organizational structure of national bank of pakistan

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4/7/2010

NATIONAL BANK OF

PAKISTANCOMMERCIAL BANKING

ORGAINZTIONAL STRUCTURE OF NBP |

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COMMERCIAL BANKINGORGANIZATIONAL STRUCTURE OF NATIONAL BANK OF PAKISTAN

TO:

MR. NADEEM ALTAF

FROM:

M. MOBASHAR ALI 08117032

ASIF MEHMOOD 08117033

MUZAMMAL HUSSAIN 08117039

IMRAN KHAN 08117043

SALMAN-UL-MUSTAFA 08117044

IRFAN MEHMOOD 08117036

MBA (BANKING & FINANCE)

SECTION A

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EXECUTIVE SUMMARY

This project is about the organizational structure of NATIONAL BANK OF PAKISTAN

widely known as NBP. In this project we visit to the RHQ SIALKOT and got the

information about their working Groups and their under divisions of NBP in Pakistan.

This project gives you the idea about departments of the NBP as well as how and what

are the functions performed by these departments. According to our knowledge and

information gathered about departments is summarized and possibly explained where

necessary and an organizational chart also developed in this regard. We also included in

it, the rights and limitations against sanctioning of loan to consumer, firm (partnership),

& Corporation. With the figures explained according to each level of hierarchy.

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CHAIRMAN & PRESIDENT

BOARD, CORP. AFFAIRS, PRIVATE & OPERAT. COMMITEE

Credit/RiskManagementGroup

Corporate &InvestmentBanking Group

OperationsGroup

Audit &InspectionGroup

ComplianceGroup

HR Manag. &Admin.Gorup

Commercial& RetailBanking Gro.

TreasuryManagementGroup

Special AssetManagementGroup

InformationTechnologyGroup

Cash Manag. &Trade FinanceGroup

OverseasBankingGroup

IslamicBankingGroup

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Board, Corp.Affairs, Privat. & Operat. Commitee

Credit Committee, Shares, Admin., Comp. & MIS

Credit & Risk Management Group

Risk Review &Industrial Research

Division

Credit ManagementService & Co-

ordination

Student LoanScheme

Corp., Commercial,Agri., & Consumer

Credit

CreditMonitoring

Credit policy/procedure & SME

Credit

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Corporate & Investment BankingGroup

Corporate &Investment Banking,

Karachi


Lahore


Islamabad

Equities

OperationsGroup

TreasurySettlement

Logistic Support &Security

Engineering (North& South)

Core BankingApplication Support

Comeseter Services& Govt. Business

Retail ProductsSupport

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Audit & Inspection Group

AdministrationBudget & Training

Monitoring &Evaluation

Internal Audit &Inspection

EDP Audit &Automation

System & SecretarialSupport

Regional Auditoffices

HR Management & Admin Group

HR & OrganizationalDevelopment

TrainingDivision

Staff Loan &Welfare Division

Employees BenefitsDivision

HR- Policies &Projects Division

Personnel & Ind.Relation Division

Recruitment &Placement Division

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Commercial & Retail Banking Group

Agriculture Division/ Administration

SME Division(Lahore)

CommercialBanking

Credit/ Retail/Collection& Recovery

CMU PR &Marketing

Karobar

Treasury Management Group

InterbankTrading

Money Market &Securities

ForeignExchange

CorporateSales

FX Sales

Money MarketSales

FinancialControl Division

Budget &Business Review

Taxation

Equity & Investment/ NIT Trustee

SBP Returns

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Special Assets Management Group

SAMG North SAMG South SAMG- Head Office

Information Technology Group

Infrastructure &Procurement Unit

SystemDevelopment

I.T.Administration

SecurityDocumentation & Q.A

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Overseas BankingGroup

Funds Management

IslamicBanking Group

BusinessDevelopment

Funds &Finance

ComplianceGroup

SBP Inspection

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Explanation of work performed by the GOURPS of NBP.

Corporate & Investment Banking Group:

• The C & IBG unit has been structured to provide adequate focus and professionalapproach towards enhancing NBP’s share of business within existing and moreimportantly new business from larger corporate customers

• With complex product structure according to various markets, more emphasis onrelationship management and provision of a high quality and responsive customerservice, C & IBG expected to double its portfolios for the next coming years

• CIBG’s present roles includes:§ Corporate and Investment Banking§ Transaction structuring§ Tailor made solution for corporate customers§ Manage existing equity portfolios

Commercial & Retail Banking Group:

• C & RBG is the largest business group within NBP offering a wide range of services, itincludes following services:

§ Mark-up based asset and liability products§ Fee based products and services

• For the risk management in these services it has:§ Standard operating procedures§ Management information system§ Verifications§ Collections and recoveries§ Write offs and write backs

• It deliver services through Regional offices, Branch Network, & Sales Teams

Treasury Management Group:

National bank treasury is currently regarded as a market leader in both foreign exchange andrupee denominated products because of its emphasis on service quality. We offer

• Narrowest bid / offer spread and quickest on line quotes• Customized solutions to minimize risk and optimize returns as per the needs and

circumstances of the clients• Focus on building sustained and long term relationship with institutional, corporate and

retail clients.

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• Local presence across the nation as well as internationally.

Special Asset Management Group:

• SAMG was established in NBP to reduce Non-Performing Loans Portfolios• Credit risk and review process complements the credit classification process, which

takes broader judgment factors into account, including collectability and lossprobabilities, and forms the basis for remedial management processes utilized by theBank

• SAMG intends to use specialized techniques and negotiations skills to recover maximumpossible amount from the Non-Performing Loans (NPLs) in accordance with existingpolicies of the Bank, e.g. rescheduling or restructuring, through court etc.

Overseas Operations:

• NBP overseas operations are segregated into developed and developing countries forsynergy of operating environment

Developed Countries Developing CountriesAmericas Region Afghanistan operationsEuropean Region Central Asian RegionFar East Region Middle East, Africa & South AsiaCario office in Middle Eastern Region

Islamic Banking Operations:

• Islamic Banking is providing currently the Following Functions:• Ijarah• Murabaha• Mudaraba and Musharaka• Liability Products governed by Islamic Laws and principles

Cash Management & Trade Finance Services Group:

• It is performing the following objectives under NBP:o Increase target market share in cash management serviceso Offer new cash management solutions according to trendo Further exploit treasury lines for the banko Reduce services turnaround time and improve quality

• Its services includes:o Under Cash Management

• Account maintenance and reconciliation• Home remittances

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• International clearing services• Tax collection• Payroll management

o Under Trade Finance Services• Export bills collection and discounting• Import reimbursement services• L/C advising, confirmation and discounting• Funds transfer service for other banks• Manitenance of Nostro and Vostro balances

Operations Group:

• The team of operation groups is working to change the face of this Bank by way ofimproving its physical outlook, effective implementation of its systems & controls and inthe quality of service provided to its customers.

• To change the general perception held towards the Group of a back office and anexpense incurring Group which actually is an income generating engine

• Aiming at ‘Zero Complaints’ through application of sophisticated database.

Information Technology Group:

IT focuses on the followings:

• Existing IT infrastructure with planned upgrade in various phases for hardware,software, networking and communication infrastructure

• Assisting business units to achieve and upgrade existing information systemrequirements through software and system upgrades

• Ensure adequate level of resource deployment through hiring specialists andoutsourcing for critical support function within IT group

• Ensure business continuity and disaster recovery planning with implementation ofpolicies to manage IT risk.

Human Resource Management Group:

HR Group focuses on the followings:

• Optimum staffing level will be determined based on specific personnel needs of thebusiness groups for undertaking business development and develop a strong middlemanagement tier.

• Compensation structure will be revised to market comparable salaries for all keypositions responsible for account solicitation, product development and relationshipmangers

• Rationalization of existing staff based on skill set, experience and career aspirations

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• Hire professionals with specialized areas of expertise for undertaking complex productdevelopment and implementation

• Continuous training based on industry dynamics and changing customer needs.

Compliance Group:

Compliance Group focuses on the followings:

• Implementation of Basel II principles for managing and mitigating organizational risk• Reporting irregulations and exceptions, identified by audit & inspection group and by

regional compliance functionaries, on monthly basis to the relevant group heads or tothe president if required

• Consolidation of regional compliance reviews for submission to the relevant authorityfor review

• Progress reports related to different functions within the organization are submitted torelevant authorities on a periodic basis

• Coordinate with regulatory authorities and external auditors for compliance relatedissues

Credit Management Group:

Credit Management Group focuses and performing effectively the followings:

• All credit related functions• Documentation• Sanction and approval (see Figures at the end)• Policy formulation / dissemination• Credit monitoring• Post disbursement monitoring• Portfolio management• Remedial management• Credit management services

Audit and Inspection Group:

The Audit Commission, an independent public body, carries out various inspections of how theCouncil conducts its affairs and publishes its findings in reports. In particular inspectionconcentrates on our accounts, performance management and financial aspects of corporategovernance (e.g. how well NBP prevent and detect fraud and corruption).NBP also carry out internal audit to ensure that statutory financial responsibilities are achieved,and to assist managers in the effective delivery of services, seeking to ensure value for money.NBP maintain close cooperation with the external auditor to reduce overall audit costs.

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To Exercise different functions, management has powers as well as restrictions to act andbehave according to the instructions provided and take into account when these instructionswere amended. To check the proper implementation BOARD has made a committee named asSTEERING COMMITTEE that will check and respond to BOARD. The list of powers and limits is

given as follows:

Powers

1. The powers are to be exercised against all types of acceptable securities and collateralswithin the parameters of Prudential Regulations, Banking Laws, Companies Act,Standard Procedures manual and Bank’s Policies issued from time to time.

2. The powers are subject to SBP restrictions, policies, and regulations in vogue andamended from time to time.

3. The president may delegate higher limit to an individual or Regional ManagementCommittee by name and the powers so delegated.

4. These powers are subject to utilization of CREDIT & RISK GROUP and COMMERCIALAND RETAIL BANKING GROUP, CORPORATE & INVESTMENT BANKING GROUP asexplained in the figures (1,2,3,4,5,&,6) given below.

Limitations

1. The president is empowered to exercise unlimited financial powers vide BOD decision.2. Powers and amounts represented in the next figures only for a time limit unless

otherwise specified.3. All the sanctioning amounts provided in the following figures are annual.4. All purchases to be strictly as per bank’s rules and the Procurement policy of NBP5. To check expenses are under budget, Regional Management Committee on monthly

basis review all the expenses and a statement thereof to be sent to the Chief ofOperations Group, Head Office.

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Figure 1: Against Liquid Securities

DSCs, SSCs, BONDS, TDRs, FDRs, etc.

CUSTOMER TYPE Limited Company Firm (Partenership) Individual (Busi. & Ind.) Individual (Consumer)

LEVEL AUTORITY Funded Non Funded Funded Non Funded Funded Non Funded Funded Non Funded

HEA

D O

FFIC

E

BOD Unlimited (Within regulatory parameters)

CREDIT COMMITEEThe board of directors in its meeting, resolved that all the authority for credit approvals is delegated to the credit.

However, Credit Proposals that fall within the purview of the Board as per directives of SBPshall continue to beput up to the Board.

SEVP/EVP/Group ChiefRisk Mangement

200.00 Unlimited 125.00 Unlimited 75.00 Unlimited 10.00 Unlimited

Group ChiefSEVP 200.00 300.00 125.00 250.00 75.00 150.00 10.00 20.00

EVP 200.00 300.00 120.00 240.00 60.00 120.00 7.50 15.00

REG

ION

REGIONALMANAGEMENTCOMMITEE

125.00 Unlimited 100.00 Unlimited 50.00 Unlimited 5.00 Unlimited

REGIONAL CHIEFPowers to beexcercisedjointly by RBCand RRMC

EVP 75.00 150.00 60.00 120.00 25.00 50.00 3.00 6.00

SVP 45.00 90.00 30.00 60.00 20.00 40.00 2.00 4.00

VP 30.00 60.00 20.00 40.00 15.00 30.00 1.00 2.00

AVP 20.00 40.00 15.00 30.00 10.00 20.00 0.50 1.00

BRA

NCH

MANAGER Jointly with Risk Manger, wherever available

SVP 90.00 Unlimited 30.00 Unlimited 20.00 Unlimited 2.00 Unlimited

VP 60.00 Unlimited 20.00 Unlimited 15.00 Unlimited 1.00 Unlimited

AVP 40.00 Unlimited 15.00 Unlimited 10.00 Unlimited 0.50 Unlimited

OG-I to OG-II 20.00 Unlimited 4.00 Unlimited 2.00 Unlimited 0.50 Unlimited

• Credit committee will also have authority to approve / confirm actions of the HO, REGIONS,Branch.

• For SMEs powers granted for Commercial Lending will continue to be exercised, until such timespecific powers based on products to be introduced are determined and announced byCommercial Banking Group / Risk Management Group / Retail Banking Group.

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Figure 2: Against Pledge

Cotton, paddy, Rice, Sugar, Wheat, Pulses, Manufactured Goods, Products, Equipment, etc.

(For Industry, Business & Trade only)Rs. InMillion

CUSTOMER TYPE Limited Company Firm (Partenership) Individual (Busi. & Ind.)

LEVEL AUTORITY FundedNonFunded Funded

NonFunded Funded Non Funded

HEA

D O

FFIC

E


CREDIT COMMITEEThe board of directors in its meeting, resolved that all the authority for credit

approvals is delegated to the credit. However, Credit Proposals that fall within thepurview of the Board as per directives of SBPshall continue to be put up to the

Board.

SEVP/EVP/Group Chief RiskMangement

150.00 300.00 100.00 200.00 75.00 150.00

Group ChiefSEVP 150.00 300.00 100.00 200.00 75.00 150.00

EVP 100.00 200.00 75.00 150.00 40.00 80.00

REG

ION

REGIONAL MANAGEMENTCOMMITEE

80.00 160.00 50.00 100.00 30.00 60.00

REGIONAL CHIEFPowers to beexcercised jointlyby RBC and RRMC

EVP 50.00 100.00 40.00 80.00 20.00 40.00

SVP 30.00 60.00 20.00 40.00 10.00 20.00

VP 25.00 50.00 15.00 30.00 5.00 10.00

AVP 15.00 20.00 10.00 20.00 5.00 10.00

BRA

NCH


SVP 30.00 60.00 20.00 40.00 10.00 20.00

VP 20.00 40.00 10.00 20.00 3.00 6.00

AVP 0.00 0.00 0.00 0.00 0.00 0.00

OG-I to OG-II 0.00 0.00 0.00 0.00 0.00 0.00



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Figure 3: Against Mortgage of Immovable property including Fixed assets of Industry.

(For Industry only)Rs. InMillion

CUSTOMER TYPE Limited Company Firm (Partenership) Individual (Busi. & Ind.)

LEVEL AUTORITY FundedNonFunded Funded

NonFunded Funded

NonFunded

HEA

D O

FFIC

E


CREDIT COMMITEE The board of directors in its meeting, resolved that all the authority for creditapprovals is delegated to the credit. However, Credit Proposals that fall within the

purview of the Board as per directives of SBPshall continue to be put up to the Board.


100.00 200.00 70.00 140.00 35.00 70.00

Group ChiefSEVP 100.00 200.00 70.00 140.00 35.00 70.00

EVP 80.00 160.00 50.00 100.00 30.00 60.00

REG

ION


80.00 160.00 50.00 100.00 30.00 6.00

REGIONALCHIEF Powersto beexcercisedjointly by RBCand RRMC

EVP 40.00 80.00 35.00 70.00 15.00 30.00

SVP 25.00 50.00 15.00 30.00 5.00 10.00

VP 20.00 40.00 10.00 20.00 5.00 10.00

AVP 10.00 20.00 5.00 10.00 2.50 5.00

BRA

NCH


SVP 25.00 50.00 15.00 30.00 5.00 10.00

VP 20.00 40.00 10.00 20.00 5.00 10.00

AVP 10.00 20.00 5.00 10.00 2.50 5.00

OG-I to OG-II 2.50 5.00 1.00 2.00 0.50 1.00



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Figure 4: Against Other Securities

Purchase of inland Bills, Purchase of or Finance against Bank Drafts & Payment Orders, Foreign BillsPurchased, Negotiation of Export Documents.



(For Industry Only) Rs. In Million

FACILITYpurchase of Bank Instruments (Pay

order/Draft)negotiaition of Export Documents Purchase of Bills under firm

contract with collateral security

LEVEL AUTORITYLimited Co. Firm

Individual(Busi. &

Ind.)

LimitedCo.

FirmIndividual(Busi. &

Ind.)

LimitedCo.

FirmIndividual

(Busi. & Ind.)

HEA

D O

FFIC

E


CREDIT COMMITEEThe board of directors in its meeting, resolved that all the authority for credit approvals is delegated to the credit.

However, Credit Proposals that fall within the purview of the Board as per directives of SBPshall continue to be put up tothe Board.


150.00 75.00 35.00 50.00 30.00 25.00 50.00 25.00 10.00

Group ChiefSEVP 150.00 75.00 35.00 50.00 30.00 25.00 50.00 25.00 10.00

EVP 100.00 50.00 25.00 40.00 25.00 20.00 40.00 20.00 7.50

REG

ION


55.00 30.00 15.00 35.00 20.00 15.00 35.00 15.00 5.00


EVP 40.00 20.00 5.00 25.00 10.00 5.00 20.00 5.00 3.00

SVP 20.00 15.00 5.00 15.00 5.00 2.00 15.00 5.00 2.00

VP 10.00 5.00 2.00 10.00 5.00 2.00 10.00 5.00 2.00

AVP 5.00 2.00 1.00 5.00 2.00 1.00 5.00 2.00 1.00

BRA

NCH


SVP 20.00 15.00 5.00 15.00 5.00 2.00 15.00 5.00 2.00

VP 10.00 5.00 2.00 10.00 5.00 2.00 10.00 5.00 2.00

AVP 5.00 2.00 1.00 5.00 2.00 1.00 5.00 2.00 1.00

OG-I to OG-II 2.00 1.00 0.50 2.00 1.00 1.00 2.00 1.00 0.50

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Figure 5: Consumer & Retail Financing and Financing to Small & Medium Enterprises

Rs. InMillion

SCHEME Small & Medium Enerprises

LEVEL AUTORITY

Consumer &RetailFinancing Funded

NonFunded Funded

NonFunded Funded

NonFunded

HEA

D O

FFIC

E


CREDIT COMMITEE The board of directors in its meeting, resolved that all the authority for credit approvals is delegatedto the credit. However, Credit Proposals that fall within the purview of the Board as per directives of

SBPshall continue to be put up to the Board.SEVP/EVP/Group ChiefRisk Mangement

30.00 60.00 25.00 40.00 12.50 25.00

Group ChiefSEVP 30.00 60.00 25.00 40.00 12.50 25.00

EVP 30.00 60.00 25.00 40.00 12.50 25.00

REG

ION


25.00 45.00 20.00 35.00 10.00 25.00


EVP 15.00 30.00 10.00 20.00 5.00 10.00

SVP 10.00 20.00 5.00 10.00 3.00 6.00

VP 5.00 10.00 2.00 4.00 0.50 1.00

AVP 2.00 4.00 1.00 2.00 0.50 1.00

BRA

NCH


SVP 10.00 20.00 5.00 10.00 3.00 6.00

VP 5.00 10.00 2.00 4.00 0.50 1.00

AVP 2.00 4.00 1.00 2.00 0.50 1.00

OG-I to OG-II 1.00 2.00 1.00 2.00


• As per approved powers of Retail Banking Group by Board of Directors (Figure 6)

• Definition of SME, Limits Securities and Pricing will be in accordance with Guidelines provided bySBP and Bank from time to time. This chart only represents the sanctioning authority.

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Figure 6: SANCTIONING POWERS – SECURED PRODUCTS

Rs. In Million

Regional Office Level Head Office Level

Level Of HierarchySanctioningPowers Level Of Hierarchy

SanctioningPowers [Max]

Regional Business Chief /Regional Risk Management Chief 3.000

Product / Credit Analyst/Mortgages 1.500

Regional Management Team 5.000 Initiation Head 5.000

Credit Head - retail 7.500

Group Chief - Retail Banking Group 15.000

Jointly by Groups Chief - RBG &RMG 25.000

To be signed by GC-RMG and oneother credit committee member 35.000

credit committee > 35.000

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HOW FOREIGN BANKS PENETRATE IN PAKISTAN

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Pakistan is a country that exports or imports many of the products made or required by it. Its

export contribution to GDP is 14.1 billion (as decreased by the recent crises of power and

suicidal attacks). Similarly its trend toward importing has been increased by the last years.

Hence, in recent decades, international trade in goods and financial services has become

increasingly important. To facilitate such trade, many banking institutions have also become

international, because they found opportunity to break the circle of monopoly of the

Government in different developing countries and to earn the above average profits, one of the

countries is Pakistan. When foreign banks come into Pakistan, Government of Pakistan make

many of the banks privatize, during Zia-ul-Haq leading, that were previously owned by the

Government. Banks have expanded internationally by establishing foreign subsidiaries and

branches or by taking over established foreign banks. The internationalization of the banking

sector has been spurred by the liberalization of financial markets worldwide. Developed and

developing countries alike now increasingly allow banks to be foreign-owned and allow foreign

entry on a national treatment basis.

Financial liberalization of this kind proceeds, among other reasons, on the premise that the

gains from foreign entry to the domestic banking system outweigh any losses. Several authors

have addressed the potential benefits of foreign bank entry for the domestic economy in terms

of better resource allocation and higher efficiency. Some writers specifically mentions that

foreign banks may

1. Improve the quality and availability of financial services in the domestic financial market

by increasing bank competition, and enabling the greater application of more modern

banking skills and technology,

2. Serve to stimulate the development of the underlying bank supervisory and legal

framework, and

3. Enhance a country’s access to international capital.

Foreign ownership of banks is often thought to improve overall bank soundness, especially

when the foreign parent banks belong to well-regulated financial systems that are themselves

healthy. Such parent banks are expected to provide greater access to the capital and liquidity

that bolster balance sheet strength, and to transfer to local banks the skills and technology that

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enhance risk management and internal controls. More broadly, foreign bank presence is

expected to fortify emerging market financial systems by encouraging higher standards in

auditing, accounting and disclosure, credit risk underwriting, and supervision opined that

foreign banks improve the quality and availability of financial services in the domestic financial

market by increasing bank competition, and enabling the application of more modern banking

skills and technology.

organizational structure of national bank of pakistan

Documents

largest business group

relationship management

mba banking finance

larger corporate customers

national bank treasury

retail clients

commitee credit committee

new business