Professional Documents
Culture Documents
PURPOSE OF STUDY
It is necessary for the students of Master that they should be acquainted with the
practical applications of their studies and should gain experiences. In this
connection every student is required to undergo a practical work known as
“Research Monograph” study in any specific topic of a field in any organization.
• The main purpose of this study is to fulfill the practical requirement of the
Masters of Business Administration degree.
INTRODUCTION
This Research Monograph examines the general impact of Information Technology (IT)
on the banking industry. The banking industry has introduced various new customer
services and products using IT. The banking industry has gone through many changes as
a result of the introduction of IT. In fact, the structure of the industry is continuously
changing because of rapid development of IT. The continued success of IT applications
means that the limitations of current IT computer systems in banks have to be reboust.1
In the research, the banking industry has demonstrated a fair amount of competence in
the application of IT. Some banks were at the cutting edge of IT and have a clear vision
of how IT could be furthered applied successfully. Banks have spent millions of rupees
on IT every year in a bid to fully automate its operations and services to customers. The
industry recognizes that IT was a major key to its development.
The research brought to light the fact that IT has increased competition within the
industry. The realizations that the market size is not really increasing has made banks
more competitive. Also, the expectation of their customers is very high and in response
banks using IT to satisfy the demand for quality services and products. However, there is
an increasing outside threat to the banking industry from the non-banking sector.
Deregulation of the banking industry has introduced more competition but the low cost of
computer technology has made it easier to enter the industry. Non-banks can now pick up
off the shelf IT solutions for the services they want to provide.
The research reveals that traditional banks find it difficult to integrate new computer
technology with their old systems. As a result, their IT costs are higher than expected and
IT integration takes to much time.
Banking as a system arose simultaneously with the use of notes. Notes have
come into use in the seventeenth century in England when many people held
heir wealth in gold. During the civil war, people were frightened of being robbed
so they had to look for someone who had a safe vault for his own business and
then to ask him to keep their gold in his safe. The obvious choice was the local
goldsmith who had a safe vault available in which he kept his gold coins and
bullion (Bullion is the name of given to uncoined refined gold and silver, generally
in the shape of bars of bricks). So it came about that goldsmith took these
deposit for safe keeping on charge of a fee and issued a receipt which
acknowledge the deposit of money and incorporated a promise to return it on
demand. More and more people came to hold these receipts. Thus, the original
purpose of the receipt became obscure as its function as promissory note – a
note which promises to pay – became all important. In time people stopped
calling them receipts and began to describe them as “notes”. Thus, the
goldsmiths emerged the first banks.
1.2 ETYMOLOGY
It has not so far been decided as to how the word ‘Bank’ originated. Some
authors opine that this word is derived from the words ‘Bancus’ or ‘Banque’ which
mean a bench.
Other authorities hold the opinion that the word ‘Bank’ which means ‘joint stock
fund’. Later on, when the Germans occupied major part of Italy, the word ‘Back’
was Italianized into ‘Bank’.
It is, therefore, not possible to decide as to which of the opinions is correct, for no
record is available to ascertain the validity of any of the opinions. (Practice and
Law of Banking in Pakistan)
Banking is indicated as primitive as human society for ever since men came to
realize the importance of money as medium of exchange.
Primarily all banks gather temporarily idle money for the purpose of lending to
others and investments which bring gain in the form of return, profit and
dividends etc. However, due to the variety of resources of money and the
diversity in lending and investment operations, banks have been placed in
various categories, such as commercial banks. Saving Banks, Merchants Banks,
Mortgage Banks, Consumer Banks, Investment Bank, Development Banks,
Cooperative Banks and Central Banks.
The commercial banks receive deposits from the general public which are
repayable on demand upon written orders of the depositors. As their most
distinctive feature the commercial banks maintain checking accounts for the
constituents.
The commercial banks are also distinguished for providing short term finance to
trade, commerce and industry to enable these sectors to expand their productive
activities.
Merchant banks are those which have been mainly financing the domestic and
international trade in United Kingdom. During the late eighteenth and early
nineteenth centuries the trade between countries was financed by bills of
exchange by well reputed merchant houses for which they would charge a
commission for their service. Thus the business of accepting bills of exchange to
finance the trade developed and gradually these business houses entered into
other banking activities and become known as “merchant banks”.
Since all the commercial banks, in addition to other banking functions, also deal
in trade financing, the term’ merchant banks’ has gradually faded away.
The basic purpose of these banks is to inculcate the habit of saving in the
people. The saving bank deposits are not repayable upon only the written orders
of the depositor but the depositor or his agent has to appear personally at the
saving bank to make withdrawal, and for this purpose he must present a pass
book, a certificate of deposit or some similar documents to prove his right to
receive payment. Post Office Saving Banks and Saving Account at National
Saving Organization are well known operational Saving Banks in Pakistan.
These banks mainly deal in loans for the acquisition or construction or real estate
against the security of mortgages. Quite a few such banks are operating in
developed part of the world. Saving and loans associations and farm-loan
associations are some of the well known forms of the mortgage banks.
Bank Ltd, which was setup in 1941 with its Head in India and Australia Bank Ltd.,
which was established in 1944 with its Head office in Pakistan. Following the
partition, an expert committee was setup and this committee recommended that
the reserved bank of India being the Central bank of undivided India should
continue to function as Central Bank of Pakistan and the Indian Currency notes
would continue to be legal tender in Pakistan till 30th September 1948.
Subsequently it was decided to have separate central banks and the State Bank
of Pakistan (SBP) was setup and started functioning from 1st July 1948. Thus the
History of banking system in Pakistan started with the established of the (SBP)
was inaugurated by Quid0e-Azam Muhammad Ali Jinnah on 1st July 1948.
Consequently, three banks were established which include Muslim Commercial
Bank formed in September 1948, Bank of Bhawalpur in October 1948 and
National Bank of Pakistan in 1949. Habib Bank also transferred its Head office
from Bombay to Karachi, due to portioned in August 1947, and it was assisted by
SBP to finance domestic trade of country. The number of Pakistan scheduled
remained unchanged up to five till 1955. The State Bank allowed the bigger
banks to open any number of branches. By the end of December 1973, the total
number of Pakistani scheduled banks increased to 13. After the nationalization of
commercial banks in 1974, five major banks emerged to be main commercial
banks, branches exceeded 6700 in 1985. In early 1990’s the Government of
Pakistan has also established First Women Bank to encourage women for
making saving and investments, to provide them more job opportunities and to
seek their active partition in the development of national economy. In the hope
that banking would enter a new era of further development and progress, Banks
Nationalization Act, 1974, was promulgated and Pakistani Commercial banks
were nationalized in Pakistan since January 01, 1974. It has now been realized
that this step has proved counter productive, hence reversal has been initiated
since January 1991, after amending the relevant laws. Besides disinvestment
and privatization of nationalized commercial banks, establishment of commercial
Research Monograph 10 Muhammad Faraz Ali Khan
An Internship Report on Banking Sector, Focus on NIB Bank Limited
and other banks in private sector has also been encouraged. Consequently, a
large number of commercial and other banks have come into operation since
1992, in private sector, offering competitive prompt, as also courteous and
efficient service to the constituents.
A new concept of interest free banking was introduced in 1981 and by now it has
been established on sound footing, and new trends and techniques are being
implemented to make this system result oriented.
Electronic banking and several other new services like ATM, SWIFT Transfers,
Credit and Charge Cards etc, have been made available and their systematic
consumption is making Pakistani banking comparable to their several modern
counterparts anywhere in the developed world.
December 27, 1993 as a public limited companies ordinance, 1984 and received
license from the State Bank of Pakistan to undertake and carry on the business
of Banking in Pakistan on April 3, 1994.
NIB Bank is fastest growing financial power house in Pakistan. NIB Bank Limited
was incorporated in March – 2003 as a Public Limited Company. In October –
2003, all assets and liabilities and all rights and obligations of the former National
Development Leasing Corporation (NDLC) – One of the leading leasing company
in Pakistan and Pakistan operation of IFIC Bank of Bangladesh were
amalgamated with and into NIB Bank Ltd.
In April – 2004, NIB Bank also acquired the Pakistan operations of Credit
Agricole Indosuez.
The growth story of NIB Bank is a unique one. In a short span of four years, NIB
Bank is proudly serving nearly half a million customers through wide distribution
footprint across more than 60 small and large cities of Pakistan.
Becoming the 7th largest bank in Pakistan is just one dimension of our growth
story. The commitment of NIB Bank’s share holder can also be gauged through
its enormous paid-up capital of our Rs.40.000 Billion, First larges paid up capital
in Pakistan banking industry. Clearly these are the reasons for your confidence in
banks robustness. The majority shareholder is with Temasek Holdings of
Singapore.
The NIB Bank Ltd. acquire majority share holding of PICIC and full control of
PCBL in June 2007. NIB Banks acquisition of PICIC is one of the largest foreign
investment in Pakistan banking industry and great milestone in local financial
sector. Principal share holding of NIB Bank will continue to be with Temasek
Holding Investment arm of Government of Singapore.
Since 1st of January 2008 NIB Bank Limited providing its services in financial
sector as “One Bank One Team” with all operations of PCBL and PICIC Merged
under NIB Bank Limited as a 7th largest bank in Pakistan along with
240 Branches, 450,000 Customers, Rs.197 Billion Total Assets, Rs.40.000 Billion
Paid-up Capital.
To become the bank-of-choice for the most discerning segments of the corporate
and consumer markets in Pakistan. We will employ state of the art technology
and communications systems to deliver financial services that are innovative and
affordable, and which will allow our customers to transact conveniently and
efficiently.
Credit rating agency, PACRA, is currently in the process of evaluating the impact
of the merger of the PICIC and PCBL with and into NIB Bank Limited. Till the
completion of the review, the rating assigned to NIB of long term A+ and short
term A1 remain on Rating Watch, with positive implications.
NIB is equipped with very strong and experienced human resource structure
consisting of financial/ investment analysts, marketing experts/economists,
engineers, chartered accountants, cost accountants, financial accountants and
legal experts.
NIB continues to pay special emphasis on the training of its professional staff and
avails to the maximum possible extent the training opportunities offered by the
World Bank, ADB, ADFIAP, ADFIMI, etc. along with training programs available
within Pakistan.
Organizational chart is a diagram that represents the positions & relationship within an
organization that reveals the company’s organizational structure...
President / CEO
Group Leader
Cluster Manager
Manager
Counter Service
Supervisor
Personal
Banking
Consultant Counter Service
Officer
Branch Service
Officer
NIB, after turning the corner, is now destined to revive its glory through
dynamic business activity which includes:
• With all such activities, NIB has started to earn sizable profit, and
has started to pay dividend to its shareholders NIB has reemerged
as a viable financial supermarket. The scope of NIB financing which
was previously confined mostly to providing long term foreign and
local currency assistance for setting up industrial ventures has
been further expanded to encompass provisions of other credit
facilities and services. Commensurate with the growing competitive
business environment, through the acquisition of a commercial
bank.
• The era of subsidized credits has been substituted with real market
forces requiring effective and efficient ability to conduct into the new
business order. NIB is presently exploring the possibilities of new
business areas as part of its diversification plan.
Markets
Systems
Core banking
Customer relationship management
CUG networks
Kiosks / new delivery channels
Risk management
Wireless Technologies
Smart cards
Data Centre / DM / DW
Call Centre/Help Desks
Resource management
Internet / electronic banking
NIB Bank was already using telecommunications in the 1995 to boost its back
office operations. In the 2000, the focus shifted to the front office, and the need to
give more autonomy to the branches. "As a result, NIB moved to a form of
distributed computing in which local branches could service 80% of their own
needs.”They only contacted the mainframe to store and forward transactions, or
to execute exceptionally large transactions."
Because of the synergy between the various NIB Bank company systems, the
bank wanted to incorporate existing equipment as far as possible: "With the
infrastructure in place, NIB are now changing applications that are 10 or 15 years
old to the new DCE environment, and testing the various types of transactions--
many of them running under PIBAS."
NIB bank banking application can be access around its 240 branches through
out Pakistan though dedicated network link (through PTCL DSL service , Wimax
technology by Wateen Telecom , Cyber network ISP .as whole network is
centralized.
Security Services provide NIB Bank with security tighter than is possible with
conventional passwords. DCE entrusts security not to the client or the server, but
to a "third party"--a dedicated and physically secure DCE security server. This
server controls three security processes:
• Authentication, to identify both the client and the server. This involves a
complex process of encrypted tickets, and thus avoids the exposure of
sending passwords over the network.
• Authorization, which determines whether that client has the right to access
the resources it is requesting (the server holds access control lists).
• Encryption, based on the DES encryption algorithm that enables an
organization to choose various levels of security up to full encryption with
all data encoded.
• These processes are hidden from users. All they see is a simple means of
using one password and one username to gain access to any data to
which they are entitled, anywhere on the network, without having to ask
for access to individual networks and servers.
Today, all major banks offer online baking services to their customers. They also
have taken many steps by adding security features to the service infrastructure,
such as measures to prevent identity theft and fraud so that online banking is a
safe and secure experience. However, as more customers depend on a reliable
online access, there are steps to take against new types of online threats. Great
Disasters happen, not because people run risks, but because they don’t
understand the risks.
Most ISPs for online banks do not have adequate tools and techniques
required to stop the onslaught. They can simply take down the
network - which furthers the purpose of the attackers.
A comprehensive security plan for security includes both network security and application security
plan.
Research Monograph 32 Muhammad Faraz Ali Khan
An Internship Report on Banking Sector, Focus on NIB Bank Limited
\
RESEARCH METHODOLOGY
The goal of the research process is to produce new knowledge, which takes
three main forms
• Primary research
• Secondary research
In social sciences and later in other disciplines, the following two research
methods can be applied, depending on the properties of the subject matter and
on the objective of the research:
• Qualitative research
• Quantitative research
been clearly defined. Exploratory research helps determine the best research
design, data collection method and selection of subjects.
During this research project report on NIB, I have used Exploratory Research
Method.
Sources of data
1. Primary data
2. Secondary data
1. Primary data
Primary data, which I have personally collected during my internship
period at NIB, from sources like interviews and discussions with bank
staff and management personnel, personal observation and doing
work myself.
2. Secondary data
This data is collected by annual reports of bank journals and
brochures published by NIB Bank, also collected necessary
information from banking related books, magazines, newspapers and
Bank website.
LIMITATIONS
During this research the following difficulties have been experienced by the
internee.
• Time Limitations The main problem faced by the internee during this
study was time limitation. Due to shortage of time on the part of the study
and officials of the bank, very few meetings and visits have been
managed.
• Secrecy of the Data
Another major problem faced was the secrecy of data. Because of that,
The IT security breach and NIB IT security policy. Hence the availability of data is
very much limited.
Conclusions
Today banks have to look much beyond just providing a multi-channel service platform
for its customers. There are other pressing issues that banks need to address in order to
chalk-out a roadmap for the future. Here are some of the concerns in the mind of every
bank's CEO.
• Customer retention: Customer retention is one of the main priorities for banks
today. With the entry of new players and multiple channels, customers have
become more discerning and less 'loyal' to banks. Given the various options, it is
now possible to open a new account within minutes. Or for that matter shift
accounts within a couple of hours. This makes it imperative that banks provide
best levels of service to ensure customer satisfaction.
• Cost pressures: Cost pressures come into play when banks are not able to afford
the cost of a certain service or initiative although they want to or need to have it in
place. This is primarily because the cost structure at the backend is not efficient
enough to offer that kind of service to the marketplace.
• The need for more investments in IT has increasingly forced some banks to sell-
out of certain banking operations. The cost of IT investment required to remain
competitive and the uncertainty future profits has forced withdrawal.
• IT Fraud is also a major problem of the banking industry especially where plastic
cards are concerned. The increased IT knowledge of the general public and
proliferation of cheap computer technology mean that weaknesses in card
Research Monograph 37 Muhammad Faraz Ali Khan
An Internship Report on Banking Sector, Focus on NIB Bank Limited
SUGGESTIONS
D. Permanent Hiring
The fresh hiring should be made permanent so that they are secured of
their future. Further the allowances and perquisites attached with the
permanent jobs will also increase the motivation level of the employees.
REFERENCES
1. www.Howstuffworks.com
2. www.sbp.org.pk
3. www.nibpk.com
6. www.kse.com.pk
9. www.Wikipedia.com