Report of Nbp Numl

8/10/2019 Report of Nbp Numl

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CHAPTER 1

INTRODUCTION TO REPORT

This study has been conducted as a result of an internship assignment. Internship

is considered an integral part of BBA (HONS) (inance) courses in N!"# $esha%ar

&ampus. The students are gi'en the opportunity to spend at least %ees in an

organi*ation to get e+posure in the real organi*ational lifestyle.

The basic aim of this internship program is the practical application of the bacground

no%ledge, to obser'e the %oring condition of different departments, and also

application of their managerial sills in real organi*ational life. The collected

information-s placed into a report, based on any of the aspects as financial, mareting,

human resource etc.

To fulfill this academic reuirement and being a student of BBA (HONS) (inance), I did

my internship in National Ban of Aora /hattaBranch.National ban of $aistan is

one of the leading and first go'ernment bans In $aistan, NB$ %as established in No',

0121.

There are certain characteristics, %hich set NB$ apart from other nationali*ed

commercial bans. These characteristics are the reasons of the de'elopment of NB$. The

most important characteristic of NB$ is that, it %ors, as an agent to the State Ban,

3here State Ban does not ha'e a branch of its o%n. The NB$ also acts as a trustee to

the National In'estment Trust (NIT), %hich is one of the premier financial institutions of

the country. It is gi'en the responsibility of mobili*ing small sa'ings. The establishment

of NB$ thus signaled the achie'ement of another milestone in the de'elopment of the

baning industry in $aistan.


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2. PURPOSE OF THE STUDYThe purpose of the study is to get an o'erall idea about the general practice of the

ban and analy*ing its acti'ities. As the branch day to day acti'ities are different so the

analysis %as taen on long term. To sho% the earning capacity as %ell as financial

position, financial statements of different years ha'e been analy*ed.

3. SCOPE OF THE STUDY

The study con'eys the description of the 'arious departmental functions at the

branch, and the analysis is done from both management and operational perspecti'e.

S3OT analysis has been conducted based on both internal and e+ternal en'ironment.

4. RESEARCH METHODOLOGY

The study conducted deals %ith both managerial and financial aspects of the

Ban. The follo%ing t%o sources ha'e been used for the collection of information.

4.1 PRIMARY SOURCES

1 $ersonal obser'ations

2 &ustomer trends.

3 Briefing by manager

4.2 SECONDARY SOURCES

1 "anuals 4 Brochures.

2 5eference boos.

3 &irculars and NB$ ne%s letters.

4 Annual reports.

4.3 LIMITATIONS:

1 "ost of the data %as of confidential nature.

2 6ue to the ban7s busy schedule, complete information %as not pro'ided.

3 No such clear comparison could be made as due to difference in theory and

practice.

5. SCHEME OF THE STUDY


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The seuence of the report if follo%ed %ith four parts. 8ach part defines its

contents, systematically9

&ontains the introduction to the study conducted. :i'ing the purpose and

methodology for the study undertaen

&arries the re'ie% of the entire NATIONA# BAN/ O $A/ISTAN, its history

and basic ob;ecti'e, for %hich it is %oring.

6escribes the organi*ational structure of the NB$ and its departments and their

functions in detail.

:i'es out the analysis taing its all aspects and defining their policies stating the

critical recommendations based on the S3OT analysis, and finally deals %ith

conclusion.


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CHAPTER-2

INTRODUCTION TO NBP

NB$ is pro'iding all types of baning ser'ices of mercantile and commercial baningpermitted in the country, %hich includes9

1 Handing of treasury transactions for the :o'ernment of $aistan as an agent to

the State Ban of $aistan.

2 $ro'iding ser'ices under a Trust 6eed as Trustee to the National In'estment Trust

(NIT) including safe custody of securities on behalf of NIT.

3 Accepting of deposits of money against current, sa'ing, term deposit and profit

and loss sharing accounts.

4 Borro%ing money and arranging finances from other bans.

5 Ad'ancing and lending money to its clients.

6 inancing of pro;ects, including technical assistance, pro;ect appraisal through

long


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STATUS AND NATURE OF BUSINESS

National Ban of $aistan (the ban) %as established under the National Ban of

$aistan Ordinance, 0121 and is listed on all the stoc e+changes. It-s registered and head

office is in /arachi. The ban is engaged in commercial baning and related ser'ices in

$aistan and o'erseas. The ban also handles treasury transactions for the :o'ernment of

$aistan (:O$) and also pro'ides ser'ices as trustee to National In'estment Trust (NIT)

including safe custody of securities on behalf of NIT.

ROLE OF NATIONAL BANK OF PAKISTAN IN ECONOMIC

DEVELOPMENT

Bans play significant role in promoting the economic acti'ities and economic

de'elopment of a country. Industry, agriculture, trade, commerce and many other

economic acti'ities are highly dependant on bans. Bans help in mobili*ation of money.

They also help in promoting the gro%th of internal resources for de'elopment by

attracting deposits into producti'e loan and in'estment. Bans not only collects the

sa'ings of the people but also gi'e loans for the de'elopment of industry, trade and

commerce.

NB$ has been playing a ma;or role in financing and de'elopmental acti'ities in $aistan.

It helps in the gro%th of economy in all spheres of our national life. It has contributed

significantly to economic gro%th of the country and has ser'ed to trade and industry in a

%ide sphere of operations.

The NB$ %as the first ban to introduce scheme of credit to small borro%ers lie farmers

etc, for the promotion of agriculture. The ban ad'ances liberal credit for rural and

agricultural de'elopment. Small short


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contribution to%ard building up of a de'eloping nation. The NB$ also helps to promote

the establishment of ne% companies by under%riting their shares. The ban also

contributes to%ards the earning of foreign e+change though its foreign e+change business

in $aistan and abroad.

MISSION

@To be recogni*ed in the maret place by institutionali*ing a merit and performance

culture, creating a po%erful and distincti'e brand identity. Achie'ing top C tier

financial performance, and adopting and li'ing out our core 'alues.

VISION

@To be the pre


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NBP AIMS1 :athering its employees and %oring together as a team to bring the future bright

altogether.

2 :oing into 5etail Baning, the ban circles to inno'ate and bring ne% and

compatible products to its customers.

3 or high uality performance the ban aims at re%ards and appreciation.

4 To pro'ide clear and open channel communication channel to facilitate its

customers.

5 The ban recogni*es the 'alue and creditability of its customers and bases their

decisions on merit.

MANAGERIAL OBECTIVES: To pro'ide the shareholders the greatest possible euity ratio.

&ontrolling the staff at highest managerial criteria and selecting them of a

standard caliber.

To gain the confidence of the customers and satisfy the staff to reduce the

opportunity cost.

To tae the staff as a team, in taing decisions related to management, %oring

en'ironment, and pro'iding facilities to get things done at ease,

To facilitate the departments to operate under full super'ision and control.


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REFERENCES

1. Siddiui, Asrar. H. (011). $ractice and #a% of Baning in $aistan. /arachi9 6ecent

$rint 8nterprises.0D


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CHAPTER-3

ORGANI!ATIONAL STRUCTURE

Organi*ational structure is the frame%or that defines the boundaries of the formal

organi*ation and %ith %hich the organi*ation operates. A suitable organi*ational structure

for the nature of the organi*ation leads to better performance.

The organi*ational structure of the ban constitutes a board of directors and an e+ecuti'e

committee as the go'erning bodies. The National Ban of $aistan (NB$) has 001

branches all o'er the country, 0? o'erseas branches 4 2 subsidiaries. The head office is

operationally in charge of central affairs including the delegation of po%er and authority

to the regional headuarters all o'er the country. These regional headuarters direct the

function of the 0> corporate branches. The NB$ has >1 regions (circles) in four pro'inces

as gi'en belo%9

T"#$% &' NBP P(&)*+,*"$ H%"/"(0%( N&. &' R%*&+

$ro'incial Headuarters No Of 5egions

Sindh ?

Baluchistan >

$un;ab 02

N3$ D

A*ad /ashmir >Total >1

Source9 %%%.nbp.p

3.1 HEAD OFFICE

The NB$ has its o%n organi*ational structure and its Head Office is situated at /arachi.

All branches, regional offices and corporate branches %or according to the rules and

regulations issued by the Head Office from time to time. The Head Office of National

Ban of $aistan, %hich is primarily responsible for maing policies and e+ecution of

policy decision include,

a) Board of 6irectors

b) 8+ecuti'e &ommittee


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c) 6i'isional head offices and pro'incial headuarters

The Head Office has nine di'isions, %hich are further di'ided into different %ings. It is

operationally in charge of central affairs including the delegation of po%ers and authority

to the >1 5egional Headuarters all o'er the country. These 5egional Headuarters directthe functions of the t%el'e corporate branches.

3.2 BOARD OF DIRECTORS

The Board of 6irectors nominates the e+ecuti'e committee, %hich nominatesdi'isional heads. It consists of president, si+ directors %oring under president and

one Secretary. $resident is the go'erning body and other si+ directors and one

Secretary 3or %ith him in a systematic %ay.

The Board of 6irectors of National Ban of $aistan NB$ has one $resident and si+

members as gi'en belo%9

T"#$% NBP BOARD OF DIRECTORS STRENGTH

$resident of the ban 0

S8$s of the ban

5epresentati'e of the $B& 0

5epresentati'e of go'ernment 0

Outsiders 0

Total E

3.3 EECUTIVE COMMITTEE

8+ecuti'e &ommittee consists of one $resident and nine members and among these nine

members, one member perform functions of both member and Secretary. Board of

6irectors nominates e+ecuti'e committee and e+ecuti'e committee nominates the

di'isional heads. NB$ has an e+ecuti'e committee %ith $resident as its chairman fi'e

S8$s are its members and president-s ad'isor as an obser'er. This body monitors the

day


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3.4 DIVISIONAL CHIEFS

In order to impro'e the management and operation of a ban, it has been split up into a

number of di'isions. 8ach di'ision of a ban is placed under the super'ision and control

of 6i'isional &hief or Senior 8+ecuti'e ice $resident (S8$) or 8+ecuti'e ice

$resident (8$). The Head Office management controls all the di'isions. The nine

di'isions of NB$ are as follo%s9

1 "anagement Support 6i'ision

2 Audit and Inspection 6i'ision

3 Treasury "anagement 6i'ision

4 &redit $olicy "anagement 6i'ision

5 "areting and 6e'elopment 6i'ision

6 O'erseas Baning 6i'ision

7 Special Assets "anagement 6i'ision

8 Ban Secretary 6i'ision.

3.5 PROVINCIAL CHIEFS

In order to impro'e the performance of the baning system, each ban has

$ro'incial &hief %ho has the po%er for sanctioning finance and other credit

facilities. The head uarters of the chiefs are situated in #ahore, /arachi, $esha%ar

and Guetta. The National Ban has >1 regions (circles) in four pro'inces and A*ad

/ashmir.


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3. REGIONS OF NBP

On "ay 0, >FFF a circular %as issued in %hich *ones %ere abolished and the %hole

country and A*ad /ashmir %as di'ided into >1 regions. The changeo'er process started

from 0st August >FFF and %as completed by 0st August >FFF. The ne% setup %as madefully functional by 0Dth September.

5egional "anagement &ommittee

A regional management committee controls all regions. 5egional management consists of

1 5egional Business &hief

2 5egional Operations &hief

3 5is management &hief

4 &ompliance &hief

T6% N"7% &' 06% R%*&+ "(%:

S.No. 5egion S.No. 5egion

0 /arachi South > /arachi &entral

ederal &apital 2 /arachi 3est

D 5a%alpindi ? #ahore 8astE aisalabad :u;ran%ala

1 $esha%ar 0F "irpur A./.

00 "ultan 0> :u;rat

0 Sialot 02 Hyderabad

0D Abbotabad 0? Sargodha

0E "ardan 0 Jhelum

01 Guetta >F Sahi%aal

>0 Bha%alpur >> 6era :ha*i /han

> 6era Ismail /han >2 Jhang

>D "u*affarabad A./. >? Sahar

>E #arana > :a%adar

>1 :ilgit KKKK KKKK

3.1 CORPORATE BRANCHES


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&orporate branches play an important role in the setup of National Ban of $aistan, to

ser'e the businessmen and the corporate sector of $aistan. There are t%el'e corporate

branches, present in the follo%ing cities.

TABLE 3.4 CORPORATE BRANCHES OF NBP

&ity No Of &orporate Branches

/arachi

#ahore

Islamabad 0

5a%alpindi 0

Guetta 0

$esha%ar 0

"irpur (AJ/) 0

aisalabad 0

Total 0>


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0.> OVERSEAS BRANCHES

NBP 6" 1 &)%(%" #("+,6%8 *+ 06% '&$$&9*+ 11 ,&/+0(*%.

T"#$% NBP FOREIGN BRANCHES

S.No. &ountry S.No. &ountry

0 !SA > rance

:ermany 2 !nited /ingdom

D 8gypt ? $eoples 5epublic Of &hina

E /orea Africa 4 "iddle 8ast 5egion

1 Bangladesh 0F &entral Asia States

00 Hong /ong 00 Afghanistan

NBP 6" '&/( (%(%%+0"0*)% &''*,% *+ 06% '&$$&9*+ ,&/+0(*%:

S.No. &ountry S.No. &ountry

0 !SA > $eoples 5epublic Of &hina

!*beistan 2 A*erbai;an

NBP 6" " /#**"(; *0/"0% *+ K"FFF. It is located in the commercial

heart of $esha%ar. Its main customer is :o'ernment of $aistan. It is also called @"ain

branch $esha%ar. It-s a large branch and has been ser'ing both ci'il and military

personnel. All the cheues dra%n on or by the ban are pooled here and then taen to

SB$ for clearance. It-s one of the most profitable branches of NB$ in $esha%ar.

3.3.1 S%0 /

1 /eeping in 'ie% the si*e of the branch the Operation manager %ill tae direct

responsibilities for some of the operation functions depending on the nature of

acti'ities in the branch and %ill act as &ompliance officer also.

2 The Operations area %ould comprise of &ash &ounter Ser'ices and &ustomer

Ser'ices.

3 The branch manager %ith the relationship officer(s), (if reuired) %ill concentrate and


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fully de'ote to credit mareting and business=deposit de'elopment.

4 Operations manager %ill report directly to the regional chief operations %ith dotted

line reporting to the branch manager.

3.3.2 BRANCH MANGER RESPONSIBILITIES

1 O'erall affairs of the branch.

2 &hecing and ensure effecti'eness of control system and %oring procedures.

3 "eeting e+isting and Ne% &ustomers.

4 "areting business=deposit de'elopment and public relations.

5 Assignments of accounts to relationship manger=officer.

6 Income and business budget.

7 $erformance e'aluation of reporting staff.

8 6e'elop ob;ecti'es for reporting staff.

9 5e'ie% of reports.

10 &onduct periodical meeting of the staff.

11 #iaison %ith controlling offices.

12 Appro'al of credit proposal %ith


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3 &reate cordial and customer friendly atmosphere in branch.

4 8nsure continuous satisfactory ser'ice to the customers.

5 5e'ie% of daily acti'ity reports.

6 8nsure compliance of ban=SB$ and local regulations.

7 Appro'al of opening of ne% accounts.

8 Appro'al of e+penses %ith in delegated authority

9 $reparation of e+penses budget.

10 6e'elop duty list for all branch operation staff

11 6e'elop ob;ecti'es for operation staff

12 $erformance e'aluation of reporting staff.

13 &ross


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4. International 6i'ision.

5. &redit 6i'ision.

6. 8lectronic Technology 6i'ision.

7. Treasury 6i'ision.

8. System 4 Operation 6i'ision.

9. In'estment $roduct !nit.

10. Asset $roduct !nit.

1. H/7"+ R%&/(,% D*)**&+:

Strategically, perhaps the most important 6i'ision at the Head Office is

responsible for human resource management, including recruitment, staff training and

e'aluation.

2. A/*0 D*)**&+:

The di'ision performs the o'erall screening of the functions formed during the

year. 6ifferent conflicts are sorted out and are sol'ed according to la%.

3. I+0%(+"0*&+"$ D*)**&+:

6ealing %ith matter regarding international trac, lie the imports and e+ports.

And also managing the foreign currency circulation.

4. T(%"/(; D*)**&+:

5esponsible for managing ban7s liuidity and foreign e+change transactions, the

treasury is one of the marets. Through repo transactions, purchase of :o'ernment paper

and foreign e+change trading, the 6i'ision adds sustainability to Ban7s sustained

earnings.

5. C(%*0 D*)**&+:

6eal in the reco'ery of loans from public. 5egular checs and balances in the

ad'ancement of loans.


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. E$%,0(&+*, T%,6+&$&; D*)**&+:

This di'ision operates as the bacbone for all operational functions in the

baning. Technology de'elopment and its enhancement is the basic function of the

di'ision. &omputer net%oring is to be arranged dealing %ith the financial transactions

and other matters.

>. C&(&("0% "+ M%(,6"+0 B"+=*+ D*)**&+:

This 6i'ision is engaged in the pro'ision of financing facilities to large corporate

clients including multinationals.

?. S;0%7 "+ O%("0*&+ D*)**&+:

This 6i'ision has been instrumental in de'elopment of procedures and manuals

for 'arious operating reuirements of the ban. The di'ision is acti'e in pro'iding

euipment procurement support and de'elopment of ne% branches. The protection of

fi+ed assets of the ban is also managed by this di'ision, as a direct ;unction.

@ F*+"+,% D*)**&+:

inance 6i'ision is 5esponsible for boo


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&ash department mainly deal %ith receipt and payment of cash. Thus in this

department there are basically t%o main functions9

* CASH RECEIPT:

&ash that comes into the ban is recorded on a credit cash 'oucher. The contra for

this 'oucher is cash. This cash is recorded on the credit side of the cashier #ong Boo.

The cash 'oucher is filled by the client himself. The officer dealing %ith the client then

signs it and then stamps it the cash is then credited to the account of the client by the

ledger eeper officer.

In case the cash is recei'ed to mae an ad;ustment that is 6emand 6raft, $ay

Order and so forth, the officer %ill recei'e cash and mae a credit 'oucher of the said

amount. The officer %ill also mae the reuired instrument %hose counter folio is gi'en

to the customer.

** CASH PAYMENT:

3hen a person comes %ith a cheues or claim on the ban through any

instrument, the Ban %ill honor his claims. 3ithdra%als from the A=c or other payments

are recorded in the cash payment register by the cashier, before maing genuineness of

the payment. After the closing of the normal baning transaction the cash is balanced and

stored in the strong room.

Lesterday7s &ash M Today7s receiptstoday7s payment cash in hand.

" CHEUE:

!nder the definition of cheues as Pa %ritten order of a depositor upon the ban to

pay to or the orders of a designated party or to a bearer, a specified sum of money on

demands.P

T;% &' C6%/%:

The cash department has to deal in 'arious inds of cheues referred in after

no%ing their functions these cheues are then handled as9

* OPEN CHEUES:


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&heues %hich are paid across the counter in cash. These are of t%o types

** B%"(%( C6%/%:

Here the order is that the payment can be made to the person carrying the

cheues. It is that the stated sum of money is paid to the bearer and is thus called bearer

cheues.

*** O(%( C6%/%:

The cheues tae into account those orders, in the name of %hich the order has

been placed. Thus such cheues are restricted to that particular person in fa'or of %hom,

the cheues has been dra%n in. This cheues is paid after the full satisfaction about the

identity of the payee. This is done either by the confirmation through signatures and

thumbprints or through the I6 card.

*) C(&% C6%/%:

The other form of cheues is the crossed cheues. It is done through dra%ing t%o

parallel lines across the face of the cheues, %ith or %ithout %ords &o or A=c payee only,

it is called a crossed cheues. The payment on this cheues is mae through account and

not through counter of the dra%er ban. In fact it is deposited in the account of the person

in %hose order or fa'or of %hom it is dra%n in.

# CHEUE CARRYING PARTIES:

0. The person %ho dra%s the cheues is called dra%er.

>. The ban on %hich the cheues is dra%n is dra%ee.

. The person to %hom the payment is to be made is called payee.

, C6%/% V"$**0;:

&heue is 'alid under its stated conditions. That is

0. No o'er %riting is done.

>. It is to be dra%n on the particular branch.


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. Orders of the &heue are straight 4 clear and in proper form.

2. Signatures are 'alid and satisfactory.

D. unds are to be sufficient in the deposit.

?. &heue should not be post


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>.1.2. DEPOSITS DEPARTMENT

This department deals %ith the retail baning, i. e. customer7s account. Accounts

are opened here and maintained by them. The main functions of the deposits department

include9

o Opening of an account

o Issuance of &heue boos

o Issuance of ban statement

o &losing of an account

o Assistance in clearing procedure.

o #ocers.

>.3 ACCOUNT OPENING FUNCTION:

The opening of an account is establishment of customer


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for it.

II. S"'%/"( ""*+0 U+*+0%+% O)%(("'0:

By mistae, accounts may be o'erdra%n. It can happen either by a ledger eeper

misreading the balance and honors a &heue for an amount larger than the balance or

simply by the crediting of another customers account by mistae. So, in such situation

only a trust %orthy and respectable customer can reali*e and point out the mistae

himself to the baner.

III. N%$*%+,%:

A baner has to mae sure he is not negligent in any case other%ise he may be

depri'ed of the statutory protection.

IV. I+/*(%:

It is necessary for a baner to respond to inuiries from other bans about his

consumer7s financial position.

>.5 SPECIMEN SIGNATURES

The specimen signatures of a customer are taen on a card called Pspecimen

&ardP. The baner %ill eep this card in the files and only honor the customer7 cheuesha'ing the same signatures. The customer has to %rite his full name and account number.

In case the baner is doubtful about the signatures he can return the cheue %ith

the remar Psignature differenceP.

Pernacular formP is a form filled by customers %ho ha'e the follo%ing

characteristics

1 &ustomers sign in any other language other than 8nglish.

2 &ustomer %ho uses his thumb impression instead of a signature

3 Shay signature.

4 Signature that can be easily copied.

The baner taes e+tra precautions %ith such type of customers and on the

computers a remar Ppersonally %ithdra%nP is indicated. So these customers ha'e to


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present the &heue themsel'es for collection. A ban must obtain > or passport si*e

photographs of the customer. One is attached to the account opening form and the other

copies are attached to the specimen signature cards. Incase a thumb impression is needed

for illiterate customers then the baner must mae sure that the left hand thumb

impression is for males and the right hand thumb impression is for females. These

impressions are not only for the specimen cards but for the account opening form too, but

a baner must attest them.

>. MARRIEDPARDANASH1N OMEN:

A married %oman is allo%ed to open an account. But the only thing that has to be

taen care of is that in case the married %omen reuests for a loan, she must pro'ide only

her o%n property as security not her husband to inuire about his %i'es balance in the

account or 'ice 'ersa. Incase of pardanashin %omen, she is allo%ed to open an account as

long as she can sign %ith her thumb impression. Incase difference occurs in 'erification

she has to gi'e her photographs. If she is reluctant to gi'e her photographs, then the

baners usually suggests opening a ;oint account for them.

>.> MINOR ACCOUNT:

A minor is a person belo% the age of P0P years. Such customers are allo%ed toopen an account to inculcate the habit of sa'ing. It is necessary that the account is opened

in the name of the minor and a guardian. A minor attains ma;ority at the age of >0 but can

only operate the account until and unless the guardian specifies. In case the minor %ants

to enter a partnership, he %ill be allo%ed but %ill not be liable for any debts. If he

%ithdra%s from the partnership contract %ithin ? months after attained ma;ority then he

is liable as a full partner for all the debts. After considering all these points, the baner

may proceed by helping the desirable customer in filling the form.

>.? FILLING THE ACCOUNT OPENING FORM:

The account opening form is easy to fill. It reuires the name, father7s name, and

profession, telephone No., NI& No. Nationality, Address, currency of account, initial

deposit etc. The person %ho introduced the customer must also sign the account opening


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form. The ban in return sends a Pa letter of thansP to the introducer. One copy of the

letter is attached to the account opening form %hile the other is sent to the introducer. An

introducer is usually a baner or one old reliable customer of the ban. There is a list of

types of accounts, %hich the customer tics according to his reuirements. The list is as

follo%9

>.@ TYPES OF LOCAL CURRENCY ACCOUNTS

>[email protected] C/((%+0 A,,&/+0

A current account is a running account, %hich is continuously in operation. NB$ current

account allo%s customers to deposit and %ithdra% cash at their o%n con'enience. The

customer can %ithdra% the current deposits anytime, %ithout

Any pre'ious notice to the ban. The ban has to honor the cheues to the e+tent of credit

balance in the account. No profit=interest is paid to the customer on these deposits, but the

customer is reuired to maintain a minimum balance in the account. The initial amount

reuired for opening of such an account is, 5s. 0FF. The current account is opened and

operated by traders, business companies, public ser'ice bodies, industrialists etc.

>[email protected] PLS S")*+ A,,&/+0

Sa'ing deposits or profit and loss sharing ($#S) are those accounts on %hich ban offers

a relati'ely lo%er rates of interest. $#S sa'ing account can be opened %ith an initial

deposit of not less than 5s. DFF.

$#S Sa'ing Account may be opened in the name of an indi'idual or ;ointly in the

name of t%o or more persons. &haritable institutions, companies, Associations,

Societies, 8ducational institutions, firms etc, may also open these accounts.

"inors and illiterates are also eligible for opening sa'ing accounts. Ho%e'er

illiterate customer must present themsel'es in person for %ithdra%als. The bandetermines the rate of profit or loss on $#S sa'ing account.

>[email protected] T%(7 D%&*0 A,,&/+0

These are the deposits than can be %ithdra%n after a certain specified period of time. The


26/83

period of time 'aries from three months to fi'e years. On these deposits return=interest

'aries %ith the duration for %hich the amount is ept %ith the ban. The rate of

interest=return on term deposit is higher than that of a sa'ing deposit. Its interest=return is

unaffected for the duration of the deposit irrespecti'e of maret fluctuations.

Term deposit is best suited for [email protected] F*+"+,% F",*$*0;

Ban also e+tends finance facility to clients against sa'ing and fi+ed term deposits on

comparati'ely lo% marup rate. The deposit is ept under lien, ho%e'er the customer

may %ithdra% the profit amount credited to his account

>.1 ACCOUNTS TERMS AND CONDITIONS

Against the submission of the ban-s prescribed application form, duly introduced in the

manner pro'ided and on supply of documents reuired, the account is made fully

functional under certain conditions. In case of account on $#S basis, ban in'est the

amount in any manner it considers under $#S system.

>.11 D%&*0

All money to be deposited to the credit of an account is accompanied by pay


27/83

>.13 STATEMENT OF ACCOUNT

Account statement is pro'ided to the customer by the ban. In these statements the ban

assures that all debit entries are correct. In case of error, the ban passes an ad;usting

entry to rectify the error.


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&5. 6epositor7s Account.

?.2. T("+'%( D%$*)%(;:

All &heue and other instruments, recei'ed for collection %hich ha'e been dra%n

on other local branches of NB$, their proceeds are collected through the system called

PTransfer 6eli'ery.P

?.3. C$%"(*+:

As collection of payments on behalf of their customers direct from the counters of

the dra%ee ban is uite cumbersome, risy and costly such proceeds are, therefore

collected through the "echanism of P&learing House.P The $rocedure presenting a

cheue as other instrument for payment by the payee7s ban to the dra%er7s ban through

the &learing House is called PP&learing.P

All local scheduled bans including those created by charter of the :o't. are

members of the local &learing House, %hich functions under the super'ision of the SB$

as NB$ %here branch of SB$ does not e+ist.

?.4. PROVIDING LOCKERS

Another function of the deposit department is allotting locers to the customers.

?.4.1. 1.TYPE OF LOCKERS

B"*,"$$; 06%(% "(% 06(%% 0;% &' $&,=%(. T6%% "(%: T"#$% N&. 3.3

SIQ8 &HA5:8S $A 58!N6AB#8

0. Small 0FFF DFF

>. "edium 0DFF DFF

. #arge >DFF DFF

The person %ho is eligible for ha'ing a locer is an account holder ha'ing a

minimum balance of 5s. 0F,FFF=< in his account. 3hen the account holder doesn7t %ant

to use the locer, he can simply return the ey and the money is then refunded. Actually

there are t%o eys.

i). "aster /ey


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ii). &ustomer /ey

The locer first opens by the master ey then by the customer7s ey only. Its o%n

account holder can operate the locer or some body authori*ed by the account holder. or

this a form and a card ha'e to be filled.

?.5. BILL REMITTANCE DEPARTMENT

5emittance of funds through bans has become the most popular, safe, sensible,

and acceptable medium of settlement of payments, as physical mo'ement of cash is 'ery

risy and costly no% a days. 5emittance department acts as an agent on behalf of the

customer in safe transferring of their money to different cities and countries.

This department performs the follo%ing functions9

1 Out%ard Bills for &ollection (OB&) In%ard Bills< for &ollection (IB&).

2 6emand 6raft.

3 Telegraphic Transfer.

4 $ay Orders.

5 $ay Slips.

6 &all 6eposits or S65.

7 &rossed &heues.

?.5.1. OBC

Out%ard Bills for &ollection is a facility pro'ided by nbp to customer under

%hich certain cheues dra%n on other bans are recei'ed by the national Ban on behalf

of customer and are sent to the other branch of the ban along %ith an OB& schedule

%here they are presented in clearing and after reali*ation of cheue the ban %ill credit

that particular customer account %hile debiting the ban on %hich the particular cheue

%as dra%n.


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?.5.2. DEMAND DRAFT

These are receipts ;ust lie cheue by %hich money can be safely transferred or

taen %ith. An application is filled and amounts %ith ser'ice charges are deposited on

that form. In application the customer states the name of beneficiary, the amount and the

name of the city or place on %hich the draft is dra%n. 6emand 6raft is the safe %ay of

transferring money, because the payee ban has to mae immediate payments after the

presentation of 6emand 6raft. &ities %here NB$ has no branch, the "uslim &ommercial

Ban acts as an agent for NB$.

?.5.3. TELEGRAPHIC TRANSFER TT

TT is the uicest and fast mode of transferring money, this type in'ol'es

transferring of funds to other cities %ith telegraphic message. After filling an applicationform, the concerned officer fills the telegraphic form and the message fa+ed to the

reuired ban and on the reception of the message the other ban maes the immediate

payment to the customer. In the telegraphic message the customer mention the name of

the beneficiary, his account number or N.I.6 and number, amount etc.

?.5.4. PAY ORDER

$ay Order means transfer of money from one person to another at local station.

$ay Order is usually, used to a'oid the ris of accepting a cheue %ith no amount

a'ailable in the account. or the remo'al of this ris, people prefer pay order instead of

cheue. $ay Order and draft are same in nature but $ay Order is made at local station, the

draft is made for the transfer of money from one station to other station e.g. $esha%ar to

/arachi.

?.5.5. PAY SLIP

The ban for the settlement of its o%n payments issues pays Slips.

?.5. CALL DEPOSIT OR SDR

&all 6eposits are used for the transfer of funds in'ol'ing go'ernment institutions.

These are dra%n on go'ernment departments etc. This deposit is a ban guarantee on


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behalf of the depositor. No cheue boo is issued in this case only ban receipt is gi'en.

?.5.> CROSSED CHEUES

&heues %hose payment is not to be made on counter. or &rossed &heues, t%o

$arallel lines are dra%n on the face of the &heue. And the payment is to be made

through account. The follo%ing persons as under tae the &rossing of the cheue.

i. The dra%er of a cheue can cross the cheue.

ii. In case of an open cheue, any holder of it can cross the cheue generally or

special one or add PNon NegotiableP.

iii. Only the dra%er %ithdra%s crossing.

?.. ADVANCES DEPARTMENT

Ban is a profit seeing institution. It attracts surplus balances from the customers at a

lo% rate of profit and maes ad'ances=finances to indi'idual and business firms at higher

rate of mar


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?..2. DEMAND FINANCE

It is a facility in %hich it is obligatory on customer to %ithdra% the entire amount. In

demand finance, full amount of loan is ad'anced to the customer on the day the loan is

sanctioned. 3hen this type of ad'ance is gi'en to the borro%er, the ban gi'es grace

period after charging installments and marup. Ho%e'er, the customer pays installments

monthly.

?..3 PERSONAL LOANS

&ustomers %hose salary account is maintained by ban are eligible for this type of loan.

It is up to three basic salaries of employees of go'ernment organi*ation. The ob;ecti'e of

this type of loan is to impro'e the life style of customers.

?..4. STAFF LOANS

These types of loans include house loans, car loan etc. They are long


34/83

performing of loans. (The ris of unFFF %ith a %ide range purpose and all branches %ere granted %ith adeuate

discretionary po%ers.

Ad'ance salary is a modified form of running finance. It initially offered three months

ad'ance salary to salaried class customers of any go't., non


35/83

3. #egal status of party-s business (indi'idual consumer, indi'idual business, firm,

limited company).

4. &opy of National Identity &ard.

5. Security (T65, 6S&, 5I& etc).

6. &onsent= !ndertaing if security o%ned by some one other than the borro%er.

7. #ien mared certificate (for National &enter Securities).

8. Borro%ers- basic fact sheet.

9. Office note for appro'al %ith detailed terms and conditions.

10. Sanction ad'ice (Acceptance of terms and conditions by borro%ers).

Against Hypothecation of :oods and "achinery %ith Additional &ollateral of

"ortgage of $roperty

1. Account (&=A or $#S).

2. $arty-s reuest.

3. Statement of stoc of hypothecated duly 'erified.

4. Statement of account.

5. aluation certificate from ban-s engineer or appro'ed 'alue, as the case may be.

6. Ban-s legal ad'isor-s certificate.

7. Title documents of the property to be mortgaged. Title deed mutation, As Sha;ra,

Nasha Tas'eeri, ard Number, appro'ed site plan.

8. Non encumbrance certificate (not more than three months old).

9. $ersonal guarantee (if property o%ned by someone other than the borro%er).

10. Borro%er-s basic fact sheet.

11. &opy of National Identity &ard.

12. inancial Statement (as per SB$ prudential regulations).

13. &IB report (as per SB$ prudential regulations).


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14. Office note for appro'al %ith detailed terms and conditions.

15. Sanction ad'ice (acceptance of terms and conditions by the borro%er).

Against mortgage of $roperty Including i+ed Assets of Industry for Industry only


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REFERENCES

2. Inter'ie% %ith O.: Ad'ances 6epartment NB$Nodeh Branch Toru "ardan

3. Nasir, ". Saeed. (011). Baning &urrency and inance. $aistan /itab

4. "ara* 2.

5. Inter'ie% %ith O:FFF). "oney and Baning. $aistan /itab "ara*.0E


38/83


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CHAPTER 4

FOREIGN ECHANGE DEPARTMENT

In modern baning system, oreign 8+change department plays 'ery important role frome'ery aspect. It is parallel baning to the general baning %ith additional functions of

imports and e+ports business. oreign e+change is controlled by State Ban of $aistan.

5ules and regulations are framed by SB$. NB$ also carries the international baning

through its oreign 8+change 6epartment. All the transactions are carried at the rate

authori*ed by SB$. or this purpose !S dollar has been fi+ed by SB$ and the rate of

other currencies are calculated in accordance %ith the formula appro'ed by SB$ and as

published daily by oreign 8+change 5ate &ommittee in /arachi. NB$ Head Office

ensures that the branches recei'e the rates published by oreign e+change rate &ommittee

on the same day.

The oreign 8+change 6epartment pro'ides the follo%ing ser'ices

1 oreign &urrency Accounts.

2 oreign 8+change 5emittance acility.

3 Import Ad'ances to Importer.

4 8+port Ad'ances to 8+porters.

5.1. FOREIGN CURRENCY ACCOUNTS:

NB$ as an authori*ed commercial ban offers the facility of oreign &urrency Account in

four currencies, %hich are !S 6ollars, Japanese Len, :erman "ar, and !/ $ound

Sterling. Top management of NB$ has authori*ed a fe% selected branches for dealing in

foreign currency accounts.

The foreign currency account facility by NB$ is a'ailable both for $aistani &iti*ens and

foreigners. The procedure for opening foreign currency account is similar to opening of

local currency accounts, e+cept that in case of foreigners, the ban reuires photo copy of


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the applicant-s passport. The account may be an indi'idual or ;oint account.

The customer may open oreign &urrency Account in any of the mentioned oreign

&urrencies. 3ithdra%al and deposits are to be made in the same currency. Similarly

interest on the account %ill also be calculated in the currency in %hich the account is

maintained.

Broadly there are t%o types of foreign currency accounts.

1 &urrent Account

2 Sa'ing Account

5.1.1. C/((%+0 A,,&/+0:

Just lie local currency current account holder, no interest is gi'en to the oreign

&urrency account holder. oreign &urrency accounts are also e+empted from Qaat,

Income Ta+, %ealth Ta+. The account holder can shift his money abroad through foreign

e+change remittance ser'ices.

5.1.2. S")*+ A,,&/+0:

NB$ offers a rate of return on foreign currency sa'ing accounts. The profit is paid in thecurrency in %hich the account is opened. This account is also e+empted from Qaat,

Income Ta+ and 3ealth Ta+. The facility of in%ard and out%ard remittances is granted to

the customer.

oreign currency department of NB$ also has a 'ery e+tensi'e system for the purchase

and sale of foreign currencies. NB$ is an authori*ed dealer in the foreign currency, gi'en

the authority by the SB$. NB$ deals in the buying and selling of oreign &urrency notes

only i.e. dealing in coins is a'oided.

Head Office of NB$ determines the ma+imum foreign &urrency balances that can be ept

in e'ery branch authori*ed to deal in oreign &urrencies. Those branches of NB$ %hich

are authori*ed to deal in oreign &urrencies must submit the follo%ing reports about

foreign e+change,


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1 5eport to :eneral "anger Office

2 Business 5eport to SB$ ("onthly Basis)

3 "onthly 5eport to Head Office

5.2. FOREIGN ECHANGE REMITTANCES

The currency of one country is legal tender only in the same country and not in other

countries. So %hat should the businessmen do %hile doing international business. To

o'ercome such difficulty of businessmen the business is done through oreign 8+change.

The importer %ill need the currency of the e+porting country. The international business

is carried out by transferring credit from debtor-s country to the creditor-s country.

oreign remittances can be done in the follo%ing %ays9

1 Telegraphic Transfer(T.T)

2 "ail Transfer (".T)

3 oreign 6emand 6raft (.6.6

5.3. IMPORT EPORT LC

No%


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It is the ban, %hich opens #=& and then sends to the country from %here imports are to

be made. The issuing ban may send this #=& to one of its branch if present there, if not,

then to some other ban located in the e+porter-s country

5.3.2 A)**+ B"+=

This ban informs the e+porter that an #=& has been recei'ed and also acts as an agent of

the e+porter.

5.3.3 N%&0*"0*+ B"+=

Negotiating ban carries out the negotiation %ith the importer on behalf of the e+porter. It

may or may or may not be the ad'ising ban. The 'arious credentials related to #=& are

settled as per agreed terms of #=&.

5.4. TYPES OF LC

ollo%ing are the important types of #etter of credit

5.4.1. C&+'*(7% L%00%( O' C(%*0

It is a %ritten agreement in %hich the ban gi'e the guarantee that if the goods %ill be of

the standard and fulfilling the conditions of #=&, and then the e+porter (after presentingthe #=& to the ban) %ill get the payment from the ban. The characteristic of this ind of

#=& is that, it can-t be cancelled after issuance and the payment %ill be must.

5.4.2. U+-C&+'*(7% L%00%( O' C(%*0

In this ind of %ritten document the ban taes the responsibilities of recei'ing the bills

of e+porter. But it doesn-t gi'e the guarantee of paying these bills. !nconfirmed #=& can

be cancelled. The importer can cancel it and after cancellation the ban don-t gi'e the

guarantee of payment of #=&. It is a ind of conditional #=& i.e. the guarantee can be

gi'en in the case %hen the importer didn-t cancel it.

5.4.3. R%)&,"#$% L%00%( O' C(%*0


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This ind of #=& can be cancelled by the ban or by the reuest of the importer. In this

ind of #=& the chances of cancellation are at e'ery moment. So it is not dealt %idely and

the importance of this #=& is 'ery little.

5.4.4. I((%)&,"#$% L%00%( O' C(%*0

This ind of #=& is issued for foreign payments. They could not be cancelled until the

gi'en conditions are not broen. So %ith this ind of #=& the e+porter has the guarantee

of payment.

5.4.5. F*% L%00%( O' C(%*0

Those drafts or #=&, the amount of %hich is %hen paid once then it comes to an end, are

called fi+ed letter of credit.

5.4.. C*(,/$"( L%00%( O' C(%*0

This ind of #=& can be used for more than one time, e.g. if one #=& is of rupees >F lac

and the e+porter pro'ides the goods in installments, it has e+ported the goods %orth

rupees 0F lac. The remaining goods %orth rupees 0F lacs ha'e to be e+ported. And if

he (e+porter) pays rupees 0F lacs to the issuer (ban) so the #=& of rupees >F lac can be

rene%ed.

5.4.>. D&,/7%+0"(; L%00%( O' C(%*0

3hen %e enclose important documents %ith the #=& then it becomes a documentary #=&,

i.e. insurance, in'oice, post or draft, clearing certificates, etc

5.5. THE MECHANISM OF OPENING AN LC:

or buying any commodity from foreign country the buyer %ill reach the seller (e+porter)

for the purchase of particular commodity of goods. After the preliminary settling of

agreement bet%een the t%o parties, the importer %ill then apply to his ban for the

issuance of an #=&. The ban then ass the Importer to fill the #=& application form. This

form contains all the details discussed and agreed upon by the t%o parties.

Besides containing information lie description of merchandi*e, port of shipment and

unloading, it also mention the documents necessary for the honoring of draft dra%n upon


44/83

the issuing ban by the importer.

!sually the follo%ing documents are attached %ith #=&.

1 Application for #=&

2 "embership &ertificate of &hamber of &ommerce or Association

3 Insurance &ertificate

4 IB& charge form

5.5.1. NEGOTIATION OF LC DOCUMENTS

The process of Negotiation starts %hen the e+porter reaches the ban for honoring the

draft dra%n on it by the importer. The e+porter sends the documents e'idencing the

shipment of goods to the ban %here the credit is a'ailable and is accompanied by a draft

dra%n on the issuing ban by the importer.

After complete scrutiny, if the documents meet the reuired terms and conditions, the

ban they may negotiate the draft. This negotiation by the ban %ill be %ith recourse to

the seller. Then this ban sends bac the documents to the issuing ban for

reimbursement and is obtained in the pre


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5.1 FOREIGN REMITTANCES

To facilitate its customers in the area of Home 5emittances, National Ban of $aistan

has taen a number of measures to9

a. Increase home remittances through the baning system.

b. "eet the SB$ directi'es= instructions for timely and prompt deli'ery of

remittances to the beneficiary.

5.1.1. N%9 F%"0/(%

The e+isting system of home remittances has been re'ised significantly impro'ed and

%ell< trained field functionaries are posted to pro'ide efficient and reliable homeremittance ser'ices to nonresident $aistani at 0? o'erseas branches of the Ban besides

$aistan International Ban (!/) #td, and Ban A#


46/83

A(*,/$0/(% F*+"+,% S%()*,%

@I eed the 3orld program, a ne% product, is introduced by NB$ %ith the aim to help

farmers ma+imi*e the per acre production %ith minimum of reuired input. Select farms

%ill be made role models for other farms and farmers to follo%, thus helping farmers

across $aistan to increase production.

A(*,/$0/(% C(%*0

The agriculture financing strategy of NB$ is aimed at three main ob;ecti'es9

1. $ro'iding reliable infrastructure for agriculture customers.

2. Help farmers utili*e funds efficiency to further de'elop and achie'e better

production.

3. $ro'ide farmers as integrated pacage of credit %ith supplies of essential inputs,

technical no%ledge, and super'ision of farming.

Agriculture &redit ("edium To%n)

1 $roduction and de'elopment.

2 3ater course impro'ement.

3 3ells.

4 arm po%er.

5 6e'elopment loans for tea plantation.

6 encing.

7 Solar energy.

8 8uipment for sprinlers.

F"(7 C(%*0

NB$ also pro'ides the follo%ing subsidi*ed %ith the range of months to 0 year on a

rene%al basis.

NBP KISAN DOST


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1 #oans a'ailable for the farmers for production, de'elopment purposes, for purchases

of tractors, for installation of tube %ells, for purchase of agricultural Implements,

micro loans, for godo%n construction, for construction of fish pond, for li'e stoc

farming, for mil processing, for cold storage, bio< gas plants etc.

2 "ar


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National Ban of $aistan is all the fore front of international baning in $aistan %hich

is pro'en by the fact that NB$ has its branches in all of the ma;or financial capitals of the

%orld.


49/83

REFERENCES

0. Inter'ie%s %ith @"r. Jehangir han, "r. Baseer, and "r. Tari, Incharge

and assistants, oreign 8+change department NB$.

>. Nasir, ". Saeed. (011). Baning &urrency and inance. $aistan /itab

"ara*.2.

. Ibid, D.

2. Siddii, Asrar. H. (011). $ractice and #a% of Baning in $aistan.

/arachi9 6ecent $rint 8nterprises.

D. %%%.nbp.net.com=p

?. %%%.nbp.ceo.com=p

E. 8conomic Bulletin ol. 0, No . Addition ("ay. June)


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CHAPTER


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FINANCIAL ANALYSIS

1.1 LIUIDITY RATIOS

#iuidity ratios are used to ;udge a firm-s ability to meet short term obligations. It sho%s

the cash sol'ency of a firm and its ability to remain sol'ent in the e'ent of ad'ersities.

1.1.1 CURRENT RATIO

This ratio sho%s a firm ability to co'er its short< term liabilities through short term assets.

The three year comparison of NB$ is gi'en belo%9

&!558NT 5ATIO

L8A5S &urrent Assets = &urrent#iabilities

&!558NT 5ATIO

>FF? ?DD = >F1F 0.0F

>FFE >1 = 20?D 0.0F

>FF >E11D2 = 20EDDE2> F.?E

CURRENT RATIO

20072006 20082004.5

2005

2005.5

2006

2006.52007

2007.5

2008

2008.5

2009

CURRENT RATIO

YEARS


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1.1.3 CASH RATIO

Sometimes it needs to 'ie% the liuidity of the firm from an e+tremely conser'ati'e point

of 'ie%, for e+ample the company may ha'e pledged its recei'ables and in'entories. In

such type of situations, the best indicator of the firm of the short< term liuidity may be

the cash ratio.

&ASH 5ATIO

L8A5S &ash = &urrent #iabilities &ASH 5ATIO

>FF? 2D1 = >F1F F.>D

>FFE ?D>D = 20?D F.0

>FF D12>FDF> = 20EDDE2> F.02

CASH RATIO

20072006 20082004.5

2005

2005.5

2006

2006.5

2007

2007.5

2008

2008.5

CASH RATIO

YEARS

INTERPRETATION:

The three year comparison sho%s the smaller cash ratio in >FF?, it is clear that probably

NB$ carried less cash in >FFE as compared to >FF.

1.1.4 OPERATING CAH FLOS TO CURRENT LIABILITIES RATIO

Operating cash flo% to current liability ratio compares cash flo% to current liabilities of a

firm and indicates the funds flo% per unit of current liability.

O$85ATIN: &ASH #O3 TO &!558NT #IABI#ITI8S 5ATIO

L8A5S Operating cash flo% =

&urrent #iabilities

&!558NT 5ATIO

>FF? ?E11 = >F1F F.>

>FFE 2>??0 = 20?D F.0>

>FF 02?1?> = 20EDDE2> F.FD


55/83

OPERATING CASH FLOW TO CURRENT

LIABILITIES RATIO

20072006 20082004.5

2005

2005.5

2006

2006.5

2007

2007.5

2008

2008.5

CURRENT RATIO

YEARS

INTERPRETATION:

NB$ has impro'ed its operating cash flo% to current liability ratio. The increase is

attributed to the operating cash flo%s, %hich has increased more then ? times.

1.2 ACTIVITY RATIOS

Acti'ity 5atios are also no%n as efficiency or turno'er ratio it measures ho% effecti'ely

the firm is using its assets.

1.2.1 RECEIAVABLES TURNOVER ADVANCES TURNOVER

5ecei'ables turno'er or Ad'ances turno'er pro'ides insight into the uality of the firm

recei'ables or ad'ances and ho% successful the firm is in its collection.

58&8IAB#8 T!5NO85 5ATIO

L8A5S "arup= Interest 8arned =Ad'ances

5ecei'able Turno'er

>FF? 0>1FD2 = 02FD2EE2 F.>>

>FFE >E0>?1 = 02FD2EE2 F.01

>FF

012D>0E = 0?F11F>?D F.0>


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RECEIVABLE TURNOVER RATIO

2008200720062004.5

2005

2005.5

2006

2006.5

2007

2007.5

2008

2008.5

Receivabe T!"#$ve"

YEARS

INTERPRETATION:

The ban has better Ad'ances turno'er ratio in the year >FF compared to the year >FF?

and better in >FFE as %ell.

1.2.2 DEPOSITS TURNOVER RATIO

This ratio compares the "arup e+pense that the ban pays on deposits to the deposits of

the ban.

68$OSIT T!5NO85 5ATIO

L8A5S &urrent Assets = &urrent

#iabilities

6eposit Turno'er

>FF? 0EE>2E = 21?0EF? F.FD

>FFE 02?1DFE = ?>?D?E F.F2F

>FF

?EDDE1 = 1DD?21F F.F0E


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DEPOSIT TURNOVER RATIO

2006 2007 20082004.5

2005

2005.5

2006

2006.5

2007

2007.5

2008

2008.5

De%$&i' T!"#$ve"

YEARS

INTERPRETATION:

The 6TO for the year >FFF has declined. It is F.F2 and F.FD for the year >FFE and >FF?

respecti'ely. It sho%s that for each rupees deposit by the customer it pays F.F? as interest

e+pense. In >FF it is F.F0E, %hich sho%s the lo%er interest.

1.2.3 TOTAL ASSET TURNOVER

:enerally the total assets turno'er measures the acti'ity of the assets and the ability of

the firm to generate sales through the use of the asset.

TOTA# ASS8T T!5NO85 5ATIO

L8A5S "arup, Interest 8arned =

Total Assets

TST

>FF? 0>1FD2 = 0ED0F2E 0.E

>FFE >E0>?1 = >1?>? 0.0

>FF

012D>0E = >ED2F02 F.EFD


58/83

TOTAL ASSET TURNOVER RATIO

20072006 20082004.5

2005

2005.5

2006

2006.5

2007

2007.5

2008

2008.5

2009

TST

YEARS

INTERPRETATION:

The Assets efficiency of the NB$ has reduced for the year >FF to 0.0R compared to

>FF? %hich %as 0.ER. In other %ords %e can say that each dollar in'estment in total

assets produces ? cents as marup. The decline in ratio is mainly because of decrease in

Total "arup = Interest 8arned amount in >FF. .

1.2.4 FIED ASSETS TURNOVER

Sometimes it is needed to find the efficiency of fi+ed assets to generate interest re'enue

or sales. i+ed assets turno'er is a tool to find ho% efficiency one the firm-s fi+ed assets

to produce "arup = Interest re'enue.

I86 ASS8TS 5ATIO

L8A5S "arup or Interest 8arned =

i+ed Assets

i+ed Asset Turno'er

>FF? 012D>0E = >0D2>??1 F.F1

>FFE >E0>?1 = 0E?0D0D>? F.0D

>FF

0>1FD2 = 2>D22?11 F.FE


59/83

FIXED ASSETS RATIO

20072006 20082004.5

2005

2005.5

2006

2006.5

2007

2007.5

2008

2008.5

(i)e* A&&e' T!"#$ve"

YEARS

INTERPRETATION:The three year comparison of fi+ed asset turno'er for NB$ sho%s that the ratio has

increased for the year >FFE. The decrease in total amount of "arup = Interest 8arned and

increase in fi+ed assets has brought this ratio do%n. Ho%e'er it decreases in >FF

increase in fi+ed assets and marup cause this.

1.3 PROFITABILITY RATIOS

These ratios indicate the firm-s o'erall effecti'eness of the operations.

1.3.1 NET PROFIT MARGINS

This is the conser'ati'e method of sales profitability. This ratio gi'es a measure of Net

Income in dollars generated by each dollar of sales.

N8T $5OIT "A5:IN 5ATIO

L8A5S Net Income = "arup or

Interest 8arned

Net $rofit "argin

>FF? ED>>>? = 0ED0F2E F.F2>FFE 2F2D1 = >1?>? F.02

>FF

D1E0? = >ED2F02 F.>0


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NET PROFIT MARGIN RATIO

20072006 20082004.5

2005

2005.5

2006

2006.5

2007

2007.5

2008

2008.5

Ne' +"$, i' -a"i#

YEARS

INTERPRETATION:

The ban has considerably impro'ed the Net $rofit "argin. In >FFE it %as earning 0F

paisa per rupee marup %hile pre'ious year >FF? comparisons sho% 2 cents per dollar

marup or return. And a ER increase in >FF.

1.3.2 GROSS PROFIT MARGIN

This ratio sho%s the profit of the firm relati'e to the sales. It is a measure of efficiency of

the firms operations as %ell as an indication of ho% product or ser'ices of the firm arepro'ided.

:5OSS $5OIT "A5:IN 5ATIO

L8A5S Net "arup or Interest

8+pense = "arup or

Interest 8arned

:$"

>FF? 0EE>2E = 0>1FD2 F.?F

>FFE 02?1DFE = >E0>?1 F.D2

>FF

?EDDE1 = 012D>0E F.2


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GROSS PROFIT MARGIN RATIO

2008200720062004.5

2005

2005.5

2006

2006.5

2007

2007.5

2008

2008.5

2009

/+-

YEARS

INTERPRETATION:

NB$ bas a better :ross $rofit "argin for the year >FF? compared to the year >FFE. It

sho%s that NB$ has become more effecti'e in producing the ser'ices reasonably abo'e

cost and charging for them. 3hile in >FF it again decreases that-s sho%s its good sign.

1.3.4 RETURN ON INVESTMENT

The return on the In'estment measures the firm-s ability to utili*e its assets to create

profits by comparing profits %ith the assets that generate the profits from du pont

approach.

58T!5N ON IN8ST"8NT

L8A5S Net $rofit "argin K Total

Asset Turno'er

5OI

>FF? F.?2 K 0.E 0.01

>FFE F.02K 0.0 F.0D

>FFF.>0K F.EFD F.0DF


62/83

RETURN ON INVESTMENTS

20042003 2005200.5

2002

2002.5

2001

2001.5

2004

2004.52005

2005.5

ROI

YEARS

INTERPRETATION:

NB$ sho%s a lo% 5OI in the year >FF compares to the year >FF? 4>FFE. Its 5OI has

decreased from, in the year >FFE, F.0D to .0D in >FF. The assets turno'er though

reduced still the impro'ement in NB$ %ill bring this ratio up.

1.3.5 RETURN ON EUITY

This ratio compares Net $rofit after Ta+es to the euity that the share holders ha'e

in'ested in the firm. A high return on euity reflects the firm acceptance of strong

in'estment opportunities and effecti'e e+pense management.

58T!5N ON 8G!ITL 5ATIO

L8A5S Net $rofit "argin K Asset

Turno'er K 8uity

5O8

>FF? F.?2 K 0.E K 001D 0?0.

>FFE F.02K 0.0 K 02>E >>D.E

>FF

F.>0K F.EFD K 00 >E>.>


63/83

RETURN ON EQUITY RATIO

20072006 20080

500

000

500

2000

2500

1000

1500

4000

ROE

YEARS

INTERPRETATION:

It is clear from the abo'e ratio comparison that the 5O8 ratio for the year >FF has

increased to >E>.> from >>D in the year >FFE. There is a decrease in euity multiplier and

asset turno'er but still the impro'ement in Net $rofit "argin in the year >FF has

fa'orable effect on 5O8 ratio.

1.3. ADVANCES TO DEPOSITS RATIOS

The firm compares the ad'ances to deposits and sees the comparisons of different years

A6AN&8S TO 68$OSITS 5ATIOS 5ATIO

L8A5S Ad'ances = 6eposits 8uals

>FF? 0EF01F1? = 21?0EF? F.2E

>FFE 02FD2EE2 = ?>?FD?E F.E

>FF 0?F11F>?D = 1DD?21F F.2F?


64/83

ADVANCES TO DEPOSITS RATIOS RATIO

20072006 20082004.5

2005

2005.5

2006

2006.5

2007

2007.5

2008

2008.5

2009

E!a&

YEARS

INTERPRETATION:

It sho%s that in >FF there is an increase both in the deposits as %ell as in the ad'ances,

%hich sho%s a good sign for the ban. Although it is decrease as compare to >FF?.

1.3.> INVESTMENT TO DEPOSITS RATIOS

The firm compares the in'estments to deposits and sees the comparisons of different

years.

IN8ST"8NT TO 68$OSITS 5ATIOSL8A5S In'estments = 6eposits 8uals

>FF? E0ED1221 = 21?0EF? F.>FD

>FFE 02D>21E0 = ?>?FD?E F.1D

>FF

0??01D?01 = 1DD?21F F.2>F


65/83

IN3EST-ENT TO DE+OSIT RATIO

20072006 20082004.5

2005

2005.5

2006

2006.5

2007

2007.5

2008

2008.5

2009

E!a&

YEARS

INTERPRETATION:

It sho%s that ban has done a good in'estment that increases its total in >FF, as compare

to >FFE 4 >FF?. It-s a good sign for the ban more cash is generated in this %ay.

1.3.? EUITY MULTIPLIER

8uity multiplier compares the assets of the firm to the share holder euity.

8G!ITL "!TI$#I85

L8A5S Total Assets = 8uity 8uity "ultiplier

>FF? 0ED0F2E = 001D?E F.1?

>FFE >1?>? = 02>E1F F.0?

>FF

>ED2F02 = 001E 0.D>


66/83

EQUITY MUTIPLIER

200520042001200

2002

2001

2004

2005

2006

2007

E!i' -!'i%ie"

YEARS

INTERPRETATION:

The euity multiplier has also been reduced from in the year >FFF. The main factor here

again is that the amount of euity has considerably increased. But increase in the year

>FFF, %ith increase both in the assets and euity.

FIVE YEAR PERFORMANCE AT A GLANCE

(5s. In millions)

Lears Total Assets 6eposits Ad'ances In'estments Shareholder

8uity

011 >D,FDE >E,10 0F1,D>2 0F>,1?1 1,1E

0111 DF,2F? >12,ED2 0>>,DD1 10,2? 0F,D

>FFF E0,?? 0?,21 02F,0 E>,?F1 00,E

>FF? 20D,F1 21,?0E 0EF,01 E0,ED1 00,1D1

>FFE 2>,F ?>,?? 02F,D2E 02,D>D 02,>E1

>FF 2E0,?F 1D,D? 0?F,11F 0??,01? 0,02


67/83

Tota A!!" t!

0

00000

200000

100000

400000

500000

2 1 4 5 6

Y"a#!

RS.

$%&$$o%!

T$'a A&&e'&

Yea"&

DEPOSITS

0

50000

00000

50000

200000

250000

100000

150000

400000

450000

2 1 4 5 6

YEARS

R!.

$%&$$o%!

De%$&i'&

Yea"&

S&/(,%: A++/"$ R%&(0 2?

ADVANCES

0

50000

00000

50000

200000

2 1 4 5 6

YEARS

R!$%&$$o%!

A*va#ce&

Yea"&

Source9 Annual 5eport >FF


68/83

I%'"!t&"%t!

0

50000

00000

50000

200000

2 1 4 5 6

Y"a#!

R!.$%

&$$o%!

I#ve&'e#'&

Yea"&


S(a#" (o)"# E*+$t,

0

5000

0000

5000

20000

25000

2 1 4 5 6

Y"a#!

R!.

$%&$$o%

!

Sa"e$*e" E!i'

Yea"&


69/83



(5s. In millions )

Lears $re,0D DF 0,22 0D,ED

>FF2D>F 0 0,20 0D,D20

>FFD0,F> 2?0 0,2> 0D,D0

>FF?,F0? 0,021 0,>2D 0D,0?

>FFE?,F2D >,>D 0,>F2 0>,01D

>FF1,FF1 2,01 0011 0>E>




70/83


71/83

FINANCIAL HIGHLIGHTS

5s. In "illions

Authori*ed &apital D,FFF

$aid up &apital 2,0F

Shareholder 8uity 4 5eser'es >E,D2

6eposits 1D,D?

Ad'ances CNet 0?F,11F

In'estment Net 0??,01?

Total Assets 2E0,?F

$re



72/83


73/83

2 The customers- relations of the NB$ staff are much %eaer as compared to other

pri'ate bans.

3 #ong term contacts are not maintained %ith customers.

4 "ost of the staff is from families %ith strong political bacground so it is 'ery

difficult to remo'e them or punish their negati'e beha'ior.

5 The technical training of the staff is negligible e.g. in case of absence of the

computer operator there is no alternate trained person %ho can record the daily

transactions.

6 The organi*ation is 'ery much mechanistic and pro'ides no fle+ibility to

encourage creati'ity.

7 The lo%er staff is non


74/83

11 "uch time is %asted %hile searching for e'en a %ee old document.

12 The staff spends more time in collections than reuired. The ban collections are

usually late because of the non


75/83

7 #easing business.

8 Hiring the ne% BBA (HONS)-s, ne% talent %hich can control the administrati'e

e+penses.

1.4 THREATS

1 The biggest threat to the operational success is the better competitors- ser'ices.

"any pri'ate sector bans are offering higher rates of return to customers than

NB$.

2 The bans in the neighborhood of NB$ ha'e become online e.g. !nion Ban,

Habib Ban, "uslim &ommercial Ban and Standard &hartered Ban, %hile it

lacs this.

3 &annibali*ation of profits is yet another threat to the success of NB$. The

branches of NB$ are located 'ery close to each other. All these branches are

taing a%ay each other-s customers.

4 One of the biggest threats to the NB$ is the increasing rate of dissatisfied

customers. "ost of these customers %ere obser'ed to be dissatisfied %ith the

delays in their ser'ices.

5 The greatest threat to the performance of NB$ is the decreasing morale of

employees. They feel that they are not pro'ided %ith bonuses, they are not gi'en

proper attention to ha'e a say in the meetings.

6 High


76/83


77/83

REFERENCES

0. an Horne, James &. (011D). inancial "anagement and $olicy.

>. $andey, ".I. inancial "anagement. Ahmedabad9 ias $ublishing

House.

. an, Horne, James. &. (011) undamentals of inancial "anagement.

!SA9 $rentice Hall Inc.0>?.

2. :ibson H. &harles (>FFF). inancial Statements Analysis.


78/83

CHAPTER ->

FINDINGS AND RECOMMENDATIONS

There is al%ays a better %ay of doing things so some of recommendations suggested for

the ban in accordance to the critical analysis.

>.1 IMPROVE UALIFICATION OF THE STAFF

Academically staff is uite ualified but most of the staff lacs professional ualification

i.e. they should do diploma in baning. It %ill help them a lot in baning and also in their

promotions. The cost of diploma in baning is lo%. It has three stages and the cost per

stage is < 5s.>, FFF.

>.2 STAFF SHOULD BE TRAINED

$roper training should be gi'en to the staff of the branch. Staff college people should

come and train the staff because some times it is difficult for staff to 'isit Staff &ollage

$esha%ar to get the reuired training. The cost estimates for the Staff &ollege employees

to come to the branch and gi'e them training %ill be lie 5s.0, FFF per Staff &ollege

8mployee for one day. So if t%o people come for t%o days after si+ months then the cost

%ill be 5s., FFF per year, %hich is negligible.

>.3 IMPROVE TECHNOLOGY

This branch has fa+, telephones and computers. It is suggested that there should be on

line baning facility and AT" (Auto Teller "achine) facility. The e+isting computers

should be interconnected by net%oring, %hich %ill cost only 5s.0F, FFF for only one

time. The benefit of Net%oring %ill be that the different departments %ill be able to

%or and easily, efficiently and %ith least %astage of time.

>.4 RANK INFLUENCE SHOULD BE AVOIDED

Some times high ran officers come and %ant themsel'es to be gi'en priority. In these

cases ban should strictly follo% the rule of first come first ser'e-. This %ill maintain the


79/83

trust of other customers that they are not neglected ;ust because they ha'e no ran.

>.5 SECRECY MEASURES MUST BE MAINTAINED

The branch must maintain the secrecy of its customer-s account especially %hen the ban

is ased on telephone to tell about the financial standing and balance in the account.

>. GOLD LOAN AND LOCKER FACILITY

Ban should utili*e its deposits by e+tending gold loans and all other ind of loans to

attract the potential customers to utili*e their full capacity. This %ill increase their

business circle, and %ill increase profits by decreasing per unit costs.

>.> MOTIVITATE THE EMPLOYEES

The staff of the NB$ Aora /hattaBranch, especially the lo%er staff is found 'ery

much demoti'ated. They are dissatisfied %ith the performance appraisal system of the

ban. They also complain about the nepotism of the upper management. The Branch

manager should establish a systematic and efficient appraisal system to o'er come the

demoti'ation and dissatisfaction of the employees.

>.? CUSTOMER ORIENTATION

8'ery leading organi*ation considers its customers as the ings. So the ban manager

needs to eep in close contact %ith the e+isting and the potential customers. He should

inform them about ne% products of the ban. The customers should be ased about the

ban-s ser'ices from time to time. And the deficiencies pointed out by the customers

should be remo'ed. The customer and staff relationship should be made mild, soft,

courteous, cooperati'e, and caring, %hich is not lie this in NB$ no% a days, as

compared to other pri'ate bans.

>.@ OB ROTATION

The employees should be rotated through different seats of different departments, so that

each and e'ery employee is a%are of the %hole baning system. It %ill benefit in the

absence of employees.


80/83

>.@ DECISION OF GOVERNMENT

The go'ernment is sending the salaries of some of the departments of the NB$, %hich

creates a lot of rush and 'oice in the ban, at the end of each month the NB$ should ha'e

to appeal to the go'ernment to retae this order and send their salaries to each department

independently. The NB$ is getting nothing out of it e+cept disaster in the ban.

>.@ DRESS CODE

6ress taes a great role in presenting somebody-s personality. 8specially for baners,dress code should come in a 'ery formal dress and thus they can sho% their customers

about their seriousness to%ards %or.


81/83

LIST OF PERSONS INTERVIEED

1 Operation "anager Aora /hatta Branch

2 O.:


82/83

1 6ecen*o, 6a'id. A and 5obbins, Stephen. $. (0112). Human 5esource

"anagement. !SA John 3iley and Sons Inc.

2 6urrani, Imran (>FFF). Internship report on NB$ submitted to Institute of

"anagement Studies.

3 Hassan, "umta* (011). The story of NB$, /arachi.

4 Harold, /oont* and Hei* 3eihrich (012). "anagement. "c:ra% hill, th

edition.

5 http9==%%%.nbp.com.p

6 /id, 3ell, 6a'id, $eterson, 5ichard and Blac 3ell. (011). inancial Institution,

"arets and "oney. !SA the 6yden $ress Harcourt Brace Jo'ano'ich &ollege

$ublisher.

7 /oont*, Harold and Hein* 3eihrich. (011). "anagement. 0Fth 8dition.

Singapore9 "c:ra% Hill.

8 Nasir, ". Saeed. (011). Baning &urrency and inance. $aistan /itab "ara*.

9 Nasir, ". Saeed. (011). 8conomic Theory. IImi /itab /hana.

10 National Ban of $aistan, (>FFF). Annual 5eport >FFF. /arachi.

11 National Ban of $aistan, 8conomic Bulletin of NB$, /arachi.

12 National Ban of $aistan, Statements of #iabilities and Assets, Statements of

$rofit and #oss (>FFF, >FFF, >FFF).

13 NB$, BBI. (011E0, &ircular No. 0=>FFF. Head Office National Ban of

$aistan, /arachi.

15 $resident Office "ays 0, &ircular No. 00=>FFF. Head Office. National Ban of

$aistan, /arachi.


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16 5ue, #eslie. 3 and #loyd #. Byers. (011>). "anagement. Boston9 6onnelley and

Sons &ompany.

17 Siddii, Asrar. H. (011). $ractice and #a% of Baning in $aistan. /arachi9

6ecent $rint 8nterprises.

18 %%%.nbp.com.p

19 %%%.sbp.org.com

20 %%%.;anggroup.com

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Report of Nbp Numl