Internship Report on National Bank

Internship Report NBP

Employees Hierarchy

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PRESIDENTPRESIDENT

EXECUTIVE VICE PRESIDENTEXECUTIVE VICE PRESIDENT

VICE PRESIDENTVICE PRESIDENT

ASSISTANT VICE PRESIDENTASSISTANT VICE PRESIDENT

OFFICER GRADE IOFFICER GRADE I

OFFICER GRADE 2OFFICER GRADE 2

OFFICER GRADE 3OFFICER GRADE 3

MESSENGERMESSENGER

PEONPEON

SWEEPERSWEEPER

BR

AN

CH

HIE

RA

RC

HY

BR

AN

CH

HIE

RA

RC

HY

SENIOR VICE PRESIDENTSENIOR VICE PRESIDENT

MEMBER BOARDMEMBER BOARD

SENIOR EXECTIVE VICE-PRESIDENTSENIOR EXECTIVE VICE-PRESIDENT


National Bank of Pakistan

National Bank of Pakistan maintains its

position as Pakistan's premier bank

determined to set higher standards of

achievements. It is the major business

partner for the Government of Pakistan

with special emphasis on fostering

Pakistan's economic growth through

aggressive and balanced lending policies,

technologically oriented products and

services offered through its large

network of branches locally,

internationally and representative

offices.

Branch Introduction

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http://www.nbp.com.pk/Branch_Nwt.htm

http://www.nbp.com.pk/Branch_Nwt.htm

http://www.nbp.com.pk/Services.htm


I did internship in (National Bank of Pakistan) Main Branch, Kutchehry Chowk, Multan.

This branch was founded in July 1962. From last many years this branch is not only

achieving its targets of deposits and advances rather it remains above the targets.

According to the financial record of last year this branch was earning more than 20% of

total profit of the region.

Every year the targets of this branch are increasing by 20 to 25 percent but still there is a

potential in the market to meet these additional targets. This branch is performing its

functions in traditional style and now it has been converted into an online branch.

What I Did…?

After joining the bank for internship initially it was so difficult for me to get the attention

of the employees, every body was terribly engaged in there own activities, no body was

having time to accommodate me. This was a crucial time for me to get the attention of

NBP’s management and to make them realize that their valuable information is so much

necessary for the up gradation of my knowledge and for the completion of the task which

I was assigned by the institution. But very soon I succeeded in making relationship with

the top influence people and with the help of these people I started permeated in the

system. This was my first step towards the completion of my task and with the passage of

time they realized that they can also utilize my efforts in a productive way to minimize

their burden.

They provided me their time and information which helped me to enhance my knowledge

and they also shared there experiences with me which I believe that it would be helpful in

my practical life. First two weeks I worked in operation

department, for next two weeks I worked in credit

department and for rest of the time I worked with

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Business Manager where I learned lot of things

including how to deal with corporate customers, with

individual customer and how loans can be recovered

from the customers.

During the internship session I got the chance to perform on different activities which are

listed below and short explanation is also given.

Account opening department

To open an account the customer have to meet the general banking

manager with an introducer (the person who is going go introduce that

person in the bank) and get an application form used for account

opening. Different color-coded application forms are available for each

type of account. Along with the form a card for specimen signature is

also supplied to customer. Manager has every right not to accept this

contract if he is not satisfied by the details provided by the customer.

In case the contract is acceptable to both, now it is ready to open the

account formally.

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

Joint

Partnership

Private Limited

Credit Department

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The earning of a commercial bank are chiefly derived from interest charges on loans and

discounts it. Now loans are recognized as advances or finances. The advances are made

through the deposits that are kept in the bank by the customers. The bank pays profit on

the deposited amount and receives mark up on the advances made of different amounts.

NBP introduced the mark up based advancing in Jan1, 1985 when the Islamization of the

economy was influence under this system of advancing the bank is entitled to receive a

constant sum of money on the amount that is outstanding on the account of the party.

Foreign Exchange

To promote flow of foreign exchange in the country, the Government of Pakistan started

a new scheme of opening of bank accounts in foreign currency. These accounts were

entitled to receive profit percentage in shape of the currency in which the account was

kept (Dollar account shall be paid profit in dollars). This has increased the flow of foreign

currency especially from the Pakistani foreign residents, who used to send money to their

families at home. The State Bank of Pakistan was given special rights to control and

monitor the performance of the “Authorized Dealers” in foreign exchange accounts.

Authorized Dealer is a person or an institution, which can deal with the foreign

exchange. The authority is given by SBP to all those scheduled Banks who have adequate

trained staff and facilities. These scheduled banks are given license to deal in foreign

currency transactions.

Remittance Department

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Remittance department provides services to the customer of the bank. The main function

of this department is transfer of funds.

INSTRUMENTS OF BILLS AND REMITTANCE DEPARTMENT

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

Demand Draft.

Mail transfer.

Telegraphic transfer.

Pay order.

Pay slip.

OBC (outward bill for collections).

IBC (inward bill for collections).

Clearing Department

There is no legal obligation on a banker to collect cheques drawn upon other banks for a

customer. However it is function of almost every modern bank of the collection of

cheques and bills on behalf of the customer.

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Clearing department services are provided in order to make arrangements for the

economic collection of the cheques, DD and other negotiable instruments. A large part of

this work is carried on through the clearinghouse.

After joining the bank in internship I got the practical exposure of all the above described

activities. The mechanism is not too simple to understand easily but still lots of

complexities have been solved.

Application of Learned Concepts

After getting entered into practical life this is a common complaint that practically things

are quite different from theoretical learning, but I did not face such big difference

because the concepts I got from the course of “Money and Banking” and “Business

Institutions” were so much close to the real world. In management and marketing style of

the employees there were somehow differences exist.

While doing internship I got lot of experience and I got the chance to apply my

knowledge practically which helped me in getting interest in learning new concepts.

After doing this practice I feel that I can even compare my practical knowledge in further

studies.

Financial Analysis

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Liquidity Ratios:

Ratios 2003 2004 2005 2006

Current Ratio 0.484 0.780 0.809 0.870

Cash Ratio 0.377 0.503 0.382 0.363

Net W.C -29385417 -106408508 -91049316 -68179014

Quick Ratio 0.484 0.780 0.809 0.870

Description: If we look at the liquidity ratios we can see that the bank has improved its liquidity

position from 2003 to 2006. There is a continuous improvement in NBP’s liquidity

position in 2003 the liquidity position was alarming and it was even less than 0.5.

Although in banks it is difficult to keep these ratios up because banks mainly depend

upon short term liabilities but still NBP’s improvement is appreciated.

Leverage Ratios:

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Ratios 2003 2004 2005 2006

Debt Ratio 0.941 0.922 0.869 0.870

Debt/Equi Ratio 16.002 11.943 6.620 6.750

Times Int Ear Ratio 2.080 2.348 2.659 2.930

Debt to Tangible N.W 16.002 11.943 6.620 6.750

Description: If we look at the Debt ratio and Debt/Equity ratio it is clearly understandable that the

bank has greater portion of debts in its capital structure, but as compare to 2003 in 2006

the condition is better and the bank has gradually increased its equity portion as compare

to the debt. Still management need to change its capital structure and higher portion of

equity may result in better results, as it is present in times interest earned ratio which is

showing that increase in the equity is putting healthy effect in returns.

Profitability Ratios:

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Ratios 2003 2004 2005 2006

R.O.Assets 0.9% 1.2% 1.64% 2.7%

R.O.Equi 15.2% 14.7% 16.7% 20.8%

R.O.Inv 6.0% 17.7% 19.7% 23.2%

R.O.Op Assets 3.7% 3.8% 5.3% 6.3%

Description:

As we have seen in other ratios of leverage and liquidity the company’s financial position

is much better in later years as compare to the year 2003, bank has got gradually and

continuous increase in its income which is increasing its return on assets, equity and

investment. Still return on assets is showing that bank is not utilizing its assets properly

and its efficiency is to be increased. Return on equity is satisfactory and showing that

bank is having very less portion of equity.

SWOT ANALYSIS

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Strengths:

Public confidence

Sound financial strength

Highest profitability

Vast operational network

Role in economic development

Utility bills collections

Corporate branches

Evening banking

Efficient home remittance

Recognition of hard work of staff

SWIFT

Internet access (www.NBP.com.pk)

Pension & salaries payments

Online city branch

Weaknesses:

Lack of good delegation

Inadequate, poorly placed network technology

complex MIS

Deep rooted bureaucratic approval

Lack of long term & short term plans

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http://www.nbp.com.pk/


Less share in import & export business

Poor resource utilization

Need better service policy

Frequent change in senior management

Opportunities:

New style management

Introduction of new products and services

Introduction of new technology & electronic banking

Capital management & equity financing

Secondary market operations

New deposit scheme

Threats:

Establishment of new private financial institutions & expansion

Govt. sponsored schemes

Political pressure

Reducing branch network

New products form private Pakistan Establishment of new private financial

institutions & expansion

New products form private Pakistani & foreign banks

Non-banking institutions

Inability to change

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Inability to change

Stakeholders interests

PEST ANALYSIS

Political:

Privatization policy and deregulation.

Impact of subsidized credit affecting and NCB’s.

Employment practices, Unions, Associations.

Political Interference and harassment.

Incidents of high taxation on banking industry.

Economical:

Constraints in mobilization of public savings because of inflation.

Staff cost.

Operating cost.

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Bad debts

Social & Cultural:

Inadequate human resources.

Cultural strain to savings.

Defaulter’s lobby.

Declining education and work ethics.

Inadequate accountability.

Adequate empowerment.

Technological:

Inadequate communication infrastructure.

Inadequate computer facilities.

Inadequate IT training.

Suggestions and Recommendations

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Based on the SWOT and PEST analysis of the National Bank of Pakistan, it is observed

that the Bank like the other public sector industries has not been showing up to mark

performance. There is a long list of weaknesses that is given on the previous page. Most

of them are going along since long time and that all efforts made to remove them have

not succeeded. On the basis of SWOT analysis of the Bank the following suggestions and

recommendations are given.

Bank should try to get rid of the political influence to be able to compete in the

industry with prudent and strong policies.

The undue reliance on the public sector be minimized and ventures of private sectors

should be taken as well.

Redefining of rules, regulations and policies should be made implemented at all costs.

Efforts of great importance to be made for the over the counter services of general

banking making it more simple and faster to get a better response of the customers.

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

and checked.

The still existed bureaucratic approval system has to be demolished.

All advances should be made by getting the maximum security and should focus on

productive work.

Better and comprehensive long-term and short-term planning should be made to

forecast the future needs.

There is a possibility of establishing a task force to ascertain the effectiveness of the

policies being implemented.

The Bank should develop a comprehensive recruitment policy to make only the

competent ones to be on the job.

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There is a still a vast pool of incompetent employees that has to right sized.

There is a lack of promotional element in the planning and budgetary decisions of the

Bank that has to think seriously.

All branches of the Bank should be computerized for increasing the effectiveness and

efficiency of its employees.

Efforts should be continued to keep the powers of employees union to the minimum,

like the current situation.

Promotions must not be delayed and should be made on time to further increase the

commitment and efficiency of the employees.

These and many other that can make a good set of recommendations, which have to be

made possible to escape from the threats and weaknesses and the risks in environment

that surrounds the Bank. The management do considers the policy matter that is not

helping the Bank, but are still in practice due the absence of prudentially regulated

system to protect them and the Bank.

Efforts have been made with serious concern to give NBP a status that it has to maintain

by having practices of:

Right sizing of the employees.

By closing unprofitable branches.

By introducing a merit based selection criteria.

Promotions made conditional with qualifications.

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Documents

Internship Report on National Bank