1.

1 INTRODUCTION TO BANKING
Banking as a system arose simultaneously with the use of notes. Notes havecome into use in the seventeenth century in England when many people heldheir wealth in gold. During the civil war, people were frightened of being robbedso they had to look for someone who had a safe vault for his own business andthen to ask him to keep their gold in his safe. The obvious choice was the localg o l d s m i t h w h o h a d a s a f e v a u l t a v a i l a b l e i n w h i c h h e k e p t h i s g o l d c o i n s a n d bullion (Bullion is the name of given to uncoined refined gold and silver, generallyi n t h e s h a p e of bars of bricks). So it came about that goldsmith took thesed e p o s i t f o r s a f e k e e p i n g o n c h a r g e o f a f e e a n d i s s u e d a r e c e i p t w h i c h acknowledge the deposit of money and incorporated a promise to return it ondemand. More and more people came to hold these receipts. Thus, the originalpurpose of the receipt became obscure as its function as promissory note an o t e w h i c h promises to pay became all important. In time people stoppedc a l l i n g t h e m r e c e i p t s a n d b e g a n t o d e s c r i b e t h e m a s n o t e s . T h u s , t h e goldsmiths emerged the first banks.

2.1 HISTORY OF NIB BANK LIMITED

NIB Bank is fastest growing financial power house in Pakistan. NIB Bank Limitedwas incorporated in March 2003 as a Public Limited Company. In October 2003, all assets and liabilities and all rights and obligations of the former NationalDevelopment Leasing Corporation (NDLC) One of the leading leasing companyi n P a k i s t a n a n d P a k i s t a n o p e r a t i o n o f I F I C B a n k o f B a n g l a d e s h w e r e amalgamated with and into NIB Bank Ltd.I n A p r i l 2 0 0 4 , N I B B a n k a l s o a c q u i r e d t h e P a k i s t a n o p e r a t i o n s o f C r e d i t Agricole Indosuez.The growth story of NIB Bank is a unique one. In a short span of four years, NIBBank is proudly serving nearly half a million customers through wide distributionfootprint across more than 60 small and large cities of Pakistan.Becoming the 7 th largest bank in Pakistan is just one dimension of our growthstory. The commitment of NIB Banks share holder can also be gauged throughits enormous paid-up capital of our Rs.40.000 Billion, First larges paid up capitalin Pakistan banking industry. Clearly these are the reasons for your confidence inb a n k s r o b u s t n e s s . T h e m a j o r i t y s h a r e h o l d e r i s w i t h T e m a s e k H o l d i n g s o f Singapore.T h e N I B B a n k L t d . a c q u i r e m a j o r i t y s h a r e h o l d i n g o f P I C I C a n d f u l l c o n t r o l o f PCBL in June 2007. NIB Banks acquisition of PICIC is one of the largest foreigninvestment in Pakistan banking industry and great milestone in local financial sector. Principal share holding of NIB Bank will continue to be w i t h T e m a s e k Holding Investment arm of Government of Singapore.S i n c e 1 st

of January 2008 NIB Bank Limited providing its services in financialsector as One Bank One Team with all operations of PCBL and PICIC Mergedunder NIB Bank Limited as a 7 th largest bank in Pakistan along with240 Branches, 450,000 Customers, Rs.197 Billion Total Assets, Rs.40.000 BillionPaid-up Capital

2.3 MISSION OF NIB BANK LIMITED

To become the bank-of-choice for the most discerning segments of the corporateand consumer markets in Pakistan. We will employ state of the art technologyand communications systems to deliver financial services that are innovative anda f f o r d a b l e , a n d w h i c h w i l l a l l o w o u r c u s t o m e r s t o t r a n s a c t c o n v e n i e n t l y a n d efficiently.

2.4 VISION OF NIB BANK LIMITED

To be a premier financial institution of international standard and repute, offeringi n n o v a t i v e v a l u e - a d d e d p r o d u c t s a n d s e r v i c e s , t a i l o r e d r e c e p t i v e l y t o t h e customer's needs and satisfaction, w h i l e o p t i m i z i n g t h e s h a r e h o l d e r s ' v a l u e through meeting their expectations, making NIB an "investor preferred institution"amply justifying its claims of a "financial supermarket" by catering all financialneeds of the customers under one roof.

2.6 ORGANIZATIONAL S T R U C T U R E / C O R P O R A T E GOVERNANCE OF NIB BANK

NIB Bank Ltd is managed by a Board of Directors with representation TemasekH o l d i n g s s h a r e h o l d e r s . T h e B o a r d o f D i r e c t o r s , w h i c h i s t h e h i g h e s t p o l i c y making body of NIB, consists of eight directors. . The Board deals with all policym a t t e r s a n d a p p l i c a t i o n s i n v o l v i n g financial assistance up to the maximuml e n d i n g l i m i t , accordingly to NIB total net worth both in foreign and l o c a l currencies. The Board's Executive Committee, comprising o f e i g h t D i r e c t o r s , deals with matters other than those involving policy and applications for financialassistance. The following gentlemen presently comprise NIB Bank ltd Board of Directors: Mr. Francis Andrew Rozario Mr. Mahmudul huq Bhuiyan Mr. syed Aamir Zaidi Mr. Thomas Patrick Sodano Mr. Tan Soo Nan Mr. Willie Wai Kong Chan

2.9 GOAL OF NIB BANK

NIB, after turning the corner, is now destined to revive its glory throughdynamic business activity which include Enhancing Recovery of Loans. Resource Mobilization for On-Lending. Revival of Sick Units. Out Of Courts Settlement Even In The Cases Under Litigation Fund Management And Expanded Merchant Banking Operations. Growth in Lease Financing. With all such activities, NIB has started to earn sizable profit, andhas started to pay dividend to its shareholders NIB has reemergedas a viable financial supermarket. The scope of NIB financing whichwas previously confined mostly to providing long term foreign andl o c a l c u r r e n c y assistance for setting up industrial ventures hasbeen further e x p a n d e d t o e n c o m p a s s p r o v i s i o n s o f o t h e r c r e d i t facilities and services. Commensurate with the growing competitiveb u s i n e s s e n v i r o n m e n t , t h r o u g h t h e a c q u i s i t i o n o f a c o m m e r c i a l bank

1. NIB BANK (Salam Banking) 1.1 Introduction to NIB Bank

As Salam is a tribute to the people other banks for granted, a symbol of respect for those whowant respect more than any thing. Salam is an every day salutation a special tribute, a mark of admiration of an expression of respect. Communicate through gesture, a node, a salute, a bow, anAddab and through hand shake. So NIB is also famous with its name Salam Banking.Basically, NIB Bank Limited started as NDLC-IFIC Bank Ltd. which was built-in in March 2003as a public limited company. It started business in October 2003 when all assets, rights andobligations of the previous National Development Leasing Corporation (NDLC) and Pakistanoperations of IFIC were combined with and into the bank with a paid up capital of Rs.1.2bn. InApril 2004 the Pakistan operations of Credit Agricole Indosuez were also merged with and into NIB. In March 2005 Temasek Holdings of Singapore acquired 25% shareholding in NIB Bank,through Bugis Investments.This shareholding was promoted and enhanced to over 70% in June 2005 following an raise in NIB's paid up capital to Rs.3.4bn.

NIB Bank has since grown speedily from a base of 2 branchesin 2003 to 45 in the 4 th quarter of 2007. Total assets have grown-up from Rs.9bn in December 2003 to Rs.87bn (excluding acquisition of PICIC through rights) as of September 30 2007, aCAGR of 85%. Credit growth has been equally rapid, increasing from Rs.7bn to Rs.43bn in thesame period (a CAGR of 64%), resulting from successes in both the commercial and consumer business.Deposits for the same period have grown at a CAGR of 95%, reaching Rs.45.3bn. The overallclient base of NIB has also witnessed a remarkable expansion in the same period as of September 2007; from a few thousand to over one hundred thousand.NIB Bank's vision is to rank amongstthe top 5 banks in the country.Therefore towards end of June 2007 it get hold of majority shares of PICIC with the aim of merging PICIC and its commercial banking subsidiary PICIC Commercial Bank Limited into NIB. The acquisition was financed through the country's largest private sector rights issue, withresultant increase in NIB's paid up capital to Rs.21.4bn. The PICIC acquisition has bought with it another subsidiary "PICIC AMC" and associate "PICIC I n s u r a n c e " . N I B a l r e a d y h a s a shareholding in NAFA, an Asset Management Company (AMC); thus its asset management business will now also be improved, with diversification in the insurance business.

1.1.1.Mission & Vision of NIB Bank 1.1.1.1Mission Statement

NIBs Mission is to provide a banking experience so unique, t h a t i t c o m p e l s e a c h o f o u r customers to want a long term, multi-product relationship with NIB Bank.

1.1.1.2V i s i o n S t a t e m e n t NIBs Vision is to:

To be the bank of choice for the most discerning segments of the consumer andcorporate markets in Pakistan. To revolutionize banking for the SME segment by creating new products anddistribution channels. To become a leading provider of investment banking and wealth managementservices. To be a top-5 choice of employer, a premier developer of human talent, and anorganization that understands and honors its social responsibilities.

1.1.2.P n t

&

The legal merger of PICIC, NIB & PCBL took place on December 31, 2007, onceall regulatory approvals were in place. NIB Bank led by Khawaja Iqbal Hassan,supported by four business heads and ten business enabling function heads. Tillfrom that it is continuously doing progress. The merger has resulted in immenselyexpanded network of 240 branches and total assets of over Rs.185bn. As a result NIB has the second highest paid up capital of around Rs.27.5bn and ranks number 7a m o n g s t c o m m e r c i a l b a n k s i n t e r m s o f d i s t r i b u t i o n n e t w o r k w h i c h i s t h e i r b i g achievement. Mergers will accumulate through lower cost deposits, better customer service delivery channels and overall improved efficiencies. These would provide a 2

Internship Report competitive edge in the face of increasing competition. Temasek Holdings remainsthe largest single investor in NIBB a n k . T e m a s e k i s t h e b u s i n e s s group from Singapore. This merger is one step forward i n combining the banking sector as visualization by State Bank of Pakistan and enhancing FDI as per the Government of Pakistan's objectives. It offers long term banking relationship to their customer through wide distribution channel embedded in their communities. It helps them intheir prosperity and growth.

1.2 Future Prospects of NIB Bank

We expect that the banking sector in Pakistan will remain e x t r e m e l y c o m p e t i t i v e f o r t h e foreseeable future. Therefore, the success of any new institution will be a function of it clarity of vision and efficiency of implementation.While we are confident that NIB Bank will achieve strong growth in revenues, we believe it isn e c e s s a r y t o c r e a t e t h e c o r r e c t foundation for sustainable growth into the future. With a n acceptable level of controls and an appropriate level of technology infrastructure, NIB Bank is poised to offer incomparable services to its valued clients through its countrywide network of branches.

NIB DEPARTMENT

1.4NIBs Services/ Products 1.4.1Loans NIB in Salam Banking offers personal loan and CAP to the customer. 1.5.1.1. Personal loan Nib gives personal loan to the small business man. Some important requirements are mention asunder; Minimum age of 21 years Maximum age of 65 the time of maturity Minimum tenure of business 3 years 5

Sole proprietorship Proper business setup Secure/unsecured If business is secure than maximum limit of the loan is 750000 In unsecured maximum 150000 1.5.1.2CAP (Cash against property) Its a type of loan in which NIB takes mortgage of any property against cash. In case of anyd e f a u l t e r , b a n k w i l l s e l l t h e p r o p e r t y o f t h a t p e r s o n a n d a v o i d l o s s . I t s a p a r t o f r i s k management. 1.5.2Accounts Types of accounts in NIB Salam banking are; Salam Business Account/ Salam Current Account Salam Bachat Account Salam Fix Account Salam Committee Account Sole Proprietor Account BBA Account Business/Company Account Partnership Account 2.1.1. Customer Service Department NIB is trying to serve according to the desire of the people. People want to choose where themark up rate is low, where the procedure is easy and where the easy installment are possible, soaccording to these requirement of the people of NIB decreases the mark up rate to 9 %,which islowest markup rte in the Pakistan, basically in the banking sector, they start to serve the marketwith two different strategies, first is to introduced the products or service on low price, and thenincrease the service charges, and 2 nd one is to introduced the service on high price and thendecrease the charges.The NIB Bank is using 2 nd strategy. And in the future of NIB is trying to maintain this strategyfor gaining the market share. The main responsibilities in this department were; To attract the customers and retain them. To listen the customers complain and solves their problems and confusions (if any). To fill deposit slips. To clear cheques. Money Transactions. Account opening. 2.1.2. Credit Department

This department is responsible for the lending of the loan to the c u s t o m e r b r o u g h t b y t h e Relationship Managers. They check the facts & figures mention by the customer are correct andfollow the certain policy. The process of loan lending to the customer is Operation Departments main responsibilities are; To collect installments of loans. Deposit and withdraw cash. Make clear transactions of credit and debit. http://www.scribd.com/doc/40175357/Internship-Report-NIB-Bank