ACKNOWLEDGEMENT

For the completion of my report I am indebted to plenty of people for their very sincere cooperation that they extended to me at various stages. First and foremost problem that every student faces is the completion of a report is gathering of data while it is very difficult to learn & rotate in different department of the bank especially in National Bank of Pakistan where work burden is quite higher compare with other banks. On the other hand there is too much short time of our internship (six weeks), furthermore staffs of the bank are too busy in their work so that we cannot be able to learn and do according to our report requirement.

I am very thankful to staff members of National Bank of Pakistan, WAH CANTT Branch, for guidance and providing me valuable information regarding my report completion. Finally I am thankful to the most merciful and Almighty Allah who gives me the strength that I fulfill my task efficiently.

EXECUTIVE SUMMARY

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This report highlights the operations and functions of National Bank of Pakistan. NBP act as financial agent to its customers in return it gets reward for its services in the shape of profit. Being a Government owned institution it plays an important role in development of society as well as in development and growth of the economy. National Bank of Pakistan is one of the leading banks in Pakistan. According to international standards of banking system it is one of the best bank in South Asian region as well as the bank of the year 2008. This report explains how different functions of NBP work and what are their services. The main purpose of the internship is to gather relevant information to compile internship report on National Bank of Pakistan Main Branch Islamabad. Another purpose of this Internship program is to enable the students to use the management techniques acquired during their courses, and find out the possible solution of management problems faced by the organization The report is based on my six week internship program in National Bank of Pakistan. The methodology reported for collection of data is primary as well as secondary data. The biggest source of information is my personal experience, observation while working with staff and having discussion with them. The annual report 2008 also helped me in this regard.

COMPANY BACKGROUND
The NBP was established vide NBP Ordinance No. XIX of November 9. 1949. British Govt. devalued its currency in September 1949, India devalued its rupees but Pakistan

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did not. It led to a crisis in trading between the two countries and India refused to lift the Pakistan Jute. To solve this problem i.e. to export jute NBP was established through an Ordinance of GOP. National Bank of Pakistan maintains its position as Pakistan's premier bank determined to set higher standards of achievements. It is the major business partner for the Government of Pakistan with special emphasis on fostering Pakistan's economic growth through aggressive and balanced lending policies, technologically oriented products and services offered through its large network of branches locally, internationally and representative offices. National Bank of Pakistan is the largest commercial bank operating in Pakistan. Its balance sheet size surpasses that of any of the other banks functioning locally. It has redefined its role and has moved from a public sector organization into a modern commercial bank. The Bank's services are available to individuals, corporate entities and government 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. Its subsidiaries are Taurus Securities Ltd, NBP Exchange Company Ltd, NBP Capital Ltd, NBP Modaraba Management Company Ltd, and CJSC Bank, Almaty , Kazakhstan . The Bank's joint ventures are, United National Bank (UK), First Investment Bank and NAFA, an Asset Management Company (a joint venture with NIB Bank & Fullerton Fund Management of Singapore). The Bank's financial performance has been remarkable. In 2006, total assets are estimated at Rs635 billion, while deposits have grown to nearly Rs502 billion. Pre-tax profit rose to Rs26 billion. Earnings per share have jumped to Rs24.01 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 Rs48 billion to Rs316 billion. The Bank maintains a sound loan portfolio diversified in nature to counter the risk of credit concentration. It ranges from

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providing credit to the un-banked market segment under NBP Karobar, to small and medium enterprises, to agricultural loans, to large corporate customers.

MISSION
NBP will aspire to the values that make NBP truly the Nations Bank, by: Institutionalizing a merit and performance culture Creating a distinctive brand identity by providing the highest standards of services Adopting the best international management practices Maximizing stakeholders value Discharging our responsibility as a good corporate citizen of Pakistan and in countries where we operate.

VISION
To be recognized as a leader and a brand synonymous with trust, highest standards of service quality, international best practices and social responsibility.

INFORMATION AND DEPARTMENTALIZATION OF NBP

INTRODUCTION
This chapter presents the services and departmentalization of NBP. Services are outputs of the firm/organization, which are in intangible form & which are the backbones of any organization to earn profit? NBP offers the following services to the people.

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 TRADITIONAL BANK ACCOUNTS DEMAND DRAFTS SHORT / LONG TERM INVESTMENTS AGRICULTURE FINANCE CORPORATE FINANCE CASH MANGMENT SERVICE CASH AND GOLD FINANCE ADVANCE SALARY LOAD STUDENT LOAN SCHEME PENSION PAYMENTS TELEGRAPHIC TRANSFER SWIFT SYSTEM LETTERS OF CREDIT TRAVELER'S CHEQUES PAY ORDER MAIL TRANSFERS FOREIGN REMITTANCES BUSINEES LOANS AGENCY SERVICES UTILITY BILL COLLECTIONS HAJJ ARRANGEMENTS SAFE DEPOSIT LOCKERS

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DEPARTMENTALIZATION
Dividing an organization into different parts according to the functions is called departmentalization. So NBP can be divided into the following main departments. CASH DEPARTMENT CLEARING DEPARTMENT ADVANCES DEPARTMENT REMITTANCE DEPARTMENT HUMAN RESOURCE MANAGEMENT FOREIGN EXCHANGE DEPARTMENT CMPUTER DEPARTMENT

SWOT ANALYSIS
This section of report constitutes the SWOT Analysis of NBP.
SWOT analysis is one of the most important steps in formulating strategy using the organization mission as a context; managers assess internal strengths distinctive competencies and weakness and external opportunities and threats.

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The goal is to then develop good strategies and exploit opportunities and strengths neutralize threats and avoid weaknesses with an overall organizational goal is to increase the wealth and value of the organization.

STRENGTHS
OLDEST INSTITUTION ALTERNATE DUTIES IN SBP ABSENCE MORE DEPOSITS THAN OTHER BANKS EMPLOYEE BENEFITS BROAD NETWORK STRICTLY FOLLOWED RULES & REGULATION PROFESSIONAL COMPETENCE HEALTHY ENVIROMNMENT RELATION BETWEEN STAFF AND OTHER EMPLOYESS STABILITY IN POLICIES RESULT BATTER EFFICIENCY EXPERIENCED AND EFFICIENT MANAGEMENT NEW CONCEPT OF MANAGEMENT TRAINEES (MTOs)

WEAKNESSES
LACK OF MARKETING EFFORT NBP UNDER POLITICAL PRESSURE FAVORITISM AND NEPOTISM

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 LACK OF FINACIAL PRODUCT INEFFICIENT COUNTER SERVICES IN THE RUSH HOURS LACK OF COMPUTERIZED NETWORKLACK OF MODERN EQUIPMENT UNEVEN WORK DISTIBUTION.

OPPORTUNITIES
ELECTRONIC BANKING MICRO FINANCING GROWING BUSINESS AND BUSINESS POLICIES TECHNOLOGICAL ADVANCEMENT OPPORTUNITY TO EXPAND FOREIGN OPERATIONS CONTINUEING THE PROCESS OF MANAGEMENT TRAINESS

THREATS
EMERGENCE OF NEW COMPETITORS POLITICAL PRESSURE BY ELECTED GOVERNMENT DOWNSIZING CUSTOMERS COMPLAINTS GROWING GLOBAL TECHNOLOGICAL ADVANCEMENT INCONSISTENCY IN GOVERNMENT POLICIES

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WEEKLY LEARNING
There are following learning points for me in the bank.

Duties
In my 1st and 2nd week in NBP I workd under the assistance of Operation Manager from him I learn about activities related to Deposit Dept: and performed such activities like: Opening an account Issue new cheques books

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Sorting out cheques Difference between cheques of current, saving and royal account

And I also scrolld the challan of Government and pass vouchers. In my 3rd and 4th week in NBP, they assigned me work related to pension department. The staff guided me very nicely and I learned lot of things pension related activities. They give the pension to retired Govt. employees. There are three types of pensions given, Provincial Central Defense

These are different according to their PPO numbers For example: Provincial PPO 123456 Central PPO 12345/pak Defense PPO da/dg1/gh/4 etc. I am full trained now in this particular job and I served lot of people in that week. How to fill form? How to enter in ledgers and balance account and what are file and book and all other things concerning to pension department? In 5th week I worked under the assistance of Chief Manager from him I learn about remittance activities: Demand Draft Telegraphic Transfer

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Pay Order Mail Transfer

In 6th week I learnt the swift operations. How swift system works and managed and how to transfer money through swift system

FINDING AND OFFER CONCLUSION

INTRODUCTION
The findings are the facts that we discover from the analysis of an organization and in the light of those findings we give the suggestion, which are realistic and adoptable for the organization. After critically analyzing both the operations and financial data of National Bank, let me summarize the findings of the report. Here, few finding and implementation plans are given to overcome the problems mentioned in the previous chapter. These analysis are mainly based on my practical working & experience at the NBP during internship. I have divided this section in four parts which are as under. Problems at the branch.

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 Function analysis. Administrative analysis. Personal managements analysis. FUNCTIONAL ANALYSIS Formal Organization Formal organization includes the activities of two or more person, which are cautiously determined groups and coordinated towards a given objective. It provides base when people are able to communicate with other, when they have common purpose and they are willing to work. In NBP, we find a formal organization. Bernard referred to an organization as a formal when the activities of two or more persons are coordinated towards a given objective. The formal organization comes into being when people are able to communicate with one another or willing to act and share a purpose. In this formal organization of NBP the activities are carried out in a more formal way. In theoretical terms it provides basis for communication with one another but in practice it is not exercised because an employee at high level cannot get straight away to manager or SVP and ask him about of his problem faced by him, because first he has to talk to his immediate superior and follow a proper channel of communication. Difference between theory and practice A vast difference exists between theory and practice and NBP has written procedure but practical work done by employees is a bit different from written procedures. Bank duty to maintain secrecy. They dont care about maintaining secrecy, especially during the rush hours. They speak loudly about the account position and while getting clearance of cheque the person can easily get the whole information from the ledge. The deposit clerk must be careful while

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passing any cheque. In this regard another shortfall is in giving the information about the balance on telephone. Excessive paper work It is notified that due to the lengthy procedure of paper work the bank employee are over burdened. They are unable to give proper attention to the clients and face difficulties in getting their job done. One reason for lengthy procedure and excessive paper work in the bank is the lack of computerized technology. More accounts fewer deposits. Efficient banking is one, which does not emphasize on number of accounts but on greater amount of deposits. NBP is more interested in increasing its number of account irrespective to its deposit. The main reason behind it is that bank does not provide personalize service to all the account holders and does not improve its quality and services Delegation of authority Manager has very limited authority; he has to take the approval from his management authority i-e. In case of advance he has to take the approval of general and regional manager. The other problem is created, when the manager is not present in his office, the customer having to wait for hours. This discourages both customer and officers because they have to suffer a lot ADMINISTRATIVE ANALYSIS Job analysis is not effective Only on the basis of job analysis it can be decided how a right person can be hired, trained, compensated or promoted. It is very important for an organization that nature of the job is described and job specifications are mentioned. Most of the employees are simple graduate and do not have proper background about their job. This creates problems both for organization and for the employees. In NBP salaries are given

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according to the seniority and grades. People with simple or complex responsibility are getting the same salary and facilities. This creates dissatisfaction among employees.

Carelessness in opening of account When customer comes to open an account, the staff does not bother to check his/her place phone number and permanent address. It is important because in case of overdraft by mistake or anything which places his accounts in debit it will be difficult to trace him. On the other hand he may be involved in any fraudulent activities against the bank. In this case the bank will be in awkward position. Lack of specialized training NBP does not provide adequate facility of specialized training to their staff. Training is generalized rather than specialized. As the worker finishes his training, he is inducted into a specific field without having great deal of knowledge about the field. In the Hayatabad branch the newly recruited employee training was not imparted, they all learned things on the job. Low Profit Rates Most of the customers shifted their account to the National Saving Center because of the low rates of saving deposit discourages the customers. Bank should increase their profit rates to attract customers. Poor Job Rotation. There is absence of job rotation in NBP Hayatabad branch. A person placed in onedepartment remains their forever. It reduces career opportunities as well boredom and in the end results in career plaguing. Job rotation is very important for employee especially for those who are newly recruited. The newly recruit should be rated in all department of the banking in order to get familiar with working of different departments so that when

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they get a responsible position they have know how of the whole system. Delays in Loan Advancement It has been observed that there is much delays in sanctioning of cases from the head office, which results in customer dissatisfaction. Lack of appreciation Another very important thing which is ignored in the bank is appreciation if the employee on their good performance. If hard work and performance of employees is not recognized and appreciated they become dishearten which results in decline in performance. PERSONAL MANAGEMENT ANALYSIS Need for better training program Need of training is greatly emphasized all around the world. Training of the personnel is part of human resource management. It has been noticed that the training program of NBP is not adequate. Once the candidate is selected and placed on the respective job. It becomes essential to train him adequately for the task. They should learn new methods for motivating customers. The training programmed of the bank should include scientific techniques to improve the decision-making and interpersonal as will individual needs of the employee both specialized to fresh as well as on job to maintain the high standards of service. Developing Managerial Leadership Leadership is a practical term of visible, clear on objective and communicating better control on financial and administrative matters. Manager is not only responsible for their own units in business, but also in people terms i.e. training, recruiting, grievance handling and taking immediate initiative in crisis situation to take major decision affection the future of the bank and banking community.

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Recruitment policy Human resources are the lifeblood of the organization. If the personnel are recruited carefully they can become asset to the organization in the case of carelessness a liability on the organization. Bank is not following its recruitment policy properly due to favoritism, nepotism and political pressure. Both the top authority and staff union tries their best recruit their favorites, indulgence of political pressure add salt to the wounds. Promotions Promotion in NBP is purely on the basis of seniority, so the new young person having high qualification remains behind for quite a lot of time. Top management and staff union put pressure for the promotion of their favorites, which gives a sense of deprivation to the deserving employee and their efficiency is affected. As the concept of promotion is attached with better in terms of greater responsibility, more prestige, greater skills and increased rate of salary. Thus a better and impartial policy of promotion needs to be followed. Transfer Transfer means when a person is shifted from one place to another place. It is done either that person is needed more on the other branch or for improving his skill variety. It is the policy of the Bank to transfer each employee 3 to 4 years. Marketing at desk Bank employee come in daily contact with many people who happen to deal with the casual remittance, travelers cheques, safe custody, pensioners, depositing license fee and variety of other functions and variety of other people with whom the Bank has no account or regular business relationship. The Bank employees are doing very little on their own to explore the possibilities of selling banking services to them as a marketing contributor. The entire Bank community should make a conscious effort in addition to their normal work to explore the possibilities of selling banking services to them. The market

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opportunities are hidden in every dealing a banker handles; the question is that if he has the art and urge to seize such opportunities. Lack of business communication There is no proper way to give information to their customer. To avoid this minor dissatisfaction and tension in the mind of customer, and deficiency of the service, it is recommended that the bank should provide brochures etc containing information in details. Some general information should be placed in information notice board on the entrance where customer can see it easily or it should be self-attractive.

RECOMMENDATIONS & SUGGESTIONS

NBP is an effectively operating and profit making organization and carrying out its activities under a specified system of procedure. The main regulatory body is State Bank of Pakistan, which provides policy guidelines and ensures that the money market operates on sound professional basis. While the head office specifies the whole procedure of function and operations. This procedure has been modernized with the passage of time with a view to streamline the approach and underlying procedure for effective overhauling of its own capabilities so as to bring them at par with international practices. Here I am giving some suggestions, which in my view can add some input for efficiency and better performance of NBP as an organization in general and as a main branch in particular. The recommendations are as follows: Professional training NBP staff lacks professionalism. They lack the necessary training to do the job efficiently and properly. Although staff colleges in all major cities but they are not performing well. For this purpose these staff colleges should be reorganized and their syllabus should be

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made in such a way to help the employee understand the ever-changing global economic scenario. Banking council of Pakistan should also initiate some programs to equip the staff with much needed professional training. Delegation of authority Employees of the bank should be given a task and authority and they should be asked for their responsibility. Gives proper attention to every work and concern bodies are responsible to delegate the authority to whom they think that will perform batter. Performance Appraisal The manager should strictly monitor the performance of every staff member especially operation manager of the branch. All of them should be awarded according to their performance and result in the shape of bonuses to motivated and incite them to work more efficiently. To Over Come Problem of Space and Furniture In the critical analysis this, problem is discussed. To overcome this problem it is suggested that a special section should be made inside the branch. Which should only handle the treasury function, salaries and pensions of federal personnel or the bank should do these functions in the evening time. Also management should purchase more furniture and arrange them in such a way which provides maximum space and convenient especially in deposit department and there should also be convenient sitting place for customers. Transfer Transfer is not properly carried out. Some of the employees are continually serving at the same post. They are simply rotated at the same branch. Therefore it is recommended that

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evenly rotation of every employee should take place after every three years in different braches of the bank. Changes in Policies There should not be any abrupt policies change by the upper management, as this practice hurts the customer confidences in the bank. Government should make long-term policies Need Qualified Staff Required, qualified staff should be provided to branch in order to improve the functioning of the branch. Especially a telephone operator should be appointed. Utility Bill Charges Bank gets Rs. 2 to 3 to processes a utility bill, and it is very tire, tough and hard job despite this working resulting in a loss to then Rs 3 to5 per transaction. These charges should be increased to RS 10 per bill to enable the branch to cover their handling costs and make some profit. Link with the Head Quarter 100 major branches of NBP should established a direct link with the, head quarter in Karachi, through Internet or Intranet. This will make the functions and decision making of the management easier and convenient. But still NBP main Branch Mansehra did not have online facilities. Credit Card National bank of Pakistan should start its operation in credit card. These cards are very helpful for the ordinary customer in general and the business people in particular. To make it mores secure and to eliminate the misuse of it, the management is required to keep proper security against the card. Installing Validator and ATM

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Validator machine is used to count the currency notes and its installation will help to eliminate to counting errors and will save time. This will also help in saving time result is work completed on time This branch is situated in the City, which is supported to be the hub of business activates. In this area an automated teller machine (ATM) is the need of the hour businessmen can easily check their balance in the bank and also with draw their money conveniently. Interest on Overdraft: Overdraft is a short-term credit facility provided by the bank to its trustworthy customers free of interest. Only bank commission is charge small amount of mark-up on the overdraft, which will help the bank to improve its revenue position. Clean Loans Clean loan or clean overdraft is the credit facility extended to the customers to the customers without any security. These types of small term loans should not be extended to anybody, because sometime these loans are provided to blue-eyed people of the management and they become a part of bad debts. Cash Financing In this mode of financing the amount of credit not utilized by the borrower is remained tax-free. It is recommended that a small amount of interest should be charge on this amount as well because the bank gas kept-aside the amount for that borrower and can not advance it anywhere. Decreasing Administrative Expenses Bank should their administrative expenses. This was Rs 8 billion in the year 2000. That can be done by lying off the surplus pool of employee with golden handshakes scheme. The branches that are not much used could also be closed. Employee can also be how to control the bank expenses. That will give positive results in the future.

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Needs to be Flexible in credit Policy As mentioned earlier, NBP is very conservative in advances and loans policy. It reduces the investment opportunities. Also loans should be given to the small businessmen and the agriculture sector at the low markup rate. It should adopt flexible credit policy while giving credit to the agriculture sector. Technological Advancement I would like to suggest that at least all the main branches of NBP should be fully computerized in order to expedite the dealing process among bankers and their customers. Every department should be provided a computer with adequate training (especially Advances, Deposits and Foreign Exchange departments) Daily records should be entered directly into these computers, (instead entering the overall daily transactions after the banking hours). It will not only reduce transaction time, will increase accuracy but will also be efficient as well. Staff Relationship Good relationship among staff member leads to the peak performances in any organization. I observed that the staff relationship was normal other wise but some time I noticed that there existed a little conformity among the staff members. Another syndrome from which the staff suffered was that all of them considered themselves more important than others. Some of the officers used to say that if I am absent for a day the bank would stop working. So this sort of attitude is not good because it mars bank image and juniors willingness learn and work hard and in the end will hurt the whole team. Improper Distribution of Work Proper distribution work leads to success in every organization. Proper distribution of work prevents the employee from over and under work situation. So for a smooth running of an organization proper distribution of work is the hint to be followed. During my internship I observed that there was no proper distribution of work in the bank. I saw that

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some of the employee worked like ants other sat idle starting here and there. So this created a lot of over work situation for while relaxation for other. Favoritism and nepotism In the during my internship in branch I saw that when some of the employees are transfer to other places, due to their relation with influential people and with top management they can cancel their transfer in few weeks, when they are unsatisfied at that place. Not in one branch of NBP but as a whole. This process will also be apply in recruitment and selection process. Deserving candidate will fails to qualify. So I suggest that in the organization there should be no favoritism, nepotism and politics and their transfer and promotion should be made on merit and according to the rules and regulations of the bank and provided favorable environment to the employee to show their performances. Skilled and Highly educated staff National bank of Pakistan requires skilled and highly educated staff. Nowadays, there is a large number of M.B.As who is unemployed. These young people have the knowledge and skill to compete in this competitive and dynamic environment of banking. National bank of Pakistan should recruit new young professional. Inter Departmental Transfer I watched during my internship that, there is number of employee who have worked on one seat for many a year. It can have negative effects motivation of employee who is hard working and intelligent. Take the example of advances section. In advance section if the employee is transfer after sixth month or seven month, how can he be able to show his performances and how can he be able to know the bank customer in a short period of time. Complaints of Customer

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There should be an information desk to provide the information and to receive the complaints of the customer in the bank. There is no complaint box available in the branch and not any person appointed to hear the complaints. So I suggest management to install a compliant box in the branch, and recruit a special person for that guidance of the customer when they are unable to manage some difficulties in banking matters. Analysis of the Business: Proper analysis of the business reports should be conducted before extending any type of loan. For this purpose professional training of the stuff member is required. Organizational Commitment It is suggested that employees working on daily wages basis should be given some benefits, which the other employees are getting. Their salaries must increase according to efficiency, performance and service. Managerial Leadership In the analysis, we have discussed the difficulties of the assistant in taking any initiative; therefore it is recommended that the assistants should he given special training to make them ready for the leadership.

Credit Monitoring The credit department of the bank should carries out vigilant credit monitoring. They should ensure the proper payment of installments and the mark-up by the borrower. The staff members who have done all the paper work of the loan extension should perform the monitoring, as he/she will be having more information about the borrower. Housing and House Hold Goods loans

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Bank should initiate these loans because most of banks customers are middle class and they cannot afford to buy house or household goods at once by their own. For this purpose bank should set lowest markup to its to attract customers. Avoiding Bad Debts Special care should be taking while extending the loan. Loans should be awarded against reasonable securities, where market value should be equal to the loan granted.

Bibligraphy
Israr, Siddiqi H. (1998Banking law and Financial Services. Karachi: Decent Print Enterprises. Page 35, 36, 40.

Sir Paged John. The law of Banking. The Law of Banking. McGraw Hill Publication: page 51-58

Dr.Aftab Ahmad Khan (Macro Economics and Financial Sector of Pakistan.)

www.nbp.com.pk Bank Nationalization act 1974.

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 President Office, June 21, 2006, Circular No. 13, 2002. Head Office National Bank of Pakistan Karachi. Standard procedure Manual of National Bank of Pakistan. Instruction Circulars of 2008

Http// www.nbp.com.pk. National Bank of Pakistan Yearly Report 2008.

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