25412804 Internship Report on MCB Bank Ltd UMAR

8/3/2019 25412804 Internship Report on MCB Bank Ltd UMAR

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Internship Report on MCB Bank Ltd.

UMAR KHALILMBA Finance REG: 2007 AG 240


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Internship Report on MCB Bank Ltd. Dijkot Road Branch (1202) Faisalabad.

Submitted By: Umar Khalil

Submitted To: Sir Yasin Zia

MBA Regular, Section C Registration # 2007 ag 240

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Dedication & AcknowledgementsI dedicate this internship report to my parents & my friend. Becauseof their prayers and encouragement I have been able to complete this report.Praise is to Allah, the most Gracious and Merciful, who blessed me with the knowledge andwisdom and enabled me to overcome this task. Heartiest gratitude to my parents wit

houttheir continuous encouragement and love I could not have accomplished this task.I am very grateful to Mr. Amir Adnan in charge placement centre for their continuous help,support and time during the entire course of my internship. I am also very grateful to all the staff members at MCB Dijkot Road Branch, Faisalabadespecially Mr. Saleem and Mr.Waheed, & Mr. Shahid for their guidance and encouragement.

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Executive SummaryMCB Bank Limited (Formerly Muslim Commercial Bank Limited) has a solidfoundation of over 50 years in Pakistan, with a network of over 900branches, over 750 of which areAutomated Branches, over 222 MCB ATMs in 41 cities nationwide and a network of over 12 banks on the MNET ATM Switch.

MCB's operations continued to be streamlined with focus on rationalization of expenses, re alignment of back end processing to increase productivity,enhancement of customer service standards, process efficiency andcontrols. The Bank has taken the lead inintroducing the innovative concept of centralizing Trade Services in the country by providingcentralized foreign trade services to branches with a view to improve efficiency,expertise and reduce delivery cost. During my internship in MCB I workedin Operations, Advances, Foreign Exchange and Customer Service Officedepartment and I successfully completed all the task/duties thatwere assigned to me. During the course of internship I learned aboutdifferent functions performed byOperations, Advances, Foreign Exchange and Customer Service Office department and

bankas a whole. I also learned banks correspondence with their customers and within branches.I learned about documentation requirements and record keeping for different activities and processes, especially the documentation requirement for differentkinds of financing facilities.

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SR # 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19

Content History and introduction Vision and mission Principal of performanceObjective Awards Corporate information Management Hierarchy Branch networkIntroduction to my branch Business operation and services Products FinancialsRatio analysis Swot analysis Competitive strategy Work done by me

Recommendations conclusion

Page No 06 11 12 13 14 15 18 20 22 23 24 38 47 52 56 59 61 6971

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History & Introduction

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HISTORY OF BANKINGThe word Bank is said to have been derived from the words Bancusor Banque or Bank.This history of banking is traced to as early as 2000 B.C. The priests in Greece used to keepmoney and valuables of the people in temples. These priests thus acted as financia

l agents.The origin of banking is also traced to early goldsmiths. They used to keep strongsafes frostoring the money and valuables of the people. The persons who had surplus money found it safe and convenient of deposit their valuables with them. Thefirst stage in the development of modern banking, thus, was theaccepting of deposits of cash from thosepersons who had surplus money with them.The goldsmiths used to issue for the money deposited with them. These receipts began topass form hand to hand in settlement of transactions because people had confidencein the integrity and solvency of goldsmiths. When it was found thatthese receipts were fully

accepted in payment of debts; then the receipts were drawn in such a way that it entitledany holder to claim the specified amount of money form goldsmiths. A depositor whois tomake the payments may now get the money in cash form goldsmiths or pay over the receipt to the creditor. These receipts were the earlier bank notes. Thesecond stage in the development of banking thus was the issue of bank notes.The goldsmiths soon discovered that all the people who had deposited money with them donot come to withdraw their funds in cash. They found that only a few persons presented the receipts for encashment during a given period of time. Theyalso found that most of the money deposited with them was lying idle.

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MCB BANK LTD. (HISTORICAL BACKGROUND)Before separation of Indo Pak, the need for more Muslim banks wasfelt. AndMuslims having strong financial capacity were thinking to invest in this sector as well. Thiswas the idea, which paved the way for setting up MCB Bank Ltd known as MCB. This w

as the third Muslim bank in the subcontinent. MCB is one of theleading banks of Pakistan with a deposit base of about Rs. 230billion and total assets of around Rs.300 billion. Incorporated in 1947, MCB soonearned the reputation of a solid and conservative financial institutionmanaged by expatriateexecutives. In 1974, MCB was nationalized along with all other private sector banks. This led to deterioration in the quality of the Banks loanportfolio and service quality. Eventually, MCB was privatized in 1991.

This bank was incorporated under companies act 1913 on 9thJuly 1947 (just before partition) at Calcutta. But due to changingscenario of the region, the certificate ofincorporation was issued on 17th August 1948 with a delay of almost 1 year; the certificate

was issued at Chit gong. The first Head office of the company was established at Dhaka and Mr. G.M. Adamjee was appointed first chairman. It wasincorporated with an authorized capital of Rs. 15 million.

After some time the registered office of the company wasshifted to Karachi on August 23rd, 1956 through a special resolution,now recently the Head office of MCB has been transferred to Islamabadin July, 1999 and now Head office is termed as Principle Office.

This institute was nationalized with other on January 1st,1974. At that time it had506 branches and deposits amounting to Rs. 1,640 million. Although. MCB has a reputationof a conservative bank but nationalization also left its effects on this instituteas well and by

end of year 1991 in which it was privatized the total number of branches were 1.287 and deposits amounting to as high as Rs. 35,029 million.

Between January 1974 and March 1991, it remained in thepublic sector as a Nationalized Commercial Bank for a period of over17 years. It was privatized on April 8, 1991. The privatization ofMuslim Commercial Bank marked the beginning of theprivatization era in Pakistan, as MCB was the first public sector enterprise to beprivatized. This large and highly successful privatization eventrepresented a quantum leap towards deregulating the economy, more so asMCB was the largest private commercial bank in Pakistan.

When privatization policy was announced in 1990, MCB was the first to beprivatizedupon recommendations of World Bank and IMF. The reason for this choice was the bet

ter profitability condition of the organization and less risky creditportfolio which made it a8


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good choice for investors. On April 8th, 1991, the management control was handed over toNational Group (the highest bidders). Initially only 26% of shares were sold to private sector at Rs. 56 per share.

The bank remained in the private sector until January 1974.The challenge to make this venture a success was multi faceted and the Nation Grou

p wasconscious of the great responsibility it had accepted. The Group constituted a management team which had the managerial experience and expertise requiredfor meeting suchchallenge i.e. reviving a business enterprises which had been under state controlfor nearly two decades. Fortunate for the bank and its valuedcustomer, the new management comprised of well known professional leadersin business and banking industry. The bank continues to benefit fromtheir vast and varied experience in both domestic and internationaltrade,finance and industry. Details of these achievements are described in ensuing paragraph.

Progress since privatizationThe post privatization leaders brought about qualitative changes in allshapes of management to reinvigorate the bank for meeting thechallenges posed by pressures generated by free market forces. MCBremained conscious of the serious economic challenges Pakistan had beenfacing, and its marketing thrust has been directed atimproving and enlarging its trade finance service capabilities. The resultant sizable increase in the banks share of foreign trade business of bothnational and multi national corporations has been very encouraging. Besides this commendable success, the bankhas also pioneered marketing of a much wider variety if saving andinvestment products, and has also set up investment banking andportfolio management services. The aim of these efforts is to speed up

mobilization of savings for channeling them into ever expandinginvestment needs of a de regulated economy.After privatization, the growth in every department of the bank has been observed.Following are some key developments: Launching of different on foreign trade.Increased participation of foreign service level.Betterment of branches and staff service level.Introduction of Rupee Traveler Cheques & Photo Credit Card for the first time inPakistan. 5) Extended use of information technology, which is evidentfrom the fact that there are 768 fully automated braches, 243 onlinebranches (integrated networking), 151 ATMS in 27 cities nation wide anda M.C.B continuously innovate new product. During the last fifteenyears, the Bank has concentrated on growth through improvingservice quality, investment in technology and people, utilizing its extensive bran

ch network, developing a large and stable deposit base and managing itsnon performing loans via improved risk management processes.9

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Training & DevelopmentThe Bank has a highly developed training systems, which includes three

staff collegesat Karachi, Lahore and Islamabad providing internal training at all levels of theBank in orderto continually improve efficiency, banking skills and customer service.

Cognizant of the specific training needs of its staff, the Bank has been nominating itsstaff in courses offered by reputable domestic as well as overseas training institutions.

Investment in new technologyBanking in Pakistan is becoming an increasingly more sophisticated fi

nancial service industry than it has ever been in the past. CustomerServices expectations have gone upconsiderably, and to meet these expectations, technology has been acquired a pivotal role.Provision of prompt and efficient customer services is becoming virtually impossible without a quantum leap in replacing old technology inherited from the pre

privatization era. There is an increased reliance oncomputerized operations in branch offices toaugment their capability in routine record keeping, convenience in information retrieval and streamlining customer services. Before privatizationMCB had only 60 computerized branches. Today, 942 branches (400 on line & 542 off line) are computerizes. This shows the commitment of thebank towards the efficiency and customer satisfaction and adapting tonew realities. The Bank has recently purchased new customercentric global banking software called SYMBOLS. Itwill be installed soon and will start functioning in 2004. To provide 24hours cash facility to its customers, the bank has so far 214 branches withautomated Teller Machines (ATMs) in 34 cities including Karachi,Hyderabad, Nawabshah, Larkana Sukkur, Quetta, R.Y.khan, Sadiqabad,

Bahawalpur, Multan, Sahiwal, Lahore, Wazirabad, Kamoki, Faislabaad,Sargodha, Gujrat, Gujrawala, Sialkot, Jehlum,Rawalpindi, Islamabad, wah, Haripur, Abbattabad, peshawaer, Nnushera, Murree and Swat.The Debit or Smart Card has also been added to the list of MCB products to furtherfacilitiesthe customers. MCB is also the host of MNET with 76 ATMs of 17 members making a total network of 290 ATMs. From April 2004, two switches MNET and 1Link have established a joint network of over 670 ATMs in Pakistan.

The Bank also started replacing conventional telex messagingsystem for funds transfer, L/C opening etc. by connecting on line withthe world wide Inter bank Financial Telecommunication Network (SWIFT) Sofar, MCB has 54 branches using SWIFT. Besides substantial saving in

cost, the use of this fast and secure communication technology hasenabled the Bank to provide quick and efficient service to its customers.

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VISIONOur vision is to be a leading financial institution and have largest network witha niche in areaswhere we have a competitive advantage With complete banking solutions. Our focus is on improvingperformance in each of our businesses to achieve consistent and superior for our h

ighly valued customers and shareholders.

MissionTo become the preferred provider of quality financial services in the countrywith profitability and responsibility and to be the best place to work.

BusinessMCB is in its over 50 years of operation. It has a network of over 900 branchesall over the country with business establishments in Sri Lanka and Bahrain. Thebranch break up province wise is Punjab (57%), Sindh (21%), NWFP (19%) andBaluchistan (3%) respectively.

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Principles of Performance Customer Focus Over the years MCB has developed strong relationships

withits customers by understanding their needs and treating them with respect, dignityand importance. The driving force behind its commitment and services is its focuson customers, ensuring that it not only meets, but exceeds their expectations.

Quest for Quality MCB strives to achieve excellence by ensuring thatevery moment of our time isspent in adding value, making sure that we do things right, first time, andevery time. With this quest for quality, MCB has always takeninitiatives in bringing banking into a new arena; from cash to theconvenience of plastic; from branch banking to internet banking andfrom face to face customer interaction to online accessibility.Employees Respect MCB encourages diversity and treat each of ouremployees with fairness. MCB gives constructive feedback for theircontinuous developmentand seek suggestions from all employees for further improvement. The bank ensuresthat quality performance is acknowledged and rewarded and exerciseutmost responsibility in decision making with regards to our employees.

Team Based Approach MCB believes in achieving its Mission and Vision byworking together as a combined group. MCB treats its employees as itsinternalcustomers and ensure that the requirements of internal customer focus are alwaysmet. Equipped with in depth product knowledge, and recognizing thestrengths in each individual, the bank strives for optimum results fromour co workers andbringing out peak performances by working towards common goals and objectives intoday's dynamic banking environment. Good Corporate Citizenship MCB seeksto continuously improve the quality of life in our communities. Thebank realizes that it has a responsibility to the society inwhich it operates and it seeks ways of playing a positive role for the bettermentof the community at large for a progressive environment, better living

and a brighter future.

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OBJECTIVES OF MCBThe following are the objectives of MCB Bank Limited.

CREATING AND MANAGING VALUES.The first objective of MCB Bank limited is to create and manage the values, whichis

one of the back bone of the objective of any well organized and managed organization.

HUMAN CAPITAL

The second objective of MCB Bank is to take care of the Human capital, which is anecessary thing for the development and prosperity of any well established organization.

BEST PLACE TO WORK.

The third objective of MCB Bank Limited is to make it a place, which is much feasibleand comfortable for employees of the bank. The MCB always conscious in developingsuch place where employees of the bank feel easiness.

TechnologyThe forth objective of MCB Bank Limited is to bring new and latest technology in the operations of the bank. AT MCB, technology has a direct relationwith your needs; it is a means for creating value and convenience forthe customer. Over the last few years MCBhas invested heavily into strengthening its technology backbone. Today it is leading the wayin banking technology and setting new standards for the banking industry; penetrat

ing intothe local market, listening to the needs of the people and educating them of simple financial products and services that create both value andconvenience. MCBs strength lies in providing a technological base atthe grass roots level of the society with a challenge toeducate and assimilate such systems across vast cultural and economic backgrounds.With over 768 automated branches, 243 online branches, over 151 MCBATMs in 27 cities nationwide and a network of over 16 banks on theMNET ATM switch, MCB continuouslyinnovates new products and services that harness technology for the customers benefit.

Branch NetworkBranch network has been divided into two business segments namely Corporate & Retail. The consumer products are offered by both segments. Thesegmentation is aimed atproviding customized service. MCB branch network is enclosed.There are five overseas branches in the network, which are as follow:Colombo, Sri Lanka Pettah, Sri Lanka Maradana, Sri Lanka Manama, Bahrain

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AWARDSMCB Bank has won many awards, which is a clear proof of its good performance. It has won Euromoney awards and Asia Money awards. Euromoney AwardsBest Bank In Pakistan Award 2006 Best Bank In Pakistan Award 2005Best Bank In Pakistan Award 2004 Best Bank In Pakistan Award 2003Euromoney Award 2003 for the "Best Bank in Pakistan".

Best Bank In Pakistan Award 2001 Best Domestic Bank Award 2000Asia Money Awards The Best Domestic Commercial Bank Award 2005The Best Domestic Commercial Bank Award 2004

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Corporate Information

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ORGANIZATIONAL STRUCTURE As MCB is a banking company listed in stockexchange therefore it follows all thelegalities which are imposed by concerned statutes Mr. Muhammad Mansha is chairman&chief executive of the company with a team of 10 directors and 1 vice chairman tohelp in the business control and strategy making for the company.

Operational Management of the bank is being handled by a team of 10professionals. This team is also headed by Mr. Muhammad Mansha. Thedifferentoperational departments are Consumer Banking & IT div; Financial & Inter branch div; Creditmanagement div; Commercial Banking div; Corporate Banking div; Treasury management& FX Group and lastly Special Assets Management (SAM) Group. For effectivehandling of branches, it has categorized into three segments withdifferent people handling each category, These categories are: a) b) c) A)Corporate Banking Commercial Banking Consumer Banking CORPORATE BANKING:

These are branches which have an exposure of over Rs. 100 million. Usually include

s multinational & public sector companies. B) COMMERCIAL BANKING;

The branches which has a credit exposure of less than Rs. 100 millionbut having a creditportfolio of more than Rs. 20 million (excluding staff loans)Usually branches in large markets and commercial areas come under this category.C) CONSUMER BANKINGThese are the branches which have exposure up to Rs. 20 million and these includeall the branches, which are neither corporate nor commercial branches.

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Recently the organizational structure was re designed as follows:Province wise branches NUMBER OF BRANCHES IN DIFFERENT LOCALITIESCorporate Consumer Commercial

20 branches

637 branches

383 branches

Punjab Sindh Nwfp Blochistan Azad Kashmir Domestic Overseas EPZ Total

632 232 123 34 19 1040 4 1 1045

Furthermore, the bank has some proposals under consideration to openmore branches in some European countries and as well as in Japan & China

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Management of The Organization & Corporate InformationBoard of Directors Mian Mohammad Mansha Chairman S.M.Muneer

Vice Chairman Tariq RafiMohammad Arshad Shahzad SaleemSarmad Amin Mian Umer ManshaAftab Ahmad Khan Atif Yaseen

Mohammad Aftab Manzoor President & Chief Executive AdvisorRaza Mansha Audit Committee Mian Mohammad Mansha

Chairman Mian Umer ManshaMember Aftab Ahmad KhanMember Chief Financial Officer Ali Munir

Company Secretary Tahir Hassan Qureshi Auditors A.F.Ferguson & Co.Chartered Accountants Riaz Ahmed & Co. Chartered Accountants

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Legal Advisors Registered Office MCB Building, F 6 / G 6, Jinnah Avenue, Islamabad. Principal Office MCB TowerI.I. Chundrigar Road, Karachi. Registrar's and Share Registration OfficeTHK Associated (Pvt.) Ltd. Shares Department, Ground Floor,Modern Motors House Beaumont Road, Karachi. Mandiwalla & ZafarAdvocates & Legal Consultants

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Hierarchy of ManagementSEVP ESEVP SVP VP AVP GRADE 1 GRADE 2 GRADE 3 ASSISTANT

Cashier

Clerical Staff

Non clerical staff

Messenger

Technical StaffDispatch Rider

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Hierarchy at MCB Branch Network

PRESIDENT

SENIOR EXECUTIVE VICE PRESIDENT

EXECUTIVE VICE PRESIDENT

SENIOR VICE PRESIDENT

VICE PRESIDENT

ASSISTANT VICE PRESIDENT

OFFICERS GRADE I II III

ASSISTANTS

CASHIER

PEONS

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BRANCH NETWORK

The following is the Branch Network of MCB Bank Limited. Sector wise position ofcircle, Consumer Sector 810 Branches

Area Head South 180 Branches

Area Head Centre 360 Branches

Area Head North 370 Branches

Commercial Sector 210 Branches

Area Head Karachi 40 Branches

Area Head South 45 Branches

Area Head Central Punjab 70 Branches

Area Head North 54 Branches

Corporate Sector 20 Branches

South Karachi 9 Branches

North Islamabad 3 Branches

Main Karachi 1 Branch

Central Lahore 7 Branches

Overseas Branches Total Branches

4 1045

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INFORMATION ABOUT MY BRANCHI did my internship in MCB Bank Limited Dijkot Road, Faisalabad. Some importantinformation about my branch, which I observed, is as follows:

MANAGEMENT OF THE BRANCHBRANCH MANAGER MR. AMIR ADNAN

OPERATIONAL MANAGER MUHAMMAD SALEEMADVANCES INCHARGE ATHAR ABBASHEAD CASHIER MR. SULTAN ALI SHAHIDCASHIER MR. MUZZAMMALPEON MR. ADILSECURITY GUARD M. SHAHID RASOOL

INTERIOR STRUCTUREThe branch is located at Dijkot Road, Faisalabad. The following departments aresituated at this branch: 1. Consumer Financing Department 2. Credit Department 3.Accounts Department 4. Cash Department 5. Customer Service Department 6. Postage &

Dispatch Department

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Business Operations & Services

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Banking Sector OverviewPakistans banking and finance sector grew by over 21 percent from July 2004 March 2005 amid the eight percent expansion in the services sector in Pakistan.Financial sector in Pakistan is going through a fast paced transitionas new groups were buying out foreign banks operations in Pakistan.The number of listed banks is also increasing. While the income from

core banking activity has increasing due to higher business volume,earnings are also expected to improve due to ventures into consumerfinance, housing finance and enhanced lending to the agriculture sector.In just four years the banking industry has expanded tremendously and now there are more than two dozen commercial and investment banks operating in thecountry. Commercial banks in the private sector had performed wellsince their inception, registering overallgrowth in the deposit base and profits. The banks also managed to maintain a healthy credit portfolio. Foreign banks have a strong presence in all majorcities and are targeting high net worth individuals and blue chipcompanies. Their strategy is quite successful as they account forabout 34 percent of total sector profits, despite having only 15 percent of deposits and 16 percent of advances.

MCBs Performance OverviewThe first half of 2005 was very promising for MCB, as the bank has achieved pre tax profitsof Rs. 4.2 billion, compared with Rs. 2.2 billion for the same period in 2004. Profit after taxhas more than doubled compared to the corresponding period for 2004 and exceeds Rs. 3billion highest ever profit in the history of MCB. This translates into earningper shares of Rs. 7.43.Advance and deposit increased to Rs. 156 billion and Rs. 241 billion reflecting agrowth of14% and 10% respectively. Additionally the banks assets expanded by 16% during th

e half year ended 2005 and crossed Rs. 300 billion marks.Banks equity (capital and reserves) increased by 41% during the half year, whichwas due to the issue of right shares and retained earnings. Increase inequity would improve thelending limit and would provide the opportunity for significant growth of the banks balancesheet. This would also help to meet the capital requirement under Basel Accord II,which will be effective from 2007.Based on continuing growth and consistently outstanding performance, MCB has onceagainreceived the Euromoney Award 2005 for the Best Bank in Pakistan. MCB has becometheonly bank to receive the Euromoney Award for Excellence for the fifth time in last

six years.In addition, Asia Money has also declared MCB as The Best Domestic Commercial Bank in Pakistan for the year 2005.25


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Fields of MCB ActivitiesThe purpose of banks is to provide some services to the generalpublic. And for thesepurpose different banks provide different services bank, in modern time commercialbanksplay a very important role and their functions are manifold. The main functions an

d services which MCB BANK Limited provides to different peoples are as follows.1) 2) 3) 4) 5) Open Different accounts for different peoples

Accepting various types of deposits Accepting various types of depositsGranting loans & advances Undertaking of agency services and also generalutility functions, few of those are as under: a)Collecting cheques and bill of exchange for the cuntomers. b) Collectinginterest due, dividend, pensions and other sum due to customers. c)Transfer of money from place of place. d)Acting an executor, trustee or attorney for the customers. Providing safecustody and facilities to keep jewellery, documents or securities. e) f)g) h) i) For proper functioning of branches and the over all bankhas been divided in differentdepartments. These departments handle different jobs so that division of work is t

here forimprovement of functions and also it is easy to control the situation. The generaldivision in a branch is as follows: 1) 2) 3) 4) 5) Cash departmentDeposit department Advance & credit department Foreign exchange departmentTechnology department (new addition in order to cop with the growing needs ofday to day technology requirements.)Issuing of travelers cheques and letters of credit to give credit facilities totravel. Accepting bills of exchange on behalf of customers.Purchasing shares for the customers. Undertaking foreign exchange business.Furnishing trade information and tendering advice to customers.

Cash DepartmentThe following books are maintained in the Cash Department: 1. 2. 3.

Receiving Cash Book Paying Cash Book Cash Balance Book26


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When cash is received in counter, it is entered in the Scroll Bookand ReceivingCashier Book. At the close 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 clerk and the

Cashier make entries in the paying book and payment Cashier Book are balanced.The consolidated figure of receipt and payment of cash is entered inthe cash balance book and drawn closing balance of cash.Opening Balance + Receipts Payments = closing Balance.This is very important department because cash is the most liquid asset and mostlyfrauds are made in this department, therefore, extra care is taken in this department andnobody is allowed to enter or leave the area freely. Mostly, cash area is grilledand its door is under supervision of the head of that department. Allthe books maintained in this department are checked by an officer.

Deposit DepartmentBank deals in money and they are merely mobilizing funds within the economy. They

borrow form one person and lend to another, the difference between the rate of borrowinglending forms their spread or gross profit. Therefore we can rightly state that deposits are the blood of the bank, which causes the body of aninstitution to get to work. These deposits are liability of the bankso from point of view of bank we can refer to them as liabilities.The total deposits of MCB are growing since is inauguration but afterprivatization there is a sharp incline in over all deposits of thebank. The increase in deposits is also acause of increase on total number of accounts; bank has progressed in both aspects.

Account Opening:

Account opening is an agreement in which customer offers his fundsand bankaccepts these funds, therefore the nature of relation between a banker and customer is of acontractual one and all the conditions applicable to this contract act are also applicable.

Procedure for Opening:Procedure for opening of account is as follows:A person, who wants to open any kind of account, has to fill in a printed form whichis provided by the bank, free of cost. Separate account opening forms are used for different types of accounts. Bank usually requires that new depositor

must be introduced by some one. Anintroducer can be any person known to the bank but preferably it should be a customer ofthe bank. However, the manager can open the account by his own introduction.

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If the manager is satisfied, it will obtain the full signature ofthe customer on theform and specimen signature card, makes the first deposit, and issues the cheque books. The following are given to the customer:

Pay in slip is the proof of deposit. For every payment which is. To

be deposited in the bank, the pay in

slip is to be filled up. The object acknowledgment for receipt of moneyto be credited this account. Cheque Book contains a number of cheques.It enables a customer to makewithdrawal from this account or make payment of various parties by issue of cheque. Pass Book is a copy of the customers account as appears in the

books of the bank. Balance is recorded in this book by the Clerk.

Clearing DepartmentEvery banker acts both as paying as well as a collecting banker, It

is however animportant function of crossed cheques. A large part of this work is carried out th

rough the bankers clearing house.A clearing house is a place where representative of all banks of the city get togetherand settle the receipts and payment of cheques drawn on each other. As the collecting banker runs certain risks in receipt of their ownership the lawhas provided certain protections t the banks.The Negotiable Instrument Act, 1881, lays down hat drawer or holder of a cheque ordraft may cross the instrument generally or specially. It further lies down thata crossed cheque can only be paid to a banker, who collects it for acustomer in good faith and without negligence.

Advances DepartmentAdvances are the most important source of earning for the banks. MCB is also givin

g full attention towards this aspect and it is also obvious from thegrowing portfolio ofadvances and from very low delinquency rate. The credit portfolio of this institution is ina very much better shape than other financial institutions of Pakistan and the credit goesto the management and the staff who are concerned about the quantity and quality as well. 1) 2) 3) Loans Cash Credits Overdraft.

1)

Loans:

Loans are monetary assistance be a financial institution to a business, individualetc.The loans are granted by the bank in lump sum, so these types called fixed or demand loans. Interest is charged on the whole amount of a fixed loan.

The borrower withdraws whole the amount of loan. This type of loanis normally granted against security of gold documents.28


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In case of demand loans against gold or documents, a demand promissory note forthe amount of loan is taken from the borrower loans are granted under; A)

Loan Against Gold:

Under this type of loan, which is granted to the borrower the Head Cashier estimatesthe value of Gold or Gold ornaments through an agent (Gold smith) and keeps a margin of40 to 50 percent. After the opening the gold loan account a token is given to theborrower, which is a bank receipt.On repayment of loan, the gold or ornaments held as security for it, together withthe demand promissory note duly discharged is returned to the borrower and his receipt forthe gold ornament taken in the demand loan ledger. This receipts states that he ornaments returned are complete and in order. Part delivery of ornamentsis given against partpayment of a loan but care is taken that the ornaments still in banks possession f

ully coversthe balance of the loan outstanding. The interest gold loan is to be applied withquarterly. B)

Loan Against Pledged of Stock:

In case of advancing such types of loans, the following precautions are dept in the mind: i) ii) iii) Requirement for Loan:For granting loan to any party or individual, the bank checks following particulars of the client: 1) 2)By Credibility, bank Judges the credibility of the client by his past bank record,CBI report etc. it is very important in making decision about giving him loan.

Feasibility report is on the running or proposed business of theclient. The reportenables the bank to judge the likely return of the business. 2) Cash CreditCredibility Feasibility Report Stock pledged must be readily saleableProducts should be readily saleable Advance should be within the borrows means

Consider such cash account is opened in the name of the customer who borrows fromthebank. Customer is granted a loan up to a certain limit, sanctioned by the head office, fromwhich he can draw when he requires and interest is charged on the amount actuallyutilizedby the customer. In order to avoid the danger of idle fund, the bank charges a cer

tain rate ofinterest by the bank on cash credit in 46 paisa per thousand on daily basis.29


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GENERAL BANKING DEPARTMENT

Clearinga. b. c. d. Receiving the instruments deposited by customersPosting the amount of instruments in credit of customers accountIf cheque returns from the concerned bank, the customer account is debited.Crossing stamp is put on the instrument and slip given to customer on receipt ofthe instrument. Clearing stamp and payee account credited are put on

the instrument and the voucher.

As we know that, one of the basic economic functions of commercial banks isto receive deposits and to honor cheques drawn upon them. So, chequeis a most commonly used instrument for making payments by accountholder. Along with the cheques, there are some other negotiableinstruments like PO, DD, TC, PS, CDR etc.(discussed in the next part) that are used for making payments and are drawn upona bank.The question arises that how these cheques & other negotiable instrumentsdrawn on one bank are deposited in other banks and money is transferred from one bank to another. Clearing House has provided this facility.Clearing house facilitates different

banks, on one city, to get their cheques drawn upon other banks to be cleared.Cheques lodged in clearing constitute two types of clearing: Outward ClearingInward Clearing

Lodgement of Cheques In Outward ClearingWhen cheques, TCs and other negotiable instruments drawn upon their banks like MCB, ABNAMRO of the same city (as Lahore) is presented in MCBBANK LIMITED Ltd. To depositthem in the respective payees accounts, these instruments are lodged in outward clearing (o/w clg) of MCCBANK LIMITED.

Clearing Stamp:After the cheques have been crossed specially, clearing stamp is put

on the cheques and other instruments, with the following days date,as these cheques should have to bepresented in their concerned drawee banks on the subsequent day.

Endorsement Stamp:The word endorsement is derived from Latin word indorsum which means on the back.Ordinarily, it means anything written or printed upon the back of an instrument.So, at the end, the cheques are endorsed in full (endorsed specially) by putting thestamp with words describing Payees account Credit5ed in BAL Circular road, Lahore.

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After putting these three stamps on cheques & other negotiable. Instruments, theyare sent to NIFT (National Institutional Facilitation Authority) withAdd List. NIFT aftersegregating the cheques of different banks delivers them to their concerned banks,which constitute the inward clearing for those drawee banks.

Accounting Procedure:After lodgment of all cheques in outward clearing, Payees accounts arecredited by the amount of their vouchers. Drawee banks will debit thedrawers accounts in their inward clearing (discussed later).As main branch Lhr. Of BAL deals with other banks through inter bank accounts andwe deal with our main branch. So, we (BAL Circular road) debit ourmain Br. Account, maintained with us, by the total amount of outwardclearing and an IBDA (inter branchdebit advise) with a debit voucher is sent to main branch Lhr.Local Clearing Main branch Payees Account Debit Credit

Return In Outward Clearing:

Some of the cheques lodged in o/q clearing are dishonored by theconcernedbranches due to some deficiencies and returned back through NIFT. This process iscarried out under main branchs governance.Either, these cheques are again lodged in outward clearing or returned to customers by canceling banks all stamps, based on the reasons. Now, the accountingentries opposite to first are passed i.e. Payees accounts aredebited & main branchs account is credited.

Inward ClearingCheque and other negotiable instruments (PO, DD, PS, CDR etc.) drawn on MCBBANKLIMITED Circular Road, sent by other banks, constitute the inward clearing of BAL.After having all the stamps and dates of cheques confirmed, the concerned drawer

s accounts are debited (in BAL Circular Road) and main branchsaccount is credited by the total amount. DEBIT Drawers AccountsCREDIT Local Clearing Main branch

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Credit DepartmentIn the credit department, the loans are issued only on the commercial basis, meansthe loans are given to companies, partnerships and the soleproprietorships. Theloans are issued against some securities and on a markup specified by the policiesof State Bank of Pakistan.

The branch has to send the reports about all types of customers and loans to thehead office. The branch can not take a decision to issue the loan toany clientwithout prior agreement from the head office. The branch can only recommend togrant or not to grant the credit to any client. The decision of the head office incase of any issue is final.The branch hires the services of different credit information service providersto evaluate the financial position and the expected repaybility of the client.The branch by itself prepares an eligibility score sheet to recommend to grantor not to grant the credit to a particular customer.

Types of Credit At The Bank

Bank provides different credit facilities to its customers, in form of short

term credit. Following are the credit facilities that the customersusually avail to meet their requirements.

OverdraftThis is the most common form of bank lending. In overdraft facility,

a customer is allowed to withdraw on his account in excess of thebalance that the borrowing customer has in credit. So, when a customerwithdraws in excess of his balance, an overdraft occurs (balancebecomes in debit). Overdraft facility can be availed for a certainlimit called OD limit and is used to meet the seasonalrequirements of cash.

Letter Of Credit

Letter of credit, whether sight or usance, is a nonfund based facility provided to the customers. L/C has already beendescribed elaborately in trade finance

section. Securities for AdvancesNo doubt, the advancing of credit involves a great risk for the

bank. Therefore, to cover this risk, the bank keeps different tangibleand non tangible securities, before sanctioning the credit facility to acustomer. The bankers prefer

such securities that carry less risk of depreciation due to market fluctuations and are easily saleable, even under changing market conditions.Common securities against banker advances are as under:32


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PledgePledge is the actual delivery of the movable & tangible property to the

lender, as a security for a credit. In a pledge, the possession of movable assetsis with bank but the ownership remains with the client. Pledge isagainst short term finances and is considered to be the best securityfor the bank. The commodities

that are pledged include generally, raw material, consumables, finished good and in Certain Cases Work In Process (WIP).

Trade Finance DepartmentThough I did not work in the trade finance department, but I had got the knowledgeaboutthe international trade and the banking procedures for the handling of international trade finance.

Import OperationsValid city markets have usual importance regarding import operation

and areconsidered as business and commercial hub of imports in Lahore. MCB Bank Limited C

ircular Road Lahore for being situated in such an area has great (2ndlargest in BAL) volume of foreign trade, especially imports.The process of imports starts with the establishment of letter of credit. Before going into the details of this process. I have tried to described theletter of credit (L/C) and its basic aspects.

Letter of CreditInternational trade involves numerous factors such as payment for

imports in the exporters country; shipment of goods within thelimitations prescribed and difficulties ofenforcing legal rights in the foreign country etc. Therefore, to overcome these impedimentsa system has been enforced, this system is represented by Letter of Credit.

The letter of credit is today the foremost way of financinginternational trade. Insimple words, a letter of credit (L/C) can be defined as:A banks written undertaking given to the exporter for payment of a certain sum ofmoney on behalf of the importer provided the exporter tenders to the bank, or itsoverseas agents, the specified document within a specified period inaccordance with the terms of the undertaking.There are four basic parties involved in an L/C: 1) 2) 3) 4)Other parties involved in L/C procession will be discussed in subsequent sections.33

Importer Issuing Bank Exporter (Beneficiary) Beneficiarys Bank


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Export OPERATIONS During the two weeks in trade finance department,I was much desirous to knowthat how the export transactions are carried out through bank, along with the imports. Theexport transactions in BAL Circular Road were not of such extensive nature as imports due

that specific area. So the processing of a normal export transaction has been discussed. Conditions for Exporter:Like an importer, there are certain conditions that a person must fulfill to become an exporter. 1) The person must be an account holder of BAL. 2)No one can export any commodity until and unless he/she is a Pakistani and has avalid export registration with the EPB. 3) The person must process a validmembership certificate of Trade Organization,licensed and recognized by Federal Government like a Chamber of Commerce (e.g.Lahore Chamber of Commerce). 4)The person must possess a valid NTN (National Tax No.) certificate. 5)A person cannot export any good unless he files a Form E (E stands for exports) withhis application to the bank. The form E must be filled in writing and all specific

ations stipulated on the form, must be met. 6)The person must have the Sales Tax Registration Certificate.

Technology DepartmentTechnological advancements are also affecting the banking industry. The foreign banks havea competitive edge over all local banks in their technologies advancements and automatedsystems. Local banks have also realized the gravity oil this situation and are striving to add computerized systems to their branches.MCB is ahead of all other local banks in this field and now it is in a position toevencompete with foreign banks. There are more than 1045 branches of MCB all over Pakistan

and out of these more than 300 branches are fully computerized Almost all the branches of big cities are computerized; therefore, the need for atechnology department at eachbranch is growing. Now a day, a computer division is working in each city to provide service to add the branches of that area.

MCB has also introduced the now concept of online banking. There are now morethan 250 branches linked through this system and they can transact with each otherdirectly

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using computer systems at their own branches. Now customers do not have to wait long fortheir transactions and can operate their account through all the online branches.

ATM Network:ATM stands for Automatic Teller Machine. This machine is used to transact in ones

account without intervention of humans. These machines are basicallyused for taking cash,confirming balances and requesting statements/Cheque books.

MCB Marketing Mix Products / Services

Due to trend setting and innovative banking, MCB Bank presents a range of qualityproducts with revolutionary perks and convenience. MCB provides a widerange of products/ services to its customers, which can be comparedwith any foreign, or national bank in terms of quality and reliability.Here is an overview of different products and services formulated by MCB Bank

Accounts Offered By MCB

One of the basic function of a commercial bank is to receive deposits and to honourcheques. Accounts offered by the banks for the deposits of customers constitute the basis oftheir operations and develops the basic relationship between a banker and customer. The largest network of over 315 on line branches in the country and growing.1) ONLINE BANKING:Providing customers with 24 * 7 real time online transaction facilities.

Full Day Banking:Enjoy the convenience of extended banking hours from 9 to 5, evenon Saturdays, for satisfying your banking needs at all MCB Full Day Bankingbranches across the country where you are now served with a wide

range of services throughout the day.

MNETMCB has provided the nation's largest operating switch with the highesttransactionvolume in the form of MNET. MNet is basically MCBs Network for Electronic Transactions; it is an electronic hub for ATM sharing plus other touch points.35


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MNET enables all the member banks (members of Muslim Commercial bank)to sharetheir electronic networks. This means customers of all member banks can use each other's ATMs. ATM machines of MNET member banks accept cards issued by: MCB Bank Citibank Standard Chartered HSBC Bolan Bank Bank of Punjab Prime Commercial Bank Saudi Pak Bank Limited

Habib Bank AG Zurich Metropolitan Bank Bank of Khyber American Express KASB My Bank Ltd NDLC IFIC Bank LtdMNET customers can use over 600,000 ATMs worldwide that carry the Cirrus logo andshop at over 5 million outlets (POS) that carry the Maestro logo

MCB ATM (24 Hour Cash): The nations largest network of over 210 ATMs and growing.Get 24 hour convenience of cash withdrawal; mini statement, bill paymentand funds transfer services.

MNET:MNET is an electronic hub for ATM sharing plus other touch points.Members include 12 local financial institutions enjoying ATM sharing andbureau services. Pakistans largest

operating switch with the highest transaction volume.

Mcb Smart Card:

MCB Smart Card a secure instrument of payment, offering Cash Freeconvenience. It provides 24hour direct access to your bank account and unmatched functionalities.

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MCB Mobile:Banking at your fingertips. Dial in anytime to get informationregarding balance and mini statements.

Pyara GharMCB Pyara Ghar is an idea Home Finance product that lets you

purchase, renovate orconstruct your home the way you have always wanted. Financing available is up to 20 years for amount up to Rs. 20 million.

Islamic Banking Services

MCB Islamic Banking provides Riba Free and Shariah Compliant solutions to variouscustomer segments in a growing number of cities. With the help ofShariah specialists,lawyers and professional commercial bankers, we have the best solutions to cater to your needs the Islamic way.

MCB Lockers

The best protection for your valuables. Lockers of different capacities are available nationwide.

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Products

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Personal BankingDeposit Accounts Khushali Bachat AccountKhushali Bachat Account, a Rupee savings account is one of MCB Banks mostpopular products. Due to the low initial deposit, the account can beopened by people from all walks of life and still avail the facility

of daily product profit calculation. Mahana Khushali Bachat MCB MonthlyKhushali Scheme provides you with a steady income every month. Justpurchase a Monthly Khushali Certificate and you will enjoy a steadyincome of your total deposit every month. Pak Rupee Savings AccountMCBs Pak Rupee Savings Account offers you attractive returns on your PakRupee investment.In addition, you have access to a countrywide ATM network convenient cashaccessibility 24 hours a day. The facility also provides you withunlimited daily transactions with a limit on maximum withdrawal amountthrough the ATM machines. Pak Rupee Current Account MCBs Pak RupeeCurrent Account offers you the convenience of unlimitedwithdrawals i.e. access to your funds whenever you want without any notice. Thereis no limit on the number of transactions you make in a day plus

you can avail finance facility up to 75% of the total deposit.In addition, you have access to a countrywide ATM network convenient cashaccessibility 24 hours a day. The facility also provides you withunlimited daily transactions with a limit on maximum withdrawal amountthrough the ATM machines.

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Pak Rupee Term DepositMCB Pak Rupee Term Deposit gives a higher rate of return. It gives you choiceof 1 month, 3 months, 6 months, 1 year, 2 years, 3 years, 4 years and 5 year termdeposits. Saving 365The MCB Saving 365 calculates profits on a daily product basis and gives youthe facility of unlimited withdrawals.

Foreign Currency Savings Account Foreign Currency Savings AccountMCBs Foreign Currency Savings Account offers you attractive returns on yourForeign Currency investment.You can invest in any of the four currencies i.e. US Dollar, UKPound Sterling, Japanese Yen or Euro Your foreign currency account isexempted from Zakat and withholding tax Foreign Currency Current AccountMCBs Foreign Currency Current Account offers you the convenience ofunlimited withdrawals i.e. access to your funds whenever you wantwithout anynotice. There is no limit on the number of transactions you make in a day. MCB Foreign Currency Term Deposit

MCB Foreign Currency Term Deposit gives a higher rate of return. It gives thechoice of 1 month, 3 months, 6 months, 1 year, 2 years, 3 years, 4 years and 5 year term deposits. Dollar Khushali AccountThe Dollar Khushali Account, a Dollar based account was introduced in 1993 atselected MCB Bank branches. Today, you can open a Dollar KhushaliAccount at over 200 branches in Pakistan.

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Loan Products MCB Business Sarmaya MCB Business Sarmaya is the best Running Financefacility against yourresidential property which empowers you to manage your business dealings better.

So act today and get MCB Business Sarmaya and thus improve your business, availlucrative opportunities and expand your business, with absolute satisfaction of cash flows. MCB Car4u Life is like a chess board. You plan yourcareer options. You analyze yourbusiness moves. But when you really want to improve your life, you make a powermove. MCB CAR4U Auto Finance is the power move that assists you inmore ways than you ever imagined. It is affordable, with lowest markup, flexible conditions, easy processing and above all, no hidden costs. MCB Pyara GharSome destinations require a long wait. Like waiting for a home of your own.But with MCB Pyara Ghar it is now easy to step into your home and start living a real life. MCB Pyara Ghar is an ideal Home Finance from your own bankthat lets you Purchase, Renovate or Construct your home the way you

have always wanted. Having your own home was never so easy Easy Personal Loan MCB Easy Personal Loan provides you with thefinancial advantage to do things you've always wanted to but never hadthe sufficient funds for. Take that muchneeded holiday. Buy a car. Refurnish your house. Purchase a new TV. Financea better education for your children. MCB Master CardSince the beginning of time, people have tried to find more convenient waysto pay, from gold to paper money and cheques. Today, money is moving away fromdistinct hard currencies and towards universal payment products thattranscendnational borders, time zones, and, with the Internet, even physical space. Plasticor "virtual" money, credit, debit, and electronic cash products,inevitably will replace cash and cheques as the money of the future.

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MCB Rupee Traveler's ChequesMCB Rupee Traveler's Cheques were first introduced in 1993 as safe cash for traveling andtravel related purposes. The product has been extremely popular and is preferred over cash by customers while traveling and in all walks of life.MCB Rupee Traveler's Cheques The safest way to Carry Cash

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Corporate Banking Cash Management Services MCBs network of over 900 branches in Pakistanenables it to collect and disbursepayments efficiently with its cash management services. This also enables it to offer you a choice of paper based or electronic fund transfer solutionsincluding collection amounts, cross branch on line transactions etc.

Working Capital Loans

Based on the customers specific needs, the Corporate Bank offers anumber ofdifferent working capital financing facilities including Running Finance, Cash Finance, Export Refinance, Pre shipment and Post shipment etc. Tailor madesolutions are developedkeeping in view the unique requirements of your business. Term Loans

MCB offers Short to Medium Term Finance to meet capital expenditureand shortterm working capital requirements of our customers. The loans are structured on the basis of underlying project characteristics and cash flows of the business.

Trade Finance Services

Under Corporate Banking MCB offers trade finance services that includean entire range of import and export activities including issuingLetters of Credit (L/Cs), purchasingexport documents, providing guarantees and other support services.

Online Services MCB ATM ServicesWith a solid foundation of over 50 years in Pakistan, with more than 750 automatedbranches, 269 online branches, over 222 MCB ATMs in 41 cities nationwide and a network of over 12 banks on the MNET ATM switch, MCB is positioned atthe forefront of the

banking industry in Pakistan. This success has been possible because of a never

ending driveto achieve higher levels of excellence, constantly striving to raise the level ofperformance. MCB Mobile Banking

At the forefront of technological excellence, MCB proudly introduces MCBMOBILE BANKING. The convenience of accessing your account balanceinformation and ministatements whenever you want or wherever you may need them, with comfort and peaceof mind.43


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MCB Call Center

Keeping up with banking services can be tedious but not with MCBBank, where phone

service is at your fingertips. Just dial our Call Centre from the comfort of yourhome or office or wherever you happen to be. It offers basic bankingservices for your convenience,eliminating the need for you to make unwanted trips to your branch. MCB Smart Card

MCB now brings you MCB SmartCard a secure and convenient instrument of payment with unmatched functionalities. It provides 24hour direct access to your bank account. The convenience and flexibility ofMCB SmartCard will help you live a smarter life. It notonly helps you manage your expenses, but also eliminates undue interest on your day to day credit card transactions. Your balance is always within yourreach and you spend accordingly. MCB Debit Card

Now MCB brings a secure, convenient and quick payment facility thatenables you to dopurchasing by using your existing MCB ATM / MCB Smart Card as a DEBIT CARD. Virtual Banking

MCB Virtual Internet Banking offers you the convenience to manage andcontrol your banking and finances when you want to, where you wantto. MCBs Virtual InternetBanking facility is simple and secure. And its free of cost. With MCB Virtual Internet Bankingyou can access any of the banking services, 24 hours a day, 7 days a week and throughout the year.

MCB Virtual Internet Banking offers a wide range of online services which makes your banking accessible anytime and from anywhere.Detailed Account Summary of all listed accounts. Ministatements of each of the listed accounts showing recenttransaction history for that account(s). Statement by Period of each of the listed accounts, based on the period specified.Immediate or Scheduled Transfer of Funds between your own accounts,as well as to third party accounts setup as beneficiaries, maintainingaccounts with MCB. Scheduling of OneTime as well as Recurring Funds Transfers.Payment of utility bills for registered Utility Companies.Immediate or Scheduled Bills Payment. Scheduling of One Time as wellas Recurring bill payments. Option for Full or Partial payment based

on the payment conditions specified by a particular Utility Company.

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Bulk Salary Transfer for Corporate Customers, to facilitate them in payingsalary to the corporate employees, who maintain accounts with MCB.Bulk Funds Transfer for Corporate Customers.Cheque Book Request for any of your listed accounts.Payment/Transfer Alerts for reminding, in advance, prior to theprocessing of specified payments and transfers.

Personal Alerts for reminding of pre specified

events and occasions.

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Islamic BankingDeposit SchemesFor customers who are looking for a deposit opportunity where they can purse theirfunds and reap halal returns on it, we offer the following products: o Al

Makhraj Saving Account o Al Makhraj

Ianat Account o Al Makhraj

Term DepositFund Based Facilities Ijarah ProductsMCBs Islamic Ijarah, analogous to the English term 'leasing, is based on the Ijarahwa Iqtina concept which means the sale of the asset to the lessee after the Ijarah has matured. Under this scheme, MCB will be the owner of theasset, and thecustomer (lessee) will be given the asset to use for a certain period of time in returnfor monthly rental payments. MCB will give a separate unilateral undertaking thatit will offer to sell the asset to the customer (lessee) at thematurity of the Ijarahagreement at a price that may be equal to the security deposit amount, hence the

term Wa Iqtina. Types of Ijarah o Car Ijarah o Equipment Ijarah

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Financial of MCB

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Balance Sheet As at December 31, 2008cash and balances with treasury banks balances with other bankslendings to financial institutions investment net advances net operating fixed assets deferred tax assets net other assets net Liabilities Bills payable borrowings deposits and other accounts subordinate loan liabilities against assets subject to finance lease

deferred tax liabilities net

other liabilities Net assetsRepresented by: Share capital Reserves Unappropraited profitSurplus on revaluation pf assets net of tax 2006 2007 39683883 38075191051372 113089261 218960598 16024123 0 17868761 410485517 1047905839406831 292098066 479232 0 1180162 11722493 355365842 551196756282768 34000638 5130750 45414156 9705519 55119675 2008 Rupee's in 00039631172 4043100 4100079 96256874 262510470 17263733 0 19810476 443615904

32465976 6577017 21081800 63486316 198239155 9054156 172373 11031450 342108243

7089679 23943476 257461838 1597440 0 0 11171496 301263929 40844314

10551468 22663840 330274155 0 0 437137 21253250 385179850 58436054

5463276 24662426 5530973 35656675 5187639 40844314

6282768 36768765 9193332 52244865 6191189 58436054

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Profit and Loss Account For the year ended December31, 2008. Markup/ return / interest earned Mark up/ return / interest expensed Net markup/ interest income Provision for diminution in the value of investments net Provision against loans and advances net Bad debts written off directlyNet mark up/ interest income after provision Non mark up/ interest incomeFee, commission and brokerage income Dividend income

Income from dealing in foreign currencies Gain on sale of securities net

Unrealized loss on revaluation of investments

classified as held for trading Other income net Total non mark up/ interest income Non mark up/ interest expense Administrative expensesOther provisions/ (reversal) net Other charges Total non mark up/ interest expense Extra ordinary/ unusual item Profit before TaxationTaxation Current year Prior years DeferredProfit after Taxation Unappropriated profit brought forward Transfer fromsurplus on revaluation of fixed assets net of taxProfit available for appropriationBasic and diluted earnings per share after tax

2006 25778061 4525359 21252702 121197 1014540 47000 1182737 20069965

2311235 811801 692010 605865 570505 4991416 25061381 6482592 1141166708 6560711 0 18500670 5701443 593497 63332 6358272 12142398 499026032166

2007 31786595 7865533 23921062 105269 2959583 199 3065051 208560112634610 632300 693408 1500865 13105 1000149 6448227 273042385426116 3743 573830 5996203 0 21308035 6442356 1294473 8945906042473 15265562 5530973 11855

2008 40043824 11560740 28483084 2683994 1335127 0 4019121 244639632866729 617554 727564 740429 103198 942362 5791440 30255403 754687810120 830839 8387837 0 21867566 7341257 864824 16533 6492966 153746005130750 21319

5022426 5542828 5152069 17164824 20808390 20526669 23.4 24.3 24.47

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Balance SheetVertical Analysis

Balance Sheet As at December 31, 2008 cash and balances with treasury banksbalances with other banks landings to financial institutions investment net advances net operating fixed assets deferred tax assets net other assets net

Liabilities Bills payable borrowings deposits and other accounts sub

ordinted loan liabilities against assets subject to finance leasedeferred tax liabilities net other liabilities Net assetsRepresented by: Share capital Reserves Unappropraited profitSurplus on revaluation pf assets net of tax

2007 39683883 3807519 1051372 113089261 218960598 16024123 0 17868761410485517 10479058 39406831 292098066 479232 0 1180162 11722493

355365842 55119675 6282768 34000638 5130750 45414156 970551955119675

2008 39631172 4043100 4100079 96256874 262510470 17263733 0

19810476 443615904 10551468 22663840 330274155 0 0 43713721253250 385179850 58436054 6282768 36768765 9193332 522448656191189 58436054

2007 % 9.67 0.93 0.26 27.55 53.34 3.90 0.00 4.35 100.00 2.9511.09 82.20 0.13 0.00 0.33 3.30 100.00

2008 % 8.93 0.91 0.92 21.70 59.18 3.89 0.00 4.47 100.00 2.745.88 85.75 0.00 0.00 0.11 5.52 100.00

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Profit and Loss Account Vertical AnalysisFor the year ended December31, 2008. Mark up/ return / interest earned Markup/ return / interest expensed Net mark up/ interest incomeProvision for diminution in the value of investments net Provision against loans and advances net Bad debts written off directlyNet mark up/ interest income after provision Non mark up/ interest income

Fee, commission and brokerage income Dividend incomeIncome from dealing in foreign currencies Gain on sale of securities net Unrealized loss on revaluation of investments

classified as held for trading Other income net Total non mark up/ interest income Non mark up/ interest expense Administrative expensesOther provisions/ (reversal) net Other charges Total non mark up/ interest expense Extra ordinary/ unusual item Profit before TaxationTaxation Current year Prior years DeferredProfit after Taxation Unappropriated profit brought forward Transfer fromsurplus on revaluation of fixed assets net of taxProfit available for appropriationBasic and diluted earnings per share after tax

2007 31786595 7865533 23921062 105269 2959583 199 3065051 208560112634610 632300 693408 1500865 13105 1000149 6448227 273042385426116 3743 573830 5996203 0 21308035 6442356 1294473 894590 604247315265562 5530973 11855 5542828 20808390 24.3

2008 40043824 11560740 28483084 2683994 1335127 0 4019121 244639632866729 617554 727564 740429 103198

2007 100 24.745 0.3312

2008 100 28.87 6.7026 3.3342 0 61.093 49.499 10.663 12.563 12.785 1.7819 16.272 100 49.087 0.0658 5.404 54.556 0 142.23 47.749 5.625 0.107542.232 100

51

9.3108 0.0006 65.613 40.858 9.8058 10.753 23.276 0.2032 942362 15.515791440 100 30255403 7546878 35.545 10120 0.0245 830839 3.7598387837 39.279 0 0 21867566 139.58 7341257 42.202 864824 8.4797 16533 5.8602 6492966 39.582 15374600 100 5130750 21319 5152069 2052666924.47


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Ratio AnalysisRatio Analysis is an important and age old technique of financialanalysis. Ratios are important and helpful in the reference that:These simplify the comprehension of financial statement and tell the whole story o

f changes in the financial conditions of the business. These provide datafor inter firm comparison. The ratios highlight the factorsassociated with successful and unsuccessful firms, also reveal strong and weak firms. These help in planning and forecasting, these can assist managementin its basic functions of forecasting, planning, coordination and control.These help in investment decision in case of investor and lending decision in caseof Bankers etc. However, the ratios are only indicators, they cannot betaken as final regarding good andbad financial position of the business other things have also to be seen.

Key Ratios1. RETURN ON EQUITY N.P.A.T * 100 Shareholder equity 2008

2007 = = 29.42% 33.61%

2. RETURN ON ASSETS: N.P.A.T * 100 Total Assets 2008 2007= = 3.60% 4.60%

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3. EARNING PER SHARE: N.P.A.TNo. Of outstanding shares 2008 2007 = 24.47% 24.30 %

=

4. RETURN ON DEPOSIT: N.P.A.T * 100 Total Deposit

2008 = 2007 =4.65 % 5.22 %

5. CASH/DEPOSIT RATIO: Cash Total Deposit2008 = 2007 = 11.99 % 13.58 %

6. INTEREST INCOME/TOTAL INCOME RATIO: Interest IncomeTotal Income 2008 = 2007 =

87.36 % 83.13 %

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7. NET PROFIT MARGIN: N.P.A.T * 100 Total Income2008 = 33.54%

2007 = 39.92 % 8. AVERAGE PROFIT PER BRANCH:Profit Net No. Of Branches 2008 =

Rs. 14,984,990.25 2007 = Rs. 14,878,715.4

9. OPERATING EXPENSE RATIO: Non markup expense Gross income2008 = 27.72 %2007 = 21.96 %

10. TOTAL ASSET TURNOVER: Interest/markup earned*100 Total asset2008 =54

9.02 % 7.74 %

2007 =


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11. RISK ASSETS TURNOVER: Net interest income after provisionRisk assets 2008 = 65.98 %

2007 = 68.11%

12. ADVANCES TO TOTAL DEPOSITS: AdvancesTotal deposits 2008 = 79.48 %

2007 = 74.96 %

13. DUE FROM BANK TO DUE FROM BANK: Landing to financial institution* 100Borrowing from financial institution 2008 =2007 =55

18.09 % 2.66 %


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Swot Analysis

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SWOT ANALYSISStrengths

MCB is the first Pakistani privatized bank and because of its quality management,marketing,innovation in products and services. Owing to all such factors they have established a good

reputation in the banking market. The name of MCB makes you recall the highly cooperativeand professional individuals ready to serve you with maximum zeal and zest.MCB have faster banking services that are making it more prominent in the bankingindustry especially in operations and Foreign exchange. The customerprefers this bank not onlybecause of its faster speedy service rather due to reasonable service charges.MCB in Pakistan is the also in the list of highly automated banks like Emirates because of itsmodern style of banking through fully computerized control and twenty four hour banking. The joining of experienced people, advanced management, advancesetup and facilities gave MCB an edge over its competitors. Weakness Staff is not sufficient Too much workload on one person Though innovation and

technological products have been introduce not fullyequipped with latest technology Innovative products New technologyHigh customer satisfaction Best possible customer facilitiesBranches almost every where in Pakistan Fast and efficient systemHas the potential to provide better services.

The majority of people are not well aware about the products of MCB. Therefore itshould advertise extensively especially RTC and Master Cards.57


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A behavior has been noted that bank tries to feel at ease with goodlooking, rich andeducated people and the poor looking customers feel some bit strange in the environment of the bank. The bank employees should try to accommodatebehaviorally all type of customers. In MCB there is lack ofspecialized skill because of job rotation policy of human resource

department. The bank should concentrate upon increasing its abilities on individual service basisMismanagement of time is another big mistake in MCB branches, the bank official time ofclosing is 5:30pm but due mismanagement of time allocation and work the staff is normally on their seats till 7:00 or 8:00 clock. Opportunities Can move far ahead from the competition because it has a lot of potential. If the branches are fully equipped with new technology. It can gain even more. Can become the leading exemplary bank of Pakistan.As on December 31, 1998, sixty eight scheduled banks with 9,106 branches are operating in Pakistan. As on this date, total population of Pakistan is140.03 million. Total number of personal accounts with all scheduledbanks as on December 31,1997, are 28.98 million. If we consider the

population statistics of working age group as on December 31,1997, itstands to the figure of 96.64 million. Thus we can say those 28% of working age people of Pakistan are having accounts with banks while 72% are unbanked. Theneed of privatization has made people to switch to banks to satisfytheir needs oflending and borrowing. This not only increases the deposits but also the credit business. Threats Unstable economy Local competitors Non availability of sufficient staff in branchChange in government policies has affected the banking business. Still banks haveto wait toget permission of state bank. The freezing of foreign currency accounts is a vitalexample of letting people not to trust on banks.

The Competition has become severe by the entrants of so many banks, So to exis

t one willhave to prove himself in its services through excellent management and will have to satisfy its shareholders. Otherwise he will be out the market. Thedecrease purchasing power of consumer in the current economic situationof thecountry affecting the business activity speed too much and the result is the low investmentfrom the investors in new projects can create problem for the bank because it is working a lot in trade.

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MCBs Competitive StrategiesTo be competitive the Bank has further reinforced its position in theConsumer Banking arena by streamlining and re launching the consumerfinancing products and introducing more convenience based solutions. Withthe re launch of auto finance and house finance products, the Bankpushed the products with full thrust. The Bank has also launched a

running finance facility against mortgage of property. Technology continued toplay an important role in improving and expanding product offerings.The Bank introduced more IT based products to cater to the changinglifestyles and needs of the customers. MCB VirtualInternet Banking was launched with wide rangingbanking solutions for the customers ranging from individual to corporate customersand it has become the most preferred Internet banking solution in the country.MCB also had the privilege of being the first Bank in Pakistan to launch the comprehensivebill payment facility through its alternate delivery channels which include Internet Banking, ATMs and MCB Call Centre, currently with six paymentpartners. Similarly, the Bank also took initiatives to increase theusage of debit facility. To provide timely and updated information, MCB

has also provided a new look to its website which is user friendlyand considerably easy to browse. The Islamic Banking initiative has beenvery successful in attracting new customer, both individuals andcompanies. Similarly, those relationships, which were confined only tocurrent account facility, have grown into stronger businessrelationships. The branch network was expanded to Lahore and Multanduring the last year and recently beenextended to Hyderabad and Faisalabad. The Bank plans to further expand its IslamicBanking branch network to other metropolitan areas and also tointroduce new sharia compliantbanking solutions to a wider range of customers for satisfying their individual and business needs. Some wideranging new strategic initiatives were also taken up which will be important for

the Bank in years to come. A private company has been formed in Hong Kong (fully owned subsidiary of MCB) in partnership with Standard Chartered Bank,handling trade transactions of select countries in the Asia Pacific region. It is projected to earn US$ 1million in its first year of operations. To increase its international presence, the Bank will be opening its representative office in Dubai and enteringinto major strategic alliances withbanks in the UAE/ especially for marketing our consumer banking products to nonresidentPakistanis. Furthermore, feasibility is also being carried out for entering otherinternational markets.MCB's operations continued to be streamlined with focus on rationalization of expenses, re alignment of back end processing to increase productivity,

enhancement of customer service standards, process efficiency andcontrols. The Bank has taken the lead inintroducing the innovative concept of centralizing Trade Services in the country by providingcentralized foreign trade services to branches with a view to improve efficiency,expertise and reduce delivery cost.59


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Management of Human Resources has been one of our core focus areas. MCB is committed towards attracting, retaining and motivating outstanding people.Challenge for MCB is to provide an environment in which employees canbetter realize their potential. The Bank introduced 'reward forperformance' where high potential officers were identified and rewardedaccordingly. In view of the competitive environment, the Bank is

focusing onperformance and introducing a more robust performance management system. MCB is also strongly committed to training its staff at all levels.The Bank will also be implementing the full suite of the latest version of SYMBOLSVersion 8. MCB Bank will run SYMBOLS eFinance modules to deliverpersonalized services to its customers over multiple delivery channels,while SYMBOLS Enterprise Operations Center will serve as its corebanking transaction processing engine. By implementing SYMBOLS, MCB Bankaims to raise the level of its customer service and its time tomarket in new product offerings for its three core banking businessesin Corporate, Commercial andConsumer Banking retaining its market leadership as Pakistan's progressive Bank.

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WORK DONE BY ME

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WORK DONE BY MEIn the MCB Bank Limited I really enjoyed working with the staff of Dijkot Road andhaving awish to be the employee of MCB. It was almost impossible to work in all the departments within that limited time. But on my request, the staff of thebranch provided me the

opportunity to work in the different departments for the sake of practical knowledge. I feel highly indebted to work in there. During my internship trainingin the MCB as I early mentioned that I have worked indifferent departments & seats and learnt followings. UTILITY BILLS COLLECTIONMCB Bank Limited collects utility bills on behalf of WAPDA, Sui Gas Companies, andPakistan Telecommunication Corporation Limited by putting the stamp onthe utility bills Paid,Date of payment, Signature of the officer receiving the utility bills. After receiving utility billsa list is made on the form, which is called Bills scroll form. One copy of the scroll is with the bank for evidence whereas the original copy with thereceipt of bills is sent to the billingdepartment of the respective corporation. The bank charge commission on the bills.

OPENING NEW ACCOUNT BASICSDuring the span of my internship in MCB I learned and observed a lot of about theopening of an account. Basically I think that the opening of anaccount is the establishment of acontractual relationship between the banker and the customer. By opening an account at a bank, a person becomes a customer of a bank. Further I amgoing to express the basicrequirements and steps involved in the opening of an account.

Learning as a Student Duties & Accomplishments During my internship in MCB I worked inOperations, Advances, Foreign Exchange and Customer Service Officedepartment and I successfully completed all the task/duties that

were assigned to me.The duties that I performed and the thing I learned each day are given as follows: July 15, 2005 Learned basic operations of remittance departmentLearned how to make entries and vouchers for Incoming TT(Telegraphic Transfer)Made vouchers and entries for Incoming TTObserved other operations e.g. PO (Pay Order), DD (Demand Draft) July 16, 2005Learned bank charges for PO, DD, TT & MT (Mail Transfer)

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Learned how to make entries and vouchers for Outgoing TT(Telegraphic Transfer)Made few Outgoing TT Learned & Made InterBranch Credit Advices against the checks received from outer city branchesJuly 18, 2005 Learned about the payment against PO & DD received from otherbranches (usually the first activity in the remittance dept.)

Learned how to issue a PO Made entries against the TT and MT in the Day BookMade Incoming and Outgoing TT Made InterBranch Credit Advices against the checks July 19, 2005Made Debit vouchers against the TT, PO & DD chargesMade Credit vouchers (contra) against the TT, PO & DD chargesMade Incoming and Outgoing TT Made InterBranch Credit Advices against the checks Made entries in the Day BookJuly 20, 2005 Learned Incoming & Outgoing TT Entries in the Daily Voucher RecordSheet Learned how to make DD and POMade Debit vouchers against the TT, PO & DD chargesMade Credit vouchers (contra) against the TT, PO & DD chargesMade Incoming and Outgoing TT July 21, 2005Learned basics of Remittance Software System

Made DD and PO entries in the Daily Voucher Record Sheet Made Inter

Branch Credit Advices entries in the Daily Voucher Record SheetMade Incoming and Outgoing TT Made InterBranch Credit Advices against the checks Made entries in the Day BookJuly 22, 2005 Learned about different Stamps on the POLearned and made entries and vouchers against Incoming MTMade Incoming and Outgoing TT Made InterBranch Credit Advices against the checks Made entries in the Day BookJuly 25, 2005 Learned and recorded the entries against Incoming MTMade Incoming and Outgoing TT Made InterBranch Credit Advices against the checks Made entries in the Day BookIssued Credit Advices against DD July 26, 2005Learned PO and DD issuance in detail

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Made the entries against Intercity Received Checks Made Incoming and Outgoing TTMade Inter Branch Credit Advices against the checks July 27, 2005Got more information about Remittance Software SystemLearned how to make cancellation entries in the Remittance SoftwareSystem in case of any discrepancyMade Debit vouchers against the TT, PO & DD chargesMade Incoming and Outgoing TT Made Inter

Branch Credit Advices against the checks July 28, 2005Learned how to cancel a DD Made Incoming and Outgoing TTMade vouchers for incoming MT Made InterBranch Credit Advices against the checks Issued Credit Advices against DDJuly 29, 2005 Learned how to make entries against the incoming TT for which thebeneficiarys account in some other bank Made Incoming and Outgoing TTMade Inter Branch Credit Advices against the checks Made entries in the Day BookJuly 30, 2005Was moved to Credits, got basic information about different operationsof Credits departmentLearned about Running Finance against the Saving Certificates also calledInstant Finance Studied few pages of Credit ManualStudied a Instant Finance Case

Learned about the entries against Monthly Installment for Car FinancingMade Daily Voucher Sheet August 1, 2005 Learned basic types of financingRead Running Finance in detail from manual Studied a Running Finance CaseMade Vouchers Made Daily Voucher Sheet August 2, 2005Learned about the different documents required for Credit InvestigationLearned about the documents required for Running FinanceLearned the Concepts of Demand and Cash Finance Made VouchersMade Daily Voucher Sheet

August 3, 2005 Studied Export Refinancing from Manual64


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Made voucher for partial Adjustment of CF (Cash Finance)Filled Credit Proposal cum Sanction Advice MCB Instant Financing, BBFS(Borrower Basic Fact Sheet) and Application for Finance for renewal of 3cases of CF. Made Lease Statement Made Daily Voucher Sheet August 4, 2005Studied Documentation/Collateral Guidelines Made Disbursement StatusLeasing Statement Made CF Vouchers Made Voucher Sheet

Made entries for monthly mark up against RF (Running Finance) August 5, 2005Studied other types of Export Financing e.g. FAFB (Finance AgainstForeign Bills), FBP (Foreign Bills Purchased)Studied Sanction Advice & Approval for FinancingMade Voucher and Voucher Sheet Studied a Credit Report August 8, 2005Learned General Documentation for financingLearned about FIM(Finance against Imported Merchandise) Made Daily Voucher SheetAugust 9, 2005 Learned documentation requirement for each type of financingMade Vouchers Made Daily Voucher Sheet August 10, 2005Made monthly entry in the Mark up Recovery Register Made Letter to AuditorMade Vouchers Made Daily Voucher Sheet August 11, 2005Learned about L/C documents Learned basics of Foreign Exchange operationsMade Voucher Sheet

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August 12, 2005 Learned about different L/C related terms and definitionsLearned about Payment against Foreign Currency ChecksLearned about Foreign Inward Telegraphic Transfer Made Voucher SheetAugust 13, 2005 Made vouchers for Foreign Currency Cash withdrawalMade vouchers for FITT(Foreign Inward Telegraphi

25412804 Internship Report on MCB Bank Ltd UMAR

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