INTERNSHIP REPORT ON

NATIONAL BANK OF PAKISTAN

MAIN BRANCH ABBOTTABAD (0301)

Submitted by: Jamil Ahmed

Roll # F-2015-03

Supervised by: Yousaf Abbasi

Government College of Management Sciences Abbottabad

SESSION

2015-2019

i
 INTERNSHIP REPORT ON

NATIONAL BANK OF PAKISTAN

MAIN BRANCH ABBOTTABAD (0301)

Submitted by: Jamil Ahmed

Roll # F-2015-03

Supervised by: Yousaf Abbasi

This internship report is submitted in partial fulfillment of the
requirements for the degree of Bachelor of Business
Administration awarded by the Abbottabad University of Science
and Technology

Government College of Management Sciences Abbottabad

SESSION
2015-2019

ii
 Government College of Management Sciences
Abbottabad

APPROVAL SHEET

Approval Committee

1. External Examiner

Mr.______________________ Signature______________________

2. Supervisor
Yousaf Abbasi ____ Signature______________________
Designation Assistant Professor GCMS Abbottabad

3. Head of department

Prof. Syed Arif Zahid Signature_____________________

Designation Principal GCMS Abbottabad

iii
 DEDICATION

I Dedicate This Report to my Loving Family & my

Respected Teachers.

iv
 ABSTRACT

Internship training program during BBA (Hons) Program is necessary for the partial
fulfillment of the completion of Degree of BBA (Hons) It is necessary for me to complete an
internship session of about 8 weeks in some manufacturing or service industry relevant to my
area of interest and specialization of students. So, I choose the Banking field because I have
the interest in this sector because my study background is related with this sector.

As a compulsory requirement of Professional Degree BBA (Hons) I opted to join NBP Bank
Limited, to fulfill my degree requirement. My reason for choosing NBP was to enhance my
skills in Finance and Accounts, so that to provide myself the opportunity to cope with real life
situation. To better understand the report my recommendation would be to look into different
parts mainly covering the overview of NBP, overall management of Finance and Accounts.

The bank staff was very much cooperative to me, they have provided me relevant material to
write a report.

v
 TABLE OF CONTENTS

Chapter 1 ......................................................................................................................................... 1
Introduction of Study ....................................................................................................................... 1
1.1 Background of Study .................................................................................................................. 1
1.2 Objectives of study..................................................................................................................... 2
1.3 Scope of Study............................................................................................................................ 2
1.4 Limitations of the work .............................................................................................................. 2
1.5 Research methodology .............................................................................................................. 3
1.5.1 The major sources for Primary data includes ................................................................. 3
1.5.2 The major sources for Secondary data includes ............................................................. 3
Chapter 2 ......................................................................................................................................... 4
Introduction to NATIONAL BANK of Pakistan ................................................................................... 4
2.1 Evaluation of Banking / Industry in Pakistan .............................................................................. 4
2.2 History of NBP ............................................................................................................................ 6
2.3 Credit Rating.............................................................................................................................. 8
2.4 Present status............................................................................................................................. 8
2.5 Organizational structure of NBP............................................................................................... 10
2.5.1 Board of Directors ......................................................................................................... 11
2.5.2 Senior Management ..................................................................................................... 12
2.5.3 Senior Management for Overseas Operation ............................................................... 14
2.6 Mission ..................................................................................................................................... 14
2.7 Objectives of National Bank of Pakistan .................................................................................. 14
2.8 Core Values............................................................................................................................... 15
2.8.1 Shall work to ................................................................................................................. 15
2.8.2 We aim to be people who ............................................................................................. 15
2.8.3 We have confidence that tomorrow we will be ............................................................ 15
Chapter 3 ....................................................................................................................................... 16
Product and services ...................................................................................................................... 16
3.1 Deposit Department ................................................................................................................ 16
3.1.1 Account opening ........................................................................................................... 16
3.1.2 Procedure of Account Opening .............................................................................. 16
3.1.3 Documents Required .................................................................................................... 17
3.1.4 Issuance of Cheque Book ....................................................................................... 17
3.1.5 Cheque Cancellation .............................................................................................. 17
3.2 TYPES of Accounts .................................................................................................................... 17
3.2.1 Current Account ............................................................................................................ 17
3.2.2 Profit & Loss Sharing Saving Account............................................................................ 18
3.3 Problems in personal account ................................................................................................ 22
3.3.1 Lunacy of customers ..................................................................................................... 22
3.3.2 Death of customer ........................................................................................................ 22
3.4 Advances department ...................................................................................................... 22
3.5 Types of financing ............................................................................................................ 23
3.5.1 Long term finance; ........................................................................................................ 23
3.5.2 Short term finance ........................................................................................................ 23
3.5.2.1 Gold finance ............................................................................................................... 23
3.5.2.2 Running finance ......................................................................................................... 24
3.5.2.3 Long term finance ...................................................................................................... 25
3.5.2.4 Advance salary ........................................................................................................... 25
3.6 Western union.......................................................................................................................... 25
3.7 Clearing department ................................................................................................................ 25
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 3.7.1 Clearing house .............................................................................................................. 25
3.7.2 NIFT (National institutional facilitation technology) ..................................................... 25
3.8 Foreign exchange department ................................................................................................. 26
3.9 Types of Cheque ....................................................................................................................... 27
3.9.1 Bearer Cheque .............................................................................................................. 27
3.9.2 Order cheque ................................................................................................................ 27
3.9.3 Crossed Cheque ............................................................................................................ 27
3.9.4 Payment of Cheque ....................................................................................................... 27
3.10 Remittance department ......................................................................................................... 28
3.11 Demand draft (Dd) ............................................................................................................. 28
3.11.1 Charges for Issuance of DD ......................................................................................... 28
3.12 Telegraphic transfer (TT)....................................................................................................... 28
3.13 computer department ........................................................................................................... 29
3.14 Establishment department .................................................................................................... 29
chapter 4 ....................................................................................................................................... 30
ANALYSIS of NBP ............................................................................................................................ 30
4.1 Financial Analysis ..................................................................................................................... 30
4.1.1 Vertical analysis ............................................................................................................. 30
4.1.2 Horizontal Analysis of NBP`s Balance sheet .................................................................. 33
4.1.3 Horizontal Analysis of Income Statement ..................................................................... 36
4.1.4Vertical Analysis of Income Statement .......................................................................... 38
4.1.5 Ratio Analysis ................................................................................................................ 39
4.2 SWOT ANALYSIS ........................................................................................................................ 52
4.2.1 strengths ....................................................................................................................... 52
4.2.2 Weaknesses................................................................................................................... 53
4.2.3 Opportunities of NBP .................................................................................................... 54
4.2.4 Threats .......................................................................................................................... 54
Chapter 5 ....................................................................................................................................... 56
Conclusion and recommendations ................................................................................................ 56
5.1 Conclusion ................................................................................................................................ 56
5.2 Recommendations ................................................................................................................... 63
References...................................................................................................................................... 72

vii
 ACKNOWLEDGEMENTS

With the name of ALLAH the Most Beneficial and Merciful, I completed my internship in
National Bank of Pakistan Main branch Abbottabad. I am really pleased to have a
professional learning experience in one of leading organizations of country. In these 8 weeks
I worked in different departments and I am truly thankful to all officers and staff who give me
assistance in whole field of assistance. I am also grateful to my honorable supervisor Yousaf
Abbasi and all other teachers who motivated me to work hard and taught me techniques to
learn work. The account of acknowledgement will remain incomplete if I do not express my
sincere appreciation, indebtedness and gratitude to my parents and siblings. They have
always been a source of encouragement for me.

And last but not the least I would like to express my gratitude to all the staff of NBP Main
Branch Abbottabad.

Jamil Ahmed

viii
 LIST OF ABBREVIATIONS

BOD Board of Directors

D.D Demand Draft

EBIT Earning Before Income Tax

EPS Earning per share

EVP Executive vice president

I.T Information technology

L/C letter of credit

M/T Mail Transfer

MIS Management Information system

NBP National Bank of Pakistan

PLS Profit and loss saving

SBP State bank of Pakistan

SEVP Senior executive vice president

SVP Senior vice president

SWOT Strength Weaknesses Opportunities Threat

SS Specimen signature

VP Vice president

ix
 EXECUTIVE SUMMARY

NBP is an equal opportunity employer. It offers great incentives and benefits of their
employees throughout the country and out of country. It provides full opportunities for
improving their careers and skills; it also gives more incentives to their employees and
increasing the rank of the smart and hard workers. In this report the methodology is use as
primary data and secondary data. Primary data is collected through observation and
interviews and secondary data is collected through annual report, circulars, brochures,
newspaper, manuals, internet and relevant books.

As part of the academic requirement for completing BBA of the students are required to
undergo eight (08) weeks of internship with an organization. The internship is to serve the
purpose of acquainting the students with the practice of knowledge of the discipline of
banking administration.

, the management control was handed over to National Group (the highest bidders). Initially
only 26% of shares were sold to private sector at Rs. 56 per share.

During my internship in NBP, I worked in All departments and I successfully completed all
the task/duties that were assigned to me.

During the course of internship, I learned about different functions performed by

Finance Department as a whole. I also learned bank’s correspondence with their employees
and within branches. I learned about documentation requirements and record keeping
for different activities and processes, especially the documentation requirement for different
kinds of activities.

x
 CHAPTER 1
INTRODUCTION OF STUDY

The basic objective of this study is to know about the current position of
the NBP in sphere of its overall analysis and to suggest meaningful and
feasible recommendations for the bank so as to improve its performance
and to restain its previous position in banking sector.

The objective of this report is to studying and analyzing the NBP in general
and main Branch (0301) ABBOTTABAD, in particular, as the partial
fulfillment for the degree of BBA Hons from Government College of
Management Sciences Abbottabad, this report is prepared and submitted to
the AUST university.

NBP is an equal opportunity employer. It offers great incentives and

benefits of their employees throughout the country and out of country. It
provides full opportunities for improving their careers and skills; it also
gives more incentives to their employees and increasing the rank of the
smart and hard workers. In this report the methodology is use as primary
data and secondary data. Primary data is collected through observation and
interviews and secondary data is collected through annual report, circulars,
brochures, newspaper, manuals, internet and relevant books.

As part of the academic requirement for completing BBA hons of the

students are required to undergo 8 weeks of internship with an organization.
The internship is to serve the purpose of acquainting the students with the
practice of knowledge of the discipline of banking administration.

1.1 Background of Study

Internship training during BBA (Hons) Program is necessary for the partial
fulfillment of the completion of Degree of BBA (Hons.). It is necessary for

1
me to complete an internship session of about eight (08) weeks in some
manufacturing or service industry relevant to my area of interest and
specialization. So, I choose the Banking field because I have the interest in
this sector because my study background is related with this sector.

1.2 Objectives of study

Internship is the capstone experience that provides me with hands-on, real-

world experience in a work setting. Ideally, internship will enable interns
to:

(a) Integrate and use my knowledge and skills from the classroom
(b) Discover where further competence is needed
(c) Take steps to gain that competence under educational
supervision, and
(d) Become better acquainted with the types of work settings in
which such competence can be applied.

1.3 Scope of Study

This study will facilitate the students regarding the working of Banking
sector of Pakistan because most of the teachers during their lectures use the
examples of Banks like NBP, National Bank, UBL, Bank Al Falah and
many others, students should study this report so that they must grasp the
functioning of such Banks.

1.4 Limitations of the work

The study is done with the sole purpose of doing the best work but there
were certain limitation faced during the internship period. The most
important limitation from which the study suffers is the non-availability of
information in a manner required for analysis and the secrecy of the bank.
Another important limitation of the study is time and space constraint.

2
1.5 Research methodology
National bank of Pakistan is one of the leading and establishes banks of the
country. It has a large setup of departments and a big organizational
structure. While working in a Main branch Abbottabad of the bank, it is not
possible to thoroughly cover all the areas of the bank, as it requires more
time and two months are in no way sufficient to do so. Different tools and
techniques were used to gather relevant information for writing the report.
Secondly, journals from regional head quarter and staff college was also
reviewed which gave very useful information about the functioning of the
bank. I also visited the national bank of Pakistan’s official web site, which
gave very useful information about the services provided by the bank.

1.5.1 The major sources for Primary data includes

 Personal observation
Personal observations during the internship period
 Interviews of management
Short interviews of the bank’s management
 Discussion with staff members
1.5.2 The major sources for Secondary data includes
 Annual reports of Bank
Annual reports of the last three years
 Books
Relevant course books
 Internet
Official web site of NBP and some other relevant sites mentioned in the
references

3
 CHAPTER 2
INTRODUCTION TO NATIONAL BANK OF PAKISTAN
NBP contains its situation as Pakistan's chief bank resolved to set higher
measures of accomplishments. It is the significant colleague for the
Government of Pakistan with exceptional accentuation on encouraging
Pakistan's monetary development through forceful and adjusted loaning
approaches, innovatively situated items and administrations offered through
its huge system of branches locally, internationally and delegate
workplaces.
The National Bank of Pakistan was established on November 09, 1949
under the National Bank of Pakistan (NBP) Ordinance, 1949 in order to
cope with the crises, which were developed after trade deadlock with India
and devaluation of Indian Rupee in 1949. Initially the Bank was established
with the objective to extend credit to agricultural sector. The Bank was
established through the promulgation of an Ordinance due to the situation
that had developed with regard to financing of jute trade. The Bank
commenced its operations from 20th November 1949 at six important jute
centers in the East Pakistan (Now Bangladesh) and directed its resources in
financing of jute crops. The Bank’s Karachi & Lahore Branches were
subsequently opened in December 1949.
NBP is also the first Bank in the country, which has completed its
operational arrangements with Western Union.
The NBP is also the first Bank, which has started a “Foreign Exchange
Company ” in order to facilitate the general masses.
2.1 Evaluation of Banking / Industry in Pakistan
At the time of independence in 1947, Pakistan’s commercial banking
facilities were almost jammed according to a plan in the whole sub
continent especially in the Muslim majority areas. Pakistan’s banking and
Industrial sectors were in very poor conditions. Banks largely depend for
their growth and development on industrial sector but at the time of
independence, Pakistan had patriotically on industry except a few textile

4
mills and only product food grains and agricultural raw materials, most of
the industries were situate in Hindu majority area now called India.
A number of banks closed their branches with the result that only 81
branches remain ed open on 30th June 1948 out of 487. The head offices
were in India and most of their employees were Hindu, and they fled to
India. Imperial Bank of India, Which was conducting government receipts
and payments, closed down most of its branches thus blocking the funds
needed by the government?
The country was in trouble and needed most of the general
commercial banking and credit facilities. This need was a little bit satisfied
with the transferring of the head offer of the HBL. To Karachi on 7th,
August 1947. This bank playing a great role in the next year in the
economic development of Pakistan as the Habib Bank was also new in the
new country it was asked to open more branches at new place this was a
difficult time foe H.B.L to open their branches in different places.
In view of the above mentioned circumstances and in order to
rehabilitee the banking in Pakistan without further delay, on the
recommendations of an committee it was decided to establish as early as
possible a central bank to control the banning and currency in Pakistan.
Accordingly state bank of Pakistan was Pakistan was inaugurated by
Quaid-e-Azam Muhammad Ali Jinnah on 1st July 1948. This bank lost on
time in meeting the national requirements of banking, currency and took
following remedial measures. Requested Government of state a new bank
of nation wide services accordingly National Bank of Pakistan was formed
in 1949 which opened many branches and in 1952 took over the emperor
Bank of India. It will draw Indian Currency notes of Rs: 125 crore from
General Circulation and send these for recovery to reserve Bank of India.
National bank was establish in November 09, 1949 under NBP ,ordinance
1949, in order to handle the crises condition which was develop after
Deadlock with India and the devaluation of Indian Rupee in 1949. The
bank proved all type of banking services to the government in general

5
public. It works as agent of sent real bank because the SBP dose not has its
own branches.
The bank schedule commercial bank and its principally engaged in the
business of banking as defined in the banking company's ordinance 1962.
National Bank of Pakistan was basically established for reducing the
difficulties of east Pakistan farmers engaged in jute and patens” after mass
migration of community from east and west Pakistan in India. The bank
commenced its operation in November 20.1949 at six centers of jute in the
then East Pakistan. Lahore and Karachi officers were opened subsequently
in December 1949. Before restructuring in 2002, national Bank of Pakistan
with its head office at Karachi operates through 9 regional headquarters at
Lahore, Karachi Hyderabad, Quetta, Peshawar, Multan, Muzaferabad,
Fasilabad and Islamabad.
The bank was incorporated with authorized capital of 60 millions .in 960
this amount was redacted to the 30 millions banks issued 15 millions of
which 25% was subscribed by the government and the balance was offered
to the general public .shears to the public where issued in 1950 and where
quickly taken up. In 190 banks ordinance was amended so that it take
ordinarily commercial banking business. On janvery-01-1974 national bank
along with thirteen others commotional banks where nationalized under the
promulgation of “nationalization” act 1974 and the shears not held by the
government where required after compensation them.
2.2 History of NBP
National bank was establish in November 09, 1949 under NBP ,ordinance
1949, in order to handle the crises condition which was develop after
Deadlock with India and the devaluation of Indian Rupee in 1949. The
bank proved all type of banking services to the government in general
public. It works as agent of sent real bank because the SBP dose not has its
own branches.
The bank schedule commercial bank and its principally engaged in the
business of banking as defined in the banking company's ordinance 1962.
National Bank of Pakistan was basically established for reducing the

6
difficulties of east Pakistan farmers engaged in jute and patens” after mass
migration of community from east and west Pakistan in India. The bank
commenced its operation in November 20.1949 at six centers of jute in the
then East Pakistan. Lahore and Karachi officers were opened subsequently
in December 1949. Before restructuring in 2002, national Bank of Pakistan
with its head office at Karachi operates through 9 regional headquarters at
Lahore, Karachi Hyderabad, Quetta, Peshawar, Multan, Muzaferabad,
Fasilabad and Islamabad.
The bank was incorporated with authorized capital of 60 millions .in 960
this amount was redacted to the 30 millions banks issued 15 millions of
which 25% was subscribed by the government and the balance was offered
to the general public .shears to the public where issued in 1950 and where
quickly taken up. In 190 banks ordinance was amended so that it take
ordinarily commercial banking business. On janvery-01-1974 national bank
along with thirteen others commotional banks where nationalized under the
promulgation of “nationalization” act 1974 and the shears not held by the
government where required after compensation them.
The period 1990’s witnessed financial referees and the national bank also in
cooperated the change in its working and offered new services and products
to its clients .at present the bank is playing very important role in financing
the trade .commerce ,agricultural and important concerns and contributing
the best to word making the country prosperous. The improve its costumer
focus redacted decision making layers restructured its entire command and
control system in business and operational spheres zones and audit offices
in the year 2002 and eliminated the total numbers of regions in hands from
9 to 29 across the country .anew matrix structure has been introduced with
the objective to separate the office and the bank offices .to improve the
good governance and enhance the internal control.
 Operation group
 corporate and investment banking group
 special assets management group
 commercial and retail banking group

7
  audit and inspection group
 overseas Coordination and Management Group
 Risk Management Group

National Bank of Pakistan is known as the premier commercial institution

of Pakistan provide the large diversified customer base of 9.009 millions,
which is the biggest figure, in the country and conduct the business
function of state bank of Pakistan in addition to provision of other financial
and allied services such as deposit banking financing and credit remittance
facilities collection government receipts and payments. sale and purchase
of government securities, Bands and other certificates, Foreign exchange
business, Safe custody, Safe deposited services and safe deposit, Lockers,
Hajji facilities Utility bills, Investment advice and other services, Special
deposits products / Schemes, pak rupee travelers choose, New product.

2.3 Credit Rating

NBP enjoys the highest rating of ‘AAA’ in the industry assigned by M/s
JCR-VIS Credit Rating Company. The ratings assigned to NBP are
primarily driven by the bank’s role in the national economy as an agent of
the State Bank of Pakistan and as a bank to the Government of Pakistan.
Additionally, ratings also derive strength from the bank’s consistently high
capitalization levels, and nationwide access that has enabled it to secure a
cost effective and diversified deposit base.

2.4 Present status

National Bank of Pakistan has a network of more than 1400
domestic branch and 19,204 employees for subsidiaries, 23. Oversea
branches, 4 reparative offices, 1 joint venture and subsidiary (overseas) all
the world the local branches are controlled through 29 regional offices and
overseas are managed through 4 overseas regional offices. It is the largest
contributory agent of government requirement. NBP provide wide range of
services and including collection of taxes and deliveries of salaries, person

8
to public sector employees. It has lowest rate on exports and other
borrowings.
National bank of Pakistan, overseas operation comprises 18
overseas branches, 5 representative offices, one international subsidiary
bank of NBP in Amatory and one joint venture with the United Kingdom.
NBP with its commitment to invest in development of the bank’s I.T
infrastructure have now developed on line branches with modern by highly
professional bankers. NBP has launched an ambitious business
reprocessing programmed to make the bank more attractive with the
eventual aim of privatization. The largest bank in the country with a
customer base 9.00 billion in poised for take off.
Source: www.nbp.gov.pk/about

9
2.5 Organizational structure of NBP

President and chairman

President Secretariat

Board of Director

Corporate and
investment banking Group
Commercial and retail
Banking Group
Operations Group

Audit & inspection group

Compliance group

Financial control division

Employees benefit,
Disbursements and trustee
Special assist
Management group
Organization
development and training
Overseasgroup
coordination
management group
Information technology
group
Risk management group

Human resources
management and Admin
Group

Source: Annual Report 2018

10
2.5.1 Board of Directors
Table 1 Board of directors

Mr. Muneer Kamal

Chairman

Mr. Syed Ahmed Iqbal Ashraf

President

Mr. Farrakh Qayyum

Director

Mr. Tariq Kirmani

Director

Mr. Iftikhar A. Allawala

Director

Mr. Muhammad Naeem

Director

Mr. Mir Balakh Sher Marri

Director

Mr. A. Akbar Sharifzada

Director

Mr. Syed Muhammad Ali Zamin

EVP, Secretary Board of Directors & Secretary Credit Committees

11
2.5.2 Senior Management

Syed Ahmed Iqbal Ashraf

President, NBP

Nausherwan Adil
SEVP & Group Chief Operations Group/Corporate Communication
Division

Mudassir H. Khan
SEVP & Group Chief, Commercial & Retail Banking Group

Nusrat Vohra
SEVP & Group Chief, Treasury Management Group

Tariq Jamali
SEVP & Group Chief, Logistics Support, Security & Engineering
Group

Kausar Iqbal Malik

SEVP & Group Chief, Compliance Group

Masood Karim Shaikh

SEVP & Group Chief, Overseas Banking Group/Global Home
Remittance Management Group

Asif Hassan
SEVP & Group Chief, Audit & Inspection Group

Wajahat A. Baqai
SEVP & Group Chief, Credit Management Group

Aamir Sattar
SEVP & CFO, Financial Control Division

Sultana Naheed
SEVP & Group Chief, Risk Management Group

12
Zahid Mahmood Chaudhry
SEVP & Group Chief, Human Resources Management &
Administration Group

Akbar Hasan Khan

EVP & Head, Corporate & Investment Banking Group

Sahibzada Rafat Raoof Ali Khan

EVP & Head, Assets Recovery Group

Khawaja Muhammad Aminul Azam

EVP & Head, Islamic Banking Group

Ovais Asad Khan

EVP - Divisional Head, Strategic Marketing Division

Mahmood Siddique
EVP, Divisional Head & CIO, IT Division

Shaharyar Qaiserani
EVP & Divisional Head, Agriculture & Business Development
Division

S.M. Ali Zamin

EVP, Secretary Board of Directors & Secretary Credit Committees

Mufti Ehsan Waquar Ahmad

Shariah Advisor

Mirza Babur Baig

EVP & Principal Staff Officer(PSO) to the President
Riffat Sultana Mughal
SVP - Head, Legal Division

13
2.5.3 Senior Management for Overseas Operation

Zubair Ahmed
SEVP & Regional Chief Executive, Middle East, Africa & South
Asia Region
M. Rafiq Bengali
SEVP & Regional Chief Executive, Americas Region
Khawar Saeed

EVP & Regional Chief Executive, Cationentral Asian Republics

Region
Muhammad Hanif Khan
SVP & Coordinator, Afghan Operations

Source: www.nbp.gov.pk/BOD

2.6 Mission
NBP will aspire to the values that make NBP truly the Nation's 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 stake holder’s value.

2.7 Objectives of National Bank of Pakistan

 Prime objectives of National Bank of Pakistan are tainting
distinguishing brand identity, attaining quality financial
performance, achieving acknowledgment in the market in terms of
quality and performance.
 National Bank of Pakistan also aims at providing assistance to
farmers, so that they can utilize their funds effectively to get the
best result.

14
  By charging interest on loans provided to the private sector and
business community.

2.8 Core Values

We aim to be an organization that is founded on
 Growth through creation of sustainable relationships with our
customers.
 Prudence to guide our business conduct.
 A national presence with a history of contribution to our
communities.

2.8.1 Shall work to

 Meet expectations through Market-based solutions and products.
 Reward entrepreneurial efforts.

2.8.2 We aim to be people who

 Care about relationships.
 Lead through the strength of our commitment and willingness to
excel.

2.8.3 We have confidence that tomorrow we will be

 Leaders in our industry.
 An organization taining the trust of stakeholders.
 An innovative, creative and dynamic institution responding to the
changing needs of the internal and external environment

15
 CHAPTER 3
PRODUCT AND SERVICES

Dividing an organization into different parts according to the functions is

called departmentalization. NBP can be divided into the following main
departments.

3.1 Deposit Department

It controls the following activities:
 A/C opening.
 Issuance of cheque book.
 Current a/c
 Saving a/c
 Cheque cancellation

3.1.1 Account opening

An account is relationship between account holder and Banker. OR
Account is an agreement between customer and banker. Preliminary
investigation is necessary because of the following reasons.
 Avoid frauds.
 Negligence.
 Inquiries about clients.

3.1.2 Procedure of Account Opening

Accounts are opened after approval of manager. Customer has to fill in
prescribed application form properly particularly complete details of next
of kin. Customer has to sign terms and conditions of account opening.
Accounts are opened with cash. In case of issuance of check book at the
time of opening of an account Manager has to give justification that
customer is personally known to him. Details of account are entered into

16
computer system. Included non-deduction of zakat and services charges
who’s applicable.

3.1.3 Documents Required

 Copy of CNIC.
 Copy of driving license in case CNIC is without photograph.
 Applicant photograph and CNIC copy attested by gazetted officer in
case of CNIC without photograph.
 Copy of service card/evidence of employment in case of salaried
person.
 Photograph in case of illiterate person.
 Zakat exemption declaration/certificate.

3.1.4 Issuance of Cheque Book

Requisition slips to verify that cheque books have been issued to the
account holder. Cheque book are issued after receipt of acknowledgement
of letter of thanks or with the remarks of managers or operation managers
giving justification for issuance of cheque book before receiving of
acknowledgment of letter of thanks. Cheque book series are recorded in
register. Charges for issuance of cheque books are recorded.

3.1.5 Cheque Cancellation

 This department can cancel a cheque on the basis of;
 Post dated cheque
 Stale cheque
 Warn out cheque
 Wrong sign etc

3.2 TYPES of Accounts

3.2.1 Current Account
It is also known as running account because it is always in
operations.Current accounts are opened on proper introduction and

17
submission of required documents along with an initial deposit prescribed
from time to time. The money can be deposited and withdrawal at any time
during the banking hours by the customers. Therefore the banks do not pay
interests on current deposits. The bank is authorized to deduct services
charges on current account levied through its half yearly schedule of
charges, in case the average balance falls below the minimum balance as
prescribed by the bank. Minimum balance required to open this account is
Rs 5000/-

3.2.2 Profit & Loss Sharing Saving Account

PLS saving accounts are opened on proper introduction and submission of
required documents along with an initial deposit prescribed from time to
time. PLS saving accounts are opened for individual (single/joint)
charitable institution, autonomous corporation, companies, associations,
educational institutions, firms etc. Interest is paid on six-monthly basis. The
amount withdrawn before 6months is deleted from assessment of profit.

3.2.3 Profit & Loss Sharing Term Account

Fixed accounts or term deposits are those deposits which are repayable
after certain period of time which may vary from 3months to 5years. In this
account no cheque book is issued to the customers. At the time of opening
account TDR is issued showing the amount of money deposited, period and
rate of interest payable. The rate of interest on fixed deposits is greater than
saving accounts which also varies with the length of period and amount
deposited. The longer the period of deposit, higher will be the rate of
interest. The shorter the period of deposit, lower will be the rate of interest.
PLS term deposit account can be opened by all who are allowed to open
current, PLS saving accounts.

18
3.2.4 Rates on term Deposit
3months 5.30%
6months 5.60%
1year 5.80%
2year 6.10%
3year 6.40%
4year 6.70%
5year 7.10%
Above 5 7.80%

3.2.5Foreign currency account

Foreign Currency Accounts are opened on proper introduction and
submission of required documents along with an initial deposit
prescribed from time to time. It can be operated singly or jointly by
individuals, partnerships, corporation, companies etc.Pakistani,
foreigners, Muslims, non Muslims can open this account in foreign
currency Dollars, Pounds sterling and Euro. In Pakistan only foreign
currency saving account is running. Minimum balance required for
foreign currency saving account is 500 Dollars.If balance is less than
required then Bank makes deductions.

3.2.6 National income daily accounts (NIDA)

NIDA are opened on proper introduction and submission of required
documents along with an initial deposit prescribed from time to time. NIDA
are opened for individual (single/joint) charitable institution, autonomous
corporation, companies, associations, educational institutions, firms etc.
Deposits in the NIDA accepted on the conditions that the depositor shall
always maintain minimum balance as prescribed by bank in his account.

19
3.2.7 Rates or profit on NIDA
2million to 25million=1.50%
25m to 50m =2%
50m to 100m =2.30%
100m to 2.50m =2.60%
2.50m to 500m =2.80%
500m to 1000m =3.10%
1000m to 2000m =3.30%
2000m to 5000m =3.50%
5000m & above =3.75%

3.2.8 Premium saver account

Premium saver accounts are opened on proper introduction and submission
of required documents along with an initial deposit prescribed from time to
time. Premium saver accounts are opened for individuals (single or joint)
only. In case where prescribed minimum balance in Premium saver account
is not maintained no profit for the month will be paid to the account holder.
In case of Premium saver account a higher rate of profit as per bank
discretion will be paid to depositor maintaining deposit below the mark of
Rs 300,000/- as compared to depositor maintaining higher deposits in their
Premium saver account.

3.2.9 Premium Amdani account

Premium Amdani products account can be opened by all who are allowed
to open current, PLS saving account. The bank reserves the right of
refusing to accept deposit from any person in premium Amdani account
without assigning any reason. Premium Amdani deposits are accepted by
the bank with minimum sums prescribed by the bank from time to time. In
case of premium Amdani additional amount in the lots of 25000/- will be
accepted. Premium Amdani Certificates will only be issued for period of 5
year. Loan will be given 85% of face value of certificate. Loan will be
sanctioned for one year and lump sum payment will be made.

20
3.2.10 Rates
1 year 7.50%
2year 8.50%
3year 9.50%
4year 10.50%
5year 11%

3.2.11 Account of blind person

Blind person (both literate & illiterate) can open an account to be operated
jointly with a visually literate person on completion of all documents and
formalities as prescribed by the bank. Operations in the joint account will
not be subject to ‘’either or Survival’’. In the event of death of blind
account holder the entire credit balance will be paid to the legal heirs of the
deceased blind account. In the event of death of joint visually account
holder the entire credit balance will be payable to the surviving blind
account holder.

3.2.12 Dormant & inoperative account

All current accounts, which have not been operated upon for six months or
all saving accounts which have not been operated upon for one year shall
classify as ‘’Dormant account’’. All current account s, which have not been
operated upon for two years or all saving accounts, which have not been
operated upon for three year shall classify as ‘’Inoperative account’’.

3.2.13 Minor’s accounts

That person who has not up till attained the age of 18years is considered as
minor. Under section 11 of contract act, 1872 minor is incompetent to enter
into contract. Therefore in bank, contract with minor is avoided. There are
two types of minor’s account.

21
3.2.13.1 According to will of guardian
Bankers in Pakistan allow minor to open to an account but on the request of
his guardian. Title of account remain s on the name of both guardian &
minor Until age of 18 year minor cant made transaction, after 18 year both
can do transactions.

3.2.13.2 after death of guardian

In case of death of account holder the credit balance in his account will be
payable to his legal heirs. They have to prove themselves through court.
Bank will present the details of his account in court. If any one of them is
minor then he will not be given balance. His account will be opened in the
Bank according to orders of court and Senior Civil Judge will be guardian
of account until he attained the age of majority. After that he can withdraw
money from the account.

3.3 Problems in personal account

3.3.1 Lunacy of customers

A customer who is incapable of understanding, is of unsound mind
cannot enter into contract with the banker as a customer.

3.3.2 Death of customer

In the event of death of an account holder, the credit balance, in any
account, in the name of an individual will be payable to the legal heirs of
the deceased individual account holder If the account is in the name of two
or more persons operated jointly the credit balance will be payable to the
legal heirs of the deceased account holders along with the remaining
account holders.

3.4 Advances department

The objective of Advances Department is”. To facilitate people by giving
short term and long term loans on easy terms and conditions”. The main

22
function of this Department is to take surplus money from the people at low
rates and lend this money to borrowers at high rates to earn profit. This
section is back born of bank. 50% of earning of bank comes from advance
department. Profitability depends on advances

3.5 Types of financing

There are two types of financing .

3.5.1 Long term finance;

 Which are for 5years or more than 5 Years.
 House building finance
 NBP advance salary
 Motor car loan
 Agriculture development loan
 Project financing
 Staff loan

3.5.2 Short term finance

 Which are for one year.
 Gold finance
 Cash finance
 Running finance

3.5.2.1 Gold finance

 Facility of Rs 1000 against 1 gm of gold.
 No maximum limit of cash.
 Mark-up 15.5% per annum.
 Repayable after one year. (Lump sum).
 Loan is given on net weight.
 Minimum on 12 g loan is sanctioned.

23
  If after one year no capacity to repay then loan can be rescheduled
by paying mark-up for one more year.
 One person cannot take additional loan on other grams of gold with
same name.
 If after one year payment is not made to bank. Bank send 3 notice to
borrower
 Again if he doesn’t reply to notice. Case will be sent to the court.
Court will give gold to bank and will order the borrower to pay
mark-up.

ii) Cash finance

It is a very common form of borrowing by business concern, commercial
concern, and industrial concern. A borrower is granted an advance up to a
certain limit against securities such as pledge of goods and mortgage
securities. Borrower pay markup only on the amount which is actually
utilized. It is granted on long term basis. Cash Finance is not available in
Abbottabad , only in big cities Bank has its own lock on warehouses.
Industries can’t reduce stock without the permission of bank. If he wants to
use the stock, the bank person will visit along with him. When stock
reduces he will pay the loan. Loan is sanction for one year. After one year it
can be renewed. Markup is paid in quarterly.

3.5.2.2 Running finance

 In running finance property is kept as mortgage or any security.
(certificate)
 The 85% loan is given because more liquid as property in the name
of bank.
 Running finance is given for one year.
 In running finance multi transaction are allowed.
 He is given a check book.
 In one year he can with draw & deposit amount several time but
cant exceed the loan limit.

24
3.5.2.3 Long term finance
3.5.2.4 Advance salary
 20 months salaries in advance.
 Minimum documentation.
 Repayable in 5 Year (60 months).
 Mark up 20% markup is paid monthly.
 Before 18%, The new ratio is applied on loan taken after
01/07/2010
 Loan sanction authority to different grade officers is
 Grade 1 : 2 lacks
 Grade 2 : 1 lack 50 thousand

3.6 Western union

It is private not govt. (a kind of Hundi).On the spot cash payment is
made.No compulsion of account.10 Digits MTCN (Money transfer control
number) is allotted. On which payment is done.It can be taken any where in
Pakistan by showing the number.Receiver has to show any one of following
in order to receive money.Original I.D. card.Original Driving
license.Original Passport.Duplicate or photo state is not accepted.

3.7 Clearing department

3.7.1 Clearing house

From many years there was clearing house in national bank of
Pakistan Main branch Abbottabad . The agents of banks who were members
of clearing house daily gather 2 times in a day and exchange the checks for
clearance with each other.

3.7.2 NIFT (National institutional facilitation technology)

Now NIFT private ltd company is performing clearing functions for
banks.There office is at Abbott Abad. In this case the banks are in loss.
Before banks cut charges from parties account. But now they can’t do so.

25
NIFT charges 8 Rs per instrument from bank, which bank can not deduct
from party’s account. Now it is advantage for party.
Procedure
The agent of NIFT visits 3times a day.In morning he brings cheque
which is drawn on NBP Main branch Abbottabad .After 2- hours he visits
again to take back if any cheque, draft or Government receipt is to be
returned with objection.In eve he visits to take cheque for next day
clearance from other banks. Which he will present to them in next
morning.All cheque of other banks are kept in a bag which is sealed with a
specific seal no.

3.7.2.1 In-Word Clearing Books

The bank uses this book for the purpose of recording all the cheque
that are being received by the bank in the first clearing. All details of the
cheque are recorded in this book.

3.7.2.2 Out-Word Clearing Book

The bank uses outward clearing register for the purpose of recording
all the details of the cheque that the bank has delivered to other banks.

3.8 Foreign exchange department

In foreign exchange customer can open account in 3 currencies.US
Dollar code 40.Uk Pound code 30.Euro code 51.Three Banks which
deal NBP transactions of F.C are.NBP New York deals the transactions of
dollar..United National Bank London (UNB) deal Pound.Same procedure
of opening account like in Pakistan Rs.Here minimum balance required is
1000$.If less then monthly $3 as services charges will be deducted.If
account is opened in any other foreign currency then amount will be
converted in $ to deduct charges.

26
3.9 Types of Cheque
Bankers in Pakistan deal with three types of cheque

3.9.1 Bearer Cheque

Bearer cheque is cashable at the counter of the bank. These can also
be collected through clearing.

3.9.2 Order cheque

These types of cheques are also cashable on the counter but its
holder must satisfy the banker that he is the proper man to collect the
payment of the cheque and he has to show his identification. It can also be
collected through clearing.

3.9.3 Crossed Cheque

These cheque are not payable in cash at the counters of a banker. It
can only be credited to the payee’s account. If there are two persons having
accounts at the same bank, one of the account holder issues a cross-cheque
in favor of the other account holder. Then the cheque will be credited to the
account of the person to whom the cheque was issued and debited from the
account of the person who has actually issued the cheque.

3.9.4 Payment of Cheque

It is a banker’s primary contract to repay money received for his
customer’s account usually by honoring his cheques. It is a contractual
obligation of a banker to honor his customer’s cheques if the following
essentials are fulfilled.
 Cheques should be in a proper form:
 Cheque should not be crossed:
 Cheque should be drawn on the particular bank:
 Cheque should not mutilated:
 Funds must be sufficient and available:

27
3.10 Remittance department
Remittance means a sum of money sent in payment for something.
This department deals with either the transfer of money from one bank to
other bank or from one branch to another branch for their customers. NBP
offers the following forms of remittances.
 Demand Draft
 Telegraphic Transfer
 Pay Order
 Mail Transfer

3.11 Demand draft (Dd)

It is the safe mode to transfer money. Customer has to fill in DD slip
in which following items are written in favors of which one wants to
make the draft, Amount, exchange and total amount. Then he has to
write his address and put signature on it. Customer will deposit
amount then draft will be prepared and given to him.

3.11.1 Charges for Issuance of DD

Up to Rs.100, 000/- 0.10% Minimum Rs.50/-
Up to Rs.1, 000,000/- 0.05% Minimum Rs.100/-
Over Rs.1, 000,000/- 0.04% Minimum Rs.400/-
paying bank for the payment of a specified amount of money. Account
holder and non account holder both can send MT. MT can only be issued to
NBP branches.

3.12 Telegraphic transfer (TT)

Telegraphic transfer is the quickest method of making remittances.
Telegraphic transfer is an order by telegram to a bank to pay a specified
sum of money to the specified person. TT can be sent only to NBP
branches. The receiver must have an account in the bank where TT is sent.
If account is not in branch where TT has sent then the responding branch

28
will prepare TT payment order and will send to the address of the receiver
but it will take time and benefits of TT will not be availed

3.13 computer department

The objective of this Department is to facilitate customers in payment of
their cheques”. The main functions performed by this department are:
 Checking balance.
 Deduction from balance on clearing cheque.
 Issuing bank statements.
 Dealing Western Union.

3.14 Establishment department

This department mainly deals with the branch employees. The main
objective of this department is to” To regulate bank business”. Main
functions of this department are:
 Keeps the record of attendance of employees.
 Employee’s salaries distribution.
 Employee’s bonuses etc.

29
 CHAPTER 4
ANALYSIS OF NBP

4.1 Financial Analysis

Financial analysis (also referred to as financial statement analysis or
accounting analysis or Analysis of finance) refers to an assessment of the
viability, stability and profitability of a business, sub-business or project.

Typically, financial analysis is used to analyze whether an entity is stable,

solvent, liquid, or profitable enough to be invested in. When looking at a
specific company, the financial analyst will often focus on the income
statement, balance sheet, and cash flow statement.

4.1.1 Vertical analysis

Common size analysis expresses comparisons in percentages. It includes
vertical analysis and horizontal analysis .Vertical analysis compares each
amount with a base amount elected from the same year. Horizontal analysis
compares each amount with a base amount for a selected base year.

2018 2017
2018 % 2017 %
Assets
Cash and Balances with
treasury bank 247917421 8.8% 160405083 6.4%
Cash and Balances with
other bank 13049725 0.5% 26992279 1.1%
Lending to financial
Institution 106391667 3.8% 26916113 1.1%
128497450 129653706
Investments 6 45.8% 4 51.6%
Advances 926339789 33.0% 740344934 29.5%
Fixed Assets 54338676 1.9% 32671800 1.3%

30
 Intangable Assets 856900 0.05% 1150437 0.08%
Defferd tax Assets 0.05% 7342482 0.37%
other Assets 170017572 6.1% 219091687 8.7%
280388625 100.0 251145187 100.0
6 % 9 %
Liabilities 0.0% 0.0%
Bills Payable 9944178 0.4% 13195055 0.5%
Borrowings 392739396 14.0% 360105674 14.3%
201131262 172705924
Deposits & Other Accounts 5 71.7% 6 68.8%
Liabilities against asset
subject to F.lease 121077 0.03% 56799 0.03%
Deferred tax liabilities 6945767 0.2% 0.0%
other liabilities 171761918 6.1% 231359391 9.2%
259282496 233177616
1 92.5% 5 92.8%
Net Assets 211061295 7.5% 179675714 7.2%

Represented by
Share Capital 21275131 0.8% 21275131 0.8%
Reserves 53442643 1.9% 49887328 2.0%
Surplus on revaluation of
assets 59262177 2.1% 49632435 2.0%
Unappropriated profit 76239599 2.7% 58069393 2.3%
210219550 7.5% 178864287 7.1%
Non-controling interest 841745 0.03% 811427 0.04%
211061295 7.5% 179675714 7.2%
Table 2 Verical analysis of balance sheet

Interpretation

Vertical analysis is the proportional analysis of a financial statement, where

each line item on a financial statement is listed as a percentage of another

31
item. Typically, this means that every line item on an income statement is
stated as a percentage of gross sales, while every line item on a balance
sheet is stated as a percentage of total assets.

The most common use of vertical analysis is within a financial statement

for a single time period, so that one can see the relative proportions of
account balances. Vertical analysis is also useful for timeline analysis, to
see relative changes in accounts over time, such as on a comparative basis
over a five-year period. For example, if the cost of goods sold has a history
of being 40% of sales in each of the past four years, then a new percentage
of 48% would be a cause for alarm.

The major components in the balance sheet of banks are deposits, advances
and investments.

Cash and Balances with treasury bank increased 8.8% than the previous
year While in 2017 it was 6.4%. Cash and Balances with other bank
Decreased 0.5% than the previous year While in 2017 it was 1.1%. Lending
to financial Institution increased 3.8% than the previous year While in 2017
it was 1.1%.
Investments Decreased 45.8% than the previous year While in 2017 it was
51.6%. Advances increased 33.0% than the previous year While in 2017 it
was 29.5%.
Fixed Assets increased 1.9% than the previous year While in 2017 it was
1.3%. Intangable Assets Decreased 0.05% than the previous year While in
2017 it was 0.08%.
Defferd tax Assets Decreased 0.05% than the previous year While in 2017
it was 0.37% other Assets Decreased 6.1% than the previous year.
While in 2017 it was 8.7% .Bills Payable Decreased 0.4% than the previous
year While in 2017 it was 0.5%. Borrowings Decreased 14.0% than the
previous year While in 2017 it was 14.3%. Deposits & Other Accounts
increased 71.7% than the previous year While in 2017 it was 68.8%.
Liabilities against asset subject to F.lease Did not increased 0.03% than the
previous year While in 2017 it was 0.03%. Deferred tax liabilities increased

32
0.2% than the previous year While in 2017 it was 0.0%. other liabilities
Decreased 6.1% than the previous year While in 2017 it was 9.2%.
Total Liabilities Decreased 92.5% than the previous year While in 2017 it
was 92.8%. Net Assets increased 7.5% than the previous year While in
2017 it was 7.2%. Share Capital Did not increased 0.8% than the previous
year While in 2017 it was 0.8%. Reserves Decreased 1.9% than the
previous year While in 2017 it was 2.0%. Surplus on revaluation of assets
increased 2.1% than the previous year. While in 2017 it was 2.0%
Unappropriated profit increased 2.7% than the previous year While in 2017
it was 2.3% .Non-controling interest Decreased 0.03% than the previous
year While in 2017 it was 0.04%. Equity increased 7.5% than the previous
year While in 2017 it was 7.2%
4.1.2 Horizontal Analysis of NBP`s Balance sheet

2017 Vs
2018 2017 2018%
Assets
Cash and Balances with treasury
bank 247917421 160405083 54.6%

Cash and Balances with other bank 13049725 26992279 -51.7%

Lending to financial Institution 106391667 26916113 295.3%

Investments 1284974506 1296537064 -0.9%

Advances 926339789 740344934 25.1%

Fixed Assets 54338676 32671800 66.3%

Intangable Assets 856900 1150437 -25.5%

Defferd tax Assets 7342482 -100.0%

33
 other Assets 170017572 219091687 -22.4%

2803886256 2511451879 11.6%

Liabilities

Bills Payable 9944178 13195055 -24.6%

Borrowings 392739396 360105674 9.1%

Deposits & Other Accounts 2011312625 1727059246 16.5%

Liabilities against asset subject to
F.lease 121077 56799 113.2%

Deferred tax liabilities 6945767

other liabilities 171761918 231359391 -25.8%

2592824961 2331776165 11.2%

Net Assets 211061295 179675714 17.5%

Represented by

Share Capital 21275131 21275131 0.0%

Reserves 53442643 49887328 7.1%

Surplus on revaluation of assets 59262177 49632435 19.4%

Unappropriated profit 76239599 58069393 31.3%

210219550 178864287 17.5%

Non-controling interest 841745 811427 3.7%

211061295 179675714 17.5%
Table 3 Horizontal analysis of balance sheet

34
Interpretation

Horizontal analysis of the balance sheet is also usually in a two-year

format, such as the one shown below, with a variance showing the
difference between the two years for each line item. An alternative format
is to add as many years as will fit on the page, without showing a variance,
so that you can see general changes by account over multiple years. A less-
used format is to include a vertical analysis of each year in the report, so
that each year shows each line item as a percentage of the total assets in
that year.

Financial statement analysis is an evaluative method of determining the

past, current and projected performance of a company. Several techniques
are commonly used as part of financial statement analysis
including horizontal analysis, which compares two or more years of
financial data in both dollar and percentage form; vertical analysis, where
each category of accounts on the balance sheet is shown as a percentage of
the total account; and ratio analysis, which calculates statistical
relationships between data.

The horizontal analysis shows that in the year 2018 Cash and Balances with
treasury bank increased 54.6%. Cash and Balances with other bank
decreased -51.7%. Lending to financial Institution increased 295.3%.
Investments decreased -0.9%. Advances increased 25.1%. Fixed Assets
increased 66.3%. Intangable Assets decreased -25.5%. Defferd tax Assets
decreased -100.0%. other Assets decreased -22.4%. Total Assets increased
11.6%.
Bills Payable decreased -24.6%. Borrowings increased 9.1%. Deposits &
Other Accounts increased 16.5%. Liabilities against asset subject to F.lease
increased 113.2%. Deferred tax liabilities other liabilities Decreased -
25.8%. Total liabilities increased 11.2%.
Net Assets increased 17.5%. Share Capital increased 0.06%. Reserves
increased 7.1%. Surplus on revaluation of assets increased 19.4%.

35
Unappropriated profit increased 31.3%. Non-controling interest increased
3.7%. Equity increased 17.5%.

4.1.3 Horizontal Analysis of Income Statement

2017 vs
2018 2017 2018
Profit After Taxaion 20035300 23345862 -14%
Exchange gain on Translation 1553803 1553454 0%
Movement in surplus (Revaluation
investment) 10362093 7605970 36%
8808290 6052516 46%
remeasurement Gain 155785 2755579 -94%
Movement in Surplus (revaluation F.A) 20261759
Movement in surplus (Revaluation Non-
Banking Assets) 167095 1047510 -84%
20250449 1708069 1086%
Total Comprehensive Income 31477459 15585277 102%
Total Comprehensive Income Attribute
to:
Shareholders of the Bank 31355263 15419944 103%
Non-Controlling interest 122196 165333 -26%
31477459 15585277 102%
Table 4 horizontal analysis of income statement

Interpatition
Horizontal analysis of financial statements involves comparison of a
financial ratio, a benchmark, or a line item over a number of accounting
periods. This method of analysis is also known as trend analysis. Horizontal
analysis allows the assessment of relative changes in different items over
time. It also indicates the behavior of revenues, expenses, and other line
items of financial statements over the course of time.

36
Accounting periods can be two or more than two periods. Accounting
period can be a month, a quarter or a year. It will depend on the analyst’s
discretion when choosing an appropriate number of accounting periods.
During the investment appraisal, the number of accounting periods for
analysis is based on the time horizon under consideration.

Profit After Taxaion decreased -14%. Exchange gain on Translation is

same 0%. Movement in surplus (Revaluation investment) increased 36%.
remeasurement Gain decreased -94%. Movement in surplus (Revaluation
Non-Banking Assets) decreased -84%. Total Comprehensive Income
increased 102%. Shareholders of the Bank increased 103%. Non-
Controlling interest decreased -26%.

Horizontal analysis of financial statements can be performed on any of the

item in the income statement, balance sheet and statement of cash flows

An income statement is a financial statement that reports a

company's financial performance over a specific accounting period.
Financial performance is assessed by giving a summary of how the
business incurs its revenues and expenses through both operating and non-
operating activities. It also shows the net profit or loss incurred over a
specific accounting period.

The income statement is divided into two parts: operating and non-
operating. The operating portion of the income statement discloses
information about revenues and expenses that are a direct result of regular
business operations. For example, if a business creates sports equipment, it
should make money through the sale and/or production of sports
equipment. The non-operating section discloses revenue and expense
information about activities that are not directly tied to a company's regular
operations. Continuing with the same example, if the sports company sells
real estate and investment securities, the gain from the sale is listed in the
non-operating items section.

A horizontal analysis, or trend analysis, is a procedure in fundamental

analysis in which an analyst compares ratios or line items in a

37
company's financial statements over a certain period of time. The analyst
uses his discretion when choosing a particular timeline; however, the
decision is often based on the investing time horizon under consideration.

4.1.4Vertical Analysis of Income Statement

2018 2017
Profit After Taxaion 20035300 100% 23345862 100%
Exchange gain on Translation 1553803 8% 1553454 7%
Movement in surplus (Revaluation
investment) 10362093 52% 7605970 33%
8808290 44% 6052516 26%
remeasurement Gain 155785 1% 2755579 12%
Movement in Surplus (revaluation
F.A) 20261759 101% 0%
Movement in surplus (Revaluation
Non-Banking Assets) 167095 1% 1047510 4%
20250449 101% 1708069 7%
Total Comprehensive Income 31477459 157% 15585277 67%
Total Comprehensive Income
Attribute to: 0% 0%
Shareholders of the Bank 31355263 157% 15419944 66%
Non-Controlling interest 122196 1% 165333 1%
31477459 157% 15585277 67%
Table 5 vertical analysis of income statement

Interpatition
Horizontal analysis of financial statements involves comparison of a
financial ratio, a benchmark, or a line item over a number of accounting
periods. This method of analysis is also known as trend analysis. Horizontal
analysis allows the assessment of relative changes in different items over
time. It also indicates the behavior of revenues, expenses, and other line
items of financial statements over the course of time.

38
Accounting periods can be two or more than two periods. Accounting
period can be a month, a quarter or a year. It will depend on the analyst’s
discretion when choosing an appropriate number of accounting periods.
During the investment appraisal, the number of accounting periods for
analysis is based on the time horizon under consideration.

Horizontal analysis of financial statements can be performed on any of the

item in the income statement, balance sheet and statement of cash flows

An income statement or profit and loss account statement of profit or

loss, revenue statement, statement of financial performance, earnings
statement, operating statement, or statement of operations) is one of
the financial statements of a company and shows the
company’s revenues and expenses during a particular period. It indicates
how the revenues (money received from the sale of products and services
before expenses are taken out, also known as the “top line”) are
transformed into the net income (the result after all revenues and expenses
have been accounted for, also known as “net profit” or the “bottom line”).
The purpose of the income statement is to show managers and investors
whether the company made or lost money during the period being reported.
One important thing to remember about an income statement is that it
represents a period of time like the cash flow statement. This contrasts with
the balance sheet, which represents a single moment in time.

4.1.5 Ratio Analysis

Ratio analysis is the most commonly used analysis to judge the financial
strength of a company. It is a quantitative relation between two magnitudes
of the same kind. This comparison allows the firm to detect major operating
differences. the main categories of ratios are.

Current ratio

The current ratio is a liquidity and efficiency ratio that measures a firm's
ability to pay off its short-term liabilities with its current assets. The current

39
ratio is an important measure of liquidity because short-term liabilities are
due within the next year.
This means that a company has a limited amount of time in order to raise
the funds to pay for these liabilities. Current assets like cash, cash
equivalents, and marketable securities can easily be converted into cash in
the short term. This means that companies with larger amounts of current
assets will more easily be able to pay off current liabilities when they
become due without having to sell off long-term, revenue generating assets.

The current ratio is calculated by dividing current assets by current

liabilities. This ratio is stated in numeric format rather than in decimal
format. Here is the calculation:

Current Ratio
Current Assets = Cash + balances with other banks+Investments
Current Liabilities = Bill payable+borrowings+deposits+sub-ordinated
loan
Assets 2017=
160085598+14395805+121709399=296190802
Current Libalities 2017=
10187250+44863930+1657132405=1712183585
Assets 2018=
16080735+26992279+26916113=213989127
Current Liabilities 2018=
13195055+360105674+1727059246=2100359975
Current Ratio =

CURRENT ASSET/CURRENT LIABILITIES

CURRENT ASSET/CURRENT
YEARS LIABILITIES RESULT
2018 213989127/2100359975 0.10

2017 296190802/1712183585 0.17

40
Interpretation
Current ratio showed a huge decrease in the year 2018 to 0.10% from the
last year’s 0.17% which is a good sign for the organization
5
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
2018 2017

Net Working Capital

Net working capital is a liquidity calculation that measures a company’s

ability to pay off its current liabilities with current assets. This
measurement is important to management, vendors, and general creditors
because it shows the firm’s short-term liquidity as well as management’s
ability to use its assets efficiently.
Much like the working capital ratio, the net working capital formula
focuses on current liabilities like trade debts, accounts payable, and vendor
notes that must be repaid in the current year. It only makes sense the
vendors and creditors would like to see how much current assets, assets that
are expected to be converted into cash in the current year, are available to
pay for the liabilities that will become due in the coming 12 months.
If a company can’t meet its current obligations with current assets, it will
be forced to use its long-term assets, or income producing assets, to pay off
its current obligations. This can lead decreased operations, sales, and May
even be an indicator of more severe organizational and financial problems.

41
The net working capital formula is calculated by subtracting the current
liabilities from the current assets. Here is what the basic equation looks
like.
Assets 2017=
160085598+14395805+121709399=296190802
Current Liabilities 2017=
10187250+44863930+1657132405=1712183585
Assets 2018=
16080735+26992279+26916113=213989127
Current Liabilities 2018=
13195055+360105674+1727059246=2100359975

NET WORKING CAPITAL =

CURRENT ASSETS –CURRENT LIABILITIES

YEARS CURRENT ASSETS –CURRENT RESULT

LIABILITIES
2018 213989127-2100359975 188637084
2017 296190802-1712183585 1415992783

Interpretation
The calculation of this ratio show that net working capital in 2018 was Rs.
188637084 while in 2017 it is Rs. 141599783

5
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
2018 2017

42
Debt to Equity Ratio
The debt to equity ratio is a financial, liquidity ratio that compares a
company's total debt to total equity. The debt to equity ratio shows the
percentage of company financing that comes from creditors and investors.
A higher debt to equity ratio indicates that more creditor financing (bank
loans) is used than investor financing (shareholders).

The debt to equity ratio is calculated by dividing total liabilities by total

equity. The debt to equity ratio is considered a balance sheet ratio because
all of the elements are reported on the balance sheet.
DER = TOTAL LIABITIES/TOTAL EQUITY

YEARS TOTAL LIABITIES/TOTAL RESULT

EQUITY
2018 2196340695/179675714 12.2
2017 1801277896/180138666 9.9

Interpretation
Debt to equity ratio for the year 2018 is 12.2% while it increased in the
current year 2017 to 9.9, due to increase in the liabilities

5
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
2018 2017

Debt Ratio

Debt ratio is a solvency ratio that measures a firm's total liabilities as a

percentage of its total assets. In a sense, the debt ratio shows a company's

43
ability to pay off its liabilities with its assets. In other words, this shows
how many assets the company must sell in order to pay off all of its
liabilities.
This ratio measures the financial leverage of a company. Companies with
higher levels of liabilities compared with assets are considered highly
leveraged and more risky for lenders.
This helps investors and creditors analysis the overall debt burden on the
company as well as the firm's ability to pay off the debt in future, uncertain
economic times.
The debt ratio is calculated by dividing total liabilities by total assets. Both
of these numbers can easily be found the balance sheet. Here is the
calculation:

DEBT RATIO = TOTAL LIABILITIES/ TOTAL ASSETS

YEARS TOTAL LIABILITIES/ TOTAL RESULT
ASSETS

2018 2196340695/2376016409 0.8

2017 1801277896/1981416562 0.9

Interpretation
Debt ratio slightly decreased in 2018 as compare to 2017 it was 0.8 % in
2017 it decline to 9 %.
5
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
2018 2017

44
Equity Ratio
The equity ratio is an investment leverage or solvency ratio that measures
the amount of assets that are financed by owners' investments by
comparing the total equity in the company to the total assets.
The equity ratio highlights two important financial concepts of a solvent
and sustainable business. The first component shows how much of the total
company assets are owned outright by the investors. In other words, after
all of the liabilities are paid off, the investors will end up with the
remaining assets.
The second component inversely shows how leveraged the company is with
debt. The equity ratio measures how much of a firm's assets were financed
by investors. In other words, this is the investors' stake in the company.
This is what they are on the hook for. The inverse of this calculation shows
the amount of assets that were financed by debt. Companies with higher
equity ratios show new investors and creditors that investors believe in the
company and are willing to finance it with their investments.

The equity ratio is calculated by dividing total equity by total assets. Both
of these numbers truly include all of the accounts in that category. In other
words, all of the assets and equity reported on the balance sheet are
included in the equity ratio calculation.
EQUITY RATIO = TOTAL EQUITY/TOTAL ASSETS

YEARS TOTAL EQUITY/TOTAL ASSETS RESULT

2018 179675714/2376016409 0.07
2017 180138666/1981416562 0.09

Interpretation
Equity ratio for the year 2018 is 0.07% and in 2017 it is 0.09% which means it
slightly decreased than the year 2018 in current year which is a good sign.

45
 5
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
2018 2017

Return on Assets Ratio - ROA

The return on assets ratio, often called the return on total assets, is a
profitability ratio that measures the net income produced by total assets
during a period by comparing net income to the average total assets. In
other words, the return on assets ratio or ROA measures how efficiently a
company can manage its assets to produce profits during a period.
Since company assets' sole purpose is to generate revenues and produce
profits, this ratio helps both management and investors see how well the
company can convert its investments in assets into profits. You can look at
ROA as a return on investment for the company since capital assets are
often the biggest investment for most companies. In this case, the company
invests money into capital assets and the return is measured in profits.

In short, this ratio measures how profitable a company's assets are.

The return on assets ratio formula is calculated by dividing net income by

average total assets.
ROA = Average total assets = Current year assets + previous year Assets /
2
2376016409+1981416562/2=2178716485

YEARS NET INCOME / AVERAGE RESULT

TOTAL ASSETS
2018 22,143,737 /2178716485 5.4
2017 19,789,680 /2178716485 1.18

46
 5
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
2018 2017

Interpretation
This ratio for both years 2018it is 5.4% 2017 is 1.18%. which is a good
sign for the firm it should always increase than the previous year

Net Interest Margin:

Net interest margin (NIM) is a measure of the difference between the
interest income generated by banks or other financial institutions and the
amount of interest paid out to their lenders, relative to the amount of their
assets. It is similar to the gross margin of non-financial companies
NIM = Interest Expenses / Interest Income

Interest Expenses / Interest

Years Income

2018 68820000/54253000 1.26

2017 59578000/54824000 1.0

Interpretation
This ratio examines how successful a firm's investment decisions are
compared to its debt situations. The interest margin ratio in 2017 is

47
decreased as compared to 2018 good sing for the bank, because investment
decisions are well planned.
5
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
2018 2017

Earning Asset to total assets

An asset that produces money for a company without any work needing to
be done. Earning assets include such things as loan, Lease, stocks, bonds,
certificates of deposit, and generally anything that earns interest or
dividends.
Earning assets include loan, Lease, investment securities and money market
assets. This ratio show that the contribution of these assets to total assets.
Earning assets = Interest Earned/Total Assets

Interest Earned/Total
Years Assets
2018 123073000/2376016409 0.06
2017 1144403000/1981416562 0.05

Interpretation
The ratio of earning to total assets in 2017 is 0.05 and in 2018 it is 0.06
which is almost increase could be favorable for the bank.

48
 5
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
2018 2017

Return on Earning Assets.

An indicator of how profitable a company is relative to its earning
assets. ROEA gives an idea as to how efficient management is at using its
assets to generate earnings.
ROEA = Net income/interest income

Years Net income/interest income

2018 23028000/54253000 0.42

2017 22752000/54824000 0.41

Interpretation
Return on earning assets is decreases in 2017 as compared to previous year,
due to good management of NBP showing favorable trend.
5
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
2018 2017

49
Equity to Total Assets.
The equity to debt ratio show how much NBP have equity out of total
assets.
DEBT RATIO = EQUITY/TOTAL ASSETS
YEARS EQUITY/TOTAL ASSETS
2018 179675714/2376016409 0.10
2017 180138666/1981416562 0.09

Interpretation.
This ratio shows the ownership of the bank. In 2018 it is 0.10 and 2017 it is
0.09 which shows in 2018bank equity are increase.
5
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
2018 2017

Non Performing Loan to Total Loan

NPL, are loans that are no longer producing income for the bank that owns
them. Loans become nonperforming when borrowers stop making
payments and the loans enter default. The exact classification can vary from
institution to institution, but a loan is usually considered to be
nonperforming after it has been in default for three consecutive months.
Credit to Deposit ratio (CD ratio)
CD ratio = ADVANCES/ DEPOSITS

50
 YEARS ADVANCES/ DEPOSITS
2018 740344934/1727059246 0.42
2017 668883928/1657132405 0.40
interpretation.
credit to deposit ratio shows how much bank uses deposit to advances. In
2018 bank use 0.42% deposit for advances and in 2017 bank use 0.40%
deposit for advances.
5
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
2018 2017

51
4.2 SWOT ANALYSIS
The word “SWOT” stands for strengths, weakness, opportunities and
threats respectively. SWOT analysis is a tool with the help of which we can
measure the performance and the prevailing condition of an organization.
In SWOT analysis we can easily identified the problem facing by the
organization and its remedial actions.
The SWOT analysis is used to focus NBP’s business to enhance strengths
and eliminate weakness, take advantage of opportunities edge against
threats.

4.2.1 strengths
1 NBP is one of the oldest banks of Pakistan therefore people have
confidence on that bank. It is the largest commercial bank in
Pakistan with a network of over 1199 branches inside the country in
which there are 9 RHQ and 40 zonal offices and one subsidiary in
17 different countries.
2 It has a pleasant working environment as compare to other bank
branches in the area.
3 It provides many facilities to its employees. Like provide interest
free loans for different purposes.
4 It provides loan facilities to its general client against jewelry.(Gold)
5 Provision of different types of officers loan of 4% mark up lower
staff is given spend benefits. They are given loan to four lacks
without interest. Bank staff is also given three types of bonuses in
every year i.e. on Eid-ul-Fittar, Eid-ul-Azha and the last one is
given annually.
6 Highest profitability
7 It deals in almost all the affairs of the government.
8 In order to give loan to the farmers they provide special services
while rendering the loan.
9 NBP open different branches in rural areas in order to facilitate the
farmers.

52
 10 It Provides loan named as NBP (SAIBBAN) for the construction of
houses to the salaried persons.
11 Provide 15 advance salary packages to the needy people.
12 Act as an agent of SBP.
13 Staff College is also the part of the national bank of Pakistan; it
helps the trainee to get some practical knowledge.
14 Not a tough competition, because it is nationalized bank.
15 Highest deposits.
16 Staff gives the importance to internees.
17 The attitude of the staff with internees and customers is very
cooperative.

4.2.2 Weaknesses
1 Complaint of the customer is not taken into consideration. It
hampers the image of the bank.
2 During the rush hours due to the lack of staff, clients wait for their
turn for long time.
3 Marketing efforts are not make to promote the bank.
4 Common people didn’t have the knowledge about the polices and
new packages of the national bank of Pakistan.
5 NBP is under the political pressure.
6 It is a nationalized bank, so the government influence is very much
in the management of national bank of Pakistan.
7 Favoritism and nepotism during appointment, transfer, promotion,
and increments.
8 No job rotation according to rules and regulation.
9 The number of branches of NBP is decreasing every year.
10 Poor quality counters service during the rush hours.
11 Lack of scheme and projects to invest the money.
12 Limited staffing and no adequate span of management.
13 Unequal distribution of work.
14 No much use of computer as it is required.

53
 15 No library for internees as well as students to get the relevant
material.
16 Delay in decision making.
17 No note counting machine.
18 No online banking system.
19 Employee does not follow the basic rules and regulation of banking.

4.2.3 Opportunities of NBP

19 Location of the branch is very suitable place.
20 Near to all major business owners.
21 NBP is the only bank which is providing facilities of collecting
from 9.00am to 5.00pm.
22 Better management.
23 Provide many utility services.
24 Micro financing scheme for the farmers and NBP also provides
monthly income to the pensioners.
25 Introduction of new technology and electronic banking.
26 Introduction of new financial scheme with higher rate in order to
attract the customers.

4.2.4 Threats
1 National bank is the only Government bank so there is political
interference time to time and every political government wants to
impose its own policies.
2 The bank cannot introduce the various earning schemes like (Allied
Bank kar Amad scheme, Muhafiz travelers Cheque HBL etc).
3 In area there are also other bank present (like HBL, UBL) employee
and most of the employee are under graduate and graduate.
4 There is also an interest policy present in the bank.
5 Sanctions imposed against Pakistan will affect exchange business
where as the freezing of account by SBP have also caused problems
for NBP.

54
6 Rapidly growing business of other foreign banks and expansion of
their brands networks in the country.
7 Strike regulation by the government and credit facilities to the
customers as well as to meet the production regulators.
8 Lack of public confidence to open foreign currency account NBP
due to political instability due to tear of economic sanctions on the
country

55
 CHAPTER 5
CONCLUSION AND RECOMMENDATIONS

5.1 Conclusion
The findings are the facts that we discover from the analysis of an
organization and in the light of those findings we give the suggestion,
which are realistic and adoptable for the organization. After critically
analyzing both the operations and financial data of National Bank, let me
summarize the findings of the report.

Here, few finding and implementation plans are given to overcome the
problems mentioned in the previous chapter. These analysis are mainly
based on my practical working & experience at the NBP during internship.

I have divided this section in four parts which are as under.

 Problems at the branch.

 Function analysis.
 Administrative analysis.
 Personal management’s analysis.

PROBLEMS AT THE BRANCH

Customer Satisfaction

In NBP customer dealing is will, but during rush hour the customer has to
wait for a long time for their turn. It’s quite hard for a new customer or
potential customer to get the required information.

Poor record management and filing system

During my internship I observed that filing system of branch is not good.

When certain record is needed the staff has to struggle to find it out and a

56
lot of time is wasted both by the staff and customer as well also old filing
and registering system are being used yet.

Unequal distribution of work

Work is not equally distributed. On one hand some employee have to work
all day without relaxing while some others have nothing to do at all. This
not only creates confusion among employees but also hurting and
disturbing for overall setup of the bank. And above all it results in
dissatisfaction among customers as well.

Marketing efforts

A useful mode of contact is through personal marketing visits or efforts.

Such visits are important in informing and perusing the existing and
potential customers about the products and creating a sense of
belongingness with them. By this way a branch manager increases their
deposits and creat more advances. The ultimate result is increase in the
bank’s deposits as well as supreme motive that is profitability.

Less staff

Staff of the branch is less and workload is too much on the existing staff.
Due to which they are unable to give proper time to their customers.
Sometimes due to this shortage of time they lose their good customers also
from this shortage of staff they are unable to give proper time to recording
and other functions of the bank.

FUNCTIONAL ANALYSIS

Formal Organization

Formal organization includes the activities of two or more person, which

are cautiously determined groups and coordinated towards a given
objective. It provides base when people are able to communicate with
other, when they have common purpose and they are willing to work.

57
In NBP, we find a formal organization. Bernard referred to an organization
as a formal when the activities of two or more persons are coordinated
towards a given objective. The formal organization comes into being when
people are able to communicate with one another or willing to act and share
a purpose.

In this formal organization of NBP the activities are carried out in a more
formal way. In theoretical terms it provides basis for communication with
one another but in practice it is not exercised because an employee at high
level cannot get straight away to manager or SVP and ask him about of his
problem faced by him, because first he has to talk to his immediate superior
and follow a proper channel of communication.

Difference between theory and practice

A vast difference exists between theory and practice and NBP has written
procedure but practical work done by employees is a bit different from
written procedures.

Bank duty to maintain secrecy.

They don’t care about maintaining secrecy, especially during the rush
hours. They speak loudly about the account position and while getting
clearance of cheque the person can easily get the whole information from
the ledge. The deposit clerk must be careful while passing any cheque. In
this regard another shortfall is in giving the information about the balance
on telephone.

Excessive paper work

It is notified that due to the lengthy procedure of paper work the bank
employee are over burdened. They are unable to give proper attention to the
clients and face difficulties in getting their job done. One reason for lengthy
procedure and excessive paper work in the bank is the lack of computerized
technology.

58
More accounts fewer deposits.

Efficient banking is one, which does not emphasize on number of accounts

but on greater amount of deposits. NBP is more interested in increasing its
number of account irrespective to its deposit. The main reason behind it is
that bank does not provide personalize service to all the account holders
and does not improve its quality and services

Delegation of authority

Manager has very limited authority; he has to take the approval from his
management authority i-e. In case of advance he has to take the approval of
general and regional manager. The other problem is created, when the
manager is not present in his office, the customer having to wait for hours.
This discourages both customer and officers because they have to suffer a
lot

ADMINISTRATIVE ANALYSIS

Job analysis is not effective

Only on the basis of job analysis it can be decided how a right person can
be hired, trained, compensated or promoted. It is very important for an
organization that nature of the job is described and job specifications are
mentioned. Most of the employees are simple graduate and do not have
proper background about their job. This creates problems both for
organization and for the employees. In NBP salaries are given according to
the seniority and grades. People with simple or complex responsibility are
getting the same salary and facilities. This creates dissatisfaction among
employees.

Carelessness in opening of account

When customer comes to open an account, the staff does not bother to
check his/her place phone number and permanent address. It is important

59
because in case of overdraft by mistake or anything which places his
accounts in debit it will be difficult to trace him.

On the other hand he may be involved in any fraudulent activities against

the bank. In this case the bank will be in awkward position.

Lack of specialized training

NBP does not provide adequate facility of specialized training to their staff.
Training is generalized rather than specialized. As the worker finishes his
training, he is inducted into a specific field without having great deal of
knowledge about the field.

In the Hayatabad branch the newly recruited employee training was not
imparted, they all learned things on the job.

Low profit rates

Most of the customers shifted their account to the National Saving Center
because of the low rates of saving deposit discourages the customers. Bank
should increase their profit rates to attract customers.

Poor job rotation.

There is absence of job rotation in NBP Hayatabad branch. A person placed

in one-department remains their forever. It reduces career opportunities as
well boredom and in the end results in career plaguing. Job rotation is very
important for employee especially for those who are newly recruited. The
newly recruit should be rated in all department of the banking in order to
get familiar with working of different departments so that when they get a
responsible position they have know how of the whole system.

Delays in loan advancement

It has been observed that there is much delays in sanctioning of cases from
the head office, which results in customer dissatisfaction.

60
Lack of appreciation

Another very important thing which is ignored in the bank is appreciation if

the employee on their good performance. If hard work and performance of
employees is not recognized and appreciated they become dishearten which
results in decline in performance.

PERSONAL MANAGEMENT ANALYSIS

Need for better training program

Need of training is greatly emphasized all around the world. Training of the
personnel is part of human resource management. It has been noticed that
the training program of NBP is not adequate.

Once the candidate is selected and placed on the respective job. It becomes
essential to train him adequately for the task. They should learn new
methods for motivating customers. The training programmed of the bank
should include scientific techniques to improve the decision-making and
interpersonal as will individual needs of the employee both specialized to
fresh as well as on job to maintain the high standards of service.

Developing Managerial Leadership

Leadership is a practical term of visible, clear on objective and

communicating better control on financial and administrative matters.
Manager is not only responsible for their own units in business, but also in
people terms i.e. training, recruiting, grievance handling and taking
immediate initiative in crisis situation to take major decision affection the
future of the bank and banking community.

Recruitment policy

Human resources are the lifeblood of the organization. If the personnel are
recruited carefully they can become asset to the organization in the case of
carelessness a liability on the organization. Bank is not following its

61
recruitment policy properly due to favoritism, nepotism and political
pressure. Both the top authority and staff union tries their best recruit their
favorites, indulgence of political pressure add salt to the wounds. The
persons selected through these channels are infantile and do not work for
the betterment for the bank.

Promotions

Promotion in NBP is purely on the basis of seniority, so the new young

person having high qualification remains behind for quite a lot of time. Top
management and staff union put pressure for the promotion of their
favorites, which gives a sense of deprivation to the deserving employee and
their efficiency is affected. As the concept of promotion is attached with
better in terms of greater responsibility, more prestige, greater skills and
increased rate of salary. Thus a better and impartial policy of promotion
needs to be followed.

Transfer

Transfer means when a person is shifted from one place to another place. It
is done either that person is needed more on the other branch or for
improving his skill variety. It is the policy of the Bank to transfer each
employee 3 to 4 years.

Marketing at desk

Bank employee come in daily contact with many people who happen to
deal with the casual remittance, travelers cheques, safe custody, pensioners,
depositing license fee and variety of other functions and variety of other
people with whom the Bank has no account or regular business
relationship. The Bank employees are doing very little on their own to
explore the possibilities of selling banking services to them as a marketing
contributor. The entire Bank community should make a conscious effort in
addition to their normal work to explore the possibilities of selling banking
services to them. The market opportunities are hidden in every dealing a

62
banker handles; the question is that if he has the art and urge to seize such
opportunities.

Lack of business communication

There is no proper way to give information to their customer. To avoid this

minor dissatisfaction and tension in the mind of customer, and deficiency of
the service, it is recommended that the bank should provide brochures etc
containing information in details.

Some general information should be placed in information notice board on

the entrance where customer can see it easily or it should be self-attractive.

5.2 Recommendations
NBP is an effectively operating and profit making organization and
carrying out its activities under a specified system of procedure. The main
regulatory body is State Bank of Pakistan, which provides policy guidelines
and ensures that the money market operates on sound professional basis.
While the head office specifies the whole procedure of function and
operations. This procedure has been modernized with the passage of time
with a view to streamline the approach and underlying procedure for
effective overhauling of its own capabilities so as to bring them at par with
international practices.

Here I am giving some suggestions, which in my view can add some input
for efficiency and better performance of NBP as an organization in general
and as a main branch in particular.

The recommendations are as follows:

Professional training

NBP staff lacks professionalism. They lack the necessary training to do the
job efficiently and properly. Although staff colleges in all major cities but

63
they are not performing well. For this purpose these staff colleges should be
reorganized and their syllabus should be made in such a way to help the
employee understand the ever-changing global economic scenario.

Banking council of Pakistan should also initiate some programs to equip

the staff with much needed professional training.

Delegation of authority

Employees of the bank should be given a task and authority and they
should be asked for their responsibility. Gives proper attention to every
work and concern bodies are responsible to delegate the authority to whom
they think that will perform batter.

Performance Appraisal

The manager should strictly monitor the performance of every staff

member especially operation manager of the branch. All of them should be
awarded according to their performance and result in the shape of bonuses
to motivated and incite them to work more efficiently.

To Over Come Problem of Space and Furniture

In the critical analysis this, problem is discussed. To overcome this problem

it is suggested that a special section should be made inside the branch.
Which should only handle the treasury function, salaries and pensions of
federal personnel or the bank should do these functions in the evening time.
Also management should purchase more furniture and arrange them in such
a way which provides maximum space and convenient especially in deposit
department and there should also be convenient sitting place for customers.

Transfer

Transfer is not properly carried out. Some of the employees are continually
serving at the same post. They are simply rotated at the same branch.

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Therefore it is recommended that evenly rotation of every employee should
take place after every three years in different braches of the bank.

Changes in Policies

There should not be any abrupt policies change by the upper management,
as this practice hurts the customer confidences in the bank. Government
should make long-term policies

Need Qualified Staff

Required, qualified staff should be provided to branch in order to improve

the functioning of the branch. Especially a telephone operator should be
appointed.

Utility Bill Charges

Bank gets Rs. 2 to 3 to processes a utility bill, and it is very tire, tough and
hard job despite this working resulting in a loss to then Rs 3 to5 per
transaction. These charges should be increased to RS 10 per bill to enable
the branch to cover their handling costs and make some profit.

Link with the Head Quarter

100 major branches of NBP should established a direct link with the, head
quarter in Karachi, through Internet or Intranet. This will make the
functions and decision making of the management easier and convenient.
But still NBP main Branch Mansehra did not have online facilities.

Credit Card

National bank of Pakistan should start its operation in credit card. These
cards are very helpful for the ordinary customer in general and the business
people in particular. To make it mores secure and to eliminate the misuse of
it, the management is required to keep proper security against the card.

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Installing Validator and ATM

Validator machine is used to count the currency notes and its installation
will help to eliminate to counting errors and will save time. This will also
help in saving time result is work completed on time

This branch is situated in the City, which is supported to be the hub of

business activates. In this area an automated teller machine (ATM) is the
need of the hour businessmen can easily check their balance in the bank
and also with draw their money conveniently.

Interest on Overdraft:
Overdraft is a short-term credit facility provided by the bank to its
trustworthy customers free of interest. Only bank commission is charge
small amount of mark-up on the overdraft, which will help the bank to
improve its revenue position.

Clean Loans
Clean loan or clean overdraft is the credit facility extended to the customers
to the customers without any security. These types of small term loans
should not be extended to anybody, because sometime these loans are
provided to blue-eyed people of the management and they become a part of
bad debts.

Cash Financing
In this mode of financing the amount of credit not utilized by the borrower
is remained tax-free. It is recommended that a small amount of interest
should be charge on this amount as well because the bank gas kept-aside
the amount for that borrower and can not advance it anywhere.

Decreasing Administrative Expenses

Bank should their administrative expenses. This was Rs 8 billion in the year
2000. That can be done by lying off the surplus pool of employee with
golden handshakes scheme. The branches that are not much used could also

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be closed. Employee can also be how to control the bank expenses. That
will give positive results in the future.

Needs to be Flexible in credit Policy

As mentioned earlier, NBP is very conservative in advances and loans
policy. It reduces the investment opportunities. Also loans should be given
to the small businessmen and the agriculture sector at the low markup rate.
It should adopt flexible credit policy while giving credit to the agriculture
sector.

Technological Advancement
I would like to suggest that at least all the main branches of NBP should be
fully computerized in order to expedite the dealing process among bankers
and their customers. Every department should be provided a computer with
adequate training (especially Advances, Deposits and Foreign Exchange
departments) Daily records should be entered directly into these computers,
(instead entering the overall daily transactions after the banking hours). It
will not only reduce transaction time, will increase accuracy but will also
be efficient as well.

Staff Relationship
Good relationship among staff member leads to the peak performances in
any organization. I observed that the staff relationship was normal other
wise but some time I noticed that there existed a little conformity among
the staff members. Another syndrome from which the staff suffered was
that all of them considered themselves more important than others. Some of
the officers used to say that if I am absent for a day the bank would stop
working. So this sort of attitude is not good because it mars bank image and
juniors’ willingness learn and work hard and in the end will hurt the whole
team.

Improper Distribution of Work

Proper distribution work leads to success in every organization. Proper
distribution of work prevents the employee from over and under work

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situation. So for a smooth running of an organization proper distribution of
work is the hint to be followed. During my internship I observed that there
was no proper distribution of work in the bank. I saw that some of the
employee worked like ants other sat idle starting here and there. So this
created a lot of over work situation for while relaxation for other.

Favoritism and nepotism

In the during my internship in Main Branch Mansehra I saw that when

some of the employees are transfer to other places, due to their relation
with influential people and with top management they can cancel their
transfer in few weeks, when they are unsatisfied at that place. Not in one
branch of NBP but as a whole. This process will also be apply in
recruitment and selection process. Deserving candidate will fails to qualify.

So I suggest that in the organization there should be no favoritism,

nepotism and politics and their transfer and promotion should be made on
merit and according to the rules and regulations of the bank and provided
favorable environment to the employee to show their performances.

Skilled and Highly educated staff

National bank of Pakistan requires skilled and highly educated staff.
Nowadays, there is a large number of M.B.As who is unemployed. These
young people have the knowledge and skill to compete in this competitive
and dynamic environment of banking. National bank of Pakistan should
recruit new young professional.

Inter Departmental Transfer

I watched during my internship that, there is number of employee who have
worked on one seat for many a year. It can have negative effects motivation
of employee who is hard working and intelligent. Take the example of
advances section. In advance section if the employee is transfer after sixth
month or seven month, how can he be able to show his performances and
how can he be able to know the bank customer in a short period of time.

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Marketing Policy

The branch should adopt various marketing strategy and promotion strategy
to promote the bank and its product. But being a nation’s bank it did not
makes so much marketing policies.

The most important in my opinion is personal marketing; it is the most

effective of all when you think in term of branch level. But on the whole
organization level, they should arrange the seminar with in the bank and
outside the bank. They should introduce various prizing schemes just like
Habit Bank. Mahana Scheme, Bank Al-Falah (monthly income earning
scheme) and various others. They should do more advertising through
newspaper and media and through channel of personal contacts.

Complaints of Customer

There should be an information desk to provide the information and to

receive the complaints of the customer in the bank. There is no complaint
box available in the branch and not any person appointed to hear the
complaints.

Every person cannot go to the manager for the complaint because most of
the people are hesitant. So I suggest management to install a compliant box
in the branch, and recruit a special person for that guidance of the customer
when they are unable to manage some difficulties in banking matters.

Analysis of the Business:

Proper analysis of the business reports should be conducted before
extending any type of loan. For this purpose professional training of the
stuff member is required.

Organizational Commitment
It is suggested that employees working on daily wages basis should be
given some benefits, which the other employees are getting. Their salaries
must increase according to efficiency, performance and service.

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Managerial Leadership
In the analysis, we have discussed the difficulties of the assistant in taking
any initiative; therefore it is recommended that the assistants should he
given special training to make them ready for the leadership.

Credit Monitoring
The credit department of the bank should carries out vigilant credit
monitoring. They should ensure the proper payment of installments and the
mark-up by the borrower.

The staff members who have done all the paper work of the loan extension
should perform the monitoring, as he/she will be having more information
about the borrower.

Housing and House Hold Goods loans

Bank should initiate these loans because most of bank’s customers are
middle class and they cannot afford to buy house or household goods at
once by their own. For this purpose bank should set lowest markup to its to
attract customers.

Avoiding Bad Debts

Special care should be taking while extending the loan. Loans should be
awarded against reasonable securities, where market value should be equal
to the loan granted.

Policies should be crafted in a way to ensure that no loan is extended on

political pressure. SBP regulation for loan approval should be strictly
followed. According to which the current ration of borrower’s business
must be 1:1 and the debt to equity ratio should be 60:40, means the
liquidity position of business should be healthy.

Car Financing Scheme

Car financing scheme with the name of “ MY CAR FINANCING
SCHEME” should be initiated This finance scheme will help the general
public to buy the car of their choice in easy quarterly installments The bank

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monitors will do strict monitoring and the car will be hypothecated with the
bank against the car loan.

Avoid Political interference

Political interference is the second big problem for National Bank of
Pakistan. So, it is very important to avoid political interference in banking
operations. In order to avoid this first suggestion is the denationalization of
the bank

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 REFERENCES
Israr, Siddiqi H. (1998Banking law and Financial Services. Karachi: Decent Print
Enterprises. Page 35, 36, 40.

Sir Paged John. The law of Banking. The Law of Banking. McGraw Hill
Publication: page 51-58

Dr.Aftab Ahmad Khan (Macro Economics and Financial Sector of Pakistan.)

Bank Nationalization act 1974.

Standard procedure Manual of National Bank of Pakistan.

Instruction Circulars of 2018
Http// www.nbp.com.pk.

National Bank of Pakistan Yearly Report 2018.

www.nbp.com.pk

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