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INTERNSHIP REPORT
ON
PABBI, BRANCH
Submitted To
SIR HAJI GUL NAWAZ
Submitted By
AAMIR KHAN
MBA (Finance)
Roll # 369
IN THE NAME OF
Allah
The most Merciful
&
Compassionat
e
Dedicate
d
To
Gomal University D.I.Khan 3
www.vu39.com/forum
My Dear
Parents,
Respected
Teachers
&
Lovely Friends.
Specialy Waqas Ahmad Khattak
TABLE OF CONTENTS
PREFACE 05
ACKNOWLEDGMENT 06
01 INTRODUCTION 07 – 09
02 HISTORY OF THE NBP 10 – 17
PREFACE
Internship is considered to be a compulsory practical training for
the MBA students. Its duration is two months and has proved to be golden
chance of training for the students in the concerned organization.
My internship was arranged in the year 2007 started from July 01,
2007 to August 31, 2007. In to this respect, the department sends me to
National Bank of Pakistan Pabbi branch. As I am specializing in Finance,
therefore this reputable organization suited me up to the best of my
satisfaction. I did my internship training there very successfully where
the Bank staff welcomed me in a very positive manner, provided me a lot
AAMIR KHAN
MBA (Finance)
Roll # 369
Session 2006-08
ACKNOWLEDGMENT
All praise is for ALLAH, the most merciful and his prophet
Muhammad for every torch of guidance and knowledge for
humanity. I offer humblest and sincerest words of thanks to GOD
Almighty WHO blessed me with potential and ability to make
material contribution to already existing ocean of knowledge.
AAMIR KHAN
Roll # 369
Session 2006-08
INTRODUCTION
Chapter # 1
INTRODUCTION
For primary data collection, I have used interview and observation method. I
have interviewed different persons in the branch which include the branch
manager and other staff members and also the customers of the branch. I have
also interviewed the OG III and Assistant Vice President because he remains
compliance officer in the branch. I have also used Observation method for the
primary data collection. I observed the condition of the branch, the working
environment, its staff, records and other operations of the bank.
Chapter # 2
Chapter # 2
At the time of independence it had been arranged between India and Pakistan
that Reserve Bank of India should act as the common monetary authority for
both countries upto end of September, 1948. But the arrangement did not
prove satisfactory. In August, 1947, Pakistan had been given a first installment
of twenty crore of rupees, out of its shares of cash balance of undivided India
to meet immediate requirements. The balance amounting to fifty crore rupees
was to be paid later, But when Pakistan demanded that amount, they refused to
hand over the money unless Pakistan agreed to give up interest in Kashmir and
thus the Government of Pakistan could not agree. This situation occurred,
when Reserve Bank of India was functioning as the Central Bank of Pakistan.
As a result of this experience, Pakistan felt it could not place any reliance on
the Reserve Bank of India. It was clear that its own central Bank was an
indispensable necessity and it was opened by the Quaid-e-Azam on the first of
July, 1948. When state Bank came into existence, it claimed its share of the
assets of the Reserve Bank of India against the Indian currency, retired from
Pakistan territory. But again dispute arose. The dispute is still unsettled and
these assets have not been delivered to Pakistan.
Many other disputes occurred between the two countries. As a result of ratio
controversy, the regular trade and payments between the two countries came
to stand still. One of the immediate consequences of this situation was the
withdrawal by Marwari merchants of the India Finance which used to be
employed annually for the movement of Pakistan's Jute Crop. A crisis of the
first magnitude threatened, because the Jute Crop was already in the market
and so their was no money to move it, prices begin to fall precipitously. At
that time there was no JUTE in Pakistan, not a single jute loom or spindle and
no posibi1ity of utilizing any of the crop within the country. As jute prices
collapsed, foreign merchants and foreign Banks to promote agrarian nearest. It
was very evident that the Government of Pakistan could not afford to continue
as a spectator of these developments.
So two ordinance were passed immediately, one setting up the Jute. Board,
and the other the decision of establishing of National Bank of Pakistan. The
object of the Jute Board was to re-organize and rehabilitate the Jute trade by
helping parties to handle it and to stabilize the market. The National Bank was
established to provide finance to suitable parties
Thus it came about that The National Bank stood behind the Jute trade, the
State Bank of Pakistan stood behind the National Bank and the Government
stood behind the State Bank.
1. Maximum Profit
As the name of the Bank indicates that it was established to finance the nation.
As a Business organization its objective is to earn more and more profit by the
least expenditures.
2. Good Administration.
A good administration is an objectives of the Bank. Without proper
administration no organization can run successfully. A good administration
should have the following qualities:-
a: Quick decision.
b: Correct decision.
3. Customer Service.
The main objective of the Bank is to serve his customers. It serves the
customers on both directly and indirectly. Bank collects money from an
individual, firms, and limited Companies etc. It also gives loan to the people.
4. Developments.
Banks spending large amount of its profit for its own development. Therefore,
the large amount of its profit is spent on opening the new branches of the bank
and increasing the work efficiency of the Bank.
5. Expenditure Discipline.
Bank is trying to minimize its expenditure. So, it keeps strict control over
expenditure and avoids wastage of money at every stage. Branch expenditure
must not increase more then 15% of the last year's budget for correspondence.
6. Zonal Inspection.
Every branch should be inspected by Zonal inspector at least once a month as
For the agricultural growth, N.B.P was the first Bank to introduce scheme of
credit to small borrowers, farmers, craftsman, and small traders etc. The Bank
advances liberal credit for rural and agricultural development and has taken
the Banking services literally to the farmer's doors, small, short run loans
given farmers are free of interest. It helps the farmers giving advances without
interest in shape of fertilizers, seeds and other agricultural instruments so that
the country may become self sufficient in wheat and other crops.
The National Bank of Pakistan has been playing a major role in industrial
development. The Pakistan Government has encouraged private enterprises by
giving fiscal and monetary concessions and has tried to create a favorable
climate for foreign investment in specified industries. The National Bank of
Pakistan has continued to serve industrial needs in its sphere all along. It
provides usually short-term and in some cases medium term finances. The
N.B.P has a predominant share in the total advances to the industry in country.
This has been possible mainly because of the large resource at the disposal.
The large number of branches all over the country which help them to attract
large deposits, and the comparatively low rate of interest at which bank is able
to make advance to the industry.
had been made, by its officers and staff particularly the senior officers to
improve the working efficiency of the Bank, to secure more business and to
build up sound working traditions.
As regard the future, the task of the Bank is plain enough, it has been an
instrument of NATIONAL policy in the past, so it shall continue in the years
to come. Its doors have been opened for anybody, from anywhere in Pakistan.
They will keep open as before.
1. Board of Directors
In the management of the Bank, the Board of Directors is at the top of. The
controlling bodies. Since there are no private share holders, so there is no
general meeting of the share holders and are no elected Directors. The Board
consists of a nominated President, a Secretary and 9 other members. After
nationalization of Bank in 1974 most of the powers of Board have been
transferred to Banking Council and executive Board. The Secretary of the
board has limited administrative powers.
2. Executive Board
The general direction and supervision of the affairs of the Bank lies in their
respective Executive Boards. The President, Secretary and 0 other members
of the Executive Board are appointed by the Federal Government. The
President being the Chief executive of the Board Directors controls and
manages the affairs of the Bank.
3. Chief Executive.
4. Divisional Chiefs.
In order to improve the management and operation of a Bank, it has been split
up into a number of divisions. Each division of a Bank is placed under this
supervision and control of Divisional Chief or Senior Executive Vice president
(SEVP) or Executive Vice President (EVP).
5. Provincial Chiefs.
In order to improve the performance of the Banking system, each Bank has a
PROVINCIAL Chief. The Provincial Chief has the powers for sanctioning
finance and other credit facilities. The headquarters of the Chiefs are situated
in each Province i.e. Lahore, Karachi, Peshawar and Quetta.
6. Circle Executive.
Bank has a number of circles. They are placed directly under the supervision
and control of the Chief executive. The chief executive is usually SVP or VP.
7. Zonal Heads.
Each circle is divided into a number of zones. Zonal heads that holds the posts
of VP or AVP administers these zones.
8. Branch Managers.
Each zone is divided into several branches. The control and supervision of
each branch is mostly entrusted to AVP or Officer of Class II. A few big and
financially sound branches are even administered by SVPS and VPS.
CHAIRMAN
CHAIRMAN
BoardofofDirectors
Board Directors
ExecutiveCommittee
Executive Committee
President
President
RegionalHeadquarter
Regional Headquarter
RegionalManager
Regional Manager
Regions
Regions
Deptt. .
BankingDeptt
Banking
Branch Managers Officer
Branch Managers Officer
CashDeptt.
Cash Deptt. Admn.Deptt.
Admn. Deptt. FinanceDeptt.
Finance Deptt.
Officer
Officer Officer
Officer Officer
Officer
Operation
Operation Corporate
Overseas Corporate
Overseas Group
Group Invest
Operation Invest
Operation Banking
Group Banking
Group Fin Group
Fin Group
Org
Org
Devel
Devel Special
Special
&Training
&Training Assets
Assets
Dept
Dept Group
Group
Strategic
Strategic
Head
HeadOffice
Office Plan &&
Plan Econ
Econ
HRM
HRM Mgt
Mgt Research
Research
Dept.
Dept. Structure
Structure Group
Group
L.T
L.T Treasury
Treasury
Planning
Planning Mgt
Mgt
Dept.
Dept.&&Imp
Imp Group
Group
Group
Group
Audit
Audit Risk
Risk
&Inspection
&Inspection Comercial Mgt
Mgt
Comercial
Group
Group &&Retail Group
Group
Retail
Banking
Banking
Group
Group
CHAPTER NO # 3
Chapter # 3
Increased Deposits
Now a day tough competition is faced in every field, and banking is
not exempted form this category whether the bank is Pakistani or
foreign, private are nationalized the competition is there. In this
competition each and every bank tries to achieve the greatest possible
amount of deposits. The tool used by the banks in order to increase
their deposits, is to provide the bank mean and hence earning interest
for them. In simple terms holding greater deposits result in greater
income of the bank, and thus profit maximization occurs accounts the
banks do not have to pay any interest to the customer hence the banks
can save some money although some facilities are provided to the
customer.
Extension of Loans
The profitability of the banks depends upon the amount of loan
sanctioned or given to the people. The credits occurred depends
greatly on one factor and that is the credit along with the interest
payable should be secure, and that in turn depends, upon the people
the bank is sanctioning loan. In the banking history we can observe a
number of incidences where people were offered huge loans and they
wrote off their loans by means of political influences. It is very
Accepting Deposits
The most important function is to receive surplus money from the
public. They throw their nets as wide as possible to collect surplus
balances of individuals, firms and public institutions. In order to
attract funds they have introduced various types of deposit schemes
that may suit the needs and tastes of a large body of depositors. The
Tijarat Ganj deposits schemes of National Bank of Pakistan are:
• Current account
• Saving account
• Fixed deposit account.
Advancing Loans
Every bank has learnt by experience that depositors do not draw
whole of their deposits at a time. They only draw a part of it for day to
day transactions, therefore a bank keeps a part of the total deposits as
“cash reserve” to meet the cash demand of depositors and advances
the Tijarat Ganj part of deposits to businessmen on interest. They
always Tijarat Ganj a reasonable ration between the tow parts to run
its business.
Transfer Money
National Bank of Pakistan provides facility to transfer from one place
to another at very nominal charges. When a person wants to transfer
his money from one place he handover money to the bank and gets a
draft at the name of the particular branch were he needs the money
and gets money at that place safely.
Agency Service
National Bank of Pakistan performs many services as an agent of its
clients or depositors. It makes payment on order cheques receives
amount of money on crossed cheques issued in favor of its clients and
deposits the amount tin their accounts. It receives salaries and
dividends of joint stock companies on behalf of clients and deposits
them in their accounts. It purchases bonds and shares of joint stock
companies for its clients under their consent.
Chapter # 4
BANKING OPERATIONS
Chapter # 4
BANKING OPERATIONS
The Bank provides a wide range of facilities for transacting money in and outside
the country. Being' custodian of the money, it manages the assets in such a way
that the Bank Tijarat Ganj solve and liquid to a high degree so that it is able to
meet the demand of the customers for cash payments. In the operation of a Bank,
there is a close relation between the Banker and the customer.
Duties of A Banker
1. To honor a customers cheques.
The Banker's duty is to honor the cheques of the customers.
i. They are properly drawn.
ii. The customers has balances to his credit.
iii. The loan contract has been signed.
iv. There is no legal bar attaching to the customers funds.
2. Standing orders:-
The Bank abides by the standing orders of the customers in making periodical
payments on his behalf such as club, library and insurance perineum etc.
Accounts of Customers
A Bank should not open an account for a customer unless his integrity and
responsibility is duly authenticated by a responsible person known to the Bank.
b. Mental patients:
If the Bank comes to know of a customers lunacy, the Bank will
immediately suspend the OPERATIONS on the account until the court
gives order or the Bank has full proof that his customer has fully
recovered. When the customers is mentally unsound, the court appoints a
receiver who operates the accounts under the direction of Master in
Lunacy.
d. Infants:-
An infant can open an account with a Bank, but he is not allowed to
overdraw the account. If the infant customer wishes to have an over draft,
an adult should draw and sign on indemnity contract.
e. Partners:-
When an account is opened by the partner they are to sign a mandate
authorizing any or all of their member to make with drawls. The partners
are jointly responsible for all the loans and other obligation incurred by the
firm.
g. Death of a customers:-
If a Bank receives the notice of a customers death, all operations on the
account are suspended until the executors or administrators produce the
CHEQUES
A cheque is a bill of exchange drawn on a Banker and payable on demand.
According to Dr. Hard, "A cheque is an unconditional order in writing drawn on a
Banker signed by the drawer, requiring the Banker to pay on demand a certain
sum in money to or to the order of a specified person or to learner." Cheque is
merely an order on a Bank by its clients to pay a sum of money to himself or to a
third party on demand.
The drawer is the person who signs the cheque. The party which is authorized to
pay back the money is called drawer. The person to whom or to who’s or order
the money is to be paid is called payee. A cheque in order to be valid must bear
the signature of the drawer. It should be in writing preferable by means of a pen.
KINDS OF CHEQUES
There are three kinds of cheques :
i. Bearer Cheque:
ii. Order Cheque: and
iii. Cross Cheque:
2. PAYMENT BY CHEQUE:
(i) Conditional payment:
A cheque or bill of exchange is not a legal tender money. A debtor,
therefore, can not compel a creditor to accept the cheque or bill of
exchange as a means of payment. When the cheque is honored and
payment is made by the Bank, the date is then effectual discharged.
(ii) Cheque through the post:
If a cheque or other negotiable instrument is sent by post and is lost in
transit and is presented and paid by the bank, the loss if any rests on the
sender. However, if the creditor requests the debtor to send the cheque by
post, than the risk is to be borne by the creditor.
(iii) Cheques as evidence of payment:
When the payee receives the amount written on the cheque from the Bank,
it serves prima face as evidence of receipt.
In all such cases, where the payment is stopped well in time, the operative
signatures are cancelled and the cheque is returned with a marked
"Cancelled in error, payment countermand."
2. Customer's Balance:-
The Banker can refuse to make the payment of a customer's cheque1 if his
balance is not sufficient to cover the cheque. However, if the Bank has
allowed the facility of overdraft, the Banker is bound to make the payment
provided the amount is within the limit of the overdraft.
6. Marking Cheques:-
A drawer may get a particular cheque 'Marked' from his Banker. The
Banker will retain the amount in order to honor the "marked" cheques. If'
the other cheques issued by him are not covering his credit Balance, Bank
will dishonor them for want of funds.
9. Bankruptcy Petition:-
If the customer is unable to pay his debt i.e. he is insolvent, then he or his
creditors present as petition to the court to take over the debtors, property
for distribution among creditors. If the Bank receives a notice of t he
refuse to honor the cheque forthwith.
ENDORSEMENT:
A cheque or a bill is endorsed when the transfer puts his signature on the back or
an along of a cheque and a bill as a part of its negotiation. If the cheque is bearer,
it needs no endorsement. However, in our country, the Banker insists on getting
so desires. If the names of the payees are two or more than two, the endorsement
should also be in the same order, which is penned down on the back of the bill.
CLASSIFICATION OF ENDORSEMENT
The main classification of endorsement are as follows:
1. Conditional Endorsement:
If the endorsement makes the payment of a bill subject to the fulfillment
of a condition or conditions, the endorsement is called conditional
endorsement. The Bank or the payer can disregard the conditions and
make the payment to the endorsee and the payment will be considered
valid.
2. Blank Endorsement:
It the endorser signs his name on the bill but does not give the name of any
other person to whom he wishes to transfer the cheque, the endorsement is
called blank. When there is no endorsee specified on the bill, it becomes
payable to bearer even though it may be originally drawn to order.
4. Restrictive Endorsement: -
A restrictive endorsement is one which restricts or prohibits the further
negotiation of the bill. For instance, pay to Hamid only signed by Rafique.
5. Partial Endorsement:-
If the bill purports to be endorsed for a part of the amount payable, the
endorsement is called partial endorsement is legally in effective.
Chapter # 5
Chapter # 5
DEPOSITS DEPARTMENT
Deposit department is one of the most important and Tijarat Ganj department of
the bank. It performs the vital function in the bank because it deals with the
supply of money to the bank. Deposits are the inputs of a bank. Deposits
department is just like a heat, as it function other department also run, otherwise
the whole system paralysis.
Each and every bank tries its best to increase their deposits. Deposits depict the
financial strength of a bank. National Bank of Pakistan is a unique and crucial
institution, which is able to increase credit in the country.
• Current account.
• Saving account
• Fixed account
REMITTANCES DEPARTMENT
This department helps in the transfer of money from one place to another place
and receives money of the people through these instruments and helps them in the
clearance and verification and transfer of money from foreign or local banks. The
bank charges a certain rate of commission on these instruments.
• Demand draft.
• Mail transfer.
• Telephone transfer.
CLEARING DEPARTMENT
National Bank of Pakistan performs the function of paying and collection of
cheques drawn on other bank by the customer of the bank with out charging fees.
They perform this clearance function for the customers or others bank in their
area because National Bank of Pakistan acts on the behalf of the State Bank of
Pakistan.
ADVANCES DEPARTMENT
The primary purpose of this department is to encourage small business to take loans
and help them in their business. The bank earns from the advancement of loan to the
people or organization and charges a certain percentage of interest on it and bank
earns profits.
Chapter # 6
Chapter # 6
PRINCIPLES OF ADVANCING MONEY
Basically there are five principles which must be duly observed while advancing
money to the borrowers
i. Safety.
ii. Liquidity.
iii. Disposal.
iv. Remuneration.
v. Suitability.
1. Safety
The elements of safety i.e. character, capacity and capital can help a Banker in
arriving at a conclusion regarding the safety of advances allowed by him.
a. Character
It is the most important factor in determining the safety of advance, as
there is no substitute character. A Borrowers character can indicate his
intention to repay the advance. Since his honesty and integrity is of
primary importance.
If the post record of the borrower shows that his integrity has been
questionable, the Banker should avoid him, especially when these
securities offered by him are inadequate in covering the full amount of
advance.
On the other hand if a person has no insight into the particular business for
which he wants to borrow funds from the Banker, there are more chances
of loss to the Banker.
c. CAPITAL
This is monetary base, because the money invested by the proprietors
represent their faith in the business and its future. The role of commercial
Bank is to provide short term capital for commerce and industry.
11. LIQUIDITY
Liquidity means the possibilities of recovering the advance in emergency, because
all the money borrowed by the customer is repayable in lump sum on demand.
Generally, the borrowers repay their loans steadily and thus released funds can be
used to allow fresh loans to other borrowers.
Nevertheless, the banker must ensure that the money lending is not blocked for an
undue long time and that the borrowers are in such financial position so as to pay
back all the amount outstanding against them on a short notice. In such a
situation, it is very important for a banker to study the borrowers assets for
liquidity. because he would prefer to lend only for a short period in order to meet
the short falls in the working capital.
iii. DISPOSAL
As a principle, the disposal of the amount of advances should be broadly based so
that a large number of borrowing customers may be benefited from the Banker's
funds. The Banker must ensure that his funds are not invested in specific sector
like textile industry, heavy engineering or agriculture etc.
The Banker must give advances to a wide range of sectors like commerce,
industry, farming agriculture concerns, small business, housing projects and
various financial concerns in order of priorities. Disposal of advance is very
necessary from point of security because it reduces the risk of non-recovery when
some thing goes wrong in one particular sector or in one field.
iv. REMUNERATION
The Banker needs sufficient earnings to see the followings:
a. Profit payable to the money deposited with him.
b. Salaries and fringe benefits payable to the staff members.
c. Overhead expense and depreciation and main of the fixed assets of the
bank.
A major portion of the bankers, earnings comes from the mark up charged on the
money borrowers by the customers. The fixation of the rate of markup to be
charged for advances of various classes depends on the type of security offered to
him and also on the duration for which the advance is allowed. When the security
offered is sound and easily encashable, the Banker may charge a lower rate of
markup on an advance for a fixed period as compared to that of fluctuating over
draft.
In order to meet his above mentioned expenses the Banker runs a great risk and he
has to think twice that the money advance should not become bad or doubtful He
should not lend his funds to a borrower with when remuneration may be much bit
also equally risky. On the other hand Banker should prefer a borrower who is
willing to offer a higher rate of markup on a comparatively lesser risk.
v. SUITABILITY
Here the word "Suitability" is not to be taken in its usual literary sense. It is used
broader sense, which means that advance should be allowed not only to the
suitable borrowers, but also in keeping with the overall national development
plans chalk out by the authorized concerned.
Before accommodating a borrower, a Banker should ensure that the lending is for
the purpose in conformity with the current national credit policy laid down by the
Central Bank of the country. Since the Bankers mainly provide short term
working capital to commerce and industry. They should see that their lending
solve borrowers financial problems. In doing so the Bankers should retain his
primary status as commercial lender only.
PROCEDURE OF ADVANCE
Bank after allows the advances to its valuable customers against registered
mortgage of immovable properties such as Factories Mills, etc. In such cases the
advances are allowed on a long term basis and are meant to cover all types of
Banking facilities outstanding against the part. Such mortgages are so draw tip
that, irrespective of partial or total adjustment, so large as the limit remain
enforced, the mortgage security continues for Bank benefits.
TYPE OF MORTGAGES
1. LEGAL MORTGAGE
a. Legal mortgage is obtained where the borrower is mortgaging his
own property.
b. Legal mortgage is obtained where a third party is mortgaging his
property for advance to borrower.
c. Legal mortgage is obtaining form a limited company whether
private or public.
The deed of mortgage is signed by all owners of the property where the property belongs
to a partnership firm, the mortgage deed is signed by all the partners of the firm. Where
the property belongs to a limited company, the common seal of the company is affixed on
the mortgage deed and one of two directors also sign the same.
ii Equitable Mortgage.
Equitable mortgage is created by title deeds and so an equitable mortgage
can not be created by a person who does not possess title deeds to his
property. Before accepting equitable mortgage special care is taken to
ensure that all title deeds of the property are obtained and kept with he
Bank.
Chapter # 7
DEPOSIT MANAGEMENT
Chapter # 7
DEPOSIT MANAGEMENT
The opening of account is the establishment of banker customer relationship. By
opening an account at a bank a person become the customer’s of the bank.
Following are the procedure of opening the accounts.
PROCEDURE:
Opening of Account
1. Separate Account opening form is used.
2. All formalities of opening saving bank to observe.
3. In case of joint accounts. Unless provided to the contrary, it is
presumed that account will be operated jointed, and accordingly all the
account holders must sign the withdrawals form and present themselves at
counts or counters.
4. All precaution for opening accounts of illiterate or semi-illiterate
persons should be taken.
Pass Book
1. At the time of opening of the accounts, every account holders is
provided with a special passbook, containing Rules and Regulation
governing the operation of the accounts.
2. Under no circumstances, operation in the account is to be allowed
with out production of the passbook.
3. Serial number of the passbook is issued is to be noted and
authenticated both on the AOF and the ledger in the case provided for the
serial number of chequebooks.
4. All the entries in the passbook are to be recorded in ink.
5. Entries in the passbook and the balance must be supervised by the
officer Incharge the officer should also sign in full against the balance
stuck in the column provided for the purpose in the passbook. And should
invariably mention his power of attorney number after confirmation that
the balance shown in the ledger and passbook are identical.
Stamp
“Duplicate passbook no … issued”
Such stamp should be signed in full by the officer Incharge and the passbook
retained by the branch duly cancelled.
2. The officer should see that with drawls and figures, signature of
the account holder according to the specimen, before, the payment is
made.
3. In order to verify that the account holder himself is present at the
counter, his signature on the with drawls form should be obtained, by the
officer, and his presence.
4. Signature of the account holder is to be verified and cancelled as
done in case of cheques.
5. It is necessary to verify that the balance in the passbook and the
ledger account tallies and that the interest has been made simultaneously
in the ledger in passbook.
6. The balance in the passbook is to be authenticated by the officer
after satisfying himself as to the above requirement by writing his power
of attorney number below his signature on the passbook in the columns
provide.
7. The withdrawls form and the passbook duly completed has given
to the cashier who will check the entries and hand over passbook to the
account holder at the time of payment.
In order to further strengthen and streamline this process, the Federal Ombudsman
of Pakistan, vide his ruling on complaint No. 11/31/5186 has directed the banks to
retain with the account opening form a Photostat copy each of the National
As per these directions, the concerned Branch managers are required to obtain the
original National identity cards along with their Photostat copies and then return
the original after attesting the authenticity of the retained copy. This preliminary
investigation is helpful because of the following reasons.
(iii) Negligence
When a banker does not make the necessary investigation, he may be
deprived of the statutory protection provided to a clearing banker under
section 131 of the negotiable instruments act. 1881. This is because in
such a case the banker will be deemed to a have acted negligently.
SPECIMEN OF SIGNATURE
When an account is opened with a banker the customer gives the banker a
specimen of the form of signature, which would appear on all this checks to
express his authority for the payment of cheques drawn on his banker. This
specimen is taken generally on a card specially designed for the purpose and rules
for the customers. Full name and account number are entered on it.
signatures by the bank and the cheque are paid. The Vernacular Form is obtained
because the bank officer are not used to verification of signature other than
English or Urdu. Hence there is likelihood of mis-verfication.
In modern time, very few business enterprises are carried out solely with the
capital of the owners. Borrowing funds from different sources has become and
essential feature of today’s business enterprises. But in the case of a bank,
borrowing funds from the outside parties is all the more vital because the entire
banking system is based on it. The borrowed capital of bank is much greater than
theirs own capital. Bank’s borrowing is mostly in the form of deposits. These
deposits are lent out to different parties. The larger the difference between the rate
at which these deposits are borrowed and the rate at which they are lent out the
greater will be the profit margin of the bank Furthermore. The larger the deposits
the larger will be funds available for the employment; larger the funds lent out the
greater will be the return earned on them; and greater the amount of return the
greater will be the profits of the bank. It is because of this interrelated relationship
that deposits are referred to as the “life blood” of the bank.
Since term deposit Tijarat Ganj with the bank for a specified period, they
can be profitably employed. By lending out or investing these funds, the
bank earns more than the interest / return that it has to pay on them to the
depositors.
PAYMENT OF TERM DEPOSITS BEFORE MATURITY
Some times depositor with draws the amount before the maturity. In such
situation the customers forego the interest / return accrued on the deposit or
borrows the required money again against the security of his fixed / term deposit
at a rate of interest / service charge which is generally 2 percent higher than the
rate allowed on the deposit.
3. Saving Deposit
Saving bank accounts generally opened in the name of individual illiterate person,
Pardanasheen ladies, minor, worker and students. These accounts are not
intendment for quick operation. If it’s found that any S.B. account is being
operated on too frequently the parties may be asked to open current for their
transactions.
In Pakistan a saving account can be opened with a very small amount of money.
And the depositor is issued a checkbook for withdrawals. Profit is paid at a
flexible rate calculated on six monthly bases under the interest free banking
system. There is no restriction on the withdrawals from the deposit accounts but
the amount of money withdrawn is deleted form the amount to be taken for
calculation products for assessment of profit to be paid to the account holder. It
discourages unnecessary withdrawals from the deposits.
In order to popularize this scheme the state bank of Pakistan has allowed the
saving scheme for school and college students and industrial labor also. The
purpose of this account is to inculcate the habit of saving in the constituents. As
such the initial deposits required for opening these accounts is very nominal.
A minimum balance of Rs. 100/- must be Tijarat Ganj tained in PLS Saving
Accounts
CHEQUES
A cheque is a type of order which a depositor issue to draw some money from bank.
It is used for both purpose, deposit and also for drawn.
Order Cheque
Order cheques is a cheque made payable to a certain person or order. It is
a cheque on which the phase “or order” is written after the name of the
payee. If cheques are made payable to a certain person without the
addition of the word “Bearer” or “order” there to, it is regarded as an order
cheque. It can be transferred only by endorsement and delivery. In this
type of cheque the word order is written instead of bearer.
Crossed Cheque
In this two parallel lines are drawn on one end of the cheque. The word
“and company” is written in this way “ & CO”. No one can draw money in
shape of cash but first it is deposited in the account of that person or in the
account of any other one and later on the cash is drawn by cheque. There
are two types of cross cheque.
Crossed Cheque
“Where a cheque bears across its face and addition of the word’s and
company or any abbreviation there of between two parallel transverse
lines simply. Either with or without the word “ not negotiable” that
addition shall be deemed to be crossing, and the cheque shall be deemed to
be crossed generally” according to this definition the essentials of general
crossing are:
Special Crossing
Special crossing has been defined as “where a cheque bears across its face
an addition of the name of banker either with or without the words “Not
Negotiable” that addition shall be deemed a special crossing, and the
cheque shall be deemed crossed specially and to be crossed to that
banker.” It is evident from this definition that:
.
iv. If a cross is lost or stolen, there is no risk of wrong
payment.
Antedated Cheques
An antedated cheque is one, which bears the date of past time. A cheque
written in May, but the may be stated of April. The amount of cheque can
be claimed within six month starting from April.
Stale Cheque
A stale cheque is that which was issued, six months back. The commercial
bank honors the cheque with in six months from the date of issue. After
the expiry of said period, the cheque is treated as stale. The drawer can
claim the payment after its renewal.
Stolen Cheque
The drawer issues a stolen cheque, but it is lost. The cheque holder is not
the actual payee, so it is treated as stolen cheque. The cheque can claim
the amount of the banker is not informed in time.
Travelers Cheque
The bank issues travelers cheque for the convenience of the traveler’s and
charges a nominal commission.
Chapter # 8
REMITTANCES
Chapter # 8
REMITTANCES
Remittances mean “the transfer of money or fund from one place to another place
through bank”. It may be “inland remittance” or “Remittance”
1. Within Locality
When a branch situated in D.I.Khan is required to send the draft to any
other branch situated in the same locality, the process will say to be within
locality. I.e. NBP Tijarat Ganj branch D.I.Khan, send any draft to NBP
Tijarat Ganj branch, this is known as within locality.
Bank draft is usually issued is cross demand draft on which “the payee account
only” is written. The payee will draw the amount by presenting the draft to the
bank.
1. Telegraphic Transfer
Telegraphic transfer is an important mode of remittance. It is the quickest
mean of transferring the funds from one place to another place by the use
of telephone or telegraphic.
Now a day, new technology is used for this purpose i.e. fax, e-mail. The
big traders and businessman use this method of remittance in this method
of remittance the purchaser is not responsible for the dispatch.
The purchaser signs the application form and the bank charge the
commission for this purpose.
2. MAIL TRANSFER
Mail transfer draft is one of the bank modes of remittance. Mail transfer is
issued by one branch of bank to another branch of the same bank by
In M.T the purchaser is not responsible for dispatch, but the bank will be
responsible for dispatch.
3. BANK DRAFT
Bank draft is the most important type of remittance. Draft is an instrument issued
by a bank. Draft is issued by one branch to another branch out of the city. The
difference branches of same bank can issue the bank draft to each other and it is
also called the banker cheques i.e. the Tijarat Ganj Branch of NBP in D.I.Khan
issued the draft to the NBP Peshawar.
Chapter # 9
Chapter # 9
During my Six Months internship at the National Bank of Pakistan Tijarat Ganj
Branch D.I.Khan, my observation and interviewing the staff members and the
manager of the branch the information that I got is not sufficient as of such a big
organization. I have pointed out some of the shortcomings, which I observed
during my internship. Now the government is serious to bring some reforms in the
NBPs for privatization. And National Bank of Pakistan management is working
on the restructuring program. The shortcomings, which are present in the Tijarat
Ganj branch of, D.I.Khan, may or may not present in the other branches.
Communication Problem
Bank staff uses peon and the clerical staff to communicate with each other. It
automatically creates a lot of problem and disturbance in the branch. The flow of
communication is very slow and creates gap between various counters and branch
departments. And the peon does verification of any sign or balance, which is not a
skilled person and time consuming.
Limited Staff
In the branch the staff is limited and the customers wait for a long time National
Bank of Pakistan also deals with most of the government affairs, federal and
provincial pensions salaries and taxes. Handling these people are very difficult
and at the beginning of the month large no of customer wait for their turn. But the
staff is low to handle such large no of customers.
FUNCTIONAL ANALYSIS
ADMINISTRATIVE ANALYSIS
Lack of Appreciation
Another very important thing, which is ignored in the bank, is appreciation of the
employees in their good performance of staff members is not recognized and
Heavy Workload
The workload on the employees of National Bank of Pakistan is very heavy. It is
usual practice for the employees to stay beyond the official working hours.
Promotion
Promotion in the National Bank of Pakistan is purely on the seniority, so the new
young person having high qualification are not having any chance to promotion.
The promotion process is very slow time the top management or the staff union
put pressure for the promotion of their favorites, which give a sense of
deprivation to the deserving employees and their efficiency is affected.
RECOMMENDATION
During my internship of Six Months at the Tijarat Ganj branch D.I.Khan. I
observed a lot of things and there is always a better way of doing things. Some of
the recommendation suggested for the Tijarat Ganj branch of D.I.Khan, and
National Bank of Pakistan as whole are as follows.
Computer should be introduced in all the branches and department of the bank.
This will reduce administrative cost to great extant. Branch should be connected
through computers with Zonal/regional office and headquarter. This will help a lot
in the operation of the bank computer knowledge should imparted to the
employees. Communication and coordination problem will be solved to greater
extent.
Recruitment in the bank should be made purely on merit basis, and the human
resources development should be fully free from any influence of higher authority
and staff union in conduction of test and in the selection of candidates.
There should be inter department transfer of employees, so that they should know
about all departments, in this way a proper coordination could be achieved. They
must have some basic information of other departments. There must be proper job
rotation.
Remittance is a basic function and a Tijarat Ganj source of income of the bank.
Unfortunately there is an increasing shift the use of informal means like Hundi.
National Bank of Pakistan has to play a vital role in mobilizing such remittances.
The top management should delegate some of the responsibilities to the lower and
middle management. So that to increase the performance and working efficiency
of the bank.
Promotion is a very sensitive and important issue and thus great care should be
observed in the decision of promotion. Personal liking and disliking and outside
pressure should be reduced and fare promotion policy should be adopted.
Promotion should give high preference to the highly qualified personnel. This will
lead as a key for the other staff members to improve their qualification and thus
got quick promotions. This will improve the quality of the staff members.
The bank should send employees for training and seminars arrange be other banks
so that they can compare the procedures adopted by other bank and adopted
whatever better and new.
CONCLUSION
National Bank of Pakistan was established as a semi public commercial bank on
November 8,1949. The primary objective of the setting of the bank was to
purchase jute form the growers in the former East Pakistan in the country.
The bank provides all types of banking services to the government and private
sectors. The overseas branches under a trust deed the bank also provides services
as trustee to national investment trust including sage custody of securities on
behalf of nit in consideration for annual service charge and commission.
BIBLIOGRAPHY
Vash Mc. (1993). “Money Banking and International Trade” 8th edition, New
York. Willy Eastern ltd.
Gardner, Dc. (1991). “Banking and Money market” 1st edition, London. Dc
Gardner Group Plc.
Tannan, M.L. (1993). “Banking law and practice in Pakistan” Masroor Book
house.