This document provided details of my achievements in terms of practical implementation and understanding of working environment in banks. During the course of my internship at National Bank of Pakistan Small Industrial Brach Faisalabad, I worked in the remittance department, clearing and Credit Department specifically on making of Agricultural credit approval and customer analysis. And I also got one week experience with general Banking to see that how the documents are handled.
INTRODUCTION OF NATIONAL BANK
National Bank of Pakistan maintains its position as Pakistanis 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 Pakistanis economic growth through aggressive and balanced lending policies, technologically oriented branches.
The National Bank of Pakistan came into existence on 20th November 1949 under the National Bank of Pakistan Ordinance No.21 of 1949.It is a semipublic bank and functions like other commercial banks.. It also functions as an agent of the Central Bank and operates the treasuries at places where no branch of State Bank of Pakistan exists. 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.
National Bank of Pakistan has built an extensive branch network with 1250 branches in Pakistan and operates in major business centre abroad. The Bank has representative offices in Beijing , Tashkent , Chicago and Toronto . It has agency arrangements with more than 3000 correspondent banks worldwide.
The Bank's financial performance has been remarkable. In 2009, total assets are estimated at Rs944 billion, while deposits have grown to nearly Rs726 billion. Pre-tax profit rose to Rs22 billion. Earnings per share have jumped to Rs16.92 in 2006. The increase in profit was achieved through strong growth in core banking income. Interest income increased by Rs10 billion through growth in the loan portfolio as well as increase in spreads. Advances increased by Rs63 billion to Rs475 billion. The Bank maintains a sound loan portfolio diversified in nature to counter the risk of credit concentration. It ranges from providing credit to the un-banked market segment under NBP Karobar, to small and medium enterprises, to agricultural loans, to large corporate customers.
To be recognized as a leader and a brand synonymous with trust, highest standards of service quality, international best practice and social responsibility.
NBP will aspire to the values that make the NBP truly the Nation's Bank, by:
Institutionalizing a merit and performance culture.
Create a distinctive brand identity by providing the highest standard of services.
Adopting the best international management practices
Mixing stakeholders value
Discharging our responsibility as a good corporate citizen of Pakistan and in countries where we operate.
Highest standards of integrity
Institutionalizing a teamwork and performance culture
Excellence in service
Advancement of skills for tomorrow challenges
Awareness of social and community responsibility
Value create for all stakeholders
ORGANIZATION CHART OF NATIONAL BANK OF PAKISTAN
Board of Directors
Chief Executive Officer
Executive In charges
Area Manager North
Area Manager South
DESIGNATIONS FO HIGHER LEVEL OFFICERS
SENIOR EXECUTIVE VICE PRESIDENT
EXECUTIVE VICE PRESIDENT
ASSISTANT VICE PRESIDENT
GRADE I OFFICER
GRADE II OFFICER
GRADE III OFFICER
Each zone is then sub divided into a no. of branches. The control and supervision of each branch is mostly entrusted to AVP or officer of grade I.
2 SECOND OFFICERS
PRODUCT / SERVICE MIX OF NATIONAL BANK
NBP offer a wide range of banking services to public and private sector corporations, partnership, individuals and others. However, there are some basic services which NBP at present offered to his customers include:
Deposits are the lifeblood of a 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 bother local & foreign currencies.
In local currency (PkR) the following type of accounts are available at the bank
Short term deposits
Fixed deposit receipts
Advances are the major source of earning income for commercial banks; it is the interest charged on the money lend to customers. Bank advances to customers are made either by way of loan or by overdraft on current account.
At present NBP provides short term loans as well as long term loans.
Following is the list of major foreign services provided by NBP to its customers: e .g:
Documentary Letter of Credit
Bills of Negotiation
Bills for collection
A brief description on of above stated services is given under;
DOCUMENTARY LETTER OF CREDIT
A documentary letter of credit may be defined as an authority issued by the opening bank on behalf of the importer in favor of the exporter with the stipulation that the drafts drawn there under will be duly honored provided that the terms and conditions as mentioned there in are duly compiled with.
With respect to the documentary credit the following types of documentary letter of credit are offered by NBP;
Back to back LC
Stand by LC
BILLS FOR NEGOTIATION
In some cases the exporter is not willing to wait for the proceeds of collection to be remitted. In such cases exporter requests the Bank to negotiate the bills i.e. he sends the documents to Bank. In this case Bank examines the documents and arranges them with the requirements mentioned in the Letter of Credit. When bank satisfied it pays to the exporter. Now Bank has the right to collect the proceeds on his own behalf from the importer's Bank
NBP performs the functions of both the exporter's and the importer's Bank as per its customer's status.
BILLS FOR COLLECTION
The exporters and bank receives the documents from the exporter, examines and dispatches them to the importer, s bank. The importer, s bank confirms these, as per the requirements stated in the letter of credit. If founds correct gets the amount from the customer, advice the exporter ,s bank about the receipt of payment and in the end makes the payment to the exporters bank.
It includes local and foreign currency fund transfer. NBP also provide the facility to its customers in remitting funds from one place to another place. The remittance (between two countries). At present bank provides the following instrument that facilitates the transfer of funds.
UNMATCHED BANKING FACILITIES
Deposit security, Guaranteed by Government of Pakistan.
Largest contribution towards Government and Semi- Government Requirements.
Agent of the State Bank of Pakistan handling Treasury Functions, receipts of Taxes & other Revenues.
Handling of salaries and pensions of federal/ provincial employees and defense personnel.
Utility Bills collections.
Sale and encashment of Prize Bonds through its 266 authorized branches.
Sale and encashment of Defence Savings and Special Savings Certificates.
Safe Deposit Lockers for customers
Services available on NBP ATM are
Cash withdrawal according to your cyclic limit.
Transfer of funds between PLS Savings Account and Current Account of the same customer through the same ATM Card.
Account Balance Inquiry.
MY INTERNSHIP PROGRAMME
Major activities performed during my internship program in different departments are as follows
ACCOUNT OPENING AND CLOSING DEPARTMENT
In this department, I gain the practical knowledge about opening account. This department deals with opening current and saving account for its customers and all matters regarding thereof. The customers opening current and saving accounts can be categorized as following Basically function of A/c opening & closing in NBP is performed under Accounts department but I am discussing it with separate heading for better understanding.
PROCEDURE TO OPEN AN ACCOUNT
When a customer wants to open an account, the bank officer gives application form to him. All information, which is necessary to be known by the bank, is requirements of the application form. From also requires the essential documents to be attached by the customer.
Following persons can open an account:
Private accounts (individual A/Cs)
Club, Society & Association
Basically following information is required:
Currency of account
Nature of Business
Special instruction regarding the account
Signature of the applicant
DOCUMENTS TO BE ATTACHED
Documents required to be attached are different for different categories.
1) - SOLE PROPRIETOR'S ACCOUNT
They have to submit their business registration certificate number.
2) - PRIVATE ACCOUNTS
For individual or private accounts following documents & information has to be given:
office address & office ph. No.
position to title
passport or identification No/
Date and place of birth
3) - JOINT ACCOUNT
If some one wants to open joint account the following information is needed:
Specimen of signatures of the joint account holders
4) - JOINT COMPANY
In this case following information & documents are required:
Certified true copy of the Memorandum and Articles of Association of the company.
Certified true copy of the resolution of the board of directors / managing committee / governing body regarding conduct of the account.
Certified list containing names and signatures of the directors / office bearers.
Certified true copy of the certificate of incorporation or registration.
Certified true copy of the certificate of commencement of business ( in case of public limited companies).
I.D. Card copy of each director
Original is also enclosed for inspection and return
List of persons authorized to operate on the account.
5) - PARTNERSHIP COMPANY ACCOUNT
Documents required in this case are as follows:
Specimen of signatures of the partners
Certified true copy of partnership deed
ISSUANCE OF CHEQUE BOOK:
A cheque book is issued to customers by the bank when they open account for withdrawal of account. After the clearance of all the relevant information, 1st cheque book is issue to customers. Customer can require cheque book again by providing a requisition slip which is there in every cheque book. Signature on the requisition slip by the account holder is mandatory.
In my Branch Mr. Ray Nawaz (Officer Grade- I) had the authority to issue cheque book. He keeps and maintains the cheque book register. Record of Cheque book inventory and cheque books issued are maintained in this register. When the cheque book was issued an entry was passed in the register with the detail of account number and no. of leaves in the cheque book.
When a customer opens an account with the bank, he is provided with cheque book for withdrawal of account. However, the first cheque book is given to the customer only when all the required documents are checked. A cheque book contains twenty five, fifty or hundred leaves. The cheque book also carries a requisition slip for the issuance of the new cheque book. This slip is duly filled and singed by the customer. The signature of the customer is verified by the bank and new cheque book is issued to the customer and serial numbers of the cheque are duly entered in the book of the bank. Along with the signature, person should also write his full name & address.
He keeps and maintains the cheque book register Cheque book inventory and cheque books issued are recorded in this register. The account number for which the cheque book is issued and the number of leaves are also recorded in this register when the cheque book issued an entry is passed in the cheque book issue register.
HOW TO CLOSE AN ACCOUNT
The account can be closed by the customer. The customer is required to submit and application for closing the account. Then the account is closed out and his balance is paid to him. Cheque book is returned back to bank and the officer cancel and the remaining cheques in cheque book.
CASH DEALING DEPARTMENT
Cash department of NBP is given the complete responsibility of handling all receipts & disbursement of cash.
Cash receipts for receive deposits.
Encashment of cheque
Cash department of NBP is a separate close part covered with glasses. No one other than cash department's employee is allowed to enter into that area.
The depositor uses cheque deposit slip (or cash deposit slip) for depositing the amount.
There are two parts of cash deposits slips:
Adjacent credit voucher.
ACCEPTANCE & PAYMENT OF CHEQUE
The cash is paid against the cheque of the client. The following points are kept in mind while receiving the cheque from the client.
Cheque should be drawn on NBP.
It should not be post dated.
It should be bearer cheque so the word bearer should not be crossed.
Payment is not stopped by the drawer.
Amount in words & figure should be same.
Alternation in date / figure / word require drawer's full signature with signature on the cheque
AFFIRMATION OF SIGNATURES
After receiving the cheque the officer verifies the signature of the account holder with the signature on the cheque. It signatures are not the same then it is returned back otherwise forwarded to computer terminal.
COMPUTER TERMINAL PROCESS
The cheque is received in computer terminal, where the computer operator checks the balance of the account holder. The operator also sees whether the stop payment instructions are received from account holder or not. After considering these two points computer operator posts the cheque in account holder ledger & returns the cheque back to the officer.
PAYMENT OF CASH
The cheque is cancelled after posting & is returned to cashier. The cashier enters the cheque in "cash paid register" & pays against the second signature of the receiver on the back of the cheque.
The procedure undertaken upon receiving deposits from the customers is as follows:
Examining the deposit slip to ensure that the name and the account numbers are clearly indicated.
Counting the cash and cheques and agree the total with the amount on the deposit slip.
After that the pay in slip is validated for cash transaction and transfer and clearing transfer as appropriate before the counterfoil is handed over to the customer.
Cheques signed by directors, partners or employees of a company, drawn in favor of them and credited in their account in the bank are to be scrutinized.
STOPPING THE PAYMENT OF CASH ON PRESENTATION OF CHEQUE
The payment of cheque is stopped dishonored on the following grounds:
Drawer's signatures differ
Payee's endorsement requires bank's guarantee
Alteration requires full signatures
Cheque is post dated
Cheque is without date
Amount in figures and word differs
Crossed cheque must be presented through the bank
Payment stopped by the drawer.
In this department, I have worked for two weeks. NIFT representative receives all the cheques from the branches at 4 o clock and makes the lots of these cheques again. Next day at early in the morning NIFT sends to their relevant branches where the validity of these cheques is verified and the accounts of the relevant clients are affected.
TYPES OF CHEQUE
Some specific types of cheque are being entertained in the clearing department of NBP Main Branch, Lahore.
These types of cheque are:
Out station cheque
In house cheque
TYPES OF CLEARING
Clearing department deals with the two type of the clearance.
These are stated below:
Cheque drawn on NBP and presented to other Banks or handed over to NBP agent in clearing house. That is inward clearance for NBP. So inward clearing results in outflow of funds to collecting bands reducing the balance in the clearing account.
Similarly cheques which are drawn on other bank are known as outward clearance for NBP. So outward clearing results in inflow of funds from paying bank into the clearing account maintained with clearing house increasing the balance in the clearing account.
Outward clearing thus may be:
Excess of outward clearing over inward clearing produces a net increase in the clearing account balance. Excess of inward clearing over outward. Clearing produces a net decrease in the clearing account balance. The first case is referred to as favorable clearing & the second case as unfavorable clearing.
Remittance is the monitory 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.
Remittance Department can be divided into two sections due to its activities.
1) - LOCAL REMITTANCE
Local remittance section deals with remittance ( incoming and outgoing but only in local i.e., Pakistan rupee and within Pakistan.
Local remittance includes the following eight functions in NBP:
I worked in this department for one week. This department deals in transfer of money from one place to another or country by:
In this department internees are advised only to observe the working of transfer of money from one place to another place of the country by the above modes of transferring money. During my stay in this department I observed that how demands draft be issued. The procedure is as follows.
Demand draft is a popular mode of transfer. The customer fills the application form. Application form includes the beneficiary name, account number and a sender's name. The customer deposits the amount of DD in the branch. After the payment the DD is prepared and given to the customer. NBP officials note the transaction in issuance register on the page of that branch of NBP on which DD is drawn and will prepare the advice to send to that branch. The account of the customer is credited when the DD advice from originating branch comes to the responding branch and the account is debited when DD comes for clearance. DD are of two types.
Open DD: Where direct payment is made.
Cross DD: Where payment is made though account.
Pay order is made for local transfer of money. Pay order is the most convenient, simple and secure way of transfer of money. NBP takes fixed commission of Rs. 25 per pay order from the account holder and Rs. 100 from a non-account holder..
When the money is not required immediately, the remittances can also be made by mail transfer (MT). Here the selling office of the bank sends instructions in writing by mail to the paying bank for the payment of a specified amount of money. Debiting to the buyer's account at the selling office and crediting to the recipient's account at the paying bank make the payment under this transfer. NBP taxes mail charges from the applicant where excise duty is charged. Postage
During my internship I also work in credit department. In NBP different type of credit facility is available which are as fellows
Agri Gold loan
NBP provide the facility to get 15 advance salaries for government employees. Maximum time period to avail this facility is 5 years for the employee. Bank is charge 13% mark up against this facility.
Basic documents which are required for giving advance salary as under:
Computerized ID Card
Three latest salary slip
Note: Employee must have his bank account in the branch.
Common document required for Agri Gold & Agri Passbook are as fellows
Application from borrower
Borrower basic fact sheet
Credit investigation report
Attested copies of CNIC borrower & next of kin
Fard jmabandi & khasra gardawri
Letter of authority for agri insurance scheme through NBP
In Agri Gold the additional document from the above mention documents are.
Valuation certificate from gold smith
In Agri Passbook the additional documents are as
Passbook on which charge in created
Charge creation certificate from revenue department
Miscellaneous security register B-68
Document execution register B-69
The main function of the accounts department of NBP is to maintain general ledger accounts and after the business hours the function of the accounts officer is to close books.
There are many other important functions performed by accounts department of NBP. So I ma going to discuss these functions in three steps:
-Types of voucher used.
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.
Debit vouchers are used in two cases:
When ever any expense is incurred.
When a depositor withdraws some amount from his account
The account of the customer is debited with the amount and debit voucher is prepared.
The format of the debit voucher includes:
-Name of branch
-Amount and other details (Narration)
There are two types of transaction in which credit vouchers are used.
When a depositor deposits any amount in his account because the liability of bank.
Any income received by the bank e.g. bank draft.
Different types of credit vouchers are used.
Now in second set these three important functions of Account department of NBP are described briefly.
All expenses vouchers are routed ask through Accounts Department.
Preparation of various statements.
Preparation daily activity report at the end of each day.
All the expense vouchers passed by each department are routed through accounts department. These expenses include:
Salaries given to all employees of the bank
Insurance - vehicle
Insurance - cash
Medical allowances (reimbursed)
Cash carrying charges etc.
Preparation of statements:
Second major functions of accounts department are the preparation of various statements. These statements are:
1)- Weekly Statements:
These weekly statements are sent at first to NBP head office Karachi.
2)- Monthly Statements:
Preparation of Daily Activity Reports:
It is also duty of accounts department to prepare daily activity report at the end of each day. It includes the details of the following:
A)- loans transactions
B)- general Ledger transactions
C)- Foreign currency related transactions
D)- fixed deposits transactions
All vouchers prepared by different relative departments on computer.
I also work in pension department where the senior citizen receive their pension there are two type of pension which are paid in NBP these are
In NBP first five of the month are fixed for Governmental pensions and the five days are for EIOB pension.
BILLS COLLECTION DEPARTMENT:
I spent one week of my training in bills collection department. Here I collected utility bills like gas, electricity, water and telephone etc.
In this department learn how to make the scroll of these bills and how to calculate the commission of the bank.
DETAIL OF BRACH DEPOSITS
NO. HAVE PLS SAVING ACCOUNT HOLDERS 2100
NO. OF CURRENT ACCOUNT HOLDERS 500
NO. OF FIXED DEPOSIT ACCOUNT HOLDERS 100
NO, OF PREMIUM AMDANI ACCOUNT HOLDERS 75
TOTAL DEPOSITS OF BRANCH 100 Million
TOTAL ADVANCES OF BRANCH 50 Million
OUT STANDING AGRI LAONS 26.708 Million
Ratio analysis is the most meaningful to compare financial information regarding a giving company.
1. Current Ratio
Formula: Current ratio = Current assets/Current Liabilities
Rupees In '000'
Rupees In '000'
An increase in the current ratio represents improvement in the liquidity position of bank while a decrease in the current ratio indicates that there has been deterioration in the liquidity position of the bank. Current ratio in 2008 is decreasing as compared with 2009. It should be improved.
2. Working Capital
Formula: Working Capital=current assets-current liabilities
Working capital should increase which will show that there is increase in current assets. But here working capital is decreasing in 2008 as compared with 2009. it should be improved.
3. Total asset turnover
Formula: Total asset turnover= sales / Total assets
Total asset turnover
Higher the total asset turnover the more efficiently its assets have been used. This measure was probably of greatest interest to management, because it indicates whether the efficient operations have been financially efficient. Total asset turnover is increasing in 2008 as compared with 2009 which is a good sign.
4. Debt Ratio
Debt Ratio = Total liabilities / Total Assets
The debt ratio measures the proportion of total assets by the creditors. The greater this ratio the greater the amount of other people's money being used to generate profits. The higher this ratio greater the degree of indebtedness an more financial leverage. NBP's debt ratio is increasing in 2008 as compared with 2009 which is not favorable.
5. Time interest earned ratio
Formula= Time interest earned ratio=Earnings before interest and taxes/ interest
Earning before interest and taxes
Time interest earned ratio
Time interest earned ratio sometimes called interest coverage ratio, measure the ability to make contractual interest payments. The higher its value the better able the organization was to fulfill its interest obligations. Time interest earned ratio is decreasing in 2008 as compared with 2009. It should be improved.
Gross Profit Margin
Gross profit margin= Gross profit / Sale
Gross profit margin
Gross profit margin measures the percentage of each sales rupee remaining after the organization has paid for its goods. The higher the gross profit margin, the better (that is the lower the relative cost of merchandise sold). Gross profit margin is decreased in 2008 as compared with 2009. It should be improved.
6. Operating Profit Margin
Operating profit margin = Operating profit / Sale
Operating profit margin
Operating profits are pure because they measure only the profits earned on operations and ignore interest, taxes and preferred stock dividend. A higher operating profit margin is preferred. Operating profit margin is decreased in 2008 as compared with 2009. It should be improved.
7. Net Profit Margin
Formula = Earnings available for common stock holder / Sale
Earnings available for common stock holder
Net profit margin
8.Earning Per Share
Earnings available for common stock holder / No. of shares of common stock outstanding
Earnings available for common stock holder
No. of shares of common stock outstanding
Earnings per share (EPS) are the earnings returned on the each share. Higher eps is good but here EPS is decreased in 2008 as compared with 2009 which is not good.
9. Return on total assets
Formula: Earning available to common stock holder / Total Assets
Earnings available for common stock holder
Return on assets often called the return on investment. It measures the overall effectiveness of management in generating profit with its available assets. The higher the firm's return on total assets, the better. ROA in 2008 is decreased as compared with 2009. It should be improved.
Return on common equity
Formula =Earnings available to common stock holder / Common Stock Equity
Earnings available for common stock holder
Common stock equity
ROE measures the return earned on common stockholders' investment. The better the ROE, the better. ROE is decreased in 2008 as compared with 2009. It should be improved.
10. Book Value per Share of Common Stock
Formula =common stock equity /No. of shares of common stock outstanding
Common stock equity
No. of shares of common stock outstanding
BV per share of common stock
Book value per share of common stock is increased as in 2008 as compare with 2009, which is a good sign.
National bank of Pakistan NBP is the largest bank of Pakistan and has more employees than any other bank in the country.
The bank recognizes that the enlightened management of their people means developing the full potential of all employees and creating a climate in which equal opportunities is a reality in both attitude and practice of employment. The Bank is providing service to a large strat of population spread all over the country and abroad.
NBP is the only government owned bank that provides services to the public. It has the largest business volume and profit earning in the country.
Bank has an effective HRM department that looks after the all aspects of the employees. Bank has some shortcomings with regards to HRM which are being addressed. The Staff of the Bank is very slow and lazy
It is tough to led professional life especially as employee of any organization. Everyone has to work as machine to get desire outcomes. Simply it is not easy to earn.
Mostly students have to do their internship after any professional degree. But in MBA (Banking & Finance) internship is really fruitful in all the way.
Truly all of my expectations here in NBP are fulfilled except stipend. I was expecting stipend from bank.
NBP is ideal ground to learn because it is only government bank left in the country. So it deals in all government transactions which other bank don't provide.
Mostly NBP branches are not online. That's why I could't learn online banking system.
Bank is not computerized and mostly the work is done manually.
Bank doesn't have any major marketing department.