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DEPARTMENTALIZATION OF NBP
Internship Report National Bank of
Pakistan
Bank's Profile
Account opening section of the Bank can be considered the most important Section because
banking starts with the account opening. Every customer of the bank either he is of credit
section or foreign section or any other department must have his account in order to get
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benefit and transaction with the bank. Therefore it is considered the most important section of
the bank. Account opening officer take special consideration for the proper recognition of the
customers.
This section performs the following functions:
1. Opening of Accounts
2. Issuance of Cheque Books
3. Closing of Accounts
1. OPENING OF ACCOUNTS
Verification
The first important step to take place in bank is to get satisfactory verification of the person,
who wants to become bank’s customer. This verification is made through the NADRA.
Now the person is provided with an application form known as Account Opening Form
(AOF). This form contains:
ii. Nature of Account: NBP has the offered services to following types of individuals.
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Internship Report National Bank of
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Minor account
Illiterate person account
Joint account
Proprietorship account
Partnership account (Registered/ Unregistered)
Limited company’s account (Public/ Private)
Accounts of clubs, societies and associations
Corporate Body (Incorporated/ Unincorporated )
Trust account
Govt Institutions (Federal/ Provincial)
iii. Initial Deposit Amount : Deposit can be accepted in the form of:
Pak Rs.
US $
UK
EURO
JY
Title of Account
Address
CNIC Number
NTN Number (if available)
Profession
Telephone number may be of office, mobile or residential
In this customer mention the name and address of person to be contacted for
ascertaining his whereabouts after the expiry of three years from the date of last
operation in his account or last communication from him to the branch to inform him
the existence of account when the customer is not available at the given address.
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This is simply the reference of the 2nd person if the bank fails to communicate with the
customer then bank can contact with the next of kin / the mentioned person to know
about its customer. Customers provide in this all the personal details of the next of
kin. e.g.
Name of person
CNIC Number
Address
Telephone number etc.
Singly
Jointly
Either/ survivor
ix. Service charges deduction: In this category customer authorize the bank to deduct
service charges as per bank's tariff.
Government employee
Pensioner
Student
Widows
State Bank of Pakistan now authorize all the banks to deduct service charges on all
types of accounts when the balance of the customer become less from 5000/-. Rs. 55/-
per month is deducted from the customer's account. 5000/- is the minimum amount
which should be kept by the customer in his account.
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Internship Report National Bank of
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Specimen of signatures will be obtained from depositor at the time of opening his account. A
specially designed card is used for this purpose; the card must be countersigned by an official
of the bank not below the rank of an officer.
For illiterate person a recent picture of the newly account holder is taken and attached with
SS Card. To reduce the risk of frauds and misuse of the cheques of an illiterate person the
specimen signature card and account opening form both are stamped by the Personal Visit
stamp. Person who use thumb impression as a mean of signature can operate their account
only by Personal Visit.
Account Opening Register
Now the name of the customer is recorded in account opening register, and from here the
account no. of the customer will be written on (top most corners) account opening form and
on specimen signature card.
Letter of Thanks
Letter of thanks is the latter issued by the bank to the customer for two purposes:
1st purpose is to say thanks to the customer for opening the account in their bank.
2nd purpose is to confirm the address provided by the customer while opening the
account.
Rs. 3 per leaf as postage charges is charged to the customer. A special cheque book register is
kept to enter the name of the person having cheque book. Customer can withdraw money by
signing a cheque and writing the amount he wants to withdraw from his account.
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Pass Book
Pass book is another important type of book handed over to the customer as he opens the
account with the bank. The withdrawal and deposit of money is recorded date wise in this
book.
Recording into General Ledger
The concerned officer records the name and amount deposited with the bank in to general
ledger. Separate ledgers are maintained for different types of accounts e.g.
As and when customer will deposit the money, amount will be credited in general ledger and
the withdrawal will be followed by a debit entry in the ledger.
Documents Enclosed by Customer
Documents required to be attached by the customer are different for different categories.
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Power of Attorney
After the fulfillment of all the necessary terms and conditions and checking of the form the
relevant officer of Account Opening then affixed stamps on the AOF for the sake of
completion of all the formal rules and regulations. He affixed three types of stamps on the
form and two types of documents.
Affixed stamps
National Bank of Pakistan Stamp
Authorized Stamp
Affixed Documents
Know Your Customer Form (KYC)
Summarizing the context of AOF briefly
Signature Card
For identification and verification of signatures
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3. CLOSING OF ACCOUNTS
Account Closing by Customer
The customer can close the account. Customer is required to submit an application for
closing the account. Then the account is closed out and his balance is paid to him after
deducting the closing charges, i.e., Rs. 200 and the application is filed in Account Closing
File. Remaining leaves of cheques will also be collected from the customer.
i. Dormant Account
All current accounts which have not been operated for six months or all saving
accounts which have not been operated upon for one year classify as dormant account.
A debt payable owing by bank due to the reason of deposit in respect of which no
transaction has taken place and no statement of account has been requested by the
creditor during a period of ten years are classified under unclaimed deposit.
These are simply a debt owned by bank when a customer has not been operating his
account during a period of 10 year. The bank serves a 3 month Final Notice in writing
to the account holder at his latest known address for his receiving balance lying in
account. Upon expiry of such period NBP then surrender the deposit to the SBP.
2. DEPOSIT SECTION
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Deposits are the lifeblood of commercial banks. The main function of a commercial bank is
to mobilize deposits of money from the savers and lend into for most profitable purposes. The
process of collection deposits is Deposits Mobilization.
Commercial banks donor receive these deposits for safe keeping purpose only .but they
accept deposits as debts. When a bank receives a deposit from a customer becomes a creditor
and the bank a debtor. When the bank receives the amount of deposits as a debtor, it becomes
the owner of it but there is an implicit agreement that the amount owned would be paid back
by the bank to depositor on demand or often at specified time.
The classification is based on duration and purpose for which the deposits are to be kept at
the bank before the depositor can withdraw them.
1. CURRENT ACCOUNT
This account is also known as running balance account. Simply we can say “A bank account
which may be used to lodge payments or to withdraw money on demand.”Its main purpose is
to serve the businessman. Form number F-53 is provided to the person to open the account. It
is a statutory requirement to maintain current account.
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Profit on PLS Saving Account is calculated on minimum monthly basis and is paid
half yearly basis announced by the Head Office after June 30 and December 31.
Zakat at the rate 2.50% is deducted from the PLS Saving Accounts.
No limit of withdrawals
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Higher will be the time period, higher will be the rate of profit, and vice versa.
A receipt is used for the amount deposited called fixed deposit receipt.
Period of deposit can vary from 3 months to 5 years depending upon the nature of
scheme offered by bank.
The scheme of NIDA was launched in December 1995 at attract at corporate customers.
NIDA are opened for individuals single or joint, Charitable institutions, Provident funds,
autonomous bodies, companies, associations, educational institutions, firms etc. the features
of this account are same to the features of the saving or PLS account except the following
ones:
In this account the minimum balance required to acquire the benefits of this account is
Rs 2 million, and the maximum limit is 5.0 million.
When the above condition is fulfilled, then the bank will pay interest on daily basis,
which is that if the deposit is minimum of 2 million than the mark up rate is
5.2%p.a.and if it is at maximum that is 5.0 million than the rate is 7.00 %p.a.
In this account the daily balance of account is taken, products are calculated and the
interest is calculated on that balance.
If the balance on any day comes below the lower limit, which is Rs 2 million then
interest will not be given.
This scheme did not gain popularity so NBP close this scheme.
3. REMITTANCE SECTION
REMITTANCE
Remittance means a sum of money sent in payment for something. This Section deals with
either the transfer of money from one bank to other bank or from one branch to another
branch for their customers.
TYPES OF REMITTANCE
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Internship Report National Bank of
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Remittance means transfer of money from one place to another place. It is of two kinds.
Inland remittance.
Home remittance.
INLAND REMITTANCE
An inland remittance means a transfer of money payable at a certain place within the country.
Inland remittances can be classified as under:-
a) Within locality.
b) Out side locality.
a) WITHIN LOCALITY
When a branch situated in D.I. khan is required to send drafts to any other branch
situated in the same city the process is know as within locality. For example N.B.P.
Main Branch, D.I. Khan sends any draft to N.B.P. Circular Road Branch, D.I. Khan.
b) OUTSIDE LOCALITY
Outside locality is an important type of inland remittances, which means the transfer
of money payable outside the city. For example, N.B.P. Main Branch D.I. khan sends
any draft to a Branch situated at D.I.Khan.
DEMAND DRAFT
A method used by individuals to make transfer payments from one bank account to another.
Demand drafts are marketed as a relatively secure method for cashing checks. It is made for
both account holders and non account holders. Secret test apply on DD. If the amount is less
than Rs.5000/- then test will not apply.
Types of DD
Junior draft
Senior draft
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Internship Report National Bank of
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Junior Draft
For 1 to 1000/- Rs. junior draft is made.
Senior Draft
For 1000 to 10 million Rs. senior drafts is made.
Date
Name of the office on which it is drawn
Name of beneficiary
Amount in words and figures
Bank exchange rates
Signature and address of the applicant
Issuance of Duplicate DD
In case draft is lost or destroyed by mistake, its duplicate can be issued at the request of
purchaser after obtaining indemnity bond on stamped paper of appropriate value. This is done
to cover the risk of double payment by mistake.
Informs the drawee branch of the loss of DD and advise them to mark caution against
payment if presented.
After necessary checking, the drawee branch will inform the branch about the status
of DD whether it has been paid or still outstanding.
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Writes on the face of duplicate DD in red ink duplicate in lien of original DD No---
dated ---reported lost.
The signing officer must check all the particulars before signing.
MAIL TRANSFER
The same application form is used for draft and mail transfers generally in NBP. The mail
transfer is not delivered to purchaser but instead the issuing office to beneficiary’s branch on
its own risk and responsibility sends it. This type of remittance facility is provided only when
the beneficiary happens to be customer of the bank.
The amount is directly credited to the beneficiary’s account and as such loss of mail transfer
has no concern with the applicant. Also the credit balance of customer is transferred from one
branch to another branch with the help of this instrument in case the Customer so desire.
The applicant desiring to remit the funds by way of mail transfer can either deposit cash or he
may ask the bank to debit his account with the cost of mail transfer including bank charges.
An exchange memo is issued to the applicant in case he desires to have some sort of receipt
from the bank for his office record. The participants of mail transfer are recorded in mail
transfer register just like drafts while at the paying branch instrument is treated as branch
voucher for credit into beneficiary’s account.
If the customer is not he account holder of this bank, then firstly he has to deposit the money
and then rest of the procedure will be adopted to transfer his money. Secret test apply on MT.
If the amount is less than Rs.5000/- then test will not apply.
TELEGRAPHIC TRANSFER
It is the message, which is sent from one branch to another on the order of payer to payee
through wire. It is one of the quickest means to transfer fund through the use of
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Telex/fax/internet or cable. Secret test apply on TT. If the amount is less than Rs.5000/- then
test will not apply.
It is quickest way of transfer funds from one branch to another of the same bank
through telephone, fax/telex.
Procedure of application and vouchering is same as a DD.
Apply test on the TT message and appropriate codes and instructions such as advice
& credit or advice & debit.
It is mostly cleared through main branch of the same area.
Recovers commission, and other charges as per applicable rate.
The entries at issuing office are recorded in telegraphic transfer issued register while at the
other end it is entered in the payable register.
Application form is filled by the client in whom the name and account number of the
beneficiary, which is to be credited and name of customer, is required. For telegraphic
transfer, the payment can be made in case or by cheque or by debiting the customer’s account
if he is the account holder.
The amount of Telegraphic Transfer should be written on the form. The amount is transferred
to beneficiary’s account in the other bank. An advice is given to the customer but application
is filled in the record of the bank.
When a TT is received then an entry is passed in TT incoming register after verifying the test.
When a person comes and wants to encase his TT, bank checks the statements of that person.
If the bank finds any account credited to the person’s account against TT, bank prepares a
voucher for this payment against that TT. The customer then presents that certificate to the
cash counter and collects money.
TRAVELER CHEQUES
When a traveler proceeds from one place to another he needs money at different places. The
remittances explained so for will be available to the beneficiary only art a particular place,
and that too all in one time, where as the requirement of a traveler may be otherwise.
N.B.P has designed its own traveler’s cheques to be used in Pakistan only, for different
denominations their colors are different.
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On the back of the cheque this can preferably be done by means of small rubber stamp.
Application for the purchaser of the cheque application form is taken. The original remains
with the issuing office as voucher and the duplicate is passed to the main branch on the bank
where account of bank is kept.
Recording
The issuance of cheque is recorded in the travelers cheque issue register. The total amount of
T.C sold is credited to the Main Branch of the Bank and the exchange charged credited to the
Branch exchange account.
Delivery: The traveler cheques are delivered to the purchaser in thick card boar.
4. CLEARING SECTION
CLEARING SECTION
The major function of Clearing Department is to receive the cheques, which are drawn on
some other bank. The customer can get the money in his account at NBP, from the cheques
drawn on another bank. The bank accepts these cheques and collects the amount from that
bank on which cheque is drawn through the Clearing House. Bank charges some commission
for this function.
CLEARING
"The transfer of funds from one branch of bank to the other branch of the same bank or the
other bank on which the instrument is drawn, without involving cash through “State bank’s
clearing house "
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We can say that cheques which cannot be cashed at the cash counter of the bank or cross
cheques go through the clearing process.
CLARING HOUSE
A clearing house is an association of commercial banks set in State Bank of Pakistan for the
purpose of interchange and settlement of credit claims
NIFT is a joint venture between a six major banks and private sector. The clearing operations
were commenced by the establishment of first centre at Karachi and now it has been extended
to all major cities of Pakistan. At such places where the area is not covered by NIFT the
clearing and settlement services are provided by National Bank of Pakistan.
To accept transfer, transfer delivery and clearing cheques from the customer of the branch
and to arrange for their collection.
To arrange payment of cheques drawn on the branch and gives for collection to any other
branch of N.B.P. or any other member or such member of local clearing house.
To collect amounts of cheques drawn on members of the local clearinghouse sent for
collection by N.B.P. branches not represented at the local clearinghouse.
1. Outward clearing.
2. Inward clearing.
1. OUTWARD CLEARING
It includes those cheques and other instruments, which are sent by the Bank to the Banks for
payment on behalf of its own clients. Cheques are sent to clearing house thorough local main
branch.
A delivery message from the local main branch comes to every branch at a fixed time to pick
its outward clearing or outward returns as the case maybe.
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2. INWARD CLEARING
The cheques drawn are called inward clearing. Drawn on National Bank through its
representatives on the Bank presented by other Banks for payment it includes those cheques
and other instruments of Pakistan branches which other Banks present at the clearing house.
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The cheques, which are collected and paid by two different branches of a Bank situated in the
same city. For example Mr. A draws a cheque on N.B.P. Circular Road Branch, D.I. Khan in
favor of Mr. B who maintains an account with N.B.P. Main Branch, D.I. Khan.
3. CLEARING CHEQUES
When the payee/endorse and the drawer of cheque maintains account with different Banks,
the collection Bank in any one of the following methods:-
It can collect cash by sending its representative with the cheques to each of the paying
Banks. It is not so much appropriate.
The Bank maintains an account with the paying Bank.
The cheques can be exchanged by representative of the various Banks who meet at a
fixed time and at a fixed place. This is the most efficient method of collection and
paying cheques.
The customers are provided with the copes of pay-in-slip, whenever the customer wants to
deposit any cheque, he fills in the pay in slip himself and hands it over the counter along with
the instrument.
The customer fills pay-in slip. This slip is just like deposit slip. The cheque number, date,
amount and account number must be written on this slip.
The officer on receipt of cheques and pay-in slip will stamp the pay-in slip with “cheque
received” and give a portion of slip to customer and the remaining portion is attached with
the original cheque. The original cheque will be marked with two stamps in case of local
clearing.
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The original cheque will be marked with three stamps which are called OBC stamps (over
branch clearing stamp) in case of intercity clearing.
All the remittance which are received from other banks then go through the inward clearance
which include all the steps for lodging of amount into customer's account.
Fanfold
The drawer bank then verify the payer's account for clearance of the cheque and send back
the amount to the presented bank or NBP through the fanfold. In case if the customer account
is short of balance then the original cheque is returned back to the presented or collected bank
with the reason of returning the cheque on the clearing return form. NBP receive this amount
in form of remittance.
Charge Deduction
On receiving the amount through fanfold bank deduct service charges of clearance which are
excise duty, commission and postage for the intercity and SC payments.
Vouchering is done on four types of fanfold;
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5. GOVERNMENT/PESION SECTION
Circular Road Branch carries the responsibility of paying pension to the pensioners. For this
purpose pension books are issued to the pensioners. In this book the pensioner has to come
personally. Incase he is not able to come line certificate has to be sent.B-143 register is
maintained for the record of pensioners.
Pension can be refused to a person in following cases:
The person himself and his life certificate both are not present.
Signature in the payment voucher is not made.
He/She has not got pension book.
Picture is not preset on the pension book.
6. ADVANCE SECTION
Advance means “To give loan to the parties’ amount may be small or big”. Advances
department is one of the most sensitive and important departments of the bank. The major
portion of the profit is earned through this department. As we known bank is a profit seeking
institution. It attracts surplus balances from the customers at low rate of interest and makes
advances at a higher rate of interest to the individuals and business firms. Credit extensions
are the most important activity of all financial institutions, because it is the main source of
earning. However, at the same time, it is a very risky task and the risk cannot be completely
eliminated but could be minimized largely with certain techniques.
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3. Investigation
Now the bank after analyzing his application, investigation about the applicant’s
credit worthiness, and also the information’s he provided about his properties. In case
of business owner’s request for loan, investigation will be made on following ways
for different business:
Sole Proprietorship: Investigation will be about:
Personal reputation of the borrower
Nature of the business
Types of properties (Shop, House and Land) their location with their present market
value.
Cash, Jewelry, Shares, Security, Bonds etc
Stock in trade
Their Liabilities
Partnership Firm
Name & addresses of the partners
Deed of Partnership
Branches if they exit
Nature of the business
Amount invested in the firm
Purpose of the loan
List of assets and liabilities
Import export registration
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1. Granting of Loan
After detailed investigation, and documentation if the finance section finds the party well
satisfactory and feasible then they sanction the finance to the party concerned.
TYPES OF SECURTIES
The word security means any thing given to protect or safeguard the repayment of an
advance and to justify this term the thing so given should itself be safe, other wise the object
for which securities can be made available can be made available in the bank against
finances. These types are:
Pledge
Hypothecation
Mortgage
In each case the bank does not become the owner of the, property but the bank has only the
right over the property until the borrower makes payment of his debt.
1. Pledge
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In a pledge, the possession of the property but not the ownership passes to the creditor. The
pledge is entitled to the exclusive possession of the property until the debt is repaid byt the
ownership remains in the pledge subject to the pledgee’s right.
2. Hypothecation
In case of hypothecation, the property in goods is changed as security for a loan from the
bank, but the ownership and possession is left with the borrower. In case of hypothecation,
neither the property in goods and nor the possession of property pass to bank. but only the
security is granted in a form of letter of hypothecation, which usually gives the banker’s
charge on the hypothecated goods.
3. Mortgage
In a mortgage, the property in the thing mortgage is conveyed to the mortgagee conditionally.
The possession, until default in repaying the loan, generally, remains in the original owner
subject to the mortgagee’s rights.
TYPES OF LOANS
National Bank of Pakistan provides various types of loans depending upon the requirement of
the borrowers. Some of the important types of loans are:
1. Demand Finance
Under a demand loan arrangement, a fresh demand account is opened through the
borrower may be having other deposit account with the banks. The amount of loan
has to be drawn by the borrower in lump sum and is to be repaid in installments or as
agreed upon. The borrower can not operate a demand loan account by depositing and
with drawing amounts periodically.
2. Demand Finance Gold
Characteristics
Security: Gold is used as a security.
Recording: Single debt entry is recorded at the time of granting loan.
Loan type: Short term loan.
Rate of markup: 43.84 pptdp (Paisa per thousand on daily product)
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Required Documents
Application Form
Introductory reference sanction advise
Valuation certificate by the gold smith
Insurance letter
IB-12 (Promissory Note)
IB-26-(Letter of Pledge)
IB-6A (Agreement Form)
Delivery Letter (F-205)
NOTE: Only NBP performs the function of advancing of loan against pledging gold.
No other bank advance gold pledged loan.
3. Running Finance
a) Clean Running Finance
Loan is granted mostly to the employees of the bank without demanding any type of
the security from them.
Characteristics:
Type of loan: Short term loan.
Number of transaction: Frequent transactions are made.
Payment balance: It will be made in lump sum.
Rate of markup: monthly installments
Required Documents
Account Opening Form
Specimen Signature Card
IB-12
IB-6
IB-31(Sale and Buy back agreement)
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4. Cash Finance
Under this type of credit NBP grant loan to its customers in cash. Under the cash
credit arrangement a customer is granted an advance up to certain limit, which they
cay draw time to time as required by him, In this case, a new cash credit account is
opened in the name of customers. These are long term loans.
Securities:
I. Hypothecation
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