This report is all about National Bank of Pakistan which is one of the leading banks of Pakistan. It is providing a vast variety of facilities to its customers. Inside the bank, in branch it has Deposit, Remittance, Clearing, Foreign Exchange, credit, Cash and Account Opening Department. The other strengths of this bank are that it is acting as an Agent of State Bank of Pakistan, providing Agency Arrangements and also it is offering wide range of products in market. NBP is also facing many challenges but its financial position shows that it is growing day by day and also maintains its position as an "Asian Tiger" in banking field.
As far as my internship experience is concerned, I learnt a lot during my internship because I got practical knowledge before entering in the practical life. I learn about rules and regulations, different procedures, the organizational culture and structure of the NBP. According to my observation, may be future of overall National Bank of Pakistan is bright but the future of Railway Road Branch of NBP in Gujrat is in danger. Poor customer relationship management, poor customer dealing and poor discipline etc. are some factors which can harm the branch in near future. But if branch overcomes its weakness by making use of its strength and opportunity available in market, then it can also have a very bright future and surely it can be on the way of progress Insha Allah and will contribute in overall progress of NBP at national and international level.
6. Conclusions of the Report
6.1 Summary of Conclusions Drawn from Internship Experience
In the light of SWOT analysis, I conclude that National Bank of Pakistan is a largest bank in Pakistan. It works in accordance with the rules and regulations set by the State Bank of Pakistan. It is the major business partner of Pakistani government with special stress on nurturing Pakistan's economic development through balanced lending strategies. National bank of Pakistan with an extensive branch setup is having an honor of introducing Cash free visa card, ATM and master card for the first time in Pakistan. It is also dealing very efficiently in the international transactions with better foreign exchange rates as compared to other banks. In stock market, the share of the National Bank is growing higher day by day which shows better worth of National Bank of Pakistan as compared to other Banks.
6.2 Observations for the sector in which your internship institution/company operates
6.2.1 General Observations about NBP:
The banking sector in Pakistan has great potential for investment and job creation for young and energetic generation and offers bright future. No doubt, the job of a banker is hard and it is difficult to achieve the goals, but one can find the status of respect and honor in society. The need of time is to solve the economic crisis and terrorism in the country in order to increase foreign investment. The foreign investors should be encouraged so that they might show their willingness to invest in the banking sector but due to terrorism, foreigners do not feel it a safe to undergo investment in Pakistan because of this reason, they recover their investment. The need of the hour is to increase foreign and domestic investment so that it can play a vital role in economic growth of the country.
6.3 SWOT Analysis:
In the last part of the report I have made a SWOT analysis of the bank. I have tried to put some useful recommendations for the betterment of the bank's activities according to my study.
6.3.1 The strengths of National Bank of Pakistan are described as under:
6.3.1.1 The Nation's Bank:
The National Bank of Pakistan is Government's owned bank so the people of Pakistan trust on NBP and deposit their surplus in this bank. Because of this, bank deposits are growing steadily.
6.3.1.2 Agent to SBP:
National Bank acts as an agent to State Bank of Pakistan in those localities where the State Bank Branches are not working. So, in the areas where SBP divisions are not established, NBP works there as an agent of SBP.
6.3.1.3 Agency Arrangements:
National Bank of Pakistan is having deposits of different governmental organizations like PIA, Pakistan Railways, Sui-gas and WAPDA owing to agency arrangements.
6.3.1.4 Corporate Branches:
Assets of National Bank of Pakistan totaled 1,035,025 million so it is now the major financial institute and it is having with 23 foreign and 1428 local branches. The bank (NBP) is acting as a major financing institute in commodity operations and agricultural sector.
6.3.1.5 Cash Gathering from Shrines:
Cash which is collected from shrines (tombs, graves) is deposited in NBP.
6.3.1.6 Investment in Capital Markets:
NBP decided to expand the deposit base by spending in the capital markets. Investment will be made not only in Pakistan but also in foreign countries.
6.3.1.7 Wide Range of Products:
National Bank of Pakistan offers wide range of products. These products include Rozgar Scheme, Advance Salary, Loan against Gold Ornaments, Cash Finance, Running Finance, Saibaan etc. So, due to wide network of the products the National Bank of Pakistan earns most of the profit and due to this, the employees feel satisfaction.
6.3.1.8 Deposit of Government Organizations:
National Bank of Pakistan is enjoying the deposit of different Government Organizations like Pakistan Railway, PIA, WAPDA, Army, Education Institutions etc.
6.3.1.9 Job Security of Employees:
National Bank of Pakistan also provides the full job security to its employees. The National Bank of Pakistan does not terminate its employees without any reason.
6.3.1.10 The Western Union:
National Bank is the bank which is providing the facility of Western union. In this particular scheme, money is transferred to Pakistan from overseas. It is the speedy way to transfer money.
6.3.1.11 ATM Finder:
It is also the strength of NBP that they have ATM finder. Now the bank is providing this facility to its customers.
6.3.1.12 Employee's Loyalty and Turnover Ratio:
Employees are loyal to NBP. Employee's turnover rate is very low. Turnover rate of NBP is very small. It is very big strength of an organization that their employees are loyal to the organization.
6.3.1.13 Wide Area of Services:
NBP provides extensive range of services. NBP offers no. of services relating to the banking system like, pension to retired government employees, traffic challans, fees received of AIOU, farms of AIOU, utilities bills, deposits, sales tax , withholding tax, property tax, and various loan schemes etc.
6.3.1.14 Online Banking:
It is also the strength of NBP that 130 of its branches are online. It helps to provide the speedy services to its customers. It also helps in checking the balances and daily transactions just at one key press.
6.3.1.15 Customer Satisfaction:
Being government's bank, it is enjoying customer satisfaction. Customers feel that their money is secured in NBP.
6.3.2 The weaknesses of National Bank of Pakistan are described as under:
6.3.2.1 No Provision of Fast Service:
The first weakness of National Bank of Pakistan is that it does not provide fast service to its customers.
6.3.2.2 Worst Conditions of Branches:
The condition of the branches is worst. Almost all branches show an ugly look. NBP should look towards it.
6.3.2.3 Poor Working Conditions:
The working conditions of National Bank of Pakistan are not up to standard. Such poor working conditions are due to the shortage of staff. One person handles the task of two or three persons or even the whole department at the same time.
6.3.2.4 Recruitment:
In National Bank of Pakistan the recruitment policy is very overwhelmed. Most of the employees are appointed with tools of corruption.
6.3.2.5 Incompetent Staff:
The recruitment is based on the reference rather than merit basis. So the staff of National Bank of Pakistan is incompetent and due to this, they waste the resources of the bank.
6.3.2.6 Lazy and Bad Mannered Attitude of Staff towards Customers:
The attitude of employees is lazy and bad mannered with the customers. So customers might go to the next bank due to such behavior.
6.3.2.7 Irregularities in Promotion:
In NBP there is not smooth and continuous promotion system. Unfair means are used in order to get the promotion especially the promotion of the managers.
3.2 introduction of the BANKING sector
A bank is a financial institution which is licensed by Government. Provision of financial services to its customers is the primary objective of any bank. Different definitions give different understanding about banking. These are:
Samuelson Says:
"Commercial banks provide certain services for customers and in return receive payments from them."
Gilbert Points of view:
"A bank is a dealer in capital or dealer in money. He is an intermediary party between the borrowers and lenders."
At the time of independence Pakistan's banking sector was not well established, reforms which were initiated in the early 1990s have transformed the sector into an efficient, sound and strong banking system. While in 1990, the banking system was dominated by five commercial banks which were all state-owned. The amendments in the Banking Companies Ordinance in 1990 launched the process of financial sector reforms by allowing privatization of the state-owned banks. Broadly speaking we can divide the development of commercial banking into four phases
PHASE-1 1947-1974 Establishment of commercial banking system
PHASE-2 1974-1979 Nationalization of banks
PHASE-3 1979-1991 Islamisation process
PHASE-4 1991-2000 Privatization process
But today, the biggest challenge for Banks in Pakistan is "increase in non-performing loans" (NPLs). Furthermore, heavy flooding and other disasters in Pakistan altered the macroeconomic outlook. These adverse developments create a difficult operating environment for banks.
So, to deal with all difficulties, the banking sector has now diversified its product base and carried out a lot of innovation. They have expanded their outreach to agriculture, SMEs, mortgage financing and consumer financing. Not only that this diversified lending portfolio moderate risks but it also raises the purchasing power of a large segment of population that was completely shut out from credit markets. For example, Pakistan's auto industry has expanded its car production by a multiple of five times in the last four years as auto financing enabled a vast number of middle class income earners to purchase the cars on monthly installments.
The Banking sector is an integral part of the country's financial services industry. The sector witnessed a phenomenal growth in 2001-03 where deposits rose by almost 100%. In the financial year of 2004-05, the banking sector experienced growth rates of 21% and 36% in its deposit and advances portfolio respectively, which in turn, has increased the banks' stability as compared to the preceding year. So the banking in Pakistan now become a highly regulated industry which witnessed a rapid progress in recent years and also lead Pakistan economy towards economic development.
3.3 SWOT ANALYSIS
SWOT analysis is an acronym that stands for strengths, weakness, opportunities, and threats SWOT analysis is careful evaluation of an organization's internal strengths and weaknesses as well as its environment opportunities and threats.
3.3.1 Strengths
NBP Railway Road Branch has qualified employees to meet the requirements of today.
Policies are well defined to all employees of NBP
NBP is playing a great role in economic development of Pakistan.
NBP also provide the facility of evening banking.
SWIFT & E-Remittance facility is also available there.
NBP Railway Road Branch distributes pension & salaries.
NBP is a government's bank so it is enjoying the customer's satisfaction due to their feeling security.
Turnover ratio of employees is very low due to loyalty of employees.
They are providing the wide area of services relating to the banking system like issuing of PO, DD, MT, TT and collection of traffic challans, utilities bills, deposits & property tax etc.
It is also enjoying the deposits of different Govt. organization like Pakistan Railways, WAPDA, and Sui-gas etc. due to agency arrangements.
3.3.2 Weakness
There is a poor quality of counter services in branch at the time of rush due to shortage of staff.
Railway Road Branch is an offline branch of NBP.
There is no punishment threat for employees who are not very professional in their field.
NBP has shortage of staff.
NBP treat its customer in not a good way & due to Govt. support & political pressure nobody can complain against him.
The working condition of the NBP Railway Road Branch is not up to standard.
Poor quality of systems is being used in NBP.
Bureaucratic organizational structure is a barrier in effective decision making.
Compliant Box is missing in branch.
Information Desk is missing in Railway Road Branch which results in wastage of time and frustration of customers.
There is no proper job rotation.
ATM facility is absent in Railway Road Branch.
3.3.3 Opportunities
NBP has opportunity to improve the standard of banking system and get more market share.
By establishing new branches in foreign countries, NBP can expand its business and generate profit.
NBP can enjoy handsome return by investing in capital markets of foreign countries.
NBP can introduce a comprehensive range of bonds to enjoy its benefits.
It can establish advisory services in order to facilitate the customers in investing in the securities.
Islamic banking is a big opportunity for NBP because customers give preference to Islamic banking as compared to conventional banking.
Training and development is also a good opportunity to get a competitive edge.
Foreign Exchange is also a good opportunity for NBP Railway Road Branch.
3.3.4 Threats
Increase in competition is a threat for NBP.
Political pressure is a big threat for NBP.
In our country, the rate of inflation is increasing along with the unemployment due to which savings of the nation is decreasing with the passage of time. So in future, the deposits of the bank will decrease which is threat for the banking sector.
Political Instability of country is another major threat to NBP.
7- Recommendations
After a thorough analysis of National Bank of Pakistan, I have made the following suggestions and recommendations in general to Railway Road Branch, Gujrat so that it should be the top performing bank in the banking sector of Pakistan on the foundation of SWOT exploration of NBP are given as follows:
Emphasize on Marketing:
Although the banks are regarded as truly a finance driven organizations, but today's dynamic environment has changed the scene of banking activities. Now, the banks need to emphasize as heavily on advertisement as it places upon the attraction of funds.
National Bank needs to advertise heavily to show the customers that it is ready to facilitate them at any time. Heavy advertisement provides a perception of high performance and a sense of belongingness.
Introduction of New Products:
National Bank needs to introduce new products for the sake of attracting, facilitating and retaining the customers. National Bank has not yet entered in the business of car financing. It can capture market and easily earn profits by it because it has large number of branches all over Pakistan.
Revise Promotion System:
As discussed earlier, the promotion system of NBP is very slow. I know the people who have worked years and years on the same designation and have not been promoted. This can be cause of employee dissatisfaction. So, the bank needs to identify the necessary changes in its promotion system to eradicate favoritism.
Installation of ATMs:
At current, there is only one ATM machine of NBP in Gujrat and about 504 ATM machines in Pakistan. As National bank has a broad base of branch network all-round the country, it can use this advantage coupled with the installation of more and more ATMs to provide convenience to its customers.
Introduction of New Blood:
The management requires introducing new and more professional officers into the bank like most of the new banks are doing. This will ensure the long commitment of the individuals with the bank and will increase the efficiency of the operations performed.
Automated Operations:
The bank should convert all of its manual operations into computer based, which is easy to use, fast, and more reliable. The evolution of online transfer has diminished the use of manual fund transfer tools, which show that the customers want their tasks to be performed in very less time.
Reduction of Political Interference:
Massive political interference in the bank should be demolished in order to make the bank prosperous. It has been seen at many branches that the politician exploit the functions of bank for the sake of their own benefits like hiring their relatives who are inefficient at performing the bank's tasks and taking loans for nonproductive purposes which causes heavy losses to the bank. The rigid and inflexible bureaucratic support system should be wiped out.
Efficient System of Audit:
The introduction of computer-based operations has increased the pace of working in the banks but it has also posed the threat of frauds by the bank staff. Many of such cases have taken place during the past few years. The audit department must keep high check and balance upon the individuals working in the branches.
Avoiding Favoritism and Nepotism:
Favoritism and nepotism should be dealt strictly. An employee whether he is of subordinate rank or superior rank if found doing favoritism and nepotism, he should be terminated or suspended on the spot.
Provision of Information:
Dispersed information desk or counter should be set in every branch in order to provide required information, ease and facility to the customers.
Better Environment:
The surroundings and environment of the bank should be relaxed so that the customer and staff must feel comfort with the environment.
Changing Responsibilities:
Job rotation must be done in timely and proper way for making personnel more proficient in banking processes.
Personnel Planning:
Over staffing and under staffing must be checked for maintaining efficiency of operations.
Work Load:
Workload of the staff members must be manageable.
Complaint Procedure:
Complaint box should be present in each branch so that customer's complaints can be recorded and banking operations can be improved accordingly.
Punishments and Rewards:
There should be a proper punishment and reward system which should be communicated to all the employees.
Layout:
The interior lay out and outlook of the Railway Road branch also needs improvement.
I, based on my personal judgments, am giving these suggestions and recommendations, other people might not agree with them. However, I tried to cover the basic suggestions that would prove worthy for the bank.
4- REFERENCES
ANNUAL REPORT (2010) "NATIONAL BANK OF PAKISTAN", financial analysis,http://www.nbp.com.pk/Publications/AnReport2010/FianancialStatemens.pdf, accessed Oct 1, 2011
BOP (2011)" BREIF HISTORY OF NATIONAL BANK OF PAKISTAN", http://bankofpakistan.blogspot.com/2011/02/brief-history-of-nbp.html accessed Oct 2, 2011
NBP (2011) "ISLAMIC BANKING AT NATIONAL BANK OF PAKISTAN, http://www.nbp.com.pk/Islamic/index.aspx, accessed Oct 1, 2011
NBP (2011) "branch network of national bank of Pakistan", http://www.nbp.com.pk/BRNTWRK/DomesticBrLocator.aspx accessed Oct 2, 2011
NBP (2011) "schedule of bank charges" instruction CIRCULAR NUMBER 52, http://www.nbp.com.pk/Services/BankCharges.pdf accessed Oct 5, 2011
OSEC (2011) "BUSINESS NETWORK SWITZERLAND" PAKISTANI BANKINGSECTOR,http://www.osec.ch/sites/default/files/PakistanBankingSector2011.pdf accessed Oct 3, 2011
RAMIZ, U.R. AND AWAIS, R (2010) "EFFICIENCIES OF PAKISTANI BANKING SECTOR", COMPERATIVE STUDY, pp. 111-128
