National Bank of Pakistan

National Bank of Pakistan
In the Name Of Almighty
ALLAH
The Most Beneficent the
Most Merciful
Internship Report Page 1

INTERNSHIP REPORT
Gulgasht branch, Multan (0542)
Institute of Management Sciences
BAHAUDDIN ZAKARIYA UNIVERSITY MULTAN

PREFACE
It is the requirement of all BBA (Banking & Finance) of deptt (Institute of management
Sciences) Bahauddin Zakariya University, Multan for the students to undergo six to eight
weeks internship training in any renowned organization. It not only helps to get an exposure
to the practical world and to get familiarized with the practices followed by different
organizations while in pursuit of their objectives but also one can learn to face the
professional challenges that are dramatically different from the educational world. This
period called the “Internship Period “, if spent properly and sincerely, enables the students to
be more confident, more knowledgeable, more responsible and, above all, more committed to
their work. I have done my internship of six weeks period i.e. from 28-06-2011 to 13-08-2011
in National Bank of Pakistan, Gulgasht Branch, Multan.
It has enabled me to understand the practical scenario in which the banking sector
operates. Also it has helped me sharpen my decision making power so as to utilize
the resources in an effective manner to generate maximum profit.
In preparing this report, I have put all of my best efforts and have tried hard to give
maximum knowledge. Despite of my all the coherent efforts, I do believe that there
will be a room for improvement.

ACKNOWLEDGEMENT
I owe my heartfelt thanks to Almighty Allah to enable me to discharge search an onerous

responsibility with due care and caution in prime interest of me and to the great credit of our
worthy teachers.
Several people were very important to develop this report, without their support I could never
successfully complete this report. The planning and preparation of this report is not just my
effort, it also included the cooperation of my friends.
In this report I’ve tried to relate everything that I thought was necessary. Though, it’s a bit
difficult to say anything about the perfection of the effort that I have made but let us hope that
it finds its place somewhere to meet the required and expected criterion.
I am also indebted to the persons under mentioned because without their help, it would not
have been possible for me to achieve this practical knowledge.
NATIONAL BANK OF PAKISTAN

Gulgasht Branch (0542)
Mr. Imran OPERATIONS MANAGER
Mr. Kashif DEPOSIT MANAGER
Mr. Farhan COMPLIANCE OFFICER

EXECUTIVE SUMMARY
As part of the academic requirement for completing BBA (Banking & Finance the
students are required to undergo for 6-8 weeks of internship with an organization. The
internship is to serve the purpose of acquainting the students with the practice of knowledge
of the discipline of business administration.
The report is based on the internship at The National Bank of Pakistan, Gulgasht
Branch, Multan. National Bank of Pakistan is a renowned bank of Pakistan, which holds first
position in banking sector in the country and is the biggest financial institution with assets
totaling over Rs.310 billion with 1428 local and 23 foreign branches. The bank is the higher
financer in agriculture and commodity operation sector and intends to offers a wide range of
services to its customers and recognizes the importance of efficient business delivery and
providing timely solutions. Following report discusses in detail the services offered by NBP.
The report also includes bank’s history, product line, and organizational structure,
functions performed at the bank and SWOT analysis of NBP. The strengths, weaknesses,
threats and opportunities depict the current situation as well as future prospects of the bank
and other services which NBP provides to its customers.
The detailed analysis of financial statements of NBP has been included as an integral part
of this report.
 Ratio analysis of important aspects of financial statements
The problems faced by the branch and ways to overcome these problems are also
discussed in detail. Moreover, Details of activities performed in the different departments of
the bank during internship are also included in this report.

TABLE OF CONTENTS
Brief Introduction Of Banking sector ---------------------------------------------- 08
State bank of Pakistan----------------------------------------------------------------- 09
National Bank’s History ------------------------------------------------------------ 09
Product Lines
1). Deposits --------------- ----------------------------------------------------------- 11
a) Current Deposits ----------------------------------------------------- 12
b) PLS Deposits ---------------------------------------------------------- 12
c) Fix Deposits Account (Time Deposit) ---------------------------- 13
d) Foreign Currency Account ---------------------------------------- 13
e) NBP Premium -------------------------------------------------------- 14
f) NBP Premium Saver ------------------------------------------------ 14
g) National Income Daily Account (NIDA) ------------------------ 14
2). Advances
a) NBP Saiban ----------------------------------------------------------- 15
b) NBP Advance Salary ----------------------------------------------- 15
c) NBP Cash & Gold --------------------------------------------------- 15
d) Student Loan Scheme ----------------------------------------------- 15
e) NBP Karobar --------------------------------------------------------- 16
3). Corporate Advance
a) Cash Finance --------------------------------------------------- 16
b) Running Finance/ Overdraft -------------------------------- 16
c) Demand Finance ----------------------------------------------- 17
4). Remittance
a) Demand Draft ----------------------------------------------- 17
b) Travelers Cheque ------------------------------------------ 17
c) Letter of Credit --------------------------------------------- 17
d) Foreign Remittance ---------------------------------------- 18
e) SWIFT System ---------------------------------------------- 18
f) Mail Transfer ------------------------------------------------ 19
g) Telegraphic Transfer --------------------------------------- 19
h) Pay Order ----------------------------------------------------- 19
5). Miscellaneous
a) Lockers -------------------------------------------------------- 19
b) NBP Cash Card ---------------------------------------------- 20
Organizational Structure ------------------------------------------------------------- 20
Branch Network of NBP -------------------------------------------------------------- 20
Departments of NBP ------------------------------------------------------------------- 21
1) Remittance Department ----------------------------------------------------- 22
2) Account Opening Department --------------------------------------------- 23
3) Cash Department ------------------------------------------------------------- 24
4) Deposits Department --------------------------------------------------------- 24
5) Advances Department ------------------------------------------------------- 25
6) Pension Disbursement Department --------------------------------------- 25
Comments on Organizational Structure ------------------------------------------ 26
National Bank, Gulgasht Branch -------------------------------------------------- 26
a) Function of Branch ----------------------------------------------------------- 26

b) Branch Hierarchy ------------------------------------------------------------- 27

c) Branch Services ---------------------------------------------------------------- 28
Learning as a Student ----------------------------------------------------------------- 28
Future Prospects ------------------------------------------------------------------------ 35
Financial Analysis (Horizontal & Vertical)---------------------------------------- 36
Ratio Analysis---------------------------------------------------------------------------- 40
SWOT Analysis--------------------------------------------------------------------------- 45
a) Strengths ------------------------------------------------------------------------ 45
b) Weaknesses --------------------------------------------------------------------- 46
c) Opportunities ------------------------------------------------------------------ 47
d) Threats -------------------------------------------------------------------------- 48
PEST Analysis--------------------------------------------------------------------------- 49
a) Political------------------------------------------------------------------------------- 49
b) Economical-------------------------------------------------------------------------- 49
c) Social--------------------------------------------------------------------------------- 49
d) Technological----------------------------------------------------------------------- 49
Competitor Analysis Of NBP------------------------------------------------------ 50
Conclusion ---------------------------------------------------------------------------- 51
Recommendations-------------------------------------------------------------------- 52
Learning As a student --------------------------------------------------------------- 53
References & Sources --------------------------------------------------------------- 54
******************
BRIEF INTRODUCTION OF THE BANKING SECTOR:

Banks play very important role in the economy of a country and Pakistan is no
exemption. Banks in Pakistan account for 95% of the financial sector. Pakistan has a
well-developed banking system which consists of a wide variety of institutions ranging from
a central bank to commercial banks and to specialized agencies to cater for special
requirements of specific sectors. The country started without any worthwhile banking
network in 1947 but witnessed phenomenal growth in the first two decades. By 1970, it had
acquired a flourishing banking sector. The era of 90s was the climax of privatization,
deregulation and restructuring in the domestic banking industry and financial institutions.
The Government only owns the National Bank but 80% of bank assets are in
private sector. Banking assets rose three-a fold over the last five years and the industry size
is reaching Rs 4 trillion. The contribution of banking sector to GDP ratio is 55.6%.
Pakistan has been ranked 2nd in performance and efficiency indicators among the South
Asian countries by the World Bank. There are 68 scheduled banks of which the top five
have 50% of the market share. Banking industry, in Pakistan, is currently under a wave of
Mergers and Acquisitions (M & As). The banking structure in Pakistan comprises of the
following types.
Public Sector Commercial Banks: National Bank of Pakistan, First Women Bank Limited,
The Bank of Khyber, The Bank of Punjab.
Local Private Banks: Askari Commercial Bank Limited, Bank Al-Falah Limited, Bank Al
Habib Limited, Faysal Bank Limited, UBL MCB Bank Limited, ABL,
Foreign Banks: ABN Amro Bank, Al Baraka Islamic Bank, American Express, CITI Bank,
Emirates Bank, Hong Kong Shangai Banking Corporation etc.
Specialized Banks: Zarai Tarqiati Bank Ltd., Industrial Development Bank of Pakistan,
Punjab Provincial Cooperative Bank Limited.

State Bank of Pakistan:
SBP acts as a nucleolus in the financial system of the country. Today, a central bank is
the central arch of the monetary and fiscal framework in many countries of the world and its
activities are essential for the proper functioning of the economy and critical for the fiscal
operations of the government and Pakistan’s banking system is no exemption. Will Roger
(1992) describe a central bank as one of the great inventions of the 20th century. State Bank
of Pakistan was established on the first of July 1948 under the SBP order 1948 as the central
bank of the country. State Bank of Pakistan reins the monetary and credit system in Pakistan.
The SBP is performing many useful functions like custodian of cash reserve of commercial
banks, custodian of foreign currency reserves, and bank of rediscount, central
clearance, settlement and transfer and conducting monetary policy for the stability of
the entire banking industry of Pakistan.
National Bank’s History:
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. 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. The Bank has also played an important role in
financing the country’s growing trade, which has expanded through the years as
diversification took place.
The National Bank of Pakistan has it’s headquarter in Karachi, Pakistan. It has the
assets totaling over Rs.310 billion with 1428 local and 23 foreign branches. Under a trust Deed,
the bank also provides services as trustee to National Investment Trust (NIT) including
safe custody of securities on behalf of NIT.
The National Bank of Pakistan 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.
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 bank is providing all banking services of
mercantile and commercial banking permissible in the country, which include:
 Accepting of deposits of money on current, fixed, saving, term deposit and profit
and loss sharing accounts.
 Borrowing money and arranging finance from other banks.
 Advancing and lending money to its clients.
 Financing of projects, including technical assistance, project appraisal through

long term/ short term loans, term finance and musharika certificates, etc.
 Undertaking and executing trusts.
 Joint venturing with foreign dealers, agents and companies for its representation
abroad.
 Participating in “World Bank” and “Asian Development Bank’s” lines of credit.
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:
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 )
Product Lines:
The most precise definition of product is anything capable of satisfying needs,
including tangible items, services and ideas. In marketing, a product is anything that can be
offered to a market that might satisfy a want or need. The National Bank of Pakistan is
offering for sale several related products individually, which is commonly known as product
lining. A product line is defined as “A group of products that are closely related because they
function in a similar manner, are sold to the same customer groups, are marketed through
same types of outlets, or fall within the given price ranges”. The followings are the main
consumer banking products of NBP.
Deposits
The National Bank of Pakistan offers to their clients a variety of Deposit Schemes
with personalized services at competitive rates of interest. Any Pakistani citizen can open
his/her account for any deposit scheme at any of its branches strategically located throughout
Pakistan. The Bank with its huge network of branches garners savings from both the rich and
the poor in urban as well as rural areas.
Current Deposits

These are payable to the customer whenever they are demanded. When a banker
accepts a demand deposit, he incurs the obligation of paying all cheques etc, drawn against
him to the extent of the balance in the account. Because of their nature, these deposits are
treated as current liabilities by the banks. Bankers in Pakistan do not allow any profit on these
deposits, and customers are required to maintain a minimum balance, failing which incidental
charges are deducted from such accounts.
PLS Saving Deposits

In NBP a Savings Deposits Account can be opened with a very small amount of
money and the depositor is issued a cheque book for withdrawals. Profit is paid at a flexible
rate calculated on six monthly basis under the Interest Free Banking System. There is no
restriction on the withdrawals from the deposit accounts but the amount of money withdrawn
is deleted from the amount to be taken for calculation of products for assessment of profit to
be paid to the account holder.
The salient features of profit and loss sharing and saving accounts of NBP are as follows
1. These accounts can be opened by individuals in their own single or joint name. The
PLS savings account can also be opened for provident fund or other benevolent
funds of companies, firms, organizations, NGO’s and educational institutions.
2. PLS saving account can be opened with a minimum amount of Rs.500/- only
3. To share in the profit a minimum balance of Rs.500/- must be maintained in the

account. The minimum balance on sixth and last of month will qualify for the profits.
The profits will be calculated on the basis of monthly minimum balance for the
periods of six months i.e. from January to June and July to December.
4. On the first day of Ramzan each year the Zakat at the rate of 2.5% will be
deducted from these deposits on the balance of that day. But if depositors affix an
affidavit of Zakat deduction along with account opening form or he is a non-
Muslim, no Zakat will be deducted from his account.
Fixed Deposit Account (Time Deposits)

The deposits that can be withdrawn after a specified period of time are referred to
as Fixed or Term Deposits. The period for which these deposits are kept by the bank
ordinarily varies from three months to five years in accordance with the agreement made
between the customer and the banker. Profit/Return is paid to the depositors on all fixed or
Time deposits, and the rate of profit/Return varies with the duration for which the amount is
kept with the banker. The salient features of fixed deposit account of NBP are as follows
1. The PLS term deposit are opened for individuals in their own single or joint names,
companies firms and other organizations.
2. The PLS term deposit receipt are issued for any amount. There is minimum or
maximum limit or deposits in a single term deposit account.
3. PLS term depositors may be allowed some facilities against the security of these
receipt credits, after making “Lien” on the relevant receipt and subject to recovery of
service charges.
4. Under term deposit scheme the depositors not cease to earn the profit immediately,
after the respective maturity date.
Foreign Currency Account

Government of Pakistan has introduced many important reforms in Foreign Exchange
Control in the country since February, 1990, for the purpose of strengthening the Foreign
Exchange Reserves. One of these reforms relates to foreign currency accounts, which can be
opened in United States Dollars, Pound Sterling, Euro and Japanese Yen in any of the
authorized branches of commercial banks throughout the country. Foreign currency
accounts are opened, on proper introduction and submission of required documents along
with an initial deposit prescribed from time to time. The bank shall have no responsibility
for or liability to the account holders for any diminution due to taxes imposed or
depreciation in the value of funds credited to the account whether due to devaluation or
fluctuation in the exchange rate or otherwise.
NBP Premium Aamdani

The amount of investment required for this account is Rs. 20,000/-to Rs.
5,000,000.The investment period is 5 years. Zakat and withholding tax will be deducted as
per rules. In NBP premium aamdani, the account holders have benefit of free demand draft,
pay order, free cheque book and NBP cash card (ATM+Debit).:
NBP Premium Saver

The minimum saving balance of Rs. 20,000 and a maximum balance of Rs. 300,000
are required for opening a premium saver account. Two debit withdrawals allowed in a
month and no limit on number of deposit transactions. The profit is calculated monthly and
Paid on half yearly basis. Free NBP Cash Card (ATM + Debit) facility is available to account
holder.
National Income Daily Account (NIDA)

The scheme of National income daily account 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. Deposits in the NIDA accepted on
the condition that the depositor shall always maintain a minimum balance as prescribed by
the bank in his account. In the event however, that any depositor wishes to withdraw the
amount and the balance in his account is less than the required amount, the account will be
converted to the ordinary PLS SB account for the purpose of calculating profit.
Advances
National Bank of Pakistan plays a pivotal role in translating the government's
development plans in terms of growth in industrial, commercial and agricultural sectors in
Pakistan. Accordingly the Bank has formulated its Credit Policy under the guidelines of SBP.
NBP Saibaan
It has different product items which are home purchase, home construction, home
renovation and purchase of land plus construction. If anyone has a Home Finance Facility
outstanding with another bank he can have it transferred to NBP through a hassle-free
process.
NBP Advance Salary

The NBP Advance salary has been the flag-ship product for NBP. Govt employ 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 turnaround time is
attributed as the most distinguishing features of the product. The product is offered
countrywide.
NBP Cash & Gold

With NBP’s Cash & Gold, the customers meet their need for ready cash against their
idle gold jewelry. The rate of mark up is 13% p.a. This product has following features
 Facility of Rs. 7,000 against each 10 grams of net contents of gold
 No maximum limits of cash
 Repayment after one year
 Only gold ornaments acceptable
 Weight and quality of gold to be determined by NBP's appointed schroffs
 No penalty for early repayment
Students Loan Scheme
Student Loan Scheme (SLS) for Education was launched by the Government of
Pakistan in collaboration with major commercial banks of Pakistan (NBP, HBL, UBL, MCB
and ABL). Under the Scheme, financial assistance is provided by way of Interest Free
Loans to the meritorious students who have financial constraints for pursuing their studies in
Scientific, Technical and Professional education within Pakistan. The Scheme is being
administered by a high powered committee comprising Deputy Governor, State Bank of
Pakistan, Presidents of the commercial banks and representative of Ministry of Finance,
Government of Pakistan.
NBP Karobar

The solution of Pakistan’s major socio-economic problems primarily lies in the

development and growth of small & micro businesses. In this regard, NBP has developed a
full range of Products under the President’s Rozgar Scheme with a brand name of “NBP
KAROBAR”. The eligible borrowers will be required to make a down payment of 15%.
Asset and Life & Disability insurances will be mandatory under this scheme. NBP will
offer following products:
a) NBP Karobar Utility Store (under a Franchise with Utility Stores Corporation)
b) NBP Karobar Mobile General Store (without USC Franchise)
c) NBP Karobar Transport
d) NBP Karobar PCO
e) NBP Karobar Tele-center
Corporate Advances
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.
Running Finance/ Overdraft

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”.
Demand Finance

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.
Remittances
Demand Drafts
Draft is an order to pay money, drawn by one office of bank upon another office
of the same bank for a sum of money payable to order on demand, aims to be issued by
or on behalf of the payee, the bank is discharged by payment in due course.
The National Bank of Pakistan provides demand drafts at very reasonable rates with
safety, speedy and reliable way to transfer money. Any person whether an account holder of
the bank or not, can purchase a Demand Draft form a bank.
Travelers Cheques
These are generally issued for the convenience of person travelling abroad, but
some Pakistani banks issue them in Pakistan currency also for use within the country as
well. Before issuing, the bankers receive an amount equal to the face value of the
cheques, and also charge a small commission. The National Bank of Pakistan provides its
services for traveler’s cheque at very reasonable and competitive rates.
Letter Of Credit
Letters of credit are very useful instruments in facilitating commercial relations
between businessmen at various places. Letter of credit state the limit of the credit and the
time during which it is held at the disposal of the guarantee. NBP provides with
competitive rates, security, and ease of transaction.
Foreign Remittances

To facilitate its customers in the area of Home Remittances, National Bank of

Pakistan has taken a number of measures to:
 Increase home remittances through the banking system.
 Meet the SBP instructions for timely and prompt delivery of remittances
to the beneficiaries.
The new features of NBP foreign remittances include:
 The existing system of home remittances has been revised and well-trained
field functionaries are posted to provide efficient and reliable home remittance
services to non resident Pakistanis at 15 overseas branches of the Bank besides
United National Bank (the joint venture between NBP and UBL in UK)., 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.
Swift System
The SWIFT system (Society for Worldwide Interbank 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-PKKA. All NBP overseas branches and overseas correspondents (over 450) are drawing
remittances through SWIFT.
Mail Transfer
A Mail Transfer is a form of remittance in which the amount remitted by a customer
or a non-customer is directly credited to the account of the beneficiary with another branch.

NBP also offer the most competitive rates in the market. The charges Rs 50/- exchange rate
and RS 75/- postage charges on issuing mail transfer. When the money is not required
immediately, the remittances can also be made by mail transfer (MT).
Telegraphic Transfer
Telegraphic Transfer is a form of remittance, which is advised by telegram, telex or
fax machines. The fundamental principles of such transfer are otherwise identical with the
Mail Transfer. It is the message, which is sent from one branch to another on the order of
payer to payee through wire. It is one of the quickest means to transfer fund through the use
of telex/fax/internet or cable. Payment to the beneficiary is affected directly by the drawee
office upon identification or through credit into beneficiary’s bank account. As such
remitting office is not required to issue any instrument payment to the remitter for delivery to
the beneficiary.
Pay Order
NBP pay orders are a secure and easy way to move your money from one place to
another. The charges of NBP are very low all over the Pakistan. It charges Rs 50/- for NBP
account holders on issuing one payment order, and charges Rs 100/- for NBP non-
account holders on issuing one payment order. It charges Rs 25/- for students on
payment of fees of educational institutions. If someone want a duplicate of payment
order they charges Rs 100/- for NBP account holders and Rs 150/- for non account
holders.
Miscellaneous
Lockers
National of Pakistan also provides lockers facility in the country. The lockers are
issued only to the depositors. Lockers are issued to any unknown person. The dual control
system is used for lockers. Officer has master key to apply on the locker but he cannot open
the locker of any person. Locker holder provides the bank has specimen signature. Whenever
the locker holders come to open the locker, his signatures are verified by the officer and then
will be able to open his locker. In case the locker holder dies, the court opens his locker in the
presence of his/her heir as mentioned in his will or and his belongings are given to them and
the locker is closed.
NBP Cash Card

NBP Cash Card is a 24-hour direct access ATM/Debit card to your bank account,
which lets you pay directly from your account as an alternative payment method to cash. The
transaction is authorized and processed by entering PIN. The NBP Cash Card holders are able
to transact at any of the 4000 + Merchants where Orix logo is displayed and can withdraw
cash from NBP, 1-Link & M-NET ATM’s across the country.
Competitors of NBP:
Competitors of NBP include both public and private sector banks.
Public Sector Banks: First Women Bank, The Bank of Khyber, The Bank of Punjab.
Private Sector Banks: My bank Ltd, Bank Al-Falah Ltd, Bank Al-Habib Ltd, Askari Bank,
Faysal Bank Ltd, MCB Bank Ltd, Habib Bank Ltd, Silk Bank etc.
Organizational Structure:
The President of National Bank of Pakistan is ranked Top at the hierarchy. The other
six directors of National Bank of Pakistan are ranked second in the hierarchy. The
Provisional, Regional & Zonal chiefs are ranked 3rd, 4th & 5th respectively. The vice President
& assistant vice Presidents of National Bank of Pakistan are ranked 6th & 7th respectively. The
Officers Grade I, II & III are ranked 8th at the hierarchy of National Bank of Pakistan. The
lower level of National Bank of Pakistan is consisted of Clerical & non- clerical staff.

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.
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 29 regions reporting to as many Regional
chiefs, who control 40 zones and 15 single Branch zones headed by Zonal Chiefs; 12
corporate branches and 1249 domestic branches headed by Branch Managers. The bank has
12 SWIFT local centers.
NUMBER OF EMPLOYEES OF NATIONAL BANK OF PAKISTAN
Permanent 13237
Temporary/ Contractual basis 842
Outsourced 2350
Total Staff Strength 16248
Departments of National Bank of Pakistan

Banking procedures are divided between various departments. Different departments
do their jobs in occurrence with the bank policies. In National Bank of Pakistan each branch
is divided into various departments depending on their size and volume of business. Head of
department manages each department & officials of the branch follow procedures. The
departments working within National Bank of Pakistan are as under:
Remittance Department
The Remittance department deals with the transfer of money from one place to
another. Funds transfer facility or remittance of funds is one of the key functions of the banks
all over the world. Remittances through banking channels save time, costs less and
eliminate the risks involved in physical transportation of money from one place to
another. National Bank of Pakistan transfers money in the following ways.
 Pay Order
 Demand Draft
 Mail Transfer
 Telegraphic Transfer
 Pay Slip
 Call Deposit Receipt
 Letter of Credit
 Traveler’s Cheque
The Job responsibilities & requirements of remittance department include:
 Responsible for money transfers, issuance of pay-orders & drafts, collection

items, maintenance of cheque books & ATM cards and all other counter
specific products and services
 Ensure highest level of customer service in a professional and competent manner
 Must ensure that the activities are carried out strictly in accordance with the laid
down procedures and SBP’s guidelines.
Parties involved in Remittances

There are four parties involved in Remittance, which are
 Remitter
 Remittee
 Issuing Bank
 paying Bank
Account Opening Department

The opening of an account is the establishment of banker-customer relationship.
This department performs the duty of opening accounts for customers. It also issues

checkbooks to customers. A person who wishes to open an account with the bank has to fill
an account opening form obtained from any branch of National Bank of Pakistan. The bank
officer obtains information about character, integrity, responsibility, occupation and the nature
of business of the perspective customer. The following requirements are necessary for
opening an account.
 Identification of the new customer.

 Ascertaining the genuineness of the stated occupation business of the customer.
 Determining the correct residential and permanent address.
 Completion of all relevant columns of the Account opening form.
 Proper completion of documentation.
Functions of Account Opening Department
 Providing account opening form according to the customer's requirements,
 Guide the customer about the requirements of the account opening and form filling,
 Check the forms whether they are correctly completed or not,
 Preparing checklist,
 Stamping on the form,
 Maintaining account opening register,
 Pasting of forms in register after release from general banking in charge,
 Issuance of cheque books,
 Issuance of accounts maintenance certificate,
 Closure of account
 Verification of signature in case of cheque presented before releasing of account
opening from SS card is not yet scanned.
Cash Department
All physical movement of cash in the bank is made through the cash department. As
bank is borrowing and lending institution, therefore cash is the top most priority of Bank.
Another aspect is that cash department is for the security purpose, security in a sense that
there should be no misuse of funds or in money leaded to bank by any party or person.
Normally cash department performs following functions
 Collection of funds

 Acceptance of deposits
 Collection of utility bills
 Payment of checks
 Remittances
 Act according to any standing instructions
 Transfer of funds from one account to another
 Verification of signatures
 Posting
 Handling of Prize bond
Deposits Department
The primary function of National Bank of Pakistan is to accept and receive surplus
money from the people, which they willingly deposit with the Bank. Like all other Banks,
National Bank of Pakistan also take attracts as much depositor’s as it can. The deposit
department accepts deposit from account holders.
The National Bank of Pakistan offer different deposit schemes to its customers, which
includes the following:
 Current Deposits
 PLS Saving Deposits
 Fixed Deposit Account ( Time Deposits)
 Foreign Currency Account
 NBP Premium Aamdani
 National Income Daily Account (NIDA)
Advances Department

The bank is profit seeking institution. It attracts surplus balance from the customer 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 the financial
institutions, because it is the main source of earnings. The job of this department is to make
proposals about the loans; the credit management division of head office directly controls all
the advances. Some advances are of the following nature
 Loan against Gold
 Agriculture advance to farmers
 Medium term advance for working capital
 Long term advance for setting industry
 Short term advance to businessman.
Pension Disbursement Department

The pension disbursement department is responsible for making pension payments to
Government Pensioners. The person who wants to receive his/her pension from National
Bank of Pakistan can open an account with any branch of National Bank of Pakistan. The
bank performs this function through Demand Draft Purchase or simply called DD Purchase.
This department performs following functions:
 Making Pension Payments
 Opening of Account of Pensioner
 Entry of amount paid to pensioner in Government Pensioners Register
 Verifications of Signatures of Pensioners
 Making Demand Draft Purchase Register.

Comments on NBP’s Organizational Structure

NBP’s organizational structure is clearly defined which supports graspable lines of
communication and reporting interactions fulfilling organizational requirements. The
drawback in the system is the lesser workforce and untrained and less qualified staff.
Uneven distribution of work among the employees becomes another imperfection of the
structure. The work among the employees is not even distributed some employees tends to be
more over burdened while others abscond away from responsibilities. The whole
department consists of only a single person whose absence provides no backup and the
work in that department is kept on pending. Also there is no rotation of employees in the
various departments; a particular individual keeps on employing his efforts in one area of
banking that only creates sense of monotony and boredom. The top management should
immediately start thinking in terms of rotating the employees in various departments, as this
transforms work force into human capital. Management should also increase its workforce to
get efficient output on the part of the employees.
NBP Gulgasht Branch

Functions of Branch:
National Bank Gulgasht Branch is situated in the main commercial market of

Gulgasht. A branch of HBL, MCB Bank and Saving Centre is present adjoining it. Since the
Bank has a nonprofit and service oriented motive, which has manifested itself in the area of
salary deposits of government employees and payment of utility bill; the branch delivers
both of these services to the customers. As the branch is offline ATM facility and MIS
techniques lacks in the branch only one software exists that is used to punch. Therefore, most
of the work is done manually; Accounts are handled manually. The branch mainly deals in
Agri. Financing and most of the branch funding is allocated in agri. financing. There
are almost 1500 agricultural accounts owned by the branch.
Branch Hierarchy


Gulgasht Branch Multan (0542)
Branch Services:
The branch has been successful in making deposit of almost 23 crore. The branch
offers its services in the following departments;

 Deposit Section
 Cash Department
 Bills and Remittance Section
 Advances Section
 Govt. Receipt & Payment Section
 Agriculture Section
 Establishment Section
Learning as a Student:
As per degree completion requirements students of BBA are required to undergo 6
weeks internship to learn that how the theoretical knowledge is implemented in practical
grounds. I chose to do my internship at The National Bank, Gulgasht Branch. I worked in the
following departments of the bank for 6 weeks which gave me better practical knowledge
about different operations of the bank. The departments where I worked are:
 Deposits Section
 Remittance Section
 Govt. Receipt and Payment Section
1st and 2nd week:

During my internship period of 6 weeks I was rotated to work in different departments
of the bank. During my first 2 weeks of internship I was assigned to work in the Deposits
Section and Advances Section of the bank. The primary function of this section is to accept
and receive surplus money from the people, which they willingly deposit with the Bank.
National Bank of Pakistan attracts as much depositor’s as it can. The deposit department
accepts deposit from account holders.
The Gulgasht Branch offers different deposit schemes to its customers, which
includes the following:

 Current Deposits
 PLS Saving Deposits
 Fixed Deposit Account ( Time Deposits)
 NBP Premium Amdani
 National Income Daily Account (NIDA)
Activities performed as an Intern:
While working with this department I learnt How to open a Bank account.
ACCOUNT OPENING PROCEDURE:
The procedure begins with the punching of account opening form to the customer file
i.e. customer’s master file. The officer records the necessary details into this register and
allots an a/c number from this a/c opening register. This register is maintained for each type
of account and the a/c no’s allotted serially. After opening a saving and current account every
applicant’s data is entered into the computer to maintain a safe record and application form is
properly filled so that it can be available when necessary. Checking officer is responsible to
Tally the manual application form with the computerized a/c opening file. For fixed deposit
only that application form is needed this is prepared manually, because most of the procedure
of fixed deposit is done manually. The signature specimen card contains two signatures of
an applicant, applicant a/c no, a/c type, branch code, title of a/c, it will be attached with
an application form. Banker uses this card at the time when he compares customer’s
signature with the signature on the cherub for avoiding fraud.
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
 Public Limited
Following the above mentioned procedure I opened almost 3 accounts (2 Current and
1 Saving Account) during this period. I filled the Account Opening forms and also issued the
cheque books to these account holders. I also filled vouchers for deposit.
3rd and 4th week:
After learning different activities in Deposits Section I was assigned to work with
Madam Mehreen , Incharge Remittance Section and Clearing Section for the next two
weeks. This department mainly deals with the transfer of money from one place to another
without directly involving cash. NBP earns lot of income in form of “Exchange” through this
service. There are two types of bills remittance
Remittance Inward: Cheques and Drafts received for payment and clearance or drawn
branch from customers or other banks on behalf of their customers is remittance inwards.
Remittance Outward: All the instruments issued by branch, which are drawn from the other
branch of the same bank or the instrument deposited for collection from other bank locally or
out of the city is called outwards remittance.
Bills remittance and collection mainly lie under following heads:
Local Short Credit (LSC): All bills for remittance and collection from customer or bank
within the city is recorded under this head in LSC book.
Short Credit (SC): All bills of remittance and collection from customer or bank outside
the city/country is recorded in SC book.
The instruments that are handled in B & R department of NBP are:
Demand Draft (DD):

A demand draft is an instrument, which is drawn by one bank upon another bank
on behalf of the customers to another branch outside the city of the same bank for a
specific sum of money payable on demand. It is made by the bank and given to the
purchaser against cash or Cheques. It is an unconditional order. The payee is not bound to
have a bank A/C in the bank. It is issued on the request of the customers and banks receive
the charges and exchange. Exchange rate is based on the amount of the instrument.
Mail Transfer (MT)
It is an instrument of transferring the money from one branch to another branch of the
same bank through mail service. In MT there is no need of advice as the amount is directly
credited to the receiver’s A/C. It is necessary for both parties to have an account in the
same bank. Its TR code is 74 and exchange charges are Rs. 100 and Rs. 75 as FED
(Federal Excise Duty).
Telegraphic Transfer (TT)
Telegraphic transfer is a fastest and safest way to transfer money. By using a

telephone a message is delivered to the other party but it is necessary that the person who
sends the message through TT is account holder of that branch. The NBP charges the
customers for TT. Rs. 100 is charged as Telephonic charges and Rs. 75 as FED (Federal
Excise Duty).
Pay Order (PO)
A Negotiable instrument (such as a draft) which instructs a payer bank to pay a

certain sum to a third party. Also called pay order. Usually it is issued for local transfer
of money within the city.
Activities performed as an Intern:
While working with this department I learnt how to issue DD’s.
Issuance Procedure:
A demand draft request slip is given to the customer; he fills in relevant
information and signs it.

 Credit voucher is filled in order to get the exchange commission charges.
 The sender deposits the total amount of the two vouchers i-e the debit and credit
voucher.
 Then the cashier sends the cash receipt voucher to the account section and the
A/C records the amount paid in his cash scroll.
 Deposit Incharge gives the DD leaf along with DD voucher to his assistant who
records the sender’s name, amount and receiver name. After writing all the
information in the DD register he gives it to the officer along with the DD for
authentication.
 Then the officer of the bills and remittance department signs it and operation manager
counter signs it.
 Head cashier and operations manager make a secret code with the help of code book,
this code is written on the advice and fanfold.
 The entry is made in the DD issuing register.
 After authentication the DD is handed over to the sender and bank sends the advice
with a fanfold to the concerned branch. DD documents must have a TR code which is
74 so; when the party presents the DD in the concerned branch its payment could be
made.
On the contra, when a DD is received i-e a customer comes to us with the DD, the
procedure is as follows.
 The DD Credit Advice is received through mail. The No’s are checked &
signatures are verified.
 An entry is made on DD payable register and vouchers are made.
 The DD credit is attached with the vouchers and is given for the posting at the
computer.
 When DD is received, the tests No.’s are checked and payment is made.

 The vouchers are given for posting. And the entry that was made in the register is
closed.
I issued DD’s to the subsequent branches following the above mentioned procedure:
 DHA Branch Lahore (1960)
Dated 16-06-2010 in favor of M/S National Cargo Amount Rs. 14,000/-
 Main Branch Lahore (0300)
Dated 18-06-2010 in favor Subuktgeen Shah Amount Rs.50, 000/-
 Main Branch Multan (037)
Dated 23-06-2010 in favor of M/S ICIL Amount Rs. 3,000/-
I also made entries in DD register. At the end of the week this registers is checked and
Manager Operations puts his signature on it. I also learnt about code checking of the cheque.
A secret code is maintained and every instrument received in verified by using this code.
5th and 6th week:
During the last two weeks of my internship I was assigned to work with Govt.
Receipt and Payment Section and retail banking. Following items are handled by this
section.
Utility Bills
The cashier in cash section receives utility bills, electricity bills and Sui gas bills and
posts the amount in the respective scroll. At the end of the day this amount is collected and is
transferred to the respective account of that organization in form of MT. The bank charges
collection commission of Rs. 2 per bill from the respective organization.
Federal and Provincial Taxes:
Federal Taxes includes:

 Income Tax
 Central Excise Tax
 Sales Tax
Provincial Taxes Includes:
 Provincial Excise Duty

 Provincial Motor Vehicle Duty
 Provincial Property Tax
 Agricultural tax
The customers deposits two copies of Tax Performa. The cashier enters this Performa
in Govt. Scroll and one copy is returned to the customer. At the end of the day a summary is
prepared known as Scroll of the Day and total amount is credited to the relevant head.
Admission Fee of Allama Iqbal Open University:
The branch also deals with the customers of AIOU. First of all DD voucher is filled.
Then the officer Remittance fills the DD according to the requirement and a treasure stamp is
posted on the DD. Then Remittance Officer and Deposit In charge sign that DD. The amount
is received from customers along with Rs. 50 as DD charges.
GOVT. PAYMENT :
NBP is fully authorized to disburse pension to the Govt. employees and retired
personnel. For distribution of pension the branch has maintained a pension register. In order
to get pension; the pensioner submits his/her pension voucher with his/her pension book to
the Incharge Govt. Receipt and Payment Section. The Incharge verifies the signatures from
the record and signs the voucher; which is then sent to the cash department for payment. At
the end of the day a pension scroll is prepared which includes the information of pensioner.
Like name, account no. amount received by the pensioner etc.

ACTIVITIES PERFORMED AS AN INTERN:
In this department I mostly did the manual work. I prepared the voucher of payment and
some forms regarding Pension of Govt. Employees. First ten days of the month are specified
for disbursement of pension. In this section I learnt about the transaction of the Govt.
payment and receipt. I also filled Hajj application forms and collected tax form. I also filled
fee voucher of AIOU which at the end of week is transferred to the AIOU account.
Future prospects
Being owned by the government nation has a trust that their deposits are secured. Due
to this reason bank can get remarkable increase in bank deposits in future. The National Bank
of Pakistan is achieving high standards of customer services and ratio of profitability. It
remains committed to the interest of all stake holders including its employees, owners,
regulators and the Pakistani nation. The organization has defined strategy on where and how
it wants to proceed in the years to come. With the implementation of new ‘Core Banking
Package’, NBP will completely automate its functions which in turn will significantly
enhance working efficiency.
NBP is introducing many new techniques to enhance the productivity and goodwill of
the bank in the eyes of common people. National bank is also introducing corporate culture,
risk management tactics by hiring trained and skilled staff thus securing people’s future by
offering jobs in a Govt.’s organization.

NBP’s Three Years’ Horizontal Analysis – Statement of Financial Position

(Balance Sheet)
2010 (10vs 09) 2009 (09vs08) 2008

----------------------------- (Rupees in ‘000)------------------------------
Assets
Cash and balances with 115,442,360 -0.3% 115,827,868 8% 106,503,756
treasury banks
Balances with other 30,389,664 7% 28,405,564 -25% 38,344,608
banks
Lendings to financial 23,025,156 17% 19,587,176 14% 17,128,032
institutions – net
Investments - net 301,323,804 38% 217,642,822 27% 170,822,491
Advances - ne 477,506,564 0.5% 475,243,431 15% 412,986,865
Operating fixed assets 26,888,226 7% 25,147,192 4% 24,217,655
Deferred tax assets - net 6,952,666 127% 3,062,271 -4% 3,204,572
Other assets - net 53,496,240 -10% 59,666,438 34% 44,550,347

1,035,024,680 9% 944,582,762 15% 817,758,326
Liabilities
Bills payable 8,006,631 -24% 10,621,169 4% 10,219,061
Borrowings 20,103,591 -55% 45,278,138 12% 40,458,926
Deposits and other 832,151,888 14% 727,464,825 16% 624,939,016
accounts
Sub-ordinated loans - - -
Liabilities against assets 106,704 150% 42,629 68% 25,274
subject to finance lease
Deferred tax liabilities - - -

Other liabilities 46,160,038 9% 42,269,623 6% 39,656,831
906,528,852 10% 825,676,384 15% 715,299,108
Net assets 128,495,828 8% 118,906,378 16% 102,459,218
Represented by
Share capital 13,454,628 25% 10,763,702 20% 8,969,751
Reserves 24,450,244 8% 22,681,707 14% 19,941,047
Unappropriated profit 65,857,438 8% 60,696,510 15% 52,456,204
103,762,310 10% 94,141,919 16% 81,367,002
Surplus on revaluation of 24,733,518 -0.1% 24,764,459 17% 21,092,216
assets - net
128,495,828 8% 118,906,378 16% 102,459,218

NBP’s Three Years’ Vertical Analysis – Statement of Financial Position

(Balance Sheet)
2010 (10vs 09) 2009 (09vs08) 2008

---------------------------- (Rupees in ‘000)------------------------------
Assets
Cash and balances with 115,442,360 11% 115,827,868 12% 106,503,756 13%
treasury banks
Balances with other banks 30,389,664 3% 28,405,564 3% 38,344,608 4%
Lendings to financial 23,025,156 2% 19,587,176 2% 17,128,032 2%

institutions – net
Investments - net 301,323,804 29% 217,642,822 23% 170,822,491 21%
Advances - ne 477,506,564 46% 475,243,431 50% 412,986,865
Operating fixed assets 26,888,226 3% 25,147,192 2% 24,217,655 3%
Deferred tax assets - net 6,952,666 0.7% 3,062,271 0.3% 3,204,572 0.4%
Other assets - net 53,496,240 5% 59,666,438 6% 44,550,347 5%

1,035,024,680 100% 944,582,762 100% 817,758,326 100%
Liabilities
Bills payable 8,006,631 0.8% 10,621,169 1% 10,219,061 1%
Borrowings 20,103,591 2% 45,278,138 5% 40,458,926 5%
Deposits and other 832,151,888 80% 727,464,825 77% 624,939,016 76%
accounts
Sub-ordinated loans - - -
Liabilities against assets 106,704 0.01% 42,629 0% 25,274 0%
subject to finance lease
Deferred tax liabilities - - -

Other liabilities 46,160,038 4% 42,269,623 4% 39,656,831 5%
906,528,852 88% 825,676,384 87% 715,299,108 87%
Net assets 128,495,828 12 % 118,906,378 13% 102,459,218 13%
REPRESENTED BY
Share capital 13,454,628 1% 10,763,702 1% 8,969,751 1%
Reserves 24,450,244 2% 22,681,707 2% 19,941,047 2%
Unappropriated profit 65,857,438 6% 60,696,510 6% 52,456,204 6%
103,762,310 10% 94,141,919 10% 81,367,002 10%
Surplus on revaluation of 24,733,518 2% 24,764,459 2% 21,092,216 2%
assets - net
128,495,828 12% 118,906,378 13% 102,459,218 13%

NBP’s Three Years’ Horizontal Analysis – Statement of Financial Position

(Profit and Loss Account)
2010 (10vs 09) 2009 (09vs08) 2008
----------------------------- (Rupees in ‘000)------------------------------

Markup/return/ 88,472,134 13% 77,947,697 27% 60,942,798
Interest earned
Markup/return/interest 45,250,476 11% 40,489,649 69% 23,884,768
Expensed
Net markup/interest 43,221,658 15% 37,458,048 1% 37,0580,30
Income
Provision against non-performing advances-net 7,011,046 36% 11,043,469 4% 10,593,565
Provision for diminution in value of investments 2,954,678 387% 605,629 62% 373,249
Provision against off balance sheet obligations 3,965 -80% 20,237
Bad debts written off directly - - -
9,969,689 -14% 11,669,335 6% 10,970,814
Net mark-up / interest income after provisions 33,251,969 29% 25,788,713 -1% 26,087,216
Non markup/interest Income
Fee, commission and brokerage income 9,631,579 7% 8,930,391 12% 7,925,370
Dividend income 1,099,493 -42% 1,920,336 -33% 2,878,932
Income from dealing in foreign currencies 2,211,139 -27% 3,028,165 -23% 3,969,057
Gain on sale and redemption of securities - net 2,512,363 -45% 4,591,894 1061% 395,427
Unrealized gain on revaluation of investments 6,730 186% 2,355
Other income 2,171,336 293% 552,216 -55% 1,245,369
Total non mark up return/interest income 17,632,640 -8% 19,025,357 0% 19,025,357
50,884,609 13% 44,814,070 -2% 45,814,070
Non markup/interest
Expenses
Administrative expenses 26,202,577 16% 22,571,470 24% 18,171,198
Other provisions/write offs 148,026 -76% 620,780 -17% 747,521
Other charges 118,887 - 63% 321,647 -44% 583,361
Total non markup/interest expenses 26,469,490 12% 23,513,897 20% 19,502,080
24,415,119 14% 21,300,173 -7% 23,000,998
Extra ordinary / unusual items - - -
Profit before taxation 24,415,119 14% 21,300,173 -7% 23,000,998
Taxation - Current 9,835,048 -98% 8,871,513 -24% 11,762,650
- Prior year(s) (939,256) -77% (4,133,282) -
- Deferred (2,043,887) 104% (999,904) -76% 4,220,242
6,851,905 83% 3,738,327 -50% 7,542,408
Profit After taxation 17,563,214 17,561,846 13% 15,458,590
Un appropriated profit brought forward 60,696,510 15% 52,456,204 15% 45,344,188
Transfer from surplus on revaluation of fixed assets on 117,738 -5% 123,934 -4% 130,456
account of incremental depreciation
Profit available for appropriation 78,377,462 11% 70,141,984 15% 60,933,234
NBP’s Three Years’ Vertical Analysis – Statement of Financial Position

(Profit and Loss Account)

2010 (10vs 09) 2009 (09vs08) 2008
----------------------------- (Rupees in ‘000)------------------------------

Markup/return/ 88,472,134 173% 77,947,697 173% 60,942,798 133%
Interest earned
Markup/return/interest 45,250,476 88% 40,489,649 90% 23,884,768 52%
Expensed
Net markup/interest 43,221,658 85% 37,458,048 83% 37,0580,30 80%
Income
Provision against non-performing advances-net 7,011,046 14% 11,043,469 24% 10,593,565 23%
Provision for diminution in value of investments 2,954,678 5% 605,629 1% 373,249 0.8%
Provision against off balance sheet obligations 3,965 20,237 0.04%
Bad debts written off directly - - -
9,969,689 19% 11,669,335 26% 10,970,814 24%
Net mark-up / interest income after provisions 33,251,969 65% 25,788,713 57% 26,087,216 56%
Non markup/interest Income
Fee, commission and brokerage income 9,631,579 19% 8,930,391 20% 7,925,370 17%
Dividend income 1,099,493 2% 1,920,336 4% 2,878,932 6%
Income from dealing in foreign currencies 2,211,139 4% 3,028,165 7% 3,969,057 9%
Gain on sale and redemption of securities - net 2,512,363 5% 4,591,894 10% 395,427 0.9%
Unrealized gain on revaluation of investments 6,730 0.01% 2,355
Other income 2,171,336 4% 552,216 1% , 245,369 0.5%
Total non mark up return/interest income 17,632,640 35% 19,025,357 42% 19,025,357 41 %
50,884,609 100% 44,814,070 100% 45,814,070 100%
Non markup/interest
Expenses
Administrative expenses 26,202,577 51% 22,571,470 50% 18,171,198 37%
Other provisions/write offs 148,026 0.3% 620,780 1% 747,521 2%
Other charges 118,887 0.2% 321,647 0.7% 583,361 1%
Total non markup/interest expenses 26,469,490 52% 23,513,897 52% 19,502,080 43%
24,415,119 50% 21,300,173 47% 23,000,998 50%
Extra ordinary / unusual items - - -
Profit before taxation 24,415,119 50% 21,300,173 47% 23,000,998 50%
Taxation - Current 9,835,048 19% 8,871,513 20% 11,762,650 27%
- Prior year(s) (939,256) 2% (4,133,282) 9% -
- Deferred (2,043,887) 4% (999,904) 2% 4,220,242 9%
6,851,905 13% 3,738,327 8% 7,542,408 16%
Profit After taxation 17,563,214 34% 17,561,846 39% 15,458,590 33%
Un appropriated profit brought forward 60,696,510 119% 52,456,204 117% 45,344,188 99%
Transfer from surplus on revaluation of fixed 117,738 0.2% 123,934 0.3% 130,456 0.3%
assets on account of incremental depreciation
Profit available for appropriation 78,377,462 154% 70,141,984 156% 60,933,234 133%
Ratio Analysis
Tools frequently used during these checkups are financial ratio analysis, which relates
two piece of financial data by dividing one quantity by the other. Ratios are calculated

because in this way we get a comparison that may prove more useful than the raw numbers
by themselves. The business itself and outside providers of capital (creditors and investors)
all undertake financial statement analysis. The type of analysis varies according to the
specific interest party involved. The nature of analysis is depending at the purpose of analyst.
Parties interested in ratio analysis
Trade creditors:
Trade creditors are interested in firm's ability to meet their claims over a very short
period of time. Their analysis will, therefore confine to the evaluation of the firm's liquidity
positions.
Suppliers of long-term debt
Suppliers of long-term debt on the other hand are concerned with firm's long-term
solvency and survival. They analysis the firm’s profitability over time, its ability to generate
cash to be able to pay interest and repay interest and repay principal and the relationship
between various source of funds.
Long-term creditors do analysis the historical financial statements but they place more
emphasis on the firm's projected financial statement to make analysis about its future
solvency and profitability.
Investors
Investors who have invested their money in the firms share are most concerned about
the firm steady growth in earning. As such, they concentrate on the analysis of the firm's
present and future profitability. They are also interested in the firm’s financial structure of the
extent it influence the firms earning ability and risk.

Management
Management employee financial analysis for the purpose of internal control and to
better provide what capital supplier seeks in financial condition and performance from
the business and from an internal control standpoint, management needs to take financial
analysis in order to plan and control effectively.
Ratio Analysis
Ratio is the comparison between two figures of balance sheet and income statement.
Current Ratio
Cash Ratio:
“This ration is obtained by dividing cash by current liabilities / liabilities”.
This ratio shows that the cash is enough for payment of current liabilities or not.
It is calculated as cash Ratio=Cash/current liabilities
2008 2009 2010

=16196396/675617003 =163820608/783364132 =168857180/860262110
=0.239 =0.209 =1962
It means that how much cash is available for payment its current liabilities. This ratio
of NBP shows a downward trend from 2008 to 2009 and eventually to 2010. So cash is less to
cover its current liabilities that are its short term obligations. So liquidity of firm is
decreasing.
Working Capital:
“It is calculated by subtracting current liabilities from current assets.”
=Current assets – Current liabilities (ans is is rupees)
2008 2009 2010

=161976396-675817003 =163820608-783364132 =168857180-860262110
=-513640607 =-619543524 =-691404930

Working capital has been decreased from 2008 to 2009 and then to 2010 .But it has
been negative throughout these two years showing short term liabilities are greater than that
of short term assets that is not a good financial indicator.
Debt Ratio
Debt to assets ratio:
This ratio shows that to which extent the organization assets are financed by debt. It is
calculated as.
Total debt/total asset
2008 2009 2010

=60942798/817758326 =77947697/944582762 =88472134/1035024680
=0.0745% =0.0825% =0.0854%
This ratio is directly related to risk, high ratio means high risk and low ratio means
low risk. From calculation it is clear that the ratio is increasing throughout the three
respective years which show high risk that’s not a good indicator. This ratio serves the similar
purpose to the debt to equity ratio. This ratio is high because of more deposits in the bank,
and deposits are the liability of customer on bank.
Interest coverage ratio
It indicates the firm’s long contractual interest paying ability.
It is calculated as, Interest coverage ratio = EBIT / interest expenses
2008 2009 2010

=42503078/23884768 =44814070/40489649 =50884609/45250476
=1.77 =1.106 =1.124
Interest coverage ratio of NBP has been decreased from 2008 to 2010 and then to
eventually 2010. It means it has been not in a good position to pay its contractual payments
in year 2010. As greater the interest coverage ratio, the better able the company is to fulfill its

interest obligations. But in the case of NBP the ratio is decreasing and hence lower is the
ability to fulfill its interest obligations.
Activity Ratio
Assets Turnover Ratio:
The relationship of net sales/revenue to total assets is known as the total asset
turnover ratio. It is calculated as.
Total revenue / total assets
2008 2009 2010

=60942798/817758326 =77947697/944582762 =88472134/1035024680
=0.0745 =0.0825 =0.085
This ratio shows us the relative efficiency with which a firm utilizes its total assets to
generate revenue. We can see that the ratio is going high and which is a good sign and shows
that NBP is utilizing its assets efficiently.
Profitability ratios
Operating profit Margin
OPM measures the percentage of each sales rupee remaining after all costs and
expenses other than interests, taxes, and preferred stock has been deducted.
It is calculated as Operating profits /Interest earned.
2008 2009 2010

=42503078/60942798 =44814070/77947697 =88472134/50884609
=0.697% =0.575% =1.738%
It represents the pure profits of the company and higher OPM is preferred but in case
of NBP its decreasing from 2008 to 2010 showing its profits are decreasing.
Net Profit Margin:
This ratio measures the firm’s profitability of sales/ interest earned after taking
account of all expenses and income taxes.

This ratio can be calculated as:
Net profit margin ratio = Net Profit after taxes / interest earned
2008 2009 2010

=15458590/60942798 =17561846/77947697 =17563214/88472134
=0.253 =0.225% =0.1985%
The higher the NPM the better is the company. But here it is decreasing from 2008to
2010 indicating decreased earnings on sales in these years.
Return on Assets:
This ratio shows the efficiency of organization that how efficiently utilizes their
assets. This ratio relates profits to assets.
It is calculated as:
Profit after Tax/Total Assets
2008 2009 2010

=15458590/817758326 =17561846/944582762 =17563214/1035024680
=0.0189% =0.0185% =0.0169%
From calculation it is clear that this ratio of NBP is going lower. It shows that NBP is
not using its assets very efficiently. That is why they are earning lower profits.
Return on Equity:
Dividing profit after taxation by shareholder’s equity. ROE compares net profit after taxes to
the Shareholder’s Equity.
This ratio is calculated as:
ROE=Profit after taxes/Share holder’s Equity
2008 2009 2010

=15458590/81367 =17561846/94142 =17563214/103762

=189.98% =186.546% =169.264%
The higher the ROE the better is for the company .But it is decreasing the case of
NBP as shown above indicating the returns earned on common stock holder’s investment is
decreasing.
SWOT Analysis
SWOT analysis is the evaluation of organization’s Strengths, Weaknesses,
Opportunities and Threats. SWOT analysis is one of the most important steps in formulating
strategy using the organization mission as a context, managers assess internal strengths
distinctive competencies and weakness and external opportunities and threats. The goal is to
then develop good strategies and exploit opportunities and strengths neutralize threats and
avoid weaknesses. SWOT analysis of NBP is given below:
Strengths
NBP (the Nation’s Bank):
Since NBP is in the possession of the Govt. therefore it is the main aspect that the
people can trust the bank and is the cause of increase in the bank’s deposits.
High Productivity:
Highest profit margin has been earned by the bank during the last few years
which is a record. The bank has also been acknowledged as the best bank in Asia and at
8th No. in world ranking. The bank has 9% Rate of Return which is the highest value
in banking industry. It is achieving high standards of customer services and ratio of
profitability. In conjunction with introducing corporate culture and risk management
tactics many other techniques have also been introduced by the bank’s management to
increase the bank’s productivity and good will.
Government’s Bank:
Since NBP is a Government bank therefore in each branch there is great deal of work
which is directly controlled by the Government. The bank’s course of action has been
constituted under law. One can refuse to go along with any of the bank’s rule or strategy if it
is against his/her goodwill.

Products & Services:
The bank provides a wide variety of products and services to its customers like
Demand Draft, telegraphic Transfer, Mail Transfer and Government transaction.
Agency Arrangements:
Owing agency arrangements, NBP is enjoying with deposit of different Govt.
organization such as, Pakistan Railways, PIA, WAPDA and Sui-gas etc.
Weaknesses
NBP has many weak points as well, which needs to be noticed. Other banks can get
benefit from these flaws. NBP’s management should manage to overcome all these flaws in
order to lead the banking industry in Pakistan.
Deficient in Research & Development:

NBP’s policies exhibit huge deficiency in research and development. Bank policies
don’t catch the altering factors and doesn’t employ proper research of commerce and section
analysis. Innovative opportunities and client varying behavior is of such importance for
today’s organizations but NBP policies doesn’t take into account the research tactics for
abolition and elimination of problems.
Lack of ATM:
Many private and foreign banks are providing ATM facility to its customers. Whereas,
NBP lacks this facility. Only few of the branches of NBP are providing ATM facility to their
customer which is a weak point of the bank.
Insufficient Counter Services in Rush Hours:

The bank fails to provide adequate services to its customers during the rush hours and
they are not well served. Presenting inefficient and inadequate services to its customers is
pathetic on the part of the bank.
Shortage of Computerized Networks

NBP lacks the use of computerized system. Since Most of the work especially
Accounts are handled manually. This is a tedious and time taking task. Uses of modern IT
techniques which could save time, energy and would have lessened the mental stress, the
employees currently have.

Unskilled and Less Qualified Staff

Unskilled and less qualified staff is another weakness of the bank. The staff should be
fully trained and skilled. So that customers could be entertained efficiently.
Uneven Work Distribution

The workload in NBP is not evenly distributed. Some employees are over burdened
while others abscond away from their responsibilities, which serve as a demotivational factor
for other employees.
Opportunities
Establishment of New Branches:
NBP by establishing new branches in foreign countries can expand its business and
earn foreign exchange.
Investment Banking:
NBP is perceived as purely commercial banking entity therefore to expand its
business the bank may start investment banking by investing in the portfolio of
handsome return.
Introducing Consumer Banking:
Mostly banks fail to adequately finance the basic needs of the customer such as
housing, transportation and other durable goods. Therefore by commencing such services
NBP can enjoy with more funds.
Introducing Islamic Banking:

Introducing Islamic Banking system in the bank would also increase bank’s
profitability.
Issuance of Bonds:
To enjoy with large amount, NBP can introduce a comprehensive range of bonds.
 INTRODUCE LEASE FINANCING:
NBP can increase its profitability by introducing lease. Since many of its customers
are getting this facility from other banks therefore the lost revenue of the clients can be got
and can increase bank’s profitability.

Threats
Competition with Foreign Banks:
NBP face pressure due to the emergence of new contenders particularly in terms of
foreign banks. These foreign banks are equipped with heavy financial power with outstanding
and inventive ways of promoting and performing their services. The bank’s management
should take initiative to improve its products and services to triumph the prevailing
environment of competition.
Political Indulgence of Employees:

Political indulgence of employees is also threatening. Employees are getting involved
in politics and lobbies among them which disturb the working conditions and goodwill of the
bank.
Lack of Efficient IT Equipments/Section:

With the passage of time other banks are introducing efficient information technology
section and establishing computer networks. NBP lacks the use of modern technology. Few
branches of National Bank are online. Most of the work is done manually on registers that
affect the budget of the branch because inventory expenses are higher which include
stationary and other things.
Pest Analysis
Political
Pakistan is a functioning democracy and gradually there is a change in

composition of legislatures with more educated people (27% of National Assembly and
17% of Senate) entering into politics. Similarly it helps in designing best strategies to
implement that could support the revival of bank industry. Like in the era of
nationalization bank had to suffer as other industry that’s why that impact is still found in
the performance of this industry.
Economical

Although banking sector development is important at the early stage of economic

growth, general liberalization presuming a homogeneous bank role may not necessarily
promote growth. The estimated cost structure indicates that state-owned commercial
banks are large enough, while development financial institutions and private banks can
expect to obtain cost-saving advantages by expanding their operations. Since scope
economies are significant, portfolio diversification generally increases bank profits.
Social
Banks always helped people in improvement of living condition of poor people in

various forms like giving loans to poor for starting business or directly providing them the
instruments that could enhance their living conditions. Similarly National Bank always
tried to provide the needy people loans on soft terms and also helped to eradicate
unemployment by providing job opportunities.
Technology
Due to the lack of IT training, the employees are habitual of traditional record
keeping in books instead of using computerized records. No attention is given in hiring of
IT specialists so that this inadequate communication infrastructure can be improved.
Competitor Analysis of NBP
Although NBP is a having huge network of branch, and capital but it lacks behind in many
ways as discussed above and fortunately or unfortunately its competitors have the qualities to
give a tough time. The account holders of NBP are either government employees,
government institutions because of its low standard of services and less use of technology.
There are three types of competitors of NBP.
Public Banks: The Bank of Punjab, First Women Bank Limited, The Bank of Khyber
Private (Conventional) Banks: HBL, MCB Bank Limited, ABL etc.
Islamic Banks: Meezan Bank Limited, Bank Islami etc.
As the bank have been mainly in providing the servies for the government and institutions
and it is the main source of revenue for the bank but now the provencial governments have

set their own banks like The Bank of Punjab etc. because of which a lot of revenue has
lost from NBP because the provincial banks provide services for their respected
establishment. So the revenue which was to come in the form of service charges is not
coming. On the other hand although First Women Bank have been established mainly for
women who have problems in going to other banks but in pure business thinking it has cut
the business share from NBP. Moreover both, provincial and First Women Bank, are as trust
worthy as NBP and also provides commercial banking services and there is not too much
difference of service standards but these have gain market share from NBP due to different
factors.
Private Banks are better in service standards, technology and human resource from NBP. As
these banks comes under the rules and regulations of SBP and have been working in Pakistan
banking industry from long time, so these have become trust worthy and capture a great
market share. NBP being the government’s bank only provide few products and most of those
products mainly focuses on economic development whereas the private banks which has
purely been established for the purpose of business provide innovative and attractive
products. Private Banks are also better in marketing than NBP. Due to these factors general
public get commercial banking services from any of these private banks rather than coming to
NBP.
NBP mainly functions according to rules and regulations of conventional banking. So a lot of
market portion was left to be captured for Islamic Banking. With the fuctioning of Islamic
banks like Meezan Bank Limited etc. this market has been captured but there has come a
problem. The people are more attracted to these Islamic banks due to their unexploitation and
functioning according to the Shariah Laws. Again these banks are better from NBP in service
standards, technology, marketing and human resource etc. These banks also provide more
innovative products from NBP. Due to these factors already account holders of NBP prefer to
do commercial banking with Islamic Banks and share of Islamic banks is growing rapidly in
Pakistan banking Industry.
Conclusion
I analyzed the National bank completely. I observed its internal and external situation
and control and reached at a conclusion.
Through my point of view in some areas bank occupies strong position in the industry
and in some areas it needs great attention for improvement. I found that implementation of

the policies is very poor. Effectiveness of any organization depends on the implementation of
the policies rather than just making the policies. If it recovers this deficiency it will really
help the bank in increasing its credibility. In products and services bank occupies a good
position and its disbursement is also very good as its branches are present is almost all cities.
But marketing department, which is responsible for the publicity of its products, is not
working well. The demand of the products depends on the awareness. Analyzing Business
Volume of the Bank I concluded that bank is in better position than the previous years. Its
profitability is good which shows that bank has cut down many of its expenses and used the
resources quite efficiently. The infrastructure of its branches is far better than before. And it
has brought many changes in the management hierarchy of the branches, which is a good
indication.
Overall conclusion of my analysis and observation about National Bank of Pakistan is

a bank on which you can trust. It is having leading position in the banking industry of
Pakistan and is serving as a major contributor in the economic development of the country.

Recommendations
During my training at Bank NBP I observed some areas that need attention of the
management like:
 Bank needs to use more marketing channels to make the public aware of its
products and services. In the presence of intense competition NBP has to realize the
importance of marketing.
 Management should distribute work equally among different employees. Some of
the employees are overburdened while some sections are overstaffed.
 NBP should immediately improve its Information Technology System. It is the need
of the hour that an integrated data interchange should be inculcated to enable top
management to monitor all activities going about in all branches through generation
of special purpose reports.
 There are a disproportionate number of seasoned bankers in the top management who
have the responsibility of making strategic decisions. This think tank should also
include a reasonable proportion of young bankers whose mindsets teem with new
creative ideas, might prove to be valuable for NBP.
 The top management should immediately start thinking in terms of rotating the
employees in various departments, as this transforms work force into human
capital. If a particular individual keeps on employing his/her efforts in one sphere of
banking it would only create a sense of monotony.
 To save the time of the customers and other clients, bank should adopt computerized
system for book keeping and other filling systems in all its branches of the country.

IF I Were the Manager of the Bank
If I were the manager of NBP, I will try to implement above recommendations

on the branch level. Moreover, here are also some other points in my point of view
which being the manager, I think can improve the performance of NBP:
 To inculcate the habit, in all staff members, of being punctual, polite and courteous
to all bank customers, so that no complaint should arise.
 To provide training to all staff members so that they are aware of all modern
innovations pertaining to the bank.
 To ensure that exceptions are not repeated over and over again through counseling
and meetings with employees, thus decreased the communication gap with the
employees.
 Realignment / Reallocation of certain branches that are not contributing to the

growth of business by discussions with the higher management and authorities.
 Frequent follow-up and review meeting to ensure that the above objectives and
other targets are met.
 As the computer is the necessity of present age and all transactions of business are
computerized now. So all the business of NBP should also be computerized.
 Satisfaction of the customer is the key to progress. So customers of the bank should
be satisfied by providing them proper attention and served them bitterly.
 Customer services center should be established when customer paid their utility
bills.
 Shortage of employees should be dealt by appointing new employees in the

branches.

 In my point of view Public administration cell should be established which give

information’s to General Public about bank affairs so that communication gaps with
the customers may shrink.

Reference & Sources
1) www.nbp.com
2) www.nbp.com.pk/nbp/About_Us/About_US.jsp
3) http://www.nbp.com.pk/Premium/index.htm
4) http://www.nbp.com.pk/Saibaan/index.htm
5) http://www.nbp.com.pk/advancesalary/index.htm
6) http://www.nbp.com.pk/CashnGold/index.htm
7) http://www.nbp.com.pk/StudentLoan/index.htm
8) www.nbp.com.pk/Publications/AnReport2010/FianancialStatements.pdf
9) www.nbp.com.pk/EconomicBulletin/FS-30June2009.pdf
10) NBP Annual Report 2009.
11) Dr. Asrar H.Siddiqui (7th Edition) Practice & Law of Banking in Pakistan [Royal
Book Company Karachi].
12) Robbins & Coulter, (7th Edition) Mangement.
13) Madem Mehreen Tanveer Bhatti (Manager)- OG-I, NBP Gulgasht br.Multan.
14) MR. Amir Khalil (Opertions Manager)-OG-1 NBP Gulgasht br.Multan.
15) Mr. Fafeem (Complaince Officer)-OG-2 NBP Gulgasht br.Multan.
16) Madem.Sana Naseer (Management Training Officer) MTO.-OG-2 NBP Gulgast

br.Multan.
17) Mr Asghar Khan, Incharge Remittance, NBP.Gulgasht br. Multan.
*********************

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National Bank of Pakistan

In the Name Of Almighty

The Most Beneficent the

Internship Report Page 1

Gulgasht branch, Multan (0542)

Institute of Management Sciences

BAHAUDDIN ZAKARIYA UNIVERSITY MULTAN

Internship Report Page 2

Internship Report Page 3

I owe my heartfelt thanks to Almighty Allah to enable me to discharge search an onerous

NATIONAL BANK OF PAKISTAN

Mr. Imran OPERATIONS MANAGER

Mr. Kashif DEPOSIT MANAGER

Mr. Farhan COMPLIANCE OFFICER

Internship Report Page 4

 Ratio analysis of important aspects of financial statements

Internship Report Page 5

Internship Report Page 6

b) Branch Hierarchy ------------------------------------------------------------- 27

BRIEF INTRODUCTION OF THE BANKING SECTOR:

Internship Report Page 7

Internship Report Page 8

State Bank of Pakistan:

National Bank’s History:

National Bank of Pakistan was established on November 9, 1949 under the

Internship Report Page 9

agent to the State Bank of Pakistan for handling Provincial/Federal Government

 Borrowing money and arranging finance from other banks.

 Advancing and lending money to its clients.

 Financing of projects, including technical assistance, project appraisal through

 Undertaking and executing trusts.

 Participating in “World Bank” and “Asian Development Bank’s” lines of credit.

Internship Report Page 11

PLS Saving Deposits

3. To share in the profit a minimum balance of Rs.500/- must be maintained in the

Fixed Deposit Account (Time Deposits)

Internship Report Page 12

Foreign Currency Account

NBP Premium Aamdani

Internship Report Page 13

NBP Premium Saver

National Income Daily Account (NIDA)

NBP Advance Salary

Internship Report Page 14

NBP Cash & Gold

 Facility of Rs. 7,000 against each 10 grams of net contents of gold

 No maximum limits of cash

 Repayment after one year

 Only gold ornaments acceptable

 Weight and quality of gold to be determined by NBP's appointed schroffs

 No penalty for early repayment

Students Loan Scheme

Internship Report Page 15

The solution of Pakistan’s major socio-economic problems primarily lies in the

b) NBP Karobar Mobile General Store (without USC Franchise)

c) NBP Karobar Transport

d) NBP Karobar PCO

e) NBP Karobar Tele-center

Running Finance/ Overdraft

Internship Report Page 16

Internship Report Page 17

To facilitate its customers in the area of Home Remittances, National Bank of

 Increase home remittances through the banking system.

The new features of NBP foreign remittances include: