NBP internship report insights

NATIONAL BANK OF PAKISTAN

INTERSHIP REPORT on
NBP BY MIRZA IHSAN
ULLAH #306-3332407
M.COM (FINANCE).
GOVERNMENT COLLEGE UNIVERSITY FSD.
B.ED(2012)
Mirza Ihsan Ullah-3063332407

2009 2010 2011 2012
Dedication
I dedicated my Report
To all Muslim invaders who gives their life, time ,blood, family and other resources
for the expansion of Deen MUHAMMAD (SAW) without any cares. Such as Musa
Ibn Nusayr and Tariq Ibn Ziyad, Muhammad bin Qasim Sultan Salahuddin, Ayubi
Tipu sultan.
&
To Templar knight and Freemason in very sad manner who wants to change
the world but happen only ALLAH wants.

MAIN BRANCH JARANWALA

INTERSHIP REPORT on NBP BY MIRZA IHSAN ULLAH #306-3332407 2012

Dedication

I dedicated my Report
To all Muslim invaders who gives their life, time ,blood, family and other resources
for the expansion of Deen MUHAMMAD (SAW) without any cares. Such as Musa

Ibn Nusayr and Tariq Ibn Ziyad, Muhammad bin Qasim Sultan
Salahuddin, Ayubi Tipu sultan.

&
To Templar knight and Freemason in very sad manner who wants to change the
world but happen only ALLAH wants.

2


Executive summary
National Bank of Pakistan is a Govt. bank. It has its head office in Karachi. It has
over
1,283 branches in Pakistan & 23 abroad. National Bank of Pakistan maintains its
position as Pakistan's 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 Pakistan's economic growth through aggressive and
balanced lending policies, technologically oriented products and services offered
through its large network of branches locally, internationally and representative
offices.
The National Bank of Pakistan offers a wide range of products& services to its
customers & recognizes the importance of efficient business delivery & providing
timely solutions. Now online facility of fund or cash transfer increases the strength of
NBP. cash in gold facility very popular in the market.

Their competitors are untied bank, Allied bank, Habib bank, First women bank, Bank
of Punjab etc. The essence of business philosophy is to cater to the banking
requirements of small & medium sized entrepreneurs, providing them qualitative &
competitive services with emphasis on encouraging exports. Its products are Pay
Order, Mail Transfer, Foreign Remittance, Foreign Currency Account, Short Term
Investment, cash in gold, Commercial Finance etc.

In Jaranwala, Main Branch of National Bank of Pakistan.
Branch code is 0342 & phone number is 0414-312631

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Preface
In order to be able to cope with the changing environment it is necessary to have
some Practical experience It is requirement of GOVERNMENT COLLEGE
UNIVERSITY FSD. that all students of M.com have to spend Six Week in any
organization to get practical exposure and to get familiarized with the ways to live in
the organizational environment which is dramatically different from the educational
environment.

That six week period called “Internship period”, if spent properly and sincerely,
enables the students to be more confident, more knowledgeable, more responsible
and more committed to its work in the practical field. I have also been assigned to do
internship of six weeks period in National Bank of Pakistan Main Branch jaranwala.It
has enabled me to understand the practical scenario and sharpen our decision
making power and utilizing the resources in an effective manner, so that our
resources generate maximum profit. In preparing this report, I have put all of my best
efforts and tried my level best to give maximum knowledge.

Despite of my all the coherent efforts, I do believe that there will always be a room
for improvement in the efforts of learner like me

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Acknowledgement
First, all praises go to the Almighty Allah, the most gracious, the most merciful, the most kind
& generous to man & his action. And who granted me a wealth of knowledge, love and
respect to share with my fellow beings. He gave me courage to pursue my passion against
all odds.

I owe my greatest gratitude to my parents for their continuous support, assistance, guidance,
love and patience without which I could not have completed this internship and report in
such a short span of time.

I am deeply indebted to my chosen bank i.e. NBP and their customers who participated in
the study. I am especially thankful to Branch manager & Mr. Muazzam in charge of
clearing department who give me cooperative company and all the staff for agreeing to
provide the required data and give me priceless knowledge.

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Table of contents
Topics page #
CHAPTER NO. 1 Evolution of banking & Introduction of NBP

1.1 Evolution & Introduction of banking --------------------------------------------------- 2
1.2 Banking history in Pakistan------------------------------------------------------------ 3
1.3 National bank of Pakistan ------------------------------------------------------------- 5
1.4 Role & Function of NBP------------------------------------------------------------------ 11
1.5 Business volume of NBP ----------------------------------------------------------------- 13
1.6 Branch Network of NBP------------------------------------------------------------------- 14
1.7 Competitors of NBP----------------------------------------------------------------------- 15
1.8 Awards and Achievements of NBP---------------------------------------------------- 16
CHAPTER NO. 2 Organizational structure & Branch Structure
2.1 Organization structure and management------------------------------------------- 18
2.2 Organizational Hierarchy chart---------------------------------------------------------- 19
2.3 Board of Directors of NBP---------------------------------------------------------------- 20
2.4 What BOD does----------------------------------------------------------------------------- 21
2.5 Senior management of NBP------------------------------------------------------------- 23
2.6 Branch structure & Branch employees Chart & of NBP--------------------------- 25
2.7 Authority &decision making in Branch------------------------------------------------- 26
2.8 Chart of hierarchy of Branch to Head office------------------------------------------ 27
2.9 Head of management in NBP----------------------------------------------------------- 27
CHAPTER NO. 3 Products of National Bank OF Pakistan
Introduction of NBP products------------------------------------------------------------ 31
3.1 NBP Premium Amdani--------------------------------------------------------------------- 31
3.2 NBP premium Saver----------------------------------------------------------------------- 32
3.3 NBP Saibaan--------------------------------------------------------------------------------- 33
3.4 NBP Advance Salary----------------------------------------------------------------------- 34
3.5 NBP Cash Card- --------------------------------------------------------------------------- 36
3.6 NBP Investor Advantage------------------------------------------------------------------ 37
3.7 NBP Cash n Gold-------------------------------------------------------------------------- 38
3.8.9 NBP Kisan Taqat & NBP Kisan Dost ------------------------------------------------ 39
3.9 NBP Pak Remit---------------------------------------------------------------------------- 39
3.10 NBP Protection Shield-------------------------------------------------------------------- 40

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CHAPTER NO. 4 Departments in NBP Branch Jaranwala

4.1 Cash Department-------------------------------------------------------------------------- 43
4.2 Accounts Department---------------------------------------------------------------------- 46
4.3 Advance Department·--------------------------------------------------------------------- 50
4.4 Remittances Department----------------------------------------------------------------- 51
4.5 Clearance Department----------------------------------------------------------------- 53
4.6 Govt. Collection Department---------------------------------------------------------------- 55
CHAPTER NO.5 MY Learning as a Trainee
5.1 Introduction of Branch and learning--------------------------------------------------- 57
5.2 1st department where I worked (Remittances) ------------------------------------- 57
5.3 2st department where I worked (Account Opening) ------------------------------- 59
5.4 Government Department (FEW DAYS) ---------------------------------------------- 63
CHAPTER NO.6 SOWT Analysis of NBP
6.1 Introduction of SWOT Analysis--------------------------------------------------------- 66
6.2 Swot analysis of NBP---------------------------------------------------------------------- 67
CHAPTER NO.7 Financial Analysis NBP
7.1Introduction of FSA------------------------------------------------------------------------ 70
7.2 3 Years Statement of Financial Position of NBP------------------------------------ 71
7.3 3 Years Statement of comprehensive income--------------------------------------- 72
7.4 Ratio analysis of NBP---------------------------------------------------------------------- 73
7.5 Horizontal analysis of Financial statement----------------------------------------- 83

7.6 Vertical analysis of Financial statement--------------------------------------------- 88

Conclusion---------------------------------------------------------------------------------- 93

Findings &Recommendation--------------------------------------------------------- 95

References -------------------------------------------------------------------------------- 98

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Chapter no 1
 Evaluation& Introduction of Baking
 Formation, Introduction, Function ,role
,Business volume, Branch network
&Achievement of organization

Page 2-17

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1.1 Evaluation& Introduction of Baking

The word “banking” is derived from the words Bancus, Banque or Back. The history
of Banking is traced to as early as 2000BC.

The origin of banking is also traced to early goldsmith. The first stage in the
development of modern banking thus was the accepting of deposits of cash
from these persons who had surplus money with themselves.

In the second step, goldsmiths used issue receipts for the money deposits with them.
These receipts began to pass from hand to hand in settlement of transaction.

In the same time they thought it profitable to lend at least some of the money
deposited with them to the needy persons. This proved quite a profitable business
for the gold smiths.

In order to create confidence among the people, different steps were taken to
regulate the banking organization.

A conference was held in Nuremberg, 1584. It was decided that a bank should be
set up by the state, which should streamline the banking organization and technique.

The first central bank was formed in Genoa in 1587. Banks of England were
established in 1694. With the passage of time the activities of the commercial banks
have greatly increased. They now deal with large number of matters such as
obtaining funds, advancing loans to businesses, farmers, households, and making
investment in stocks discount bills of exchange etc.

MODERN BANKING
By the year 1700 the bank of England was not only 100 issuing notes but also
conducting accounts for customers. In 1853 bank of England further impetus for
cheques, currency, and they became very popular among the customers who would
either pass them from hand to hand. In 1946 the labor government nationalized the
Bank of England.

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1.2 BANKING HISTORY IN PAKISTAN:
At the time of partition, the total number of commercial bank on Pakistan was 38 out
of these: the Pakistan banks were 2; Indian banks 29 and the exchange banks & the
total deposits of Pakistan banks stood at Rs.880.0 millions where the advance is
were Rs.198.0 million. Before partition of sub continent, the entire banking business
was almost controlled and managed by non-Muslims. The Muslims were deliberately
kept cut of banking profession by the healthy Hindu community. When Hindu
capitalists became sure of the division of sub continent: they secretly began transfer
their capital to the safe place in India, when Pakistan declared an independent state
in august 1947. The fund and other valuables were transferred at an accelerated
pace to India. . The numbers of scheduled banks branches were reduced from 619
to 213 only both wings of the country after in dependence. The non-schedules banks
also suffered a severe jolt and their number was reduced from 411 to 106 over the
same period. West Pakistan where there was greater exodus of non-Muslims to
India suffered a great deal as a number of branches fall down from 487 to 69.In the
East Pakistan though the number of branches were not closed in such a great
number as in West Pakistan, a large number of portion of the deposit were
withdrawn from the banks and transferred to transferred to India by

the non Muslims. The mass scale closure of branches and with drawl of the deposits
caused a dead lock in the banking business in Pakistan .The government of Pakistan
was quite aware of the serious banking situation caused by the withdrawal of
deposits and whole scale migration of banking staffs to India. It took up the challenge
and started recognizing the crippled banking immediately after partition .A
moratorium of free months was also allowed to banks that had financial difficulty due
to sudden with drawl of deposits. In addition to above the following arrangements
were made for facilitating settlement of claims by the governments .Each bank was
to declare on to its offices both in India and Pakistan as clearing house for transfer of
accounts. Each bank was open at lea stone central office in Pakistan Where it could
consolidate work of all its branches and Start

Paying out to depositors. The government took some effective measures for
providing banking Training facilities to Muslims.

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There were some complaints that Hindu banks were not honoring the cheques of
Pakistani national and were also refusing to give securities kept in their custody. The
government issued an ordinance which empowered it to investigate all such
complaints and if satisfied of their bonfires, the payment should be realized. In case
the bank insisted on non-payments, the government should realize the assets of the
banks, which were sufficient to discharge such liabilities. The government
of Pakistan also allowed the removal of Valuables, kept in save deposits vaults and
lockers by Submitting an application and getting necessary approval from the
custodian of evacuee property .The government of Pakistan tried to provide all kinds
of facilities with sincerity to the known Muslims bankers for restoring normal banking
facilities in the country but the response was discouraging. An inter dominion
agreement was reached between India and Pakistan in April1949.The main
provisions of the agreement were as under;

The inter dominion agreement could not be fully implemented.

India delayed the transfer of Muslim deposits to Pakistan.

The non devaluations decision of Pakistan government further led to the suspension
of remittance facilities through normal banking channels. Due to panicky with drawl
of deposits; some banks went into liquidation and the payments could not be made
to the depositors. In order to regulate the both of banking on sound footing, the
following measures were taken to develop the banking system in Pakistan. The state
bank of Pakistan which is the central bank of the country was established in July
1948. The national bank of Pakistan was established on 1949. This bank is to serve
as an agent to the SBP in the areas ,where SBP has no set-up.

DEFINITION OF BANK

Banking companies ordinance 1962 section 5(b) defines bank as, “Banking
means the accepting for the purpose of lending or investment, of deposits of money
from the public, repayable on demand or otherwise, an draw able by cheques, drafts
order or otherwise.

In other words,

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A bank is an institution which Accept deposits at lower rate of interest and give
advances at higher rate of interest.

1.3 NATIONAL BANK OF PAKISTAN
History and growth of NBP
The history of National Bank of Pakistan is part of Pakistan‟s struggle for economic
independence. National Bank of Pakistan was established on November 9, 1949
under the National Bank of Pakistan Ordinance, 1949 in order to cope with the crisis
conditions which were developed after trade deadlock with India and devaluation of
Indian Rupee in 1949. Initially the Bank was established with the objective to extend
credit to the agriculture sector. The normal procedure of establishing a banking
company under the Companies Law was set aside and the Bank was established
through the promulgation of an Ordinance, due to the crisis situation that had
developed with regard to financing of jute trade. The Bank commenced its operations
from November 20, 1949 at six important jute centers in the then, East Pakistan and
directed its resources in financing of jute crop. The Bank‟s Karachi and Lahore
offices were subsequently opened in December 1949.
National Bank of Pakistan is the Pakistan's 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 Pakistan's economic growth through
aggressive and balanced lending policies, technologically oriented products and
services offered through its large network of branches locally, internationally and
representative offices. In modern business services provided by organizations are
termed as Products
The National Bank of Pakistan came forward to establish its offices in the Cotton
growing areas and extended credit facilities liberally in order to restore stability to the
market. In 1951, the country was once again faced with a crisis in the cotton trade
when prices was crashed and touched the lowest level since independence following
the cessation of hostilities in Korea. The bank in collaboration with the cotton board
provided the necessary Credit facilities to the trade and the crisis was tided over.
The nature of responsibilities of the Bank is different and unique from other
banks/financial institutions. The Bank acts as the agent to the State Bank of Pakistan
for handling Provincial/Federal Government Receipts and Payments on their behalf.

12


National Bank of Pakistan is today a progressive, efficient, and customer focused
institution. It has developed a wide range of consumer products, to enhance
business and cater to the different segments of society. Some schemes have been
specifically designed for the low to middle income segments of the population. These
include NBP Advance Salary, NBP Saibaan, NBP Kisan Dost, and NBP Cash n Gold
Nowadays and credit rating

At present day nbp is the main hand of government and state bank of Pakistan .nbp
performs many functions on behalf of government .NBP works in Pakistan as well as
in abroad.

Short term & long term credit rating

Sr. Name of Rating Short Long Date of Remarks
# Bank Agency Term Term Rating

National Rating
Bank of JCR-VIS A-1+ AAA JUNE Outlook -
Pakistan 2011 Stable

Definition of A-1’

The term A-1 when rating an insurer's ability to meet debt obligations in the short
term. A-1 indicates that the insurer has a strong ability to meet its debt obligations.
A-1 is the highest rating that Standard & Poor's issues for short-term debt.

Definition of 'AAA'
The highest possible rating assigned to the bonds of an issuer by credit rating
agencies. An issuer that is rated AAA has an exceptional degree of creditworthiness
and can easily meet its financial commitments. Ratings agencies such as Standard &
Poor's and Fitch Ratings use the AAA nomenclature to indicate the highest credit
quality, while Moody's uses AAA.

13


VISION STATEMENT OF NATIONAL BANK OF
PAKISTAN

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

14


MISSION STATEMENT OF NATIONAL BANK OF
PAKISTAN

• Creating a distinctive brand identity by providing the highest
standards of services
• Adopting the best international management practices
• Maximizing stakeholders value
• Discharging our responsibility as a good corporate citizen of
Pakistan and in countries where we operate

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CORE VALUE OF NATIONAL BANK OF PAKISTAN

• Highest standards of Integrity
• Institutionalizing team work and performance culture
• Excellence in service
• Advancement of skills for tomorrow‟s challenges
• Awareness of social and community responsibility
• Value creation for all stakeholders

16


GOAL OF NATIONAL BANK OF PAKISTAN

To enhance profitability and maximization of NBP
share through increasing leverage of existing customer
base and diversified range of products.

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1.4 Role of the organization in Pakistan

NBP is playing a vital role in development of Pakistan; NBP is making a pioneer role
in development of agriculture sector, which is the main production sector in Pakistan.
As we all knows that agriculture sector is major part of our exports e.g. cotton,
sugar, rice, wheat etc. so its helps to earn major part of foreign exchange through
our exports. The nature of responsibilities of the Bank is different and unique from
other banks/financial institutions. The bank also handles treasury transactions for the
Government of Pakistan as an agent to the State Bank of Pakistan for handling
provincial/Federal Government receipts and payments on their behalf. The National
Bank of Pakistan has also played an important role in financing the country‟s growing
trade, which has expanded through the years as diversification.

1.5 FUNCTIONS OF NATIONAL BANK OF PAKISTAN

National Bank of Pakistan is a commercial bank, so like other commercial banks it is
engaged in financing internal trade and also in other ordinary banking business of
receiving deposits, advancing loans and discounting bills of exchange.

Accepting Deposits

The most important function is to receive surplus money from the public. They throw
their nets as wide as possible to collect surplus balances of individuals, firms and
public institutions. In order to attract funds they have introduced various types of
deposit schemes that may suit the needs and tastes of a large body of depositors.

 Current account
 Saving account
 Fixed deposit account.
Advancing Loans

Every bank has learnt by experience that depositors do not draw whole of their
deposits at a time. They only draw a part of it for day to day transactions; therefore a
bank keeps a part of the total deposits as “cash reserve” to meet the cash demand of
depositors and advances the Tijarat Ganj part of deposits to businessmen on
interest.

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National Bank of Pakistan gives loans in following ways.

 By opening a loan account
 By means of overdraft
 By discounting bills of exchange
 By purchasing bond and securities
Creation of the Medium of Exchange

It is neither safe nor easy to make payment in the form of metallic coin or paper
notes; therefore cheques make payments. Almost 90% of the financial transactions
are made through cheques. National Bank of Pakistan collects and makes payment
of cheques for its customers.

Transfer Money

National Bank of Pakistan provides facility to transfer from one place to another at
very nominal charges. When a person wants to transfer his money from one place
he handover money to the bank and gets a draft at the name of the particular branch
were he needs the money and gets money at that place safely.

Agency Service

National Bank of Pakistan performs many services as an agent of its clients or
depositors. It makes payment on order cheques receives amount of money on
crossed cheques issued in favor of its clients and deposits the amount tin their
accounts.It purchases bonds and shares of joint stock companies for its clients under
their consent.

General Utility Services

It keeps their precious documents, gold ornaments, bonds, and shares etc in safe
custody in its locker. National Bank of Pakistan provides the services of clearing the
utility bills i.e. electricity, gas and telephone bills of its customer and provide evening
banking service.

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1.6 Business volume:
The National Bank of Pakistan is the foremost bank determined to set higher
standards of achievements. It is the key business partner for the Govt. of Pakistan
with special emphasis on nurturing Pakistan‟s economic growth through aggressive
& impartial lending policies.
As we look to the business side volume of NBP.NBP has strong position of assets
and deposits. The assets and deposits of NBP increasing day by day. it shows the
trust of people on NBP. With the help of this it can expand their business.
Loan and equity of NBP increases from previous years. It means more equity means
more share and it means more capital.

Years from 2009 to 2011

Particulars 2009 2010 2011
Total Assets
946,253,269 1,038,018,467 1153480100

Total Deposits
727,513,013 832,134,054 927415127

Total Equity
10,763,702 13,454,629 16818286

Total Loans
727,513,013 832,134,054 927415132

Total Investments
217,596,037 301,078,498 319527524

Net Profit
21119 24662 26116

Earnings per share 12.97 13.24 10.53

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1.7 Branch Network of National Bank of Pakistan
With the geographical development of its branches, the National Bank of Pakistan
has been able to extend its services to a much larger number of Pakistanis all over
the country. Today the Bank has more than 8.8 million accounts & Bank maintains its
presence in all the major financial centers of the world through its 23 (2011)
overseas branches and 5 representative offices. Of these, three representative
offices have recently been set up at Tashkent (Uzbekistan), Baku (Azerbaijan) and
Almaty (Kazakhstan) to take advantage of the emerging opportunities in CIS
countries. Bank‟s role Apart from having a vast branch network, Bank is at the
forefront in the acquisition and application of new technologies in every aspect of its
banking facilities. It has acquired leased telephone lines for on-line banking. The
Bank has 12 Regional Computer Centers to cover various on-line and batch system
requirements of branches and controlling offices. Presently the National Bank of
Pakistan is divided into various Groups headed by SEVPs/EVPs. Its field operations
are controlled by 23 regions reporting to as many Regional chiefs, who control 40
zones and 15 single Branch zones headed by Zonal Chiefs; 12 corporate branches
and 1283 domestic branches headed by Branch Managers. The bank has 13 SWIFT
local centers.
Apart from having a vast branch network, Bank is at the forefront in the acquisition
and application of new technologies in every aspect of its banking facilities. It has
acquired leased telephone lines for on-line banking. Bank has also a presence on
the internet. The of Pakistan has 1274 online branches throughout the country. It has
modernized its services by installing Automated Teller Machines (ATMs) called
“CASH LINK” at selected branches. The Bank's organizational structure reflects the
three levels at which it operates: international, national and local. The Head Office
formulates and implements the strategic, management and operational policies.
The Bank's geographical organization consists of branches located in the regional
capitals and in some provincial capitals. The branches' activities relate to the State
treasury service, payment system services, currency circulation, banking and
financial supervision, and the analysis of economic and financial developments at
the local level.

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The Bank has representative offices abroad, in London, New York and Tokyo; a
number of officers are seconded as financial experts to Italian embassies and
consulates. The Bank has representative offices in Beijing, Tashkent, Chicago and
Toronto

1,283 Branches
23 Overseas Branches
29 Regional Offices
10 Representative Offices
1274 Online branches
5 Subsidiaries
149……………. ATM
4 Joint ventures
8 Islamic baking

1.8 COMPETITORS OF NBP

The competitors of the National Bank of Pakistan are as follows:
Askari Bank National Savings
Habib Bank Limited Allied Bank Limited
United Bank Limited Faysal Bank
First Woman Bank Standard Charter
Muslim Commercial Bank Bank Al-Falah
Bank of Punjab Silk Bank
Dubai Islamic Bank Sonehri Bank

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1.9 NBP Awards and Achievements.

2011 &2012

 Listed in top 1000 banks of the world for the year 2012" by the world
renowned “The Banker” magazine owned by the Financial Times Group,
London.

 “Pakistan: Transaction of the Year Award - 2011”, awarded by Islamic
Finance News, for two wind farm projects of 50MW each in which the bank
acted as international inter-creditor agent (for the Islamic Development Bank,
the Asian Development Bank and syndicates of local banks).
 “Transaction of the Year Award - 2011”, awarded by CFA Association of
Pakistan for the private placement and offer-for-sale of Engro Foods Limited.

 "Bank of the Year" awarded for the year 2011 by the world renowned "The
Banker" magazine owned by the Financial Times Group, London

 "Top Corporate Finance House (Fixed Income) Award of the Year 2011",
awarded by the "CFA Association of Pakistan".
 National Bank of Pakistan Awarded “Best Emerging Markets Bank 2011”
Awarded By Global Finance Magazine.
 “Bank of the Year” awarded for the year 2010 by the world renowned “The
Banker” magazine owned by the Financial Times Group, London
 "Runner up of Corporate Finance House (Fixed Income) Award of the
Year 2010", awarded by the "CFA Association Pakistan".
 NBP is awarded “President of Pakistan Trophy”, a top slot award by
Federation of Pakistan Chambers of Commerce and Industry in 2010.
 NBP is awarded “Prime Minister of Pakistan Trophy”, a top slot award by
Lahore Chambers of Commerce and Industry in 2010
 Among the global leading banks, NBP is the only Pakistani bank appearing in
top 500 banks of the world in “The Banker” magazine owned by the
Financial Times Group, London

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Ch no. 2

Organizational Structure and Management

&

Branch Structure and Management

Page 18 - 29

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2.1 Organizational Structure and Management
A well-developed and properly coordinate structure is an important requirement for
the success of any organization. It provides the basic framework within which
functions and procedures are performed. Any organization needs a structure, which
provides a framework for successful operations. The operation of an organization
involves a number of activities, which are related to decision making, and
communication of these decisions. These activities must be well coordinated so that
the goals of the organization are achieved successfully
The Organization Structure shows the internal operations and reporting lines of the
National Bank of Pakistan. The bank has clearly defined organizational structure,
which supports clear lines of communications and reporting relationships.
There exists a properly defined financial and administrative power of various
committees and key management personnel, which supports delegations of authority
and accountability.
The internal operations of the Bank are organized into 15 main departments and
divisions headed by senior management of the bank and are report directly to the
Board of Directors. The organizational structure of National Bank of Pakistan is
centralized because all the decisions of the bank are taken by the top Management.
The National Bank of Pakistan‟s Departmental key roles and functions are as
follows:
The ownership, management, and control of all the commercial banks were taken
over by the Government of Pakistan on January 1 st, 1974. A banking council was
formed under the Nationalization Act 1974. The banking council was set up for
making policy.Recommendations to the Federal Government, formulating policy
guidelines for the banks and their reorganization.
The management and organizational structure of the nationalized banks have
uniformity. This management and organizational structure is briefly described as und

25


26


2.3 BOARD OF DIRECTORS
Pursuant to Section 11 of The Banks‟ (Nationalization) Act, 1974, the number of
Directors of the Bank shall not be less than 5 and not more than 7, excluding the
President. The Federal Government may, if deems necessary, appoint a Chairman
of the Board in respect of the Bank. At present National Bank of Pakistan‟s Board of
Directors consist of 6 Directors and a President who is the Chief Executive of the
Bank and presides over the meetings of the Board

1.Qamar Hussain
Chairman Board, President , NBP
Mr. Qamar Hussain is the President of National Bank of Pakistan (NBP), the largest
Commercial Bank of the country. He holds an MBA degree in International Business
& Finance from Mcgill University, Montreal, Canada and has undergone
extensive training in business leadership abroad.

Mr. Hussain started his banking career from Bank of America N.T. & S.A., Pakistan
in the year 1981. Prior to joining NBP in 2009, he has worked with American
Express Bank Limited as Senior Director Global Credit, New York and earlier as
Senior Director Country Manager, Bangladesh. He had also been associated with
the CHASE MANHATTAN BANK in Pakistan and USA.

2.Mr. Tariq Kirmani
Director
Soon after completing his Masters in Business Administration (MBA) Mr. Kirmani
embarked upon a rewarding career, starting with a multi-national Oil Company
(Caltex later Chevron Pakistan) in 1969 and worked for seven years in the United
States of America, United Arab Emirates and Australia in different senior
management positions in Marketing, Operations and Finance. In 1991, Mr. Kirmani
became the first Pakistani to be elected as a Company Director of the mentioned
multi-national company.

3.Mrs. Haniya Shahid Naseem
Director

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Mrs. Haniya Shahid Naseem has done her Masters in Business Administration with
honors in 1995. She is a certified director from the Pakistan Institute of Corporate
Governance and has also done various short courses in management and banking.
Mrs. Haniya Shahid has more than 15 years of diversified experience in the
education, agriculture and corporate sectors..
4,Mr.Aftab Anwar Baloch
Director
Mr. Aftab Anwar Baloch an officer of Pakistan Customs Service belongs to Seventh
Common Training Programmed. He joined service of Government of Pakistan
during 1980 and possesses 32 years of rich experience both in formulation and
implementation of fiscal policy relating to levy charge and collection of Federal
Taxes i.e. Customs Duty, Sales Tax, Federal Excise Duty etc.

5.Mr. Shahid Aziz Siddiqi
Director
Mr. Shahid Aziz Siddiqi is presently Chairman State Life Insurance Corporation of
Pakistan. Mr. Siddiqi holds a Master Degree from the Karachi University and a Post
Graduate Diploma in Development Studies from the University of Cambridge UK. Mr.
Siddiqi topped the Civil Services examination of 1968.

6.Mr. Zahid Hussain
Director
Zahid Hussain started his career with Pakistan Tobacco Company Ltd. and
subsequently worked for British American Tobacco Co. Ltd, London. Later he joined
Pakistan Automobile Corporation and served Suzuki, followed by Toyota as General
Manager Marketing. He was promoted as Chief Executive MAZDA.

2.4 What directors do…..?

1. The Board of Directors shall assume its role independent of the influence of the
Management and should know its responsibilities and powers in clear terms
2. The Board shall approve and monitor the objectives, strategies and overall
business plans of the institution.

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3. All the members of the Board should undertake and fulfill their duties
&responsibilities keeping in view their legal obligations under all the applicable laws
and regulations.
4. The Board shall clearly define the authorities and key responsibilities of Senior
Management without delegating its policymaking powers to the Management and
shall ensure that the Management is in the hands of qualified personnel.
5. The Board shall approve and ensure implementation of policies, including but not
limited to, in areas of Risk Management, Credit, Treasury & Investment, Internal
Control System and Audit, IT Security, Human Resource, Expenditure, Accounting &
Disclosure, and any other operational.
6. As regards Internal Audit or Internal Control, a separate department shall be
created which shall be manned preferably by professionals responsible to conduct
audit of the Bank, Various Divisions, Offices, and Units Branches etc. The Head of
this department will report directly to the BOD or Board Committee on Internal Audit.
7. The business conditions and markets are ever changing and so are their
requirements. The Board, therefore, is required to ensure existence of an effective
„Management Information system‟ to remain fully informed of the Activities
8. The Board should meet frequently (preferably on monthly basis, but in any event,
not less than once every quarter) and the individual directors of an institution should
attend at least half of the meetings held in a financial year. The Board should ensure
that it receives sufficient information from Management on the agenda items well in
advance of each meeting to enable it to effectively participate in and contribute to
each meeting.
9. The Board should carry out its responsibilities in such a way that the external
auditors and supervisors can see and form judgment on the quality of Board‟s work
and its contributions through proper and detailed minutes of the deliberations held
and decisions taken during the Board meetings.
10. To share the load of activities, the Board may form specialized committees with
well-defined objectives, authorities and tenure.
11. The Board should ensure that it receives management letter from the external
auditors without delay. It should also be ensured that appropriate action is taken in
consultation with the Audit Committee of the Board to deal with control or other
weaknesses identified in the management letter.

29


2.5 Senior management of National Bank of Pakistan

Dr. Asif A. Brohi SEVP, Operating Officer & Group Chief

Shahid Anwar Khan SEVP &, Credit Management Group

Ziaullah Khan SEVP Chief Assets Recovery Group

SEVP, Training & Organization Development
Dr. Mirza Abrar Baig Group

Nausherwan Adil SEVP & Group Chief, Operations

Tariq Jamali SEVP & Group Chief, Compliance Group

SEVP & Group Chief, Corporate &
Nadeem A. Ilyas Investment Banking Group

SEVP & Group Chief, Treasury Management
Muhammad Nusrat Vohra Group
Khalid Bin Shaheen SEVP & Group Chief, Global Home
Remittance Management Group

Imam Bakhsh Baloch SEVP & Group Chief, Audit & Inspection
Group

Asif Hassan SEVP & Group Chief, Small and Medium
Assets Recovery Group

M. Rafiq Bengali SEVP & Group Chief, Overseas Banking
Group and RCE Americas Region

30


Zubair Ahmed SEVP & Group Chief, Logistics &
Engineering Group

Tahira Raza SEVP & Group Cheif, Risk Management
Group

Sheharyar Qaisrani EVP & Divisional Head Agriculture Business
Division

Muhammad Hassan Khaskheli EVP & Divisional Head, Personnel &
Industrial Relations Division, HRM&A Group

Qamar Hussain EVP & Divisional Head, Human Resources
Division

Aamir Sattar EVP & Financial Controller, Financial Control
Division

Raza Mohsin Qizilbash EVP & Head, Legal Division

Mahmood Siddique EVP & CIO, IT Division

S.M. Ali Zamin EVP, Secretary Board of Directors &
Secretary Credit Committees

Aamir Abbasi SVP & Divisional Head, Corporate
Communication Division

Kashif Aziz SVP, Head PMO

Muhammad Naeem Ansari VP / Secretary Operations Committee

2.6 ORGANIZATION STRUCTURE OF THE BRANCH

31


.Any organization needs a structure, which provides a framework for successful
operations. The operation of an organization involves a number of activities, which
are related to decision making, and communication of these decisions. These
activities must be well coordinated so that the goals of the organization are achieved
successfully

Chart of Hierarchy of Branch

Branch Employees
 Manager MR. Main Zulfiqar
 Deputy manager MR. Saraj ul din
 Operation manager MR. Shahnawaz
 Accountant MR M.Mubarik ali
 Credit officer MR. Rai Sohail
 Recovery officer MR. Allah Datta
 Clearing & ATM officer MR. Muazzam
 Remittance officer MR. Hassan
 Collection officer MR. Akbar ali

32


 Bill collection officer MR, M.Asif
 Cashier MR, Abdul Majeed
 Massager MR, Mian Saleem
 Helper MR, Sohail Ahmed
 Peon MR,M. Arshad
 Sweeper MR,M. Ibrahem
 Guard MR. M.Sahkeel

No. of Employees in Branch 17

Official ……………………...... 13
Non official ……………………… 4
________________
Total Employees 17

2.7 Authority And Decision Making of Branch
 Centralize Decision Making
The Branch Manager of National Bank of Pakistan is responsible for all the affairs of
the Bank. All the decisions relating to Branch are made by him and the subordinates
have to obey these decisions. All the employees of the Bank are report directly to the
Branch Manager. The branch has one operation Managers. Operation Manager I
controls Deposits, Advance & Branch accounts department.

 Authority
The chain of command illustrates the authority structure of National Bank of Pakistan
Main Branch Jaranwala. Authority is the formal and legitimate right of the manger to
make decisions, issues orders and allocates resources to achieve organizational
desired outcomes. By analyzing the chain of command of NBP, one can come to the
conclusion that, as there is scalar pattern followed at the organizational setup of
NBP, therefore

33


 Delegation
Delegation is the process, which managers use to transfer the authority and
responsibility to position below in the hierarchy At National Bank of Pakistan
Jaranwala branch Operation Managers have some authority & responsibility relating

to affairs of the Branch.

2.8 Chart of Hierarchy of Branch to Head office

2.9 Heads of Management in Nation Bank of Pakistan
 Executive Board
 Board of Directors
 Chief Executive
 Divisional Chiefs
 Provisional Chiefs
 Circle Executive

34


 Zonal Heads
 Branch Managers

1) Executive Board
The general direction and supervision of the affairs of commercial banks lies in their
respective Executive Boards. An EB also consists of a President, a Secretary, and
9 other members, appointed by the Federal Government
2) Board of Directors
In the management of the banks, the board of directors is at the top of the controlling
body. Since there are no private share holders now, so there is no general meeting
of the share holders and no elected directors. The board has limited administrative
powers because after the Nationalization Act 1974, most of powers are transferred to
the Banking Council and Executive Board.
3) Chief Executive
The President of the Executive Board is the Chief Executive. He is the administrative
head of a bank and presides over the meetings of Executive Board.
4) Divisional Chiefs
In order to improve the management and operation of a bank, it has been split up
into a numbers of divisions. Each division of a bank is placed under the supervision
and control of Divisional Chief (also called the Senior Executive Vice President

or Executive Vice President)
5) Provisional Chiefs
In order to improve the performance of banking system, each bank has a Provisional
Chief. PC has the powers for sanctioning finance and other credit facilities. Each
headquarter is situated in each province e.g. in Lahore, Peshawar, Quetta, and
Karachi.
6) Circle Executive
Each commercial bank has a number of circles placed directly under the control and
supervision of Chief Executive.
7) Zonal Heads

35


Each circle is divided into a number of zones. These zones are administered by
Zonal Heads who hold the posts of Vice President or Assistant Vice

President.
8) Branch Managers
Each zone of commercial bank is divided into several branches. The control and
supervision of each branch is mostly entrusted to Assistant Vice President or Officer
G-I

Comments on the organization structure:
The National Bank has great contribution towards building wide Banking structure in
Pakistan and serving all aspects of the National life and all classes of society. NBP is
fully aware of the developments taking place in the world as well as the changes
occur in the economic and social condition with in the country. The bank is
determined to meet new challenges by redefining its goals and strategy.

36


Chapter no. 3
Products of NBP

Page 31 - 41

37


Products of National Bank OF Pakistan
A product is anything that can be offered to a market to satisfy a want or need and a
service is an act or performance that is essentially intangible and does not result in
the ownership of anything. What products or services have to be offered to the target
market depends on the market requirement and also the organization‟s profits. The
organization will offer those products and services, which result in maximum profits
and minimum costs. A bank is an organization rather a financial institution that
provides products such as different types of deposits and services like foddering
financing facilities to its customers
National Bank of Pakistan always makes efforts to improve its goodwill in the general
public. It introduces different kind of schemes time to time. The most popular
schemes conducted by NBP are as under:

1. NBP Premium Amdani
2. NBP premium Saver
3. NBP Saibaan
4. NBP Advance Salary
5. NBP Cash Card
6. NBP Investor Advantage
7. NBP Cash n Gold
8. NBP Kisan Taqat
9. NBP Kisan Dost
10. NBP Pak Remit
11. NBP Protection Shield

3.1. Premium Aamdani

38


Feather
• Earn up to 12.25% p.a.
• Minimum deposit of Rs. 20,000/- with maximum balance of Rs. 10 million for 5
years
• Free Demand Draft, Pay Order and Cheque Book*
• Convenience of NBP online Aasan Banking (for online banking customers)
• Free NBP Cash Card (ATM+Debit)
• Running finance facility up to 90%
• Profit paid every month as follows
Profit rates are expected

Year Profit Rates %

1st 11.25

2nd 11.50

3rd 11.75

4th 12.00

5th 12.25

3.2. NBP Premium SaverVER

39


Feather

1. Earn up to 8.50% p.a.
2. Minimum saving balance of Rs. 20,001/- & a maximum balance of Rs.
1million*.
3. Free NBP Cash Card (ATM + Debit).
4. Convenience of NBP Online Aasan Banking (for online banking customers).
5. Two debit withdrawals allowed in a month & no limit on number of deposit
transactions.
6. Profit calculated on monthly and paid on half yearly basis.

3.3. NBP Saibaan

 Home Purchase
 Home Construction
 Home Renovation
 Purchase of Land + Construction
Home Purchase& Home Construction

Financing Amount Upto 35 million
Financing Period 3 to 20 years
Debt to Equity 85: 15 (Maximum)

Home Renovation& Purchase of Land
Financing Amount Upto 15 Million

40


Financing Period 3 to 15 Years
Debt to Equity 80:20 (Maximum)

Eligibility *

 Must be Pakistani Resident (National)
 Aged between 21 and 65 years at the time of application/disbursement of
loan.
 Salaried Person, Self-employed professionals and businessmen.
 Minimum income requirement Rs. 5000 for Govt. Employees, Rs. 10,000 for
other salaried persons and Rs. 15,000 for self employeed and businessmen.
 Property located in NBP approved localities.
 Service duration: Two years for salaried class Three years for self-
employed/business class.

Required document With Applications Form **

Two attested passport size photographs
• Two attested copies National Identity Card
• Cheque for the processing charges

4.4. NBP Advance Salary

In January 2003 National Bank of Pakistan has launched a unique product, NBP
Advance Salary. Currently this product is for fixed income permanent employees of

41


Federal & Provincial Government, Semi-Government, Autonomous, Semi-
autonomous, local bodies and other Government organizations

NBP Advance Salary, the leading personal loan product of the country, is
maintaining its inimitability ever since it was launched. This was only possible due to
its swift growth and remarkable loan disbursement of over 138 billion.

You can avail up to 20 net take home salaries with easy repayment installments. Its
hassle free acquisition with no prior formalities and easy availability in a short turn-
around time is attributed as the most distinguishing features of the product. The
product is offered country wide .

• Easy installments of 1 to 60 months at your choice.
• No minimum income, collateral & insurance charges required.
• Quick processing and fastest disbursement.
• For permanent employees of Government, Semi Government and Autonomous
bodies receiving salaries through NBP.

Terms and Conditions

Permanent Employees of Govt., Semi-Govt., Autonomous,
Eligibility Semi Autonomous, Local & other bodies who are
maintaining their Salary A/Cs at NBP.

Repayment Direct deduction from Salary A/C

Maximum Loan Amount Rs. 490,000/-

Max. Repayment
5 years (60 months)
Period

Advance in terms of #
of net take home Up to 20 net take home salaries
salaries

42


Markup Rate SBP Discount Rate + 5%

Processing Fee 1% of Loan Amount

Verification Charges Rs 500/-

Life Insurance No Insurance of any kind.

Documentation
at actual
Charges

Contact Your Salary disbursing NBP Branch.

At the time of approval and disbursement the
Remaining Service applicant’s ,,remaining service age should be 6
Age
months after maturity of the ..loan

3.5. Cash card+ ATM

 Comfortable and secure environment for trading
 NBP financing at very easy terms requiring minimum documentation
 Minimum turn around time
 No security requirement from the customer except for the customer's equity
 Customer's equity freely available for investment.
 Equity acceptable in cash

Eligibility

 Pakistani CNIC COPY
 Over 21 years of age

43


 An account with NBP
 Equity in the form of cash
 NO default with any financial institution.

NBP Cash Card Safety Tips

Never share your Personal Identification Number (PIN) or given it out over
telephone.
 Never write your PIN Code on your card.
 Never keep your card and PIN at the same place.
 As you approach an ATM, beware of your surroundings, if you notice
anything unusual, visit the ATM later.
 Immediately report a lost of stolen card to your NBP branch.
 Stand close to the ATM machine while entering your PIN and do not allow
anyone to watch.
 Ensure that the merchant has entered the correct amount of transaction
before you enter your PIN code.
 Maintain your POS receipt as a record and ensure that he card returned to
you by the cashier/attendant is yours.
 Protect your card from direct sunlight and magnetic fields.
 Do not bend your card.
 Carefully dispose off your old card when you are issued a new one.

3.6. NBP Investor Advantage

A margin financing facility developed for retail investors in line with Government‟s
efforts to promote Pakistani capital markets and will replace the Badla (COT) system

44


with a stable financing system in line with international financial markets. Besides
offering a comfortable environment to the retail stock investors, a financing facility
will also be available. Willing investors can avail NBP financing at very easy terms
requiring minimum documentation and least turn around time. The NBP financing
also does not require any security from the customer except for the customer‟s
equity.
Requirements of document

 Photograph of Applicant
 NBP Account - Current or PLS
 Copy of CNIC
 Copy of CNIC of Two (2) References
 Borrower Basic Fact Sheet

3.7. Cash in Gold

Meet your need for ready cash against your idle gold jewellery with no minimum or
maximum limits. Facility of Rs. 40000/- against 10 grams of gold
Feather
 Rate of mark up 15.50% p. a.
 Facility of Rs.40000/- against each 10 grams of net content of Gold.
 NO maximum limits of cash.
 Repayment after one year.
 Roll over facility.
 Only Gold ornaments are acceptable.
 Weight and quality of Gold to be determined by NBP‟s appointed shroff

Required documents

 Photograph of Applicant

45


 Application form
 NBP Account - Current or PLS
 Copy of CNIC
 Copy of CNIC of Two (2) References
 Stamp papers five.
 Open new account

3.8. NBP Kisan Taqat
National Bank Pakistan Dairy Form Scheme
Advantage to Getting Loan from NBP
Very Near Banks Branch from you
Easy and Short Paper working
Get ride from the tension payment of Installments
Experience Staff‟s Help and Guide

3.9. NBP KISAN DOST

Agriculture Farming Program
• Competitive mark-up rate.
• Quick & easy processing.
• Provision of technical guidance to farmers at their doorstep.
• Wide range of financing schemes for farmers.
• Finance facility up to Rs. 100,000/- for landless farmers on personal guarantee.
• Financing available against Pass Book, Residential / Commercial property, Gold
ornaments and paper security.

3.10. NBP Pakremit

46


Pakremit is an internet based Home Remittance Service. This service is available to
U.S. residents for sending money to their family and friends in Pakistan. One must
have a valid US Dollar account with a U.S. bank or a US Dollar credit or debit card in
order to remit funds through this channel. Remitters in USA can log on to our user
friendly website, www.pakremit.com and easily remit funds to Pakistan from the
comfort of their homes, in a matter of minutes. The service is fully secure with
advance encryption application and is available for use 24 hours a day, 7 days a
Week. Fees and exchange rate have been set at competitive levels and the remitters
have the ability to track delivery of funds as well.
Process
 Remitters log on to www.pakremit.com and after completing the registration
process, are able to remit funds. The whole process takes a few minutes.
 Funds in Pak Rupees can be sent to beneficiaries, having an account with
any bank in Pakistan, including NBP. While funds are credited directly to
beneficiaries maintaining accounts with NBP, a pay order or demand draft is
couriered to other banks for their customers. Pay order or demand draft can
also be couriered directly to the beneficiary‟s office or home, if requested by
the remitter.
 Funds in US Dollars can be sent only to a Beneficiary maintaining a US Dollar
account with one of NBP‟s Foreign Exchange Branches.

3.11.NBP Protection Shield

Insurance Coverage In case of Accidental Death (Including death due to *Riots,
Strikes, Civil commotion, Acts of Terrorism and Natural Calamities like Flood, Earth
Quake, Cyclones etc.)
Coverage of Rs. 200,000/- for Rs. 20/- per month
Definitions
Provided the insured is not directly involved in these activities

47


Accident
Unintentional, unfortunate or a harmful event by chance or apparent cause.
Accidental Death
Death due to accidental injuries, but not illness.
Insured Person
A National Bank of Pakistan PLS account holder, aged between 18 years and above,
and whose premium is deducted & details are reported to the selected insurance
company by NBP.
Policy
Group Personal Accident Policy dated 26/09/05 executed between NBP and Insurer.
Principal Sum
The amount stated in the Policy‟s Schedule of Benefits as respects each Insured
Person.
Product Detail
 No medical Required
 No Documentation
 Fixed Auto Premium deduction Facility (After customer
consent)
 Choice of Deactivation
Eligibility
 NBP PLS Account holder

48


Chapter no 4

DEPARTMENTS OF NBP MAIN BRANCH
JARANWALA

PAGE 43-55

49


DEPARTMENTS OF NBP MAIN BRANCH
Departmentation is arranging the activities into meaningful groups. It distributes the
workload and increases efficiency and effectiveness. Departmentation can be done
on various bases for example, Departmentation for customers, by function or by
location. National bank of Pakistan, Main Branch Jaranwala consists of various
departments based on its different functions. So it can be said that the basis for
Departmentation at NBP is purely functional.
DEPARTMENTS OF NBP MAIN BRANCH JARANWALA
NBP Main Branch Jaranwala is operating following departments

1. Cash Department
2. Deposits Department.
3. Advance Department·
4. Remittances Department.
5. Clearance Department
6. Govt. Collection Department
4.1CASH DEPARTMENT

This department consisted of three sections namely.
1. Cash Receipts
2. Token Department
3. Cash Payments

1.1Cash Receipt
In this section the cashier was receiving cash. He recorded the cash received with a
pay in slip and other documents (it necessary) and recorded it in the cash receipt
register. There were two separate types of pay-in-slips, which were used for
depositing cash, checks, and drafts. There were prescribed forms in which the
information was fed. After filling the pay-in-slip with the amount, the cash and slip

50


both were received by the cashier who entered those in the cash register and fixed a
stamp on the pay-in-slip. A part of this slip is given to the customer for his record and
other was maintained with the bank.

1.2Token Section
As the checks holders were used to go to the section. They presented the checks to
the person at the section. He checked that whether the check belonged to the same
bank, the amount in words and figures were same, check was not outdated and the
signature was there etc. Then he handled a number to the check and a token was
given to the customer/check hold
Cash Payments
The check allotted with a number by the token department is sent to the clearing
officer/passing officer. After the proper verification of the signature of account
holder‟s, cash balances and posting of that particular check to the account, the
check was passed to the cashier who ultimately called on the number fixed on the
check. The customer bearing that token number arrived at the counter. The cashier
checked out the number and paid the amount as per checks and entered number
and amount in the cashbook maintained with him.
The Negotiable Instruments. Act, 1881,

“Cheque is a bill of exchange drawn on a specified banker and not expressed to be
payable otherwise than on demand”2.

Since a Cheque has been declared to be a bill of exchange, it must have all its
characteristics as mentioned in Section 5 of the Negotiable Instruments Act, 1881.
Therefore, one can say that a Cheque can be defined as an:

“An unconditional order in writing drawn on a specified banker, signed by the drawer,
requiring the banker to pay on demand a sum certain in money to, or to the order of,
a specified person or to the bearer, and which does not order any act to be done in
addition to the payment of money”3. (Law of Banking by Dr. Hart, p.327).

The Requisites of Cheque

Define cheque

51


There is no prescribed form of words or design of a Cheque, but in order to fulfill the
requirements mentioned in Section 6 above the Cheque must have the following.

a) It should be in writing

b) The unconditional order

c) Drawn on specific banker only

d) Payment on Demand

e) Sum Certain in money

f) Payable to a specific person

g) Signed by the drawer

h) Date on cheque

i) Signature on back.

Payments of cheque

1. Receiving of Cheques
The cash is paid against the cheques of the client. The following points are
important. Cheque is drawn on same branch Cheque is not post dated. Amount in
words and figure are same. It should be bearer cheques so the word bearer should
not cross.
2. Verification of signature.
After receiving the cheques the cheques the operation manager verify the signature
of the account holder and the signature on the cheques. If the signature is not same
it is returned back otherwise forward to BBO Operator for posting.
3. Token assign.

After verification of signature , a token given to the bearer of cheque for the of of
payment of cheque.
4. Computer Terminal Process

52


The cheque is received in computer terminal, where BBO operator checks the
balance of the account holder. The BBO operator also sees the stop payment
instructions, whether received from account holder or not. After considering these
points BBO Operator post the cheque in BBO (Branch back office system) and
forward to operation manager.
5. Payment of Cash
After posting the cheque the operation manager cancelled the cheque and returned
back to cashier. The cashier enters the cheque in cash paid registered and pays
against the second signature of receiver on the back of the cheque.

4. 2. ACCOUNTS DEPARTMENT

In modern time, very few business enterprises are carried out solely with the capital
of the owners. Borrowing funds from different sources has become and essential
feature of today‟s business enterprises. But in the case of a bank, borrowing funds
from the outside parties is all the more vital because the entire banking system is
based on it. The borrowed capital of bank is much greater than theirs own capital.
Bank‟s borrowing is mostly in the form of deposits. These deposits are lent out to
different parties. The larger the difference between the rate at which these deposits
are borrowed and the rate at which they are lent out the greater will be the profit
margin of the bank Furthermore. larger the funds lent out the greater will be the
return earned on them; and greater the amount of return the greater will be the
profits of the bank. It is because of this interrelated relationship that deposits are
referred to as the “life blood” of the bank

Current account

Current deposits are also called demand liability on current deposits. NBP pays
practically no interest on current deposits. Businessmen usually open current
accounts. In NBP current account can be opened with a minimum amount of
Rs.500/-.

 Minimum amount for opening this account is Rs.500
 Any person can open the account with the bank
 According to inter banks agreement interest is not paid on current account.

53


 Bank act as custodian of money
 Over draft facility is provided to the customers
 Customer can withdraw money through cheque supplied by bank
Profit And Loss Sharing Account

In general it is also called saving account .To provide interest free banking facilities
in Pakistan, this type of account was introduced in January 1982 after the
islamization of banking. The main features of this account are: -

 Instead of having fixed return in the form of interest the deposited money will
be shared in profit and loss of the bank.
 One can open the account by depositing minimum Rs.100
 Withdrawal is allowed 8 times in the month total not exceeding Rs.15000.
 To withdraw a large amount a notice of 7 days to the bank is necessary.
 There is not any kind of interest is provided on money deposited.
 Rate of profit is declared at the close of each half-year.

Fixed Deposit Account:

This account is the major source of funds for the banks. This account is best for
people who have surplus money and don‟t need such funds in nearer future. The
money is deposited for a fixed period of time. Main features of this account are: -

 Fixed amount is deposited for fixed period.
 Amount of profit can be obtained after each six months.
 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.
 The amount can be withdrawn before maturity after surrendering interest..

Types of Accounts Holders.
Following are the main categories of accounts.
 Individual Account
 Joint Account
 Company Account
 Club, Society, Association or Trust A/C

54


 Partnership Account
i). Individual Account:
Any account or proprietor of a business can open an individual account in National
Bank Limited. PLS (Profit & Loss Sharing) Saving account can be opened without
any minimum requirement. The client has to the following documents to the bank in
order to open an individual account with the bank. One copy of National Identity The
customer has to fill the account opening form and have to put his signature at the
signature specimen cards and also have to fill the Cheque Book Application form.
After the approval from the branch manager, the bank opens a new individual
account.

II). Joint Account
When more than one person opens a single account, it is called joint account. The
names of both persons are written on the title of the account at the signature
specimen cards. One person cannot operate joint account. Both persons have to put
their signatures on the Cheque in order to encash the Cheque..
iii). Company Account
Public as well as Private Limited companies can open a bank account at the name of
the company. They have to submit the following documents to the bank in order to
open an account at their company‟s name.
 One copy of Certificate of Incorporation
 Memorandum of Association and Article of Association
 List of Directors of the Company
 Copy of Board Resolution
 The Company‟s certificate of Commencement of Business (In case of Public
Limited Company)
 Signature Specimen Cards.
iv). Club, Society, Association or Trust
Any club, association or Trust can open an bank account at their own name. The
requirements of the bank regarding this type of account are:
 Copy of the rules of the club/ society
 Copy of office Bearers
 Certificate Copy of Resolution

55


 Copy of NIC
 Name of person authorized to sign, their office, position and
 Specimen signature.
v). Partnership account
Partnership account can also be opened with the National Bank Limited. Account
title will be name of the partnership firm. Partners who are willing to become the
authorized signature will have to sign the account opening form of the bank. Other
requirements are
 Copy of partnership deed
 Copy of Registration Certificate
 Specimen Signature Cards.

Procedure to Open an Account
Step by step

1.Get accont opening form

2.Filling the form

3.Submit form

4.Specimen signature

5.Account number

6.pay-in-slip

7.Initial deposit

8.Pass book

9.Cheque book

56


4.3. ADVANCE DEPARTMENT
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. The job of
this department is to make proposals about the loans. The Credit Management
Division of Head Office directly controls all the advances. 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.
TYPES OF CREDIT FACILITY
In addition to purchase and discounting of bills, bankers in Pakistan generally lend in
the form of cash finance, overdrafts and loans. NBP provides advances to different
people in different ways as the case demand.
a. Cash Finance
b. Running Finance
c. Demand Finance
4.3.1 Cash Finance
This is a very common form of borrowing by commercial and industrial concerns and
is made available either against pledge or hypothecation of goods, produce or
merchandise. In cash finance a borrower is allowed to borrow money from the
banker up to a certain limit, either at once or as and when required. The borrower
prefers this form of lending due to the facility of paying markup/services charges only
on the amount he actually utilizes. If the borrower does not utilize the full limit, the
banker has to lose return on the unutilized amount. In order to offset this loss, the
banker may provide for a suitable clause in the cash finance agreement, according
to which the borrower has to pay markup/service charges on at least on self or one
quarter of the amount of cash finance limit allowed to him even when he does not
utilize that amount.
4.3.2 Overdraft/Running Finance

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This is the also a common form of bank lending. When a borrower requires
temporary accommodation his banker allows withdrawals on his account in excess of
the balance which the borrowing customer has in credit, and an overdraft thus
occurs. This accommodation is generally allowed against collateral securities. When
it is against collateral securities it is called “Secured Overdraft” and when the
borrowing customer cannot offer any collateral security except his personal security,
the accommodation is called a “Clean Overdraft”. The borrowing customer is in an
advantageous position in an overdraft, because he has to pay service charges only
on the balance outstanding against him. The main difference between a cash finance
and overdraft lies in the fact that cash finance is a bank finance used for long term by
commercial and industrial concern on regular basis, while an overdraft is a
temporary accommodation occasionally resorted to.
4.3.3Demand Financing/Loans
When a customer borrows from a banker a fixed amount repayable either in periodic
installments or in lump sum at a fixed future time, it is called a “loan”. When bankers
allow loans to their customers against collateral securities they are called “secured
loans” and when no collateral security is taken they are called “clean loans”. The
amount of loan is placed at the borrower‟s disposal in lump sum for the period
agreed upon, and the borrowing customer has to pay interest on the entire amount.
Thus the borrower gets a fixed amount of money for his use, while the banker feels
satisfied in lending money in fixed amounts for definite short periods against a
satisfactory security
4.4 .REMITTANCES DEPARTMENT

NBP also provides facility of money transfer. NBP uses all the three means to
transfer money. This department is also known as Bills department

4.4.1 Bank or Demand draft:
Demand draft is a popular mode of transfer. The customer fills the application form.
Application form includes the beneficiary name, account number and a sender‟s
name. The customer deposits the amount of DD in the branch. After the payment the
DD is prepared and given to the customer. NBP officials note the transaction in
issuance register on the page of that branch of NBP on which DD is drawn and will
prepare the advice to send to that branch. The account of the customer is credited

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when the DD advice from originating branch comes to the responding branch and
the account is debited when DD comes for clearance. DD are of two types.

a) Open DD: Where direct payment is made.

b) Cross DD: Where payment is made though account.

4.4.2Payment Order (PO)
Payment order is made for local transfer of money. Pay order is the most convenient,
simple and secure way of transfer of money. NBP takes fixed commission of Rs.
93Per payment order from the account holder and Rs. 100 from a non-account
holder.

4.4Mail transfer (MT):
An account holder of a bank, who maintains accounts in more than one branches of
the bank, may want to transfer the funds from his one account to another account.
Other than this, non-constituent wishes to remit funds in a particular account at some
place with the branch of the bank to another branch can resort to the transfer by
mail, described as mail transfer remittance. Bank is responsible for mailing and
remittance.

4.5Telegraphic transfer (TT):
A more quick system of TT is also present to assure the requirements of fast growing
business community, which have no time. If the amounts are deposited in cash, a
sample cash vouchers is passed, giving credit to the main office Karachi, and a
telegraphic message is sent to the bank on which the TT is drawn, specifying the TT
number, date, name of the party in whose favor it is drawn and the test member.

There are two types of telegraphic transfers:

 In case of advice and credit
 In case of advice and pay

4.6Demand Draft Purchaser (DDP)
DDP is an instrument purchased by National bank on behalf of government for the
compensation of government employees as well semi government etc. After
purchases of DDP, The copy of this instrument sent to the government for the

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