INTERNSHIP REPORT

ON

NATIONAL BANK OF PAKISTAN

MAIN BRANCH TATTA PANI AJ&K

By

SADIA KOUSAR Roll No. 220864 MBA (Finance) Session (2009-2011)

LETTER OF TRANSMITTAL

The concept of globalization and development in technology has made our lives more dynamic and competitive. So everyone should have practical and

professional knowledge to cope with the upcoming challenges. So internship is the essential part of MBA degree programme and this 6 weeks intensive practical training in a leading organization like National Bank of Pakistan contributes a lot towards specific job skills. It is a great opportunity for MBA students to familiarize themselves with the knowledge, techniques application and tools used in the present business environment. Student life is a period of preparation for the upcoming future. In this period one is expected to make all around developments of mental, moral and physical. Life is a struggle and kind of battle. The internship program is to stuff the brain with all sorts of facts and formulation. Internship program provides a golden opportunity to the students through which they can expose themselves to the environment of practical learning in business organizations that enables them to develop and enhance their capabilities and skills in administration and management and help lot in the practical life afterwards. After ceaseless efforts, it is a matter of great satisfaction for me to finally see my internship report in my hands. This report is collection of my observations and experience during my internship period. This report will help to understand all the major activities of National Bank of Pakistan which will be beneficial for me in the future to meet the new emerging challenges in the competitive business world.

Sadia Kousar Roll No. 220864 MBA (Finance)

INTERNSHIP LETTER

First of all I am thankful to ALLAH, the most compassionate, the most merciful and beneficial to his entire universe. Lots of prayers for His beloved Prophet Hazrat Muhammad (PBUH) who is the sole cause of the creation of the entire universe.

This report has been made possible through the assistance and guidence of many people whom I wish to recognize with great appreciation. I am especially indebted to executives and other personnel who provide information and permitted to go through publications for use in the completion of this report. I am also thankful to the Dean Faculty of Administrative Sciences Kotli, Professor Dr. Mushtaq A. Sajid and Mr. Zafar Iqbal Chairman Department of Commerce who has given me the chance to be acquainted with practical work in such a prestigious institution. Thanking all the members of all the departments of National Bank of Pakistan, Specially Raheel Khursheed Main Branch Tatta Pani for their co-operation and help with whom I worked and who gave me guidence during my internship program. Especially I would like to thanks Bank Manager Mr Anwar Abbasi, and Operational Manager Muhammad Ashiq who were a source of inspiration for me in every step during the internship program. I am also thankful to Mr. Nayyer (Brother) and my all-family members who always prayed and sacrificed for me. Moreover, my friends, that proper guidance brightened my academic career. My friends who helped me a lot while completing this work. Finally to all those who have helped, I expressed my deepest gratitude.

Thanks

Internship program is an essential part of MBA program for six to eight weeks in a well reputed organization such as National Bank of Pakistan. To fulfill this requirement I have completed an internship of six weeks in National Bank of Pakistan Main Branch Tatta Pani not only to meet the

degree requirements but also to gain a professional awareness of the knowledge. I have gained so far during my internship. In the poor performance of the economy of Pakistan, National Bank of Pakistan has managed to out perform its competitors and maintain its growth momentum. National Bank of Pakistan is emerging as a leading market player in the Financial Sector in Pakistan. National Bank of Pakistan is only government commercial Bank in Pakistan to offer innovative products and services to its customers. This enables their customers to Bank round the clock from the comfort of their homes. National Bank of Pakistan being a leading bank of Pakistan has been quick to introduce ATM (Automated Teller Machine) Services to their customers. Electronic Cash Dispensing Facilities are now available almost all-major centers like Karachi, Lahore, Rawalpindi, Kotli, Muzaffarabad, Rawalakot and Mirpur A.K. All these ATMs are linked through a state-of-the-art Satellite based communication system offering real-time 24-Hours service. In due course of time, they plan to install more ATMs and extend this ONLINE Facility to other operating centers of the Bank.

It was a great chance for me to enter in a practical business world and see what is the difference between the theoretical world (book) and the practical life of e banker. Before this training program at National Bank of Pakistan, Main Branch Tatta Pani, I have been feeling a sense of dissatisfaction because of the unbalance to explore the cause of this dissatisfaction. The internship training program has no doubt brought a revolutionary chance in my priorities for learning. I had great practical experiments and an actual and factual witness of the management thoughts. It has also created a great change in my attitude towards studies. This report bears the impression of my experience; I have gained during the training program at NBP. The main purpose of writing this report is to express

the overall picture and particular function of NBP. To complete this report I collected data from the web site and annual report 2008-2009 of National Bank Of Pakistan, in addition Mr. Ajmal Ahmed Credit Manager, and other employees also guided me about the history of the bank I hope that it will help the reader to know and learn about the organization structure, the function of particular departments and other useful information about the NBP. My internship report is based on the practical application of my knowledge that I have gained in my course of MBA. I have also included the problems faced by the NBP and also include some suggestions towards these problems. I hope this report provide better understanding about NBP and banking system of NBP and practical know-how about banking business in a professional way which enable me to meet the current challenges in the competitive business world.

Sadia Kousar Roll No. 220864 MBA (Finance)

I Personally Dedicate This Final Report to My Beloved Parents and All My Honorable Teachers Who helped me in the Submission of this report And Always Guide Me Towards the Avenue of Success.

INTRODUCTION: The National Bank of Pakistan was established on 20th November 1949 under the National Bank of Pakistan Ordinance No. X1X of 1949, promulgated on 8th November 1949, describing it as a semicommercial bank. The bank operates like any other commercial bank in the country, seeking funds from the depositors and providing credits for all sectors of the economy including agriculture, industry, trade etc. The National Bank has a distinction, in addition, to act as an agent of the Central Bank and operates treasuries where the State Bank does not any branch. The bank was nationalized in January 1974 when the banks were taken over by the Government; the Bank of Bahawalpur was subsequently merged in the National Bank. National Bank of Pakistan has not released its annual report as yet. National Bank of Pakistan maintains its position as Pakistanis premier Bank determined to set higher standards of achievements. It is the major business partner for the government of Pakistan with special emphasis on fostering Pakistanis economic growth through aggressive and balanced lending policies technologically oriented products and services offered through its large network of branches.

1.1 Background of study:

The internship requirement in the degree of Master in Business Administration (Finance) led me to experience an exciting and professional exposure to NBP as an intern. 1.2 Purpose: The main purpose of the study in hand is together relevant information to compile internship report on National Bank of Pakistan. To observe, analyze and interpret the relevant data competently and in a useful manner.
To work practically in an organization

To improve report writing skills. To develop interpersonal communication.

1.3 Objectives of studying the organization The Primary purpose of this study is to fulfillment of the requirements for the degree of MBA. For this connection each student of MBA is required to undertake training in a relevant organization selected by them for the period of 6 to 8 weeks. The secondary purpose of this internship is to understand how the theoretical knowledge can be applied to a practical situation and examine organization financial issues and to identify its opportunities and problems and also suggest suitable corrective measures for it. This internship is also very important to gain confidence and to understand the mechanism of the organization. As an internee I want to achieve following objectives during my internship in NBP: 1. To familiarize with the business organization. 2. To familiarize with different departments of the organization and their functioning. 3. To enable myself to understand how business processes are carried out in organization. 4. To understand how information is used for decision making at various level in an organization. 5. To relate theory with practice. 6. I was also keen to gain professional experience in an actual testing environment. 7. I want to develop my skills in application of theory to practical work situation. 8. To develop my attitude conductive to effective interpersonal relationship. 9. To acquire good habit and sense of responsibility. 10. To develop my interpersonal communication.

1.4 Overview of the organization 1.4.1 Vision: To be the pre-eminent financial institution in Pakistan and Achieve market recognition both in the quality and delivery of service as well as the range of product offering. 1.4.2 Mission Statements: NBP will aspire to the values that make NBP truly the Nations Bank, by:

Institutionalizing a merit and performance culture Creating a distinctive brand identity by providing the highest standards of services Adopting the best international management practices Maximizing stakeholders value Discharging our responsibility as a good corporate citizen of Pakistan and in countries where we operate.

1.4.3 Values: NBP aim to be an organization that is founded on Growth through creation of sustainable relationships with our customers.
Prudence to guide our business conducts.

A national presence with a history of contribution to our communities. NBP shall work to Meet expectations through Market-based solutions and products. Reward entrepreneurial efforts. Create value for all stakeholders. NBP aim to be peopling who Care about relationships. Lead through the strength of our commitment and willingness to excel.

 Practice integrity, honesty and hard work. We believe that these are measures of true success. NBP have confidence that tomorrow we will be Leaders in our industry. An organization maintaining the trust of stakeholders. An innovative, creative and dynamic institution responding to the changing needs of the internal and external environment 1.5 Brief history of the organization: The NBP was established vide NBP Ordinance No. XIX of November 9. 1949. British Govt. devalued its currency in September 1949, India devalued its rupees but Pakistan did not. It led to a crisis in trading between the two countries and India refused to lift the Pakistan Jute. To solve this problem i.e. to export jute NBP was established through an Ordinance of GOP. National Bank of Pakistan maintains its position as Pakistan's premier bank determined to set higher standards of achievements. It is the major business partner for the Government of Pakistan with special emphasis on fostering Pakistan's economic growth through aggressive and balanced lending policies, technologically oriented products and services offered through its large network of branches locally, internationally and representative offices. National Bank of Pakistan is the largest commercial bank operating in Pakistan. Its balance sheet size surpasses that of any of the other banks functioning locally. It has redefined its role and has moved from a public sector organization into a modern commercial bank. The Bank's services are available to individuals, corporate entities and government. While it continues to act as trustee of public funds and as the agent to the State Bank of Pakistan (in places where SBP does not have a presence) it has diversified its business portfolio and is today a major lead player in the debt equity market, corporate investment banking, retail and consumer banking, agricultural financing, treasury services and is showing growing interest in promoting and developing the country's small and medium enterprises and at the same time fulfilling its social responsibilities, as a corporate citizen. 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. It has agency arrangements with more than 3000 correspondent banks worldwide. Its subsidiaries are Taurus Securities Ltd, NBP Exchange Company Ltd, NBP Capital Ltd, NBP Modaraba Management Company Ltd, and CJSC Bank, Almaty,Kazakhstan . The Bank's joint ventures are, United National Bank (UK), First Investment Bank and NAFA, an Asset Management Company (a joint venture with NIB Bank & Fullerton Fund Management of Singapore). The Bank's financial performance has been remarkable. In 2006, total assets are estimated at Rs635 billion, while deposits have grown to nearly Rs502 billion. Pre-tax profit rose to Rs26 billion. Earnings per share have jumped to Rs24.01 in 2006. The increase in profit was achieved through strong growth in core banking income. Interest income increased by Rs10 billion through growth in the loan portfolio as well as increase in spreads. Advances increased by Rs48 billion to Rs316 billion. The Bank maintains a sound loan portfolio diversified in nature to counter the risk of credit concentration. It ranges from providing credit to the un-banked market segment under NBP Karobar, to small and medium enterprises, to agricultural loans, to large corporate customers. The Bank has also played an important role in financing the countrys growing trade, which has expended through the years as diversification took place. Today the Bank finances import/export business to the tune of Rs.62.17billion, whereas in 1960 financing under this head was only Rs.1.54billion. The field is being de-layered to improve customer services and enable faster decision making. As a result of this de-layering zones have been eliminated and the numbers of regions have been increased. Organizational hierarchy at the regional level has been restructured and operational and business activities have been completely separated. This separation will improve communication, decision making and promote teamwork. For the third consecutive year, the Bank is recognized as the best Bank in Pakistan for the year 2004 by the prestigious periodical. The Banker UK (a subsidiary of Financial Times Group).

1.6 Nature of National Bank of Pakistan National Bank of Pakistan is one of the scheduled leading Bank of Pakistan. It performed General Banking, Finances, Government / Treasury operations and Foreign Exchange Services. It is rending services to its customers and not goods. It also under takes the government transactions, like government accounts, government drafts and payment and pensions etc. this is the reason by why National Bank of Pakistan cannot be denationalized. This Bank serviced government as well as general public both. National Bank of Pakistan operates in accordance with the previous of Banking Companies Ordinance 1962. Section 5(b) of this ordinance says Banking means the accepting for the per pose of landing or investment of deposits of money from the public, repayable of demand or otherwise, and with draw by cheques, drafts, pay orders or otherwise, 1.6.1 Functions of National Bank of Pakistan National Bank of Pakistan maintains its position as Pakistan's premier bank determined to set higher standards of achievements. It is the major business partner for the Government of Pakistan with special emphasis on fostering Pakistan's economic growth through aggressive and balanced lending policies, technologically oriented products and services offered through its large network of branches locally, internationally and representative offices.

ORGANIZATIONAL STRUCTURE At Head Office Karachi

Figure 1

PRESIDENT DIRECTORS GROUP CHIEFS Business Group Chief Risk Managem ent Group Chief Operationa l Group Chief Complianc e Group Chief

2.1 BRANCH LEVEL STRUCTURE

At Branch Level

Figure 2

MANAGER

OPERATION MANAGER

COMPLIANCE MANAGER

2.3 HIERARCHICAL STRUCTURE OF REGIONAL OFFICE

Business volume Profit and Loss Account Dec 31 Currency in Millions of Pakistan Rupees TOTAL REVENUES Cost Of Goods Sold GROSS PROFIT Selling General & Admin Expenses, Total EBT, EXCLUDING UNUSUAL ITEMS Impairment Of Goodwill Other Unusual Items, Total Other Unusual Items EBT, INCLUDING UNUSUAL ITEMS Income Tax Expense Minority Interest In Earnings Earnings From Continuing Operations NET INCOME NET INCOME TO COMMON INCLUDING EXTRA ITEMS NET INCOME TO COMMON EXCLUDING EXTRA ITEMS As of: 2008 PKR Dec 31 2009 PKR Dec 31 2010 PKR 57,485.9 -57,485.9 30,760.8 26,116.0 ---26,116.0 8,406.8 2.6 17,709.2 17,711.8 17,711.8 17,711.8 Dec 31 2011 4 Year Trend

Restated Restated

Reclassified PKR

41,953.1 45,002.0 51,678.7 261.8 330.3 --

41,691.3 44,671.7 51,678.7 18,101.5 22,486.4 26,732.0 22,261.3 21,198.8 24,714.9 -988.0 988.0 ----92.6 ---

23,249.3 21,198.8 24,622.3 7,565.2 3,749.8 -3.0 1.8 6,883.9 70.9

15,684.1 17,449.0 17,738.4 15,681.1 17,450.8 17,809.3 15,681.1 17,450.8 17,809.3 15,681.1 17,450.8 17,809.3

Statement of Financial Position

Currency in Millions of Pakistan Rupees Assets Cash And Equivalents Trading Asset Securities TOTAL CASH AND SHORT TERM INVESTMENTS Other Receivables TOTAL RECEIVABLES Restricted Cash Other Current Assets TOTAL CURRENT ASSETS Gross Property Plant And Equipment Accumulated Depreciation NET PROPERTY PLANT AND EQUIPMENT Goodwill Deferred Tax Assets, Long Term Other Intangibles Other Long-Term Assets TOTAL ASSETS As of:

Dec 31 2008 Restated PKR

Dec 31 2009 Restated PKR

Dec 31 2010 PKR

Dec 31 2011

4 Year Trend

Reclassified PKR

71,746.1 55,431.3 3,124.1 2,564.4

53,349.7 6,732.8 82,014.7 20,616.5 20,616.5 93,050.7 4,868.2

43,177.6 19,462.9 106,278.8 19,885.9 19,885.9 116,735.6 9,985.3 274,673.5 34,466.4 -6,981.2 27,485.2 562.6 7,973.1 79.1 19,871.7 1,153,480.1

88,340.9 76,351.9 2,105.7 2,105.7 13,686.4 13,686.4

74,522.9 90,023.6 14,161.3 22,819.7

193,128.8 218,810.8 220,431.9 28,214.4 29,982.1 -3,962.7 -4,810.5 32,766.5 -5,727.1 27,039.4 562.6 6,954.2 18.8 17,538.3

24,251.7 25,171.6 -3,203.6 20.3 -3,064.5 29.3

36,318.9 32,043.8

820,077.2 946,253.3 1,038,018.5

LIABILITIES & EQUITY Accrued Expenses Short-Term Borrowings Current Portion Of Long-Term Debt/Capital Lease Current Portion Of Capital Lease Obligations Other Current Liabilities, Total TOTAL CURRENT LIABILITIES Long-Term Debt Capital Leases Minority Interest Unearned Revenue, Non-Current Pension & Other Post-Retirement Benefits Other Non-Current Liabilities TOTAL LIABILITIES Common Stock Retained Earnings Comprehensive Income And Other TOTAL COMMON EQUITY TOTAL EQUITY TOTAL LIABILITIES AND EQUITY 15,204.6 18,432.9 36,615.2 33,705.1 5,117.9 15.2 2,921.1 19.0 21,419.3 13,455.0 6,265.6 51.6 19,895.5 21,697.1 21,566.3 8,803.3 56.2 21,557.0 1,001,038.9 2,684.9 36.5 495.5 347.8 4,457.8 9,119.8 1,017,685.7 16,818.3 89,094.8 29,385.8 135,298.9 135,794.4 1,153,480.1

10,242.6 22,312.1

692,529.5 804,884.1 893,169.5 3,049.6 10.0 112.7 133.3 3,052.8 11,734.9 23.6 110.9 218.0 3,531.0 2,949.5 71.8 498.1 94.9 3,905.8 6,528.2

16,850.7 5,069.0

715,626.0 825,460.7 906,719.6 8,969.8 10,763.7 13,454.6 84,725.8 32,620.3

67,612.0 77,562.5 27,756.7 32,355.4

104,338.5 120,681.6 130,800.8 104,451.2 120,792.6 131,298.8 820,077.2 946,253.3 1,038,018.5

Statement of Cash flow

Currency in

As of: Dec 31

Dec 31

Dec 31

Dec 31

2008 Millions of Pakistan Rupees NET INCOME Depreciation & Amortization Amortization Of Goodwill And Intangible Assets DEPRECIATION & AMORTIZATION, TOTAL Amortization Of Deferred Charges (Gain) Loss From Sale Of Asset (Gain) Loss On Sale Of Investment Asset Writedown & Restructuring Costs Other Operating Activities Change In Trading Asset Securities Provision For Credit Losses (Income) Loss On Equity Investments Change In Other Working Capital CASH FROM OPERATIONS Capital Expenditure Sale Of Property, Plant, And Equipment Cash Acquisitions Investments In Marketable & Equity Securities CASH FROM INVESTING Long Term Debt Repaid TOTAL DEBT REPAID Common Dividends Paid PKR

2009 PKR

2010 PKR 17,809.3 1,105.5 0.1 1,105.6 12.9 -35.0 2,603.8 92.6 -3,416.8 -4,163.3 7,008.0 -49.9

2011

Year Trend

Restated Restated 15,681.1 17,450.8 761.2 -761.2 4.2 -8.0 371.7 -875.8 -875.8 6.0 -7.9 -3,226.8 --

Reclassified PKR 17,711.8 1,337.1 0.1 1,337.2 34.8 -17.7 2,532.5 --6,907.5 -7,241.9 6,219.7 -115.7 -67,648.4 -54,095.5 -2,072.3 171.5 -5,674.3 -10,523.1 -17,370.9 -62.0 -62.0 -10,077.2

-10,266.1 -7,808.4 -225.6 -1,369.1

10,634.4 11,148.8 -134.8 36.5

-47,727.1 -78,463.4 -33,267.8 -30,909.0 -61,357.7 -12,300.7 -1,648.3 -1,776.3 24.9 -14.0 -30.0 -2,757.9 63.2 -209.3

13,372.0 -36,867.7 -81,901.2 14,635.9 -36,763.2 -83,759.9 -17.9 -17.9 -25.9 -25.9 -27.3 -27.3 -8,060.5

-6,104.9 -5,820.3

TOTAL DIVIDEND PAID CASH FROM FINANCING Foreign Exchange Rate Adjustments NET CHANGE IN CASH

-6,104.9 -5,820.3 27,409.4 96,317.5 2,623.1 1,097.0

-8,060.5 96,533.2 -472.6

-10,077.2 85,141.9 -13,675.5

13,759.4 -706.4

4. Number of Employees of National Bank of Pakistan Permanent Temporary/ On Contractual basis Bank's own staff strength at the end of the year 13237 842 14079

Outsourced Total Staff Strength

2350 16429

An employee may be defined as: "A person in the service of another under any contract of hire, express or implied, oral or written, where the employer has the power or right to control and direct the employee in the material details of how the work is to be performed." [i]An employee contributes labor and expertise to an endeavor. Employees perform the discrete activity of economic production. Of the three factors of production, employees usually provide the labor. Specifically, an employee is any person hired by an employer to do a specific "job". In most modern economies, the term employee refers to a specific defined relationship between an individual and a corporation, which differs from those of customer, or client. The relationship between National Bank of Pakistan and its employees is usually handled through the Human Resource Management & Administration Group & Employees benefit disbursement & trustee division. These groups handle the incorporation of new hires, and the disbursement of any benefits which the employee may be entitled, or any grievances that employee may have. There are differing classifications of workers within National Bank of Pakistan, these are: Permanent Temporary / On Contractual Outsourced

The Employees of National Bank of Pakistan are organizing into trade unions, which represent most of the available work force in National Bank of Pakistan. These trade Unions utilize their representative power to collectively bargain with the management of bank in order to advance concerns and demands of their membership.

5. PRODUCT LINES OF NBP NBP Saibaan

Finance available for home purchase, home construction and improvement. Period of repayment ranges between 3-20 years.

home

Loans available up to a maximum of Rs.10 million. Mark-up choices available. Rate ranges between 7.5% 9.75%. Minimum approval and disbursement timing. Limited to areas where there are no documentation, fee, resale and foreclosure related issues, so to protect the banks interest.

Why NBP Saibaan?

Affordable Easy installment No surprises

Flexible

Mark-up choices Grace period option Structured and programmed Minimum approval and disbursement timing Outstanding international reputation A secure and reliable government bank since 1949.

Convenient

NBP Advance Salary

10 month salaries in advance (certain conditions apply). Minimum documentation. Repayable in 5 years. No processing charges; no collaterals, no guarantees, no insurance. Mark-up charged at 11% per annum on reducing balance method.

NBP Kisan Dost

Loans available for the farmers for production, development purposes, for purchase of tractors, for installation of tube wells, for purchase of agricultural implements, micro loans,

for godown construction, for construction of fish pond, for livestock farming, for milk processing, for cold storage, bio-gas plants etc.

Mark-up 13% per annum. Loans available at the farmers doorsteps. Agricultural experts to guide farmers. Loans available against agricultural passbooks, gold ornaments and paper security

NBP APNA KAROBAR

NBP Karobar Mobile General Store. NBP Karobar Transport. NBP Karobar PCO. NBP Karobar Tele-Centre.

NBP Cash Card It is a 24-hour direct access ATM/Debit card to your bank account, which lets you pay directly from your account as an alternative payment method to cash. The transaction is authorized and processed by entering PIN. The NBP Cash Card holders are able to transact at any of the 4000 + Merchants where Oryx logo is displayed and can withdraw cash from NBP, 1-Link & MNET ATMs across the country. Advantages

You won't need to carry a lot of cash with you every time you go out. Secure and Safe transaction. Account Information on tips (like: Mini Statement, Balance Inquiry, Utility Bill Payment etc.) Enable To Withdraw Cash From 1-Link ATMs / MNET ATMs. No Card Issuance Fee for first 12 Months.

NBP Online Balance Enquiry Statement of Account Stop payment Cash withdrawal through cheques Cash deposit to own and third party account Transfer of funds to own and third party account

NBP Pak Remittances Pakremit is an internet based Home Remittance Service. This service is available to U.S. residents for sending money to their family and friends in Pakistan. One must have a valid US Dollar account with a U.S. bank or a US Dollar credit or debit card in order to remit funds through this channel. Remitters in USA can log on to our user friendly website, www.pakremit.com and easily remit funds to Pakistan from the comfort of their homes, in a matter of minutes. The service is fully secure with advance encryption application and is available for use 24 hours a day, 7 days a week. Fees and exchange rate have been set at competitive levels and the remitters have the ability to track delivery of funds as well.

NBP Premium Aamdani Amount of investment required from Rs. 20,000/- to Rs. 5,000,000 Investment period is 5 years Free Demand Draft, Pay Order and NBP Online Aasan Banking* Free Cheque Book / NBP Cash Card (ATM + Debit)

Financing facility available upto 90% of the deposit value Premature encashment will attract penalties Zakat and withholding tax will be deducted as per rules

NBP Premium Saver Minimum saving balance of Rs. 20,001 and a maximum balance of Rs. 300,000* Free NBP Cash Card (ATM + Debit) Two debit withdrawals allowed in a month and no limit on number of deposit transactions. Profit calculated monthly and paid on half yearly basis

NBP Kisan Takat Easy and less paper work. Free of down payments. Help of skilled employees. Above 50 years experienced banking.

6. STRUCTURE OF DEPARTMENTS & DEPARTMENTAL OPERATIONS: 6.1 ACCOUNTS DEPARTMENT

In almost all the banks have their opening and closing departments and this is the especially function of A/C department. Firstly all types of Accounts which can be opened in NBP have been described: 6.1.1 CATEGORIES OF ACCOUNTS Current Account Saving Account Fixed Account

Current Accounts

This type of account is basically used to meet the daily transactions. Current account provides safety to the customer's money, gives the advantage of paying debts by the convenient and safe means of sending cheques through the post thus avoiding the trouble and loss that units in PKR, US$, GBP and DM. Saving Account

This is the profit oriented category of the accounts. There is a time limit for drawing cash; customer cannot draw money before a certain time. In NBP saving a/c is used as current a/c, & there is no main difference between current & saving account except profit. This account can be opened by limited company, Partnership Company, club societies & associations, joint & sole proprietorship.

Fixed Account

These deposits are fixed for particular period. Commercial Banks also pay an interest on these accounts. 6.2 CASH DEALING DEPARTMENT Cash department of NBP is given the complete responsibility of handling all receipts & disbursement of cash, as a result of transaction in both local & foreign currencies & near cash items such as traveler cheque etc (when they are issued against cash). As a consequence it is also responsible for the bookkeeping of these transactions & the safe custody of cash & near cash securities. Following are the major functions of the cash dealing department of NBP: Cash Receipts (or receive deposits) Encashment of Cheque

Cash department of NBP is a separate close part covered with glasses. No one other than cash department's employee is allowed to enter into that area. 6.2.1 Cash Receipt The depositor uses cheque deposit slip (or cash deposit slip) for depositing the amount. There are two types of cash deposit slip: One for current account-holders Other for saving account holders

Both are in different colours for clear identification. There are two parts of cash deposit slips: Counter foil Adjacent credit voucher

Procedure

The cashier first verifies all the requirements of the cash deposit slip that whether these are fulfilled or not & verifies the amount written in words & figures. After that he enters the detail of the receipt in the "Inward Cash Register". The deposit slip is stamped, cash is received & counter foil is given to the depositor. The adjacent credit voucher is used for recording & posting purposes. 6.2.2 Encashment of Cheque Cheque encashment involves following four main steps. These steps are: Accepting of cheques Affirmation of signatures Computer terminal process Payment of cash

Requirements to Encash a Cheque Following requirements are essential to encash a cheque. No Stop Payment Instruction

No stop payment instruction is presented for the account. Instrument in Writing

It must be in writing. However, there is no bar on writing material but the cheque written with lead pencil is not honored by the bank in practice because unauthorized alternations can also easily be made are difficult to detect so a cheque should be either typed or pen written or printed.

Cheque must not be crossed

The cheque which could be presented to the drawee bank for encashment over the counter should not be crossed whereas crossed cheques are deposited into account. The sum of money must be certain

A cheque must contain an order to pay a certain sum of money only amount in figures and words must be same. Drawer's Signature

The document in order to be validly called a cheque must bear the drawer's (account holder) signature or that of his authorized person. At the time of opening an account a customer provides a banker with a specimen of his signatures, so the signature on the cheque must tally with that. Sufficient Balance

Sufficient balance should be present in the customer's (drawer's) account to encash cheque. Stop Payment Instructions

If a customer lost his cheque book he would make stop payment instruction to cash department of NBP. Stop payment instructions can be made in two ways. Verbal Written

The customer could inform the cash department on telephone or face to face meeting to stop payment, but later a written instruction must be made on a prescribed form. If customer make stop payment instruction to the bank and bank make payment to someone else after lodgment of stop payment instruction in the computer, Bank would become liable for this fault. Acceptance of Cheque

The cash is paid against the cheque of the client. The following points are kept in mind while receiving the cheque from the client. Cheque should be drawn on NBP It should not be post dated It should be a bearer cheque so the word bearer should not be crossed. Payment is not stopped by the drawer Amount in words & figure should be same Alternation in date/figure/word require drawer's full signature, with signature on the cheque

If signatures are not the same then it is returned back otherwise forwarded to computer terminal. Affirmation of Signatures After receiving the cheque the officer verifies the signature of the account-holder with the signature on the cheque. If signatures are not the same then it is returned back otherwise forwarded to computer terminal. Computer Terminal Process The cheque is received in computer terminal, where the computer operator checks the balance of the account holder. The operator also sees whether the stop payment instructions are received from account holder or not. After considering these two points computer operator posts the cheque in account holder ledger & returns the cheque back to the officer. Payment of Cash The cheque is cancelled after posting & is returned to cashier. The cashier enters the cheque in "cash paid register" & pays against the second signature of the receiver on the back of the cheque. Nearly everyday in the morning time; cash comes from State Bank of Pakistan through Brinks (which provide safe cash delivery services). This cash is required by the bank to meet the current needs of cash. This cash is received from the Brinks in the presence of an authorized officer & cashier of bank, with full satisfaction.

6.3 CLEARING DEPARTMENT Almost all commercial banks engage to furnish a wide variety of services to their customers. Clearing service is one of more significance and important activity of all commercial banks. The elementary function of clearing department is to facilitate the customers to with regard to collection of their cheques pertain to other banks, regardless related with inside or outside the city. The customer can amass money in his account at NBP from the cheques issued on another bank. First of all, bank accepts the cheque in the clearing department & afterward on collects these cheque from the bank on which it is issued through the clearinghouse i.e. SBP. For instance, an account holder of NBP presents a cheque, which is not issued on NBP but the, but the person has an account in NBP, in this situation bank accepts this Cheque in clearing department & subsequent to collecting the amount from that bank on which cheque is issued, NBP credits the account of customer. This task is called clearing function. 6.3.1 Clearing It can be demonstrated as shift of funds from one branch of bank to the other branch of the identical bank or the dissimilar bank on which the instrument is issued, without linking cash through State Bank's clearing house or in other words cheques which cannot be cashed at the cash counter of the bank. Clearing House

This services is directly related with central bank i.e., SBP to the other commercial banks. SBP is considering a single provider clearing house facility. Many commercial banks are the members of the clearinghouse. All banks represent their bank in the clearinghouse. More specifically it can be explained in the following way. A clearinghouse is an association of commercial banks set up in a given locality for the purpose of interchange & settlement of credit claims. As mentioned earlier a representative of each bank represents his bank in the clearinghouse and represents its cheques on behalf of its banks account holder cheques, which are not issued on their own bank in the clearinghouse. Clearing house hand over these cheques to the respective banks

on which these cheques are drawn & receives cheques from other banks, if any. The SBP maintains the accounts of the NBP like other scheduled banks and debits the account of the drawee bank and credits the presented bank which is NBP in that case. 6.3.2 Types of Cheque The NBP Jutial Cantt branch Gilgit deals with such type of cheques. These can be demonstrated in the following way. Local cheque Out station cheque In house cheque

Local Cheque

It can be explained in the following way as collection of cheques from the banks which are the members of the clearinghouse and which are placed within the city. Out Station Cheque

It means collection of cheque from the banks, which are positioned outside the city and presenter bank and the bank on which the cheque is issued are not placed in the same city. In House Cheque

It indicates that the house cheques, which are issued on one branch of NBP and presented to another branch of NBP such cheques, are marked with transfer stamp.

6.3.3 Types of Clearing

Now I would like to explain the dealing of clearance department. Actually it deals with the two type of the clearance. Inward clearance Outward clearance

Inward Clearance

It means cheque issued on NBP and offered to other Banks or handed over to NBP agent in clearing house. It is an inward clearance for NBP and causes outflow of money to collecting banks dropping the balance in the clearing account. Outward Clearance

It is the reciprocal of inward clearance. It reveals cheque which is issued on other, bank and presented to NBP are known as outward clearance for NBP and causes inflow of money from paying bank into the clearing account maintained with the clearing house, rising the balance in the clearing account. However outward clearing may be due to: Local clearing Outstation clearing

As mentioned earlier surplus of outward clearing over inward clearing delivers a net increment in the clearing account balance. Surplus of inward clearing over outward. Clearing delivers a net decrease in the clearing account balance. The first situation is considered as favorable clearing & the second situation is considered as unfavorable clearing. The balance of incoming & outgoing clearing should be nil (zero).

6.4 REMITTANCE DEPARTMENT

Remittance is the monitory transfer from one place to another place or from one country to another country to fulfill the requirements of the customers by the order of the customer. 6.4.1 Category of Remittance Local Remittance Foreign Remittance

6.1.1.1 Local Remittance Local remittance section deals with remittance (incoming and outgoing but only in local i.e. Pakistan rupee and within Pakistan. Local remittance includes the following eight functions in NBP: Transfer through pay order Transfer through demand draft Telegraphic transfer Issuing of SBP cheques Mail transfer Local/internal transfer Preparation of balance certificate

Transfer through Pay Order

Pay order is also called as cashier order, manager's cheque, & banker's cheque, & cheque on services. Pay order is an instrument through which payment can be made from one bank to another bank within city. In case of NBP, pay orders are also used, instead of demand drafts; outside the city where NBP does not have its branch. So, we can say except Karachi for all other cities pay orders are issued by NBP.

Transfer through Demand Draft

It has been defined as an unconditional order in writing addressed by one person to another, signed by the person giving it (the drawer), and requiring the person to whom it is addressed (the drawee) to pay on demand or at a fixed or determinable future time a certain sum of money to or to the order of, a specified person (the payee) or to the bearer. Demand Draft (DD)

Demand draft is an instrument which is payable on demand, & through which funds are transferred outside the city or country, where NBP has its branch. Main Purpose The main & important purpose of issuing the demand draft from the bank is that environment of our country is not too good to carry cash from one place to another. So demand draft helps us to overcome this situation to some extent because it avoids carrying cash amount with us Telegraphic transfer (TT)

Generally a mail transfer takes 3 to 4 days to reach its destination. T.T is the fastest mode of transferring funds from one bank to another bank not in days but in hours or minutes. In such cases transfer of funds message is passed on through a telegram, to the drawee branch of the same bank. When the urgency of situation demands that the payment is to be made immediately then the message is conveyed to the drawee branch by telephone. Payment to the beneficiary is affected directly by the drawee office upon identification or through credit into beneficiary's bank account. SBP Cheques

In this country where law and order situation is getting worse and worse every day, SBP cheque is another way to ensure safety in carrying the amount from one place to other. SBP cheques are issued on the request of clients of bank who do not want to carry cash. On the written request of the account holder, account officer is asked to issue SBP cheque.

SBP cheques are issued in favor of individuals and beneficiary. Bank receives the cheque on the day of issuance. SBP cheques are allowed within city or clearinghouse. Mail Transfer (MT)

This is an order to pay money, drawn by one branch of a bank upon another branch of the same bank or Mail transfer is the transfer of funds from one branch to another branch of the same bank within Pakistan. If such balance is transferred by means of mail, it is described as mail transfer remittance. Local/Internal Transfer (LT)

Local or Internal transfer is the transfer of funds from one account to another account within the same branch i.e., Main branch, Lahore. Preparation of Balance Certificates

It is also the duty of remittance department to prepare the balance certificates of their clients. These certificates are prepared on monthly basis. These certificates show the balance (or amount) of the clients in their account, & can also be prepared on the request of the client when he needs it as early as possible. These certificates of balance are then sent to the clients on the address of their offices or on residence address. So that they remain aware of the position of their accounts in the bank. 6.1.1.2 Foreign Remittances Foreign Remittances section deals with remittances (incoming and outgoing) but in foreign currency and outside Pakistan. Funds are transferred into four types of currencies by Remittance department. USD GBP JPY DEM

This section of foreign remittance is divided into two parts: Outgoing FCY Remittance Incoming FCY Remittance

These terms outgoing & incoming remittance means sale & purchase of foreign exchange in the above four currencies. 6.5 FOREIGN EXCHANGE DEPARTMENT Foreign exchange department of NBP deals in four currencies namely; US$ (U.S. Dollar), GBP (Great Britain Pounds) DEM (German Mark) YEN (Japanese YEN) As fluctuations in PAK.Rupees are very frequent so accounts in foreign currency are profitable for customers. 6.5.1 Functions This department performs the following functions: Spot sell Spot purchase Forward sell Forward purchase Deposit Clearing Spot sell Sale of Dollars on daily basis is called a spot sell

 Spot purchase When dollars are purchase for fulfilling the daily needs of the payment, this process is called a spot purchase. Forward sell If the payment is received in advance then these dollars will be sold at current rate, this is called forward sell. Forward purchase When dollars are required in future, then these are purchase at current rate for future purposes. This is called a forward purchase. Deposit In this case, $100,000 comes in any customers account of NBP, the bank is not allowed to keep extra dollar amount (or foreign currency) with them but to sell them to SBP. So these dollars (or any foreign currency) will be sold and forward booking will be made for that customer, in case he demands for his money. So whenever the customer demands his money it will be given to him at current rate (if need in Pak rupee). Clearing Foreign exchange department also performs this function. We can define clearing that transfer of funds from one branch of bank to the other branch of same bank or the other bank on which the instrument is drawn without involving cash, through the State Bank of Pakistanis clearing house. Whenever there is need of sale or purchase of dollars e.g. in import, export, credit, cash, or remittance department they are reported under foreign exchange department & its commission is given to the credit department. Banks are not allowed to keep dollars with them but sell them. So purchase the dollars only, when they are needed.

Head office is responsible for sale or purchase of currencies, in the market at market rate. 6.6 EXPORT DEPARTMENT There is no single country in the world, which is self-sufficient. In order to survive in the international market and fulfill its needs a country needs foreign exchange. Export is a major source of earning foreign exchange. Contrary to imports, every country wants to increase its exports because the foreign exchange earned through exports can help in meeting the other need of the country. As exports play a major role in the economic development of a country, governments take major steps to boost the export of the country. If country has more exports than imports, then the balance of payments is favorable or surplus. On the other hand if the exports are less than imports then the balance of payment is unfavorable or deficit. 6.6.1 Conditions for Exporter For export purpose following requirements are necessary. Export registration fee is Rs.1500 Exporter has to fill E-Form and to attach invoice with it. Realization Certificate for rebate purpose. Test Agrees: This stamp should be on L/C which is received by exporter's bank otherwise L/c will not be accepted by NBP as Negotiating/Remitting Bank. The bank hands over the L/C to the exporter after receiving the L/C from the L/C advising bank. The exporter prepares the goods according to the instructions of the L/C. When the shipment is ready then the documents are prepared according to the instructions as mentioned in the L/C. The main documents L/C are: Bill of exchange Airway bill/bill of lading Invoice performs

 E-Form Form of country of origin Packing list Insurance (if any)

The importer's bank receives these documents and verifies with the letter of credit. After verification the documents are handed over to the importer. The importer takes the documents and releases the shipment from port. At maturity importer bank makes the payment to the beneficiary's bank. The banks receive the payment and after deducting the commission, service charges etc., the proceeds are credited to the party's account. 6.7 CREDIT DEPARTMENT In NBP the credit activities are played under a separate department. So the main activities of this department are: To give credit to customers Closely monitor the development in different accounts Reporting to SBP & head office.

6.7.1 CREDIT "Credit means any arrangement, however named or described, whereby a bank (the issuing Bank) acting at the request and on the instructions of a customer (the applicant), or on its own behalf". It is to make a payment to or to the order of a third party (the beneficiary) or is to accept and pay bills of exchange (drafts) drawn by the beneficiary. A authorizes another bank to effect such payment, or to accept and pay such bills of exchange (draft). 6.7.2 Types of Credit Facilities The types of credit facilities offered to customer are of two basic kinds.

 Funded facilities/cash credit Non funded facilities/Non cash credits Cash Credits Cash credits are those where the bank actually advances money against further repayment. These are also known as funded facilities. Non-Cash Credits Non cash credits are those where the bank substitutes its own credit for that of its customer e.g. Opening import letters Issuance of bank guarantee

7. SWOT Analyses of Branch SWOT Analysis is a technique that is used to get the information about the internal and external environment of an organization. After careful environmental scanning and considering various forces that can affect the operations of National Bank of Pakistan Main Branch Tatta Pani, I conclude that the branch has:

7.1 Strengths There is Participating Management in the branch. Deposits are increasing day by day. It has minimum balance requirements for accountholders than other banks. NBP Branch is leading bank in the city. It has Strong financial position.

7.2 Weaknesses Centralization authority restricts the branch to make its own policies. Old technology is used to carry on day to day operations. High volume of paper work is there. There is improper distribution of work in the branch. It has also Lack of incentives and promotional opportunities. No training programs for new employees in the branch. High documentation cost has to bear in daily operations.

7.3 Opportunities Increase in foreign remittances has greater opportunities for the branch. Increase in banking habits of the public can increase its accountholders. Improve income level of the people may in results in increase its deposits. Needs of accounts due to earthquake 2005 can be properly utilized. High demand for credit by the public may increase its lending and advances.

7.4 Threats

Increase in competition among banks restricts the branch to earn high profits. Its Limited product line cannot attract the customers properly. No proper advertising system is used by the NBP Main Branch Tatta pani.

There are also Security problems for the branch. Decrease in the savings of the public results in the decrease of deposits. Rise in Inflation reduced the saving power of the customers.

8. FINDINGS The role of the banks is economic development of a country is very vital. It plays the following role:

Basically banks remove the deficiency of capital by mobilizing savings and investment. A sound banking system integrators the small and scattered savings of he community and makes them available for productive purposes. National Bank of Pakistan is playing an important role in mobilizing and allocating finances from and to different industrial and commercial sectors. The bank is acting as a bridge between savers and investors. Without a commercial bank like National Bank, money saved would remain idle and the sectors short of funds would remain unfed.

This would strayed the economic activities of life and enthusiasm although in this report only important factions have been emphasized, the agency and he utility services provided the National Bank are also of significant important.

The main objection is to provide to their people who will save their time and money.

8.1 CONCLUSION The main source of the economic development in every developed and developing country is the commercial banks. Especially for the developing country like Pakistan, banks prove to be a backbone of the economy. As for as National Bank of Pakistan is concerned, its story is a part of the struggle for economic development. At the time of independence the Hindus controlled our economy. After many stages of its evaluations and development the National Bank replaced Imperial Bank of India in 1952 and at this time it is the one, largest bank for the economic development in Pakistan. The national bank of Pakistan is the only nationalized bank in Pakistan. This bank is also working as central bank. All the other commercial banks have been privatized. For the smooth and continuous running in its operational activities the national bank has been divided into different departments and during my internship program at the national bank of Pakistan I got training practically in following departments. Deposits Department Clearing Department Advance Department

Remittance Department Cash Department

These departments are well organized and esteemed institutions. I am feeling pleasure because these departments made my mental horizon and gave me practical insight and courage. There are many challenges for the national bank of Pakistan, like privatization, information technology, world trade organization, corruption etc. There are so many other problems for the bank. But the banks performance is brilliant in this regard and its growing trend of future will be the prosperity of the country as well as the nation. 8.2 RECOMMENDATIONS AND SUGGESTIONS During their internship period at National bank I have come across certain aspects which need some attention and improvement. I would like to give a few suggestions and recommendations which might assist in the advancement and achievement of the bank. Computerization in Banking

National Bank has computerized its accounts but it has computerized its daily counter services. Computerization its accounts but it has not computerized its daily counter services. Computerization of all the branches may be a difficult task, but it could result in a lot of saving for the bank. National Bank has computerized its accounts but it has not computerized its daily counter services. Computerization of all the branches may be a difficult task, but it could result in a lot of saving for the bank.

Evening Bank

In big cities and especially the branches located in commercial areas should extend evening banking services to its clients as safe keeping of money after close of business house not free of danger. Proper Safeguarding of Bank Branches

In these days many branches of various banks have been looted. In order to avoid any such incidence, proper safeguarding measures should be taken to protect the life and property. Room for Improvement in Customer Services

Due to nationalization of banks the customers services of the bank are below than the standard. Employees are not as active as they should have been, they have no concern about customer service they only do their routine work. This is only possible when they around give incantation to their employees. In some branches there is shortage of staff and there is also over staffing in some branches. With proper staffing improved services could be extended to the clients. In the National Bank there is a need for the introduction of new saving schemes for low and middle income people. Reward System & Timely Promotions

There is no inventive of reward for the performance and hardworking of employees, promotion is only based on seniority. As a result, employees do not try to work hard. In order to increase the productivity and performance of him employees Bank should raise reward system, so that can accomplish their objects successfully and discharge their duties efficiently. In many cases officers are drawing maximum of their, pay scale for year together. In such cases timely promotions should be made to create enthusiasm amongst its employees. Effective Chequing System

In Pakistan, an effective chequing system is not prevailing. People prefer to receive payment in hard cash rather than in the form of a cheque. This is mainly due to the fact that in Pakistan collection of cheques takes time. In addition cheques are dishonored mainly due to the reason there

are insufficient fund in he drawers accounts. If the collection of cheque procedure is speeded up and the account holders are made bound be bank to write cheques only when they have funds in their accounts, an effective chequing system can be developed in our country. Loans should be sanctioned on Merit

Unfortunately most of the loans are being given on the basis of political background rather than on merit. Cash loans are later written off politically resulting in a heavy amount of losses for the bank. It is suggested that the loan sanctioning body of the bank must consist technical people. There should be no pressure from the government regarding sanctioning and writing off of the loans. Professionalism

In National Bank, there is a lack of professionalism at most of the levels. Employees feel overburdened due to the shortage of staff. The bank should create now jobs to have competent and professional persons for various posts, so increase in the number of staff can raise the efficiency of the Bank. Privatization

The banks performance under Nationalizations is through satisfactory to some extent yet if the bank is de-controlled and privatized by the government, there are possibilities that it will improve its present performance like other banks that are showing excellent performance after privatization.

APPENDIXES Abbreviations Meanings

NBP ATM CEO A.K L/C L/G PC Banking POS PIN CD PLS IBDA IBCO RF NTN NIC LBC OBC PO DD MRTC

National Bank of Pakistan Automatic Teller Machine Chief Executive Officer Azad Kashmir Letter of Credit Letter of Guarantee Personal Computer Banking Post of Sale Personal Identification Number Current Deposits Profit & Loss Sharing Account Inter Branch Debit Advice Inter Branch Credit Order Running Finance National Tax Number National Identity Card Local Bills for Collection Outward Bills for Collection Pay Order Demand Draft Muhafiz Rupee Traveler Cheque

MT

Mail Transfer

References

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