Introduction

History of Bank
There are different opinions that how the word "Bank" originated. Some of the author's opinion that this word is derived from the word "Bancus" or "Banque", which means a bench. It is associated to the fact that the Jews transacted the business of money exchange on benches in the market place, and when the business failed, the people destroyed the "Bench". Some of the authors are opinions that the word "Bank" is derived from the German word "Back", which means "Joint Stock Fund". In fact human left the need of bank when it began to realize the importance of money as medium of exchange. In 2000 B.C, the temples were used as banks because of their respect. In Europe with the "Revival of Civilization" in the middle of twelve century, trade and commerce started expanding and this development compelled the business community to borrow the money from the moneylenders on high rate of interest. Seeing the demand, these moneylenders started organizing themselves and bank start up at the principle seaports of southern Europe.

Definitions of Bank
A bank is a financial institution and is licensed by Government. To provide the financial services to its customers is the primary activity of any bank. "A financial institution, which deals with money and credit. It accepts Deposits from individuals, firms and companies at a lower rate of interest and gives at higher rate of interest to those who need them." "Banks provide certain services from customers and in return receive payment from them". "A banker is dealer in capital or more properly, a dealer in money. He is intermediate party between the borrower and the lender. He borrows of one and lends to another". "By banking, we mean the business of dealing in credits and by a "Bank" we included every person, firm or company having a place of business where credits are opened by deposits of collection of money or currency. Subject to be paid or remitted in Cheques or order, money is advanced or loaned on stocks, bonds, bill of exchange, promissory notes are received from discount or sale". 1

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History of Banking in Pakistan

Banking in Pakistan first formally started during the period of British Empire. After independence from British in 1947, It was decided that the Reserve bank of India should continue and perform the duty as a Central bank until September 30, 1948. At the time of partition, total numbers of banks in Pakistan were 38 out of these the commercial banks in Pakistan were 2, which were Habib Bank Limited and Australia Bank of India. The Governor General of Pakistan, Muhammad Ali Jinnah issued the notification for the establishment of State Bank of Pakistan on 1st of July 1948. In 1949, National Bank of Pakistan was established and it formally started in operations. There were 14 Pakistani scheduled commercial banks operating in the country till 1973.

1. National Bank of Pakistan 2. Habib Bank Limited 3. Habib Bank (Overseas) Limited 4. United Bank Limited 5. Muslim Commercial Bank Limited 6. Commerce Bank Limited 7. Australia Bank Limited 8. Standard Bank Limited 9. Bank of Bahawalpur Limited 10. Premier Bank Limited 11. Pak Bank Limited 12. Lahore Commercial Bank 13. Sarhad Bank Limited 14. Punjab Provincial Co-operative Bank Limited

The Pakistan Banking Council prepared banks amalgamation schemes in 1974 for amalgamation of smaller banks with the five bigger banks of the country. There five banks are as under:

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1. National Bank of Pakistan 2. Habib Bank limited 3. United Bank limited 4. Muslim Commercial Bank Limited 5. Allied Bank Limited

State Bank of Pakistan nationalized all commercial banks in 1974, through this the business and operation of banks in or outside the country were brought under the government ownership and control. On June, 1980, The Finance Minister announced to start Islamic Banking System in Pakistan in budget speech.

Overview of National Bank of Pakistan

National bank of Pakistan was established on November 1949, through passing of a special ordinance. The need for the establishment came due to the economic crises, to get rid from the interference of Reserve Bank of India. The main purpose of the National Bank of Pakistan was to extend credit to the agriculture sector. In 1952, Governor of State Bank of Pakistan decided to replace Imperial Bank of India by National Bank of Pakistan. Mr. Mumtaz was announced the first chairman of National Bank of Pakistan. The National Bank of Pakistan has its headquarters in Karachi, Pakistan. The bank operated 1295 branches in Pakistan and 40 overseas branches. NBP is the largest Commercial Bank of Pakistan and it provides both commercial and public sector banking services. NBP with providing the general banking services is also acting as an agent of State Bank of Pakistan, in areas where State Bank does not have its own branches. NBP is working with the State Bank in implementation of credit policies that are developed by government and State Bank, to control and monitor the fiscal and monetary policies and situations. The bank has been providing services to the government in salary payment to all government employees. Under a trust Deed, the bank also provides services as trustee to National Investment Trust (NIT). National Bank of Pakistan is the first bank in the country to introduce and implement supervised Ruler Credit Program that help small framer to obtain loans at his door step on 3

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easy terms and conditions. NBP has introduced profit and loss sharing system (PLS) as a major toward Islamization of economy. National Bank of Pakistan is today a progressive, efficient and customer focused organization. To enhance business and to attract every segment of society, some schemes have been specially designed for low to middle income persons. These include NBP Karobar, NBP Advance Salary, NBP Saibaan, NBP Kisan Dost, and NBP Cash n Gold. It has variety of special credit schemes like small finance for agriculture, administrator to Qaez-eHasna loans to students, self employment scheme for unemployed persons and Public Transport Scheme. Deposit Schemes being offered by NBP's Islamic Banking Branches including Current deposit Scheme and Profit & Loss Sharing (PLS) Deposit Scheme on Mudaraba Basis. To facilitate overseas Pakistanis to send their remittance the Bank signed an agreement with Western Union for expanding the base for remittances. More over it has started Electronic Home Remittance Projects. This project introduces technology based system to ensure that the Bank's branches keep a track of the remittance received from abroad till its final receipts. National Bank has awarded as the Best Foreign Exchange Bank of Pakistan in 2004 up to 2007, kisan Time Award-2005 for NBP's services in agriculture field.NBP is 100% owned by the Government of Pakistan. It is listed on the Karachi, Islamabad, and Lahore Stock Exchange.

Vision:
"To be recognized as a leader and a brand synonymous with trust, highest standards of service quality, international best practices and social responsibility"

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Mission Statement:

NBP will aspire to values that make NBP truly The Nation's Bank, by:
Institutionalizing a merit and performance culture Creating a distinctive brand identity by providing the hightest standards of services Maximizing stakeholders' value Discharging our responsibility as a good corporate citizen of Pakistan and in countries where we operate

Values:
NBP aim to be an organization that is founded on
Growth through creation of sustainable relationship with our customers. A national presence with a history of contribution to our communities.

NBP shall work to

Meet expectations through Market-based solutions and products Reward entrepreneurial efforts Create value for all stakeholders

NBP have confidence that tomorrow we will be.

Leaders of our industry An organization maintaining the trust of stakeholders

Objectives:
To enhance profitability and maximization of NBP share through increasing leverage of existing customer base and diversified range of products. In future NBP is going to 5

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introduce modern banking services to keep pace with the competition and more important our customer needs. These are, Debit Cared Internet Banking Mobile Banking Call Centers

Organizational Structure
Organizational Hierarchy Chart

President Directors / SEVPS Provisional Chiefs / EVP Regional Chiefs / EVP Zonal Chief / SVP Vice President Assistant Vice President Officer Grad I, II, II
Clerical / Non-Clerical Staff

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Board of Directors
NBP, Board of Director List consist the following member and their designations.

Syed Ali Raza

Chairman Board, NBP

Qamar Hussain
President, NBP

Mr. Tariq Kirmani

Director

Mrs. Haniya Shahid Naseem

Director

Mr. Ekhlaq Ahmed

Director

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Senior Management Groups

The senior management of NBP is consists of Group chiefs, who directly report to the Directors of bank. The whole functions of NBP are performed under these Groups. The NBP has Following Groups and Divisions

Corporate and investment Banking Group Operations Group Credit Management Group Audit & Inspection Group Compliance Group HRM & Administration Group Commercial & Retail Banking Group Overseas & Coordination Group Financial Control Division Treasury Management Group Information Technology Group Special Assets Management group Islamic Banking Group Employees benefits Group

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Senior Management of NBP comprises of the following members and their respective designation

NAME
Qamar Hussain Dr. Asif A. Brohi Shahid Anwar Khan Ziaullah Khan Nausherwan Adil Syed Iqbal Ashraf Muhammad Nusrat Imam Bakhsh Baloch Asif Hassan Dr. Mirza Abrar Nadeem A. Ilyas Aamir Abbasi Raza Mohsin Aamir Sattar

DESIGNATION
President SEVP & Group Chief, Commercial & Retail Banking SEVP & Group Chief, Credit management Group SEVP & Group Chief, Islamic Banking Division SEVP & Group Chief, operations Group SEVP & Group Chief, Overseas Banking Group SEVP & Group Chief, Treasury Management Group SEVP & Group Chief, Audit & Inspection Group SEVP & Group Chief, Assets Recovery Group SEVP & Group Chief, HRM & Administration Group SEVP & Group Chief, Corporate & Investment Group SVP & Divisional Head, Corporate Communication EVP & Head, Legal Division EVP & Financial Controller, Financial Control Group

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Organogram of National Bank of Pakistan

Chairman and President

Board of Directors

President Secretariat

Audit Committee

HRM Sub Committee

Sports and Culture Committee

IT Sub Committee

Islamic Banking & Subsidiaries

Operations Committee

Credit Committee

Assets & Liabilities Committee

Secretary Board of Director Group

IT Group

Corporate & Investment Banking Group

Special Asset Managem ent Group

Treasury Management Group

Audit & Inspection Group

Compliance Group

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HRM & Admin Group

Operation Group

EBD and TD

Islamic Banking Division

Credit Management Group

Overseas Coordination & Management Group

Commercial & Retail Banking Group

Financial Control Division

29 Regional Offices

Overseas Offices

Regional HR Chief

Regional Operations Chief

Regional Credit Management Chief

Regional Business Chief

Regional Compliance Chief

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Nature of National Bank of Pakistan

National Bank of Pakistan was incorporated in Pakistan under the NBP ordinance, 1949 and public limited company listed in all Pakistan Stock Exchange. The bank is engaged in providing commercial banking and related services in Pakistan and overseas. The nature and responsibilities of the Bank is different from other banks. The bank also handles treasury transactions for the Government of Pakistan. The bank in providing all banking services in public and commercial sectors, which include:

Providing deposits facilities on Current, Fixed, Saving, Term Deposit and Profit and Loss Sharing Account. Advancing and lending money to its clients. Buying, selling, dealing, including forward contracts of foreign exchange. Financing for projects, including technical assistance, long term/short term loans, term finance and musharika certificates. Joint venturing with foreign dealers, agents and companies for its representation in abroad. Financing for seasonal crops like cotton, wheat, rice, sugar cane, etc.

Branch Network of National Bank of Pakistan

National Bank of Pakistan has been able to extend its services with the geographical development of its branches. NBP has 12 corporate branches and 1295 domestic branches headed by Branch Managers. The bank has 12 Swift Local Centers and 156 online branches. It has modernized its services by installing Automatic Teller Machines (ATMs) called "CASH LINK". It has agency arrangements with more than 3000 correspondent banks worldwide Its subsidiaries are Taurus Securities Ltd, NBP Exchange Company Ltd, NBP Capital Ltd, and NBP Modaraba Management Company Ltd. The Bank's joint ventures are, United National Bank (UK), First Investment Bank and NAFA an Asset Management Company. 12

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The Branch network of NBP is divided into following categories

ATM Network (Total ATMs 101 & Total ATM Machines 104) Domestic Network (1295 Branches) Islamic Network (10 Branches) Online Network (156 Branches) Overseas Network (40 Branches) Swift Network (20 Branches) Customer Facilitation Centers (6 Customer Facilitation Centers) Agriculture Branches (825 Branches)

Products of National Bank of Pakistan

Deposits
The National Bank of Pakistan offers to their clients a variety of Deposit Schemes at competitive rates of interest. Any Pakistani citizen can open his/her account for any deposit scheme at any branch located throughout Pakistan.

The Deposit Schemes that are offered by NBP are following,

1) Current Deposits 2) PLS Saving Deposits 3) Fixed Deposit Account (Time Deposits) 4) Foreign Currency Account 5) NBP Premium Aamdani
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6) NBP Premium Saver 7) National Income Daily Account ( NIDA)

1) Current Deposits
Current Deposits are payable to customer whenever they are demanded. When a banker accepts a demand deposit, he incurs the obligation of paying all cheques drawn against him to the extent of the balance in the account. Bankers in Pakistan do not allow any profit on these deposits, and customers are required to maintain a minimum balance limit otherwise bank charges deducted from such accounts. This is because Current deposits may be withdrawn by the depositors at any time, so bank cannot freely employ such deposit. Current Accounts are opened, on proper introduction and submission of required documents along with initial deposit limit.

2) PLS Saving Deposits

Saving Deposit Account can be opened with a very small amount and bank issues a cheque book to depositor for withdrawals. Profit is paid at a flexible rate calculated on six month basis under the Interest free Banking System. There is no restriction in the withdrawals but the amount of money withdraw is deleted from the amount to be taken for calculation of profit. The SBP has allowed some Saving Scheme for the school and college student and for industrial labour. For this initial deposits are very nominal. NBP charge Rs. 500 for opening this account. The head office of NBP determines the profit or loss on PLS saving deposits and advice its branches the rate and time of distribution of these profits. On the first day of Ramzan each year 2.5% Zakat is deducted from these deposits on the balance of that day, but these deductions not allowed for Non-Muslim.

3) Fixed Deposit Account (Time Deposits)

The deposits that can be withdrawn after a specified period of time are referred to as Fixed or Term Deposits. The period for which these deposits are kept by the bank varies from 14

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three months to five years with the agreement made between the customer and the banker. Profit/Return is paid to the depositors in all fixed or Time deposits, and the rate varies with the duration for which the amount is kept by the banker. By giving an advance notice to the bank the deposit can be withdraw from the bank. The rate of return depends on the deposit duration.

4) Foreign Currency Account

Government of Pakistan has introduced many important reforms in Foreign Exchange Control in the country since February, 1990, for the purpose of strengthening the Foreign Exchange Reserves. One of these reforms relates to foreign currency accounts, which can be opened in Dollars, Pounds, Euro and Japanese Yen in any of the authorized branches. These accounts are opened, on proper introduction and submission of required documents along with an initial deposit. Rate of return depends in the deposit duration.

5) NBP Premium Aamdani

NBP Premium Aamdani is a retail product of the bank. The amount of investment required for this account is Rs, 20,000 to Rs. 5,000,00. The investment period is 5 years. Zakat and withholding tax will be deducted as per rule. The account holders have benefit of free demand draft, pay order, free cheque book and NBP cash card. Profit rate varies with the passage of time,

1st years.. 11.25% 2nd years..11.50% 3rd years...11.75% 4th years...12.00% 5th years12.25%

6) NBP Premium Saver

NBP Premium Saver is a retail product of the bank. The minimum saving balance of Rs. 20,000 and a minimum balance of Rs. 300,000 are required for opening a premium saver 15

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account. Two debit withdrawal allowed in a month and no limit on number of deposit transactions. The profit is calculated on monthly and paid on half yearly basis, 8.5% p.a +. Free NBP cash card facility is available to account holder.

7) National Income Daily Account (NIDA)

The scheme of National Income Daily Account was launch in December 1995 to attract corporate customers. It is a current account scheme and is part of profit and loss system of account. Deposit in the NIDA accepted on the condition that the depositor shall always maintain a minimum balance in his account. The account will be converted to ordinary PLS account for the purpose of calculating profit if the balance in account is less than the required amount. Rs. 2-million is required to open an account and there is no maximum limit. It is a checking account and there s no limit of withdrawals.

Rates on National Income Daily Account

From Rs 2-million to Rs 50-million, the rate is 1.4%. From Rs 50-million but less than Rs 500-million, the rate is 1.5%. From Rs 500-million but less than Rs 1000-million, the rate is 1.6%. From Rs 1000-million and above than, the rate is 1.75%.

Advances
National Bank of Pakistan plays an important role in government development plans in terms of growth in industrial, commercial and agricultural sectors in Pakistan. The Bank has formulated its Credit Policy under the guidelines of State Bank of Pakistan.

The financing scheme that the offered by NBP,

1) NBP Saiban 2) NBP Advance Salary 3) NBP Cash & Gold 4) Students Loans Scheme 16

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5) NBP Karobar-President's Rozgar Scheme

1) NBP Saiban
The NBP Saiban is retail product. It is a Home Financing Scheme. It has different product items which are Home Purchase Home Construction Hone Renovation Purchase of Land + Construction

If anyone has a Home Finance Facility outstanding with another bank he can transferred it to NBP through a Hassle-free process, Balance Transfer Facility (BTF)

2) NBP Advance Salary

The NBP Advance Salary has been a flag-ship product for NBP. NBP Advance Salary is a leading personal loan product of the country. Easy installment of 1 to 60 month at your choice. No minimum income, collateral & insurance charges required. Quick processing and fastest disbursement. This scheme is available for permanent government employee, semi government employees, local and other person who have their salary accounts at NBP.

3) NBP Cash & Gold

The customers meet their need for "Ready Cash Against their Gold and Jewelry". The rate of mark up is 13% p.a.

The product has following features,

Facility of Rs. 20,000/- against each 10 gms of net weight of Gold. No maximum limit of cash Repayment after one year Roll over facility No penalty for each repayment 17

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4) Student Loan Scheme

The announcement made by the Federal Finance Minister in his 2001-2002 budget speech, a Student Loan Scheme (SLS) for education was launched by the Government of Pakistan in collaboration with major commercial banks if Pakistan. Under the Scheme, financial assistance is provided by way of Interest Free Loans to the deserving student. The maximum period of repayment of loan is 10-years from date of first installment.

5) NBP Karobar- President' Rozgar Scheme

NBP has developed a full range of Products under the President's Rozgar Scheme with a brand name of "NBP KAROBAR". The scheme will be offered to eligible young and literate citizens of Pakistan with in an age limit of 18-45 years having a minimum qualification of Matriculation.

The scheme is available under following conditions,

Minimum down payment, 10% of asset price (5% for PCO & Telecaster) Tenure 1 to 5 year (for PCO 2 years) Grace period 3 month Maximum loan amount Rs. 200,000/Mark up 1 year KIBOR + 2.00% p.a. The customer will pay markup @ 6% p.a., rest will be borne by GOP*

NBP will offer following products: a) NBP Karobar Utility Store b) NBP Karobar Mobile General Store c) NBP Karobar Transport d) NBP Karobar PCO e) NBP Karobar Tele-Center
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a) NBP Karobar Utility Store

The product has been designed in collaboration with "UTILITY STORES

CORPORATION OF PAKISTAN (USC)" to provide financing facility of an average amount of Rs. 100,000/- for maximum period of five years with grace period of three months. Following two financing options are available under this product: NBP Karobar Utility Store (Shop) NBP Karobar Mobile Utility Store

b) NBP karobar Mobile General Store

This financing program has been designed on the similar pattern of Mobile Utility Store. The only different is that the borrower will have the liberty of procuring stocks, supplies, grocery items from open market.

c) NBP Karobar Transport

The NBP Karobar Transport is designed to finance 2/3 wheeler, 4 stroke, Auto scooter, Motorcycle Rickshaw, an average amount of Rs. 100,000/- for maximum period of five years with grace period of three months.

d) NBP Karobar PCO

This product is designed to finance setting-up a PCO. NBP will be providing for purchase of Mobile/Wireless Telephone Set with connection, Credit Balance. The average amount of financing will be Rs. 5,000/- for maximum period of two year with grace period.

e) NBP Karobar Tele-Center

This product is designed to finance setting-up a Tele-Center. NBP will be providing for purchase of Mobile/Wireless Telephone Set with connection, Computer, Printer and Fax 19

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Machine to establish Tele-center on a rented shop or owned premises. The average amount of financing will be Rs. 50,000/- for maximum period of two year with grace period.

Commercial Finances
1) Cash Finance 2) Running Finance/ Overdraft 3) Demand Finance

1) Cash Finance
In cash finance, a borrower is allowed to borrow money from the bank up to a certain limit, either at once or when required. The borrower prefers this lending due to the facility of paying markup charges only on the amount he actually utilizes.

2) Running Finance/ Overdraft

When a borrower requires temporary accommodation his bank allows withdrawals on his account in excess of the balance available in his account. This accommodation is generally allowed against collateral securities. When it is against collateral securities it is call "Secured Overdraft" and when borrower cannot offer any collateral security except his personal security it is called "Clean Overdraft".

3) Demand Finance
When a customer borrows from a bank a fixed amount repayable either in periodic installments or in lump sum at a fixed future time, it is called a "loan". When it is against collateral securities it is called "secured loan", and when no security is taken it is called "clean loan".

Remittances
1) Demand Draft
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2) Travelers Cheques 3) Letter of Credit 4) Foreign Remittances 5) Swift System 6) Mail Transfer 7) Telegraphic Transfer 8) Pay Order

1) Demand Drafts
A method used by individuals to make transfer of payments from one bank account to another. The major difference between demand drafts and normal cheques is that demand drafts do not require a signature. When a person requires a draft he should complete a application form in which he should mention the amount of draft, the name of the payee, and the place of payment. The NBP provides demand drafts at very reasonable rates and any person whether an account holder of the bank or not, can purchase a demand draft from bank.

2) Travelers Cheques
They are generally issued for the person travelling abroad, but some Pakistani banks issue them in Pakistan currency also for use within the country. The bank receives an amount equal to the face value of the cheques and also charges its commission, before issuing it. Foreign currency traveler cheques are issued with the Exchange Control Regulation act, 1947. The NBP provides their services for it at very reasonable rates. There is no restriction on the period of validity.

3) Letter of Credit
A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. If the buyer is unable to make payment on the purchase, the bank will be responsible to cover the full or remaining amount of purchase. With

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competitive rates, security, and ease of transactions, NBP letters of credit are the best way to do your business transactions.

4) Foreign Remittances
To facilitate its customers in the area of Home Remittances, National Bank of Pakistan has taken a number of measures to increase home remittance through the banking system. NBP is providing home remittance services without any charges.

5) SWIFT System
The SWIFT System (Society for Worldwide Inter Bank Financial Telecommunication) has been introduced for speedy services in the area of home remittances. The SWIFT Center is operational at NBP with a universal access number NBP-PKKA. All NBP overseas branches and overseas correspondents are drawing remittances through SWIFT.

6) Mail Transfer
A Mail Transfer is a form of remittance in which the amount remitted by a customer or a non-customer is directly credited to the account of the beneficiary with another branch. Move your money safely and quickly using NBP Mail Transfer service. And NBP also offer the most competitive rates in the market. They charges Rs 50/- exchange rate and RS 75/- postage charges on issuing mail transfer.

7) Telegraphic Transfer
Telegraphic transfer is a form of remittance, which is advised by telegrams, telex or fax machines. It is the message, which is sent from one branch to another on the order of payer to payee. It is one of the quickest mean to transfer fund.

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8) Pay Order
NBP pay orders are a secure and easy ways to move money from one place to another. The charges of NBP are very low all over the Pakistan. It charges Rs 50/- for NBP account holders on issuing one payment order, and charges Rs 100/- for NBP non-account holders on issuing one payment order. It charges Rs 25/- for students on payment of fees of educational institutions. If someone want a duplicate of payment order they charges Rs 100/- for NBP account holders and Rs 150/- for non account holders.

9) NBP Cash Card

NBP Cash Card is a 24-hour direct access ATM/Debit Card, which give the facility of withdrawal at any time from where you want. The transaction is authorized and processed by entering PIN. Its enable to withdraw Cash from 1-Link ATMs / MNET ATMs

10) International Banking

NBP is the pioneer of International Banking in Pakistan which is proven by the fact that NBP has its branches in all of the major financial capital of the world. Additionally, the Bank recently set up the Financial Institution Wing, which is placed under the Risk Management Group. The roles of Financial Institution Wing is,

To effectively manage NBP's exposure to foreign and domestic correspondence Manage the monetary aspect of NBP's relationship with the correspondents to support trade, treasury and other key business area Generation of trade finance business and revenues The lowest rates on export and other international banking products Access to different local commercial banks in international banking

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Branch Introduction
In order to be able to cope with the changing environment it is necessary to have some practical experience. As the students of Business Administration we have to pass through various managerial techniques. I was selected to do my internship in National Bank of Pakistan Main Branch Vehari. I work there for six weeks & it gave me greater practical knowledge about the operations of a Bank.

Following is given the complete information about the Bank Main Branch Vehari,

Name of Branch Branch Code Region Address Phone No. Name of Manager

National Bank Main Branch Vehari. 0414 Multan V-Chowk NBP Main Branch Vehari 067-3361207, 067-3361208 Mr. Khuram Rasheed

Name of Operational Manager Mr. khursheed Name of Supervisor Supervisor Cell No. Incharge Clearing House Incharge Pension Section Incharge Advance Section
Sir Abdul Ghaffar Khan 0300-7732622 Sir Khalid Sir Ameer Hamza Sir Naseer-ul-Bhatti

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Branch Structure

Branch Manager

Operations Manager

Clearing Section

Remittances Section

Advances Section

Agriculture Section

Account Opening

Deposit Section
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Cash Section

Government Payments

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Layout of NBP Main Branch Vehari

NBP Main Branch Vehari

Commercial Banking

Government Banking

Cash Department

Deposits

Remittances

Advances

Agriculture Department

Government 26 Government Utility Bills Payments If you need any kind of help you can mail me Receipts at : [email protected]

Departments of the Branch

Banking procedures are divided between various departments. In national Bank of Pakistan each branch is divided into various departments depending on their size and volume of business. The departments working within National Bank of Pakistan Main Branch Vehari are as under,

1) Account Opening Department 2) Cash Department 3) Deposits Department 4) Computer Department 5) Advances Department 6) Government Department 7) Remittance Department 8) Clearing House Department

Account Opening Department

This department performs the duty of opening account from customers. It also issues chequebooks to customers. A person who wishes to open an account with the bank has to fill an account opening form. The information's that are necessary for opening account. a) An account can be opened as: b) An individual account c) Joint account d) Proprietorship account 27

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e) Limited company account f) Partnership g) Club, Society, Association and trust

Information Required By Bank

Name Address Telephone No. Nature of Business Country of Residency Photocopy of NIC Special Instruction regarding the account Signatures

Documentation In case of limited company account

Photocopy of NIC Application form Copy of company's memorandum and articles of association List of directors Copy of board resolution Certification of incorporation Their signature cards Certificate to commence business

Documentation In case of Partnership Account

Application form A copy of partnership deed Signature cards of partners Registration certificate copy A copy of NIC

Documentation In case of Club, Society, Association or Trust

Application form 28

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 Copy of rules Certified copy of resolution Signature card

Functions of Account opening Department

Providing account opening form according to the customer's requirement, Guiding the customer about the requirements of the account opening and form filling, Checking the forms whether they are correctly completed or not Preparing checklist Stamping on the form Maintaining account opening register Posting the form to general banking in charge Issuance of cheque books

Cash Department
The most important department in the bank is Cash Department. The reason is that it performs the following functions, Collection of funds Acceptance of deposits Collection of utility bills Payments of cheques Remittance Verification of signature Transfer of funds from one account to another Posting Government receipts & payments 29

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The two main activities of cash department,

Deposits Cash in Customer's Account

When the customer wants to deposit amount in his account then he has to fill a deposit slip. The depositor can deposit through a cheque, for this the depositor has to fill transfer slip. The customer has to fill following information The deposit day date The account in which the cash will be deposited The name of the account holder Signature of depositor

Make Payment from Customer's Account

When the customer draws a cheque on the bank to pay a certain amount then Branch Bach officers (BBO) operator will debit the customer's account that show reduction in his account balance.

Parties to Cheque
Drawer, the person or entity who makes the cheque Payee, the recipient of money Drawee, the bank where the cheque can be presented for payment

Types of Cheque
Bearer Cheques, are cashable at the counter of the bank Order Cheques, are also cashable on the counter but its holder must satisfy the banker that he is the proper man to collect the payment Crossed Cheques, are not payable in cash, it can only be credited to the payee's account

Cheque Enhancement Procedure

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Token Issuance
The filled out the cheque and then gave it to the assistant who check following information, Cheque is drawn on same branch Cheque is not post dated Amount in words and figure are same Holder two signature on back side of cheque

After verifying all above information the assistant write down the token number on back side of the cheque and give the token to the holder. Then he posted to stamps on the cheque (Pay Cash and Verify stamp). After that he forwards it to the BBO operator.

Computer Terminal Process

After receiving the cheque the BBO operator first verify the signature of the account holder and the signature on the cheque. After verification the BBO operator checks the balance in the account and amount on cheque. If the balance in the account greater than the amount on cheque. He debt the cheque and forward it to cashier.

Payment of cash
The cashier enters the cheque in cash paid register and pays the cash to the holder of the same token number written on the back on the cheque.

Deposits Department
The primary function of NBP is to accept and receive surplus money from the people. It is stated that deposits are the blood of banks due to entire body of financial institution to get work. The reason is that the main function of bank is that it activates the money in the economy. The deposit department accepts/collects from account holders. The National Bank of Pakistan offer different deposit schemes to its customers, which includes the following, Current Deposits 31

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PLS Saving Deposits Fixed Deposit Account Foreign Currency Account NBP Premium Aamdani National Income Daily Account (NIDA)

Computer Department
This department is playing a important role in making the banking procedures faster and helping the bank for providing the better services to the customers. The main objective of this department is to facilitate customers in payment of their cheques. The National Bank of Pakistan has three types of branches in all over Pakistan,

a) Online Branches, which are directly link with central computer through wide
area network fiber optics

b) Batch Branches, where all transactions are carried out with the computer base
system but these branches are not connected to the central computer, they are using different type of system, Branch Back Office (BBO) is one of them.

c) Manual Branches,
daily transaction.

where all transactions are carried out manually and records are

maintained in registers. Manual branches reports Regional head office regarding their

Main function of computer department, Checking balance Deduction from balance on clearing cheques Issuing bank statement Dealing Western Union Maintaining Records Defects & Errors Handling Keeping System Up to date

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Advances Department
The advances department is very important and sensitive section of the bank. The job of this department is to make proposals about the loans, the credit management. The advances department receives application from customers/borrowers. After receiving and completing documentation, it completely analyzes and detailed investigates then decide whether to approve the loan or not. The main objective of this department is,

"To facilitate the people by giving short and long term loans on easy terms and condition"

Some advances that provided by this department,

Loan against Gold Agriculture advances Medium term advances for working capital Long term advances for setting industry Short term advances to businessman NBP Saiban NBP Advance Salary NBP Cash & Gold Student Loans NBP Karobar

The terms that are mostly used by advances department,

a) Finance against the pledge of stock b) Finance against the hypothecation c) Borrower credit worthiness d) Collateral e) Hypothecation f) Pledge g) Mortgage

a) Finance against pledge of stock

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In this type all the stock remains in the control of the bank, means if a borrower wants to take a loan for is business then he would be pledge his stocks equal or more then the value of the applied loan.

b) Finance against the hypothecation

To pledge an asset as collateral on a loan without the lender taking possession of the collateral. In this type the bank only monitor the stock but stock remains in the possession of the borrower.

c) Borrower Credit Worthiness

The ability to borrow money. The better one's creditworthiness, the more likely it is that a bank or other financial institution will extend credit. The most important factor consider in the credit analysis is credit worthiness of borrower. The credit worthiness is base on the borrower willingness to pay the obligations. The background, stability of employment, nature of business, previous record.

d) Collateral
Properties or assets that are offered to secure a loan or other credit. An additional security given against the loan. Before advancing the loan the banker should preferred to pledge any properties to secure a loan. It refers to the right that a banker has to liquidate goods if you fail to service as loan.

e) Hypothecation
Where a borrower pledges collateral to secure a debt, but the ownership remains to the borrower.

f) Pledge
Something delivered as security for the payment of a debt or fulfillment of a promise, the act of delivering goods, property to another for security.

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g) Mortgage
All the document of the ownership and registration of moveable property is submitted to the bank with an authority letter which has an agreement to give authority of selling property in case when borrower will not able to repay the loan.

Government Department
Payment of pension also is being done by this department. Department of Government section receives the district, provincial and central receipt. It also performs the duty of collecting all Government departments' utility bills, and cheques payment.

Government Receipts
Utility Bills District, Provincial and Central Taxes Admission Fee of Allama Iqbal Open University (AIOU)

NBP makes payments to following,

Retired officers of Armed Forces Retired teachers, and lecturers Civilian Defense civilian pensioner Wapda and railway retired employees

Documents required for the pension payments,

Pension payment order Copy of NIC Pension book Photographs of the pensioner Information regarding, occupation, department and cell number Two specimen signature

Pension Enhancement Procedure

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First the pensioner should have pension book Pensioner information form, to be filled in by the pensioner

Pension Adjustment According to 2011 Budget

According to 2011 budget, The employees, who were retired before 2002, will take 20 % increment in pension and also 20 % increment in Medical The employees, who are retired after 2002, will take 15 % increment in pension and also 15 % in Medical

Remittance Department
The Remittance department deals with the transfer of money from one place to another. This department deals with either the transfer of money from one bank to other or from one branch to another for their customers and also worldwide. Remittances through banking channels save time, less costs and eliminate the risks.

National Bank of Pakistan transfers money in following ways;

Pay Order Demand Draft Mail Transfer Telegraphic Transfer Pay Slip Call deposit Receipt Letter of Credit Traveler's Cheque

Kinds of Remittances
Transfer within the branch Transfer from one branch to another Transfer from one bank to another bank in the same city Transfer from one city to another or worldwide. 36

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Parties Involved in Remittance

There are four parties involved in Remittance,
a) Remitter b) Remittee c) Issuing Bank d) Paying Bank

a) Remitter
One who request for remittance. The remitter comes to issuing branch, asks for a remittance to be made, and deposits the money to be remitted. The bank charges him a commission. He may or may not be the branch customer

b) Remittee
A remittee is also known as payee. The person in whose name the remittance is made or the person who receives the payment.

c) Issuing Bank
The bank that sends or issue the remittance through demand drafts and other remittance instruments.

d) Paying Bank
Paying bank also known as the drawee branch. The bank that makes the payments.

Clearing House Department

It is place where both debtors and creditors from different commercial banks gather to settle their claims. Clearing is the transfer of funds from one branch of bank to other branch of the same bank or the other bank on which the instrument is drawn, without involving the cash. It also Facilitate customers for payment their cheques of other banks. The clearing system enables cheques to be paid or cleared centrally and settlement made for receivables and payables between the banks. Formally, SBP co-ordinates clearing activities but where SBP does not have its own office, National Bank of Pakistan performs 37

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this functions. But clearing house facility is available only for the banks situated within the same city.

Following are types of cheques collected for clearing;

a) Transfer Cheques b) Clearing Cheques c) Collection Cheques

a) Transfer Cheques
Transfer cheques are those cheques which are collected and pain by two different banches of the same bank of same city

b) Clearing Cheques
Clearing cheques are those cheques which are drawn on the branches of some other bank of the sane city

c) Collection Cheques
Collection cheques are those cheques which are drawn on the branches of either the same bank or of another, but branches are not in the same city or they are not the member of clearing house.

There are two types of clearing;

a) Inward Clearing b) Outward Clearing

a) Inward Clearing
All cheques and drafts deposited by the customers for collection from other bank locally or out of city are called inward clearing. The entry is made in the inward clearing register, serial no. , Instrument no. , Account no.

b) Outward Clearing
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When bank send cheques to another bank for clearing. All cheques and drafts of NBP when deposited in any other bank for collection then those banks send that cheques to NBP for clearance and collection through the agent of SBP on behalf of their customer.

Procedure
Endorsement Checking
Every cheque must be check by deposit section to ensure that the cheque is genuine. Name, signature of drawer, crossing stamp, name, title of account and account no.

Test Code Checking

After endorsement checking, then it passes over to operation manager fir clearing the accuracy of test code applied on it.

Signature Checking & Record the Cheque

Signature code must be checked by the incharge of remittance and collection section, then all the cheques are written in an advice received folder

Clearance
After checking all requirements a fanfold affixing with a stamp of "Your LSC/SC is paid" and TR code i.e. 74 is send to SBP. The date of sending advice number and sender name must be recorded in transfer register.

Timing for Clearing

The timing for clearing in NBP Main Branch Vehari is following

Before Ramzan:
1st Clearing 10 am 2nd Clearing 1 pm

During Ramzan:
1st Clearing 9.30 am 2nd Clearing 12 pm 39

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PEST Analysis
It is very useful for an organization to consider its environment before beginning the process. In fact, it is very important to continue the environmental analysis and feed all aspects of planning. The organization's environmental analysis is made up of,

The internal environment e.g. staff, office technology, wages and finance. The micro-environment e.g. external customers, agents, distributors, suppliers and competitors. The macro-environment e.g. political forces, economic forces, socio-cultural forces and technological forces.

These are known as PEST factors;

Political, factors are how and to what degree a government interferes in the
economy such as tax policy, labour law, and trade restrictions.

Economic, factors includes economic growth, interest rates exchange and

inflation rate.

Social Cultural Factors, factors include the cultural aspects such as population
career attitudes.

Technological Factors, factors include technological aspects

Political Factors
Political instability in Pakistan can lead to changes in laws and policies which can be in favor or against the banking sector

Major Political down falls,

Violence in Karachi Talibinization affected our repute in the world Investors hesitate investing in Pakistan

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Militancy operation in FATA, NWFP and other Tribal Areas it impact on other parts of the country Privatization policy and de-regulation The struggle for a share of power between the provinces Absence of a complete constitution Employment practices, union and association Incidents of high taxation on banking industry

Economical Factors
Economy of Pakistan is facing issues about employment, inflation, illiteracy, which hinders business growth.

Major Issues;
Inflation stood at 16.50 percent and gradually increasing Decrease 2.4 % in Gross Domestic Product Balance of payment Debt of government increased Decrease in Foreign direct investment Staff Cost Operating Cost

Socio Cultural Factors

Low saving culture Religious culture and people hesitate to accept interest 15.2 percent unemployment and increasing population Inadequate H.R Defaulter's lobby Inadequate accountability

Cultural issues can be there but still as there a=are a number of multinational companies there, therefore, cultural issues are not prominent

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Technological Factors
Inadequate communication infrastructure Inadequate computer facilities Inadequate training facilities

But, NBP can introduce new technology to increase competencies, Banks turning to heavy IT investments which differentiate their products Provide response times Improve customer satisfaction Products and services are gaining faster acceptance like ATM, internet banking and mobile banking

SWOT Analysis
SWOT Analysis is a strategic planning used to evaluate the strengths, weakness, opportunities, and threats involved in a business venture. It involves specifying the objective of business venture and identifying the internal and external factors.

Strengths, Attributes of the organization that are helpful and give it an advantage
over others in the industry.

Weakness, Attributes of the organization that is harmful and disadvantage

relative to others.

Opportunities, External conditions which are helpful to achieving objectives,

and to make greater sales and profit.

Threats, External conditions which could cause damage/trouble to the business's

performances.

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Strengths
Declared World's best Foreign Exchange bank in 2008 10 the best bank in terms of "Profit on capital" in the world Gold loan facility Agricultural loan on low rates Employee's allowances are high against competitors NBP has largest branches network in Pakistan Government support NBP is a Government bank and perform functions like giving salaries and pension payment, utility bills collection NBP has strong financial scheme Advance salary scheme AAA rating, credit standing First Bank to open branch in Kabul First Pakistani Bank to open branch in Iraq Large overseas Branch network Western Union Facility NBP Rozgar scheme Renewal of licenses No cash withdrawal limit on ATM

Weaknesses
Poor Technology Poor Staffing Poor communication system ATM facility is not provided in all branches Rude employee's behavior with customers Political influences Lack of technical education Lack of implementation of rules and regulation 43

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Poor decoration of NBP branches There is no proper system for internee's training Less number of online branches Nepotism / Favoritism No participation of employee's in decision making, policy making and setting up of strategic goals Less female staff Less number of employee's The employees have to complete their work manually, which is very time consuming Pension system still depend on registers, no computerize system

Opportunities
Being a Government Bank NBP has wide scope in economic market Being an agent of SBP it can play vital role in local economy Earning commission on government transactions NBP can expand its business by opening new branches in different countries NBP can diversify its investment and they can earn more foreign exchange by making investment in capital market NBP should offer more schemes for agriculture and industrial sector. They should provide finance to farmers both for short and long term basis Proper advertisement of NBP products and services can lead to high demand NBP must have to develop its information technology system in branches Should provide online banking facilities in all branches Bank's deposit is increasing rapidly so there is a great opportunity to enhance its investment and financing Reliability creates chances to enhance deposit and profitability

Threats
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Employee's rude behavior with customers Professional jealousy among the employee's Customers dissatisfaction Poor performance of employee's that can affect the goodwill of bank The involvement of political references during recruitment can be threat for NBP NBP is lacking behind in IT and computer professionals compare to others The No. of banks are increasing and they facilitate their customer better than NBP SBP rated NBP "Marginal" in respect of System & Control Government payment and salaries create heavy workload

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