CHAPTER # 2

ORGANIZATION STRUCTURE OF NATIONAL BANK OF PAKISTAN

2.1 NBP Organizational Structure:

Figure 2.1
2.2 Historical Background Of National Bank Of Pakistan:

National bank of Pakistan was came into been under NBP Ordinance No. 19 of 9, November,
1949.The main aim of NBP was to increase credit in the agriculture sector and to remove the
crisis in banking sector. The trading crisis between Eastern and western Pakistan India lift
refused the Pakistan jute. For the solution of the problem NBP was established by An Ordinance
of government of Pakistan.NBP established the offices in cotton growing surfaces and provide
credits to the farmer. MR. Muhammad Ali Muhajir was the first Managing Director (MD) of
NBP. Imperial Bank of India is replaced National bank of Pakistan which is decided by
Governor of State Bank Of Pakistan. Head Office of NBP is in Karachi. Bank operates 1249 in
2007 branches in Pakistan and 22 international branches(2007).

2.3 Management Of National Bank Of Pakistan:

Management is involved in the activities of Planning, Organizing, leading and Controlling to

evaluate the goal by using human resources and other resources.

2.3.1 Centralized Management System:

The organization in which decision taken by top management.

2.3.2 Decentralized Management System:

The organization in which decision taken by front line Manager.

National Bank of Pakistan is centralized management system organization.

2.4 Share Capital Of NBP:

The share capital is Rs 21,275,000,000. Net asset of NBP has worth of 1,706,361,000,000 in the
year of 2015.
2.5 Domestic Operations Of NBP:

National Bank of Pakistan has 1403 branches in the year 2015 and in year 2014 number of
branches are 1332.Islamic Banking branches in the year 2015 has 79 and in year 2014 number
of branches are 22.

2.6 Foreign Operation Of NBP:

National Bank of Pakistan has 27 branches in the year 2015 and in year 2014 number of
branches are 23.These branches are in different countries

 Street No.10 Wazir Akbar khan Kabul branch Afghanistan.

 9A Nobel Prospect Baku Branch Azerbaijan.
 9 Manama centre government avenue PO box No. 775 manama regional branch Bahrain.
 79 Motijheel commercial area Dhaka branch Bangladesh.
 DAAR-E_SHAHIDI 69 Agrabad Chittagong Bangladesh.
 Toronto Representative office Canada NBP first Canadian place 100 king street west.
 435 kun lun hotel 2 xinyuan Chaoyang district Beijing.
 90 avenue Des Champs Elysees 75008 Paris branch.
 Frankfurt Branch Holzgrabrn Germany.
 Main Branch Voeux road central Hong Kong.
 Nathan road Kowlon branch Hong Kong.
 Nishi shinsaibashi Cho-Ku Osaka Japan.
 Nishi minato Tokyo Japan.
 Near by OBEIKAN shop Riyadh Kingdom of Saudi Arabia.
 Moscowskya Street Kyrgyz Republic.
 Jongna gu Seoul Republic of South Korea.
 Seidi street Ashgabat Turkmenistan.
 100 wall street New York United States of America.
 Connecticut Avenue N.W Washington DC USA.
  Main Branch Dubia United Arab Emirates.
 Representative branch Abu Dabi UAE.
 Soul Branch North Korea.
 Fins Circut street central London United Kingdom.
 Glassgow branch UK.
 Shefield Branch UK.
 Bradford Branch UK.
 Manchter Branch UK.

2.7 Sangrai Battal Branch Mansehra:

 Branch Manager > Muhammad Iftikhar Alam.

 Cashier > Ehsan Khan.
 Clerk > Muhammad Ayaz.
 Non clerical staff > 3.
 Total Employees > 6.

2.8 National Bank Of Pakistan Growth During 2013-15:

 Pakistan fastest growing of Islamic Banking service and branches.

 Pakistan most wider online banking system.
 Pakistan largest agriculture financing lender.
 Pakistan largest consumer bank.
 NBP plays important role in strengthening nation and facilitating citizen.
 National Bank Of Pakistan achieved phenomenal growth in years 2014-15.
Table 2.1

Years Assets Deposits Profit Before Tax

2013 1,364,900,000,000 1,101,100,000,000 7,100,000,000
2014 1,543,100,000,000 1,233,500,000,000 22,000,000,000
 2015 1,706,400,000,000 1,431,000,000,000 33,200,000,000
Growth % from 2013 25.2% 30.8% 368%

2.9 Account Opening In NBP:

NBP has simplified the process of account opening with the initial deposits to as low as Rs 100
and minimum reduction commissions.

2.10 Recoveries Of NBP:

Recoveries of NBP in the year 2015 is Rs 4,986,000,000 provision write back during this year.

2.11 Customer And Network Facilitation:

NBP opened new 49 branches in the year 2015.NBP installeted 500 ATMs machines during
2015. Installation of new 500 ATMs machines is expected during year 2016.

2.12 Electronic Banking:

NBP provides the service of SMS alert service and E statement. The service of SMS alert is
known as NBP Paigham. NBP provide the new service for Pensioner that is automation of
Pension payment through biometric ATMs.

2.13 Infrastructure Of NBP:

NBP start the application of Core Banking at all their domestic operation of banks. The number
of branches are 1403.

2.14 Islamic Banking Division:

NBP Islamic Branches Network has 79 branches in year 2015 its increase from 22 branches in
the year 2014. Rs 12,700,000,000 deposits in all branches of NBP Islamic banking.

2.15 Stockholder Value:

NBP paid Rs 15,960,000,000 in the form of dividend in the year 2015.Earning per share is Rs
9.03 in year 2015 its increase from 8.25 in the year 2010.

2.16 Services Provided By NBP:

NBP offers different types of services to their customers.

2.16.1 Demand Draft:

NBP provides the services of demand draft which is fast, easy and reliable path to transfer
money with low rates. A person is either a accountholder of the NBP bank or not also purchase a
demand draft from all branch of NBP..

2.16.2 SWIFT System:

The term SWIFT stand for (Society for Worldwide Interbank Financial Telecommunication)
have define as the Fastest and safest services part of remittances. The international access code
of National Bank of Pakistan is NBP-APKKA.

2.16.3 Letter of Credit:

NBP provide the service of (LOC) to their customers. by this service the exporter and importer
gives LOC to each other. it is opposite to overdraft. LOC is the amount of invoices unpaid,
transaction of goods and order confirmed but yet to be shipped.

2.16.4 Travellers Checks:

Traveler checks (TC) a sight draft which is backed by letter of credit provided by main financial
services firm .TC are fastly accepted cash by NBP and are insured by the issuer against loss,
theft, damage.

2.16.5 Pay To Order:

Pay Order is a negotiable instrument like a Draft which defines a payer bank to pay a specific
amount to 3rd party. Pay to Order is also called pay order.NBP charged Rs 50 on the issuance of
pay order from their account holder and from non-account holders charged Rs 100 on each pay
order.

2.16.6 Overseas Remittance:

Transfers of funds from one country to another country through Banks. National bank of
Pakistan increase overseas remittance by their new banking system.

The monetary policy of State bank of Pakistan decrease the discount rate during the year 2015
from 8% to 6%. It decrease the cost of borrowing.

2.17 Intermediate-Term/ Long Term Investment:

National Bank of Pakistan provides intermediate term loan or long term loan to their customers.

2.17.1 Intermediate-Term Agriculturial Loans:

 NBP provides loans for wind power plants.

 NBP provides loans for Tubewells.
 NBP provides loans for solar power plants.
 NBP provides loans for fencing.

2.17.2 Long-Term Agriculturial Loans:

A loan financing equipment, vehicle etc like banker's acceptance which is especially designed
for the agriculture sectors.

2.18 NBP Advance Salary:

A consumer advances in which NBP provides Advance Salary to government employees. In this
type of loans the employees get their fifteen months salaries in advance. It is a personal loan
product.
2.19 NBP SAIBAAN:

A consumer financing in which NBP offers mortgage financing facility. In this financing a
person pledge their land, machinery, and other assets to take the advances.

2.20 Meri Gari Car Financing Scheme Of NBP:

NBP offers long term advances to the citizen of Pakistan to purchase their own car in easy
payment of installment.

2.20.1 Terms And Contitions For Car Financing:

 Name of finance Meri Gari Car Financing

 Maximum amount of finance Fifteen Hundred thousand Rupees

 Minimum amount of finance Three Hundred Thousand Rupees

 Daily Basis Mark up rate Rs. 0.43 per Rs. 1000

 Time Period of Financing 36 months or 60 months

 Installment Repayment (12 or 20 equal quarterly)

2.20.2 Calculation Of Car Financing:

Amount Rs. 500,000

Markup rate Rs. 0.43 per 1000

Installments 12 (3 years)

Installments in 1 year 4
Markup rate for 1 year = 0.43 × 365/1000=0.157

Mark up = 500000 × 0.157×(1+12)

2×4

= Rs. 157,562.5

Quarterly installment = P A + markup

Installments

=500,000 + 157,562.5 / 12 = Rs. 54,796

The borrower will pay Quarterly installment of Rs. 54,796

2.21 Remittance Department Of NBP:

Remittance is concern with shifting of funds from one branch of bank to another branch of bank
for their client. These are

 NBP Foree Remittance

 Easy Remittance account
 Western Union (WU)
 Xpress Money
 Ria
 IFE

2.22 Vision And Mission Of NBP:

 Institutionalizing a merit and performance based culture.

 To recognized as market leader in banking industry.
 To provide high quality services to customers.
 Following the best overseas management practices.
  Obeying Corporate social responsibilities.

2.23 Board Of Directors:

Names Positions
 MR. Munir Kamal Chairman
 MR. Syeed Ahmad Iqbal Ashraf President
 MR. Tareeq kiramani Director
 MR. Iftekhar A.Allahwala Director
 MR.Balakh Sher Marri Director
 MR.A. Akbar shareefzada Director
 MR.Farrukh Qayyum Director
 MR. Mohammad Naeem Director

2.24 Senior Management:

Names Positions
 Sultana Naheed SEVP Risk Management Group
 Sheikh Maqsood Kareem SEVP International Banking Group
 Mohammad Nusrat Vohra SEVP Treasury Management Group
 Tariq Jamali SEVP Logistic Support Group
 Malik Kauser Iqbal SEVP Compliance Group
 Akbar hassan khan EVP Corporate Investment Banking
 Mudassar H. Khan SEVP Commercial Retail Banking Group
 Mirza Babar Baig EVP / PSO to the President
 Mufti Ehsan Waqar Ahmad Shariah Advisor
 Wajahat SEVP Credit Management Group
 Awais Asad Khan EVP Strategic Marketing Division
 Sahibzada Rafat Rauf Ali Khan EVP / Head

EVOLUTION OF BANKING IN PAKISTAN

2.25 Background:
The term "bank" is derived from German word "back" which means "joint stock funds". with the
passage of time when the German occupied main part of Italy the term "back" is convert into
"Bank".

Banks are categorize into two types

1. Wholesalers Banking
2. Retail Banking

2.25.1 Wholesale Banking:

Wholesale banking is define as to refers to financial institution that satisfied the financial need of
large-value customers. Wholesale banking involved in direct financing. Wholesale banking raise
deposits to finance loan, that generate interest income.

2.25.2 Retail Banking:

Retail banking is define as to give small-value payment and financial needs to individuals, small
sized businesses and medium sized businesses. Retail banking involved in indirect financing.
Retail banking raise funds from Certificate of deposits (CDs) or floating-rate note in
international market.

2.26 Definitions Of Bank:

"Bank is define as financial institution which is authorized by government to accept deposits,

clearing cheques, interest payment, make advances, act as intermediary in financial transaction,
and provide other financial to its clients"

Banking means the business which deal in credits and a "Bank" which include individual, firm or
corporation having a place business where credits are opened by deposits of collection of money.
The lender lend money to individual and charged their interest. Merchant issued slip includes
names and stamp to save money.

2.27 Evolution Of Banking In Pakistan:

Banking sector plays vital role in an economy as its main purpose is to secure the state assets.
Different commercial banks offer different financial services of a same nature. IMF report 2013
states that Pakistan experienced fast growth in banking sector. The performance of banks largely
depends upon the structure of market such as number of banks and market share of banks; the
profitability of bank decreases with the increase of competition. The banking zone of any
country mobilizes Deposits and allocates Advances across time . Banks also provides financial
services such as payment services. A Banking sector reducing the cost thus adding up to profits.

The banking sector in developing countries has experienced a shift from being government
owned to privatization giving birth to competition among banks. Many studies have been done in
different parts of the world that signifies the impact of competition on the banking sector,
especially in developing countries. Measurement of competition and its impact on the banking
sector is very essential for a country particularly in developing countries because many policies
can be formed on the bases of these results. For occasion the results from this measurement can
lead towards the regulation and deregulation of different policies.

2.28 Central Bank Of Pakistan:

State Bank Of Pakistan was first bank established in Pakistan 1947 also known as the central
bank. The regulatory body for all banks in Pakistan is State Bank Of Pakistan. For setting the
criteria for all banks of Pakistan SBP is responsible for that such as introduction of new policies,
monitoring previous policies. State bank of Pakistan is also responsible for changing the interest
rate for Banks. SBP also responsible for printing the notes. The others Banks of Pakistan are
their reserve in SBP therefore its also called Banker's Bank.

2.29 Growth Rate Of Commercial Banks:

Commercial Banks have showed remarkable progress. The banks progressed was showed fast
growth in the shorter time period from 1948-72. Their number of offices increased from 195 to
3600 including 71 branches outside the country deposits went from to 880 billion to 19000
billion and advances from 200 billion to 12500 billion. Following are some of the banks that
progressed in this time span:

 National bank of Pakistan

  Habib Bank Ltd.

 United Bank Ltd.

 Muslim Commercial Bank

 Standard Bank Ltd.

 Bank of Khyber

2.30 Islamic Banking:

“MytGharm” introduced a system for Islamic Banking in Egypt bank in 1960s. After that the
trend shows the rapid growth of Islamic banking in all aver the world. In 1980 State Bank of
Pakistan allowed the establishment of Islamic banks in private sector, the banks which already
exists in financial market of Pakistan was allowed to setup of new subsidiaries which is
considered as separate body for their operations. Such banks were required to hire Sharia
advisors to keep their operations according to the Sharia. Many services based on Islamic Sharia
providing by many banks of Pakistan.

These are the top Islamic bank of Pakistan:

 Meezan Bank

 AL Baraka Islamic Bank

 Bank Islami

 Dubai Islamic Bank

 Burj Bank

 Bank Al Falah Ltd

2.31 Pakistan Credit Rating Agency (PACRA):

There is wide range of banks operating in Pakistan and some of them operate at international
level as well. Even though only few are the top of the list due to their particular individuality and
exclusive features. Following is the list of top 10 banks of Pakistan according to the Pakistan
Credit Rating Agency (PACRA) March 2015.

Top Banks in Pakistan Table 2.2

Sr.# Bank Rating

1 Standard Chartered Bank (Pakistan) Limited AAA

2 MCB Bank Limited AAA

3 National Bank of Pakistan AAA

4 Habib Bank Limited AAA

5 Bank Al Habib Limited AA+

6 Allied Bank Limited AA+

7 Habib Metropolitan Bank Limited AA+

 8 United Bank Limited AA+

9 Faysal Bank AA

10 Askari Bank AA

2.32 Banking Reforms 1972:

Under 1972 reforms State bank of Pakistan give power to banks make more responsive to the
requirement of economic growth with social justice. The main purpose of reforms is that equal
distribution of Bank credit, improving the efficiency and effectiveness of bank securing great
social accountability of bank system.

Nomination of the Director of board every bank take approval from State bank Of Pakistan. The
time period of Director is not more the six years. The banks required to shift 10% of their profit
their reserves every years after the reserve became equal to the paid up capital.

2.33 Banks Nationalization Act (1974) :

After One year six months of banking reforms, the government of Pakistan nationalized the
system of banking.

A few wealthy bankers have give the power to use capital for the fastest development of the
economy of the country. To give equal credit too different sectors.