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Create value for all stakeholders.
We aim to be people who
Care about relationships.
Lead through the strength of our commitment and willingness to excel.
Practice integrity, honesty and hard work. We believe that these are measures of true success.
We have confidence that tomorrow we will be
Leaders in our industry.
An organization maintaining the trust of stakeholders.
An innovative, creative and dynamic institution responding to the changing needs of the
internal and external environment.
Our Mission
To provide reliable banking services to Government, financial institutions, public and to act as an
operation alarm of State Bank of Pakistan.
Our Vision
Our vision is to develop the SBP BSC (Bank) into a strong and dynamic institution, equipped
with an efficient and professional human resource base, having the requisite technology and fully
capable of providing quality service to stakeholders, while complementing the State Bank of
Pakistan in achieving its objectives.
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Banking in Pakistan
FOURPHASESOF BANKINGIN PAKISTAN
Broadly speaking, the development of commercial banking is divided into 4 phases.
At start of these phases, following are the steps which were taken by the government to give a
boast to the banking sector.
Establishment of the state bank of Pakistan (1st July, 1948)
Setting up of National Bank of Pakistan (Nov, 1949)
Banking Companies Ordinance 1962 for protection and guidance to banks
Establishment of financial institution like:
PICIC (1957)
A.D.B.P (1961)
I.D.B.P (1961) H.B.F.C (1961)
N.D.F.C (1973)
NATIONALIZATION ERA
On 1st January, 1974 all Pakistani banks were nationalized through nationalization Act 1974.
Under this law all Pakistani banks became a public property. All small banks were merged in
bigger banks to create 5 major Pakistani banks. These banks were to control by Pakistani
banking council. The major changes after nationalization were as follows:
Working of banks were extended to underdeveloped areas
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Establishment of Commercial Banking System(1947-74)
Nationalization of Banks(1974-79)
Deregulation Process (1991-98)
Islamization Process (1979-91)
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Market expansion for credit and deposits
Decrease in service level of bank officers
Decrease in profitability of banks
Banks Position on January 1990
Banks No. of branches Deposits
(Rs. In Million)
HBL 1926 153,431
NBP 1448 128,679
UBL 1684 87,482
MCB 1288 50,013
ABL 750 33,757
Total 7096 453,362
POST NATIONALIZATION ERA:
In 1990 the government of Pakistan decided to denationalize all the nationalization institutes. For
this purpose amendments were made to nationalization act 1974 and 2 nationalized banks were
privatized along with this a permission to open banks in private sector was also granted. After
these changes a large no. of private and foreign banks started their operations in Pakistan and the
present status can be seen by the following figures
Scheduled Banks in Pakistan
Category No. of Banks
Nationalized Commercial Banks 4
Private Commercial Banks 17
Public Sector Specialized Banks 4
Foreign Banks 21
Total Scheduled Banks 40
In addition to above mentioned scheduled banks there are 11 development financial institutes, 16
investment banks and 21 leasing and modarba companies.
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HISTORICAL BACKGROUNDOF NATIONAL BANKOF PAKISTAN
The story of National Bank of Pakistan is part of our struggle for economic independence. When
we won political independence, mostly Hindus controlled our economy. East Pakistan was
spared from massive migration but its economy was also, being dependent on Calcutta badly
hurt. Most bankers and business experts left Pakistan and the economic life was brought to a
standstill. The mostly branches of Imperial Bank of India were only in partial operation with
skeleton staff.
It was very difficult for Pakistan to build up its own Banking system immediately after
independence without sufficient resources as at that time most of the commercial banks in
Pakistan were the branches of foreign banks, Indian and others was staffed mainly by non-
Muslims. Those banks, which stayed, were considering the winding up of their business. By 30thJune 1948, the number of scheduled banks in Pakistan declined from 487 to only 195.
There was a controversy on establishment of our Central Bank because we had no experience but
it was resolved and SBP was established, 3 month a head of schedule, on July 01, 1948. On
October 03, 1949, 2 central banks were to announce the new par value of both currencies but
India denied a day earlier. India also froze out trade balance surplus that is still an unsettled
dispute. India had also withdrawn the merchants who were employed annually for movement of
jute crop by financing it. There being no jute industry, prices fell sharply, foreign banks and
foreign merchants stood aside and an agrarian unrest was threatening. Two Ordinances were
therefore issued.
Jute Board Establishment Ordinance
NBP Ordinance dated 08.11.1949
Establishment of National Bank of Pakistan
NBP was established on 20.11.1949 to provide finance to suitable parties under the National
Bank of Pakistan Ordinance No. 21of 1949. It is a semipublic bank and functions like other
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commercial banks. NBP stood behind jute trade, SBP stood behind NBP and the Government
stood behind SBP. Speedy it was such that 6 branches came in to being at once and the doubts on
our ability to handle the situation was dispelled forever. Now the Jute Board and NBP were in
this field, the foreign merchants and bankers also rushed into get their share in the business and
consequently NBP had to lay out much les finance that it could. Until June 1950, NBP remained
exclusively in Jute operation; therefore other commodities were also taken up.
In 1952, NBP replaced Imperial Bank of India. In 1962, the number of branches increased from
6 to 239 and deposits from Rs. 5 crore to Rs. 106 crore, profit from 3 million to 21 million, and
the staff increased from 380 to 7091, as compared to 1949-50. in December 1966, its 600th
branch was opened raising the deposit to 2.31 billion and staff to 14963. Up to 1965, the
shareholders had received 225% of their original investment. Now it has 13272 employees, 1199
branches and Rs. 395.6 billion deposits.
Today there are 7000 branches of commercial banks along with an established network of
supplementary financial institution. All this development in the banking sector is the result of
withering efforts of four decades.
The National Bank of Pakistan was also nationalized, along with other banks. In January 1974,
the bank of Bahawalpur was also merged into this bank.
Dual Function of NBP
The National Bank of Pakistan performs two types of functions. It acts as an ordinary
commercial bank. And at places where there are no branches of Pakistan it represents Pakistan
that is why it cannot be privatized.
MANAGEMENT SYSTEM
Head Office of the Bank
The head office of the National Bank of Pakistan is in Karachi.
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Central Board
The general superintendent and direction of the affairs and business of the bank shall be
encrusted to the Central board which may exercise all powers and things as may be exercised or
done by the bank and or not by this ordinance expressly directed or required to be done by the
bank in general meeting.
a) The central Board shall consist of the following directors namely.
b) The Managing Directors appointed by the central Government under section 16.Nine
Directors are elected in local or special meetings by the shareholders in the following
manners. The share holders registered in a branch, register maintained for an area
mentioned in sub-section (5) of section 8, shall elect from amongst themselves, such
number of directors for that area as may be decided before election by the Central
Government having regard to the proportion which that share capital subscribed by the
shareholders of that area bears to the whole. Provided that the shareholders registered in
branch register maintained at Dacca shall elect from amongst themselves at least two
Directors. Three directors appointed by the Central Government, provided that the total
number of the elected and appointed Directors representing the area for which the Decca
register is maintained shall be not be less than three.
c) The President of the Central Board shall be appointed by the Government from amongst
the Directors.
2.2.1 Board of Directors
The supreme governing body of the National Bank of Pakistan is the Board of Directors.
Governments representatives, Pakistan Banking Council nominee, nominee of corporate sector
and three members from the National Bank of Pakistan are the summary of the board. The
members of the board are:
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Syed Ali RazaChairman & PresidentSyed Ali Raza is the Chairman and President of National Bank of Pakistan(NBP), the largest commercial bank of the country. Mr. Raza is a graduate of
the London School of Economics and M.Sc. in Admn. Sciences as well as a
Fellow Member of The Institute of Bankers in Pakistan. He started his career in1974 with Bank of America, arising to become Managing Director and Regional
Manager for the Middle East, North Africa and Pakistan for Bank of America.
Mr. Tariq KirmaniDirectorSoon after completing his Masters in Business Administration (MBA) Mr.Kirmani embarked upon a rewarding career, starting with a multi-nationalOil Company (Caltex later Chevron Pakistan) in 1969 and worked forseven years in the United States of America, United Arab Emirates andAustralia in different senior management positions in MarketingOperations and Finance. In 1991, Mr. Kirmani became the first Pakistanito be elected as a Company Director of the mentioned multi-national
company.
Mrs. Haniya Shahid NaseemDirectorMrs. Haniya Shahid Naseem is an MBA with more than fifteen years experience
of working in the education, social, industrial textile and agriculture sectors of
Pakistan. She has served for 5 years on the Board of a textile company, having a
turnover of more than one Billion Rupees. Presently she is actively involved inthe administration of Pakistan Public School Multan. She is a progressive
agriculturist and actively participates in the management of her familys
agricultural farms. She is a member of the Multan Chamber of Commerce and
Industry, and is also on the guest faculty of IBA, Multan.
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Ms. Nazrat BashirDirectorMs. Nazrat Bashir belongs to District Management Group of Civil Services of
Pakistan. She is Masters in Economics from New York University, New York,USA and Master in Psychology from Peshawar University, Peshawar.She has
extensively traveled abroad and has attended various international Seminars and
Conferences such as on Micro Finance, Anti Money Laundering, Instruments ofFinancial Markets etc. Domestically too she has attended various programmes in
some of very prestigious institutions of Pakistan.
Mr. Ekhlaq AhmedSecretary Board of DirectorsMr. Ekhlaq Ahmed, EVP is the Company Secretary of the Bank and also the
Secretary of Credit & Operations Committees. He is M.A. (Economics) fromRajshahi University, Bangladesh (former East Pakistan). He is a Diplomaed
Associate Institute of Bankers, Pakistan (DAIBP) and secured overall 1 st
position in order of merit and won Muslim Commercial Bank Prize in thesubject of Foreign Trade & Foreign Exchange. He is an Associate of Institute
of Corporate Secretaries of Pakistan (ACIS). He is also a Certified Director on
the panel of Pakistan Institute of Corporate Governance (PICG) since
November, 2007. Mr. Ekhlaq Ahmed is the first senior executive of the Bankwho has achieved the status of Certified Director.
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Qamar HussainChief Operating Officer , Head of Credit & Risk Management Group
Dr. Asif A. BrohiSEVP & Group Chief, Operations Group
Shahid Anwar KhanSEVP & Group Chief, Overseas Banking Group / Corporate & Investment Banking Group
Ziaullah KhanSEVP & Group Chief Agriculture Finance Group
Dr. Mirza Abrar BaigSEVP & Group Chief, Human Resources Management & Administration Group
Amer SiddiquiSEVP & Group Chief, Commercial & Retail Banking Group
Tariq JamaliSEVP & Group Chief, Compliance Group
Nadeem A. IlyasSEVP Group Chief, Assets Recovery Group / Corporate & Investment Banking Group
Muhammad Nusrat VohraSEVP & Group Chief, Treasury Management GroupKhalid Bin ShaheenSEVP & Group Chief, Global Home Remittance Management Group
Imam Bakhsh BalochSEVP & Group Chief, Audit & Inspection Group
N. B. SoomroSEVP , Special Assignments, President's Secretriate
Agha FidaullahEVP/Group Chief, Special Assets Management Group
Shafique Ahmed KhanEVP & Divisional Head, Islamic Banking Division
Ekhlaq Ahmed
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EVP & Secretary Board of Directors
Fazal-ur-RehmanEVP & Head P&IR Division, HRM&A Group
Muhammad Hanif
EVP & Head HR & OD Division, HRM&A GroupMuhammad Iqbal QasimEVP & Head SC & CSR Division, HRM&A Group
Tahira RazaEVP & Head Risk Review Division, Credit and Risk Management
Mohammad Kumail DehradunwalaEVP & Chief Information Officer /Head Of Information Technology Division
Aamir SattarSVP & Divisional Head, Financial Control Division
Faisal Mahmood
VP & Divisional Head (A) , PMO & Project Director CBA
Local Board
The local board shall be established for the areas mentioned in sub section (5) of section B, one
each at Karachi, Dacca and the Lahore, and shall without prejudice to the powers conferred by
the section 12, have power, within the prescribe limits generally to
Transact all usual business of the bank. A local Board shall consist of the following members
namely.
(a) The Managing Director
(b) One member appointed by the central board from amongst the Directors elected by
the shareholders registers in the branch register of the area.
(c) Two members appointed by the Central Government from the area in which the Local
Board is established.
(d) Three members elected in a local or special local meeting from the amongst
themselves by the shareholders register in the branch register of the area.
Managing Director
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The Managing director shall be appointed by the Central Government for o period not exceeding
five years and on such salary and terms and conditions of the service as the central Government
may determine.
New Management Structure:
The previous management was removed by the bank nationalized ordinance 1974. The general
direction and the superintendent of the affairs and the business of the banks vests in the
Executive Board consisting of the President (Chief Executive) and five senior executive of the
bank. The Federal Government in 1980 constituted a Board of the bank and two additional
members one representing the ministry of Finance and the other, Pakistan Banking Council.
Thus, therefore, all nationalized commercial banks are controlled by the Pakistan banking
Council being subject to State Bank of Pakistan Regulation as well. The federal ministry is
responsible for bank operations in the ministry of Finance. Recently by the order of the President
of Pakistan, Banking Council of Pakistan is removed.
ORGANIZATIONAL STRUCTURE
At Head Office KARACHI
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Branch Network
Types of Branches
There are different types of branches of National Bank of Pakistan. We explain them one by one.
o There are main branches in every city. In one city there is only one main branch. It is
directly under the regional office.
o Then there are commercial branches. These are the ordinary branches and are in the
commercial areas such as the Mall Road Branch.
o The industrial branches are exclusively in industrial zones.
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o There is one special type known as corporate branch. Only large amount of advance and
deposits are dealt in such branches. Usually receipt of utility bills is not accommodated
under such branches.
o There are also residential branches. There are exclusively in residential colonies.
o Another type is the mixed branch such as civil secretarial branch.
o There are also project branches created for specific purposes.
o Another unique type is the model branch. No other bank liking Pakistan has these. In
these branches all the work is done by the officer. Even the officers list on the counters.
Model branches are in Karachi, Lahore and Islamabad.
Domestic Branch Networks
National Bank of Pakistan is the only Pakistani bank to have representative offices in all over the
Pakistan as well as in Azad Jammu & Kashmir.
Domestic Branches
PUNJABBahawalpur
D.G. Khan/ RYKhan
Faisalabad
Gujranwala
Sialkot/ Narowal
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Islamabad
Jhang
Jhelum/ Gujrat/ Chakwal
Lahore
Multan/ Baha'nagar
Murree/ Attock/ Gilgit
Rawalpindi
Sahiwal
Sargodha/ Sheikhupura
SIND
Dadu/ Sanghar
Hyderabad
Jacobabad/ Shikarpur
Karachi
Larkana
Mirpurkhas/ Badin
Nawabshah/ N' Feroze
Sukkur/ Khairpur
Tharparkar
BALOCHISTAN
All Branches
NWFP
Abbottabad/ Mansehra
Bannu/ D.I. Khan
Kohat / Mingora
Mardan
Peshawar
AZAD KISHMIR
Muzaffarabad
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Mirpur
Kotli
Poonch
BaghBhimber
Palandri
Neelam
Haveli
Hatian Bala
**88 BRANCHESINAZADKASHMIROVERSEAS BRANCH NETWORK
National Bank of Pakistan is the only Pakistani bank to have representative offices in Canada,
China, Uzbekistan and Azerbaijan. The economic potential of these locations is enormous. NBP
was the first international bank to open its branch in Kabul in October 2003.
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Progress of Branch Network of National Bank of Pakistan
Year Total Branches
1950 171951 29
1952 40
1953 52
1954 65
1955 67
1956 73
1957 85
1958 105
1959 129
1960 1561961 194
1962 239
1964 450
1965 519
1966 618
1991 1421
1995 1537
1997 1468
1998 1434
1999 1431
2000 1428
2001 1245
2002 1204
2003 1199
2008 1232
2009 1219
NBP'S INITIATIVE IN 2009
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Audit & Inspection
Internal Auditing is an independent, objectiveassurance and consulting activity designed to addvalue and improve organizational operations. It
helps the bank accomplish its objectives by
bringing a systematic, disciplined approach toevaluate and improve the effectiveness of risk
management, control and governance processes.
Divisions of National Bank of Pakistan
In order to perform all the functions, the National Bank of Pakistan has made some divisions,
which perform some specific functions.
Credit Division
The main function of this division is to make the credit policies, and also to do credit ceiling
which means the maximum amount of credit that cab is given to a certain client. This division
also looks for the agricultural and small loans; it also considers the ceases of right off i.e. bad
debts.
Corporate Credit Division
The major function of this division is to handle the big loans and industrial financing, I.B.R.D. It
also does the evaluation of credit ceiling policy devised by the credit division.
International Division
This division has to look after the administration of National Bank of Pakistan, out side Pakistan.
It takes care of all the affairs about the advances given outside Pakistan, the position of
employees outside Pakistan etc.
Recovery and Litigation Division
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This division comes into operation when recovery of advances given becomes difficult or
impossible. It is the job of this division to decide whether to go court against the client or not.
Audit and Inspection Division
The major function of this division is to carry out the inspection of rules and policies. It also
inspects the books of accounts, whether they are kept rightly or not.
Administration Division
This division consists of two wings
The Personnel wing
The Establishment wing
The personnel wing concerns with employee welfare and administration. It looks after things like
rules relating to the administration of employees, the medical bills etc. there is also a disciplinary
cell which is for the punishment if an employee does something wrong.
The establishment wing has the main function of controlling the debt stock i.e. furniture,
transport facility, stationary, sports portfolio, security arrangements, and staff welfare.
Research Corporate Planning and Human Resource Development
Division
Its main job is to do human resource management. For this purpose there are staff colleges in
Pakistan. There are four of them. They give training to employees outside organization and also
outside the country.
Engineering and Maintenance Division
The job of this division is maintenance of buildings, construction of projects, project designing.
The head of this division is an engineer who has designation of executive vice president.
Finance and Investment Division
It looks after the accounts, investment in resources and devices where to allocate the surplus
funds.
Customer Services Division
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The main job of this division is to manage the opening and closing of branches, Islamization
policy then there is a complete cell where the customer makes the complaints if they are not
treated well. This division also accepts Hajj applications. This division is very important as it
directly concern the customers who are the ones to make the deposits which the bank invests.
Business Promotion and Marketing Division
It concerns the marketing and selling of the policies and interest rates of National Bank of
Pakistan through advertisements of television or in the newspapers etc.
Law Division
This division consists of an executive committee and evaluation committee. Their job is
documents evaluation and they give legal opinion to recovery and litigation division also.
Computer DivisionThis division does data processing through computers and develops control systems. All these
divisions perform their functions through the branches and they are located at the head office in
Karachi.
Functions of National Bank of Pakistan
The NBP performs two types of functions. It acts as an ordinary commercial bank and places
where there is no branch of State Bank of Pakistan it represents it. As a commercial bank it
performs the following:
1. Accepting of deposits of money on current a/c, saving a/c, term deposit and other profit and
loss sharing accounts.
2. Borrowing money and arranging finance from other banks.
3. Advancing and lending money to its clients.
4. Financing of projects including technical assistance, project appraisal through long term &
short term loans
5. Buying, selling, dealing & discounting of bills of exchange, promissory notes, drafts, bill of
lading, and other instruments of securities.
6. Foreign exchange business.
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7. Financing of seasonal crops like cotton, wheat & rice.
8. Receiving of bonds, valuables etc for save custody.
9. Carrying on agency business of any description other then managing agent on behalf of
client, including govt. and local authorities.
10. Generating, undertaking and promoting etc of issue of shares, bonds.
11. Transacting guarantees and indemnity business.
12. Undertaking and executing trusts.
13. Making investments in other banking companies.
14. Joint ventures with foreign dealers, agents and companies for its representation abroad.
15. Participating World Bank and Asian development banks lines of credit.
16. Utility services
17. Providing Hajj services to intending Hajjis
18. Agent to State Bank of Pakistan for collecting.
19. Gold finances.
Functions of NBP as a Representative of State Bank of Pakistan
1. Collection of cheques and bill of exchange for its customers.
2. Paying insurance premium, rent or other obligations of the customers.
3. Transferring of money from one place to another.
4. Collecting interest dues, dividend, pensions and other sums due to customers.
5. Acting an executor, trustees for the customers.
6. Providing safe custody and jewelry documents and securities.
7. Issuing of travelers cheques and letter of credit to give credit facilities.
8. Purchasing shares for the customers.
9. Accepting bills of exchange on behalf of customers.
10. Undertaking foreign exchange business.
11. Furnishing trade information and tendering advice to the customers.
12. Formulating operation policy guidelines for the banks.
13. Laying down performance criteria for banks and taking steps for ensuring their observance.
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14. Evaluating the performance of the banks in the context of operational guidelines issued to the
banks.
15. Determining the areas of coordination of the banks.
16. Making recommendations to the federal govt. for the appointment of auditors of the bank.
17. Conducting such surveys, inquiries and appraisals may be necessary for the purpose of this
act.
18. Exercising and performing such powers and functions of the federal govt. under the act and
such other functions as the federal govt. may assign to it.
FIELDOF ACTIVITIES
FIELDOF ACTIVITIES DEPOSITS
To receive deposits is a basic function of all commercial banks. Commercial banks do not
receive these deposits for save keeping purpose only. But they accept deposits as debts. When a
bank receives deposit from a customer becomes the creditor and a bank a debtor. After receiving
a deposit, the bank becomes the owner of it. It may, therefore, use it as it deems appropriate. But
there is an implicit agreement that the amount owned would be paid back by the bank to
depositor on demand or after a specified time. Deposits are the lifeblood of the bank and their
classification is based on the duration and purpose for which the deposits are to be kept at the
bank before the depositors can withdraw them. At present NBP accepts deposits in both local and
foreign currency and provides a variety of accounts according to the desire of the customer.
Local Currency DepositsIn local currency the following accounts are available at the bank.
1. Current Accounts
2. Profit and Loss/Saving Account
3. Short term Deposits
4. Fixed Deposit Receipts
Current Account
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The accounts are opened with the minimum limit of Rs.5000/- No interest is allowed by the
bank. The funds held in the account are payable on demand without any restrictions on
withdrawal. The bank normally opens current account for business need of the firms. In this,
following types of accounts are opened.
a) Private or Public limited company
b) Societies/Club/Association
c) Proprietorship
d) Partnership
Profit and Loss/Saving Account
These accounts are opened with not less than Rs.5000/- if at any time the sum does not fall
below this amount the account will not qualify for sharing in profit nor shall it be liable for loss,
if any. There is no restriction on the maximum amount. The account will be credited/debited
with the amount of profit/loss worked out at the rate determined by the bank on the basis of its
networking results at the end of each half year. These will be only checking accounts,
withdrawal will be allowed not often than 8 times in a calendar month and more than one PLS
account in the same name.
National Income Daily Account (NIDA)
The scheme was launched in December 1995 to attract corporate customers. It is a current A/c
scheme and is a part of the profit and loss system in operation throughout the country.
Minimum Deposit Rs. 2 million is needed to open the account with no maximum
limit
Profit Paid on a half-yearly basis on a monthly average balance. The
rates of profit vary according to the slab of deposit.
Profit rate Deposit of Rs. 2 to 2000 the rate fluctuates from 1.4 to 1.75
Conditions There is no limit of withdrawal
Fixed Deposit
In this type of accounts, a certain amount is deposited for a certain period such as six months,
two years or longer. A fix deposit receipt is issued in the name of the depositor. The officer in
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charge and the bank manger sign the receipt. A notice is given to the depositor on a prescribed
form 2 weeks before the FDR falls due, requesting him to withdraw his money or to
review his deposits. The interest allowed varies with the period.
Short Term Deposits
Application for short-term deposit is taken on form F-486 and the amount on the form F-88.
NBP now offers excellent rates of profit on all its short-term investment accounts advised by the
head office from time to time and laid down in section XII of supplement No.1. Whether you are
looking to invest for 3 months or 1 year, NBPs rates of profit are extremely attractive, along
with the security and service only NBP can provide.
Call Deposits
Branch may accept call deposit from local bank or from other on such rates on interest as may beprescribed by the head office from time to time through controlling office. These deposits will be
credited to call deposit account in favors of government and semi-government department should
also be credited to call deposit account.
Accounts Department
The main function of the accounts department of National Bank of Pakistan is to maintain
general ledger accounts and after the business hours the function of the accounts officer is to
close books.
General ledger
It is the prime record of the branch reflecting its assets and liabilities and serves as the master
control of accounting system of the branch. It consists of only those accounts, which are
authorized by the head office.
Voucher System
Voucher is a written authorization used in approving a transaction for recording and payment. It
is a system, which is generally designed to provide strong internal control over the transaction,
which takes place in any department of the bank. One debit and one credit voucher is prepared.
At the end of the day, these vouchers are collected and recorded.
Debit voucher is used in two cases
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Following Persons can open an account
Sole proprietor
Partnership Company
Joint Stock Company
Club, Society, Trust & Association
Agent on behalf of principal
Executers and Administrators
Basically following information is required
Name of applicant
Type of account to be opened
Nature of Account
Address
Telephone
CNIC No
NTN No if available
Operating Instruction
Currency of accounts
Nature of business
Residential status
Special instructions regarding the account
General information about Introducer
Signature of the applicant
Signature of introducer
Documents to be attached
Documents required to be attached are different for different categories.
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Sole Proprietors Account
Attested photocopy of CNIC
They have to submit their business registration certificate number.
In case of salaried person attested copy of his service card or any other acceptable
evidence of service, including, but not limited to a certificate from the employer
In case of illiterate person a passport size photograph of a new account holder
besides taking his/her left to right thumb impression on the specimen signature
card.
Partnership company accounts Attested Photocopy of CNIC of all partners
Certified copy of partnership deed duly signed by all partners of the firm
Attested copy of Registration Certificate with registrars of firms.
In case the partnership is unregistered, this fact should be clearly mentioned on the Account
opening form
Authority letter, in original, in favors of the person authorized to operated the account
of the firm
Join Stock Companies Accounts
If someone wants to open join account the following information is needed
Certified copies of
Resolution of Board of Directors for opening of accounts specifying the person(s)
authorized to operate the company account
MOA
AOA
Certificate of incorporation
Certificate of commencement of business
Attested copies of CNIC of all Directors
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List of directors on form 29 issued by the registrar of joint stock company
Societies/club and association accounts
Certified copies of
1. Certificate of Registration
2. By-laws/rules and registrations
Resolution of governing body/Executive committee for opening of account
authorizing a person(s) to operate a account and attested copy of CNIC of the
authorized person(s).
An undertaking signed by all the authorized persons on behalf of the institution
mentioning that when any change take place in the persons authorized to operate a
account, the bank will be informed immediately
In case of trust account
Attested copy of certificate of registration
Attested copy of CNIC of all trustees
Agent Account
Certified copy of power of attorney
Attested copy of CNIC of the agent
Executers and Administrators
Attested copy of CNIC of all executers or administrators
Certified copy of letter of administration
Computer Section
In computer section data regarding all nature of transactions of any department is recorded under
the following related head
Vouchers
Remittances
NBP general Account
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Clearing account
DTR (Daily Transaction Report)
Western Money
The transfer and payment of money from foreign countries is also dealt with under this section.
The customer is required to fill a form having such information as name, address, code, the
address of person by whom the amount is transferred. The 10-digit code given by the customer is
verified from an online program money transfer. After verification, the payment is made.
Remittance Department
Remittance is the monetary transfer from one place to another place or from one country to
another country to fulfill the requirements of the customers by the order of the customer.
Local Remittance
Outward Bills for Collection
1. Clean bill
These are negotiable instruments drawn on outstation branches of the bank, send
for collection on behalf of customer i.e. cheques, drafts etc.
2. Documentary bills
These are the bills accompanied by documents such as TR, Bills of lading etc. having title,
collected on behalf of their customers. If payment is made other than cheques then this mode is
used. It is an arrangement between two parties. Bank plays role as an agent. Documentation is
properly drawn between two parties but in 99% cases clean bills are used.
Inward bills for collection
These are the bills, which are received locally. They are received from out station branches of the
bank and parties drawn on recipient banker or other bank or parties. The main document invited
in clearing and remittance department are as follows:1. Demand draft
Demand draft is an instrument, which is drawn by one branch of the same bank. If any person
wants to make payment from one city to another city there he can make payment through
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institution
b) Issuance of duplicate Payment Order
1. For NBP Account Holder Rs. 100/-(flat)2. For NBP Non-Account Holder Rs.100/-(flat)
Rs.150/-(flat)
Clearing Department
This department deals with the transactions related to the other bank. The State Bank of Pakistanacts as a clearing agent for the commercial banks. It deals with the cheques of any other branch
of other bank. If more than one cheque is attached with slip then the entry is to be done one by
one. The cheque number, date on the cheque and the name of the branch of the bank on which
the cheque is drawn is entered. When the clearing has been prepared then the next step is to
stamp the cheques and slips with clearing stamp on front of the cheque and slip and NBP
General Account on the back. After this clearing is to be passed to the incharge officer who
signs on it. Amount is transferred to the customer account after 3-4 days. Cheques and slips are
to be stamped carefully because sometimes clearing has been returned due to the reason of not
properly stamped or any other.
Advances Department
Advances are the major source of earning income for commercial banks, it is interest charged on
the money lend to the customer. Bank advances to customers are made either by way of loan or
by overdraft on current account. At present NBP provides both long term as well as short-term
loans.
1. Loans
2. Cash credit
3. Overdraft
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Loans
a) Loan against Gold
facility of Rs.5000 against 10 grams of gold
Mark-up 9% per annum
Repayable after 1 year
Under this type of loan, which is granted to the borrower, the head cashier estimates the value of
gold or gold ornaments through an agent {gold smith} and keeps a margin of 40 to 50%. After
the opening of the gold loan a/c a token is given to the borrower, which is a bank receipt.
On repayment of loan, the gold or ornaments held as security for it, together with the demand
promissory note duly discharged is return to the borrower and his receipt for the gold ornament
taken in the demand loan ledger. This receipts states that the ornaments returned are complete
and are in order. Part delivery of ornaments is given against part payment of a loan but care is
taken that the ornaments still in the banks possession fully covers the balance for the loan
outstanding. The interest on gold loan is to be applied with quarterly rest.
b) Cash credit
Here, cash credit a/c is opened in the name of customer to borrow from the bank. Customer is
granted a loan up to a certain limit which is sanctioned by the head office, which he draw when
he requires interest is charged on the amount actually utilized by the customer. In order to avoid
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the danger of idle funds, the bank charges a certain rate if interest, even if the customer does not
withdraw any amount.
The credit is usually given against the securities of goods or merchandise as follows:
i. Advances against pledge stock in trade or products
When a cash is granted against the pledge of stick or product, cash credit form is taken, from the
certain products or stock, but the actual pledge is created when the stock or finish product are
placed under the banks lock and key or the document of title are duly endorsed to the bank by
the borrower.
ii. Hypothecation of stock on finish products
The difference between pledge and hypothecation is that under the pledge the borrowers goods
are placed in the banks possession under own lock whereas, under hypothecation, they remain in
the possession of the borrower or guarantor and are merely charged to the bank under documents
signed by them. Even though the documents empower the bank to take the possession of the
goods hypothecated, but it is possible that the borrower may actually resist any attempt.
iii. Mortgage of property
Title deeds immovable property is accepted by the bank only as collateral security or
alternatively as unauthorized security.
) Overdrafts
When the bankers permit his customer to overdraft upon his current a/c up to a certain limit, it is
called overdraft facility provided by the bank. The customer is charged with the interest for the
amount he has actually overdrawn from the bank. The customer is free to take the overdraft
facility up to the limit whenever he needs and he can at any time return back the advance to the
bank by deposited the amount with the bank.
There are two types of drafts:
i. Unsecured overdraft
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4. Farm power
5. Development loans for tea plantation
6. Fencing
7. Solar energy
8. Equipment for sprinklers
Farm Credit
NBP also provides the following subsidies with ranges from 3 months to 1 year on a renewal
basis:
1. Operating loans
2. Land improvement loans
3. Equipment loans for the purchase of tractors, farm implements or any other
equipment
4. Livestock loans for the purchase, care and feeding of livestock.
Production loans
Production loans are meant for basic inputs of the farms and are short term in nature. Seeds,
fertilizers, sprayers etc are all covered under this scheme.
Corporate Finance
1. Working Capital and Short Term Loans
NBP specializes in providing Project Finance i.e. export refinances to exporters, running finance,
cash finance, small finance, and pre shipment / post shipment agricultural production loans.
2. Medium term loans and capital expenditure financing
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NBP is providing financing for its clients capital expenditure and other long-term investment
needs. By sharing the risk associated with such long-term investments, NBP
Expedites clients attempt to upgrade and expand their operation thereby making possible the
fulfillment of its clients vision. This type of long term financing proves the banks belief in its
capabilities and its commitment to the country.
3. Loan Structuring and Syndication
NBPs leadership in loan syndicating stems from ability to forge strong relationships not only
with borrowers but also with bank investors. Because NBP help borrowers meet substantial
financing needs by enabling them to reach the banks most interested in lending to their
particular industry, geographic location and structure through syndicated debt offerings. NBPs
syndication capabilities are complemented by its capital strength and by industry teams, who
bring specialized knowledge to the structure of a transaction.
NBP Saibaan Home Finance
NBP has announced the launch of a housing scheme to cover all sections of the society with
monthly income starting from as low as Rs. 5000/- per month*. *(Conditions apply)
Branded as NBP Saibaan the scheme offers a maximum loan of Rs.10 million in accordance
with the debt burden criterion. Loans are available for Home Construction, Home Purchase and
Hone Improvement. For Home Improvement Loans the maximum is Rs.2 million.
Home construction and Home Purchase can be repaid over a period of 20 years, whereas the
repayment period for Home Improvement loan is 15 years.
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The scheme was launched at a function in Karachi presided
over by Mr. Shaukat Aziz.
NBP Advance Salary
In January-2003, National Bank of Pakistan has launched a
unique product, NBP-Advance Salary. Currently this
product is for fixed-income permanent employees of
Federal & Provincial Government, Semi-Government, Autonomous, Semi-autonomous, local
bodies and other Government organizations. The product is purely cash flow based and offers its
holder to avail 15 (fifteen) net salaries in one go to be repaid in up to 60 (sixty) months. With no
collateral, insurance or processing fee requirements, Advance Salary provides rapiddisbursement in a short turnaround time. It is repayable in 5 years.
Cash and Billing Department
In this department receipts and payments of cash are done.
The cash payment is made to
1. Pensioners
2. Salaried persons
3. General withdrawals by account holders
4. Western money
5. Counter payments (if any)
Cash is received through
1. Cash deposits by account holders
2. Locker security and rent
3. Bills collection
In billing section, bills are collected from general public through cheque and by cash.
All utility bills are collected
SCO Telephone Bills
PWD
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Public School
A.I.O.U
SCO SECURITY
Further collections are:-
PROPERTY TAX
CHALLAN
Locker Facility
National Bank of Pakistan provides locker facility. Locker provides the safe custody of
documents and valuables. The person who wants to obtain locker, he/she has to maintain an
account in that branch. For opening the locker, locker opening form is filled in by the customer.Then the customer has to deposit the amount of security and the rent of the locker also. After
meeting all these formalities, a locker number is issued to the customer. A duplicate key of the
locker is given to the customer to operate a locker. On every operation of account, an entry will
be passed in register in which his/her signature, date, locker no and the time of operating the
locker will be recorded. The locker may be small, medium and large.
Pension
National Bank of Pakistan also deals with the payment of pensions to government employees at
the end of the month till the 5th of next month. Pensions are dealt under 3 types i.e.
Central pension
Defense pension
Provincial pension
The pensioners collect their pensions under their given PPO number (pension payment order
number). In case of family pension, the family members of retired employee collect the pension.
All the data is entered into the computer with basic information about the pensioner.
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Work Done by Me
I completed my internship at National Bank of Pakistan, Main Branch (0486), Skardu. In the
period of 6 weak, I tried my best to gain a practical exposure and an experience to plan, develop,
present and report and to seek a challenging career oriented position in the field of general
banking by using the potential of handwork and professional skills. I worked almost in all
departments. I discussed some detail of departments related to my practical experience.I worked in these sections of the bank.
ACCOUNTS DEPARTMENT:
o Preparation of Debit Vouchers
o Preparation of Credit Vouchers
o Expense Vouchers
o Account Opening
o Issuance of Cheque
o Preparation of Pension Bills
o Preparation of Benevolent Fund
COMPUTER SECTION:
o Entry of Vouchers
o Remittance
o Entry of Debit Voucher
o Entry of Credit Voucher
o Entry of Cheques those presented for withdrawal
o NBP General Account
o Reports of different transaction
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o Day End Reports
WESTERN MONEY:
o Receive Money
o Send Money
GOVT SECTION:
o Clearing of Government Cheques
o Clearing of Government Challans
o Clearing of Pension Bills
Accounts Department
Procedure of opening an Account
The all types of accounts have same opening procedure.
Step I
First I gave the account opening form to a new customer who is willing to open an account in
this branch.
Step II
I briefly explain the required information and required documents to be attached with this form.
Step III
After the submission of form and required documents, I marked the account number allotted to
new account holder.
Step IV
Then the head of accounts department signs on it after confirming all conditions. Then I took
signature of new account holder on SSC (specimen signature card). Manager of the bank also
signs on the form.Step V
After this, I entered his/her name against the allotted account number.
Procedure of closing an Account
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The customer can also close an account. The customer is required to submit an application for
closing an account. Then the account is closed out and his/her balance is paid to him. Cheque
book is returned back to the bank and the officer cancels the remaining cheques in the cheque
book.
Accounts not in use
Inoperative Accounts
Accounts which are not in use for 1 year are considered as inoperative accounts
Dormant Accounts
Accounts which are not in use for 6 months are considered as dormant accounts
Advances Department
To lend the money is one of the basic functions of the bank. Luckily, I got the opportunity to
work in this department also. The Manager operation and the Branch Manger deals with this
department.
It may be noted here that the loan is given in two categories1. Project Loan
2. Working Capital Loan
Project loan is given to start the project and working capital loan is given for the functioning of
the project.
Firstly, when the request comes for the loan, the requestor should submit following documents
with the Credit facility request
Loan application form
Board profile
Working capital requirement schedule
Board resolution
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8) A token number is written on the cheque along with posted, signature verified and
pay cash stamps and the cheque is given to the officer for posting in the ledger.
After these steps the cheque is posted i.e. the date, to cheque the amount in the debit side and
then subtract from the balance of the account.
The cheque is then given for checking i.e. the signature verification and all the things are again
verified by the joined custodian and the cheque is given to the cashier for payment after recorded
in the cash scroll. The cashier checks the cheque again and makes payment after writing
the cheque number in the cash scroll maintained by the cashier.
How to deposit the cash?
If the customer wants to deposit amount in form of cash, then he is required to fill blue slip, inwhich the customer's Account No and amount of cash is mentioned. This slip is given to cahier
with the pre mentioned amount.
How to deposit the cheques?
If the customer wants to deposit cheques then he is required to fill pink slip .The Account No,
name of the account holder and cheque number will be mentioned on it.
This slip will be attached with the cheque .If the cheque is of the same branch then similar
transfer entry will be passed, but if the cheque is drawn on other banks or on other branches of
national bank then cheque will be sent for clearing. In case if the cheque is not cleared by that
bank or branch it is returned unpaid with an objection memo.
Reasons of returning clearing cheques:
The following can be the reasons for returning a cheque:
1) Effects not yet clear: please present again.
2) Not arrange for.
3) Payees endorsement required.
4) Payees endorsement irregular.
5) Refer to drawer.
6) Drawer's signature differs.
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holder .The cheque book now is also entered in slip. The Account NO, against which cherubic is
issued, the cheque book number, name of the account holder, date of issuance is also
recorded in cheque book register and the signature of account holder will be
taken on it.
Issuance of cheque book to 3rd person
In case, if account holder sends a third person to get his cheque book then the procedure is as
follows.
An authority letter is given to the third party by the accountholder
The accountholder verifies the signature of the 3rd person on that authority letter
The bank officer gate the signature of that third person to confirm whether he is
the same, that account holder has sent for the purpose of cheque book collection.
Charges of Cheque Book
NBP charges 2.50 Rs. per leaf of cheque book. If cheque book is lost then the new cheque book
without requisition slip will be issued. In such case bank charges Rs.100 in addition to cheque
book charges.
Computer SectionIn this section, I worked of composing the letters and documentation which is sent to Region and
to Head Office and to other related section of the bank. There is a proper entry system of all
letters who are sent from the bank to the related section or branch of bank. 3 copies are prepared
of any letter with its documents.
. To send to a required place
2. To keep in the related file
3. To keep in register in which the number allotted
Preparation of Audit Report
I also prepared 2 Audit Reports in the guidance of the Manager Operation and the Branch
Manger.
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Regional Inspection Report
Surprise Audit Report
Collection of Utility Bills
In cash department, I also worked in utility bills collection
In case of SCO bills, the telephone number and the amount of bill is entered in the
telephone bill collection scroll. The amount of total vouchers collected is also
mentioned in it. Of it, four copies (A, B, C, D) are prepared.
In case of PWD, WASA, 2 copies are prepared of that scroll. The consumer
number and the amount of the bill are entered.
SCO Security is also collected from the general public
Property tax, Challan for traffic, Challan for Domicile and Challan for Wheat is
also collected in National Bank of Pakistan.
After all these steps the Fan Fold/ RBV (Responding Branch Voucher) is prepared. Through this
voucher the amount of bills collected is transferred to the concerned Govt. department. This is a credit
voucher against it a debit voucher is prepared. This voucher is contra of RBV. In the debit voucher we
debit the C/A Sundry party A/c with the narration "to the amount of utility bills transferred". Thisvoucher is debited with the total amount i.e. the amount of bills transferred to the Govt. & commission
amount.
Locker Operation
I also worked in the filed of locker operation.
Firstly, I gave the application form for hiring a locker to a client. I also explained him/her other
requirements/documents required for locker. Then After this, I filled the form F-353 and gave to
a client. This form is used to pay the locker rent. A debit voucher is also given to a client to payinsurance of the locker. All dues are paid on annual basis. After payment the client gave the
receipt and we enter his/her name in the register. The key is given to the locker hirer.
If the locker hirer fails to pay the rent and insurance of the locker after one year for the next year,
the letter is sent to him/her mentioning the time period and the amount due on him/her.
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The locker register requires following information
Serial no
Locker no
Name of locker hirer
Date of issuance
Date of last operation
Number of notices served to hirer
Date of last notice sent
BALANCE SHEET
As on September 30th, 2008
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PROFITAND LOSS STATEMENT
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Rs. In000s
Rs. In000s
Assets 2007 2008
Cash and balance with other banks 71,196,956 78,625,227Balances with other banks 31,019,330 40,641,679Lending to financial institutions 16,282,942 23,012,732Investments 156,985,378 139,946,995Advances 268,838,779 316,110,406Other assets 23,941,056 27,113,698Operating fixed assets 9,454,365 9,681,974Deferred tax assets - -
Total assets 577,718,806
635,132,711
LiabilitiesBills payable 1,741,156 10,605,663Borrowing from financial institutions 8,756,847 11,704,079
Deposits and other accounts 463,426,602 501,872,243Liabilities against assets 16,629 13,235Other liabilities 23,496,910 26,596,300Deferred tax liabilities 4,462,718 2,387,073
Total liabilities 501,900,862
553,178,593
Net assets 758,167,944
81,954,118
Share capital 12,178,495 7,090,712Reserves 12,354,256 13,879,260Unappropriated profit 19,372,523 32,074,677
Total 37,635,706 53,044,649Surplus on revaluation of assets 38,182,238 28,909,469Total 75,817,944 81,954,118
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For the year ended September 30th, 2008
Particular Rs. In
000s
Rs. In
000s2008 2007
Net markup /interest income 30,153,716 23,370,897
Net non-markup /interestincome
12,162,892 9,392,351
Total income 42,316,608 32,763,248
Operating expense
Administrative expense 13,433,441 11,221,789
Other provisions (17,283) 198,298
Other charges 208,327 63,206
Total operating expense 13,634,485 11,483,293
Profit before tax 9,008,708 12,025,158
Net taxes payable 4,810,605 5,782,229
Profit after tax 4,19,103 6,242,929
Profit available forappropriation
36,394,869 23,594,628
Basic Earning per share 24.01 17.92
Diluted Earning per share 24.01 17.92
HORIZONTAL ANALYSIS__________________________________________________________________________
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PROFIT & LOSS STATEMENT
FORTHE SEP 30TH, 2008
Income & Expenditure 2008
(Rs.000)
2007
(Rs.000)
Increase/
Decrease
%age
change
Markup/Interest earned 43,788,628 33,692,665 10,095,963 30.0
Fee Commission and Brokerage
income
6,144,628 4,926,604 1,218,024 24.76
Dividend income 2,891,755 1,718,478 1,173,277 68.2
Income from Dealings 1,333,840 1,205,638 128,202 252
Other income 627,618 177,839 449,779 31.31
TOTAL 54,786,469 41,721,224 1,306,524 100
OPERATING EXPENDITUREInterest Expense 13,634,912 10,321,768 3,313,144 32
Provision For diminution in thevalue of investment
709,461 (245,881) (463,580) (188)
Profit against non-performing
loans and advances
3,075,723 2,446,739 628,984 25
Bad debts written off directly 5,284 23,069 (17,785) (77)
Administrative expenses 13,443,441 11,221,789 2,221,652 19
Other provisions (17,283) 198,298 (181,015) (91.2)
Other charges 208,327 63,206 145,121 229
Taxes 9,288,231 6,346,584 2,941,647 46
Total 39,829,174 30,375,572 8,588,168 28.27
HORIZONTAL ANALYSIS
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BALANCE SHEET
ASON SEP 30TH, 2008
Assets 2008
(Rs.000)
2007
(Rs.000)
CHANGE
(Rs.000)
%age
change
Cash on Hand 78,625,227 71,196,956 7,428,271 (10.43)Balance with other Banks 4,064,167 31,019,330 9,622,349 31.0Lending to FinancialInstitutions
23,012,732 16,282,942 6,729,790 41.3
Investments 139,946,995
156,985,738
(17,038,743)
(10.5)
Advances 316,110,406
268,838,779
47,271,627
17.5
Other Assets 27,113,698 23,941,056 3,172,642 13.2Operating Fixed Assets 9,681,974 9,681,974 227,609 2.40
Total Assets 635,132,711
577,718,806
57,413,545
9.937
LiabilitiesBills Payable 10,605,663 1,741,156 8,864,507 509Borrowing from FinancialInstitutions
11,704,079 8,756,847 2,947,232 33.65
Deposits and otherAccounts
501,872,243
463,426,602
38,445,641
8.28
Liabilities against assetsof leasing
(13,235) 16,629 (3,394) (20)
Other Liabilities 26,596,300 23,496,910 3,099,390 13.19Deferred Tax liabilities 2,387,073 4,462,718 (2,075,645
)46.51
Total Liabilities 553,178,593
501,900,862
51,277,731
10.21
Net assets 81,954,118
75,817,944
6,135,814
8.09
Share Capital 7,090,712 5,908,927 242,315 10.000,004
Reserves 13,879,260 12,354,256 747,537Un-Appropriated Profit 32,074,677 19,372,523 319,519 32.8,013,
848Surplus on revaluation 28,909,469 38,182,238 3,483,972 26.163,44
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of assets 8183.274,1
53
Total 81,954,118
75,817,944
6,135,814
8.09
COMMENTS
The horizontal analysis shows that overall there is a positive trend. Interest
income, non- interest income, profit before tax, and profit after tax increases
and on the other hand the interest expense decreases. Although there is
decrease in investment & lending to financial institutions but on the other
hand there is also a declining trend in liabilities against assets of leasing.
These are all better signs for both bank & investors.
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VERTICAL ANALYSISPROFIT & LOSS STATEMENT
FORTHE SEP, 2008
Particulars
2008
(Rs.000)
% age 2007
(Rs.000)
% age
Interest Earned 43,788,628 79.9 33,692,66
5
80
Fee Commission and
Brokerage income
6,144,628 11.2 4,926,604 11.8
Dividend income 2,891,755 5.27 1,718,478 4.11
Income from dealing 1,333,840 2.43 1,205,638 2.88
Other income 627,618 1.145 177,839 0.42
Total 54,786,46
9
100 41,721,2
24
100
Operating Expenditure
Interest Expense 13,634,912 35.0 10,321,768
33.9
Provision for diminution in the
value of investment
709,461 1.82 (245,881) 0.80
Profit against non performing 3,075,723 7.90 2,446,739 8.05
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loans and advances
Bad Debts written off 5,284 0.013 23,069 0.07
Administrative expenses 13,443,441 34.5 11,221,78
9
36.9
Other provisions (17,283) 0.04 198,298 0.65
Other Charges 208,327 0.535 63,206 0.208
Taxes 993,000 25.65 6,346,584 20.81
Total 38,929,17
4
100 30,375,5
72
100
Interpretation
The vertical analysis of profit and loss statement shows that interest andnon-interest expense decreases as compare to previous years that is apositive sign and on the other hand, the interest income and non-interestincome decreases. While the operating expenses decreases resultantly theprofits before and after tax increases and in the end the profit available forappropriation also shows an upward trend.
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VERTICAL ANALYSISBALANCE SHEET
ASON SEP, 2008
Assets 2008(Rs.000)
%age 2007(Rs.000
)
%age
Cash on Hand 78,625,227 12.0 71,196,956
12.32
Balance with other Banks 40,641,679 6.0 31,019,330
5.36
Lending to FinancialInstitutions
23,012,732 3.0 16,282,942
2.81
Investments 139,946,995
22.0 156,985,738
27.1
Advances 316,110,406
49.0 268,838,779
46.6
Other Assets 27,113,698 4.0 23,941,056
4.14
Operating Fixed Assets 9,681,974 9.0 9,454,365 1.36Deferred Tax Assets - - - -
Total 635,132,711
100 577,718,806
100
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LiabilitiesBills Payable 10,605,663 1.9 1,741,156 0.34Borrowing from FinancialInstitutions
110,704,079
2.11 8,756,847 1.74
Deposits and otherAccounts
501,872,243
90.7 463,426,602
93.3
Liabilities against assetsof leasing
(13,245) 0.002 16,629 0.003
Other Liabilities 26,596,300 4.43 23,496,910
4.68
Deferred Tax liabilities 2,387,073 0.80 4,462,718 0.889Total Liabilities 553,178,5
93100 501,900,
862100
Net Assets 81,954,11
8
- 75,817,9
44
-
Share Capital 7,090,712 8.62 5,908,927 7.79Reserves 13,879,260 16.9 12,354,25
616.2
Un-Appropriated Profit 32,074,677 39.0 19,372,523
25.25
Surplus on revaluation ofassets
28,909,469 35.2 38,182,238
50.0
Liabilities & Equity 81,954,118
100 75,817,944
100
COMMENTS
Cash balance with other treasury banks increase by 12.00%, balances with other banks also
increased by 6.00%. Although lending to financial institutions, investments, other assets &
operating fix assets decreases but there is an increasing trend in advances up to 49.00%.
Bills payable & deposits and other account increases, on the other hand, borrowing from
financial institutions, liabilities against assets of leasing decreases. But the net worth increases
from to Rs.81954118 million which is a good sign from shareholders point of view.
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Ratio Analysis
Return on Total Assets
This ratio shows the yield earned by the use of assets in financial year.
Formula
Profit after tax /total assets * 100
2007
12709444/577718806 * 100
2.199936%
2008
17022346/635132711 * 100
2.680124%
Comments
This ratio is increased from 2.199% in the year 2006 to 2.68% in year 2007 due to increase in
markup& interest earned during the year 2006 in spite of increase in assets by the way of
revaluation which is a sign of good performance of the bank during a year.
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Return on Equity
Dividing the earning after tax by shareholders funds carries out this ratio the purpose of
calculating the ratio to find out the yield after utilizing the shareholder fund for one year. The
way of calculating this ratio is given below:
Formula
Net profit after tax / shareholders equity * 100
2007
12709444/5908927 * 100
215.09%
2008
17022346/7090712 * 100240.07%
Comments
The yield on equity has increased from 215.09%to 240.07%due to increase in markup & interest
earned during the year 2008 as compare to 2007 and the mark up and discount paid during the
year 2008 has decreased as compare to the year 2007.
Earnings Per share
This is very important ratio for the shareholders and investors. The shareholders and investors
give the main emphasis to the earning per share while making the decision to invest or to become
a member of the company. This ratio is calculated as follows:
Formula
Net profit after tax / total no. of shares
200712709444/709071
17.92
2008
17022346/ 709071
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24.01
Comments
As discussed earlier the earning per share is of utmost importance to the shareholders and
investors, here in this case the earning per share has increased to Rs. 24.01 in the year 2007 from
Rs. 17.92 in the year 2006, which is better sign from shareholders and investors perspective.
Liquidity and Solvency Ratios
Loan to advances ratio
This ratio is of most importance to the lending institutions. While lending to the banks or other
parties the institution keep an eye on the loan to advances ratio. Lower the ratio is better for the
lending institution: higher ratio is not good for the lending institution as well as the party.
Formula
Total loans / total advances * 100
2007
268838779/ 577718806 * 100
46.53%
2008
316110406/ 635132711 * 100
49.77%
Comments
As we discussed earlier that the lower the ratio is, the better it is for the lender and as well as to
the institution itself. In this case the ratio is increased to 49.77% in 2007 from 46.5%in 2006. It
shows that the bank loans have increased more as compare to its advances.
Proprietary Ratio
It is the ratio of funds belonging to shareholders to the total assets of the company. Funds
belonging to share holders mean share capital plus reserves and surplus both of capital and
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revenue nature. Losses should be deducted. Funds payable to others should not be added. Higher
the ratio the better it is for all concerned. It is worked out as:
Formula
Shareholders fund / total assets * 100
2007
75817944 / 577718806 * 100
13.12%
2008
81954118 / 635132711 * 100 =12.90%
Comments
In the year 2006 the ratio is 13.1%it increases to 12.9% in 2007. As discussed earlier the higher
the ratio the better it is for the organization.
General ratios
Cost of borrowing
It is a comparison between mark-up and the deposit, the lower the markup paid the better it is for
the institution.
Formula
Markup paid / deposit * 100
2007
10321768/ 463426602 * 100
0.02%
2008
13634912/ 501872243* 1000.0027%
Comments
The cost of borrowing is decreased from 0.02% in 2006 to 0.0027in the year 2007 to which is
healthy sign for the concern. This is mainly due to advances.
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The minimum balance requirements of the bank are low and its service charges are also
not very high as compared to its competitors. This implies that those customers who are
not satisfied with other banks may come to NBP for depositing their money or doing
some other business with the bank.
6) Emphasis on customers satisfaction:
The managers and employees at NBP try their level best to provide maximum satisfaction
to all their valued customers and especially to key accounts.
7) Introduction of Agric-Finance Wing:
The introduction of the Agric-Finance wing was an addition in the banks product lines
and thus a means of banking upon the market that has not be fully trapped. This can help
increase profits of the bank in the future.
8) Consistent Share Price Movement with Stock Exchange:
The share price movement of NBP has remained consistent with that of stock exchange
from 1990-2008. This means that the banks business has remained stable over the years.
Also its share price these days is higher than one of its arch rivals HBL.
9) Deposits and financing have increased:
The deposits and financing of the bank have increased over the year, which means that
the bank is growing with the passage of time.
10) Consistent Dividend Policy:
NBP has had consistent dividend policy since the last two years, which means that the
bank has been successful in satisfying its shareholders. And satisfying the shareholders is
the most important objective of any organization.
11) Social Responsibilities:
On the social front the bank collects donation for Shaukat Khanum Memorial Hospital,
Taleem for All Trust and sponsors of the social events to make good images in the eyesof its customers and prospects.
12) Banks are Regulated:
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The bank are regulated and monitored by the State Bank of Pakistan. The serves as a
strength for banks because if the banks are facing severe liquidity problems then the state
bank will come as a lender of the last resort.
WEAKNESSES:
1) Turnover Rate is high:
Although the banks turnover rate has decreased from previous years but it is still high.
Thus NBP should carefully look into this matter if wants to compete the banking
industry.
1. Incompatible Salary Package:
The basic salary paid to the banks employees is compatible with other banks but the
fringe benefits offered are not compatible. This leads to employee dissatisfaction and
high turnover.
2. Centralization:
NBP has centralized it department to decrease its cost and to generate more and more
business from present customers as attracting new customers is more costly than retaining
present ones. Centralization creates problems for the customers, as they do not find all the
departments at every branch of the bank.
2. Obsolete Software:
NBP at present is using very obsolete software technology. Regarding technology NBP is
far behind its competitors. This internal weakness increases the work burden for the
employees and leads to their dissatisfaction and fatigue.
3. Hassle of Paper Work:
In spite of having a computerized system the bank has to handle a lot of paperwork,
which is very unproductive, increases the paper cost of the bank and leads to employee
difficulty.
4. No Paper Training:
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The bank does not provide proper training to its new recruits, as it does not have any such
policy in place for its. Thus the new people who join the bank may get disillusioned in
the beginning of their career and may not understand how to perform functions in the best
way they desired to be performed.
5. Head Office Handle Policy Formulation:
It is the responsibility of the Head Office to handle policy formulation and then after
decisions have been reached policies and communicated to branches. Decision making
thus centralized. The branches therefore have authority for changing any policy allegation
of power is thus only made for performing the functions outlined by the head office.
6. Underemployment:
NBP does not hire the appropriate number of employees for each department. This leads
to overburden on employees of each department. If the officer who heads the department
it absent then there is no one to take his responsibility. This leads to dissatisfaction
customers and increase in pending work.
7. Equipment Ordering is Time Consuming:
The equipment that the branches require such as computer or generators have to be
rendered from the Head Office. The head office then arranges for the equipment and
transfers it to the destination branches. NBP head office consumes a lot of time in making
the required equipment available at the branches and this leads to inefficiency of
operations.
OPPORTUNITIES:
I. Growth in Real GDP:
The GDP of Pakistan has increase and this indicates that the economy of Pakistan isgrowing so its opportunity not only for NBP but also for the entire banking industry. If
economy increases at progressive rate then this will help grow the business of the banks.
II. Increase in Per Capita Income:
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The per capita income of Pakistan has increased which is a good economic indicator as
when per capita income increases the disposable income of the people will be more and
thus they can do more business with the bank.
III. Increasing Branch Network:
The banks competitors have large branch network and more branch network means
accessibility of the customer is increased and thus prospects can also be attracted which
will increase tax base of the bank.
IV. Internet Banking:
Internet banking includes giving account status and mini statements to customer through
online. NBP do not provide this facility to its customer, through introducing the features
of internet banking to its customer on its website bank can increase its revenue.
V. Global Expansion:
The bank can opt for global expansion, as today a world of global economy exists. It can
acquire smaller banks in neighboring country of Pakistan or it can itself move outside the
Pakistan if it has capital to do so.
VI. Increasing in Foreign Remittance:
The foreign remittances of workers have increased. This can provide good business to the
bank through its remittance department.
VII. Reduction in Corporate Tax Rates:
The government has reduced the tax rates of bank. This opportunity will allow banks to
earn more and increase earnings of their shareholders.
VIII. SBP Reforms:
SBP has been active in introducing reforms towards compliance of international
standards and codes in the banking sector this leads to standardization in the working ofthe bank and foreign banks may thus be inclined to do business with Pakistanis bank
including NBP.
IX. Relationship with the Government:
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If NBP improves its relationship with bank by being a socially responsible firm then
government encourages the bank which can lead to its growth and prosperity in future.
X. Growth in Banking Industry:
As various reforms and steps have been taken to attract investors and banking industry
taking advantage of this NBP can also be part of this growth and expand their operations.
THREATS:
A. Competitors have Larger Branch Network:
The competitors of NBP like Askari Bank, HBL, Allied Bank and HBL etc have larger
branch network as compared to NBP and this serves as a threat to the bank.
B. Variety of Products:NBP does not have such a great variety of products as its competitors and thus it is not
satisfying its customer to the extent that it should as NBP does not offer credit card and the
customers wanting these products may switch to any other bank for getting those products.
C. Default by Borrowers:
If the banks borrowers default then bank will have to liquidate the security of borrowers
and may in some cases seek to help of the court but it is not easy for the profitability of the
bank.
D. Documentation of Lending:
The pain that bank has to bear in documenting its lending is very time consuming and
costly and poses as a threat to banking sector. The bank calls it risk asset management.
E. Withholding Tax:
Withholding tax is imposed on cash withdrawals at bank at the rate which specified by the
SBP, on withdrawal of more than Rs. 25000. This discourages people to keep their money
with bank.
F. Crisis Faced by Muslim World:
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Pakistan being part of the Muslim world is facing the problem of being blamed for
terrorism this leads to bad image ofPakistan all over the world and thus foreign banks in
any other country hesitate