MBA Report Ghazanfar

National Bank of Pakistan
INTERNSHIP REPORT (Reg. No. 003-PBK-0009)
INTRODUCTION
Banks are most probably oldest institutions in the world. They are now a
pivotal part of any country’s economy and play a major role in the
financial health of a country.
I interned in NATIONAL BANK OF PAKISTAN (NBP) for 6 weeks. NBP
is the Pakistan’s own bank and growing every day. NBP is operating
domestically as well as internationally.
While I worked in NATIONAL BANK OF PAKISTAN, I concluded the fact
that it has the image of a strong growing and successful organization
with highly satisfied customers. It has a well-developed ATM network.
NBP has very dedicated employees who have no objection on working
overtime with out any financial compensation.
The purpose of this report is to provide an in-depth understanding of this
Bank and what was learned during the six-week period. Furthermore, it
provides the environmental factors that influence the working of this
bank.
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The bank has three departments i.e. consumer department, corporate
department and the operations department, which are further divided in
to many sections. I had a chance of working in the accounts department,
foreign exchange section, advances section, establishment section and
deposit section.
The report also will outline a general problem that was found in the
organization. Here, it must be clarified that two specific problems were
identified.
First the fact that NBP has a very large branch network as opposed to
other banks, which are major competitors, NBP has to take intensive
care for that.
The other problem is that NBP suffers from excessive employees in a
branch, as it is not privatized. In the end, findings will be stated and
recommendations will be given to improve the current problems.
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OBJECTIVES OF STUDYING THE

ORGANIZATION
The major objectives of studying the Organization are as
under;
• To see “Emerging commercial & HR challenges in the
organization and strategies for business support and
institution strength.
• To see ‘Partial fulfillment of MBA degree as a
correlation of theoretical concepts to practical
experience with the observations of ground realities.
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OVERVIEW OF ORGANIZATION
Brief History:
FORMS OF BANKS:
 Central Bank
 Commercial Banks
 Scheduled Banks
 Non-scheduled Banks
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BANKING HISTORY IN PAKISTAN:
At the time of partition, the total number of commercial bank on Pakistan
was 38 out of these: the Pakistan banks were 2; Indian banks
29 and the exchange banks & the total deposits of Pakistan
banks stood at Rs.880.0 millions where the advance is were Rs.
198.0 million.
Before the partition of sub continent, the entire banking business was
almost controlled and managed by non-Muslims. The Muslims
were deliberately kept cut of banking profession by the healthy
Hindu community. When Hindu capitalists became sure of the
division of sub continent: they secretly began transfer their
capital to the safe place in India, when Pakistan declared an
independent state in august 1947.
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The fund and other valuables were transferred at an accelerated pace to
India. There was mass scale migration of non-Muslims from
West Pakistan to India, which also caused the drain on the bank
deposits. The Hindus in order to rain the economy of the newly
established state closed down most of head offices and the
branches of the scheduled and non-scheduled banks in
Pakistan. The number of scheduled banks branches were
reduced from 619to 213 only both wings of the country after
independence.
The non-schedules banks also suffered a sever jolt and their number
was reduced from 411 to 106 over the same period. West Pakistan
where there was greater exodus of non-Muslims to India suffered a
great deal as a number of branches fall down from 487 to 69.
In the East Pakistan though the number of branches were not closed in
such a great number as in West Pakistan, a large number of portion of
the deposit were withdrawn from the banks and transferred to India by
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the non Muslims. The mass scale closure of branches and with drawl of
the deposits caused a dead lock in the banking business in Pakistan.
The government of Pakistan was quite aware of the serious banking
situation caused by the withdrawal of deposits and whole scale
migration of banking staffs to India. It took up the challenge and started
recognizing the crippled banking immediately after partition.
A moratorium of free months was also allowed to banks that had
financial difficulty due to sudden with drawl of deposits. In addition to
above the following arrangements were made for facilitating settlement
of claims by the governments.
Each bank was to declare on to its offices both in India and Pakistan as
clearing house for transfer of accounts. Each bank was open at least
one central office in Pakistan Where it could consolidate work of all its
branches and Start paying out to depositors. The government took some
effective measures for providing banking Training facilities to Muslims.
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There were some complaints that Hindu banks were not honoring the
cheques of Pakistani national and were also refusing to give securities
kept in their custody. The government issued an ordinance which
empowered it to investigate all such complaints and if satisfied of their
bonafides, the payment should be realized. In case the bank insisted on
non-payments, the government should realize the assets of the banks,
which were sufficient to discharge such liabilities. The government of
Pakistan also allowed the removal of Valuables, kept in save deposits
vaults and lockers by Submitting an application and getting necessary
approval from the custodian of evacuee property.
The government of Pakistan tried to provide all kinds of facilities with
sincerity to the known Muslims bankers for restoring normal banking
facilities in the country but the response was discouraging. An inter
dominion agreement was reached between India and Pakistan in April
1949.
The main provisions of the agreement were as under;
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 The inter dominion agreement could not be fully implemented.
 India delayed the transfer of Muslim deposits to Pakistan.
 The non devaluations decision of Pakistan government further led
to the suspension of remittance facilities through normal banking
channels.
Due to panicky with drawl of deposits; some banks went into liquidation
and the payments could not be made to the depositors. In order to
regulate the both of banking on sound footing, the following measures
were taken to develop the banking system in Pakistan.
The state bank of Pakistan which is the central bank of the country was
established in July 1948. The national bank of Pakistan was established
on 1949. This bank is to serve as an agent to the SBP in the areas,
where SBP has no set-up.
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The industrial development bank of Pakistan was set up on August 1,
1961 with a paid up capital of Rs; five crore.
The agricultural development bank of Pakistan (ADBP) was set up in
1961. It provides short, medium and long term loans to the farmers. In
Jan, 1974 the entire commercial banks were nationalized. The
commercial banks were merged with stronger once and in all five major
banking companies were formed. MCB and ABL have again been
privatized.
The Pakistan banking council was set up for coordinating the activities of
the nationalized commercial banks. The banking council formulates the
policies and guidelines for the banks that has been dissolved in
nationalized.
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NATURE OF ORGANIZATION
NATIONAL BANK OF PAKISTAN:
The national bank of Pakistan (the Bank) was established as a semi
public commercial bank on 09 November 1949, under national bank of
Pakistan ordinance, 1949, through the primary object of setting of the
bank was to purchase jute from growers in the former East Pakistan and
to perform the commercial banking function in the country.
The normal procedure for establishing a Banking company under
companies’ law was set aside, & the bank was established through
promulgation of ordinance due to crises situation that had developed
with regard to financing of jute trade. The Bank started its operations
from November 20, 1949, at six important jute centers in the then East
Pakistan, & directed its resources to jute financing.
The nature & responsibilities of the bank are different & unique from
other banks & financial institutions. The Bank acts as agent to State
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Bank of Pakistan (SBP), for handling provincial & federal Government
payments & receipts on its behalf.
The Bank was incorporated with an authorized capital of Rs.60 Million.
In December 1960, the authorized capital was reduced to 15 Millions, of
which the government subscribed 25 %, the balance was offered to
general public. The share floated to the public was floated in 1950, &
was promptly taken. In 1950, the Bank’s ordinance was amended, so
that it could take up ordinary commercial bank operations.
The year 1970 witnessed a row of nationalization. On January 01, 1974,
the bank along with other 13 commercial banks were nationalized by the
promulgation of the Banks (Nationalization) act 1974 & shares not held
by the government of Pakistan were acquired from private owners of the
shares after compensating them.
The Bank of Bahawalpur, Mehran Bank, NDFC, was merged with
National Bank of Pakistan.
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The bank had a market share of about 22% and it remained the largest
financial institution in Pakistan.
The bank covers fifty lac clients in Pakistan and abroad with 1450
branches. There is an encouraging increase in the deposits of the
coverall deposits have increase to million during 2002.
The Bank has provided to credit to both public and private sector to the
full extent with in prescribed limit fixed by SBP. A some of million have
been advanced at the end of 2002.
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BUSINESS VOLUME
Financials Highlights (2005)
(Rs. In Millions)
Authorized Capital 75,00

Paid-up Capital 59,09
Share Holders Equity & reserves 74,341
Deposits 463,427
Advances Net 268,839
Investments Net 156,986
Total Assets 577,719
Pre Tax Profit 19,056
After Tax Profit 12,709
No. Of Branches 1,242
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PRODUCT LINE
The bank is providing all banking services of mercantile & commercial
banking permissible in the country, which include,
 Handling of treasury transactions for the government of
Pakistan as agent to SBP.
 Accepting of deposits of money on current, fixed, saving, term
deposit & profit & loss sharing.
 Borrowings money & arranging finance from other banks.
 Advancing & lending money to its clients.
 Financing of projects including technical assistance, project
appraisals through long term / short term loans, term finance &
musharika certificate.
 Buying, selling, dealing, including entering into forward
contracts of foreign exchange.
 Financing seasonal crops, like cotton, wheat, rice, sugarcane,
tobacco, etc.
 Receiving bonds, scrip, valuables for safe custody.
 Carrying on agency business of any description other than
managing agents, on behalf of clients, including Government &
local authorities.
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 Generating, undertaking, promoting, etc of issues of shares &
bonds, etc.
 Transaction guarantees & indemnity business.
 Undertaking & executing trusts.
 Joint venture with foreign dealers, agents & companies for its
representation abroad.
 Participating in world bank & Asian Development Bank’ lines of
credits.
 Providing personalized Hajj services to the intending borrowers.
TRUST ACTIVITIES OF NBP:
1. National Investment Trust (NIT): under the trust deed, the
Bank provides services as a trustee to NIT, & is performing
function of sale /purchase of NIT Units, safe custody &
maintaining a unit holders accounts. The Bank is keeping
approximately ONE Billion shares with market value at
31.12.2002, of Rs.28.034 Millions in safe custody / central
depository Company on behalf of NIT.
2. LONG TERM CREDIT FUNDS (LTCF): Consequent upon
amalgamation of NDFC, the Bank Manager on behalf of
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Government of Pakistan, Long Term Credit Fund (LTCF)
established from the proceed of loan disbursed from various
funding agencies for financing private sectors energy
development projects. The Bank charges a fee in
consideration of the services. Funds assets are accounted
for separately from those of the Bank & amounted for Rs.48
Billions, as on 31.12.2002.
3. QARZ-E-HASNA FUNDS:
The work relating to Qarz-e-Hasna Scheme was attended by
Pakistan Banking Council(PBC) since inception. PBC was
dissolved in 1997. in order to fill the void created by
dissolution of PBC, & in order to continue the scheme, SBP
decided to entrust all funds & transferred all record to Qarz-
e-Hasna scheme to the bank with the instructions to perform
all work relating to funds.
BRANCH NET WORK:
Presently the Bank is divided into 10 Groups. Its field
operations are controlled by 29 Regions, reporting to
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Regional Business Chiefs, Regional Risk Management
Chiefs, Regional
Compliance Chiefs, & 1181 domestic Branches headed by
Branch Managers. The Bank is serving to almost 9 Million
Account holders.
The Bank maintains its presences in all the major financial
centers of the world through its 15 overseas Branches & 4
representative offices. The Bank’s role globally is well
assisted by its network of correspondence Banks located
strategically in Asia, America, and Europe & Africa.
The Bank has one joint venture in UK & one wholly owned
subsidiary in Kazikhstan. The UK operations of the Bank was
merged with that of UBL to form a joint venture Bank namely
United National Bank (UNB) incorporated in UK, with a paid
up capital of Pound sterling 30 Million. The Bank has 45 %
share holding while the Balance 55 % with UBL.
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NATIONAL BANK OF PAKISTAN “ operations”
The bank since its established is playing a key role in development of
the country. It is effectively involved in all types of agricultural and
industrial financing. National bank of Pakistan an important role in
Pakistan.
It provides not only banking facilities to the general public but also
provides banking facilities to the other commercial banks.
National bank of Pakistan is authorized to act an agent of the state
bank of Pakistan and a part treasury where the state bank of Pakistan
does not give its own branch.
Role of national bank of Pakistan can be explained with the help of
following heads.
• GENERAL BANKING
• SPECIALIZED BANKING
• MODERN BANKING
• BANKERS BANK
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• MONTHLY INCOME SCHEME
• LENDING OPERATIONS
 Corporate finance
 Commercial & Retail finance.
 Special Assets Management (SAM)
 Risk Management
 Advance Salary.
 SME.
 Housing scheme, SAIBAN.
 Others
GENERAL BANKING:
In general banking, National Bank of Pakistan provides following
types of services to the general public.
TYPES OF ACCOUNTS:
• SAVING ACCOUNTS
• CURRENT OR DEMAND ACCOUNTS
• FIXED ACCOUNTS
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SAVING ACCOUNTS(PLS)
These types of account are designed to encourage the saving habit of
the customer and lead to long-term or invest relationship. Bank
saving accounts are in the nature of deposits accounts and are not
normally available for drawings.
Rates of interest are typically ahead, by a small margin. Savings
accounts with the banking sector represent a very small proportion of
total deposits. Customer can make any withdrawals from type of
account. The cash reserve ratio is typically low them the current
account because the withdrawals against this account is very low.
CURRENT OR DEMAND ACCOUNT
These are those deposits, which can be drawn by the depositor at my
time by representing a cheque to the bank. People deposits their
money in this account they gave a ready command on their account
in developed and under developed countries of the world, a very
significant part of money is kept under current or demand account.
On this type of account of interest transfer of cash or by cheque takes
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place at sight. The cash reserve ratio for his account is very high. The
operating cost for the handling of this type of this account is very high
because with drawls are very regular.
FIXED OR TERMS ACCOUNT
Fixed accounts are those which are deposited for a fixed period of
time and repayable after the expiry of stipulated time to the customer.
Those people who have surplus funds and want to have save
investments deposit the amount in the fixed account. The rate of
interest given to depositor varies with the length of deposit, i.e. it is
higher for longer period and lowers for shorter period.
The rate of this type of deposits is higher than saving bank accounts.
The cash reserve against this deposit are very low because there no
fear of with drawl of a month before the stipulated of time. No paying
books or passes book or cheque is issued to the customers against
these depositors.
The management of national bank of Pakistan have right to revise all
these rates of interest with out any notice to customers generally
rates of interest are revised after six months. The amount deposited
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for 7 and 30 days short term notice and accumulated for the period
exceeding the limit and the customers get the interest of extra days of
deposit but in the case of months and years the customer did not get
any additional interest for the exceeding period of deposit.
REMITTANCES:
In general banking, National bank of Pakistan also provides following
facilities to the people. The remittances may be divided into two
classes.
• INLAND REMITTANCE
• FOREIGN RENITTANCE
INLAND REMITTANCE
The remittance of the money from one branch of bank to in other
branch of the same or the other bank within the country is known as
inland remittance.
FOREIGN REMITTANCE
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The remittance of foreign investment into the country is called foreign
remittance. National bank of Pakistan offers the following types of
foreign remittances.
• DEMAND DRAFT (DD)
• MAIL TRANSFER (MT)
• TELEGRAPHIC TRANSFER (TT)
• TRAVELERS CHEQUES (TC)
• SWIFT
• WESTERN UNION
DEMAND DRAFT(DD)
Demand draft also known as DD. A person who whishes to remit
money to some another place may if he does not send his own
cheque, obtain from his bank a draft on demand payable to the
person who is to be paid money. It may be drawn upon one of the
banker’s own branches, or upon some other bank where an exist for
draft to be drawn. Whenever a draft is drawn own advice is
dispatches the same day. Advising the bank or branch as the case
may be, of the particular of the draft of that banker on whom it is
drawn may recognized the draft was it is presented.
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MAIL TRANSFER
There were also known as MT. The transfer by mail of an account of
currency to another country. The remitter sign auroras requesting the
banker to transfer the amount by giving the name and address of the
payee.
TELEGRAPHIC TRANSFER(TT)
Often called TT. It is quickest method of making payment to any
person. The payment of money in a foreign country may, when
necessary be affected by telegraph; the banker is instructed that
charges are to be born by the payee.
TRAVELERS CHEQUES(TC)
These are also called TC. Traveler’s cheques first came into use
century ago. A form of travel currency giving the holder the security of
a letter of credit and convenience of a total currency. In practice, they
are acceptable in payments of accounts on board ship, at hotels and
in stories. They are in form of a draft. They should be so signed
immediately on issue and place is provided on the cheque for the
signature of the beneficiary on its.
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SWIFT ():
WESTRUN UNION:
NATIONAL BANK OF PAKISTAN, has a vast net work of branches,
that accepts funds, from overseas Pakistanis under home remittance,
free of charge. The Bank has around 450 correspondents banks
through overseas Pakistanis can remit funds to Pakistan.
In order to discourage Hundi / Hawalas and to facilitate overseas
Pakistanis to remit funds conveniently, NATIONAL BANK OF
PAKISTAN, has entered into an agreement with Western Union
Financial Services International, a US based 150 years Old company,
engaged in money transfer, on May, 2002, in order to avail the
services of 101,000 outlets of Western nion in 184 countries of the
world.
LOCKERS:
National bank of Pakistan also provides lockers facility in the country.
The lockers issued to any unknown person.
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The dual control system is used for lockers. The officer has master
key to apply on the lockers of any person. The locker holders provide
the bank has specimen signature.
Whenever the lockers holders come to open lockers, his signature is
verified by the officer and then will be able to open his locker. If the
key of the locker is lost company providing these lockers break the
lockers and new lock is fitted in its locker and lock is destroyed in the
presence of the locker holder and bank charges RS 1200 for that.
In case the locker holder dies, his locker is opened in the presence of
his heir as mentioned in his will or by the court and his belongings are
given to them and the locker is closed.
CREDIT
It may be defined as “The sale of goods and services and money
claims in the present in exchange for a promise to pay in future.”
The most important activity of the bank is the granting of credit to the
customers. NBP provides short term, long terms financing for
domestic and international trade.
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Board of directors and Credit committee of NBP designs all types of
decisions for extending credit and inform about these decisions to the
branch managers.
Manager can grant the credit limit to each customer with in the
declared limits approved by the controlling offices. There is a clear
hierarchy that has been approved by Board of Directors circulated
through document of empowerment. Banks grant credit to the
customers for a certain period of time. The banks provided credit to
the customers so that they can purchase ahead of their liability.
By giving these facility to the customer’s large scale production of
commodity can be achieved and economic growth rate can be
increased. The power to sanctioned loans had been delegated for
controlling different offices, according to amount of loan.
National Bank of Pakistan provides following three types of credits to
the customers.
• ADVANCES
• GUARANTEE
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• SECURITIES
The following types of analysis are done for credit selection.
• MANAGEMENT ANALYSIS
• OPERATIONAL ANALYSIS
• FINANCIAL ANALYSIS
• SECURITY ANALYSIS
• INDUSTRY ANALYSIS
• RISK ANALYSIS
• CIB REPORTS
• PRUDENTIAL REGULATION
ADVANCES
Advances provided by bank are of the following two types.
• FUNDED
• NON-FUNDED
FUNDED
In fund based bank contributes a large amount of the fund based on
clarified as follows.
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• DEMAND FINANCE
• CASH FINANCE
• EXPORTS
• RUNNING FINANCE
DEMAND FINANCE
In demand finance 100% cash collaterals and some property is
involved. It can be provided to any customer. Any individual or joint or
company account holder can get benefit from these types of facility.
People has to provide the cash collaterals in the form of PAK Rs i.e.
is fixed deposits, Saving deposit or like RIC, Gold Ornaments, Prize
bond or defense saving certificate (DSC) or special saving certificate
(SSC) or WAPDA bearer bond. A mark up of 11% is charged
CASH FINANCE
Bank provides these types of finances to customer helping them to
fulfill their working capital needs. It has short term nature, i.e. expiry
of the limit is maximum a year. In areas like Multan, where seasonal
crops needs a lot of funds, seasonal finance is a important portfolio.
In this type of finance bank need 100% collaterals along with pledge
of stocks.
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In case of hypothecation of stocks, or stocks under guarantees etc,
the collateral requirement is @ 167 % of the amount of the limit. It is
provided to limited company, partnership or proprietorship account
holders. The mark up rate for this type is 11%, but it varies from
person To person, depending upon his creditability, volume of the
business, & credit risk rating.
EXPORTS
The bank provides the following facility to the export for the promotion
of exports.
• PERCIPIENT-PART-1 (FACPA-P-1)
• PERCIPIENT-PART-2 (FAPC-P-II)
• POSTSHIPMENT (FAFB)
• EXPORT UNDER LC (FBP)
PERCIPIENT-PART-1(FACPC-P-1)
The bank provides this type of advance facility to those exports who
have not enough money to make first shipment in percipient-part-1.
After approval from the SBP, bank provides the loan to the customer
as the rate of 12%.
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(3.bank,9 Sep)
PERCIPIENT-PART-P-2(FACPC-P-II)
In percipient-part-2 a ee report is sent to the SBP BY the customer. In
this report the customer gives details of the previous year’s exports
after the approval from SBP a 5/12 loan on previous year’s working
amount is given to the customer.
POST SHIPMENT (FAFB)
The post shipment means that the customer has enough amounts to
make first shipment but no more so bank issue a loan to the exporter.
The loan is given to the 6% if the customer is not able to return the
loan with in the stipulated period of time the bank charges more.
EXPORT UNDER LC (FBP)
The exports which are under a LC are also provided with the facility of
loan. The bank charges 20% rate and amount is given to the exporter
after the approval of the LC by the bank.
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NON-FUND
Non-fund base business is the business where the Bank is not
involving its funds at the time of sanction of certain facility. But it is
contingent liability of the bank & in the case of needs Bank is
supposed to honour it spromise.
• GUARANTEE
• IMPORTS
GUARANTEES
A guarantee is defined as “An undertaking by a person to
responsible for the debt of another person.”
A guarantee is a promise between one person to another person or
party to answerable for the debt of the third party. Bank issue
guarantee after 100%cash collaterals are provided by the person with
35% in the form of cash.
National Bank of Pakistan issues guarantees to government agencies
like atomic energy, high way department, and customs arthritis. Sui
northern gas and others. It also issues guarantee to multinational
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organization like SIBA GIGY, SANDOZ, PBS, and etc. for the
purchase of pesticide or insecticide from any fertilizer company.
Bank accepts only other bank guarantee but in some cases personal
guarantee is also accepted. The guarantee issued is treated as
contingent liability. According to local rules and regulation the policy
for issuance of guarantee can be charged. The expiry of the
guarantee can be set by both bank and guarantor. The minimum
period is one year and the guarantee can be reissue for extra period
with paying charges.
Each guarantee must be signed by the two officers whose signatures
appears in the specimen signature book of bank and also counter
sign by the controlling office. Any amendment must also be signed by
both officers. Am amendment in the guarantee can be made after
giving written application to issuing branch. If the value of guarantee
is reduced by the amendment the liability amount will be reduced and
if will value is increased additional liability entries will be passed.
The bank provides following types of guarantees to the customers.
• BID BOND
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• MOBILIZATION BOND
• PERFORMANCE BOND
BID BOND
The facility provided at the time of bed opening is called bid bond.
MOBILIZATION BOND
When the bid is accepted, the bank provides this type of facility to the
customer.
PERFORMANCE BOND
When the project is completed, a performance certificate is provided
by the contractor about the performance of the project for one year.
During one year, if there is any mishap in the project the repair
otherwise authorities claim the performance charges from the bank.
Bank charges commission on issuances of guarantee as per their
schedule of charges. If the party did not pay the amount in the
stipulated time period, bank puts this case for recovery. If some is
recovering then it is good otherwise bank deduct the amount from its
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profit and starts the legal procedure against the property pledged by
the customer to bank.
Bank assesses the demand of the customer and then writes letters to
other banks to provide them confidential report of credibility about the
customer this is one provided in the shape of CIB (credit information
bureau) report provided by the sbp. In this report the credits of the
customers with bank operating in Pakistan are given. After checking
this report the bank issues the guarantee to the customer. In case of
death of his heir as given in the will be responsible for that guarantee.
IMPORTS
Bank provides non funded credit facility to the following basis.
• SIGTH L.C
• USANCE or DA L.C
SIGTH L.C
In this type of L.C when payment is made documents are released. A
cash margin of 30% is relational by the bank.
USANCE L.C
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The payment after a period of days. Which is given in the L.C a
margin of 30% is retained by the bank.
SECURITY
It is an interest or right in the property gives to the creditor to convert
it in cash in case of debtor fails to meet the principle and interest. The
provides the following securities to the customers.
MORTGAGES:
Transfer of interest in movable property for securing the payment of
money lend on existing or future liability. The following two types of
mortgage are provided by the bank.
• REGISTERED MORTGAGE
• EQUIABLE MORTGAGE
REGISTERED MORTGAGE
Registered mortgage is provided on the residential property,
commercial industrial property, law plot, etc. A party can get
registered mortgage if they provide the following documents to the
bank.
• TITLED DEED
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• NON ENCUMBRANCE (NEC)
• PTI FORM (IN CASE A CONSTRUCTED HOSE)
• VLUATION CERTIFICATE
• AFFIDAVIT
• MORTGAGE DEED
• PERSONAL GUARANTEE OF MORTGAGOR
• POWER OF ATTORNEY
• LEGAL OPINION
Banks examine all these reports, and if they are correct then issue
the mortgage to the party. The bank examines these reports to see
that the property they want to mortgage is registered is not already
pledged. The bank also calculates the value of property and the legal
opinion of the customer in case of non payment.
EQUITABLE MORTGAGE
Equitable mortgage is provided on the residential property,
commercial industrial property, raw plot, etc.
• TITLE DEED
• NON ENCUMBRANCE CERTIFICATE (NEC)
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• PTI FORM (IN CASE A CONSTRUCTED HOUSE)
• VALUATION CERTIFICATE
• AFFIDAVIT
• MEMORANDUM OF DEPOSIT OF TITLE DEED
• PERSONAL GUARANTEE AG MORTGAGOR
• POWER OF ATTORNEY
• LEGAL OPINION
In this mortgage a charge from bound the customer for any legal
action in case of non payment. In this type of mortgage hypothecation
of stocks involves.
PLEDGE
A pledge is an “a class security given to customers for stocks ware
house, customs, and etc. it is defined as actual delivery of movable
property to lender as security for a loan. When the customer makes
the payment of the loan in full he can back his mortgage property
from the bank i.e. when full payment is made the stock is released.
DOCUMENTATION:
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Documentation is a very important aspect while sanctioning a loan.
Right from first application from the borrower, it is the duty of the
Branch Manager to verify the genuineness of the title deeds,
unbroken chain of ownership & subsequently ensure that all the
documents that are needed in case of some unusual circumstances
have been obtained.
OVERSEAS OPERATION
Out of 180 countries in the world no one is self sufficient by any
means. All of them are dependent on one and another. When goods
are exported to foreign country money is given to foreign dealers this
involves many problem. The main problem is conversion of money.
Every country has its own currency measures i.e USS, RIYAL, UKE.
JAP YEN, PAK RS, and etc. so these currencies are not legal in other
countries of the world. This problem is solved by having a world wise
exchange rate of each currency with one another. Central bank have
a control on each country monetary policies. In each country of the
world authorized dealers do the business of foreign exchange.
- 40 -
National bank of Pakistan regulates the monetary policies in the
country performing its functions as the agent of the state bank of
Pakistan.
LETTER OF CREDIT
A letter of credit is defined as under
“Undertaking by the importer’s bank to exporter that the draw in
accordance with terms and conditions of the credit, will be honored if
presented with in the validity of the credit.”
Letter of credits are many types but the following two types are main
types.
• IRREVOCABLE
• REVOCABLE
IRREVOCABLE
An undertaking which cannot be canceled without of confirmation of
both parties.
REVOCABLE
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An undertaking which can be amended or canceled with out any
notice to beneficiary by the importer. Letter of credits can be
classified into two classes. These are following.
• SIGHT L.C
• USANCE OR D/A L.C
USANCE or L.Cs
In this class of L.C the payment is made after a specific period of
time.
OPENING OF L.C
For opening of l.c the following documents are required by the bank.
• APPLICATION OR BOND
• ORDER OR INVOICE OR INDENT
• INSURANCE (MIST ACCORDING TO PAKISTAN RULES)
• LIABILITY ENDORSEMENT OF CUSTOMER
• IRRVOCABLE DOCUMENTARY CREDIT (L.C)
• SERENITY FORM
An L.C is issued after opening the letter of credit it is sent to the
negotiating bank.
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BILLS UNDER L.C
After receiving the L.C. the negotiation bank checks the documents,
which are provided by the exporter with that are described in the L.C.
if there is not discrepancy in that documents then the negotiating
bank gives the payment to the exporter otherwise vice versa.
The negotiating bank sends the document provided by the exporter to
the l.c issuing bank with their covering letter <known as bills under
L.C. The negotiating bank sends these documents by two mails so
that if one mail is not received then the set from 2 nd mail can be used
for further transactions. The negotiating bank sends following
documents to the advising bank.
• Covering letter to advising bank 1 copy
• Bill of exchange 2 copies
• Invoices 8 copies
• Bill of lading or air way bill 3 copies
• Packing list 3 copies
• Shipping advice to insurance company 1 copy
• Shipping certificate 1 copy
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The advising bank chicks all the documents which they received from
the negotiating bank funds any information which is not given L.C in
this bill if bank finds no thing then transaction is made and if there is
any discrepancy them the advising bank may claim the return of
amount from the negotiating bank.
REMITTANCES UNDER L.C
The advising bank gives the authority to the negotiating bank to get
money from their account from of their branches. If the bank has no
account with the negotiating bank or the currency of the l.c is different
from that of the official country currency. Then the advising bank
issues a debit authority letter to the negotiating bank to get the money
from that bank and authorize the bank make payment to the
negotiating bank.
REPORTING TO THE SBP
After an import transaction is completed then the officer uses an I
from to report to the sbp for that import. This I form is issued in
quadruplicate. One of its copies is sent to the sbp. Other copies are
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for bill of entry 2 national bank of Pakistan copies. This form contains
the information about the import against an l.c i.e. description of
goods their quantity amount of l.c shipment date port shipment vessel
and etc.
EXPORTS
A term used for goods and articles commodities sent from the country
to another. Exports in Pakistan are done by the following four modes.
These modes are
• ADVANCE PAYMENT
• CONSIGNMENT SALE
• COLLECTION
• UNDER L.C.
ADVANCE PAYMENT
In this type of exports the payment is being made in advance by the
importer. This shows the height of confidence between importers after
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the shipment is completed then the bank sends and E- form to SBP
stating the export being made.
CONSIGNMENT SALE
Consignment is given to the auction house with out any order. A trust
receipt is being made issued. Amount is given to the exporter when the
goods are being sold or if the auction houses are not able to give the
exporter the required money then gave to return the goods in full to the
exporter. This payment is made after a specific period of time on which
both the parties had agreed i.e. 30, 60, 90, 120, 180, days. If neither
the payment is made nor the goods are returned the importer (auction
house) are treated as criminal under section 420 of criminal act in
Pakistan.
COLLECTION
Under this type of exports, bank has no liability, buyer and seller sets
the rules for this type of export. Only documents are rooted through the
bank and also payment is received through the bank. It is done with the
prior arrangement between the buyer and seller firm order. Payment is
made by the draft, when the bank received the documents through
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other bank the payment is made. The following documents are
produced by the exporter with the bank at the time of exports.
• EXPORT LICENSE
• COVERING SCHEDULE
• COVERING LETTER (DOCUMENT ARE RECEIVED)
• AIRWAY BILLOR BILL OF LADING
• INVOICE
• PACKING LIST
• CERTIFICATE OF CHAMBER OF COMMERCE
• INSURANCE OF GOODS
• E FORM
In this type of exports payment can be made in parts.
UNDER L.C
Bank receives an L.C from the importer for exporter of goods. These
export l.cs used in Pakistan are following two types.
• SIGHT L.CS
• USANCE OR D/A LCS
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SIGHT L.CS
The l.c in which payment is made at sight basis after documents are
delivered.
USANCE OR DA L.CS
In this class of l.c the payment is made after a specific period of time
bank checks all the documents provided by the exporter with that listed
in the l.c. If no error then payment is being made else vice verse. The
payment in this type of export is made in full else specified, partly
payment may be made when both the parties agrees. After receiving
the l.c and checking all the documents an approval sheet is being
issued by the officer. The bank provides the bill of exchange. Exporters
provide the following documents to the bank.
• BILL OF LADING OR AIR WAY BILL
• INVOICE
• PACKUNG LIST
• CERTIFICATE OF CHAMBER OF COMMERCE
• INSURANCE
• E FORM
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The bank informs sbp about current export uses the e. form. It is
issued in quadruplicate. The custom authorities retain first spy of E-
form and returned SBP, 2nd copy is for SBP’ 3rd for exporter and 4th for
the banks record. When full payment is being made the SBP’s copy is
returned to SBP.
After receiving their copy SBP compares the two forms.
EXPORTER REFINANCE
Government of Pakistan is introducing many schemes to permute the
export an earn foreign exchange in 1976 the government introduced
export refinance scheme. This scheme proved to be very productive
from time in time is being amended but its original work frame
remaining the same.
According to this scheme scheduled bank were asked to financed for
the finished goods an after completion of varies formalities. The
exporter can get counter finance from sbp. From 1985-86 sbp gets 9%
and the remaining 3% for the issuing bank. If the party is not able to
pay the amount in the stipulated time period the issuing bank charges
18.25% of which 9% they have to pay to the sbp in the specific period
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and the remaining for them. This facility is being provide to the exporter
in three types. These are under
• BILLS PURBHASED REFERENCE LINE
• PRESHIPMENT
• POSTSHIPMENT
BILL PURCHASED REFERENCE LINE
It indicates the two things
BILL PURCHASED LIMIT OF EXPORTER
FBP facility is usually covered by foreign bank L.C. but even then
drone a certain line for bills purchase limit of any borrower.
LIMIT OF ANY FOREIGN BANK ISSUING L.C
Also known as bank line or country exposure. Banks in Pakistan gave
to as certain the extent of risk they can afford for any specific bank of
global basis and for any individual country of example. Pakistani bank
can not take any risk of exporter of countries like, DJBOUTI, IRAQ,
former YUGOSLAVIA. Similarly banks giving bountiful reputation or
financial position while functioning is economically strong countries.
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PRE SHIPMENT
Banks allow this against certain deals made under an l.c. between
Pakistani and a foreign exporter made shipment in according with the
deal under and l.c exporter submit the shipping documents evidencing
the pre shipment finance if the exporter has taken already any
percipient then bank checks from the books and if he is requesting for
more within the limit he may get it this facility is provided to exporter in
two parts which are as follows.
• PRESHIPMENT PART-1
• PRESHIPMENT PART-2
PRESHIPMENT PART-1 case is sent to SBP for the author
The following documents are send to SBP.
• SECURITY FORM
• COVERING LETTER FORM BANK
• DEMAND PROMISSORY NOTES (DP NOTE)
• UNDERTAKING BY EXPORTER
• PEREFORMS ORDER (2COPIES)
• INVOICE
• BILL OF LADING OR AIR WAY BILL
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• EXPORT FORM (E-FORM)
• FORM EB
• RATE SHEET
After examining these documents, if no error exists, SBP issues
refinance facility to the exporter else returns the documents for
correction to the bank. In pre shipment part 2nd the exporter has to
submit an E-form to the SEP in this form the exporter states the
exports he had made during a full year against each E-form. After
examining this from, SBP gives a 45% loan for refinance to exporter on
the exports the last year.
POST SHIPMENT
The exporter made the shipment from his own sources and then
providing these documents can obtain the reference from SBP.
FOREIGN CURRENCY
All the banks in Pakistan deal in the four currencies i.e. USS, UKP,
DM, and JAP. The foreign currency accounts are mentioned by the
depositors in the above mentioned currencies. These currencies are
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utilized to issues the foreign exchange to the Pakistan travelers to any
foreign currency with the approval of SBP.
Presently it is ban on providing F/C to the traveler. For the traveling
purpose bank can issues the traveling cheques to the travelers which
are exchange able in the country of visit. TCs are issued on the behalf
of well reputed agencies whose interments are accepted world wide,
some of them are AMERICAN EXPRESS, BANK OF AMERICA,CITY
CORROPTION, THUMAS COOKS. The TCs have no time limit.
In Pakistan foreign currency is under sbp control and each bank has to
maintain a certain level currencies are under SBP control and each
bank has to maintain a certain level currencies in cash daily. This cash
is utilized for the foreign currency account holders. The foreign
currency on hand is revealed each day and in case of revolution bank
income account is credited for the difference and in case of revaluation
income accounts bank balance sheet and this value varies according to
the rate of each currency.
FOREIGN REMITTANCES
Foreign remittance is two types. These are under,
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• IN WARDS
• OUT WARD
IN WARDS
Foreign exchange coming into Pakistan from Pakistani residing abroad
or from foreigners is called in ward foreign exchange.
OUT WARD
Foreign exchange going out from Pakistan by Pakistani residing in the
country is called out ward foreign exchange. All the foreign exchange is
done with the help of DDs, TCs, to TTs.
DEMAND DRAFT (DD)
Demand draft also known as DD. A person who wishes to remit money
to some one other country. If he does not send his own cheques,
obtain from his banker a draft on demand payable to the person who is
to be paid the money. It may be drawn upon one of the banker pawn
branches or upon some other bank where an arrangement exists from
draft to drawn.
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TRAVELER’S CHEQUE (TC)
They are also called TC. Traveler’s cheques first came into use a
century ago. A form of travel currency giving the holder the security of
a letter of credit and convenience of local currencies. They are usually
issued in USS, UKP, DM, AND JAPY, and are encashable at the
correspondent bank at home or abroad.
TELEGRAPHIC TRANSFER (TT)
Often called TT. It is a quickest method of making payment to any
person. The payment of money in a foreign country may, when
necessary, be effected by telegraph, the banker sending a cable, with
the necessary particular, to his foreign correspondent. The cost of the
cable is charged to the customer at whose request the transfer is
made, unless the banker is instructed charges are to born by the
payee.
SPECIALIZED BANKING
National bank of Pakistan also performs some special function in the
field of banking. It also maintains the government’s accounts. In this
regard, various taxes and other central and provisional obligation can
be paid in it. It also disburses the salary among the govt. Employees of
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various departments according to the advice provided by treasury
office. It also provides the facility of pension to the retired employees of
the government.
MODERN BANKING
National bank of Pakistan also provides the utilities services to the
people. People can pay their utility bills in it. It provides the credit card
facility to the general public. People can purchase goods from the
authorized stores with the help of credit card. More over, DD, MP, TT
and travelers cheques are the employees of modern baking.
National bank of Pakistan also provides the loan facility against the
security of gold. But this scheme is not much expensive.
MONTHLY INCOME SCHEME (MIS)
The facility of monthly income scheme was also available in the
national bank of Pakistan in near past. Minimum deposit limit in
monthly income scheme was RS 10000/= and the rate of interest was
14% p.b, where as rate of against was 16.5% pa on the deposit of RS
100000/. Now a day’s new scheme is not available. But the clients can
maintain old scheme. Rate of interest on (MIS) changes after six
month.
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AGRICULTURAL LOAN
Because Pakistan is basically a farming country. About 70% of its
populations living in rural areas and nearly 50% of them engaged in
farming.
In 1972, National bank of Pakistan started first time a super vise credit
scheme for the farmers. Loans are advancing to the frame reagents the
security of land, crops, and fixed assets and even on personal security.
National bank of Pakistan provides the agricultural credit for the
purchase of inputs, cattle, tractors, dairy farming, installation of tube
wells etc.
Following are the main types of agricultural credits.
SHORT TERM LOANS
Range of short term credit is one year. Such credit is used for the
purchase of seeds, fertilizers, pesticides, and other casual expenses.
GHAR GHAR TV (CONSUMER DUREABLES)
National Bank of Pakistan started to provide consumer’s durables to its
valuable clients. For that an agreement was reached between NBP &
LG, where in the company offered their products through financing to
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clients with certain pre-requisites. Previous experiences have made the
management to be extra-conscious to avoid Non-performing loans
under this head. That is why, only cash or cash equivalents were
accepted as security. The concept of guarantee remained alive.
ADVANCE SALARY:
In order to inflate the lending balloon & to help the government
employees to enjoy comforts of life, NBP, has launched, advance
salary to them. In first instance it was 03-take home, & recently the
same has increased to 10-take home, with the conditions that the
monthly deduction should not exceed 50 % of the gross salary & the
monthly installments should not exceed 25 % of his monthly salary.
The repayment period have been increased from 36 months (3 years)
to 60 months (05 years). The rate of mark-up has been squeezed from
15 % p.a. to 11 % p.a.
This mode of financing has tremendously attracted the borrowers. The
total numbers of borrowers as on 31.08.2003, when the rate of Mark-up
was 15 % & the borrowers were restricted to 03 Take-home salaries,
were about 125,000. it is expected that this graph will go upward, when
Bank is offering 10 take home salaries.
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HOUSE BUILDING LOAN “SAIBAN”:
Economy of Pakistan is showing very healthy signs. All the indicators
are demonstrating success story. But issue remains that the benefits of
this accomplishment should go down the line. All out efforts are being
planned, to encourage investments & than to create jobs, that will
ultimately help to reduce the poverty scenario. For that Government of
Pakistan is stressing very hard to help to grow house building sectors.
It has been estimated that a lot of potential is untapped in this sector.
The same is growing with even grater speed. Another feature is that
about 40 industries are directly or indirectly associated with this sector.
So developing this sector means,
 Providing shelters to unsheltered.
 Gearing up economy.
 Reducing poverty statistics.
 Generate a wave of investment.
For the purpose, the GOP is steering to tape this untapped area of
investment. On direction & guidance of SBP, National Bank of
Pakistan, has started the House building scheme with the name
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“SAIBAN”. Initially the scheme has been launched in three
Cosmopolitan cities, Lahore, Islamabad & Karachi. Due to intricacies,
legal hurdles & documentations issues, NBP, is going ahead slowly &
surely.
The scheme has been offered to following three categories,
 House Constructions.
 House Purchase.
 House Improvement.
 House Advantage Loan.
These loans are being offered to different income groups, i.e. Salaried
Class, Business men, self-employed, etc. specialized people have
been consulted to assess the income, of the prospective borrowers,
evaluation of the works done or to be done, vetting of legal documents.
It is being felt in a banking industry that a good banker is one who is a
good Manager, Engineer, Lawyer, Evaluator, or at least a jack of all.
The coming product of “SAIBAN” is proving the hypothesis. The rate of
Mark-up is different for different customers. Salaried class will be
benefited the most.
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SEASONAL FINANCING:
Seasonal financing is the most beautiful way of financing. The beauty
of the finance is that at least once in a year, the balance in the A/C
comes to zero. This way, a banker has immediate signals of warnings.
In the area, where crops like Cotton, Rice/Paddy, etc, are main feature,
the seasonal finance is the main source of income of the Banks. In
Multan Region, our main concern is Cotton finances. Ginners, Oil
extractors, Cotton traders, spinning Mills owners, weavers, are
overlapping the list of the borrowers. The outstanding touches its
heights in Decembers & take a downward slide in ensuing months.
This type of financing is based on,
 Past track record of the borrowers.
 Capacity of the factory.
 Value of the collaterals available.
 Overall economic condition of the country.
 Crop situation. Etc.
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The rate of mark-up is quite reasonable. Strict monitoring of the
pledged stocks, continuous follow up from Branch as well as controlling
offices is some of indispensable features.
MEDIUM TERM LOANS
Range of such credit is from one to five years. Medium term credit is
used for the purchase of implements, BMR (Balancing, Modernizing, &
Replacement) etc. due to the fact that the time of repayment is too
large, & uncertainty is too high, & necessary risk management skills
are not in place, banks avoid, such loans. But now banks are very
consciously coming in the field. National Bank of Pakistan is also
coming up with some very good schemes, like BMR facilities to
Ginners.
LONG TERM CREDIT
Such types of loans are extended for building industrial projects. Last
time in early 1990s, IBRD (World Bank), OPEC, credit lines were
offered to install industrial projects, through National Bank of Pakistan.
LMM (Locally Manufactured Machinery) loans were granted, to a large
numbers of the borrowers. But the results were not that encouraging.
These loan went bad & the result was inflated NPL (Non Performing
Loans) Portfolio. It was a big plan, but it failed due to,
 No Planning,
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 No expertise at sanctioning level.
 Poor monitoring.
 Political involvement.
 Other factors.
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ORGANIZATIONAL STRUCTURE
MAIN OFFICES
Overseas Branches
Domestic Branches
16 Overseas Branches 29 Regional Offices

4 Representative Offices 1,189 Branches
1 Subsidiary 143 Online Branches
1 Joint Venture 4 Subsidiaries
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HRM OPERATIONS
With the privatization of major NCB’s the competitive
landscape particularly in the financial sector has
substantially changed. NBP today is the only public sector
bank it has to compete with big private entities in terms of
technology, people, customer service etc to ensure
decisive market share of business and continue to maintain
and improve its position as a pre-eminent financial
institution of the country.
• In our survey conducted in October 2005 with regard
to major challenges being faced by NBP, it is
estaiblished that the two biggest challenges NBP
faced today are:
 Technology
 Lack of skilled Manpower
• The bank already in the process of acquiring Core
banking Technology from software providers of
international repute and the system shall be installed
shortly. To survive and grow on a sustained basis it is
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imperative that NBP upgrades its human resource
base to meet the challenges of competition and
technology.
• Hence this study on emerging HR challenges in NBP
and strategies for business support and institution
strengthening is very important.
• The bank undoubtly has taken a number of decisive
initiatives in last two years to upgrades its HR, create
motivating climate and enhance employee satisfaction
with the full support of the president and group chiefs
which are considered very critical and vital for the
success of any HR initiative
• Inform all members of HR family about present
standing of the bank in the financial sector and the
vision to maintain the leadership position in future in
the industry.
• To identify the areas of deficiency in HR and take
appropriate measure for improvement.
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• To acknowledge, recognize and appreciate the efforts
of our colleagues who are helping us to shape the HR
initiatives and practices on most modern lines.
- 67 -
STRUCTURE OF HRM DEPARTMENT
 At Regional Office
H R Chief
G.M. (HR) Officer (HR)
Officer (HR) KPO Assistant (HR) KPO
 At Branch Level
At Branch Level the HR functions are mostly advised and directed by the Branch
Manager with the assistance of one Officer or assistant.
- 68 -
PROFILE OF EMPLOYEES
• Total No. of employees: 13824
• Staff at different branches
o Category-I 03 to 05
o Category-II 06 to 14
o Category-III 15 to 40
o Corporate Branches More than 50
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FUNCTIONS OF HRM DEPARTMENT
(10.1) Major Functions
• Recruitment of employees
• Organization of Departments and Training
• Staff Service Rules
• Disciplinary Cases
• Staff personnel files
• Appraisal of Staff
• Rewards and Promotions
• Pay Packages
• Retirement and pension Benefits
• Formulation of HR policies etc.
(10.2) Support to other Departments
HR Department plays a very critical role to harmonize the HR
needs of all other departments of the organization. The supportive
mission statement of HR department to other as;
“To standardize HR policies and procedure for dissemination to all
bank offices in manners and form that could ensure uniformity in their
application and practice.
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CRITICAL ANALYSIS OF THEORETICAL CONCEPTS

RELATING TO PRACTICAL EXPERIENCE
During the period of my job at the Bank, I have found following
strengths and weaknesses with relation to bookish and practical
studies.
Theoretical concepts show the following cycle to enhance requirement
analysis, data gathering, system design and implementation thereof.
While experience study during internship with HRM department, it is
concluded that under branch management leadership, the branch
manager at times try to motivate the members through present and
future behavioral patterns, while the people’s needs and their ways in
which they can be satisfied are much more complex than they actually
thinks.
Branch Managers are the Leaders of the man and woman who report
to them. They must play this role very convincing if they are earn the
respect and commitment of the employee reporting to them. Secondly
they must remember that it is the frontline employees who produce
result s and they must helped through infra structure support and
guidance to rise their full potential so that they can contribute their best
efforts to the bank.
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Conceiving solution, alternatives and options
There would be situation when problems would seen insurmountable to
the employees. It is times like these when leadership quality is tested.
Branch Managers must have the ability to come up with solutions,
alternative and options that their juniors can not yet conceive. Success
in this endeavor establish the managers competence and instills in the
employees the feeling that their leader truly deserves to lead them, that
the power He/She enjoys is not ‘ position power’ but that which has
being bestowed in reorganization of his/her leadership qualities.
Employee empowerment
This is an area that is often not given the importance it deserves. Most
managers over look the fact that unless employees are provided the
requisite systems and operational support they need and also
empowered to take routine decisions on their own, they keep
performing well their potential and over a period of time lose the desire
to take on higher responsibilities. It drags down the overall branch
productivity. Managers must carefully assess the empowerment needs
of each employee and provide the support and flexibility the employee
needs to encourage him/her to accept higher responsibilities.
- 72 -
Planning Process
Branch managers must guide the planning process keeping in view all
possibilities that could affect the outcome and make provision for
possible contingencies to ensure that the plans succeed because
nothing inspires the employees more than achieving the desired level
of success. Managers must develop the ability to visualize obstacles
and devise workable solution to overcome them to demonstrate to the
employees that there is always a way out if desire to succeed is there.
Coordinating Employees
Leaders do not produce results; the frontline workers do, but they can
not succeed in that endeavor, especially in team work situations,
unless their activities are so coordinated that they complement each
other, and perform their assigned roles in a timely and effective
manner. In large branches where performance depends on coordinated
actions by inter-dependent units, success lies in minimizing conflict.
This objective can not be achieved unless teams are put together in a
manner that guarantees cohesion. Achieving critically important
cohesion is a function of making logical choices keeping in view the
psyche of individual team members and their willingness to compliment
each other’s efforts and expertise.
- 73 -
Judicious Performance review and rewards
To succeed in the all important objective of having a battle-ready
workforce all the time, employees must be rewarded judiciously i.e.
performance review and rewards process should be perceived by the
employees to be just. Jobs differ in terms of the intensity and precision
of the efforts required to perform them. Not all of them produce
precisely measurable results i.e set of exact figure. This requires the
leader to have the discerning ability for judiciously appertaining the
critically of the role of each employee the extent to which his/her out
put is depended on the support of the related units, and the quality and
quantity of the out put the employee produces. Finally, the manager
must look at employee performance in totality and focus merely on
isolated instances of failure. Only then can the leader be seen as
judicious in rewarding employee and succeed in building a cohesive
and committed team.
Backing up empolee effort convincingly
Nothing can ensure success more convincingly than the conviction
among branch employee that they will be backed up by the branch
manager and that he/she will stand by them and, if necessary put up a
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fight to defend them when they are right. This feeling needs to be
developed credibly by judicious demonstration of employee support.
Work Culture
Managers must cultivate a culture in the branch where by every
employee develops healthy respect for office discipline, cooperation
with fellow employees and participation in building the image of the
branch. Disciplinary action should take into account the actual
circumstances leading to misconduct so that the disciplinary action is
proportional to the seriousness/intensity of the offence or negligence
committed by the employee, and no more. It should not reflect when
data, personal animosity or uncaring attitude, employees must also be
made to appreciate that, like all other service organizations, banks
operate for the well being of the society. Being accepted by the society
as a good citizen is imperative for any bank to survive in the long run.
To create and sustained this image, employees must insure that their
actions manifest a healthy respect far in–house procedures and
practices and the banking regulations in force, and an attitude for
visibly confirming to accepted fair market norms and conventions while
interacting with customers, but more importantly, when dealing with
competitors banks or inter-depended and can not be seem to be under
mining each other’s valid interest at the behest of their customers.
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SHORTFALLS OF HR DEPARTMENT
CRITICAL APPRECIATION ANALYSIS
Recent past in Pakistan has witnessed a tremendous row of
modernization in Banks. Bank’s operating in public sectors only,
gradually went under control of private expertise. All this has triggered
a competition in financial sectors, that was never in vogue. After
privatization of HBL, about 80% of the Banking industry will go in
private hands.
All these developments has surely pushed this Bank(NBP) to adopt
formal competitive techniques to ensure its profitability, market share,
rather existence. The new management, after appreciating the needs
of modern age has initiated a chain of restructuring in the Bank. They
had stressed on following factors.
1. De-layering & reformation.
2. Human Resources Development.
3. Revision of profit rates.
4. introduction of Retail Banking operation.
- 76 -
DE-LAYERING.
In the last year,2002, the regional set-up has been re-structured.
Nine regional Headquarters and 32 Zonal offices were abolished
and 29 regional offices were set-up. These regional office where
governed by regional Management Committee Comprise of
following four Members.
1. Regional Business Chief (RBC)
2. Regional Operating Chief (ROC)
3. Regional Credit Chief. (RCC)
4. Regional Compliance chief (RCC)
5. Regional HR Chief
This new set-up has decentralized the power structure. Initially the new
set-up did created few problems, due to the fact, that in past only one
man show was in vogue, but now, after proper guidance from Head
Office, it is delivering well.
HUMAN RESOURCE DEVELOPMENT.
- 77 -
Once a neglected area, HRD is attaining its due attention in this Bank.
Proper training I being imparted after need assessment &
recommendations of the Branches and regional offices.
As the bank has very old traditions and customs. usually staff shortage
do not allow the bosses to spare their staff for the trainings /
workshops. Still the resistance is due to expense incurred on such
issues. President of the Bank has circulated the instructions to shun
this approach.
REVISION OF PROFIT RATES/ SECURITY REQUIRMENTS.
Bank in Pakistan are flushing with liquidity, money market operations
are not giving the desired profits. All these factors are forcing the
Bank’s searching for new borrowers and offering them loan at reduced
rates. NBP, being one of the largest Bank is also keeping the pace.
Profit rates has been reduced and have been linked with T-Bills rates
for Corporate Clint’s the security requirements that used to be 1:1 for
pledged stocks, have been reduced to 1:0.3 these issues has made the
bank competitive bank.
INTRODUCTION OF RETAIL BANKING OPERATIONS.
- 78 -
Consumer financing that had revised the world economy after 1931,
remained very rare in Pakistan. But now NBP has launched NBP Ghar
Ghar T.V,NBP, advance Salary. Reportedly few other products are in
principle line Ghar Ghar T.V have tremendous results, if NBP had not
dealt with L.G one but any how , high hopes are there for NBP –
Saiban. This scheme is in line Govt. urged to boost, constructor sector.
STRENGTHS
• National bank of Pakistan is govt. owned bank that is why
Pakistani nation has trust on the bank that their deposits are
secured due this reason the deposits of the bank are
increasing with passage of time.
• National bank of Pakistan is one of the few banks, which give
due attention resources development. Management arranges
numerous courses on different topic directly or indirectly
related to banking.
• NBP also works as agent of SBP in those cities where the SBP
branches not working.
• National bank of Pakistan plays a vital role in the national
economy through mobilization of hitherto untapped local
- 79 -
resources, promoting savings and providing funds for
investments.
• National bank of Pakistan is giving a higher profit rate on its
different types of deposits such as PLS Term deposits and
Monthly Income Scheme etc. Its profit is better than many
other commercial banks cooperating in Pakistan.
• Today more than six million clients are with NBP. These
customers are served by its branches all over Pakistan. The
total personal strength of the bank stood at 18,500
approximately.
• In order to facilitate the nation the NBP playing an important
role in the development of the following sector.
1- Environment.
2- Education
3- Health care
4- Sport
WEAKNESSES
• National bank of Pakistan is a govt. owned organization that is
why every Govt. has strong impact on its operations to the
other banks. So in this sense it is lowest in rank.
- 80 -
• In bank of Punjab, compute is not being used. Because of that
the services time to customers is long and the customers have
to wait for long time. And almost all other banks have
maintained their computer system.
• In NBP employees are recruited on the basis of nepotism,
political favoritism or through other tools of corruption.
Recruitment is not done on merit and fairly.
• The working condition of the NBP is not up to standard. No
computer has developed there.
• Because it is Govt. owned organization so the rules and
regulation are not implemented by the employees. Because
there are not strict checks are applied on their performance.
• In NBP loans are extended to non-productive investment on
political basis. Because of that the bank has to face very
difficulties to return back the investment.
• In the NBP individual differences have strong impact on the
organization’s performance due to the wrong criteria of
selections of the employees. So with the passage of time
individual differences are increasing which are undermining the
good will of the organization.
- 81 -
• In this organization the authority structure is bureaucratic which
is a barrier in rapid and effective decision making.
• National bank of pakistan does not marketing activity. They
don’t make any advertisement and don’t offer any prize
scheme for the people.
OPPORTUNITIES
• Until recently the bank perceived as purely commercial banking
entity so in order to expand its business the bank may starts
investment banking by investing in the portfolio of handsome
return.
• The bank by establishing the new branches in foreign countries
can expand its business and can enjoy with the profit.
• The bank must start use of computer in all branches and make
a computerized database system so as to enhance its
customer service and to give the credit card and ATM card
facility.
• The bank should establish its branches in foreign countries,
through it; it can have world recognition and can expand its
business a lot, and can enhance its market, share and profit.
- 82 -
• The NBP can enjoy handsome return any diversify its funding
base by investing into capital market of other countries. So it
will enable it to establish name recognition in the world.
• Despite of poor customer service of NBP people still come to
NBP because of its govt. ownership as they feel its secure
therefore bank improve its deposits by giving facility of night
banking and also can compete its competitors with positive
steps.
• It can establish advisory services division in order to facilitate
the customers investing in the securities.
THREATS
• In our country rate of inflation is increasing with the increase on
unemployment. So due to the increase in the price of the
products the saving of the nation is decreasing with the
passage of time. So it is a threat for the banking sector. In
future deposits of the banks will decrease.
• The number of banks are increasing in Pakistan with the
passage of time. So due to poor working conditions and poor
customer services it is the possibility that NBP will lose its
market share in future.
- 83 -
• On NBP Govt. policies have strong impact. A slight change in
Govt. sector and policies may affect the performance of the
bank. The bank to work with in the regulation frame work.
• The business ways and banking ways are rapidly changing; the
customer needs are quick and through services. And NBP at
this time proactive to the change of market.
CONCLUSIONS & RECOMMENDATION
Pakistan’s financial sector is dominated mostly by commercial banks,
which encompass nationalized commercial banks (3 banks), domestic
private banks (15 banks), and partially private banks (2 banks)
branches of foreign banks (19 banks). The other part of financial sector
is dominated by NBFI’s, which include development finance
institutions, leasing companies, specialized banks and investment
banks.
Over the decade of 1990’s Pakistan’s financial sector has been going
through a series of reforms. The more important reforms in term of their
impact on the financial sector have included: increased SBP autonomy,
permission to open private commercial banks, bank privatization,
- 84 -
rationalization of the rate structure in line with market dynamics,
restructuring of NCB’s introduction of BIS capital adequacy standards
and more recently the formation of the Corporate and Industrial
Corporation (CIRC)
Some other findings and recommendations are as under
• All the branches of the national bank of Pakistan should be
computerized & they should maintain a computerized database
system.
• The political involvement that can make its routes in
administrative decisions should be minimized on all the
operations of national bank of Pakistan.
• The counter service be improved for customer satisfaction,
should be guaranteed through rapid delivery of financial
products & services.
• The decision making is a bit slow, that should be improved.
• Risk management has not been implemented in true sense.
The manager is key player in credit management. He is
recommending officer, sanctioning authority (depends upon
documents of empowerment), credit administrator, & in true
sense a monitor of the same. That should be discouraged.
- 85 -
• Implementation of the rules, regulations and policies should be
ensured, through better management.
• Human resource development needs a lot of input.
• Physical infrastructure is to be improved.
• Advances to the non productive investments should be
stopped.
• The bank should develop a comprehensive recruitment policy
in order to have the competent people.
• For the development of the human capital the bank should
conduct a series of training program to achieve the mission.
REFERENCES AND SOURCES
• NBP Annual Reports: 2003, 2004 and 2005
• SBP Journals
• Journal of Institute of Bankers Pakistan
• NBP-HR reports: 2005 and 2006
• Practice and Laws of Banking in Pakistan
• Business Recorder ( Daily Newspaper)
- 86 -
• www.nbp.com.pk
- 87 -

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MBA Report Ghazanfar

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National Bank of Pakistan

INTERNSHIP REPORT (Reg. No. 003-PBK-0009)

financial health of a country.

I interned in NATIONAL BANK OF PAKISTAN (NBP) for 6 weeks. NBP

domestically as well as internationally.

While I worked in NATIONAL BANK OF PAKISTAN, I concluded the fact

that it has the image of a strong growing and successful organization

with highly satisfied customers. It has a well-developed ATM network.

NBP has very dedicated employees who have no objection on working

overtime with out any financial compensation.

The purpose of this report is to provide an in-depth understanding of this

provides the environmental factors that influence the working of this

The bank has three departments i.e. consumer department, corporate

department and the operations department, which are further divided in

to many sections. I had a chance of working in the accounts department,

foreign exchange section, advances section, establishment section and

organization. Here, it must be clarified that two specific problems were

care for that.

The other problem is that NBP suffers from excessive employees in a

branch, as it is not privatized. In the end, findings will be stated and

recommendations will be given to improve the current problems.

OBJECTIVES OF STUDYING THE

The major objectives of studying the Organization are as

• To see “Emerging commercial & HR challenges in the

organization and strategies for business support and

• To see ‘Partial fulfillment of MBA degree as a

correlation of theoretical concepts to practical

experience with the observations of ground realities.

BANKING HISTORY IN PAKISTAN:

At the time of partition, the total number of commercial bank on Pakistan

was 38 out of these: the Pakistan banks were 2; Indian banks

29 and the exchange banks & the total deposits of Pakistan

banks stood at Rs.880.0 millions where the advance is were Rs.

almost controlled and managed by non-Muslims. The Muslims

were deliberately kept cut of banking profession by the healthy

Hindu community. When Hindu capitalists became sure of the

division of sub continent: they secretly began transfer their

capital to the safe place in India, when Pakistan declared an

independent state in august 1947.

The fund and other valuables were transferred at an accelerated pace to

India. There was mass scale migration of non-Muslims from

deposits. The Hindus in order to rain the economy of the newly

established state closed down most of head offices and the

branches of the scheduled and non-scheduled banks in

Pakistan. The number of scheduled banks branches were

where there was greater exodus of non-Muslims to India suffered a

great deal as a number of branches fall down from 487 to 69.

such a great number as in West Pakistan, a large number of portion of

the deposits caused a dead lock in the banking business in Pakistan.

The government of Pakistan was quite aware of the serious banking

situation caused by the withdrawal of deposits and whole scale

migration of banking staffs to India. It took up the challenge and started

recognizing the crippled banking immediately after partition.

A moratorium of free months was also allowed to banks that had

financial difficulty due to sudden with drawl of deposits. In addition to

above the following arrangements were made for facilitating settlement

of claims by the governments.

effective measures for providing banking Training facilities to Muslims.

cheques of Pakistani national and were also refusing to give securities

kept in their custody. The government issued an ordinance which

empowered it to investigate all such complaints and if satisfied of their

bonafides, the payment should be realized. In case the bank insisted on

non-payments, the government should realize the assets of the banks,