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 :
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
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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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