Prof. Ch. Nazir Ahmed

National Bank Of Pakistan1

Submitted to:

Prof. Ch. Nazir Ahmed

Submitted By:

Muhammad Imran Shahid

Roll NO 170

M.Com (Finance)

HaileyCollege Of Commerce

University Of The Punjab

Lahore.
DEDICATION

This Report is dedicated to

My Dear Parents

My DearFriends

My HonorableTeachers

Whose Guidance is Always

With me.

ACKNOWLEDGE

My report will remain incomplete if I do not mention the efforts of those people who helped me in completing this work.

First of all I will thank to Ch. Nazir Ahmad Principal of HaileyCollege who gave me opportunity to work in such a prestigious organization which are well known in the country. I also tribute to my all teachers who able me to work with experienced persons and enable me to work very efficiently throughout the period of Internship.

The administration department of NBP prepared my internship program. Administration officer Mr.Ehtesham with special attention prepared this program. The program was organized in such a way that sufficient time was given to each department according to its importance. I am really thankful for his co-operation during the internship.

At last, I would like to thank all those persons who helped me in completing this report.

Muhammad Imran Shahid

M.Com

CONTENTS

CHAPTER:1

BANKS AND SCOPE OF BANKING

What is Bank?

Banking in Developing Societies

New Challenges of Contemporary

CHAPTER:2

INTRODUCTION OF NATIONAL BANK

Present Status and History

Management

Mission/Objectives

Services Provided by NBP

Organizational Chart

CHAPTER:3

PROSUCT / SERVICES MIX OF NBP

Product/ Service Mix

Deposits

Advances

Foreign Services

CHAPTER:4

ACCOUNT OPENING AND CLOSING DEPARTMENT

Account opening and closing Department

Types of Account

How to open an Account

Document Required

Deposit Deportment

Terms and Conditions

CHAPTER:5

CASH DEALING DEPARTMENT

Cash Dealing Department

Cash Receipt

Information Required

Acceptance of Cheque

Payment of Cash

CHAPTER:6

CLEARING DEPARTMENT

Clearing Department

Clearing

Types of Clearing

Items to be Checked on Clearing House

Cheque Returned

CHAPTER:7

REMITTANCE DEPARTMENT

Remittance Department

Local Remittances

Foreign Remittance

CHAPTER:8

ACCOUNTS DEPARTMENT

Accounts Department

Functions of Accounts Department

Types of Vouchers

Accounting Procedure in NBP

CHAPTER 9

MY INTERSHIP PROGRAMME

Work Done by Me at the Branch

CHAPTER:10

MANAGEMENT OF ORGANIZATION

Management of Organization

Other Information about Branch

CHAPTER:10

FINANCIAL ANALYSIS

Horizontal Analysis

Vertical Analysis

Ratio Analysis

Comments on Ratio Analysis

CHAPTER:11

RECOMMENDATIOS

Recommendations

CHAPTER # 1

BANKS AND SCOPE OF BANKING

WHAT IS BANK?

A bank is an institution for the custody, loan or exchange of money for sanctioning credit, for transferring funds by domestic foreign bills of exchange. It is a pipeline through which currency moves into and out of circulation.

As it is clear from the definition of banking, the main activity or function of banking is borrowing and lending of money with a margin of gain. However, as far as the present day banking is concerned, there are a number of different banks, set up under specific different objectives, performing various functions.

BANKING IN DEVELOPING SOCIETIES.

In the developed societies, the banks do not have to make many efforts in mobilizing savings, as it has become a second habit with the people. The commercial banks are financing the short and long term capital needs of the business. The loans and discounts of commercial banks include real state mortgages and long term loans, which extend to as long a period as ten years. These banks also administer estates, acts as insurance agents and underwriters, provide brokerage services and implement domestic as well as foreign economic polices of the government.

Commercial banks in developing countries have to make vigorous efforts of resource mobilization at all levels. However, with the passage of time the commercial banking operations are under going remarkable qualitative change. In Pakistan for instance, banking facilities are being extended to the un-banked places. Planned efforts are being made to enhance the supply of bank advances to the new priority sectors in consonance with the present day socio-economic needs.

A special scheme to induct commercial banks in the field of agricultural credit was introduced in December 1972. The scheme provides for short and medium term loans to farmers under a much simplified procedure. State Bank’s measures aimed at increasing the flow of credit to the small man in business and industry as well as to housing and non-traditional exports have also yielded positive results. The large risk to the commercial banks in the sphere of agricultural finance and small loans are being covered to a reasonable extent by the “Credit Guarantee Scheme”. Mandatory targets for small loan credit to the agriculture sector and for housing have been prescribed and are being enforced. Corporate banking is also being reorganized and reactivated on a more viable fines.

NEW CHALLENGES OF CONTEMPORARY AGE

Banks play a vital role in the economic development of country. They accumulate the idle savings of the people and makes them available for investment. They also create new demand deposits in the process of granting loans and purchasing investment securities. They facilitate trade both inside and outside the country by accepting and discounting of bills of exchange. Banks also increase the mobility of capital. They provide a variety of facilities for remitting a large amount of money from one place to another by the transfer of a small slip of paper.

In a country like Pakistan, which is still in the initial stages of economic development, and well –organized banking system is the need of the day. There is acute shortage of capital in Pakistan. The banks have to play an important role in promoting capital formation, in controlling speculation in maintaining a balance between requirements and availability and in direction physical resources in to desired channels. In advanced countries of the world like America, Japan, Germany, the rate of capital formation ranges from 12% to 25% of their Gross National Product. Whereas in Pakistan the rate of saving has varied from 5% to 8% only. In order to accelerate the rate of economic development the Government has been acquiring foreign capital. The banks by launching a vigorous campaign both in the villages and cities can mobilize the idle savings and can increase the rate of investment. The country thus becomes independent of foreign capital, which in fact has let us down on almost all the crucial happenings in the country.

This deficiency of capital accumulation is due to so many reasons like, lower per capital income, disparity of wealth, unorganized banking system, ineffective fiscal measures etc. One reason of this capital deficiency is the non-adoption of modern marketing tools, such as market research, sales organization, sales training, sales management, advertising etc. for attracting deposits. So these are the new challenges for banks which are to be achieved for the betterment of the economy.
CHAPTER # 2

INTRODUCTION OF NATIONAL BANK

PRESENT STATUS AND HISTORY

National Bank of Pakistan maintain its position as Pakistanis premier Bank determined to set higher standards of achievements. It is the major business partner for the government of Pakistan with special emphasis on fostering Pakistanis economic growth through aggressive and balanced lending policies, technologically oriented branches.

The National Bank of Pakistan came into existence on 20th November 1949 under the National Bank of Pakistan Ordinance No.21 of 1949.It is a semipublic bank and functions like other commercial banks. Therefore it receives funds from the depositors and provides loans/credit facilities in all sectors including trade, industry and agriculture. It also functions as an agent of the Central Bank and operates the treasuries at places where no branch of State Bank of Pakistan exists. The National Bank of Pakistan was also nationalized, along with other banks, in January 1974. The Bank of Bahawalpur was also merged into this Bank.

MANAGEMENT

An Executive Board composed of six Senior Executives of the Bank and the President who is also the Chief Executive supervises the affairs and business of the Bank.

CAPITAL

The authorized capital of the Bank is Rs.2500 million divided into 100 million ordinary shares of Rs.10 each. After nationalization, all the shares held by persons other than the Federal Government or Corporations i.e, owned and controlled by the Federal Government were considered as transferred and vested in the Government.

BRANCHES

The Bank had a network of 1531branches in the country and 28 branches in foreign countries. These countries are as follows:

1)- United States of America

2)- United Kingdom

3)- France

4)- Germany

5)- Africa, Middle East Region

6)- Bahrain Obu

7)- Asia Pacific Region

8)- Japan

9)- Republic of Korea

10)- Central Asian States

11)- Bangladesh

12)-PeoplesRepublic of China

13)-Pakistan.

ACTIVITIES AND ACHIEVEMENTS

FOREIGN EXCHANGE

The branches of the Bank in foreign countries handled the export business and import business.

National Bank of Pakistan started a joint venture in collaboration with the Bank of Al-Jazira. Its head office is at Jeddah and also includes twelve other branches. National Bank of Pakistan as a trustee of the National Investment Trust Limited, and also operates a subsidiary for the promotion of agricultural production named the National Agriculture Limited.

MISSION/OBJECTIVES OF NATIONAL BANK OF PAKISTAN

MISSION STATEMENT

To make the Bank comparable and competitive with all International standards in performing, quality of operations, quality of staff, quality of financial strength and quality of products and services.

Objectives & missions are the means to reach some beneficial end. No one can achieve any target before setting it firstly.

So in the same way National Bank has some objectives, which it is trying to achieve. Following are some of them:

1)_ To maximize profit

2)_ To provide all sort of banking services.

3)_ To serve the humanity in all parts of the world through its network of branches throughout the world.

4)_ To satisfy customers beyond their expectations by providing personalized effective & efficient services in best & possible manner.

5)_ To serve Pakistan better in order to give socio-economic uplift.

6)_ To provide the maximum profit to depositors by achieving sound profitable growth.

7)_ To develop & enhance its system & technology.

8)_ To train its staff.

9)_ Providing information & advice to its customers.

10)_ Providing facilities of foreign currency accounts.

SERVICES PROVIDED NATIONAL BANK OF PAKISTAN

National Bank of Pakistan provides following main services to its customers:

It acts like a financial intermediary between importers and exporters.

It provides services in share of deposits, advances guarantees etc.

Full and efficient services of foreign trade.

Better computer system through which statement of accounts of a client could be made rapidly.
ORGANIZATION CHART OF NATIONAL BANK OF PAKISTAN

DESIGNATIONS FO HIGHER LEVEL OFFICERS

PRESIDENT

SENIOR EXECUTIVE VICE PRESIDENT

GRADE 22

EXECUTIVE VICE PRESIDENT

GRADE 21

VICE PRESIDENT

GRADE 20

ASSISTANT VICE PRESIDENT

GRADE 19

GRADE I OFFICER

GRADE 18

GRADE II OFFICER

GRADE 17

GRADE III OFFICER

(GRADE 16)

CHAPTER # 3

PRODUCT / SERVICE MIX OF NATIONAL BANK

Product of a bank include all those services, which a customer can use effectively in has general and business live.

NBP Main Branch, Lahore offer a wide range of banking services to public and private sector corporations, partnership, individuals and others. However, there are some basic services which NBP at present offered to his customers include:

• Receipts f customer deposits.
• Collection of his cheques drawn on other banks.
• Making payments through cheques drawn on it.
• Making remittances
• Foreign trade services.

At present NBP offering the following financial services and investments options to customers.

1-Deposits

2-Advances

3-Foreign Services

DEPOSITS

To receive deposits is a basic function of all commercial banks. Commercial banks do not receive these deposits for save keeping purpose only. But they accept deposits as debts. When a bank receives a deposit from a customer becomes the creditor and the bank a debtor. When the bank receives the amount of deposit as a debtor, it becomes the owner of it. It may, therefore, use it as it deems appropriate. But there is an implicit agreement that the amount owned would be paid back by the bank to depositor n demand or often a specified time.

Deposits are the lifeblood of a bank and their classification is based on the duration and purpose for which the deposits are to be kept at the bank before the depositors can withdraw them. At present NBP accepts deposits in bother local & foreign currencies and provides a variety of accounts where these sums are put in at the desire of the customers.

LOCAL CURRENCY DEPOSITS

In local currency (PkR) the following type of accounts are available at the bank

1-Cruuent Account

2-Saving A/c

3-Short term deposits

4-Fixed deposit receipts

A brief explanation of the above stated accounts is given below:

CURRENT ACCOUNT

These are payable to the customer whenever they are demanded. The bank treats these deposits as current liabilities. No profit is given on these accounts and there is no restriction of minimum balance to be kept in these accounts.

SAVING ACCOUNT

In such types of account, the depositors are normally allowed to withdraw a limited amount of money only twice a week.

FIXED DEPOSIT RECEIPTS

In these accounts the amounts are deposited for fixed period which may be 1 month, 3 months,6 months and 1 year.

SHORT TERM DEPOSITS

In these accounts the amounts are deposited for fixed period but shorter than that of fixed deposit receipts, which may be 7 days ,and 30 days.

FOREIGN CURRENCY DEPOSITS

At present NBP Main Branch accepts US$, GBR, YEN and DM in shape of foreign currency deposits. For these foreign currency deposits bank has offered the following accounts.

1-Foreign Currency Accounts.

2-Foreign Currency Saving Accounts.

A brief description of above stated accounts is given under.

i- FOREIGN CURRENCY CURRENT ACCOUNTS

In these accounts depositors can deposit a sum of money in any of the above mentioned currencies. The depositor can also withdraw any amount subject to he availability of the amount. No profit is given on these accounts and no restriction as per the minimum balance required.

ii-FOREIGN CURRENCY SAVING ACCOUNTS

NBP pays the interest that is earned on the sums available in the accounts by making investments.

ADVANCES

Advances are the major source of earning income for commercial banks; it is the interest charged on the money lend to customers. Bank advances to customers are made either by way of loan or by overdraft on current account.

At present NBP provides short term loans as well as long term loans.

FOREIGN SERVICES

Following is the list of major foreign services provided by NBP to its customers :e .g:

a-Documentary Letter of Credit

b-Bills of Negotiation

c-Foreign Services

d-Bills for collection

A brief description on of above stated services is given under;

DOCUMENTARY LETTER OF CREDIT

A documentary letter of credit may be defined as an authority issued by the opening bank on behalf of the importer in favor of the exporter with the stipulation that the drafts drawn there under will be duly honored provided that the terms and conditions as mentioned there in are duly compiled with .

With respect to the documentary credit the following types of documentary letter of credit are offered by NBP;

Revocable LC

Irrevocable LC

Confirmed LC

Transferable LC

Back to back LC

Stand by LC

Sight LC

Usance LC

BILLS FOR NEGOTIATION

In some cases the exporter is not willing to wait for the proceeds of collection to be remitted. In such cases exporter requests the Bank to negotiate the bills i.e. he sends the documents to Bank. In this case Bank examines the documents and arranges them with the requirements mentioned in the Letter of Credit. When bank satisfied it pays to the exporter. Now Bank has the right to collect the proceeds on his own behalf from the importer’s Bank

NBP performs the functions of both the exporter’s and the importer’s Bank as per its customer’s status.

BILLS FOR COLLECTION

The exporter’s and bank receives the documents from the exporter, examines and dispatches them to the importer,s bank. The importer, s bank confirms these, as per the requirements stated in the letter of credit. If founds correct gets the amount from the customer, advice the exporter ,s bank about the receipt of payment and in the end makes the payment to the exporters bank.

REMITTANCE

It includes local and foreign currency fund transfer. NBP also provide the facility to its customers in remitting funds from one place to another place. The remittance (between two countries). At present bank provides the following instrument that facilitates the transfer of funds.

TT ( telegraphic Transfer)

DD (Demand Draft)

PO (Pay Order)

These will be discussed in detail in the remittance department.

UNMATCHED BANKING FACILITIES

Deposit security, Guaranteed by Government of Pakistan

Highest rates of return to attract the savings.

Lowest rates on exports and other borrowings.

Largest contribution towards Government and Semi- Government Requirements.

Agent of the State Bank Of Pakistan handling Treasury Functions, receipts of Taxes & other Revenues.

Handling of salaries and pensions of federal/ provincial employees and defence personnel.

Utility Bills collections.

Haj arrangements.

Sale and encashment of Prize Bonds through its 266 authorized branches.