Internship Report On National Bank

Internship Report

NBP

Employees Hierarchy PRESIDENT MEMBER BOARD SENIOR EXECTIVE VICE-PRESIDENT EXECUTIVE VICE PRESIDENT

BRANCH HIERARCHY

SENIOR VICE PRESIDENT

VICE PRESIDENT

ASSISTANT VICE PRESIDENT

OFFICER GRADE

I

OFFICER GRADE

2

OFFICER GRADE

3

MESSENGER

PEON

SWEEPER

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Internship Report

NBP

National Bank of Pakistan

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.

Branch Introduction I did internship in (National Bank of Pakistan) Main Branch, Kutchehry Chowk, Multan. This branch was founded in July 1962. From last many years this branch is not only

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Internship Report

NBP

achieving its targets of deposits and advances rather it remains above the targets. According to the financial record of last year this branch was earning more than 20% of total profit of the region. Every year the targets of this branch are increasing by 20 to 25 percent but still there is a potential in the market to meet these additional targets. This branch is performing its functions in traditional style and now it has been converted into an online branch.

What I Did…? After joining the bank for internship initially it was so difficult for me to get the attention of the employees, every body was terribly engaged in there own activities, no body was having time to accommodate me. This was a crucial time for me to get the attention of NBP’s management and to make them realize that their valuable information is so much necessary for the up gradation of my knowledge and for the completion of the task which I was assigned by the institution. But very soon I succeeded in making relationship with the top influence people and with the help of these people I started permeated in the system. This was my first step towards the completion of my task and with the passage of time they realized that they can also utilize my efforts in a productive way to minimize their burden. They provided me their time and information which helped me to enhance my knowledge and they also shared there experiences with me which I believe that it would be helpful in my practical life.

First two weeks I worked in operation

department, for next two weeks I worked in credit department and for rest of the time I worked with Business Manager where I learned lot of things including how to deal with corporate customers, with

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Internship Report

NBP

individual customer and how loans can be recovered from the customers. During the internship session I got the chance to perform on different activities which are listed below and short explanation is also given.

Account opening department To open an account the customer have to meet the general banking manager with an introducer (the person who is going go introduce that person in the bank) and get an application form used for account opening. Different color-coded application forms are available for each type of account. Along with the form a card for specimen signature is also supplied to customer. Manager has every right not to accept this contract if he is not satisfied by the details provided by the customer. In case the contract is acceptable to both, now it is ready to open the account formally.

ACCOUNTS TYPES Though in theory there many types of accounts but commonly account operators can be classified in one of the following categories, each have different documentation requirements:  Single  Joint  Partnership  Private Limited

Credit Department

The earning of a commercial bank are chiefly derived from interest charges on loans and discounts it. Now loans are recognized as advances or finances. The advances are made

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Internship Report

NBP

through the deposits that are kept in the bank by the customers. The bank pays profit on the deposited amount and receives mark up on the advances made of different amounts. NBP introduced the mark up based advancing in Jan1, 1985 when the Islamization of the economy was influence under this system of advancing the bank is entitled to receive a constant sum of money on the amount that is outstanding on the account of the party.

Foreign Exchange

To promote flow of foreign exchange in the country, the Government of Pakistan started a new scheme of opening of bank accounts in foreign currency. These accounts were entitled to receive profit percentage in shape of the currency in which the account was kept (Dollar account shall be paid profit in dollars). This has increased the flow of foreign currency especially from the Pakistani foreign residents, who used to send money to their families at home. The State Bank of Pakistan was given special rights to control and monitor the performance of the “Authorized Dealers” in foreign exchange accounts. Authorized Dealer is a person or an institution, which can deal with the foreign exchange. The authority is given by SBP to all those scheduled Banks who have adequate trained staff and facilities. These scheduled banks are given license to deal in foreign currency transactions.

Remittance Department

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Internship Report

NBP

Remittance department provides services to the customer of the bank. The main function of this department is transfer of funds.

INSTRUMENTS OF BILLS AND REMITTANCE DEPARTMENT

The instruments that are handled in the Remittance department are as follow:

 Demand Draft.  Mail transfer.  Telegraphic transfer.  Pay order.  Pay slip.  OBC (outward bill for collections).  IBC (inward bill for collections).

Clearing Department

There is no legal obligation on a banker to collect cheques drawn upon other banks for a customer. However it is function of almost every modern bank of the collection of cheques and bills on behalf of the customer. Clearing department services are provided in order to make arrangements for the economic collection of the cheques, DD and other negotiable instruments. A large part of this work is carried on through the clearinghouse.

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Internship Report

NBP

After joining the bank in internship I got the practical exposure of all the above described activities. The mechanism is not too simple to understand easily but still lots of complexities have been solved.

Application of Learned Concepts After getting entered into practical life this is a common complaint that practically things are quite different from theoretical learning, but I did not face such big difference because the concepts I got from the course of “Money and Banking” and “Business Institutions” were so much close to the real world. In management and marketing style of the employees there were somehow differences exist. While doing internship I got lot of experience and I got the chance to apply my knowledge practically which helped me in getting interest in learning new concepts. After doing this practice I feel that I can even compare my practical knowledge in further studies.

Financial Analysis Liquidity Ratios:

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Internship Report

Ratios Current Ratio Cash Ratio Net W.C Quick Ratio

NBP

2003

2004

0.484

0.780

0.377

0.503

2005 0.809 0.382

-29385417 -106408508 -91049316 0.484

0.780

0.809

2006 0.870 0.363 -68179014 0.870

Description: If we look at the liquidity ratios we can see that the bank has improved its liquidity position from 2003 to 2006. There is a continuous improvement in NBP’s liquidity position in 2003 the liquidity position was alarming and it was even less than 0.5. Although in banks it is difficult to keep these ratios up because banks mainly depend upon short term liabilities but still NBP’s improvement is appreciated.

Leverage Ratios:

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Internship Report

Ratios Debt Ratio Debt/Equi Ratio Times Int Ear Ratio Debt to Tangible N.W

NBP

2003

2004

2005 0.869

2006

0.941

0.922

0.870

16.002

11.943

6.620

6.750

2.080

2.348

2.659

2.930

16.002

11.943

6.620

6.750

Description: If we look at the Debt ratio and Debt/Equity ratio it is clearly understandable that the bank has greater portion of debts in its capital structure, but as compare to 2003 in 2006 the condition is better and the bank has gradually increased its equity portion as compare to the debt. Still management need to change its capital structure and higher portion of equity may result in better results, as it is present in times interest earned ratio which is showing that increase in the equity is putting healthy effect in returns.

Profitability Ratios:

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Internship Report

Ratios

NBP

2003

2004

2005 1.64%

2006

R.O.Assets

0.9%

1.2%

2.7%

R.O.Equi

15.2%

14.7%

16.7%

20.8%

R.O.Inv

6.0%

17.7%

19.7%

23.2%

R.O.Op Assets

3.7%

3.8%

5.3%

6.3%

Description: As we have seen in other ratios of leverage and liquidity the company’s financial position is much better in later years as compare to the year 2003, bank has got gradually and continuous increase in its income which is increasing its return on assets, equity and investment. Still return on assets is showing that bank is not utilizing its assets properly and its efficiency is to be increased. Return on equity is satisfactory and showing that bank is having very less portion of equity.

SWOT ANALYSIS

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Internship Report

NBP

Strengths: 

Public confidence



Sound financial strength



Highest profitability



Vast operational network



Role in economic development



Utility bills collections



Corporate branches



Evening banking



Efficient home remittance



Recognition of hard work of staff



SWIFT



Internet access (www.NBP.com.pk)



Pension & salaries payments



Online city branch

Weaknesses: 

Lack of good delegation



Inadequate, poorly placed network technology



complex MIS

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Internship Report



Deep rooted bureaucratic approval



Lack of long term & short term plans



Less share in import & export business



Poor resource utilization



Need better service policy



Frequent change in senior management

NBP

Opportunities:  New style management  Introduction of new products and services  Introduction of new technology & electronic banking  Capital management & equity financing  Secondary market operations  New deposit scheme

Threats:  Establishment of new private financial institutions & expansion  Govt. sponsored schemes  Political pressure  Reducing branch network  New products form private Pakistan Establishment of new private financial institutions & expansion

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Internship Report

NBP

 New products form private Pakistani & foreign banks  Non-banking institutions  Inability to change  Inability to change  Stakeholders interests

PEST ANALYSIS Political: 

Privatization policy and deregulation.



Impact of subsidized credit affecting and NCB’s.



Employment practices, Unions, Associations.



Political Interference and harassment.



Incidents of high taxation on banking industry.

Economical: 

Constraints in mobilization of public savings because of inflation.

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Internship Report



Staff cost.



Operating cost.



Bad debts

NBP

Social & Cultural: 

Inadequate human resources.



Cultural strain to savings.



Defaulter’s lobby.



Declining education and work ethics.



Inadequate accountability.



Adequate empowerment.

Technological: 

Inadequate communication infrastructure.



Inadequate computer facilities.



Inadequate IT training.

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Internship Report

NBP

Suggestions and Recommendations Based on the SWOT and PEST analysis of the National Bank of Pakistan, it is observed that the Bank like the other public sector industries has not been showing up to mark performance. There is a long list of weaknesses that is given on the previous page. Most of them are going along since long time and that all efforts made to remove them have not succeeded. On the basis of SWOT analysis of the Bank the following suggestions and recommendations are given.

∗

Bank should try to get rid of the political influence to be able to compete in the industry with prudent and strong policies.

∗

The undue reliance on the public sector be minimized and ventures of private sectors should be taken as well.

∗ ∗

Redefining of rules, regulations and policies should be made implemented at all costs. Efforts of great importance to be made for the over the counter services of general banking making it more simple and faster to get a better response of the customers.

∗

The behavior of the employee, especially on the counter has to be strictly monitored and checked.

∗ ∗

The still existed bureaucratic approval system has to be demolished. All advances should be made by getting the maximum security and should focus on productive work.

∗

Better and comprehensive long-term and short-term planning should be made to forecast the future needs.

∗

There is a possibility of establishing a task force to ascertain the effectiveness of the policies being implemented.

∗

The Bank should develop a comprehensive recruitment policy to make only the competent ones to be on the job.

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Internship Report

∗ ∗

NBP

There is a still a vast pool of incompetent employees that has to right sized. There is a lack of promotional element in the planning and budgetary decisions of the Bank that has to think seriously.

∗

All branches of the Bank should be computerized for increasing the effectiveness and efficiency of its employees.

∗

Efforts should be continued to keep the powers of employees union to the minimum, like the current situation.

∗

Promotions must not be delayed and should be made on time to further increase the commitment and efficiency of the employees.

These and many other that can make a good set of recommendations, which have to be made possible to escape from the threats and weaknesses and the risks in environment that surrounds the Bank. The management do considers the policy matter that is not helping the Bank, but are still in practice due the absence of prudentially regulated system to protect them and the Bank. Efforts have been made with serious concern to give NBP a status that it has to maintain by having practices of:

∗ ∗ ∗ ∗

Right sizing of the employees. By closing unprofitable branches. By introducing a merit based selection criteria. Promotions made conditional with qualifications.

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