Farhan Internship Report Nbp

INTERNSHIP CONCLUSIVE REPORT 2009 Master of Business Administration Program Internee name:

Farhan Ali

Registration No:

FA07-MBA-041

Specialization:

Finance

Telephone:

03455917074

E-mail address:

[email protected]

COMSATS INSTITUTE OF INFORMATION TECHNOLOGY Company Name: PAKISTAN Postal address:

NATIONAL BANK OF NBP NIH BRANCH P/O NIH IBD

Supervisor Name:

Muhammad NAZIR

Telephone Number:

03335646875

Start Date for Internship: JULY 15, 2008

Evaluation

FA07-MBA-041

1

Farhan Ali FA07-MBA-041

NATIONAL BANK OF PAKISTAN

Masters in Business Administration

It is certified that the internship report and the working contained in it conforms to all the standards set by the institute for the evaluation of any such work

1. _______________________________________________________________________ _ 2 ._______________________________________________________________________ 3. _______________________________________________________________________ _ 4. _______________________________________________________________________ _

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PREFACE 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 a series of various managerial techniques. During this practical course we are provided with an opportunity to learn that how the theoretical knowledge can be implemented in practical grounds. I was selected to do my internship in National Bank of Pakistan NIH Branch Islamabad. I worked there for six weeks & it gave me a greater practical knowledge about the operations of a bank.

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ACKNOWLEDGEMENT I am highly grateful to almighty Allah who gave me the power to complete this report. I am also highly thankful to my honorable teachers for theirs guidance. I am indebted to all the employees of National Bank of Pakistan NIH Branch Islamabad Special thanks to “MR: Nazir Ahmed” OM of National Bank of Pakistan NIH Branch) and all other employees of the branch for their cooperation.

Table of contents

Summary

7

About NBP

9

Functions of NBP

11

Services

14

Branches all over the Country

22

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4

Oversea Branches

23

Organogram

24

Departmentation

27

Horizontal Analysis

33

Vertical Analysis

37

Ratio Analysis

41

SWOT Analysis

43

Problems With Branch

49

General suggestions

52

Learning

56

Annexure

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

MISSION

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NBP will aspire to the values that make NBP truly the Nation’s Bank, by: • Institutionalizing a merit and performance culture • 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

CORE VALUES • 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

GOALS FA07-MBA-041

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

Summary The NBP was established vide NBP Ordinance No. National Bank of Pakistan maintains its position as Pakistan's premier bank determined to set higher standards of achievements. Growth in Deposits was accompanied by increase in Bank portfolio in advances. NBP advances reached Rs.554.4 million by December 1959, which was one third of the total schedule bank credit National Bank of Pakistan is the largest commercial bank operating in Pakistan . In today's competitive business environment, NBP needed to redefine its role and shed the public sector bank image, for a modern commercial bank. National Bank of Pakistan is today a progressive, efficient, and customer focused institution. The Bank has expanded its range of products and services to include Shariah Compliant Islamic Banking products. The Bank's joint ventures are, United National Bank (UK), First Investment Bank and NAFA, an Asset Management Company (a joint venture with NIB Bank & Fullerton Fund Management of Singapore).Since NBP is a commercial bank, it performs a variety of functions. Like other commercial banks, NBP is engaged in financing international trade. Profit Before taxation shows declining trend 18% decrease in current year profit with decreasing rate of 6% this decrease is caused by greater increase in Interest expense increase from 5% to 35% with 200% growth rate this increase is because of greater increase in other charges with growth rate of 1655%, FA07-MBA-041

7

Admin expense increase from 5% to 27%, Profit after tax in current year less than the previous year because of greater increase in Current taxation by 37% as compare to last year tax. Cash & balance with treasury Banks is increase in current year from 12% to 13% of total assets portion of balance with other banks shows decreasing trend in current year 4.7% of total assets as compare to 4.9% and 6.4% in 2007 and 2006 respectively, lending to financial institution decreasing other assets portion is increasing in current year which is 5.4% of total assets as compare to 4.06% and 4.3% in 2007 and 2006 respectively. Net assets portion is decreasing this decrease because of increase in liabilities which means in NBP’s debts increase, equity portion also increasing as compare to previous year of equity portion this increase because of increasing in reserves, the increase in equity show that the NBP’s dependence on equity financing increasing while the dependence on debt financing decreasing, Markup/ interest unearned show increasing trend last few years but markup/ expensed increase which is 64.5% of interest income as compare to 50% and 46% in 2007 and 2006, markup interest income after provisions show decreasing trends since 2006 this decrease because of greater increase in provision against non performing advances and provision for/ diminution in the value to investment. NBP has the relative competence in having more deposits than the other bank. Customers feels secure their money in NBP. NBP can utilize the electronic banking opportunity to ensure on line banking 24 hours a day. Banks are played role in trade and commerce. So the business of commercial banks is increase. The bank is facing threats with the emergence of new competitors especially in terms of foreign banks. So increase in no. of banks is a threat for NBP, Modern and computerized banking is required to fulfill the customer’s need. Net assets portion is decreasing this decrease because of increase in liabilities which means in NBP’s debts increase, equity portion also increasing as compare to previous year of equity portion this increase because of increasing in reserves, the increase in equity show that the NBP’s dependence on equity financing increasing while the dependence on debt financing decreasing Markup/ interest unearned show increasing trend last few years but markup/ expensed increase which is 64.5% of interest income as compare to 50% and 46% in 2007 and 2006, markup interest income after provisions show decreasing trends since 2006 this decrease because of greater

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increase in provision against non performing advances and provision for/ diminution in the value to investment. NBP has the relative competence in having more deposits than the other bank. Customers feels secure their money in NBP. NBP can utilize the electronic banking opportunity to ensure on line banking 24 hours a day. Banks are played role in trade and commerce. So the business of commercial banks is increase. The bank is facing threats with the emergence of new competitors especially in terms of foreign banks. So increase in no. of banks is a threat for NBP Modern and computerized banking is required to fulfill the customer’s need. NBP have wide network of branches. Employee can also be how to control the bank expenses.

ABOUT NBP The NBP was established vide NBP Ordinance No. XIX of November 9. 1949. British Govt. devalued its currency in September 1949, India devalued its rupees but Pakistan did not. It led to a crisis in trading between the two countries and India refused to lift the Pakistan Jute. To solve this problem i.e. to export jute NBP was established through an Ordinance of GOP. 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 Bank in 1950 had one subsidiary ‘The Bank of Bahawalpur’ on December4, 1947 by the former Bahawalpur State.NBP was undertaking Treasury Operations and Managing Currency Chests or Sub Chests at 57 of its offices where the turnover of the business under the head amounted to Rs.2460 million. Deposits held by NBP constituted about 3.1% of total deposits of all Pakistani Banks in 1949, which rose to 38% in 1952. Growth in Deposits was accompanied by increase in Bank portfolio in advances. NBP lent out to Textile, Yarn, Iron and Steel and played a pioneer role in support of agriculture and

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commerce. NBP advances reached Rs.554.4 million by December 1959, which was one third of the total schedule bank credit National Bank of Pakistan is the largest commercial bank operating in Pakistan . Its balance sheet size surpasses that of any of the other banks functioning locally. It has redefined its role and has moved from a public sector organization into a modern commercial bank. The Bank's services are available to individuals, corporate entities and government. While it continues to act as trustee of public funds and as the agent to the State Bank of Pakistan (in places where SBP does not have a presence) it has diversified its business portfolio and is today a major lead player in the debt equity market, corporate investment banking, retail and consumer banking, agricultural financing, treasury services and is showing growing interest in promoting and developing the country's small and medium enterprises and at the same time fulfilling its social responsibilities, as a corporate citizen. In today's competitive business environment, NBP needed to redefine its role and shed the public sector bank image, for a modern commercial bank. 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. It has implemented special credit schemes like small finance for agriculture, business and industries, administrator to Qarz-e-Hasna loans to students, self employment scheme for unemployed persons, public transport scheme. The Bank has expanded its range of products and services to include Shariah Compliant Islamic Banking products. For the promotion of literature, NBP recently initiated the Annual Awards for Excellence in Literature. NBP will confer annual awards to the best books in Urdu and in all prominent regional languages published during the defined period. Patronage from NBP would help creative work in the field of literature. The Bank is also the largest sponsor of sports in Pakistan. In 2002 the Bank signed an agreement with Western Union for expanding the base for documented remittances. This project introduces technology based system to handle inward remittances efficiently, by ensuring that the Bank's branches keep a track of the remittance received from abroad till its final receipt. National Bank of Pakistan has built an extensive branch network FA07-MBA-041

in Pakistan and 10

operates in major business centre abroad. The Bank has representative offices in Beijing, Tashkent, Chicago and Toronto. It has agency arrangements with more than 3000 correspondent banks worldwide. Its subsidiaries are Taurus Securities Ltd, NBP Exchange Company Ltd, NBP Capital Ltd, NBP Modaraba Management Company Ltd, and CJSC Bank, Almaty, Kazakhstan. The Bank's joint ventures are, United National Bank (UK), First Investment Bank and NAFA, an Asset Management Company (a joint venture

with

NIB

Bank

&

Fullerton

Fund

Management

of

Singapore).

Functions of NBP Since NBP is a commercial bank, it performs a variety of functions. Like other commercial banks, NBP is engaged in financing international trade. Its other major functions include receiving deposits, advancing loans and discounting of exchange. The functions performed by NBP are: Accepting Deposits This function is important because banks largely depend on the funds deposited with them by its customers. Deposits are of many types: •

Current deposits

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/-. •

PLS saving deposit Profit and loss sharing deposits (PLS) are also called checking accounts. One can

deposit and draw money easily. Profit on PLS is calculated every month but paid after six months. PLS account can be opened with a minimum amount of Rs.500/FA07-MBA-041

11

•

PLS term deposits

Fixed term deposits are deposits with the bank for certain fixed period before the expiry of which they cannot be withdrawn unless giving due notice. In this case the rates of profit will be different depending upon the time period.

Discounting bills of exchange Discounting of bill is practically speaking lending for exchange at their market rate i.e. it pays to holder of the bill an amount equal to the face value after deducting interest at the current market rate for the period. This bill has to be mature. This is the common way used for keeping a part of assets of the bank in a liquid form. Agency service NBP also provides best and unique service to its valued customers. NBP provide the following agency services to the customers: •

Collection of dividends

As NBP deals with the purchase and sale of various types of securities, therefore NBP also provide dividend or interest earned on share or bonds or invested money. •

Collection of Cheques

In the collection and payment of Cheques, bills and promissory notes etc. National bank of Pakistan acts as an agent for its customers. •

Acting as an agent

NBP also acts as an agent correspondent or representative for its customer at home or abroad.

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•

General utility services:

Utilities provided by NBP are as follows: a. Clearance of utility bills NBP provides the service of clearing the utility bills i.e. electricity, gas and telephone bills of its customers. For this purpose it also provides evening banking services. b. Lockers facility National bank of Pakistan also provides locker facilities to its customers to keep their valuable assets in it. The charges of different size of lockers are different. c. Acts as a referee NBP provides useful services to its customers by acting as a referee to their credit worthiness. d. Supply of information NBP provides operational and advisory service for foreign exchange accounts/activities. The prestigious periodical “The Banker” UK recognized NBP as the best bank for 20012002 and NBP is the bank of the year for 2003-2004 of Pakistan. i. AAA rating awarded JCR-VIS Credit co. Ltd and affiliated of Japan Credit Rating Agency for 2001. ii. AAA+1 rating awarded JCR-VIS Credit Co.Ltd and affiliated of Japan Credit Rating Agency for 2002

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SERVICES DEMAND DRAFTS If you are looking for a safe, speedy and reliable way to transfer money, you can now purchase NBP’s Demand Drafts at very reasonable rates. Any person whether an account holder of the bank or not, can purchase a Demand Draft from a bank branch. 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 system has built-in features of computerized test keys, which eliminates the manual application of tests that often cause delay in the payment of home remittances. The SWIFT Center is operational at National Bank of Pakistan with a universal access number NBP-APKKA. All NBP overseas branches and overseas correspondents (over 450) are drawing remittances through SWIFT. Using the NBP network of branches, you can safely and speedily transfer money for your business and personal needs. LETTERS OF CREDIT NBP is committed to offering its business customers the widest range of options in the area of money transfer. If you are a commercial enterprise then their Letter of Credit

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service is just what you are looking for. With competitive rates, security, and ease of transaction, NBP Letters of Credit are the best way to do your business transactions. TRAVELER'S CHEQUES Negotiability: Pak Rupees Traveler’s Cheques are a negotiable instrument Validity: There is no restriction on the period of validity Availability: At 700 branches of NBP all over the country Encashment: At all 400 branches of NBP Limitation: No limit on purchase Safety: NBP Traveler’s Cheques are the safest way to carry our money PAY ORDER NBP provides another reason to transfer customer’s money using their facilities. Their pay orders are a secure and easy way to move customer’s money from one place to another. And, as usual, their charges for this service are extremely competitive.

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Issuance of Pay order 1. For NBP Account Holder Rs. 50/2. For NBP Non-Account Holder Rs. 100/Rs. 25/- from student for payment of fee favoring educational institution

Issuance of duplicate Pay order 1. for NBP Account Holder Rs. 100/2. for NBP Non-Account Holder Rs. 150/MAIL TRANSFERS Move your money safely and quickly using NBP Mail Transfer service. And they also offer the most competitive rates in the market. FOREIGN REMITTANCES To facilitate its customers in the area of Home Remittances, National Bank of Pakistan has taken a number of measures to: • Increase • Meet

home remittances through the banking system

the SBP directives/instructions for timely and prompt delivery of

remittances to the beneficiaries New Features: The existing system of home remittances has been revised/significantly improved and well-trained field functionaries are posted to provide efficient and reliable home

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remittance services to nonresident Pakistanis at 15 overseas branches of the Bank besides Pakistan International Bank (UK) Ltd., and Bank Al-Jazira, Saudi Arabia. • Zero

Tariffs: NBP is providing home remittance services without any

charges. • Strict

monitoring of the system is done to ensure the highest possible

security. • Special

courier services are hired for expeditious delivery of home

remittances to the beneficiaries. SHORT TERM INVESTMENTS NBP now offers excellent rates of profit on all its short term investment accounts. Whether you are looking to invest for 3 months or 1 year, NBP’s rates of profit are extremely attractive, along with the security and service only NBP can provide. National Income Daily Account (NIDA) The scheme was launched in December 1995 to attract corporate customers. It is a current account scheme and is part of the profit and loss system of accounts in operation throughout the country. EQUITY INVESTMENTS NBP has accelerated its activities in the stock market to improve its economic base and restore investor confidence. The bank is now regarded as the most active and dominant player in the development of the stock market. NBP is involved in the following: • Investment

FA07-MBA-041

into the capital market

17

• Introduction

of capital market accounts (under process)

NBP’s involvement in capital markets is expected to increase its earnings, which would result in better returns offered to account holders. COMMERCIAL FINANCE Let them help make your dreams become a reality Their dedicated team of professionals truly understands the needs of professionals, agriculturists, large and small business and other segments of the economy. They are the customer’s best resource in making NBP’s products and services work for them. TRADE FINANCE OTHER BUSINESS LOANS AGRICULTURAL FINANCE NBP provides Agricultural Finance to solidify faith, commitment and pride of farmers who produce some of the best agricultural products in the World. Agricultural Finance Services: “I Feed the World” program, a new product, is introduced by NBP with the aim to help farmers maximize the per acre production with minimum of required input. Select farms will be made role models for other farms and farmers to follow, thus helping farmers across Pakistan to increase production. Agricultural Credit: The agricultural financing strategy of NBP is aimed at three main objectives:• Providing

FA07-MBA-041

reliable infrastructure for agricultural customers

18

• Help

farmers utilize funds efficiently to further develop and achieve

better production • Provide

farmers an integrated package of credit with supplies of essential

inputs, technical knowledge, and supervision of farming. Agricultural Credit (Medium Term): • Production

and development

• Watercourse

improvement

• Wells • Farm power • Development

loans for tea plantation

• Fencing • Solar

energy

• Equipment

for sprinklers

Farm Credit: NBP also provides the following subsidized with ranges of 3 months to 1 year on a renewal basis. • Operating • Land

loans

improvement loans

• Equipment

loans for purchase of tractors, farm implements or any other

equipment FA07-MBA-041

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• Livestock

loans for the purchase, care, and feeding of livestock

Production Loans: Production loans are meant for basic inputs of the farm and are short term in nature. Seeds, fertilizers, sprayers, etc are all covered under this scheme.

CORPORATE FINANCE Working Capital and Short Term Loans: NBP specializes in providing Project Finance – Export Refinance to exporters – Preshipment and Post-shipment financing to exporters – Running finance – Cash Finance – Small Finance – Discounting & Bills Purchased – Export Bills Purchased / Pre-shipment / Post Shipment Agricultural Production Loans Medium term loans and Capital Expenditure Financing: NBP provides financing for its clients’ capital expenditure and other long-term investment needs. By sharing the risk associated with such long-term investments, NBP expedites clients’ attempt to upgrade and expand their operation thereby making possible the fulfillment of their clients’ vision. This type of long term financing proves the bank’s belief in its client's capabilities, and its commitment to the country. Loan Structuring and Syndication: National Bank’s leadership in loan syndicating stems from ability to forge strong relationships not only with borrowers but also with bank investors. Because they understand their syndicate partners’ asset criteria, they help borrowers meet substantial financing needs by enabling them to reach the banks most interested in lending to their particular industry, geographic location and structure through syndicated debt offerings.

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Their syndication capabilities are complemented by their own capital strength and by industry teams, who bring specialized knowledge to the structure of a transaction. Cash Management Services: With National Bank’s Cash Management Services (in process of being set up), the customer’s sales collection will be channeled through vast network of NBP branched spread across the country. This will enable the customer to manage their company’s total financial position right from your desktop computer. They will also be able to take advantage of NBP outstanding range of payment, ejection, liquidity and investment services. In fact, with NBP, you’ll be provided everything, which takes to manage your cash flow more accurately. INTERNATIONAL BANKING National Bank of Pakistan is at the forefront of international banking in Pakistan which is proven by the fact that NBP has its branches in all of the major financial capitals of the world. Additionally, NBP have recently set up the Financial Institution Wing, which is placed under the Risk Management Group. The role of the 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 areas, thereby contributing to the bank’s profitability • Generation

of incremental trade-finance business and revenues

NBP offers: • The

FA07-MBA-041

lowest rates on exports and other international banking products

21

• Access

to different local commercial banks in international banking

BRANCHES ALL OVER THE COUNTRY

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29 Regional Offices 1,189 Branches 4 Subsidairies

Oversea Branches

16 Overseas Branches

29 Regional Offices

4 Representative Offices

1,189 Branches

1 Subsidiary

4 Subsidiaries

1 Joint Venture

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ORGANANIZATIONAL STRUCTURE PRESIDENT & CHAIRMAN

CHIEF REPRESENTATIVE

PSO & SECRETARIAT

BOARD OF DIRECTOR

SECRETARY

OPERATION COMMITTEE

CREDIT COMMITT EE

ASSET & LIABILITY COM

FINANCE GROUP OPERATIONS GROUP

FINANCE & ACCOUNTS DEPT

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EMPLOYE E INSURANC E PENSION RETIREME NT BENEFIT

CORPORAT E INVESTME 24 NT BANKING GROUP

REGIONA L OPERATIO N OFFICERS OPERATIO N DEPARTM

IT OPERATIONS & SERVICES REGIONAL COMPUTER CENTERS SWIFT CENTERS FAR EAST

LOGISTICS SUPPORT ENGINEERI NG GENERAL SERVICES SECURITY FOUR OVERSEAS REGIONAL STAFF WELFARE EUROPE & USA

CENTRAL ASIA

MIDDLE EAST

AUDIT GROUP

RISK MANAGEME NT GROUP

REGIONAL AUDIT OFFICE

HEAD OFFICE AUDIT REGIONAL CREDIT CHIEF CREDIT DEPT HEAD

IT PLANNING DEVELOPME NT GROUP

SPECIAL ASSET MANAG EMENT GROUP

HR MANAGEME NT DEPT IT SYSTEM DEVELOPMENT

RETAIL BANKING

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STRATEGIC PLANNING AND ECONOMIC RESEARCH GROUP

NETWORKING SOFTWARE DEVELOPMENT ELECTRONIC PRODUCT AND SERVICES DELIVERY TO OPERATIONS

HR MANAGEMEN T RECRUITMEN T /PLACEMENT COMPENSATI ON BENEFIT 25 PERSONAL DATA DISCIPLINE

ORGANIZA TIONAL DEVELOPM ENT & TRAINING

ALL REGIONAL CHIEF OFFICER ALL RETAIL BANKING

PROMOTION PERFORMANCE APPRAISAL GOAL SETTING

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TRAINING UNION AFFAIRS

26

DEPARTMENTALIZATION CASH DEPARTMENT Cash department performs the following functions Receipt The money, which either comes or goes out from the bank, its record should be kept. Cash department performs this function. The deposits of all customers of the bank are controlled by means of ledger accounts. Every customer has its own ledger account and has separate ledger cards. Payments It is a banker’s primary contract to repay money received for this customer’s account usually by honoring his cheques. The Requisites of Cheque There is no prescribed form of words or design of a Cheque, but in order to fulfill the requirements 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

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g)

Signed by the drawer

Types of Cheques Bankers in Pakistan deal with three types of cheques a) Bearer Cheques Bearer cheques are cashable at the counter of the bank. These can also be collected through clearing. b) Order cheque These types of cheques are also cashable on the counter but its holder must satisfy the banker that he is the proper man to collect the payment of the cheque and he has to show his identification. It can also be collected through clearing. c) Crossed Cheque These cheques are not payable in cash at the counters of a banker. It can only be credited to the payee’s account. If there are two persons having accounts at the same bank, one of the account holder issues a cross-cheque in favour of the other account holder. Then the cheque will be credited to the account of the person to whom the cheque was issued and debited from the account of the person who has actually issued the cheque. CLEARANCE DEPARTMENT A clearinghouse is an association of commercial banks set up in given locality for the purpose of interchange and settlement of credit claims. The function of clearinghouse is performed by the central bank of a country by tradition or by law. In Pakistan, the clearing system is operated by the SBP. If SBP has no office at a place, then NBP, as a representative of SBP act as a clearinghouse. In-Word Clearing Books

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The bank uses this book for the purpose of recording all the cheques that are being received by the bank in the first clearing. All details of the cheques are recorded in this book. Out-Word Clearing Book: The bank uses outward clearing register for the purpose of recording all the details of the cheques that the bank has delivered to other banks. ADVANCES 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. Forms of Loans 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 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

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29

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. b) Overdraft/Running Finance This is the most 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. c) Demand 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

FA07-MBA-041

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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 REMITTANCE DEPARTMENT Remittance means a sum of money sent in payment for something. This department deals with either the transfer of money from one bank to other bank or from one branch to another branch for their customers. NBP offers the following forms of remittances. •

Demand Draft

•

Telegraphic Transfer

•

Pay Order

•

Mail Transfer

HUMAN RESOURCE MANAGEMENT Human Resource plays a vital role in the success of every service organization. They interact between man and machine. Their attitude can win or loose the customer. The positive attitude could only be created in a conducive environment, which can make the staff dedicated towards the organization and its objectives. In reality the man is more important than machine as it is the human which could get maximum out of machine to keep a happy customer. However, most organizations give little importance to this very important asset. DEPOSIT DEPARTMENT: It controls the following activities: a)

A/C opening.

b)

Issuance of cheque book.

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31

a)

Current a/c

b)

Saving a/c

c)

Cheque cancellation

d)

Cash

FOREIGN EXCHANGE/DEPARTMENT: This deptt mainly deals with the foreign business. The main functions of this deptt are: a) L/C dealing. b) Foreign currency accounts dealing. c) Foreign Remittance dealing. L/C dealing NBP is committed to offering its business customers the widest range of options in the area of money transfer. If you are a commercial enterprise then our Letter of Credit service is just what you are looking for. With competitive rates, security, and ease of transaction, NBP Letters of Credit are the best way to do your business transactions. Foreign currency account dealing: This deptt deals with the foreign currency accounts which mainly include dollar account, euro account etc. Foreign Remittance dealing. This is very important function of this deptt.

Horizontal Analysis FA07-MBA-041

Balance Sheet 32

Assets Cash & Balances with treasury Banks

2008(%) 112

2007(%) 121

Growth 16.5

Balances with other banks

102

92

-3

Lending to financial institutions-net

80

93

-13

Investment-net Advances-net

81 121

151 108

16 14.5

Operating fix assets Deferred tax Assets-net

93

268

80.5

Other assets

144 107

114 120

29 14

Liabilities Bill payables Borrowings

145 374

67 92

6 133

Deposit and other accounts

106

118

12

Liabilities against assets subject to finance lease

75

253

64

deferred tax liabilities-net other liabilities

0 128 111

214 116 117

7 22 14

Net Assets

88

142

15

110 126 116

115 114 141

12.5 20 28.5

117

131

24

45 88

163 142

4 15

Represented By Share capital Reserves Unappropriated profit Surplus on revaluation of Assets-net

ANALYSIS

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Total assets growth rate is 140% this is because of Cash and Balances with treasury banks grow by 60% which caused by increase 21% in 2007 and 12% in 2008, Advancesnet grow by 40.5% in current year increase by 21% as compare to 8% in 2007. Operating fixed assets growth rate 80.5% but current year Operating fixed decrease by 7% Other assets also show a greater increase from 14% to 44% in current year and its growth rate approximately 29%,while lending to financial institution shows declining trend since last few years over all declining 13% and Balance with other banks declining at rate of 3%. Liabilities growing by 14% Other liabilities increase from 16% to 28% with growth rate 22%, Borrowing and Liabilities against subject to finance lease show greater increase with growth rate of 133% and 64% respectively, and Bill payable & deposit in other banks also increasing with growth rate of 6%-12% respectively, Equity show positive trend with growth rate of 24% this is because of Reserves and Un-appropriated profit increasing with rate of 20% and 28.5% & Share capital increasing with 12.5%.

Income Statement

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Mark-up/Return/Interest earned Mark-up/Return/Interest expensed Net-Mark-up/interest Income provision against non-performing advances Provision for/(reversal of) diminution in the value of investment Provision against off balance sheet obligations Bad debt written off directly Mark-up/interest Income after provisions Non-Mark-up/interest Income fee,commision and brokerage income dividend income Income from dealing in foreign currencies Gain on sale and redemption of securities-net Unrealized/(loss) on revaluation of investments classified as held-for-trading Other income Total Non-Mark-up/interest Income Non-Mark-up/interest expenses Administrative expenses Other provisions/write offs Other charges Total Non-Mark-up/interest expenses Profit Before Taxation Taxation-current -prior years -deferred Profit After Taxation Un-appropriated profit brought forward Transfer from surplus on revaluation of fix assets on account of incremental depreciation Profit available for appropriation

FA07-MBA-041

2008(%) 120.5 141 110 224

2007(%) 115 121 111 153

Growth 17.6 31 10.5 89

-927 232 90.25

5 755.09 199 104.048

-561 327.5 116 -2.85

117 88.22 380.6 17

110 113 78 200.2274

13.6 0.53 179 9

-5.34 845 121 100

716 23.5 111 106

310 384 16 3

127 445 3403 135 82 82 141 -1304 84 76 141

105 -972 8 105 107 107 96 74 522 97 112 166

16 -264 1655 20 -6 -6 19 -63 -390 -10 -6 54

334 119

95 140

164 30

35

ANALYSIS Markup/interest earned increasing at the rate of 17.7% on other hand Interest expenses also increasing with the rate of 31% that’s why, Net markup/interest income after provisions decrease by 10% as compare to last year Interest Income After provision decreasing with rate of approximately 3% this decrease is because of increase in Provision against off balance sheet obligations and Bad debts written off directly with rate of 218% & 116%,and Provisions against Non performing assets with greater increase rate about 81% but on the other hand Provisions for/diminution in the rate of investment shows greater decrease at rate of 561%,Total Non Markup/Interest Income increase in current year increase from 11% to 21% with rate of 16% this increase is because of greater increase in Other Income and Unrealized/on revaluation of investment classified as held for trading with rate of 384%& 310 respectively and Income from dealing in foreign currencies, current year shows greater increase of 380% as compare to last year with rate of 179%. Profit Before taxation shows declining trend 18% decrease in current year profit with decreasing rate of 6% this decrease is caused by greater increase in Interest expense increase from 5% to 35% with 200% growth rate this increase is because of greater increase in other charges with growth rate of 1655%, Admin expense increase from 5% to 27%, Profit after tax in current year less than the previous year because of greater increase in Current taxation by 37% as compare to last year tax.

VERTICAL ANALYSIS

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BALANCE SHEET

Assets Cash & Balances with treasury Banks Balances with other banks Lending to financial institutions-net Investment-net Advances-net Operating fix assets Deferred tax Assets-net Other assets

2008 13.02 4.7 2.1 21 50.5 3 0.4 5.5

2007 12.4 4.9 2.81 27.7 44.7 3.4 0 4.066

2006 12.38 6.4 3.6 22 49.77 1.5 0 4.3

1.43 5.7 87

1.1 1.7 92

1.7 1.8 79

0.0035 0 5.5 87.5 12.5

0.0052 0.8 5 85 15

0.0021 0.4 4 87 13

11 24.5 64.5 10 2.5 12.5

11.77 23 65.5 9 6 15

1 2 5 8 4.5 13

Liabilities Bill payables Borrowings Deposit and other accounts Sub-ordinate loans Liabilities against assets subject to finance lease deferred tax liabilities-net other liabilities Net Assets Represented By Share capital Reserves Un-appropriated profit Surplus on revaluation of Assets-net

ANALYSIS

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Cash & balance with treasury Banks is increase in current year from 12% to 13% of total assets portion of balance with other banks shows decreasing trend in current year 4.7% of total assets as compare to 4.9% and 6.4% in 2007 and 2006 respectively, lending to financial institution decreasing other assets portion is increasing in current year which is 5.4% of total assets as compare to 4.06% and 4.3% in 2007 and 2006 respectively. Total liabilities show increasing trend in current year which is 87.5% of total assets as compare to 84.7% and 87.1% in 2006 and 2007, this increase is because to greater increase in bill payable, borrowing and other portion of liabilities. Net assets portion is decreasing this decrease because of increase in liabilities which means in NBP’s debts increase, equity portion also increasing as compare to previous year of equity portion this increase because of increasing in reserves, the increase in equity show that the NBP’s dependence on equity financing increasing while the dependence on debt financing decreasing.

INCOME STATEMENT

2008(%)

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2007(%)

2006 (%)

38

Mark-up/Return/Interest earned Mark-up/Return/Interest expensed Net-Mark-up/interest Income provision against non-performing advances Provision for/(reversal of) diminution in the value of investment Provision against off balance sheet obligations Bad debt written off directly Mark-up/interest Income after provisions Non-Mark-up/interest Income fee,commision and brokerage income dividend income Income from dealing in foreign currencies Gain on sale and redemption of securities-net Unrealized/(loss) on revaluation of investments classified as held-for-trading Other income Total Non-Mark-up/interest Income

164.45234 64.452341 100 28.586422

150.3725 50.37252 100 14.04448

146.2537 46.25373 100 10.20015

1.0072014 0.0107939 0

-0.11968 0 0.118643

-2.35281 0 0.017524

29.604418 70.395582

14.04344 85.95656

7.864855 92.13515

21.386377 7.768713 10.710383 1.0670481

20.16589 9.703531 3.100932 6.963208

20.37768 9.590045 4.423468 3.87851

0.0046063 3.3605915 44.297719

-0.09505 0.438196 40.27671

-0.0148 2.081395 40.3363

114.6933

126.2333

132.4714

Non-Mark-up/interest expenses Administrative expenses Other provisions/write offs Other charges Total Non-Mark-up/interest expenses

49.034441 2.0171634 1.5741824 52.625787

42.24245 0.499642 0.05097 42.79306

44.58303 -0.05732 0.690883 45.2166

Profit Before Taxation Taxation-current -prior years -deferred

62.067514 62.067514 31.741164 0 -11.3882

83.44021 83.44021 24.71493 1.164149 0.962641

87.25484 87.25484 28.83757 1.759823 0.20555

20.352965 39.016078 122.35995

26.84172 56.59849 95.37669

30.80294 56.4519 64.24589

0.3520317 164.42653

0.115991 152.0912

0.136169 120.834

Profit After Taxation Un-appropriated profit brought forward Transfer from surplus on revaluation of fix assets on account of incremental depreciation Profit available for appropriation

ANALYSIS Markup/ interest unearned show increasing trend last few years but markup/ expensed increase which is 64.5% of interest income as compare to 50% and 46% in 2007 and

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2006, markup interest income after provisions show decreasing trends since 2006 this decrease because of greater increase in provision against non performing advances and provision for/ diminution in the value to investment. Total no markup/ interest income show increasing trend which is because of greater increase in income from dealing in foreign currency and fee, commission and brokerage income and other income, profit before taxation show declining trend this is because of increase in the portion of interest expense in current year which is 52.6% as compare to 43% and 45% in 2007 and 2006, interest expense increase in because of increase in admin expenses, other provision/ write off and other charges also increasing. Profit after taxation show greater declining which is because of increasing in taxation which was 31.74% of interest income, the decrease in profit after taxation most effective decreasing profit before taxation.

RATIO ANALYSIS

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2008 (%)

2007 (%)

2006 (%)

Return on Assets

2.8

3.7

4.1

Return on equity

17.7

27.4

32.1

Rate paid on funds

3.05

2.36

2.6

Net Interest Margin

5.8

5.5

5.8

Reserve as a percentage

188

334

451

879

932

1043

50.5

45

50

10

9

8.4

30

48

17

of loans

Debt to Equity Advances to Assets Equity to Assets Equity to advances Deposit times capital

1 times

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9.5 times

41

•

The ROA shows declining trend which means the overall effectiveness in generating profit with available assets is decreasing in current year 2.8% as compare to 3.7% in 2007 &4.1% in 2006 which means the assets not properly utilizing to generating profit,ROA major Effected by declining in Net profit.

•

ROE also shows declining trend since last few years return against equity is decreasing because of decrease in Profit before taxation in current year is less as compare to 2007 & 2006.

•

Rate of interest paid from assets is improving this is because of increase in interest expense.

•

Net interest margin is greater in 2008 which is 5.8% as compare to 5.5% in 07, this improvement is because of increase in Net interest income which is caused by increase in interest earned.

•

Reserves as percentage of loan decreasing means reserve account to cover un expected default on loans by borrowers is decreasing, non performing loans decreasing and the effect on provision for loan losses decreasing and Net income & earning/share also less.

•

Debt to Equity shows declining which means the dependency on debt is decreasing and also the difficulty regarding to borrow more funds.

•

Advances to Asset measure total Advances outstanding as percentage of total asset, current year ratio is 50.5% which is more than 07 & 06 which indicates that NBP is loaned up and its liquidity is decreasing this increase risk to default.

•

Equity to assets is common measure used to analyze capital adequacy of bank, The adequacy of NBP shows increasing trend.

•

Equity to advances reflects the degree of equity coverage to outstanding advances/loans, the degree of equity coverage to outstanding is decreasing, and this decrease is because of increase in loans/advances in current year.

•

Deposit time capital in 2008 & 2007 shows that deposits and equity are equal but in 2006 deposit was 9 times greater than equity which was because of greater increase in deposits.

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SWOT Analysis STRENGTHS Oldest Institution: NBP in one of the oldest bank of Pakistan and first nationalized bank Hence its customer base is strength from this plus point as customers have more confidence in the bank. The additional value services as the privilege for the bank. Alternate duties in SBP Absence: The NBP performs additional services for its customers as well as the other bank customer in the absence of SBP. More deposits than other Banks: NBP has the relative competence in having more deposits than the other bank. This is because of the confidence the customer have in the bank. The bank being the privileged and oldest bank in banking sector of Pakistan enjoys this edge over all others, lacking it. Broad Network: The bank has another competency i.e. it has broad-basses network of branches throughout the country also more than one branch in high productive cities. The customers are provided services at their nearest possible place to confirm customer satisfied. Strictly followed rules & regulations: The employees at NBP are strict followers of rule & regulation imposed by bank. The disciplined environment at NBP bolsters its image and also enhances the over all out put of the organization.

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Professional Competence: The employees at NBP here have a good hold on their descriptions, as they are highly skilled Professionals with back ground in business administration, banking, economics etc. These professional competencies enable the employees to understand and perform the function and operation in better way. Western union facility: National Bank of Pakistan is only one bank which has the facility of Western union. In this particular scheme money is transfer in Pakistan from abroad. This is the fastest way to money transfer. You can receive the money from bank to see the name and password of particular client. ATM finder: There is also strength of NBP that they are found the ATM. They now provide this facility to the customers. Customer satisfaction: Because of government’s bank, it is enjoying the customer’s satisfaction. Customers feels secure their money in NBP. Online banking: There is also strength of NBP that 130 branches are online. It helps the speedy services giving to the customers. There is also help in checking the balances and daily transactions just at one key press. Employee’s loyalty: Employees are very much loyal to NBP. Employee’s turnover is very low in NBP. Very few employees are leaving the jobs in NBP. So it is very big strength that your employees are loyal to your organization.

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WEAKNESSES: Lack of Marketing Effort: The bank does not promote its corporate image, services, etc on a competitive way. Hence lacks far behind in marketing effort .A need for aggressive marketing in there in the era marketing in now becoming a part of every organization. NBP under Political Pressure: The strong political hold of some parties and government and their dominance is affecting the bank in a negative way. They sometime have to provide loan under the pressure, which leads to uneven and adjusted feeling in the bank employees. Lack of Financial Product: The bank falls far behind when the innovative and new schemes are considered. It has not been involved in the tug of war between the competitors to the accounts and strengthens the existing customer base. This stands out to be the major incompetence and weakness of the banks. Inefficient Counter Services in the Rush Hours: During the rush hours, the bank is founded out to be a total flop to handle the mob of people peaking from windows and doors. The bank has deficiency to operate in the stages of rush hours where the people find them services entangled in a situation of nowhere because they are not well served. Lack of Computerized Network: The bank lack the strength of being powered by the network of computers, which have saved time, energy and would have lessened the mental stress, the employees have currently. This would add to the strength if it were powered by network of computers. Lack of Modern Equipment: FA07-MBA-041

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The bank lacks the modern Equipment that is note counting machine computers. Even if there is any equipment they lack to fall in the criteria of being rearmed as update and upgraded Uneven Work Distribution: The workload in NBP is not evenly distributed and the workload tends to be more on some employees while others abscond away from their responsibilities, which server as a demotivation factor for employees performing above average work. Lack of communication between employees: During the internship in NBP I found the problem of lack of communication between the employees and management. They have not very much understanding with each other and not share the work of each other. Public dealing is not very effective: Public respect is not very effective in NBP. Employees are not taking care of the customers, especially in pension and bills department. Staff shortage: There is also weak point for NBP that staff is very short and more staff is required to meet the needs of the branch work. OPPORTUNITIES Electronic Banking: The world today has become a global village because of advancement in the technologies, especially in communication sector. More emphasis is now given to avail the modern technologies to better the performances. NBP can utilize the electronic

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banking opportunity to ensure on line banking 24 hours a day. This would give a competitive edge over others. Growing banking system: Nowadays banking system is growing quickly so NBP have opportunities to improve the standard and get the more share in the market. .Increase in economic activities: The economic activities are increase nowadays, so banks are contributes more in economic activities. Banks are played role in trade and commerce. So the business of commercial banks is increase. THREATS Emergence of New Competitors: The bank is facing threats with the emergence of new competitors especially in terms of foreign banks. These foreign banks are equipped with heavy financial power with excellent and

innovative ways of promoting and performing their services. The bank

has to take initiative in this regard or will find itself far back in competition. Political Pressure by Elected Govt: The ongoing shift in power in political arena in the country effects the performance of the bank has to forward loans to politically powerful persons which create a sense of insecurity and demoralization in the customer as well as employees.

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Customer Complaints: There exists no regular and specific system of the removal of customer complaints. Now a day a need for total customer satisfaction is emerging and in their demanding consequences customer's complaints are ignored Increase in no. of banks: Increase in no. of banks is a threat for National Bank of Pakistan. No. of private banks (commercial and private) are operating their business and provide the same facilities. So increase in no. of banks is a threat for NBP. Modern type of banking: Modern and computerized banking is required to fulfill the customer’s need. So maximum branches of NBP are worked in old traditional ways. The whole structure changes to online: NBP have wide network of branches. Only 130 branches are online, so it is very difficult and time consumed to convert all branches to online system. So there is also risk involves that if one commuter of one branch suffers in problem, all system and all commuters of all branches must be turnoff.

Problems with Branch

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Customer Satisfaction In NBP customer dealing is will, but during rush hour the customer has to wait for a long time for their turn. It’s quite hard for a new customer or potential customer to get the required information. Poor record management and filing system During my internship I observed that filing system of branch is not good. When certain record is needed the staff has to struggle Unequal distribution of work Work is not equally distributed. On one hand some employee have to work all day without relaxing while some others have nothing to do at all. This not only creates confusion among employees but also hurting and disturbing for overall setup of the bank. And above all it results in dissatisfaction among customers as well. Bank duty to maintain secrecy. They don’t care about maintaining secrecy, especially during the rush hours. They speak loudly about the account position and while getting clearance of cheque the person can easily get the whole information from the ledge. The deposit clerk must be careful while passing any cheque. In this regard another shortfall is in giving the information about the balance on telephone. Excessive paper work It is notified that due to the lengthy procedure of paper work the bank employee are over burdened. They are unable to give proper attention to the clients and face difficulties in getting their job done. One reason for lengthy procedure and excessive paper work in the bank is the lack of computerized technology. More accounts fewer deposits.

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Efficient banking is one which does not emphasize on number of accounts but on greater amount of deposits. NBP is more interested in increasing its number of account irrespective to its deposit. The main reason behind it is that bank does not provide personalize service to all the account holders and does not improve its quality and services Delegation of authority Manager has very limited authority; he has to take the approval from his management authority i-e. In case of advance he has to take the approval of general and regional manager. The other problem is created, when the manager is not present in his office, the customer have to wait for hours. This discourages both customer and officers because they have to suffer a lot Carelessness in opening of account When customer comes to open an account, the staff does not bother to check his/her place phone number and permanent address. It is important because in case of overdraft by mistake or anything which places his account in debit it will be difficult to trace him. On the other hand he may be involved in any fraudulent activities against the bank. In this case the bank will be in awkward position Lack of specialized training NBP does not provide adequate facility of specialized training to their staff. Training is generalized rather than specialized. As the worker finishes his training, he is inducted into a specific field without having great deal of knowledge about the field Low Profit Rates Most of the customers shifted their account to the National Saving Center because of the low rates of saving deposit discourages the customers. Bank should increase their profit rates to attract customers.

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Delays in Loan Advancement It has been observed that there are delays in sanctioning of cases form the head office, which results in customer dissatisfaction. Lack of business communication There is no proper way to give information to their customer. To avoid this minor dissatisfaction and tension in the mind of customer, and deficiency of the service, it is recommended that the bank should provide brochures etc containing information in details.

GENERAL SUGGETIONS NBP is an effectively operating and profit making organization and carrying out its activities under a specified system of procedure. The main regulatory body is State Bank of Pakistan, which provides policy guidelines and ensures that the money market operates on sound professional basis. While the head office specifies the whole procedure of

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function and operations. This procedure has been modernized with the passage of time with a view to streamline the approach and underlying procedure for effective overhauling of its own capabilities so as to bring them at par with international practices. Here I am giving some suggestions, which in my view can add some input for efficiency and better performance of NBP. The recommendations are as follows: Professional training NBP staff lacks professionalism. They lack the necessary training to do the job efficiently and properly. Although staff colleges in all major cities but they are not performing well. For this purpose these staff colleges should be reorganized and their syllabus should be made in such a way to help the employee understand the ever changing global economic scenario. Banking council of Pakistan should also initiate some programs to equip the staff with much needed professional training. Delegation of authority Employees of the bank should be given a task and authority and they should be asked for their responsibility.

Performance Appraisal The manager should strictly monitor the performance of every staff member. All of them should be awarded according to their performance and result in the shape of bonuses to motivated and incite them to work more efficiently. Changes in Policies

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There should not be any abrupt policies change by the upper management, as this practice hurts the customer confidences in the bank. Government should make long term policies. Need of Qualified Staff Required, qualified staff should be provided to branch in order to improve the functioning of the branch. Especially a telephone operator should be appointed. Utility Bill Charges Bank gets Rs. 2 to 3 to processes a utility bill, and it is very tire, tough and hard job despite this working resulting in a loss to then Rs 3 to5 per transaction. These charges should be increased to RS 10 per bill to enable the branch to cover their handling costs and make some profit. Link with the Head Quarter 100 major branches of NBP should established a direct link with the, head quarter In Karachi, through Internet or Intranet. This will make the functions and decision making of the management easier and convenient. Credit Card National bank of Pakistan should start its operation in credit card. These cards are very helpful for the ordinary customer in general and the business people in particular. To make it mores secure and to eliminate the misuse of it, the management is required to keep proper security against the card. Decreasing Administrative Expenses Bank should their administrative expenses. This was Rs 8 billion in the year 2000. That can be done by lying off the surplus pool of employee with golden handshakes scheme. The branches that are not much used could also be closed. Employee can also be how to control the bank expenses. That will give positive results in the future. FA07-MBA-041

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Needs to be Flexible in credit Policy As mentioned earlier, NBP is very conservative in advances and loans policy. It reduces the investment opportunities. Also loans should be given to the small businessmen and the agriculture sector at the low markup rate. It should adopt flexible credit policy while giving credit to the agriculture sector. Technological Advancement I would like to suggest that at least all the main branches of NBP should be fully computerized in order to expedite the dealing process among bankers and their customers. Every department should be provided a computer with adequate training (especially Advances, Deposits and Foreign Exchange departments). Daily records should be entered directly into these computers, (instead entering the overall daily transactions after the banking hours). It will not only reduce transaction time, will increase accuracy but will also be efficient as well. Not only it will be economical but will also reduce the extra burden of work of the bank. It will also help in reducing the use of excessive paper work.

Marketing Policy The branch should adopt various marketing strategy and promotion strategy to promote the bank and its product. The most important in my opinion is personal marketing; it is the most effective of all when you think in term of branch level. But on the whole organization level, they should arrange the seminar with in the bank and outside the bank. They should introduce various

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prizing schemes just like Allied Bank. Karamad Scheme, Bank Al-Falah (monthly income earning scheme) and various others. They should do more advertising through newspaper and media and through channel of personal contacts. Complaints of Customer There should be an information desk to provide the information and to receive the complaints of the customer in the bank. There is no complaint box available in the branch and not any person appointed to hear the complaints. Every person cannot go to the manager for the complaint because most of the people are hesitant. So I suggest management to install a compliant box in the branch, and recruit a special person for that guidance of the customer when they are unable to manage some difficulties in banking matters.

LEARNING AS A STUDENT INTERN: There are following learning points for me in the bank. Duties

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In my 1st and 2nd week in NBP I work under the assistance of Mr.Muhammad Nazir (Operation Manager) from him I learn about activities related to Deposit Dept: and performed such activities like: •

Opening an account

•

Issue new cheques books

And I also scroll the challan of Government and pass vouchers. In my 3rd and 4th week in NBP, they assign me work related to pension department. Mr. Muhammad Nazir (Operation Manager) guides me very nicely and I learned lot of things pension related activities. They give the pension to retired Govt. employees. There are three types of pensions given, •

Provincial

•

Central

•

Defense

These are different according to their PPO numbers For example: Provincial PPO 123456 Central PPO 12345/pak Defense PPO da/dg1/gh/4 etc. I am full trained now in this particular job and I serve lot of people in this week. How to fill farm? How to enter in ledgers and balance account and what are file and book and all other things concerning to pension department.

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In 5th and 6th week I work under the assistance of Mr.Muhammad Nazir (Operation Manager) from him I learn about remittance activities: •

Demand Draft

•

Telegraphic Transfer

•

Pay Order

•

Mail Transfer

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