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INTERNSHIP REPORT 1
Holy Prophet Muhammad (P.B.U.H)
The greatest social reformer
And
First step to talk……
To
All those from whom I learnt
Who always remains?
In our heart
Through out the whole span of our life and are
INTERNSHIP REPORT 2
Nearest, dearest and deepest
To us
Contents
Introduction o The Sector…………………………………………………08
History of National Bank of Pakistan…………………………………….10
Vision………………………………………………………………………..12
Mission Statement…………………………………………………………12
Core Values……………………………………………………………….. 12
Goals……………………………………………………………………….. 12
Organizational chart……………………………………………………….13
Account opening department...............................................................14
Deposit department..............................................................................19
Credit & Advances Department............................................................21
NBP Karobar........................................................................................28
Foreign Exchange Department............................................................32
Remittance Department.......................................................................35
Clearing Department............................................................................36
Govt. Department.................................................................................38
Financial Analysis................................................................................39
Ratio Analysis.......................................................................................44
Findings................................................................................................51
Swot Analysis......................................................................................52
Suggestions & Recomendations..........................................................54
Duties...................................................................................................56
Accomplishments.................................................................................57
INTERNSHIP REPORT 3
How experience impact in my career...................................................58
Refferances..........................................................................................59
Biblography...........................................................................................60
PREFACE
INTERNSHIP REPORT 4
In preparing this report, I have put all of my best efforts and have tried hard to give
maximum knowledge. Despite of my all the coherent efforts, I do believe that there
will be a room for improvement.
ACKNOWLEDGEMENT
First of all, I thank Almighty Allah, who has given me the courage to write this
report. I also thank my respectable teacher Miss Fareeha Nisar for her
generous initiation, co-operation and coordination and the way he showed her
concerns from the very beginning till the end. Thank you, Mam; indeed we
owe you a great deal. This internship provided me a golden opportunity to
learn .In this report I’ve tried to relate every thing that I thought was
necessary. Though, it’s a bit difficult to say anything about the perfection of
the effort that I have made but let us hope that it finds its place somewhere to
meet the required and expected criterion.
INTERNSHIP REPORT 5
Mr. Mukhtar Hussian OFFICER (GRADE III)
INTERNSHIP REPORT 6
it has taken various measures to facilitate overseas Pakistanis to send their
remittances in a convenient and efficient manner. In 2002 the Bank signed an
agreement with Western Union for expanding the base for documented
remittances. More recently it has started Electronic Home Remittances
Project. This project introduces technology based system to handle inward
remittances efficiently, by ensuring that the Bank's branches keep a track of
the remittance received from abroad till its final receipt.
National Bank of Pakistan has built an extensive branch network with 1250
branches in Pakistan and operates in major business centre abroad. The
Bank has representative offices in Beijing, Tashkent, Chicago and Toronto.
National Bank has earned recognition and numerous awards internationally. It
has been the recipient of The Bank of the Year 2001, 2002, 2004 and 2005
Award by The Banker Magazine, the Best Foreign Exchange Bank ––
Pakistan for 2004, 2005, 2006 and 2007, Global Finance, Best Emerging
Market Bank from Pakistan for the year 2005, Global Finance, Kissan Time
Awards – 2005 for NBP's services in the agriculture field.
INTERNSHIP REPORT 7
INTRODUCTION OF THE SECOTR
Types of bank
These are the following types of banks
Central Bank
Commercial Bank
Exchange Bank
Saving Bank
Industrial Bank
Agriculture Bank
COMMERCIAL BANKS
The most widely spread banks in any country with an objective to mobilize the
saving of the people and providing finance to the investors. These banks are
in the ground for profit earning motive and in competition with each other.
These banks are providing the basic services to the customers in the form of
deposits, advances, remittances and other.
INTERNSHIP REPORT 8
The other banks, which form the banking structure in Pakistan, are playing
role in the economic development of the country.
The role of the commercial bank in the growth and development of the
economy on sound and steady footings is discussed briefly as follows:
Mobilization Of Resources
The commercial banks are the most efficient organizations of the economy in
the mobilization the resources and making a profitable pool of these
resources. Taking then money from the savers and lending it to the investors
is the most prominent job of the bank.
Promotion Of Saving Habit
There are persons who have money but cannot put them in profitable use.
The banks attract these persons by offering a variety of accounts. They
provide them not only the safety of the funds but also higher returns on them.
The banks, in this way, promote the habit of thrift among the people.
Effective Implementation Of Monetary Policy
With the help of a good banking system in the country the government and
the Central Bank regulate the monetary supply and demand of the money. A
good system helps in the implementation of the policies that are formulated by
the government. Through these banks using different techniques of credit
control makes credit expansion and contraction.
.
INTERNSHIP REPORT 9
2. History of National Bank of Pakistan
INTERNSHIP REPORT 10
As a result of the exchange rate controversy, regular trade and payments
between the two countries came to standstill. India froze the surplus earned
by Pakistan from a favorable balance of trade, and one more financial dispute,
which is still alive, was added to the unsettled list. One of the immediate
consequences of this situation was the withdrawal of Mrwari Merchants of the
Indian finance, which used to be employed annually for the movement of
Pakistan’s jute crop. A crisis of the first magnitude threatened because the
jute crop was already in the markets and, as there was no money to move so
prices began to fall precipitously. At that time, there was no jute industry in
Pakistan, not a single jute loom or a spindle and no possibility, therefore, of
utilizing any of the crops with in the country. As jute prices collapsed, foreign
merchants and foreign banks stood aside to watch the process and the
seriousness of the situation threatened to promote agrarian unrest. It was now
very evident that the government of Pakistan could not afford to continue that
the special mission to Delhi had failed, Government of Pakistan moved
quickly. Two ordinances were passed immediately, one setting up the Jute
Board and other National Bank of Pakistan. The objective of the Jute Board
was to re-organize and rehabilitate the jute trade by helping parties to handle
it and to stabilize the market. National Bank of Pakistan was established to
provide finance to suitable parties.
Thus it came about that National Bank of Pakistan stood behind the jute trade
and State Bank of Pakistan behind the National Bank, and government stood
behind the State Bank. It was all organized so rapidly (six branches came into
being at once) that any doubt that might have lurked in the minds of outsiders
about Pakistan’s ability to tackle the situation were dispelled once and or all.
Until June 1950, the Bank was engaged exclusively on jute operation.
Thereafter, it was felt that it could expand its business to include other
commodities as well. Bank took a big stride in 1952, when it replaced the
Imperial Bank of India, as an agent of State Bank of Pakistan. Presently, there
are 24 overseas branches, and 11 regional offices, 1250 Domestic branches
of the National Bank of Pakistan.
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VISION
To be recognized as a leader and a brand synonymous with trust, highest
standards of service quality, international best practices and social
responsibility.
MISSION STATEMENT
“To make the Bank complete and competitive with all international
Standard in performing, quality of, operations, staff, financial strength.
And products and services To develop a culture of excellence in every spare
of activity of the bank.
CORE VALUES
Highest Standard of integrity
Institutionalizing a team work and performance culture
Excellence in service
Advancement of skills for tomorrow’s challenges
Awareness of social and community responsibility
Value creation for all stakeholders
GOALS
To enhance profitability and maximization of NBP share through increasing
leverage of existing customer base and diversified range of products.
INTERNSHIP REPORT 12
3. BUSINESS OPERATION
PRESIDENT
PRESIDENT
MEMBER
MEMBERBOARD
BOARD
SENIOR
SENIOREXECTIVE
EXECTIVEVICE-PRESIDENT
VICE-PRESIDENT
EXECUTIVE
EXECUTIVEVICE
VICEPRESIDENT
PRESIDENT
SENIOR
SENIORVICE
VICEPRESIDENT
PRESIDENT
HIERARCHY
BRANCHHIERARCHY
VICE
VICEPRESIDENT
PRESIDENT
BRANCH
ASSISTANT
ASSISTANTVICE
VICEPRESIDENT
PRESIDENT
OFFICER
OFFICERGRADE
GRADE II
OFFICER
OFFICERGRADE
GRADE 22
OFFICER
OFFICERGRADE
GRADE 33
MESSENGER
MESSENGER
PEON
PEON
In January 1964, the bank started its well-known people’s credit scheme. The
scheme was designed to provide financial assistance to the smaller
businessmen on easy and liberal terms. It was welcomed all aver the country
and has been of considerable service ever since. It’s major objective was to
build a strong middleclass, which is a powerful guarantee of social stability in
an otherwise uncertain world.
Along with the social activities as an agent of State Bank of Pakistan, National
Bank of Pakistan has also been a good banking institution to be compared
with other commercial banks. It is providing the modern unmatched banking
facilities such as:
Deposit security; Guaranteed by Government of Pakistan.
Largest contribution towards Government and Semi-Government
requirements.
Agent of the State Bank of Pakistan for handling Treasury Functions
receipts of Taxes and other Revenues.
Handling of salaries and pensions of country’s federal/ provincial
government employees and defense personnel.
Utility Bills collection.
Evening banking at selected branches.
Corporate Branches with premium banking facilities for corporate
clients.
Efficient home remittance services.
ATMs providing round the clock access to accounts.
SWIFT offers quick service in the areas of remittances and trade
finances.
INTERNSHIP REPORT 14
Rupee Travelers cheques
National Bank of Pakistan with its Head Office in Karachi operates through 9 regional
Headquarters. A Board of Directors, appointed by the Federal Government, manages
the Bank. The Regional Headquarters are headed by Regional Chief Executives
(RCEs). Next controlling unit is Zonal Chief Office, which comprises group of
branches working under his jurisdiction.
Account Opening
Deposits
Credit and Advances
Foreign exchange
Remittances
Government
TYPES OF ACCOUNTS
In NBP, there are the following types of accounts:
INTERNSHIP REPORT 15
Current Account.
Saving Account.
Term Deposit.
Current account
In current account there is no interest on it. It is for only transaction purposes.
They are paid on demand. When a banker accepts a demand deposit, he
incurs the obligation of the paying all cheques drawn against him to the extent
of the balance in the account. As there is no profit paid on this account it is
also called checking account because cheques can be drawn on it. Current
account is mostly opened for business. The minimum amount for opening the
account is Rs.1000/-.
Saving account
The purpose of this account is to induce the habit of saving individuals in the
neighborhood. The profit on PLS saving Accounts in NBP is checking
accounts paid on the basis of profit and loss calculated after six month. The
minimum deposit for opening the account is Rs.1000/-.
Term deposits
A term deposit is a deposit that is made for a certain periods of time (not more
than 5 years). At the end of the specific period, the customer is allowed to with
draw the principle amount.
The term deposit account rate varies after six month and rate is depend upon
the period of term deposits, as period is increased the rate is also increased
and the minimum balance requirement is Rs.1000/- but no maximum limit.
Prior A/C is not required for term deposits.
The amount of profit is given to deposits in three ways:
By cash.
INTERNSHIP REPORT 16
By sending a bank draft to depositor’s home address or office or
whichever is specified as mailing address.
The amount is credited in any one of the checking accounts of the
depositor.
LETTER OF THANKS
At the end, after opening the account, NBP issues letter of thanks to “Account
opener” and “Account introducer” for the trust they have on NBP at the same
day. The purpose of this letter is to check the address of both the parties for
future contact.
Cheque-book issuing
Check books are issued only for checking account such as current account,
saving account. They are not issued for other fixed and term deposits
because of their long-term account’s nature.
When an account is opened, chequebook is usually issued the next day,
however they too are issued on the same day of opening the account keeping
in view the energy requirements the account holder.
Chequebook leaves vary with the nature of the account. For example, 50
leaves and 100 leaves chequebook are issued for current accounts
depending upon the energy of the account holder. Where as 10 or 25 leaves
chequebook are for saving accounts. 10 leaves chequebook are handed over
to “easily individual’s account, holder”.
INTERNSHIP REPORT 17
Issuing Procedure
Everyday posting
At the end of each day, posting of Cheque-books is performed, the account
department makes credit vouchers of excise duty on Cheque-book leaves,
and posts it in the company.
LOCKERRS
Locker services are provided by the banks in order to provide the customer a
safe place where they can keep their precious documents, things, like jewelry
which can be dangerous for robbery and theft to keep in the house. Against
these locker service the bank take certain charges. NBP also has a great
number of lockers in most of its branches.
NBP has three main types of lockers.
Small Size Lockers.
Medium Size Lockers.
Large Size Lockers.
Locker charges vary with the size of the lockers. Locker charges are half for
the employees of the National Bank to the normal charges charged to the
customers. Recently locker charges have been reduced by 25% as previous.
INTERNSHIP REPORT 18
3.2.2) DEPOSIT DEPARTMENT
Cash department is very sensitive and risky part of the bank. Very cautious
and competent personnel are needed for the job. NBP has really such a
diligent staff with appreciable competencies and will to do work.
Main function of deposit department is to deal with cash payment and cash
receipts.
CASH DEPOSIT
There are two types of deposit slips; Red slip is for Cheque deposit, where
Green slip is for cash deposit. If a customer comes to deposit cash in his
account the procedure is as followed in this case:
CASH PAYMENT
When a customer comes to withdraw a certain amount from his account, he
brings a Cheque along with him. In this case the following steps are taken.
Procedure
INTERNSHIP REPORT 19
The entry is made in the Paying Cash book and the Serial number is
written on the Cheque.
Types of Cheques
In Pakistan, banks deal with two types of cheques:
Open Cheque—they are payable in cash at counters.
Crossed Cheque—they are not payable in cash at counter.
Open Cheque
The Branch has online computer system, hence firstly he check the balance in
his account by giving the account number and check the title of account as
well, and debit the account by the mentioned amount. When Cheque is found
in order, the token clerk affixes “Token Stamp” on the Cheque, writes the
token number on it and puts his initial there and after this token is given to the
presenter and Cheque is handed over to the authorized officer for further
processing.
Crossed Cheque
The customer of the branch deposits the Cheque drawn on same branch, for
payment to be credited into his account, attached with pay slip. Signs it. Then
he checks the balance in the account if the account has sufficient balance, he
passes the Cheque and the account is debited by the mention amount and
account of the depositor of Cheque is credited by the same amount. The
Cheque is treated as debit voucher and pay slip, credit voucher. The
information about the both is mention is Transfer Voucher Sheet.
INTERNSHIP REPORT 20
3.2.3) CREDIT AND ADVANCES DEPARTMENT
The earning of a commercial bank are chiefly derived from interest charges on
loans and discounts it. Now loans are recognized as advances or finances.
The advances are made through the deposits that are kept in the bank by the
customers. The bank pays profit on the deposited amount and receives mark
up on the advances made of different amounts.
CREDIT PRINCIPLE
The following principles are to be adopted for lending authority, approval,
monitoring and control on a basis consistent with NBP’s operational objectives
and business stages.
Objectives
INTERNSHIP REPORT 21
Credit report
The report is prepared by bank of the intending borrower with a view to
considering his Credit Worthiness and Eligibility for the Bank Finance.
Besides other things it contains the net worth of the borrower.
TYPES OF FINANCES
Finances can be classified into two categories:
Clean Finances.
Secured Finances.
Clean Finances
Clean Finances are those finances, which are allowed to govt. employees,
against their salaries. The limits of the Clean Finances are up to 20 basic pay,
and are required to repay within 5 year.
Legal Documentation
SECURED FINANCES
Secured finances are those finances against which security has been
pledged. Security can be the property, stocks, deposits, prize bonds,
hypothecation charges, shares, mortgages on tangible readily reliable
unencumbered assets, and govt. securities.
INTERNSHIP REPORT 22
Secured finances are of the following categories:
Running Finance.
Agri. Finance.
Demand Finance (Gold Finance).
Cash Finance.
Small Finance.
These are also known as the short-term finances.
Running Finance
Running Finance is a short-term finance, one year of payment, to assist a
large-scale business operator to carry on his day-to-day requirements of liquid
funds. This account is opened to made operations in his favor or course all
disbursements are made under proper consideration of the securities and 4
C’s of the borrower. Bank retain 25% margin on the Running Finance, means
that if security has a value of Rs.100000 then against it Rs.75000 has been
financed by the bank. The mark up rate on the Running Finance is Rs.0.4384
paisa/1000/day.
Security
Running Finance can be against the following securities:
Bank’s Deposits.
National Defense Saving Certificate.
National Investment Trust Units.
Life Insurance Policy.
Shares of Joint Stock Companies on Bank’s approved list.
Prize Bond.
Agri. Finance
Now a day Agri. Finance has been included under the category of the
Running Finance. Basically there are two types of Agri. Finances:
Agri. Finances for Crop.
Agri. Finances for Development.
INTERNSHIP REPORT 23
For the development and expansion of the most participative sector of our
economic prosperity, the National Bank of Pakistan has been providing loans
and finances to the agricultural sector since its establishment. Agri. Finances
for crop is called as short term finance that is provided to carry on the
operational requirements of the Agri-business such as purchase of seeds,
fertilizers, pesticides, and other seasonal requirements of the farmers till the
final activities to make the product reach to the market. This finance is
provided to cover a period of less then one year.
The other type is long term, which is provided, or the purchase of Agri-
machinery and other heavy equipment (tractor, harvester) that are used for
the reclamation of the Agri-land. But these equipments have registration joint
with the bank. This finance is provided more than one year.
Security
Personal guarantee (personal identity).
Third party guarantee.
Against third party guarantee.
Mortgage of immovable property.
Against Agri. Pass Book.
Documentation
Formal request
Term deposit Receipt duly discharged by the client.
Letter of undertaking.
Mark Lien by the Patwari and verified.
Property Valuation Certificate issued by the Bank Engineer.
Copy of extracts of form City Survey or maturation record.
Certificate of Title Clearance issued by the Bank’s law Officer.
Non-Encumbrance Certificate.
Search Certificate issued by the Registrar Joint Stock Companies.
Insurance Policy Premium paid with Bank Mortgage Clause.
INTERNSHIP REPORT 24
Original sale deed.
On Objection Certificate issued by form co-operative Society to the
effect that the borrower is not indebted to the society.
Short term Agri. Loans has different financing limit and depend of the nature
of the crop and area covered by the crop. In case if some crop is destroyed by
rain or some other reason then the payment of the loan may post pone and
the repayment may be extended by the concerned authority. Or in some
special case the loan may be forgiven to the farmer.
Security
Demand Finance are given against Gold ornaments. Bank make their self
secure by taking 50% margin, because of mark-up (18%), default risk,
impurities, and in case of auction sale of the gold sales tax (18%).
Operation
Request for the loan.
Assessment.
Sanction of the loan.
Documentation
Letter of introduction
Gold loan insurance letter.
Delivery letter for Gold ornaments cum evaluation certificate (F – 205).
INTERNSHIP REPORT 25
Gold smith’s weight (net weight) quantity and quality
valuation certificate.
Cash Finance
This finance is normally used by small businesses or individuals for their petty
matters involving cash transactions, up to a maximum of rupees three
hundred thousand. These are normally for the seasonal business like cotton,
which have 6-8 month business. The mark-up / interest is calculated on the
amount outstanding on his account. The calculation of mark-up / interest is
based on the number of days a specific amount is withdrawn.
Security
Pledge of stock.
Third party guarantee and Hypothecation of stock.
Pledge of stock & collaterally secured by third party’s guarantee.
Documentation
Formal request for the facility.
Insurance policy.
Letter handling over physical possession of the Godown by the
borrower.
F – 218 Letter acknowledging Bank’s Lien in the stock stored (taken
from Godown owners).
Letter from client authorizing the Bank to Debit salaries of Godown staff
to his account.
Resolution to be obtained from the limited co. covering operations on
an account.
Resolution to be obtained from the limited co. covering authority to
Directors to execute documents.
Certified copy of Memorandum and Articles of Association.
Certificate of Incorporation.
Certificate of Commencement of business (in case of public limited).
INTERNSHIP REPORT 26
Resolution passed by the board of Directors for the grant of Cash
Finance facility.
Balance sheet (audited).
Small Finance
Small Finance is normally for the expansion of the business. In Small Finance
Hypothecation is in the custody of the owner. Where as if the security is
pledge then it will in the custody of bank.
Security
Hypothecation.
Pledge.
Stock.
Mortgage.
Vehicles.
Documentation
INTERNSHIP REPORT 27
Along with NBP the Government of Pakistan (GOP) supports:
1. Life and disability insurance paid by GOP with no medical examination
required.
2. 6% mark-up paid by customer, rest paid by GOP.
Tenure
1 to 5 Years (for PCO 2 years)
INTERNSHIP REPORT 28
Grace Period
Initial 3 months
Security
In case of Utility Store shop set ups:
• Hypothecation charge over the present and future assets in store (except
stock).
• One guarantor, having minimum net income of Rs. 10,000/-p.m.(subject
to NBP verification) or must be property owners
• Personal guarantee of the applicant
• 4 cross cheques
In case of Mobile Utility Stores:
• A lien would be marked under hire purchase/hypo agreement on the
INTERNSHIP REPORT 29
vehicle
• Personal guarantee of the applicant
• 4 cross cheques
Eligibility Criteria
• Must be a Pakistani national bearing Computerized NIC
• Age between 18 to 45 years
• Must be residing in the same city/ district for the last 2 years
• Availability of 2 references
• No default or rescheduling history of the applicant
• References must be residing in the same city / district where the applicant is
residing
Security
• A lien would be marked under hire purchase/hypo agreement on the vehicle
• Personal guarantee of the applicant
• 4 cross cheques
INTERNSHIP REPORT 30
• No default or rescheduling history of the applicant
• References must be residing in the same city / district where the applicant is
residing
Security
• A lien would be marked under hire purchase/hypo agreement on the vehicle
• Personal guarantee of the applicant
• 4 cross cheques
Eligibility Criteria
• Must be Pakistani national bearing a Computerized NIC
• Age between 18 to 45 years
• Must be residing in the same city/ district for the last 2 years
• Availability of 2 references & 1 guarantor
numbers
• No default or rescheduling history of the applicant
• References must be residing in the same city / district where the applicant is
residing
Security
• Hypothecation charge over the present and future assets of the business
INTERNSHIP REPORT 31
• One guarantor, having minimum net income of Rs. 10,000/- p.m. each
(Subject to NBP verification) or must be a property owner for single telephone
set minimum income requirement for guarantor is Rs. 5,000/- per month and
for multiple sets Rs. 10, 000/- per month.
• Personal guarantee of the applicant
• 4 cross cheques
• Customer to visit any NBP branch to obtain loan application form and
scheme details. Application form could also be downloaded from the
NBP web site. Photo copy of the form will also be accepted. Each form
will cost Rs. 5. In case of photocopy or down-loaded form, form fees
will be charged at the time of application submission
• Customer to submit the application form along with all the required
documents as well as the verification and the processing fees
• The application form and all the relevant papers of the customer will be
checked by the Branch staff and if found complete, application
processing will commence
• Upon fulfillment of all the details and approval of the loan by the
competent authority, Purchase Order in favor of vendor will be issued
and a copy of the same will be given to the customer
Imports.
Exports.
Foreign Remittance.
US Dollars
Pound Sterling
Dutch Mark
Japanese Yen
INTERNSHIP REPORT 33
The opening of foreign currency goes through the same kind of process that is
used for opening of an ordinary deposit account. A prescribed form has to be
filled as an application for opening of account. Personal identification card and
introducer is required who can be an old account holder with the Bank or an
officer of the Bank. Foreign Currency accounts can be opened in following
three types.
INTERNSHIP REPORT 34
Currency name New Account Old Account
The Bank maintains separate ledgers for every type of currency account. The
most significant accounts with the Bank, in number and frequency of
transactions, are US Dollar and Pound Sterling. That is the reason these
accounts are made eligible to share the profits.
Remittance department provides services to the customer of the bank. The main
function of this department is transfer of funds.
DEMAND DRAFT
A demand draft is an instrument, which is drawn by one bank upon another
bank for a specific sum of money payable on demand. It is made by the bank
and given to the purchaser against cash or Cheque. If two banks are involved,
then one banks sends a DD to anther bank. But in customer – Bank case the
customer sends his DD to the receiver.
INTERNSHIP REPORT 35
MAIL TRANSFER
A Mail Transfer is mode of remittance that is used for transfer of money in
case the responding branch is of the same bank, which is issuing the MT.
Simply to say, all inter-branch transfer are done through MTs. A MT does not
need an advice to be sent because the amount of MT is directly credited to
the account of the payee. So it is an easy mean to transfer the amount from
one account to the other account with in the same bank but different
branches.
TELEGRAPHIC TRANSFER
It is said to be the fastest mean of transfer of funds from one place to the
other. In this method a Telex message is used to make an order of payment
of the responding branch. It is a costly mean and the charges are
comparatively higher than other means.
PAY ORDER
It is a cheque drawn by a bank on itself. Pay order is an instrument in which
three parties are involved, the purchaser, the bank and the receiver. Any
customer can purchase it. It is usually made by govt. Bodies. A single bank is
involved in this case.
OTHER FUNCTIONS
INTERNSHIP REPORT 36
There is no legal obligation on a banker to collect cheques drawn upon other
banks for a customer. However it is function of almost every modern bank of
the collection of cheques and bills on behalf of the customer.
Clearing department services are provided in order to make arrangements for
the economic collection of the cheques, DD and other negotiable instruments.
A large part of this work is carried on through the clearinghouse.
Book keeping
There are three registers in this department:
Clearing summary register.
Inward clearing register.
Outward clearing register.
INTERNSHIP REPORT 37
Outward Clearing Register
The outward clearing register is used to write down the detail of the outward
cheques. Outward cheques are those cheques, which have been delivered to
different banks. The amount of these cheques will be debited to SBP account
so these cheques are in favor of us and have a positive effect.
Different instruction is dealt in he clearing department. All negotiable
instruments e.g.
Cheques
Pay slips
Pay orders
Term deposits
In order to make arrangements for the speedy and economic collection of
cheques, bills and other documents payable or deliverable at offices of
clearing house. State Bank of Pakistan provides clearing services in all the big
cities. Where State Bank of Pakistan has no office then NBP act the role of
clearing house.
INTERNSHIP REPORT 38
FINANCIAL ANALYSIS
INTERNSHIP REPORT 39
BALANCE SHEET
INTERNSHIP REPORT 40
Total Liabilities 553178593 75817944
Net Assets 81954118 75818944
Share capital 7090712 5908927
Reserves 13879260 12354256
Unappropriated profits 32074677 19372523
53044649 37635704
Surplus on revaluation
of assets 28909479 38182238
INTERNSHIP REPORT 41
PROFIT AND LOSS STATEMENT
INTERNSHIP REPORT 42
Taxation 9288231 6346584
Profit after taxation 17022346 12709444
Inappropriate 19372523 10885184
profit brought forward
Profit available for appropriation 36394869 23594628
Basic earning per share 24.01 17.92
Diluted earning per share 24.01 17.92
INTERNSHIP REPORT 43
FINANCIAL RATIOS
INTERNSHIP REPORT 44
1. LIQUIDITY RATIOS:
(a) Net Working Capital=current assets- current liabilities
Bank’s net working capital has been decreased this year from the previous
year that shows that their current liabilities are more than the current assets.
We can say that their working capital is
Negative. It is a good for the bank as it shows the increase in interest of
customers on bank. But it will also increase the risk, as it will decrease
liquidity.
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Bank’s quick ratio that tells that the bank can pay its short-term obligations
within 3 months has been increased this year from the previous year. It is also
good for the bank.
Current ratio indicates bank’s ability to meet short obligations. Current ratio
has improved as compared to last year. This increase is due to increase in
loans to financial institutions. This positive increase is good for the company.
2. Activity Ratios:
(a) Total Assets Turnover= mark up earned
Average total assets
2006
= 43788628 =6.89%
635132711
2005
= 33692665 =5.83%
577718806
Total assets turnover indicates the efficiency with which the bank uses its total
assets to generate mark up. a specified period of time has been increased
this year to 6.89%that shows that the bank had generated more this year by
using the assets of the bank.
3. Leverage Ratios:
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577718806
Leverage ratio or debt ratio tells the degree of indebt ness of the entity. This
means against liability of 0.87 rupee, bank has 1 rupee of assets to satisfy it
and this is a good sign.
Debt equity ratio decreased as compared to previous year, which indicates
that less equity is used to finance the total assets as compared to last year
Times interest earned ratio tells the relationship between EBIT and the
interest paid of specific time period. This year this ratio has been increased
that shows that they are paying more portion of interest relating to the
previous year.
4. Profitability Ratios:
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(a) Gross profit margin = Gross Profit
Total net sales
2006
= 30153716 =68.86%
43788628
2005
= 23370897 =69%
33692665
Gross Profit ratio measures the percentage of each rupee earned from
revenues remaining after the cost of goods has been paid. A decrease in this
ratio is observed as compared to last year.
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1577718806
Return on assets that tells the profit the bank earned on the use of the assets
has
decreased this year relating to the previous year.
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709071
2005
= 12709444 = 17.92
5908927
Earning per share ratio tells the earning by one share of common equity. This
ratio has increased related to the previous year indicating that each share is
generating more profit than the last year.
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FINDINGS
The increase in Current Ratio from 0.82 to .84 is showing that the bank
is increasing capacity of meeting its short-term obligations. As per the
regulations of SBP, this Ratio must not be lower than 1:1.
The bank’s debts are 6.74 times its Equity. Bank is getting sufficient
return on its assets i.e. 2.68% as well as on its equity i.e. 20%.
The Income Statement is showing an upward trend as compared to the
previous year. The Net Profit has comparatively increased by 33%
The Operating Cash Flows of the company were negative in 2005but in
2006 they are positive. It is mainly because of management’s control
over expanses and profits earned and retained.
Cash Flows from Investment activities are negative and those from
financing activities are negative too. It means that bank1 has made
Capital investments, on the other hand, has paid its liabilities.
Net Cash Flow for the current year are negative which means that
outflows are greater than Inflows but it is good because company has
generated from Operating Activities and has made investments and
paid its Liabilities.
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3.3) SWOT ANALYSIS
STRENGTHS
Public confidence
Sound financial strength
Highest profitability
Vast operational network
Role in economic development
Utility bills collections
Corporate branches
Evening banking
Efficient home remittance
Recognition of hard work of staff
SWIFT
Internet access (www.NBP.com.pk)
Pension & salaries payments
Online city branch
Pension & salaries payments
Online city branch
WEAKNESS
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Lack of long term & short term plans
Less share in import & export business
Poor resource utilization
Need better service policy
Frequent change in senior management
Opportunities
New style management
Introduction of new products and services
Introduction of new technology & electric banking
Capital management & equity financing
Secondary market operations
New deposit scheme
Leasing
Threats
Establishment of new private financial institutions & expansion
Govt. sponsored schemes
Political pressure
Reducing branch network
New products form private Pakistan Establishment of new private
financial institutions & expansion
Non-banking institutions
Inability to change
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SUGGESTIONS & RECOMMENDATIONS
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There is a still a vast pool of incompetent employees that has to right
sized.
These and many others that can make a good set of recommendations, which
have to be made possible to escape from the threats and weaknesses and
the risks in environment that surrounds the Bank. The management do
considers the policy matters that are not helping the Bank, but are still in
practice due the absence of prudentially regulated system to protect them and
the Bank.
Efforts have been made with serious concern to give NBP a status that it has
to maintain by having practices of:
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4) LEARNING AS A STUDENT INTERN
4.1) DUTIES
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In Govt. section I was concerned to make scrolls of pension distribution,
passport fee, traffic challans, and utility bills and at the end of the day total
them and check them with counter ledger. And at the end of the day making
debit and credit voucher for government's payment (pension) and revenue
collection. These vouchers are sent to the IT section of the bank where the
corresponding accounts are updated by the amounts of the vouchers. Also to
make entries in the pension ledgers and in the book of the pensioners.
4.3) ACCOMPLISHMENTS
The first thing which I noticed is that ground realities are different as
compared to with the theories or some factors which increase this difference
like management practices, economic conditions, political scenario and other
external factors. But still we can’t deny the importance of class room theories
because they help us in great way in understanding the operations of the
bank. The courses of “Management” and “HRM” enable me that how bank
should be reactive toward changes like economic, cultural, and technological
and deals with the issues relating staff. I saw the practical implementation of
“Marketing Management” being followed in retail banking e.g. in new product
development and communicating its features to target audience. The subjects
of International finance and Analysis of financial statements helped me lot
while I was working in the foreign exchange department and while preparing
this report. Also the subject of Accounting and Financial management helps
me while I was working in credit department. The financing process of all
international trade which modern banking made less complicated and more
secure have increased with the global-village concept in the world. For banks
it is an opportunity to grasp the maximum share as possible through being
more efficient to reach the customer.
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WHAT I LEARNT IN THE ORGANIZATION
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REFERENCES
NAME AND DESIGNATION
Rana Meher Hussain (Assistant Vice President )
Syed Manzar Ali Gillani (Incharge Remittance)
Syed Sana ullah Kazmi (Officer Remittance)
Muhktar Hussain (P.A to Chief Manager)
Muhammad Ali (Govt. Section)
Abdur Raheem Bhutta (Remittance Section)
Mr. Mirza Aziz Baig (Foreign Exchange)
Mr.Syed Ameer Muslim Gardezi (C.F.A)
NAME OF INTERNEE
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BIBLOGRAPHY
1. www.nbp.com.pk
2. Annual report of National Bank
3. Old Internship report 2001
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