nbp report 52

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ON

NNATIONALATIONAL BBANKANKOOFF PPAKISTANAKISTANMain Branch, Khanewal

PresentedBy:

Muhammad Usman

MBAIT (1)Roll no. 41

Session: 2001 2003


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DDEDICATEDEDICATED TTOO MMYYPPARENTSARENTS

WWHOHOAALWAYSLWAYS CCAREARE MMEE

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Page#

1. Preface

07

2. Acknowledgement ... 10

Section 1: BANKING SYSTEM IN

PAKISTAN

3. History of Banking in Pakistan

12

4. What is Commercial Bank?

15

5. Management and Organization of a Commercial

Bank

17

6. Banker and Customer Relationship

22

7. Efforts towards Islamic Banking in Pakistan

26

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Section 2: ORIGIN OF NATIONAL BANK

8. National Bank of Pakistan ... 30

9. Board of Directors

33

10. Senior Management 34

Section 3: ACTIVITIES PERFORMED IN

NBP

11. Functions of National Bank of Pakistan

36

12. Cash Department

38

13. Deposit Department 40

14. Different Types of Deposits

40

14.1.Current Account

41

14.2.PLS Saving Bank Account 42

14.3.Fixed Deposits 42

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14.4.Short Notice Term Deposit 43

14.5.Call Deposit

43

14.6.Cumulative Deposit Certificate

43

14.7.Monthly Income Scheme 44

14(b) Ledgers of Deposit Department

44

15. Clearing Department

45

16. Types of Cheques Collected

46

16.1.Transfer Cheques

46

16.2.Clearing Cheques

46

16.3.Collection Cheques 46

17. Advances and Credit Department

47

18. Securities

47

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18.1.Bankers Lien 47

18.2.Guarantees

48

18.3.Mortgage 48

18.4.Hypothecation 49

18.5.Pledge

49

19. Types of Advances

50

19.1.Demand Finance (Ordinary Loans)

50

19.2.Running Finance (Overdraft)

50

19.3.Cash Finance 51

19.4.Small Finance 52

19.5.Finance against Bills 52

19.6.Agriculture Loans

52

20. Other Services 54

20.1. Utility Bills Collection

54

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20.2. NBP Pak Rupee Traveler Cheque

54

20.3. Foreign Currency Accounts

54

21. Different schemes conducted by NBP

55

21.1.Hajj Mubarak Scheme

55

21.2.NBP Advance Salary Scheme

56

21.3.Fund Management Scheme

56

21.4.LG TV Scheme

57

Section 4: TRAINING SUBSTANCE

22. Work performed by me

59

a. General Banking

59

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b. Cheque at Counter

60

c. Cheque Payment procedure

60

d. Issuance of Demand Draft

61

e. Bills Collections Department

61

f. Bill Remittance Department

62

g. Deposit Department

62

23. Recommendations

64

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PREFACE

Banking sector owes a pivotal importance in

the economy of any country through its vibrant

functions. This is the deep seated motivator that

geared up me to join any bank for internship.

Moreover, the practice and familiarity learned

during this tenure would also attest very helpful

and alleviating in the awaiting proficient life.

This report is an upshot of my six weeks

internship in National Bank of Pakistan, Main

Branch, Ghallamandi, Khanewal. National Bank of

Pakistan posses an imperative and historical

importance in the banking sector of Pakistan. It

always remains the center of hustles in business

activities. It always endows with great covenant

of rally round in terms of funds and services at all

epochs of its dynamism.

Although, a derisory period of six weeks is

not enough to learn the complex operations of

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National Bank of Pakistan yet I made industrious

efforts to converse them comprehensively in this

report. Particularly, I have remunerated more

accents on study of distinguishing features and

services of National Bank of Pakistan. I have

made maximum venture to elaborate this report

with the material read, listened and observed.

I have strong belief that this report will guide

and ease the readers to understand the

operations of banking system and more

prominently have good knowledge about National

Bank of Pakistan, one of the most trusty and

leading banks in Pakistan.

Dear readers, I hope that you will appreciate

my report and sense that reading my report is not

like to waste the time in any respect because of

the four principal reasons as under:

1 ... ... A conscientious attempt is made to

provide 100 % realistic knowledge of the real

world organization, National Bank of Pakistan.

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2 ... ... Almost all the terms are first

explained themselves in a simple and

comprehensive way used in this organization

before bringing them into play in different

dealings so the reader may soundly familiar to

the operations performed in the banks.

3 ... ... No Gup is made from beginning to end

in the report not even of a single word.

4 ... ... Although, it is not a titanic sized

report but the material provided is not a

bogus. Also, this report is wholly up to date,

equipping the information about currently

prevailing functioning and services of the

Banking System of National Bank of Pakistan.

If any reader likes my report and he want to

get a soft copy of the report, so dont worry. You

can get the soft copy of my report very easily.

What you have to do to get a soft copy of the

report? You have to do only one thing for this

cause. Please address me your request in my

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email and I will send a soft copy of my report to

the calling ID or otherwise mentioned. I check my

email account after 10 days. My email address is

as under :

[email protected]

M. Usman Khan

MBA (IT)

Roll No. 41

Session: 2001-2003

ACKNOWLEDGEMENTI am very gratifying to Almighty Allah who

permitted me to be trained in a real world

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organization, NBP, as well as to complete this

report in a very limited time.

My thanks are also due to the young,

dynamic, congenial, and qualified staff of NBP

who never let me alone in different situations

related to my internship. Without their humble

help, it was not easy.

I cannot forget to pay my special thanks to

Mr. Afzaal, Vice President and In charge of

Advances, NBP Regional Office Multan, who

managed the internship permission for me from

the Head Office of NBP Karachi to depute my

internship in NBP Main Branch, Khanewal.

M. Usman Khan

Section

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BANKING SYSTEM

IN PAKISTAN

In this section five topics are discussed. Three major topics of thissection are:

History of Banking in Pakistan

Management and Organization of a Commercial

Efforts towards Islamic Banking in Pakistan

HISTORY OF BANKINGHISTORY OF BANKING

IN PAKISTANIN PAKISTAN

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The partition plan was announced on June 3, 1947

and August 15, 1949 was fixed as the date on which

independence was to take effect. It was decided that

the Reserve bank of India should continue to function

in the dominion of Pakistan until September 30, 1948

due to administrative and technical difficulties

involved in immediately establishing and operating a

Central Bank.

At the time of partition, total number of banks in

Pakistan were 38 out of these the commercial banks in

Pakistan were 2, which were Habib Bank Limited and

Australia Bank of India. The total deposits in Pakistani

banks stood at Rs.880 million whereas the advances

were Rs.198 million. The Governor General of

Pakistan, Muhammad Ali Jinnah issued the order for

the establishment of State Bank of Pakistan on 1st of

July 1948.

In 1949, National Bank of Pakistan was

established. It started with six offices in former EastPakistan. There were 14 Pakistani scheduled

commercial banks operating in the country on

December 1973, the name of these were:

1. National Bank of Pakistan

2. Habib Bank Limited

3. Habib Bank (Overseas) Limited

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4. United Bank Limited

5. Muslim Commercial Bank Limited

6. Commerce Bank Limited

7. Australia Bank Limited

8. Standard Bank Limited

9. Bank of Bahawalpur Limited

10. Premier Bank Limited

11. Pak Bank Limited

12. Lahore Commercial Bank Limited13. Sarhad Bank Limited

14. Punjab Provincial Co-operative Bank Limited

The Pakistan Banking Council prepared banks

amalgamation schemes in 1974 for amalgamation of

smaller banks with the five bigger banks of the

country. These five banks are as under:

1. National Bank of Pakistan

2. Habib Bank Limited

3. United Bank Limited

4. Muslim Commercial Bank Limited5. Allied Bank Limited

So, through the Nationalization of Bank Act 1974,

the State Bank of Pakistan, all the commercial banks

incorporated in Pakistan and carrying on business in or

outside the country were brought under the

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government ownership with effect from Jan. 1, 1974.

The ownership, management, and control of all banks

in Pakistan stood transferred to and vested in the

Federal Government. The Finance Minister announced

plans to start Islamic Banking system in Pakistan in

the budget speech on June 26, 1980, but it could not

be possible till August, 2003.

WHAT IS AWHAT IS A

COMMERCIAL BANK?COMMERCIAL BANK?17


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A bank is a financial institution which deals with

money and credit. It accepts deposits from individuals,firms, and companies at a lower rate of interest and

gives at a higher rate of interest to those who apply

for loan. The difference between the terms at which it

borrows and those at which it lends from the source of

its profit. A bank, thus, is a profit earning institute.

Any bank that performs this functioning is called the

commercial bank.

According to Crowther:

A bank is a firm which collects money from those

who have it spare. It lends money to those who

require it.

According to Banking

Ordinance 1962:

According to Section 5(b) of Banking

Ordinance 1962, meaning of banking is as under:

Banking company is a company which transacts

the business of banking in Pakistan, mainly of

accepting, for the purpose of lending and and

investments of deposits of money from the public,

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repayable on demand or otherwise and withdraw able

by cheque, draft, order, or otherwise

MANAGEMENTMANAGEMENT

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ANDAND

ORGANIZATIONORGANIZATIONOF A COMMERCIALOF A COMMERCIAL

BANKBANK

The ownership, management, and control of all

the commercial banks were taken over by the

Government of Pakistan on January 1st, 1974.

A banking council was formed under the

Nationalization Act 1974. The banking council was

set up for making policy recommendations to the

Federal Government, formulating policy guidelines for

the banks and their reorganization.

The management and organizational structure of

the nationalized banks have uniformity. This

management and organizational structure is briefly

described as under:

1 ... ... Board of Directors

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2 ... ... Executive Board

3 ... ... Chief Executive

4 ... ... Divisional Chiefs

5 ... ... Provisional Chiefs

6 ... ... Circle Executive

7 ... ... Zonal Heads

8 ... ... Branch Managers

1. Board of Directors

In the management of the banks, the board of

directors is at the top of the controlling body. Since

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there are no private share holders now, so there is no

general meeting of the share holders and no elected

directors. The BOD consists of a nominated

President, a Secretary, and 9 other members.

The board has limited administrative powers because

after the Nationalization Act 1974, most of powers are

transferred to the Banking Council and Executive

Board.

2. Executive Board

The general direction and supervision of the

affairs of commercial banks lies in their respective

Executive Boards. An EB also consists ofa President,

a Secretary, and 9 other members, appointed by

the Federal Government.

3. Chief Executive

The President of the Executive Board is the Chief

Executive. He is the administrative head of a bank and

presides over the meetings of Executive Board.

4. Divisional Chiefs

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In order to improve the management and

operation of a bank, it has been split up into a

numbers of divisions. Each division of a bank is placed

under the supervision and control of Divisional Chief

(also called the Senior Executive Vice President or

Executive Vice President)

5. Provisional Chiefs

In order to improve the performance of banking

system, each bank has a Provisional Chief. PC has the

powers for sanctioning finance and other credit

facilities. Each headquarter is situated in each

province e.g. in Lahore, Peshawar, Quetta, and

Karachi.

6. Circle Executive

Each commercial bank has a number of circles

placed directly under the control and supervision of

Chief Executive.

7. Zonal Heads

Each circle is divided into a number of zones.

These zones are administered by Zonal Heads who

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hold the posts of Vice President or Assistant Vice

President.

8. Branch Managers

Each zone of commercial bank is divided into several

branches. The control and supervision of each branch

is mostly entrusted to Assistant Vice President or

Officer G-II.

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BANKER ANDBANKER AND

CUSTOMERCUSTOMER

RELATIONSHIPRELATIONSHIP

The relationship between the banker and the

customer are of utmost importance. Both serve the

society and the economy to expand. Before we discuss

the relationships between the banker and the

customer, it seems necessary that the two terms

banker and customer are made clear.

* Banker

A banker is a dealer in capital or more properly a

dealer in money. He is an intermediate party between

the lender and the borrower and charges a definite

amount of money, which is the profit of his.

* Customer

A customer is a person who maintains a regular

account with the bank, without taking into

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consideration the duration and frequency of operation

of his account.

The relations between the banker and the

customer are generally studied as under:

*Debtor and Creditor

The general relationship between banker and

customer is primarily that of a debtor and creditor.

When customer deposits money with a bank, the bank

then is the debtor and the customer is the creditor.

The customer expects from the bank that (I) his

money will be kept safe by the bank, (II) it will be

returned on demand within business hours. The

position is reverse if the customer is advanced loan

i.e. the banker becomes the creditor and the customer

is the debtor.

*Principal and Agent The special relationship between the customer

and the banker is that of principal and agent. The

customer (principal) deposits cheques, drafts,

dividends etc. are for collection with the bank. He also

gives written instruments to the bank to purchase

securities, pay insurance premium, installments of

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loans etc on his behalf. When the bank performs such

agency services, he becomes an agent of his

customer.

*Bailer and Bailment

Relationship

A bailment is the delivery of goods in trust. A

banker may accept the valuables of his customers

such as jewellery, documents, securities etc. for safe

custody. In such a case the customer is the bailer and

the bank is the bailee. It charges a very small amount

of money as service charges for safe custody of

valuables.

*Pledger and Pledgee

When a customer pledges goods and documents

with the bank as security for an advance, he then

becomes the pledger and the bank becomes the

pledgee. The pledged goods are to be returned intact

to the pledger after the debt is repaid by him.

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*Mortgager and

MortgageeMortgage is the transfer of an interest in specific

immoveable property for the purpose of securing the

payment of money advanced or to be advanced by

way of loan. When a customer pledges specific

immoveable property with the bank as security for an

advance, the customer becomes the mortgager and

the bank becomes the mortgagee.

*Bank as a Trustee

The bank acts as a trustee for his customers inthose cases where he accepts other valuables for safe

custody. In such case, the customer continues to be

the owner of the valuables deposited with the bank.

*Executor, Attorney,

Guarantor

The bank also acts as executor, attorney, and

generator for his customers.

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Section 2

THE ORIGIN OF

NATIONAL BANK

NATIONAL BANK OFNATIONAL BANK OF30


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PAKISTANPAKISTAN

National Bank of Pakistan,

the Nations Bank.

National Bank of Pakistan (NBP) was established

under the National Bank of Pakistan Ordinance

1949. The primary objective of NBP was to purchase

jute from the growers in the former East Pakistan and

also to perform the commercial banking functions in

the country.

National Bank of Pakistan is now the biggest

financial institution with assets totaling over Rs.310billion with 1428 local and 23 foreign branches.

The bank is the higher financer in agriculture and

commodity operation sector.

Different facts and figures of opening balances

of the year 2003 about National bank of Pakistan are

as under:

CAPITAL STRUCTURE

National bank of Pakistan was incorporated with

an issued capital ofRs. 15 million.

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AUTHORIZED CAPITAL

The bank has now the Authorized Capital ofRs.

25 billion.

SUBSCRIBED AND PAID-UP

CAPITAL

The Subscribed and Paid-up Capital is Rs. 1.46

billion.

TOTAL DEPOSITS

National bank of Pakistan is the largest

commercial bank of the country and has Total

Deposits ofRs. 362.87 billion.

ADVANCES

The total Advances stood at Rs. 140.55 billion

made by NBP in the form of money at call and

short notices, cash credit, loans for short and long

periods.

INVESTMENTS

The total Investment rose to Rs. 143.53 billion.

This total Investment includes PTC, TFC, and

securities of Provincial of Federal Government.

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PRE-TAX PROFIT

The pre-tax profits of NBP have gone up to Rs.

6.05 billion.

AFTER-TAX PROFIT

The after-tax profits of NBP have been Rs. 2.26

billion.

TOTAL ASSETS

The Total Assets of NBP are Rs. 432.81 billion

which is a great achievement.

TOTAL EXPENDITURES

The Total Assets of NBP are Rs. 26.30 billion

which are very less as compared to previous years

expenditures.

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SENIOR MANAGEMENTSENIOR MANAGEMENTR. A. Kaleemi SEVP & Group Chief, Operational Group

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Masood Karim SEVP & Grp Chf, Co. & Invst Banking Grp & ChfFncl Officer

S. M. Rafique SEVP & Secretary Board of Directors

Derrick Cyprian SEVP & Group Chief, Special Assets & RemedialMngt Group

Amin Akhtar EVP & PSO to the President

Farooqul Hassan EVP & Chief Presidents Implementation Secretariat

Shahid Anwar EVP & Group Chief, Commercial & Retail BankingGroup

Safdar Khawaja EVP & Group Chief, Audit & Inspection Group

Asif A. Brohi EVP & Group Chief, Strategic Planning & Eco ResearchGroup

Javed Mehmood EVP & Group Chief, Risk Management Group

M. Nusrat Vohra EVP & Group Chief, Treasury Management Group

Nadeem Dogar EVP & Group Chief, IT Planning &Implementation Group

Dr. Abrar Baig Head of Human Resources ManagementDepartment

Uzma Bashir Head of Organization Development & TrainingDepartment

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Section 3

THE ACTIVITIESPERFORMED IN NBP

In this section a number of topics are discussed. The major

topics of this section is:

Functions of National Bank of Pakistan

Cash Department

Deposit Department

Different Types Deposit Department

Clearing Department

Advances and Credit Department Securities Types of Advances

Other Services

Different schemes conducted by NBP

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FUNCTIONS OFFUNCTIONS OF

NATIONAL BANK OFNATIONAL BANK OFPAKISTANPAKISTAN

National Bank of Pakistan is a commercial bank, in

modern time it plays a very vital role and its functions

are manifold. The main functions are as under:

(1) Accepting various types of deposits.

(2) Granting loans and advances.

(3) Undertaking of agency services and also general

utility functions, few of these are as under:-

a ... ... Collecting cheques and bills of exchange

for the customers.

b ... ... Collecting interest due, dividend,

pensions, and other sum due to customers.

c ... ... Providing safe custody and facilities to

keep jewellery, documents, and securities etc.

d ... ... Transfer of money from place to place.

e ... ... Acting an executor, trustee or attorney

for the customers.

f ... ... Issuing of travelers cheques and letters

of credit to give credit facilities to travel.

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g ... ... Accepting bills of exchange on behalf of

customers.

h ... ... Purchasing shares for the customers.

i ... ... Undertaking foreign exchange business.

j ... ... Furnishing trade information and

tendering advice to customers.

For proper functioning of all these activities, the

bank has divided its operations into differentdepartments that would be discussed next. These

departments are as under:

(1) Cash Department

(2) Deposit Department

(3) Clearing Department

(4) Advances and Credit Department

(5) Remittance Department

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* CASH* CASH

DEPARTMENTDEPARTMENTThe following books are maintained in the cash

department:-

1 ... ... Receiving Cashier Books

2 ... ... Token Book

3 ... ... Paying Cashier Book

4 ... ... Scroll Books

5 ... ... Cash Balance Book

When cash is received in counter, it is entered in

the Scroll Book and Receiving Cashier Book. At theclose of the day, these are balanced with each other.

When the cheque or any negotiable instrument is

presented at counter for payment, it is entered in the

Token Book and Token is issued to the customer. The

Token and the cashier make entry in the Payment

Book and the payment is made to payee. At the close

of the day, the Token Book and paying Cashier Book is

balanced. The consolidated figure of receipt and

payment of cash is entered in the Balance Book and

drawn closing balance of cash.

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OPENING BALANCE + RECEIPT PAYMENT =

CLOSING BALANCE

This is very important department because cash

is the most liquid asset and mostly frauds are made inthis department, therefore, extra care sis taken in this

department and no body is allowed to enter or leave

the area freely. Mostly, cash area is grilled and its door

is under the supervision of head of that department.

Officer checks the books maintained in this

department.

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* DEPOSIT* DEPOSIT

DEPARTMETDEPARTMET

IMPORTANCE

Bank deals in money and they are merelymobilizing funds within the economy. They borrow

from one person and lend to another, the difference

between the rates borrowed and lend from their

spread or gross profit. Therefore, we can rightly state

that deposits are the blood of the banks which cause

the body of an institution to get to work. These

deposits are liability of the bank so from the viewpoint

of bank we can refer to them as liabilities.

TYPES OF DEPOSITSTYPES OF DEPOSITS

Deposits can be segregated on two bases, one is

the duration in which these funds are expected to be

with the bank, and second is the cost of getting these

funds. So we can divide deposits into two classes

according to duration:

1 ... ... Time Deposits

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2 ... ... Demand Deposits

(1)CURRENT ACCOUNT

In this type of accounts, the client is allowed to

deposit or withdraw money as and when he likes, but

there is requirement of maintaining the minimum

balance of Rs.5000/- other wise Rs.50/- will be

deducted every month. Usually the businessmen open

this type of account and the bank pays no profit on it.

These types of deposits are also exempt from

compulsory deduction of Zakat.

(2)PLS SAVING BANK ACCOUNT

This type of account is for those persons who want

to make small savings. This type of account is opened

with a minimum deposit if Rs.200/- If the balance in

the account falls below the minimum requirement

then a flat charge of Rs.150/- is made in the account

once in a half year. Zakat and other withholding taxes

are deducted as per rules of the government.

(3)FIXED DEPOSITS

In this type of account a certain amount is

deposited for a certain period such as six months, one

year, two year or longer. A fixed deposit receipt is

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issued in the name of the depositor. The receipt is

signed by the officer in charge and the bank manager.

A notice is given to the depositor on a prescribed from

two weeks before the Fixed Deposit Receipt (FDR) falls

due, requesting the depositor to withdraw his money

or to renew his deposits. The interest is allowed on

fixed deposit varies with the period for which the

deposit is made.

(4)SHORT NOTICE TERM

DEPOSIT

This kind of deposit is for a short period as the name

indicates. The depositor may withdraw his deposit at

any time by giving seven days notice to the banker.

This type of deposit facilitates the trader to withdraw

his amount with interest of the deposited period.

(5)CALL DEPOSIT

Call Deposits are the sorts of deposits, which are

deposited with the banker against any tender. This is

with out interest deposit, this may be with interest

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provided with the depositor has agreed to keep this

amount with the banker for some fixed period.

(6)MONTHLY INCOME SCHEME

National Bank of Pakistan has also introduced

Monthly Income Scheme for the benefits of its

customers. An individual or institution, company,

corporation etc. can take the advantage of this

scheme.

LEDGERS OF DEPOSIT

DEPARTMENT

The following types of ledgers are concerned with

deposit department:

1 ... ... Saving Ledgers

2 ... ... Current Ledgers

3 ... ... Profit and Loss Sharing Ledgers

4 ... ... Fixed Deposit Register

5 ... ... Cash Book

6 ... ... Daily Profit and Loss Summary Book

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7 ... ... Voucher Register

* CLEARING* CLEARING

DEPARTMENTDEPARTMENTEvery banker acts both as a paying as well as a

collecting banker. It is however an important function

of crossed cheques. A large part of this work is carried

out through the bankers clearing house. A clearing

house is a place where representatives of all the

banks of a city get together and settle the receiptsand payments of cheques drawn on each other bank.

As the collecting banker runs the certain risks in

receipt of their ownership, the law has provided

certain protections to the banks.

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TYPES OF CHEQUESTYPES OF CHEQUES

COLLECTEDCOLLECTED

(1)TRANSFER CHEQUES

Transfer cheques are those cheques which are

collected and paid by two different branches of the

same bank situated in the same city.

(2)CLEARING CHEQUESClearing Cheques are those cheques which are

drawn on the branches of some other bank of the

same city or of the same area which covers a

particular clearing house.

(3)COLLECTION CHEQUES

Collection Cheques are those cheques which are

drawn on the branches of either the same bank or of

another bank, but branches are not in the same city or

they are not the members of clearing house.

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**ADVANCES ANDADVANCES AND

CREDIT DEPARTMENTCREDIT DEPARTMENT

The function of Advances and Credit Department

is to lend money in the form of clean advances,

against the promissory note, as well as secured

advances against tangible and marketable securities.

The bankers prefer such securities, which do not run

the risk of general depreciation due to market

fluctuations. Common securities for the bankersadvances are as under:

SECURITIESSECURITIES

(1)BANKERS LIEN

(Moveable property possessed to the lender

cannot be sold in case of default)

Lien is the bankers right to hold the property

until the claim on the property is paid. The bankers

look at their lien as a protection against loss on loan

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or overdraft or any other credit facility. In ordinary

lien, the borrower remains the owner if the

property, but the actual or constructive possession

remains with the creditors, though he has no right

to sell it.

(2)GUARANTEES

When an application for an advance can offer

any tangible security, the banker may rely on

personal guarantees to protect himself against loss

on advances or overdraft to the applicant.

(3)MORTGAGE

(Immoveable property possessed to the lender can

be sold in case of default)

A mortgage is the transfer of an interest in

specific immoveable property for the purpose of

securing the payment of money advanced or to be

advanced by way of loan, and existing of future

debt, or the performance of an engagement, which

may rise to a particular liability. The person in

whose interest the property is transfer is called

mortgagee.

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(4) HYPOTHICATION

(Immoveable property possessed to the

borrower can be sold in case of default)

When property in the shape of goods is

charged as security for a loan from the bank, the

ownership and possession is with the borrower, the

goods are said to be hypothecated. The essence of

hypothecation is that neither the property in goods

nor the possession of them passes to the lender, but

the security is granted by means of letter of

hypothecation which usually provides for a bankerscharge on the hypothecated goods.

(5)PLEDGE

(Moveable property possessed to the lender

can be sold in case of default)In a pledge, the ownership remains with

pledger (borrower), but the pledgee has the

possession of property until the advance is repaid in

full. While in case of defaulter, the pledge has the

right of sale after giving due notice.

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TYPES OFTYPES OF

ADVANCESADVANCES1 ... ... Demand Finance(Ordinary Loans)

2 ... ... Running Finance(Overdraft)3 ... ... Cash Finance

4 ... ... Small Finance

5 ... ... Agriculture Loans

(1)DEMAND FINANCE

(ORDINARY LOANS)

These are those advances which are allowed in

lump sum for a fixed period and are repayable in lump

sum or gradually in installments.

(2)RUNNING FINANCE

Running finance are advances, which are gradually

given to meet temporary requirements of the

customers. A good customer uses the banks running

finance limit, as a mean of protecting his credit in the

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market and as a line of second defense to meet his

commitments. There are two types of running finance:

1) UN-SECUREDUnder this type of overdraft, the bank relies upon

the personal security of the customer or customers

account.

2) SECURED

Under this type of overdraft, the bank allows his

customer to withdraw more than his deposit after

giving security against the amount overdrawn. The

securities against which they are given are as under:

a ... ... Share Certificates

b ... ... Savings Certificates

c ... ... Deposits

d ... ... Mortgage Property

e ... ... Guarantee of a person

(3)CASH FINANCE

These types of loans are given against the

following:

1 ... ... Against locally manufactured goods

2 ... ... Cash finance against rice and paddy

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3 ... ... Against pledge

4 ... ... Against commodities

5 ... ... Besides advances against the above

commodities bank may be approached by

parties for advances against other

commodities like tobacco, oil, etc.

6 ... ... Against Trust Receipts

(4)SMALL LOANSLoans are allowed to contractors clearing and

forwarding agents. These loans are repayable within a

year.

(5)AGRICULTURE LOANS

Agriculture loans are given to the farmers with

holding up to 25 acres for meeting their short medium

and long term production requirements such as:

a ... ... Agriculture inputs

b ... ... Tractors instruments

c ... ... Tube wells

d ... ... Live stock farming

e ... ... Land Improvements

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(6)(6) OTHEROTHER

SERVICESSERVICES54


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* UTILITY BILLS COLLECTION

For the convenience of the customer, National

Bank of Pakistan also collects different kinds of

utility bills such as:

Electricity Bills, Sui-Gas Bills, Telephone Bills etc.

* NBP PAK RUPEE TRAVELER

CHEQUE

NBP Pak Rupee traveler Cheque is better than

cash, because you get the power to purchase as

well as your money can be refunded in case you

would loss your cheque. It is a safe and convenient

way of purchase.

DIFFERENT SCHEMESDIFFERENT SCHEMES

CONDUCTED BY NBPCONDUCTED BY NBP

National Bank of Pakistan always makes efforts to

improve its goodwill in the general public. It introduces

different kind of schemes time to time.

The most popular schemes conducted by NBP are

as under:

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1 ... ... Hajj

Mubarak Scheme

2 ... ... NBP

Advance Salary Scheme

3 ... ... Fund

Management Scheme

4 ... ... LG TV

Scheme

(1) HAJJ

MUBARAK SCHEME

For the convenience of a person with a limited

income who desire to perform Hajj, Hajj Mubarak

Scheme is introduced. Moreover, National Bank of

Pakistan process the Hajj applications of thousands of

people successfully more than any other bank in

Pakistan.

(2) NBP

ADVANCE SALARY SCHEME

Do you need urgent funds? If yes then head to

National Bank of Pakistan and avail NBP Advance

Salary Scheme, which allow you to draw three

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months salary in one go. This facility is available to

permanent employees of the:-

1 ... ... Federal and Provincial governments

2 ... ... Semi-governments, autonomous, semi-

autonomous, local bodies, and government

corporations

3 ... ... Other corporations approved by NBP

No guarantee, collaterals, or insurance is requiredto avail this scheme. NBP gives the facility to repay

the excessive amount within 1 to 36 months. The

procedure is very easy, just fill the application form

and choice between 1 to 36 months and take your NBP

Advance Salary within 3 days after submitting your

form.

(3) FUND

MANAGEMENT SCHEME

This scheme is offered to corporate under customerand is aimed at providing better rate of return up to

15% per annum. One of the objectives of the scheme

is to develop the secondary market for government

securities.

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(4) LG TV

SCHEME

It is the most popular of NBP schemes for the year

2003. NBP incorporates with LG Appliances

Corporation. If you want a TV set but have not enough

money to purchase it then head to NBP, fill an

application form of LG TV Scheme. NBP gives you the

facility to pay for the TV set in smaller installmentsduring a time period of 2 years.

Any one can avail this scheme. Two government

employees are required to present the witness to

repay the loan if the applicant is unable to repay the

loan or the applicant should have the Fixed Term

Deposit in NBP more worthily than the amount

advanced to the applicant and it should have the

duration of more than two years.

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Section 4

TRAINING

SUBSTANCE

In this section two topics are discussed. Two major topics of this

section are:

Work performed by me

Recommandations

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WORK PERORMEDWORK PERORMED

BY MEBY ME

I joined National Bank of Pakistan, Main Branch

Khanewal on 9th June, 2003. First day, the manager

introduced me about the functioning of the branch and

the staff. The manager told me that Counter is the

most important place of the bank. During the six

weeks of my internship, I worked in different sections

of the branch and did the maximum practice of

banking system details of which is as under:

GENERAL BANKINGGENERAL BANKING

First of all, I was asked to work in different

sections of general banking. I was attached to Counterwith Mr. Mumtaz who has good command on this

section. Here we dealt with new customer who wanted

to get information and to deal with the branch. This is

a very interesting department because here we met

people of different types and deal with them

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accordingly. In this section, I observed the following

functions:

CHEQUE AT COUNTER

A cheque to withdraw the amount is presented on

the counter with the following requisites:

1 ... ... Name of theAccount Holder

2 ... ... Current or

previous date

3 ... ... Amount in

figures

4 ... ... Amount in

wording

5 ... ... One

signature of the account holder in the right

bottom corner of the cheque and two

signature of the bearer on the back

6 ... ... Branch

Stamp in front of the cheque

7 ... ... If the

Account Holder uses thumb instead of

signature then the Pass Book is necessary

with the cheque

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Operations officer checks and verifies all these

requisites. If it fulfills all the requisites, it is forwarded

for payment after a certain procedure.

CHEQUE PAYMENT

PROCEDURE

After all the requisites are verified and then the

excessive balance is checked and prescribed amount

is deducted narrated on the cheque, then SIGNATURE

VERIFIED stamp (in case of signature only) on the

signature and a PAY CASH stamp are fixed and a

Token is given to the cheque bearer after writing

Token No. on the specified cheque. Then the Officer G-II verified the cheque and forwarded it to the cashier

where the cheque bearer receives the amount from

the account.

ISSUANCE OF DEMAND

DRAFT

A Demand Draft is provided to the client in which

he has to specify that bank it is drawn. The amount

both in words and figures is written on Demand Draft.

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BILLS COLLECTIONS

DEPARTMENT

I spent second week of my training in bills

collection department. Mr. Afzal is the in charge of this

section. Here we collected utility bills like electricity

bills, gas bills, and telephone bills.

BILL REMITTANCE

DEPARTMENT

This is very important and interesting

department. This section deals with the transfer of

money from one branch to another branch. Nearly four

drafts are issued daily from this department. Here I

know how the amount is transferred and what the

procedure is. This department also deals with TT

transfer of money. I worked nearly two weeks in thisdepartment.

DEPOSIT DEPARTMENTDEPOSIT DEPARTMENT

Deposit department deals with Current, Savings,

and Fixed Accounts. In current account the bank does

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not give any interest and you can deposit the whole

amount in lump sum in business hours.

However in PLS savings account we can only

withdraw up to Rs.25000/- without any notice

otherwise a prior notification of a weak is required to

the bank if the amount to be withdrawn is more than

Rs.25000/-

Old ages are interested in Fixed Account usually.The rate of interest is higher more than that of in

Current and PLS savings Account but the amount

cannot be withdrawn before a specific time fixed by

the client.

To open the account customer have to fulfill an

application form and submit to the concerning

authority. In Current and PLS saving Account, a

Cheque Book is issued to the client and he becomes

the Account Holder of NBP. I worked in this

department for one and a half week.

PROCEDURE FOR OPENING

ACCOUNT

For opening a (PLS, CURRENT ACCOUNT, FIXED ACCOUNT)

is that an application is submitted in the form prescribed

by NBP where the application is duly introduced by

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another account holder together with information as the

bank may required.

Normally bank required information from applicant as

such (name ,fathers name ,occupation for which purpose

account is opened , who much amount want to submit,

get signature on signature card etc.) Information taken

from existence account holder regarding account number,

name, fathers name dully verified signatures

CLOSING ACCOUNT

There are a number of reasons why an account is closed.

Some of the more common reasons are follows:

1. At client own request.

2. Death of the account holder.

3. Bankruptcy of the account holder.

4. Liquidation or winding up under the companies act.

PROCEDURE FOR CLOSING AN ACCOUNT

An account is closed at the request of a client or as a

result of improper conduct of the account holder or

because he has a nil balance. In the first case a letter from

customer requesting the closure of his accounts obtained.

If however the account is being closed due to improper

conduct or because the account has a nil balance, it is

ensured that a letter has been sent to customer

sufficiently in advance informing him of out intention

account has been closed. There are also other deposits

schemes of NBP these are:

.

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nbp report 52

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