeks of

my internship, I worked in different sections of the

branch and did the maximum practice of banking

system details of which is as under:

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GENERAL BANKINGGENERAL BANKING

First of all, I was asked to work in different sections

of general banking. I was attached to Counter with Mr.

Mumtaz who has good command on this section. Here

we dealt with new customer who wanted to get

information and to deal with the branch. This is a very

interesting department because here we met people of

different types and deal with them accordingly. In this

section, I observed the following functions:

CHEQUE AT COUNTER

A cheque to withdraw the amount is presented on

the counter with the following requisites:

1 ... ... Name of the

Account Holder

2 ... ... Current or

previous date

3 ... ... Amount in

figures

4 ... ... Amount in

wording

5 ... ... One signature of the account holder in the

right bottom corner of the cheque and two

signature of the bearer on the back

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6 ... ... Branch

Stamp in front of the cheque

7 ... ... If the Account Holder uses thumb instead of

signature then the Pass Book is necessary

with the cheque

Operations officer checks and verifies all these

requisites. If it fulfills all the requisites, it is forwarded

for payment after a certain procedure.

CHEQUE PAYMENT

PROCEDURE

After all the requisites are verified and then the

excessive balance is checked and prescribed amount is

deducted narrated on the cheque, then SIGNATURE

VERIFIED stamp (in case of signature only) on the

signature and a PAY CASH stamp are fixed and a Token

is given to the cheque bearer after writing Token No. on

the specified cheque. Then the Officer G-II verified thecheque and forwarded it to the cashier where the

cheque bearer receives the amount from the account.

ISSUANCE OF DEMAND

DRAFT

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A Demand Draft is provided to the client in which

he has to specify that bank it is drawn. The amount

both in words and figures is written on Demand Draft.

BILLS COLLECTIONS

DEPARTMENT

I spent second week of my training in bills

collection department. Mr. Afzal is the in charge of this

section. Here we collected utility bills like electricity

bills, gas bills, and telephone bills.

BILL REMITTANCE

DEPARTMENT

This is very important and interesting department.

This section deals with the transfer of money from one

branch to another branch. Nearly four drafts are issued

daily from this department. Here I know how the

amount is transferred and what the procedure is. This

department also deals with TT transfer of money. I

worked nearly two weeks in this department.

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DEPOSIT DEPARTMENTDEPOSIT DEPARTMENT

Deposit department deals with Current, Savings,

and Fixed Accounts. In current account the bank does

not give any interest and you can deposit the whole

amount in lump sum in business hours.

However in PLS savings account we can only

withdraw up to Rs.25000/- without any notice otherwise

a prior notification of a weak is required to the bank ifthe amount to be withdrawn is more than Rs.25000/-

Old ages are interested in Fixed Account usually.

The rate of interest is higher more than that of in

Current and PLS savings Account but the amount

cannot be withdrawn before a specific time fixed by theclient.

To open the account customer have to fulfill an

application form and submit to the concerning

authority. In Current and PLS saving Account, a Cheque

Book is issued to the client and he becomes the

Account Holder of NBP. I worked in this department for

one and a half week.

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Sectio

n 6

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FINANCIAL

ANALYSIS

In this section two topics are discussed. Two major

topics of this section are:

Profit and Loss Account

Balance Sheet

Cash Flow Statement

Financial Position

Five Years Performance at a Glance

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FINANCIAL

POSITIONDifferent facts and figures ofopening balances of

the year 2003 about National bank of Pakistan which

show the financial position are as under:

CAPITAL STRUCTURE

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National bank of Pakistan was incorporated with an

issued capital ofRs. 15 million.

AUTHORIZED CAPITALThe bank has now the Authorized Capital ofRs. 25

billion.

SUBSCRIBED AND PAID-UP

CAPITALThe Subscribed and Paid-up Capital is Rs. 1.46

billion.

TOTAL DEPOSITS

National bank of Pakistan is the largest commercial

bank of the country and has Total Deposits of Rs.

362.87 billion.

ADVANCES

The total Advances stood at Rs. 140.55 billion

made by NBP in the form of money at call and short

notices, cash credit, loans for short and long

periods.

INVESTMENTS

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The total Investment rose to Rs. 143.53 billion.

This total Investment includes PTC, TFC, and

securities of Provincial of Federal Government.

PRE-TAX PROFIT

The pre-tax profits of NBP have gone up to Rs.

6.05 billion.

AFTER-TAX PROFITThe after-tax profits of NBP have been Rs. 2.26

billion.

TOTAL ASSETS

The Total Assets of NBP are Rs. 432.81 billion

which is a great achievement.

TOTAL EXPENDITURES

The Total Assets of NBP are Rs. 26.30 billion

which are very less as compared to previous years

expenditures.

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Section 7

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SWOT ANALYSIS

In this section four topics are discussed. They are as

under:

Strengths

Weaknesses

Opportunities

Threats

SWOT ANALYSIS

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STRENGTHS

National Bank the

Nations Bank

State Bank of Pakistan is government owned bank

that is why Pakistani nation has a trust on the bank that

their deposits are secured. Due to this reason the

deposits of the banks are increasing with the passage

of time.

Agent of State Bank of

Pakistan

National Bank of Pakistan also works as an agent

of State bank of Pakistan in those cities where SBP

branches are not working.

Agency Arrangements

National Bank of Pakistan is enjoying with deposit

of different Govt. organization like Pakistan Railways,

PIA, WAPDA, Sui-gas due to agency arrangements.

Deposits

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National bank of Pakistan is the largest commercial

bank of the country and has Total Deposits of Rs.

362.87 billion and becomes the first bank to cross the

deposit of Rs. 350 billion.

Profitability

The pre-tax profits of NBP have gone up to Rs.

6.05 billion.

Corporate Branches

National Bank of Pakistan is now the biggest

financial institution with assets totaling over Rs.310

billion with 1428 local and 23 foreign branches.

The bank is the higher financer in agriculture and

commodity operation sector.

Collection of Cash from

ShrinesCash collected from different shrines is also

deposited in National Bank of Pakistan.

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Comprehensive Range of

Financial Products

In order to facilitate the customers, NBP is offering

the comprehensive range of financial products which

are as follows:

Credit Cards

Foreign Exchange Bearer Certificates

National Bank Daily Accounts

Travelers Cheques etc.

Investing in Capital Market

NBP has decided to diversify the fund base by

investing in capital markets not only in Pakistan but

also in the foreign countries.

WEAKNESSES83


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Lack of Implementation

of Rules and Regulations

Because NBP is a govt. owned organization so

there is a lack of implementation of rules and

regulations.

Poor Working Conditions

Despite, cultural change program the working

condition of the NBP is not up to standard.

Recruitment PolicyIn NBP, employees are recruited on the basis of

favoritism or through other tools of corruption.

Incompetent Staff

Due to wrong recruitment policy staff of NBP is not

proficient in their work.

Irregularities in

Promotion

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In NBP there is no smooth and continuous

promotion system. Unfair means are used in order to

get the promotion especially the promotion of the

managers.

Individual Difference

In NBP the individual difference have strong

impact on the organizations performance due to the

wrong criteria of selection of the employee. So with the

passage of time individual differences are increasing

which are undermining the good will of the

organization.

No Major Use of

Computer

In NBP there is no major use of computer for

maintaining the records of branches as compared to

other banks of the country.

Strong Union

Union has strong impact on performance of NBP.

So the top management is unable to punish the

violators and shrieks.

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Organizational Structure

In this organizational the organizational structure

is bureaucratic which is a barrier in rapid and effective

decision making.

OPPRTUNITIES86


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Consumer Banking

The basis need of the consumer such as housing,

transportation and other durable goods are not

adequately financed by the banks. So by initiating

these services, the bank can enjoy with more funds.

Investing in the ForeignCapital Market

NBP can enjoy handsome return its funding base

by investing in capital markets in the foreign countries.

Investment Banking

Until recently the bank perceived as purely

commercial banking entity so in order to expand its

business the bank may start investment banking by

investing in the portfolio of handsome return.

New Branches

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NBP by establishing new branches in foreign

countries can expand its business and can enjoy with

the profit.

Issuance of Bonds

To enjoy with large amount, NBP can introduce a

comprehensive range of bonds.

Night Banking

Despite of poor customer service of NBP, people

still come to NBP because of its Govt. ownership as

they feel it secure therefore bank improve its deposit

by giving facility of night banking and also can compete

its competitors with positive steps.

Advisory Services

It can establish advisory services in order to facilitate

the customers in investing in the securities.

THREATS

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Competition

The no. of banks in Pakistan is increasing with the

passage of time. So due to poor working condition and

poor customer service it may be possible NBP will lose

its market share in future.

Inflation

In our country, the rate of inflation is increasing

along with the unemployment. So due to the increase in

price of the products, the savings of the nation is

decreasing with the passage of time. So it is the threat

for the banking sector. In the future, the deposits of the

bank will decrease.

Government Policy

On NBP Govt. policies have strong impact. A slight

change in Govt. policies may affect the performance of

the bank. The bank has to work with in the regulation

frame work.

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Section 8

RECOMMENDATIONS

In this section only one topic is discussed that is:

Recommendations

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RECOMMENDATIONSRECOMMENDATIONS

PROPER PLANNING

Bank should make a plan to gear up its recovery

efforts on war footing and reorganize the recovery

function of global bases. In addition, bank should

tighten up control on expenditure

USE OF COMPUTERS

To save the time of the customers and other clients,

bank should adopt computerized system for book

keeping and other filling systems. It will increase theefficiency of the bank. I know that there are some

branches which are computerized but most of the

branches in various cities of the country are not

computerized. So the bank should mechanize all its

branches in the country.

ADOPTION OF ADVERTISING

Bank should launch advertising campaigns through

out the year to promote the habits of savings in the

people. Bank should open more branches in the remote

areas of the country to get deposits and idle resources.

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Bank should provide similar facilities to all its branches

in big cities. The standard of service and other facilities

are far better as compared to smaller cities.

PROPER GUIDANCE

Bank should adopt such an induction plan that

when a customer opens his account with the bank, he

should be supplied with a booklet which enables him to

know the procedure of filling the cheques and pay-in-

slip etc. It will save a lot of time of the bank staff

afterward during of the conduct of the account of that

customer.

DIVISION OF WORK The billing system of national bank of Pakistan

must be improved to facilitate the customers and

workers. The work should be divided among the staff

e.g. collection of bills, countering of cash and then

entry of these.

CHECK ON EXPENDITURES

Expenditures must be controlled which are very

high and unnecessary.

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BORROWING AT LOW COST

Deposits must be taken at a lower cost and given at

higher interest rate.

nbp main branch khanewal 2003

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