final report- faizan idrees

Preface

It is the requirement of the MBA course, Comsat Institute of Information, Technology Lahore that all students of MBA have to spend six or eight weeks in any organization to get practical

exposure and to get familiarized with the ways to live in the organizational environment which is dramatically different from the educational environment. That two months period called

³Internship Period ³, if spent properly and sincerely, enables the students to be more confident, more knowledgeable, more responsible and, above all, more committed to its work in the practical field. I have also been assigned to do internship of six weeks period in MCB Ghalla Mandi branch Bahawalnagar.

It has enabled me to understand the practical scenario and sharpen our decision making power and utilizing the resources in an effective manner, so that our resources generate maximum profit.

In preparing this report, I have put all of my best efforts and tried my level best to give maximum knowledge. Despite of my all the coherent efforts, I do believe that there will always be a room for improvement in the efforts of learner like me.

Comsats Institute of Information Technology, Lahore

Acknowledgement

Person is not a perfect in all the contexts of his life; He has a limited mind and mind thinking approaches. It is the guidance from Almighty Allah that shows the man light in the darkness and the person find his way in the light.

Without this helping light, person is nothing but a helpless creation.

The teaching of the Holy Prophet Muhammad (PBUH) were also the continuous source of guidance for me especially his order of getting

knowledge and fulfilling once duty honestly was key motivation force for me.

With prayers of my parents and support of my teachers it became possible to formulate this report. I pay high regards to them.

I am indebted to all the staff of MCB Bank Limited, Ghalla Mandi Branch Bahawalnagar who appreciated all my work, supervised me, provided their assistance to me when I needed and inculcated their knowledge in me. Without their cooperation, I would never have been able to complete this Internship contentedly and with pleasure.


Table of Content

Preface........................................................................................................................................................1

Acknowledgement.......................................................................................................................................2

Executive summary.....................................................................................................................................5

Introduction of Sector..................................................................................................................................7

MCB BANK LIMITED.............................................................................................................................8

Vision Statement.............................................................................................................................9

Mission Statement...........................................................................................................................9

Objectives of MCB...........................................................................................................................9

Policies of MCB..............................................................................................................................10

Core values of MCB........................................................................................................................10

Marketing Mix...........................................................................................................................................11

1. Product Mix & Price of MCB Bank......................................................................................................12

2. Placing Strategy of MCB Bank............................................................................................................16

3. Promotion strategy of MCB Bank......................................................................................................17

FIELDS OF ACTIVITIES.................................................................................................................................17

1. Account Opening Department.......................................................................................................18

2. Clearing department......................................................................................................................23

3. Remittance Department................................................................................................................25

3. Advances Department...................................................................................................................27

5. Cash Department............................................................................................................................30

6. Technology Department.................................................................................................................33

Personal Learning......................................................................................................................................35

Financial Statement Analysis.....................................................................................................................37

1. Balance Sheet....................................................................................................................................38

2. PROFIT & LOSS ACCOUNT..................................................................................................................41

3. Ratio analysis.....................................................................................................................................43


SWOT ANALYSIS.........................................................................................................................................47

SEGGESTION..............................................................................................................................................49

REFERENCES..............................................................................................................................................51

Executive summary


The banking structure in Pakistan comprises of the following types, State Bank of Pakistan, Commercial Bank of Pakistan; Exchange Banks, Saving banks, Cooperative banks, specialized credit institutions. The state bank of Pakistan is the Central bank of the country and was established on July 01, 1948. The network of bank branches now covers a very large segment of national economy. The State Bank of Pakistan issues the shares of these periodically. Bank employees and other common peoples can also purchase these shares and earn profit. In1956, MCB transferred its registered office to Karachi, where the Head Office is presently located. In April 1991, MCB became Pakistan’s first privatized bank.

The corporate branch at Shah rah-e-Faisal Karachi (SFK) branch is the corporate branch of MCB in Karachi. The bank is using SWIFT for transfer of information about imports and exports. MCB SFK branch has Currently Following three Departments General Banking Department, Advances Department & Foreign Exchange Department.

To open an account the customer has to meet the general banking manager with an introducer. The procedure begins with the punching of account opening form to the customer file i.e. customer’s master file. Before closing any account, bank send letter to the account holder for informing him that his account is going to be closed. There is need an approval from higher authority to close any account. Current deposits are those which are payable to bank whenever demanded by the customer. Bank does not pay any profit on current deposits. The following are the financial products/services of MCB Malay Mail Scheme, PLS Account, Saving 365 Account, Capital growth certificate scheme, Fund Management Scheme, Khushali Bachat Account, Term/Fixed Deposits and others like night banking, credit cards, traveler cheques.

In remittance department like any other bank MCB also have instruments for transferring of money, Telegraphic Transfer, Mail Transfer. In cash department both deposits and withdrawals go side by side. This department works under the accounts department and deals with cash deposits and payments. This department maintains the following sheets, books, and ledger of account cash received voucher sheet, cash paid voucher sheet, Paying-in-slip, Cheque book, Cash balance book. The clearing in Karachi at MCB or other banks is being done through NIFT (National Institute of Facilitation Technology).

Bank provides this facility to the people who need advance money to meet their requirement. Party dealing with other banks financial condition of borrower business and as a first step credit proposal is being made. MCB provides advances, which are two types. Secured Advances, Unsecured Advances. MCB usually classified advances in to following types Agricultural Advances, Commercial Advances.

Industrial Advances, Commercial Advances are of following types.

Demand Finance, Cash Finance, Foreign bills purchased, Finance against imported goods, Finance against foreign bills, Export Refinance Part I (Pre Shipment) & others. Banks Agriculture division deals with the agriculture advances. Bank provides the Agriculture Advances in order to enhance and support the agriculture sector of the country. Farm Credit & Non Farm Credit.


In foreign exchange, MCB is dealing Foreign Currency Accounts, Foreign Remittances, and Foreign Bills for Collection, Imports & Exports.

Foreign currency accounts & the foreign currency department deals with the following types of accounts, Dollar Khushali account, Current account, Saving bank account, Term deposit, Prime Currency Scheme. Foreign accounts are convertible on floating rate available to the bank. Letter Of Credit facility is being provided by MCB in foreign exchange.

Introduction of Sector


The word 'Bank' is said to have been derived from the words Bancus or Banque or Bank. This history of banking is traced to as early as 2000 B.C. Banking in fact is primitive as human society, for ever since man came to realize the importance of money as a medium of exchange, the necessity of a controlling or regulating agency or institution was naturally felt. The priests in Greece used to keep money and valuables of the people in temples. These priests thus acted as financial agents. The origin of banking is also traced to early goldsmiths.

They used to keep strong safes for storing the money and valuables of the people. The first stage in the development of modern banking, thus, was the accepting of deposits of cash from those persons who had surplus money with them

The goldsmiths used to issue receipts for the money deposited with them. These receipts began to pass from hand to hand in settlement of transactions because people had confidence in the integrity and solvency of goldsmiths. When it was found that these receipts were fully accepted in payment of debts; then the receipts were drawn in such a way that it entitled any holder to claim the specified amount of money from goldsmiths. A depositor who is to make the payments may now get the money in cash from goldsmiths or pay over the receipt to the creditor. These receipts were the earlier bank notes. The second 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 do not 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. They also found that most of the money deposited with them was lying idle. At the same time; they found that they were being constantly requested for loan on good security. They thought it profitable to lend at least some of the money deposited with them to the needy persons. This proved a profitable business for the goldsmiths. They instead of charging safe keeping charges from the depositors began to give them interest on the money deposited with them. This was the third stage in the development of banking.

The banking structure in Pakistan comprises of the following types.

State Bank of Pakistan Commercial Bank of Pakistan Saving banks. Cooperative banks Specialized credit institution

All these commercial banks were nationalized in January 1, 1974, and were recognized and merged into the following five banks:

National Bank of Pakistan MCB bank limited Habib Bank Limited United Bank Limited


Allied Bank of Pakistan

The Government of Pakistan in the late 90’s introducing the need for the privatization of state owned banks and companies. The private sector has accepted the challenge and most of the banks are privatized today. The State Bank of Pakistan issues the shares of these periodically. Bank employees and other common peoples can also purchase these shares and earn profit. Throughout the period of banking history the banks have been expanding rapidly and achieved the desired goal of progress.

MCB BANK LIMITED

MCB was founded by ISFHANI and ADAMJEE families in Calcutta on July 9, 1947. MCB is not an overnight success story rather good track of services are responsible for the leaps and bounds progress. After the partition of the Indo-Pak Subcontinent, the bank moved to Dhaka from where it commenced business in August 1948.In 1956, the Bank transferred its registered office to Karachi, where the Head Office is presently located. Thus, the bank inherits a 52-year legacy of trust in its customers and the citizens of Pakistan.

The performance of MCB was badly affected by bureaucrat government. In January 1974, MCB was nationalized by Bhutto Government following the bank act 1974 subsequently in June 1974 Premier Bank Limited merged with MCB.

When privatization policy was announced in 1990, MCB was the first to be privatized upon recommendations of World Bank and IMF. The reason for this choice was the better profitability condition of the organization and less risky credit portfolio which made'' it a good choice for investors. On April 8th, 1991, the management control was handed over to ³National Group´ (the highest bidders). Initially only 26% of shares were sold to private sector at Rs. 56 per share.

MCB besides being money financial organization have rendered invaluable services in the economics and social developments of our country. MCB today, represents a bank that has grown with time, experience and Pakistan. A major financial institution, in scope and size, it symbolizes a fully-grown tree. Evergreen, Strong, and firmly rooted.

MCB is Pakistan’s largest bank by market share 18% its assets are of PKR 605 bin in 2011, and the largest by market capitalization having a market capitalization of US$ 1.8 billion. The Bank has a customer base of approximately 4.5 million and a nationwide distribution network of 1,130 branches,


including 8 Islamic banking branches, and over 600 ATMs, in a market with a population of over 160 million. (July 2011 record).

Vision Statement

To be the leading financial services provider, partnering with our customers for a more prosperous and secure future.

Mission Statement

We are a team of committed professionals, providing innovative and efficient financial solutions to create and nurture long-term relationships with our customers. In doing so, we

ensure that our shareholders can invest with confidence in us.

Objectives of MCB

MCB as being privately owned, the primary objective is maximum net profit, growth of business and to capture maximum potential market. The operating results of MCB shows an impressive improvement compared to the last financial year and the improving return on assets indicate the increasing operational and administrative efficiency, just because MCB is continually achieving its objectives. These objectives are:

Delivering remarkable returns to stakeholders, sustainable performance, exceeding market and shareholder expectations

Providing value added services through operational expansion, geography and upgraded systems

Building a corporate culture of equality, trust and team spirit as we remain dedicated to be a socially responsible organization

Improved customer services Effective ues of electronic media. Decentralization of authority. Enlightened personal policies. Modernization of branches. Launching of new product. Effective staff motivation policies.


Policies of MCB

MCB Bank since its establishment in 1947 has been providing excellent services all because of the strengthened policies and strategies set out by its Broad and Management, these policies cover all grounds of good banking, following is the road map to their success:

Customer satisfaction will always remain the number one benchmark; the aim is to maximize value for clients by offering high quality financial solutions that best meet their current needs and long-term goals.

Bank is continuously looking for expansion in terms of deposits so highly dedicated Business development Officers (B.D.Os) is being hired.

To maintain sufficient resources over a long period of time and utilize them in productive way. This can be done through Liquidity Management and Credit Risk Management.

To promote strong and ethical business practices in the industry by focusing more on effective collaboration with stakeholders.

The corporate policy focuses on striking the optimum balance in organizational workflows and processes.

The policies include; employ and retain an unparalleled workforce of highly motivated, energetic, well-trained and productive employees, and offer them an inspiring work environment, competitive salaries, excellent benefits and caring leadership.

MCB Bank is committed to the personal welfare and professional development of all team members and sharing expertise and operational excellence across the groups.

The Bank is fully aware that branch network has direct impact on the business so; an intensive branch network will be established all around the Country.

Core values of MCB

These values and business principles provide the framework within which they carry out their operations, abides by;

INTEGRIY


We are the trustees of public funds and serve our community with integrity. We believe in being the best at always doing the right thing. We deliver on our responsibilities and commitments to our customers as well as our colleagues.

RESPECT

We respect our customer’s values, beliefs, culture and history. We value the equality of gender and diversity of experience and education that our employees bring with them. We create an environment where each individual is enabled to succeed.

EXCELLENCE we take personal responsibility for our role as leaders in the pursuit of excellence. We are a performance driven, result oriented organization where merit is the only criterion for reward.

CUSTOMER CENTRICITY

Our customers are at the heart of everything we do. We thrive on the challenge of understanding their needs and aspirations, both realized and unrealized. We make every effort to exceed customer expectations through superior services and solutions.

INNOVATION

We encourage and reward people who challenge the status quo and think beyond the boundaries of the conventional. Our teams work together for the smooth and efficient implementation of ideas and initiatives.

Marketing Mix

Marketing is the task of creating, promoting and delivering goods and services to consumers and businesses. Organizations identify and profile distinct group of buyers who might prefer or require varying products and marketing mixes. The customer seeks for value and satisfaction. The organizations can increase the value of the customer offering in several ways e.g. raising benefits, reducing costs etc. marketing mix is a set of marketing tools that the firm uses to pursue its marketing objectives in the target market. These marketing tools are known as 4 ps of marketing. These four marketing tools are viewed as 4c’s by the consumers.

Product Customer solution


Price Cost for customerPlace ConveniencePromotion Communication

To identify the customer needs and fulfilling hem is the basic objective of an organization. Marketing is not just satisfying your customers, you have to delight them and this can be done by acting upon this phrase.

“Under Promise and Over Deliver”

MCB Bank provides a winning combination of products and services to its prime customers. It is one of the country’s leading commercial banks, which ensures complete security, and reliability in all-financial transactions.

1. Product Mix & Price of MCB

MCB Rupee Traveler cheque

MCB Rupee Travelers Cheques are as good as cash, in fact better. Better because with Rupee Travelers Cheques you have the power to purchase and a feeling of security that should you lose them, you will get a refund.MCB Rupee Travelers Cheques are accepted at major shops, travel agents, hotels, business establishments and MCB branches all over Pakistan. You don't have to be an MCB account holder to buy the Rupee Traveler Cheques. Anybody can purchase them. It's a safe and convenient way to conduct everyday business. At a time when thefts and robberies are on the increase, you are better off carrying Travelers Cheques rather than money.

Mahnama Khushali Scheme

A 5- year fixed Deposit Scheme, targeted to persons with small savings who would desire a regular monthly return on their investment.

Salient Features

Minimum amount of investment shall be Rs.0.010m and the maximum amount of investment would be Rs. 1.000m.

Khushali Certificates can be purchased by individuals (singly or jointly) or by the Proprietorship/Partnership concerns or Companies, etc. in their name


The Khushali Certificate will be of five years maturity.

The interim rate of profit offered will be minimum 1% per month. If the profit declared by the bank is higher, additional profit will be paid.

Zakat will be deducted wherever applicable on yearly basis whether you will be receiving your profit or encashing your certificates.

As per Government Directions, tax on the profit / return is o be deducted by MCB branches at the time of payment

MCB Khushali Bachat Account

Salient Features

8% rate of return per annum. Returns calculated on daily. Average balance and paid half yearly. Introduced first time in Pakistan. The facility of helping account holders pays utility bills (electricity, telephone and gas) through

their account. No queues. No delays

Prime Currency Account Scheme

Launched to attract deposits in foreign currencies. US Dollars, Pound Sterling, Euro and Japanese Yen.

Salient Features

Owing foreign currency account under the Prime Currency Scheme allows you to earn attractive rates of interest in foreign currency.

You have a choice between opening this account in your personal name and opening it under joint names.

Whether you are a resident or a non-resident Pakistan, MCB Prime Currency Scheme invites all to operate a foreign currency account.

Foreign nationals and foreign companies can also open a foreign currency account under the Prime Currency Scheme.

Your foreign currency account can be opened in four global currencies: The United States Dollar, the Pound Sterling, the Japanese Yen and the Euro.


Travelers Cheques and Foreign Currency Notes can also be issued to holders of personal and Joint accounts.

Rupee Loan facility will also available against this account. You can draw any amount of foreign exchange from your foreign currency account and transfer

or remit the amount freely to any part of the world without any restrictions. The restrictions imposed by the State of Pakistan for the opening of foreign currency accounts in

case of passport; Work-permit and resident Visa have been withdrawn. Your account will be restriction free.

The Prime Currency Scheme is exempt from all forms of taxes including Income Tax, Wealth Tax and Zakat deductions.

MCB Prime Currency Scheme is a world in itself

Hajj Mubarak Scheme

A saving scheme, of 2/3 years duration, for the convenience of persons, with a limited income, who desire to perform Hajj, was introduced. Under the 2 years scheme, a monthly deposit of Rs.2800 is required, whereas under the 3 years scheme, the required monthly deposit is only Rs.2200.

Capital Growth Certificate Scheme

For long term depositors under which the amount deposited almost doubles at the end of 5 years. For the scheme, the minimum amount of deposits is Rs. 100000 while there is no maximum limit. In case of premature encashment of the certificate, the depositor will profit at the same rates as that of PL Saving Account.

MCB Mobile Banking

At the forefront of technological excellence, MCB proudly introduces MCB MOBILE BANKING*. The convenience of accessing account balance information and mini statements whenever want or wherever may need them, with comfort and peace of mind.MCB Mobile Banking service is available to all MCB ATM cardholders, 24 hours - 365 days.

MCB Islamic Banking Services

Islamic banking services through exclusive units/branches offering a range of liability and asset based Shari compliant products like Musharika, Murabaha, and Ijara and is tasana.

MCB Smart Card

MCB now brings you MCB Smart Card-a secure and convenient instrument of payment with unmatched functionalities. It provides 24-hourdirect access to your bank account the convenience and flexibility of MCB Smart Card will help live a smarter life. It not only helps you manage your expenses, but also avoids undue interest on your day to day credit card transactions. Your balance is always within


your reach and you spendaccordingly.MCB is the only bank to introduce a debit card that gives the option to choose from domestic and international card for local and global usage respectively.

Fund Management Scheme

This scheme is offered to corporate and customers and is aimed at providing better rate of return up to 15% per annum. One of the objectives of the scheme is to develop secondary market for Government Securities.

Consultancy Services

In the process of privatization of public sector units, prospective buyers need professional assistance and MCB, with its expertise, offers to them specialized service for valuation of the market value of the industrial unit, preparing bid documents and ranging finance for the purchase of the unit.

Self Supporting Scheme

For the benefits of genuine worker/borrowers who are poor and needy and for small entrepreneur the bank as evolved a self supporting scheme: maximum amount of loan Rs.25000 and minimum Rs.5000 per individual. Loan will be totally free of mark-up.

Fax Press

This product was first of its kind introduced by using modem technology of The Fax Machine. It facilitates speedy transfer of funds within Pakistan.

Utility Bill Collection

With the aim of extending this service to wider range of customers, the number of MCB branches collecting Utility Bills more than 900.

MCB Car Cash

Car financing and leasing at competitive rates with flexible options Car cash finances both semi-commercial and non-commercial vehicles for personal and business use.

MCB Locker

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

MCB Master Card

THE FUTURE OF MONEY Since the beginning of time, people have tried to find more convenient ways to pay, from gold to paper money and checks. Today, money is moving away from distinct hard currencies and towards universal payment products that transcend national borders, time zones, and,


with the Internet, even physical space. Plastic or "virtual" money, credit, debit, and electronic cash products, inevitably will displace cash and checks as the money of the future.

MasterCard International has expanded globally in more locations in the world than any other card. The card was introduced by MCB Bank Limited in 1995 and now offers card members over15 million outlets in 232 countries.

Remit Express

Fastest to Pakistan. Anywhere in Pakistan.

The fastest way of getting your money across to Pakistan. Remit Express offers low cost remittance from U.A.E. and Saudi Arabia .Your relatives, friends or business associates receive draft within 72 hours. MCB Remit Express has been specifically designed to meet the needs of the expatriate Pakistani community residing in the Gulf countries.

Easy Personal Loan

Helping You Do More

MCB Easy Personal Loan provides you with the financial advantage to do things you've always wanted to but never had the sufficient funds for. Take that much-needed holiday. Buy a car. Refurnish your house. Purchase a new TV. Finance a better education for your children.

MCB Pyara Ghar

MCB gives dream home at the lowest and best possible mark-up rates. You can choose either one of our two mark-up rate options- fixed or variable. Early repayment option tailor-made to allow making partial prepayments at dates that suit.

MCB Virtual

MCB Virtual provides the continence of banking on internet. Whether at office or home or traveling. Log on at www.mcb.com.pk and enjoy24 hours access of all your accounts for the largest array of service.

2. Placing Strategy of MCB BankThe location of the bank plays a vital role in making its operations profitable. If the bank is

located in some business center then it will be very easy for it to attract business people as its customers. Therefore MCB has most of its branches at places where it can reach its targets customer easily.


3. Promotion strategy of MCB bank

MCB Bank is actively participating in promotion of its products and services through advertisement and other promotional schemes. Initially, the bank focused on the upper class customer’ sonly and offered products for a limited class of people. But now the strategy has been changed and the bank is now targeting the middle market also. The products offered are of diverse nature to cater the needs of maximum number of people.

FIELDS OF ACTIVITIES

The purpose of banks is to provide some services to the general public. And for this purpose different banks provide different services to the people in different forms. The MCB Bank is a commercial bank, in modern time commercial banks play a very important role and their functions are manifold. The main functions and services which MCB Bank Limited provides to different peoples are as follows.

Open Different accounts for different peoples Accepting various types of deposits Accepting various types of deposits Granting loans & advances

Undertaking of agency services and also general utility functions, few of those are, as under;

Collecting cheques and bill of exchange for the customers. Collecting interest due, dividend, pensions and other sum due to customers Transfer of money from place to place. Acting an executor, trustee or attorney for the customers, Providing safe custody and

facilities to keep jewellery, documents or securities Issuing of traveler’s cheques and letters of credit to give credit facilities to travel. Accepting bills of exchange on behalf of customers.


Purchasing shares for the customer Undertaking foreign exchange business. Furnishing trade information and tendering advice to customers.

For proper functioning of branches and the overall bank has been divided in different departments. These departments handle different jobs so that division of work is there for improvement of functions and also it is easy to control the situation. The general division in a branch is as follows:

1. Account Opening Department

Account opening and closing is the function of accounts departments. Account opening department is the most important department in any commercial bank's operations. The reason is that it serves as a first step in establishing customer-bank relationship. The main objective of any bank is to attract as many new accounts and deposits as possible. In order to fulfill this objective the first step is the opening of new accounts and maintaining the existing ones. The department of account opening is the major source of doing so.

BASICS TO OPEN AN ACCOUNT

INTRODUCTION AND PRELIMINARY INVESTIGATION

Before opening an account MCB as like the other banks in Pakistan as certain whether or not the person who is going to open the account is a desirable customer or not. Then MCB determine the prospective customer’s integrity, respectability, occupation and the nature of business by the introductory references given at the time of account opening. Negligence in this informal preliminary investigation may result in serious consequences not only for the banker concerned directly but also for other bankers and the general public who may be affected indirectly.

In order to further strengthen and streamline this process, the Federal Ombudsman of Pakistan, vide his ruling on complaint no. II/31/5186, has directed the banks to retain with the account opening form a Photostat copy each of the National Identity Cards of the person desiring to open an account as well as that of the introducer. As per these directions, the concerned Branch Managers are required to obtain the original National Identity Cards along with their Photostat copies and then return the original after attesting the authenticity of the retained copy.


Preliminary investigation is necessary because of the following reasons:

Avoid Frauds: If a banker does not make the necessary inquiries mentioned above he may enabled is honest

persons to possess cheque books for fraudulent purposes. If any such person happens to be an undercharged bankrupt, the banker might be placed in an awkward position for having allowed such a person to open and open a bank account.Safeguard against unintended overdrafts:

Sometimes due to a mistake an account may be given an overdraft, For instance, the ledger keeper, misreading the balance of an account honors a cheque for an amount larger than the balance. Similarly a credit entry belonging to a customer may be made by mistake in another customer’s account. In such situations the excess amount withdrawn by the customer can only be realized if the customer is a respectable person.Inquiries about clients:

Being a banker MCB has a business obligation to respond to inquiries from other banks etc. about his customer’s financial position. Though the banker gives only a general ideal about the financial standing of his customer.Specimen Signature;

When an account is opened with MCB customer provides to the bank a specimen of the form of signature which would appear on all his cheques to express his authority for the payment of cheques drawn on his banker. This specimen is taken generally on a card specially designed for this purpose, and rule for the customers, full name, and account number are entered on it.

If the bank has reasons to doubt the genuineness of a signature, he should either get it confirmed for his satisfaction or return the cheque with the remark ‘Signature differs’. If the signature of the customer is forged the banker cannot escape his liability because he has actually acted on his customer’s mandate.

HOW TO OPEN AN ACCOUNT (GENERAL)

Before opening an account in MCB the following points must be considered in this regard. Another account holder of the bank should properly introduce the new customer. The account holder should sign the account opening form in the presence of bank officer

and the signature is duly verified. A copy of identity Card is required by Bank. Against submission of the Bank’s prescribed application form, duly introduced in the manner

provided and on supplying such document, as may be required and account may be opened.


The Bank reserves to itself the right to refuse to open an account without assigning any reason.

Each account shall be allotted a distinct number that is to be quoted in all correspondence with the bank relation to the account.

Minimum amount for opening and continued maintenance of various types of accounts is as follows:

Saving 10000 Current 10000

The bank reserves the right to change the above mentioned minimum balance requirement at any time without any notice.

PROCEDURE TO OPEN AN ACCOUNT

When a customer wants to open an account, the bank officer gives him an application form. All information, which is necessary to be known by the bank, are requirements of the application form. Form also requires the essential documents to be attached by the customer. Basically following information is required to open an account with MCB.

Title of Account Full Name of Applicant Occupation Address Telephone No. Currency of account Nature of Business Introducer’s Name, Address & Signatures Special instruction regarding the account Initial Amount of the Deposit Signature of the applicant

DOCUMENTS TO BE ATTACHED

Further I learned that if you wanted to open an account with MCB then you should attach the following documents with your application form which are different for different categories.

SOLE PROPRIETOR’S ACCOUNT

In order to open an account with MCB Sole Proprietors have to submit their business registration certificate number.

PRIVATE / JOINT ACCOUTS


For individual or private or joint accounts National Identity Card is required.

JOINT STOCK COMPANY

Before an account of a Public Limited Company is opened MCB must ask the person authorized to do so to submit the certified copies or the following documents;

Certified true copy of the Memorandum and Articles of Association of the company. Certified true copy of the resolution of the board of directors / managing committee /

governing body regarding conduct of the account. Certified list containing names and signatures of the directors / office bearers. Certified true copy of the certificate of incorporation or registration. Certified true copy of the certificate of commencement of business (in case of public limited

companies). Balance Sheet I.D. Card copy of each director Original is also enclosed for inspection and return List of persons authorized to operate the account. Power of Attorney in favor of the person opening account.

PARTNERSHIP FIRM ACCOUNT

Information which is required to be submitted to MCB by a partnership firm in this case is as follows:

Full Names Address Specimen of signatures of the partners Certified true copy of partnership deed Registration No. if the Partnership is registered.

SOCIETIES / CLUBS AND ASSOCIATIONS ACCOUNT

MCB is authorized to open the accounts of the societies/clubs and associations, These are non-trading organizations, formed for the promotion of culture, science, education, recreational activities and charitable purposes etc. some of these institution are registered under the Societies Registration Act, 1866, and are issued a certificate of registration after they have been found fit for registration.

ISSUANCE OF CHEQUE BOOK

When a customer opens an account with the bank, he is provided with cheque book for withdrawals from account. However, the first cheque book is given to the customer only when all the required documents are checked. A cheque book contains ten, twenty five, fifty or hundred leaves.


The cheque book also carries a requisition slip for the issuance of the new cheque book .This slip is duly filled and signed by the customer. The signature of the customer is verified by the bank and new cheque book is issued to the customer and serial numbers of the cheque are duly entered in the book of the bank. Along with the signature, person should also write his full name & address. Usually only one cheque book is issued at a time, however big concerns who need a number of cheque books at a time, may ask the bank to stock as number of cheque books in their name and to point their name on these cheque books.

The officer keeps and maintains the cheque book register Cheque book inventory and cheque books issued are recorded in this register cheque book is issued at a time, however big concerns who need a number of cheque books at a time, may ask the bank to stock as number of cheque books in their name and to point their name on these cheque books.

The officer keeps and maintains the cheque book register Cheque book inventory and cheque books issued are recorded in this register.

In case of loss of cheque book or requisition slip on cheque book the customer has to fill the Form No. 216-B to obtain a new cheque book.


2. Clearing department

Every banker acts both as a paying as well as a collecting banker, It is however an important function of crossed cheques. A large part of this work is carried out through the bankers clearing house.

A clearing house is a place where representative of all banks of the city get together and settle the receipts and payment of cheques drawn on each other. As the collecting banker runs certain risks in receipt of their ownership the law has provided certain protections to the banks.

The Negotiable Instrument Act, 1881, lays down hat drawer or holder of a cheque or draft may cross the instrument generally or specially. It further lies down that a crossed cheque can only be paid to a banker, who collects it for a customer in good faith and without negligence.

Types of Cheques

Transfer cheques:

Are those cheques, which are collected and paid by the same branch of bank.

Transfer delivery cheques:

Are those cheques, which are collected and paid by two different branches of the same bank, situated in the same city.

Clearing cheques:

Are those cheques, which are drawn on the branches of some other bank of the same city or of the same area, which is covered by a particular clearing house.

Collection cheques:

Are those cheques, which are drawn on the branches of either the same bank or of another bank, but those branches, are not in the same city or they are not the members of clearing house.

PROCESSING OF OUTWARD CLEARING (Collections)

Cheques are received from the clients. These cheques are received along with a deposit slip. One part of the deposit slip is returned to the customer with a clearing stamp on it. The date of clearing is one day ahead of the current day, because it takes one day for a cheque to get clearance.

The cheques are then sort out as local and outstation. The details of the cheque i.e. the amount, cheque number, the account number and the name of the Drawee bank are entered. These cheques are


then prepared to be sent to the clearing house. A slip and a sheet are along with the cheques to ensure that all the cheques are being entered and sent.

PROCESSING OF INWARD CLEARING (Payments):

Exchange and settlement of cheques and other instruments is done in the clearing house. These cheques are received and then sort out. The process of sorting out includes checking of all the necessary and required particulars. The signatures are also verified.

PROCESSING OF RETURN CLEARING:

If there is any particular missing in the cheques, then these are returned back to the clearing house along with the memo.

PROCESSING OF CHEQUES RETURNED:

The cheques of the customers that are being returned by the Drawee banks due to any reason stated in the cheque returning memo are given back to the presenting back in the clearing house. These cheques are returned to the customers.


3. Remittance Department

Remittance department performs following functions:

Mail Transfer (MT) Telegraphic Transfer (TT) Demand Drafts (DD)

MAIL TRANSFER (MT)

When a customer requests the bank to transfer his money from one branch of bank to another branch of the same bank or from one city to another city to the same bank or any other bank. Customer fills the form given by bank. If the customer has an account with that amount as mentioned in the application form then concerned officer will undertake the following procedure to make the mail transfer complete.

1. Branch Mail transfer form

2. Receiving Branch Register copy

3. Issuing branch register Copy

4. Beneficiary advice

5. Advice to customer

In case where the customer is not account holder of the bank then the customer will have to deposit the amount which he wants to transfer under Mail. Then the above said procedure will be done.

TELEGRAPHIC TRANSFER (TT)

This type of transfer is simple. After filling the application form the concerning officer shall fill the telegraphic transfer form. Then it is sent to the required bank which on receiving it immediately makes the payment to the customer and after wards the voucher are sent to that bank by ordinary mail.

DEMAND DRAFT (DD)

Demand draft is just like cheques and issued when the customer wants to take cash with him personally. The idea behind is to avoid the risk and burden of currency notes in huge quantity. Demand draft can easily be handled whatever amount it has and the money can easily be taken from the bank when it is presented. In fact, the bank persuades the customer to transfer money by drafts and avoid the risk of frauds involves in MT and T.T. Draft is only issued when the bank knows customer and bank has the confidence in him.


In case of transfer of money by drafts, the customer has to fill an application form. Then the concerned officer fills the following forms:

Customer’s advice Customer’s debit form Register copy Cover Advice

FOREIGN DEMAND DRAFT

Foreign Demand Draft is just like demand draft. The only difference is that a bank issues FDD to the bank of another country. It requires foreign exchange and it involves seven forms, which are to be filled.

PAY ORDER

Pay order is meant for bank’s own payments but in practice these are also issued to our customer for making payments.

A pay order is written authorization for payment, made in a receipt form issued and payable by the bank, to the person named and addressed therein on his giving a proper discharge thereon.

It is issued by and drawn upon and payable by the same branch of the bank. It is neither transferable nor negotiable and as such it is payable to the payee named therein. Pay order cannot be issued to a minor. Some time bank don’t want to give its deposits to

customer. So in that case pay order is given to that customer and he can use it for making payments. When customer wants to cash the pay order then the amount of the pay order will be debited from the bank. If pay order submitted to other bank like ABL, BAL then the process of clearing will be adopt.


3. Advances Department

Advances are the most important source of earning for the banks. MCB is also giving full attention towards this aspect and it is also obvious from the growing portfolio of advances and from very low delinquency rate. The credit portfolio of this institution is in a very much better shape than other financial institutions of Pakistan and the credit goes to the management and the staff who are concerned about the quantity and quality as well.

Loans Cash Credits Overdraft

LOANS

Loans are monetary assistance by a financial institution to a business, individual etc. 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 loan is normally granted against security of gold documents. In case of demand loans against gold or documents, a demand promissory note for the amount of loan is taken from the borrower loans are granted under;

LOAN AGAINST GOLD

Under this type of loan, which is granted to the borrower the Head Cashier estimates the value of Gold or Gold ornaments through an agent (Gold smith) and keeps a margin of 40 to 50 percent. After the opening the gold loan account a token is given to the borrower, which is a bank receipt. On repayment of loan, the gold or ornaments held as security for it, together with the demand promissory note duly discharged is returned to the borrower and his receipt for the gold ornament taken in the demand loan ledger.

This receipts states that he ornaments returned are complete and in order. Part delivery of ornaments is given against part payment of a loan but care is taken that the ornaments still in banks possession fully covers the balance of the loan outstanding. The interest gold loan is to be applied with quarterly.

LOAN AGAINST PLEDGE OF STOCKS

In case of advancing such types of loans, the following precautions are kept in the mind:

Stock pledged must be readily saleable


Products should be readily saleable Advance should be within the borrows means.

REQUIREMENTS OF LOAN

For granting loan to any party or individual, the bank checks following particulars of the client:

Credibility Feasibility Report

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 the client. The report enables the bank to judge the likely return of the business.

The following documentation is made for loan

An application or request letter for loan by the customer Legal opinion of the legal advisor of the bank (for the title deeds) Consent letter from the regional office Vetting Certificate (includes consent No., Facility whether fund based or no-fund based,

addresses etc. Valuation of property any consultant or any panel of consultants approved by State Bank of

Pakistan Original title deed or sale deed Affidavit General power of attorney (made by advocate for the person/owner taking loan for the

company) Mortgage deed Mutation document made Verification of the property by the bank from the competent authority Hypothecation of stock certificate (Running is to be given against 75% margin of stock) IB-25R Letter of hypothecation (duly signed by the party) IB-12 , DP Note/Promissory Note (Bank prepared itself, duly signed by the party, revenue stamps

of Rs. 100 put on it) IB-6R Agreement of finance mark up (Contract with party for taking mark up on quarterly basis) IB-24 (used for title deed) IB-29 (used for guarantee from party) IB-26 (used for pledge of stock, margin is different for different goods) No. IB-28 (used for lien) etc.


After that Loan is sanctioned to the party fulfilling all the terms and conditions for the purpose. The procedure given above is for both short and long term loans.

SECURITIES HELD AGAINST FINANCING

FOR RUNNING FINANCE

Hypothecation of Stocks (50% Margin) Collateral security (house, land, factory etc..

FOR CASH FINANCE

Pledge of stocks (20 to 25% Margin) Collateral security (house, land, factory etc...)

CASH CREDIT

Such cash account is opened in the name of the customer who borrows from the bank. Customer is granted a loan up to a certain limit, sanctioned by the head office, from which he can draw when he requires and interest is charged on the amount actually utilized by the customer. In order to avoid the danger of idle fund, the bank charges a certain rate of interest, even if the customer does not withdraw any amount. The rate charged by the bank on cash credit in 46 paisa per thousand on daily basis.


5. Cash Department

The following books are maintained in the Cash Department:

Receiving Cash Book Paying Cash Book Token Book Scroll Book

Cash Balance Book When cash is received in counter, it is entered in the Scroll Book and Receiving Cashier 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 is made to payee. At the close of day, the Token Book and Paying Cashier Book are balanced. The consolidated figure of receipt and payment of cash is entered in the 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 mostly frauds are made in this department, therefore, extra care is taken in this department and nobody is allowed to enter or leave the area freely. Mostly, cash area is grilled and its door is under supervision of the head of that department. All the books maintained in this department are checked by an officer.

Stop Payment

The department also makes arrangements for stop payment of cheques on the request of the client. The request of stop payment is made in the following case

The cheque has been stolen or lost To cancel the cheque, which has already been written out, and handle to the counterpart, and

the client will request the bank not to make the payment if presented.

DEPOSIT DEPARTMENT

Bank deals in money and they are merely mobilizing funds within the economy. They borrow from one person and lend to another, the difference between the rate of borrowing lending forms their spread or gross profit. Therefore we can rightly state that deposits are the blood of the bank which causes the body of an institution to get to work. These deposits are liability of the bank so from point of view of bank we can refer to them as liabilities.

The total deposits of MCB are growing since its inauguration but after privatization there is a sharp incline in over all deposits of the bank. The increase in deposits is also a cause of increase on total number of accounts; bank has progressed in both aspects.


TYPES OF DEPOSITS

Deposits can be segregated on two bases, one is the duration in which there funds are expected to be with the bank and second is the cost of getting these funds. So divide deposits in two classes according to duration of deposits i.e.

Time deposits / liabilities Demand deposits / liabilities And on the basis of the cost to acquire

These funds, a deposit can be classified as any one of following four,

High Cost Medium Cost, Low Cost No Cost.

Banks has different kinds of deposit schemes in order to induced posits. These schemes are a mixture of the above mentioned two types of deposits with an addition of different services &requirements such as minimum balance' requirement, mode of transaction, basis for calculation of profit, deductions, additional benefits, eligibility for different groups.

In the similar fashion, MCB has a large variety of deposit schemes and some of them are as follows:

CURRENT ACCOUNT

In this type of accounts the client is allowed to deposit or withdraw money as and when he likes. He may, thus, deposits or withdraws money several times in a day if he likes. There is also no restriction of amount to be deposited or withdrawn. However, there is requirement of minimum balance maintenance of Rs.10000/-. Usually this type of account is opened by the businessmen. No profit is paid by the bank and no service charges are deducted by the bank on current deposits account. These types of deposits are also exempt from compulsory deduction of Zakat.

PLS ACCOUNT

This type of account is for those persons who want to make small savings. This type of account is opened with a minimum deposit of Rs.10000/-. Under this scheme deposits can be made only up to a-costing amount and withdrawals are allowed twice a week or 8 times a month. If a big amount is required a seven days notice is required before the withdrawal. The profit is paid on these accounts on the minimum balance during a month for the whole of that month. Zakat & other withholding taxes are deducted as per rules of the government.

KHUSHALI BACHAT ACCOUNT


This is an advance form of PLS saving a/c, in this type of account. The minimum balance requirement for this type is Rs. 10000/-.There is also restriction on the number of withdrawals as well,i.e. up to 4 times in a calendar month. For maintaining this extra balance the customer gets the benefits of profit calculation on daily product basis and also free service of standing instructions of paying utility bills and HBFC installments. All other rules of saving account are applicable.

PLS 365 GOLD

This is a special type of saving account in which customer maintains a minimum balance of Rs. 300,000- and in turn he gets the benefits of daily profit calculations and also there is no restriction on the maximum number of withdrawals as was there in the case of KBA. There is also another advantage of this scheme that if balance on a particular day falls below the minimum balance then only the product of that day is ignored whereas in KBA, if balance falls below the minimum limit then all the products for that month are ignored on in other words no profit is paid for that month.

Khaunm Bachat Scheme

This is a type of term deposit, in this type of deposit an account is deposited and monthly payments of Rs. 1000/- are made by the account holder in this account for a minimum of 10 years. After the expiry of term, he receives his funds along with profit for the tenor. The distinctive feature of this product is that profit is calculated on monthly basis and charged to account on end of each half /ear.

Then profit is also calculated on that amount of profit which is credited to the customer's account. So we can say that in this type of account there is a concept of accumulated profits on profit. This ends in getting a heavy return for the depositor at the end of tenor for his small savings. This product was actually introduced to promote saving habits in the people. Zakat and wit holding taxes are deducted as per rules only at the time of maturity while making payment to the customer.

Term Deposits Receipts

This is a type of term deposit in which a receipt is issued for varying tenors ranging from 1 month to 5 years or more. These are in the form of receipts and profit on these receipts is paid biannually. These receipts are encashable after expiry of the period for which they were issued. Different profit rates are applied to different type of TDRs.


6. Technology Department

Technological advancements are also affecting the banking industry. The foreign banks have a competitive edge over all local banks in their technologies' advancements and automated systems. 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 to even compete 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 a technology department at each branch is growing. Now a day, a computer division is working in each city to provide service to and the branches of that area.

MCB has also introduced the now concept of online banking. There are now more than 250 branches linked through this system and they can transact with each other directly using computer systems at their own branches. Now customers do not have to wait long for their 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 one's account without intervention of humans. These machines are basically used for taking cash, confirming balances and requesting statements / cheque books. MCB has the largest ATM network in the country at the moment with almost one ATM at each online branch and also ATM terminals at International Airports. This network covers more than the 27 cities of Pakistan including the provincial capitals and large commercial cities of the country.

ATMs are operated through a card issued to the valued customers and by application of Personal Identification Number (PIN number). A person can withdraw from any machine across Pakistan with having an account in only one branch of MCB. This was only possible with the help of online system. In this system all the machines are linked to central banking host at IRM division Karachi through either satellite or telephone controller. This system identifies the card holder and his PIN Number.

Now MCB has also entered into a contract with Cirrus which is a subsidiary of MasterCard. This contract will enable an ATM cardholder to use his account even when he is out of country at all the ATMs where Cirrus logo is displayed.

Green Cards are ordinary cards with a maximum withdrawal facility of Rs. 10,000/- in a day. The annual fee for this card is Rs. 300/- only.

Gold Cards are special cars with maximum withdrawal limit of Rs. 25000/- in a day. These cards are issued to the persons having more than Rs. 500000/- as their average balance.


International Cards are issued in collaboration with Cirrus and are useable all over the world with maximum withdrawal facility according to the standards of Cirrus.

Personal Learning


In this 6 weeks period, at Muslim Commercial Bank Limited, I have gone through all the departments and tried to understand and learn the process of all the activities.

Week # 1

ASSALAM O ALAIKUM SIR, as I was supposed to keep u in touch with my weekly progress of internship. I m designated at MCB Bank Limited. During this week I worked with CSO (Customer Service Officer) and I perform the following activities.

Maintenance of account opening register and folder I have also learnt how to open an account, document necessary for account opening. Phone banking i.e. informs callers about their current position. Attend the phone calls. Attend the customer inquiries. Filling deposit slips. Received ATM forms. Received and entered daily DAK. Issued balance certificate and bank statement. Made charges voucher for TT / DD/ and PO. Made CC’s (cheque collection)

Week # 2

ASSALAM O ALAIKUM SIR, as I was supposed to keep u in touch with my weekly progress of internship. I m designated at MCB Bank Limited. In the second week I posted at Clearing department. And I learnt and perform the following activities.

Counting of the total no. of cheques presented for clearing. Sent those cheques to the area office for clearing. Checks the stamping on cleared cheque and enter those cheques in record. Issuance of local DD and Pay order. To fill incomplete documents. Made entries in the day book. Made the entries against intercity received cheques. Learn how to make cancellation entries in case of any discrepancy. Procedure of cancellation of cheques.

Week # 3


ASSALAM O ALAIKUM SIR, as I was supposed to keep u in touch with my weekly progress of internship. I m designated at MCB Bank Limited. The whole week I was posted at Remittance department. And I learnt and perform the following activities.

Maintenance of Remittance registers. To check the folder consisting of inward and outward remittances and telegraphic transfer. Learned about payment against PP & DD received from other branches. Learn how to issue a PP & DD. Made credit and debit vouchers (contra) against TT, PP & DD. Made incoming and out coming TT. Learned basics of remittance software system Learned about stamps used in TT, PP & DD. Issued credit advice against the DD. Learned how to make cancellation entries in the remittance software system in case of any

discrepancy. Learn how to cancel a DD. Made entries in the day book. Made enter branch credit advice against the cheques.

Week # 4

ASSALAM O ALAIKUM SIR, as I was supposed to keep u in touch with my weekly progress of internship. I m designated at MCB Bank Limited. The week four was very interesting. The whole week I spent with operation manager. And learnt about what function performed by operation manager. During the whole internship I touch with operation manager and see multiple tasks that he was performing.

Check the activities performing in different departments. Handing all the issues regarding any mishaps in any department. Apply the rules and different orders in the branch forward from the head office. Issuance of ATM cards. Check and verifying the cash vouchers and transfer vouchers. Answer the mail of different types from other banks and head office. Verifying the cheques of customers that use thumbs. Issuance of cheques book to the customer Made entries in the daily book. Inform all the employs about ant changes occur in any procedure.

Week # 5


ASSALAM O ALAIKUM SIR, as I was supposed to keep u in touch with my weekly progress of internship. I m designated at MCB Bank Limited. In the fifth week I was posted at credit department. And I learnt and perform the following activities.

How to approve a specific credit line for a client. Learnt about the Running finance against the saving certificate. Studies few pages of credit manual. Learnt about the cash financing. Learnt about the entries against monthly installment for car financing. Read Running finance in detail from manual. Studied a Running and Cash finance case. Learnt about the different document required for credit investigation. Daily check the foreign exchange rates and write down on the foreign exchange board. Studied Documentation / collateral guideline. Made entries for monthly markup against RF ( Running Finance) Learned documentation required for each type of financing. Learnt basics of foreign exchange operation. Learnt about for foreign currency cash withdrawals.

Week # 6

ASSALAM O ALAIKUM SIR, as I was supposed to keep u in touch with my weekly progress of internship. I m designated at MCB Bank Limited. The whole week I posted at cash department. And I learnt and perform the following activities.

Receiving Cash Book Paying Cash Book Token Book Scroll Bor

Financial Statement Analysis

ITEMS 2006 2007 2008 2009 2010

Rupees on '000'

Assets

cash and balances with treasury banks 32,465,976 39,683,883 39,631,172 38,774,871 45,407,183

balance with other banks 6,577,017 3,807,519 4,043,100 6,009,993 1,478,569


Lending to financial intution 21,081,800 1,051,372 4,100,079 3,000,000 4,401,781

Investments 63,486,316 113,089,261 96,631,874 167,134,465 213,060,882

Advances 198,239,155 218,960,598 262,135,470 253,249,407 254,551,589

Operating fixed assets 9,054,156 16,024,123 17,263,733 18,014,896 20,947,540

Deferred tax assets 172,373 -

-

-

-

Other assets 11,031,450 17,868,761 19,810,476 23,040,095 27,705,069

Total Assets342,108,24

3410,485,51

7443,615,90

4509,223,72

7567,552,61

3

Liabilities

Bills payable 7,089,679 10,479,058 10,551,468 8,201,090 10,265,537

Borrowings 23,943,476 39,406,831 22,663,840 44,662,088 25,684,593

Deposits and Other accounts 257,461,838 292,098,066 330,181,624 367,604,711 431,371,937

Sub-ordinated loans 1,597,440 479,232 -

-

-

Liabilities against assets subject to finance lease -

-

-

-

-

Deffered Tax Liabilities - 1,180,162 437,137 3,196,743 4,934,018

Other liabilities 11,171,496 11,722,493 21,345,781 15,819,082 16,092,319

Total Liabilities301,263,92

9355,365,84

2385,179,85

0439,483,71

4488,348,40

4

Net Assets 40,844,314 55,119,675 58,436,054 69,740,013 79,204,209

Represented by:

Share capital 5,463,276 6,282,768 6,282,768 6,911,045 7,602,150

Reserves 24,662,426 34,000,638 36,768,765 38,385,760 40,162,906

Unappropriateed profit 5,530,973 5,130,750 9,193,332 15,779,127 21,414,955

35,665,675 45,414,156 52,244,865 61,075,932 69,180,011

surplus on revaluation of assets 5,187,639 9,705,519 6,191,189 8,664,081 10,024,198

40,844,314 55,119,675 58,436,054 69,740,013 79,204,209

1. Balance Sheet

Vertical Analysis of Balance Sheet

ITEMS V 06 V 07 V 08 V 09 V 10


Vertical Analysis (Values in %)

Assets cash and balances with treasury banks 9.49% 9.67% 8.93% 7.61% 8.00%

balance with other banks 1.92% 0.93% 0.91% 1.18% 0.26%

Lending to financial intution 6.16% 0.26% 0.92% 0.59% 0.78%

Investments 18.56% 27.55% 21.78% 32.82% 37.54%

Advances 57.95% 53.34% 59.09% 49.73% 44.85%

Operating fixed assets 2.65% 3.90% 3.89% 3.54% 3.69%

Deferred tax assets 0.05% 0.00% 0.00% 0.00% 0.00%

Other assets 3.22% 4.35% 4.47% 4.52% 4.88%

Total Assets100.00

%100.00

%100.00

%100.00

%100.00

%

Liabilities 0.00% 0.00% 0.00% 0.00% 0.00%

Bills payable 2.07% 2.55% 2.38% 1.61% 1.81%

Borrowings 7.00% 9.60% 5.11% 8.77% 4.53%

Deposits and Other accounts 75.26% 71.16% 74.43% 72.19% 76.01%

Sub-ordinated loans 0.47% 0.12% 0.00% 0.00% 0.00%

Liabilities against assets subject to finance lease 0.00% 0.00% 0.00% 0.00% 0.00%

Deffered Tax Liabilities 0.00% 0.29% 0.10% 0.63% 0.87%

Other liabilities 3.27% 2.86% 4.81% 3.11% 2.84%

Total Liabilities 88.06% 86.57% 86.83% 86.30% 86.04%

Net Assets 11.94% 13.43% 13.17% 13.70% 13.96%

Represented by: 0.00% 0.00% 0.00% 0.00% 0.00%

Share capital 1.60% 1.53% 1.42% 1.36% 1.34%

Reserves 7.21% 8.28% 8.29% 7.54% 7.08%

Unappropriateed profit 1.62% 1.25% 2.07% 3.10% 3.77%

10.43% 11.06% 11.78% 11.99% 12.19%

surplus on revaluation of assets 1.52% 2.36% 1.40% 1.70% 1.77%

0.00% 0.00% 0.00% 0.00% 0.00%

11.94% 13.43% 13.17% 13.70% 13.96%

Horizontal Analysis of Balance Sheet


ITEMS H 06-07 H 07-08 H 08-09 H 09-10

Horizontal Analysis _ Moving Base Method (Values in %)

Assets cash and balances with treasury banks 1.87% -7.59% -14.77% 5.07%

balance with other banks -51.75% -1.74% 29.50% -77.93%

Lending to financial intuition -95.84% 260.85% -36.26% 31.65%

Investments 48.46% -20.93% 50.68% 14.38%

Advances -7.95% 10.78% -15.84% -9.82%

Operating fixed assets 47.50% -0.31% -9.09% 4.33%

Deferred tax assets -100.00%

Other assets 35.00% 2.59% 1.32% 7.89%

Total Assets 0.00% 0.00% 0.00% 0.00%

Liabilities

Bills payable 23.19% -6.83% -32.29% 12.31%

Borrowings 37.17% -46.78% 71.67% -48.40%

Deposits and Other accounts -5.45% 4.60% -3.01% 5.29%

Sub-ordinate loans -75.00% -100.00%

Liabilities against assets subject to finance lease

Deffered Tax Liabilities -65.73% 537.07% 38.48%

Other liabilities -12.55% 68.49% -35.44% -8.73%

Total Liabilities -1.69% 0.29% -0.60% -0.30%

Net Assets 12.47% -1.90% 3.97% 1.90%

Represented by:

Share capital -4.16% -7.47% -4.17% -1.30%

Reserves 14.90% 0.07% -9.05% -6.12%

Unappropriateed profit -22.69% 65.80% 49.52% 21.77%

6.12% 6.45% 1.84% 1.63%

surplus on revaluation of assets 55.92% -40.97% 21.91% 3.81%

12.47% -1.90% 3.97% 1.90%

2. PROFIT & LOSS ACCOUNT

Profit & Loss Account 2006 2007 2008 2009 2010


Markup/ return/ interest earned

25,778,061

31,786,595

40,043,824

51,616,007

54,821,296

Mark up/ return/ interest expense 4,525,359

7,865,533

11,560,740

15,841,463

17,987,767

Net mark up/ interest income

21,252,702

23,921,062

28,483,084

35,774,544

36,833,529

- Provision for dimininution in the value of investment

121,197

105,269

2,683,994

1,484,218

444,476

- Provision against loans and advances 1,014,540

2,959,583

1,335,127

5,796,527

3,100,594

- Bad debts written off directly 47,000

199

-

41,576

52,047

1,182,737

3,065,051

4,019,121

7,322,321

3,597,117

Net mark up/interest income after provisions

20,069,965

20,856,011

24,463,963

28,452,223

33,236,412

Non mark up/interest income

Fee, commission and brokerage income 2,311,235

2,634,610

2,954,394

3,331,856

4,129,540

Dividend income 811,801

632,300

617,554

459,741

543,906

Income from dealing in foreign currencies 692,010

693,408

727,564

341,402

632,346

Gain on investment 605,865

1,500,865

740,429

773,768

411,834

Unrealized gain/ loss on revaluation of investment -

-

-

-

-

Classified as Holding as Trading -

(13,105)

(103,198)

-

-

Other income 570,505

563,213

855,697

736,118

547,680

Total non mark up interest income 4,991,416

6,011,291

5,791,440

5,642,885

6,265,306

25,061,381

26,867,302

30,255,403

34,095,108

39,501,718

Non mark up/interest expense

- Administrative expenses 6,482,592

5,022,416

7,546,878

10,107,189

12,173,942

- Other proposition/write off 11,411

(3,743)

23,135

142,824

88,261

- Other charges 66,708

540,594

817,824

690,150

986,440

Total non mark up/ interest expense 6,560,711

5,559,267

8,387,837

10,940,163

13,248,643

Extra ordinary/unusual items -

-

-

-

-

Profit before taxation

18,500,670

21,308,035

21,867,566

23,154,945

26,253,075

Taxation-Current year 5,701,443

6,442,356

7,341,257

7,703,305

8,027,433


- Prior years 593,497

(1,294,473)

(864,824)

(2,232,226)

-

- Defferd 63,332

894,590

16,533

2,188,569

1,352,467

6,358,272

6,042,473

6,492,966

7,659,648

9,379,900

Profit after Taxation

12,142,398

15,265,562

15,374,600

15,495,297 16873175

Unappropriateed profit brought Forward 4,990,260

5,530,973

5,130,750

9,193,332

15,779,127

Transfer from surplus on revaluation of fixed assets 32,166

11,855

21,319

22,324

21,792

5,022,426

5,542,828

5,152,069

9,215,656

15,800,919

Profit available for appropriation

17,164,824

20,808,390

20,526,669

24,710,953

32,674,094

Basic/diluted earnings per share (In Rupees) 19.33

24.30

22.25

22.42

22.20

1

3. Ratio analysis

Regulatory Ratio 2006 2007 2008 2009 2010

A Advance To Deposit Ratio


Advance 198,239,155

218,960,598

262,135,470

253,249,407

254,551,589

Deposit 257,461,838

292,098,066

330,181,624

367,604,711

431,371,937

Advance / Deposit 77.00% 74.96% 79.39% 68.89% 59.01%

B Cash to deposit ratio

Cash on Hand & Cash with other Banks 6,577,017

3,807,519

4,043,100

6,009,993

1,478,569

Total Deposit 257,461,838

292,098,066

330,181,624

367,604,711

431,371,937

Cash on Hand & Cash with Other Banks / Total Deposit 2.55% 1% 1% 2% 0%

2 Capital Adequacy Ratio

A Equity To Asset Ratio

Shareholder Equity 35,665,675

45,414,156

52,244,865

61,075,932

69,180,011

Total Asset 342,108,243

410,485,517

443,615,904

509,223,727

567,552,613

Shareholder Equity / Total Asset 10.43% 11.06% 11.78% 11.99% 12.19%

B Equity To Deposit Ratio

Shareholder Equity 35,665,675

45,414,156

52,244,865

61,075,932

69,180,011


292,098,066

330,181,624

367,604,711

431,371,937

Shareholder Equity / Total Deposit 13.85% 15.55% 15.82% 16.61% 16.04%

3 Efficiency Ratio

A Deposit To Total Liabilities


292,098,066

330,181,624

367,604,711

431,371,937

Total Liabilities 301,263,929

355,365,842

385,179,850

439,483,714

488,348,404

Total Deposit / Total Liabilities 85.46% 82.20% 85.72% 83.64% 88.33%

B Investment in Total Asset

Investment 63,486,316

113,089,261

96,631,874

167,134,465

213,060,882


410,485,517

443,615,904

509,223,727

567,552,613

Investment / Total Asset 18.56% 27.55% 21.78% 32.82% 37.54%

4 Profitability Ratio

A Net Profit Margin

Profit After Tax 12,142,398

15,265,562

15,374,600

15,495,297 16873175

Total Income 20,069,965

20,856,011

24,463,963

28,452,223

33,236,412

Profit After Tax / Total Income 60.50% 73.20% 62.85% 54.46% 50.77%


B Operating profit margin

Operating profit 4,991,416

6,011,291

5,791,440

5,642,885

6,265,306

Total Income 20,069,965

20,856,011

24,463,963

28,452,223

33,236,412

Operating Profit / Total Income 24.87% 28.82% 23.67% 19.83% 18.85%

C Return On Total Equity

Net Profit 17,164,824

20,808,390

20,526,669

24,710,953

32,674,094

Total Equity 35,665,675

45,414,156

52,244,865

61,075,932

69,180,011

Net Profit / Total Equity 48.13% 45.82% 39.29% 40.46% 47.23%

D Return On Total Asset

Net Profit 17,164,824

20,808,390

20,526,669

24,710,953

32,674,094


410,485,517

443,615,904

509,223,727

567,552,613

Net Profit / Total Asset 5.02% 5.07% 4.63% 4.85% 5.76%

Comments on Ratios

1. Regulatory Ratios;

Advances to Deposit Ratio

This ratio is calculated by dividing the amount of advances by deposits, indicating the relationship of advances and deposits. It means that what is the percentage of advances to deposit of a bank. Overall this ratio shows decreasing trend that means management is inefficient toward advancing of loan.

Cash to deposit Ratio

The ratio is calculated by dividing the cash on hand and cash with other banks by total deposits of the bank. This ratio tells that at any time if cash is needed to meet the liabilities of deposit liabilities to what percentage it is available. This ratio is on decreased trend which is unfavorable, indicate that bank is not utilizes its deposits.

2. Capital Adequacy Ratios;

Equity to Assets


This ratio is calculated by dividing shareholder’s equity by total assets. This ratio shows continuously increasing trend which is favorable for bank resulting in decrease in debt ratio.

Equity to Deposits

This ratio shows the percentage of shareholder’s equity to total deposit and calculated by shareholder’s equity by total deposits of the bank. This ratio shows increasing trend which is favorable for a bank.

3. Efficiency Ratios;

Deposit to Total Liabilities

This ratio is calculated by dividing total deposits by total liabilities. This ratio shows the percentage of total deposits (major liability of the bank) to total liabilities. This ratio is in increased trend it means that management doing properly investing its funds.

Investment to Total Assets

This ratio is calculated by dividing investment by total assets. The investment to total asset indicates the portion of investment in bank’s total assets; in 2010 it is increased which is a favorable sign. This shows that management work properly and efficiently and utilizing the assets fully by investment.

Net Profit Margin

This ratio is calculated by dividing profit after tax by total income. This ratio shows what the percentage of net profit to total income is. This ratio decreased in 2010 which is not favorable this shows management does not work efficiently.

Operating Profit Margin

This ratio is calculated by dividing the operating profit by total income indicating that what the percentage of operating profit to the total income is. Operating profit ratio shows the profits of a firm that earn on its income. It decrease in 2010, which shows a negative sign.

Return on Equity

This ratio is calculated by dividing net profit by total equity. It measures a firm's efficiency at generating profits from every rupee of net assets (assets minus liabilities), and shows how well a company uses investment rupees to generate earnings growth. last year it show a negative trend.


Return on Total Assets

This ratio is obtained by dividing net profit by total assets. This ratio shows that what percentage of earning the company is attaining on total assets.

This ratio measure bank ability to utilize its assets to create profit by comparing profit with assets generates profit. This ratio shows decreasing trend in 2006 this mean that management is not properly using its assets. And in 2007 it is increased.

SWOT ANALYSIS

STRENGTH

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 your call the highly cooperative and professional individuals ready to serve you with maximum zeal and zest.


MCB have faster banking services that are making it more prominent in the banking industry especially in operations and Foreign exchange. The customer prefers this bank not only because 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 its modern style of banking through fully computerized control and twenty four hour banking. The joining of experienced people, advanced management, advance setup and facilities gave MCB an edge over its competitors.

WEAKNESSES

The majority of people are not well aware about the products of MCB. Therefore it should advertise extensively especially RTC and Master Cards. A behavior has been noted that bank tries to feel at ease with good looking, rich and educated people and the poor looking customers feel some bit strange in the environment of the bank. The bank employees should try to accommodate behaviorally all type of customers.

In MCB there is lack of specialized skill because of job rotation policy of human resource department. The bank should concentrate upon increasing its abilities on individual service basis. Mismanagement of time is another big mistake in MCB branches, the bank official time of closing 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

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 is 140.03 million. Total number of personal accounts with all scheduled banks as on December 31, 1997, is 28.98 million. If we consider the population statistics of working age group as on December 31, 1997, it stands 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 unbaked. The need of privatization has made people to switch to banks to satisfy their needs of lending and borrowing. This not only increases the deposits but also the credit business.

THREATS

Change in government policies has affected the banking business. Still banks have to wait to get permission of state bank. The freezing of foreign currency accounts is a vital example of letting people not to trust on banks.

The Competition has become severe by the entrants of so many banks, So to exist one will have to prove himself in its services through excellent management and will have to satisfy its shareholders. Otherwise he will be out the market.


The decrease purchasing power of consumer in the current economic situation of the country affecting the business activity speed too much and the result is the low investment from the investors in new projects can create problem for the bank because it is working a lot in trade.

SEGGESTION

Bank must let potential customers know that all attractions for banking exist. This is done by advertising on television and obtaining press coverage, in conjunction with direct mail, window displays, leaflet in branches and in appropriate other locations(such as hotels, shops, etc.) and including leaflets in statement of accounts sent to existing customers in the hope that they will tell potential customers about the services provided by our bank.


Financially unsophisticated people might feel bank accounts, cheque books, credit cards, etc. are difficult to understand and to keep control thereof.

Some personal sector customers prefer not to come to branch. They increasingly want to deal with the bank in other ways, such as home banking or use of Automated Teller Machines (ATMs),which need to be at the branch or some important shopping plazas.

It is widely known that there is a substantial Black Economy in Pakistan, Where people earn income that is undisclosed to their venues authorities. Payments for goods and services in the black economy are necessarily in cash, because transactions by cheques are more likely to be exposed to the revenue authorities. Some people will therefore avoid bank accounts to preserve secrecy of earnings.

One way to retain the personal sector customers is to offer a wide range of services such as tax advice, free life insurance equivalent to amount deposited, shares portfolio management, fund management facility, etc., complimentary to the core services. Banks must have a slightly different mix of services. Banks must have a slightly different mix of services and mean of providing these such that customers can choose the mix that suits them best.

Arguably, there has been a little encouragement from banks to persuade people to open a bank account. Opening hours are restricted, and there is commonly held beliefs that bank operate for their convenience and not for the convenience of the customers.

Logic leads to promotional campaign through employers who are customers of the banks and their employees are paid in cash. Such business accounts should be encouraged to open the accounts of their employees with the banks. It might be worth offering free banking for a specific period to new accounts or simply publicizing the services available by means of posters at the employer’s premises.

It might be possible to attract another type of personal customers through business accounts, namely directors and denier employees, etc. Again an incentive package could be put together. The banks may choose to make its existing products distinctive or to introduce new products. It is often easier to benefit from adverse changes made by other banks than to attract customers by innovations.

A short term promotional technique is to offer price incentives, for example, low interest rates on advances or limited issue high profit bearing term deposits. Longer term, a Loss Leader may be offered. For example, profit bearing current accounts are not very lucrative but any bank cannot afford not to offer these. The reduced profits can be augmented by profits made on other products.


REFERENCES

http://www.sbp.org.pk/http://en.wikipedia.org/wiki/MCB_Bankhttp://www.mcb.com.pk/privilege/product_proposition/current_life_account.asphttp://www.mcb.com.pkStatistical Bureau of Pakistan http://www.fbs.gov.pkComsats Institute of Information Technology, Lahore

http://www.fbs.gov.pk/

http://www.mcb.com.pk/

http://www.mcb.com.pk/privilege/product_proposition/current_life_account.asp

http://www.mcb.com.pk/privilege/product_proposition/current_life_account.asp

http://en.wikipedia.org/wiki/MCB_Bank

http://www.sbp.org.pk/

Personal Meeting with Branch ManagerPersonal Meeting with Operational Manager


final report- faizan idrees

Documents

state bank of pakistan

staff of mcb bank limited

central bank

promotion strategy of

objectives of mcb

policies of mcb

product mix price of

network of bank branches