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CHAPTER # 1

INTRODUCTION

1.1 Introduction

Chapter one is about introduction of report. As a part of requirement of

MBA degree six week internship is necessary for student. This chapter

includes background, purpose, scope, objectives and methodology of the study. It

also include introduction of organization.

1.2 Background of the study

Internship training program during Master in Business administration

Program is necessary for the partial fulfillment of the completion of Degree of

Master in Business Administration as per HEC ( Hire education commission )

requirement. It is necessary for me to complete an internship session of about

6 weeks in some manufacturing or service industry relevant to my area of

interest and specialization. So, I choose the Banking field because I have the

interest in this sector because my study background is related with this sector.

1.3 Purpose of the study

Internship is the capstone experience that provides me with hands-on,

real-world experience in a work setting. Ideally, internship will enable internees

to:

a. Use my knowledge and skills get from the classroom,

b. Discover where further competence is needed,

c. Convert the bookish knowledge into practical life, andd. become better acquainted with the types of work settings in which such

Competence can be applied.

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1.4 Scope of the study

This study will facilitate to me regarding the working of Banking sector of

Pakistan because most of the teachers during their lectures use the examples of

Banks like MCB, National Bank, UBL, Bank Alfalfa and many others,

Students should study about the functioning of such Banks. It will help full for me

in future.

1.5 Limitation of the study

T he study is done with the sole purpose of doing the best work but

there were certain limitation faced during the internship period. The most

important limitation from which the study suffers is the non-availability of

information in a manner required for analysis and the secrecy of the bank.

Another important limitation of the study is time and space constraint.

In the MCB New General Bus Stand Branch, Sargodha fraud was held by chief

cashier and operation manager so an Audit Team was there and management was

busy in providing information to auditor and sat s claims of customers.

1.6 Objectives

I worked as an internee in MCB New General Bus Stand branch, Sargodha.

The main objectives to study in MCB were:

a. To get some experience in working with well reputed organization.

b. To gain knowledge about the professional environment of the bank.

c. To know about the technology utilized in the banks.

d. To deal and manage with the situation of stress.

1.7 Methodology

There are mainly two methods that are used for the collection of data.

1. Primary Data

2. Secondary Data

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1. Primary Data:

a. Observation of functions of Branch operations on the spot.

b. Observation of different processes of Branch on the spot.

2. Secondary Data:

a. Internet is very helpful for me to study more about banking sector of

Pakistan.

b. Different type of booklets of the Bank.

c. Annual reports

d. Journals

e. Newspapers

1.8 Summary

This is the first chapter of the report containing the detail introduction

of the report. Internship training program during Master in Business

administration Program is necessary for the partial fulfillment of the

completion of Degree of Master in Business Administration. Internship will

enable internees to integrate and use knowledge and skills from the

classroom. This study will facilitate me regarding the working of banking sector

of Pakistan. For achieving my purposes, objectives and for the preparation

of the internship report I required some kind of data, I used both methods

of data collection that are primary sources and secondary sources for that purpose.

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CHAPTER # 2

HISTORY AND ABOUT MCB

2.1 Historical Background

MCB Bank Limited formerly known as Muslim Commercial Bank

Limited MCB Bank is not an overnight success story. It was incorporated by the

Adamjee Group on July 9, 1947, under the Indian Companies Act, VII of 1913 as a

limited company. The bank was established with a view to provide banking

facilities to the business community of the South Asia

After the partition of the Indo-Pak subcontinent, the bank moved to Dhaka (then

the capital of former East Pakistan) 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 59 years legacy of trust of its

customers and the citizens of Pakistan.

2.1.1 Nationalization:

In January 1974, the Government of Pakistan nationalized MCB following

the Banks (Nationalization) Act 1974. MCB was neither the only bank which wasnationalized solely as neither it nor any other bank being merged with it due to its

consistent and firm policies and its sound position.

2.1.2 Privatization:

A wave of economic reforms swept Pakistan in the lattes introducing the

Need for privatization of state owned banks and companies. This was the first bank

to be privatized in 1991 and the bank was purchased by a consortium of Pakistani

corporate groups led by Nishat Group.Nishat Group is one of the leading and most

diversified business groups in Pakistan. The group has strong presence in the most

important business sectors of the country such as banking, textile, cement and

insurance.

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Mian Mohammad Manshais the Chairman of the group (and also MCB) and has

played instrumental role in its success. In recognition of Mr. Manshas

contribution, the Government of Pakistan has conferred him with "Sitara-e-

Imtiaz", one of the most prestigious civil awards of the country.

2.2 About MCB:

Over the years MCB has developed strong relationships with its customers

by understanding their needs and treating them with respect, dignity and

importance. The driving force behind its commitment and services is its focus on

customers ensuring that it not only meets, but also exceeds their expectation.

They strive to achieve excellence by ensuring that every moment of their time is

spent in adding value, making sure that they do things right, first time, and every

time. With the quest of quality MCB has always taken initiatives bringing banking

into a new arena; from cash to the convenience of plastic; from branch banking to

internet banking and from face to face customer interaction to online accessibility.

MCB now focuses on three core businesses namely Corporate, Commercial and

Consumer Banking. Corporate clientele includes public sector companies as well

as large local and multi national concerns. MCB is also catering to the growing

middle class by providing new asset and liability products. MCB Bank Limited(Formerly Muslim Commercial Bank Limited) has a solid foundation of over 63

years in Pakistan, the Bank provides 24 hour banking convenience with a network

of over 1000 branches, the largest ATM network in Pakistan over 450 ATM

locations in the market.

2.2.1 Vision & Mission

VISION & MISSION

To be the leading financial services provider, partnering with our customers for a

more prosperous and secure future.

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Mission StatementWe 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.

a. Providing innovative

b. Efficient financial solutions

c. Long-term relationships with our customers

d. Shareholders invest with confidence

2.2.2 Values of MCB

1. Integrity

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.

2. Respect

We respect our customers 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.

3. 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.

4. Customer centricity

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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.

5. 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 initiative.

2.2.3 Awards and Achievement:

1. Euro money Awards

a. Best Bank in Asia Award 2008

MCB has been awarded as Euro money Award 2008 for the Best Bank

in Asia".

b. Best Bank in Pakistan Award 2006

MCB has yet again received the esteemed Euro money Award for the Best

Bank in Pakistan. It is the only bank to receive the Euro money Award for

Excellence for the sixth time in the past seven years.

Best Bank in Pakistan Award 2005




c. Best Domestic Bank Award 2000

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MCB was awarded as a Euro money Award 2000 for the Best Domestic

Bank in Pakistan".

2. Asia Money Awards

a. The Best Domestic Commercial Bank Award 2005

MCB Continues to shine as once again Asia Money declares MCB as "The

BestDomestic Commercial Bank in Pakistan" for the year 2005.

b. The Best Domestic Commercial Bank Award 2004

MCB has a distinction of winning the Asia Money 2004 award for being

"The BestDomestic Commercial Bank in Pakistan".

2.2.4 Pattern of Share Holdings

Description Shareholding Percentage

Directors, CEO and children 52,190,877 7.5518

Associated Companies 57,009,034 8.2490

NIT & ICP 5,835 0.0008

Banks, DFI & NBFI 2,239,307 0.3240

Insurance Companies 46,052,057 6.6635

Modarabas & Mutual Funds 7,208,703 1.0431

Public Sector Cos. & Corp. 131,749,731 19.0636

General Public (Local) 101,843,819 14.7364

General Public (Foreign) 2,400,126 0.3473

Others 44,237,663 6.4010

Foreign Companies 246,167,375 35.6194

Company Total 691,104,527 100.00

2.3 Organization Structure

As MCB is a banking company listed in stock exchange therefore it follows

all the legalities, which are imposed by concerned statutes. MR. Mian Mohammed

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Mansha is chairman & chief executive of the company with a team of 10 directors

and 1vicechairman to help in the business control and strategy making for the

company.

A team of 10 professionals is handling operational management of the bank. MR.

Mian Mohammed Mansha also heads this team.

The different operational departments are:

a. Consumer Banking & IT Division

b. Financial & Inter Branch Division

c. Banking Operations Divisions

d. HRD & Legal Division

e. Financial Control & Audit Division

f. Credit Management Division

g. Commercial Banking Division

h. Corporate Banking Division

2.3.1Board of Directors

Mian Mohammad Mansha Chairman

Mr. S. M. Muneer Vice Chairman

Mr. Tariq Rafi Member

Mr. Shahzad Saleem Member

Mr. Sarmad Amin Member

Dr. Muhammad Yaqub Member

Mian Raza Mansha Member

Dato' Mohammed Hussein Member

Mr. Aftab Ahmad Khan Member

Mr. Abdul Farid Bin Alias Member

Mian Umer Mansha Member

Mr. Muhammad Ali Zeb Member

Mr. Atif Bajwa President / CEO

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2.3.2 Organizational Structure MCB Head Office

10

Chief Executive

5 SEVPs

10 EVPs

5 VPs

AVP

OG-I

OG-II

OG-III

Clerical Staff

Non-Clerical

Chairman Board of Directors

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2.3.3 Organization Structure, MCB (1064)

2.3.4 Branches network

11

G u a

M e s s e

C a s h

O f f i c e

A c c o u

A s s i s t

M a n a

B r a n c h M

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(Domestic operation) (Overseas operation)

(1057 Branches) (8 Branches)

Commercial = 986 Sri Lanka = 5

Consumers = 44 Bahrain = 1

WBG = 11 EPZ = 1

Islamic = 11 UAE = 1

Sub branches 05

2.3.5 Province Vise Network

Province No. Of Branches

Baluchistan 37

Khyber paktunkhwa 106

Azad J. Kashmir 18

Punjab 665

Sindh 248

Domestic 1074

Total 2138

2.4 MCB, New General Bus Stand Branch, Sargodha (1064)

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Detail of Staff as on 15/7/2010

Name Job Title Job Description

ARSHAD

MAHMOOD(029016)

BRANCH

MANAGER(OG-111)

To enforce effective managerial

control on overall of the branch aswell as on staff related matter.

To promote business activities and

development.

Deep look on income& expanses

matter.

Quality customer service and

development

RASHEED

AHMAD

(021105)

MANAGER

OPERATION

(OG-11)

To supervise overall operations of the

branch.

To ensure effective control on internal

working

Issuance of cheque books and RTC.

Arrangement of all type of security

stationary.

Passing cheques/vouchers

Cash received stamp

MISS

SADIA

BASHIR

(3E-0195)

GENERAL

BANKING

(OUTSOURCE)

DDs/ TTs/ pond advice.

Maintenance of all books and records.

Supervise overall ATM related

operations.

ATM claim processing manually.

Account opening

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MR.

AKHTER

PARVEZ

(019219)

GENERAL

BNKING

OFFECER

(ASSISTANT)

Cheque collection from outstation

branches.

In word/ out word clearing.

Other duties advise by manger.


development.

MISS

NAZISH

PAUL

(030948)

CHIEF CASHER

(OG-111)

Responsible for overall supervision/

monitoring of all type of cash

department.

Cash received & paid.

Maintenance of files and registers.

Other duties advise by manger.


development.

CHAPTER# 3

PRODUCTS AND SERVICES

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3.1 Personal Banking

3.1.1 Deposit Accounts

1. Khushali Bachat Account

Khushali Bachat Account, a Rupee savings account is one of MCB Banks

most popular products. Due to the low initial deposit, the account can be opened

by people from all walks of life and still avail the facility of daily product profit

calculation.

2. Mahana Khushali Bachat

MCB Monthly Khushali Scheme provides you with a steady income every

month. Just purchase a Monthly Khushali Certificate and you will enjoy a steady

income of your total deposit every month.

3. Pak Rupee Savings Account

MCBs Pak Rupee Savings Account offers you attractive returns on your

Pak Rupee investment. In addition, you have access to a countrywide ATM

network convenient cash accessibility 24 hours a day. The facility also provides

you with unlimited daily transactions with a limit on maximum withdrawal

amount through the ATM machines.

4. Pak Rupee Current Account

MCBs Pak Rupee Current Account offers you the convenience of

unlimited withdrawals i.e. access to your funds whenever you want without any

notice. There is no limit on the number of transactions you make in a day plus youcan avail finance facility up to 75% of the total deposit. In addition, you have

access to a countrywide ATM network convenient cash accessibility 24 hours a

day. The facility also provides you with unlimited daily transactions with a limit

on maximum withdrawal amount through the ATM machines.

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5. Pak Rupee Term Deposit

MCB Pak Rupee Term Deposit gives a higher rate of return. It gives you

choice of 1 month, 3 months, 6 months, 1 year, 2 years, 3 years, 4 years and 5

year term deposits.

6. Saving 365

The MCB Saving 365 calculates profits on a daily product basis and gives

you the facility of unlimited withdrawals.

7. Foreign Currency Savings Account

a. MCBsForeign Currency Savings Account offers you attractive returns on your Foreign

Currency investment.

b. You

can invest in any of the four currencies i.e. US Dollar, UK Pound Sterling, Japanese

Yen or Euro.

c. Your

foreign currency account is exempted from Zakat and withholding tax

8. Foreign Currency Current Account

MCBs Foreign Currency Current Account offers you the convenience of

unlimited withdrawals i.e. access to your funds whenever you want without any

notice. There is no limit on the number of transactions you make in a day.

9. MCB Foreign Currency Term Deposit

MCB Foreign Currency Term Deposit gives a higher rate of return. It gives

the choice of 1 month, 3 months, 6 months, 1 year, 2 years, 3 years, 4 years and 5

year term deposits.

10. Dollar Khushali Account

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The Dollar Khushali Account, a Dollar based account was introduced in

1993 at selected MCB Bank branches. Today, you can open a Dollar Khushali

Account at over 200 branches in Pakistan.

3.1.2 Loan Products

1. MCB Business Sarmaya

MCB Business Sarmaya is the best Running Finance facility against your

residential property which empowers you to manage your business dealings

better. So act today and get MCB Business Sarmaya and thus improve yourbusiness, avail lucrative opportunities and expand your business, with absolute

satisfaction of cash flows.

2. MCB Car 4u

Life is like a chess board. You plan your career options. You analyze your

business moves. But when you really want to improve your life, you make a

power move.MCB CAR4U Auto Finance is the power move that assists you in

more ways than you ever imagined. It is affordable, with lowest mark up, flexible

conditions, easy processing and above all, no hidden costs.

a. Eligibility

MINIMUM NET TAKE HOME INCOME OF Rs. 15,000. Your monthly

installment for MCB Car4U should not exceed 45% of your net take home

Income.

25 to 57 year of age. Age of 60 shall not be reached before the maturity of

the facility.

Pakistani National residing in cities where MCB Car4U has been

launched.

Businessmen and self employed with the minimum experience of 3 years

in the same business and profession. For salaried individuals, 2 years with the

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same employer and overall three years of employment history.

b. Monthly Installment/Rental Calculation

Your total monthly installments will include finance installment amount

and insurance charges. You can calculate your monthly finance installment by

using the following calculator for your selected term:

3. MCB Pyara Ghar

Some 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 bank that lets you

Purchase, Renovate or Construct your home the way you have always wanted.

Having your own home was never so easy.

Who Can Apply

Pakistani national residing in the city and area where the product is launched and

25 years old or above when you apply and under 60 at the time of maturity of the

applied financing period. Salaried person, self-employed professional or a

businessman with a verifiable businessman with a verifiable monthly incomestream. Net take-Home income not less than Rs.25, 000 per month, Have 5 years

or more of business or professional experience. Employed with the present

employer for 2 years with a total employment history of 5 years.

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Term (years) Advance Installment Deferred Installment

3 .03469 .03516

4 .02797 .02834

5 .02400 .02432

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Home Purchase Home Renovation Home Construction

Financing

Amount

Rs. 200,000 to Rs.5,000,000(flexibleup to 7m)

Rs. 100,000 to Rs.2,000,000

Rs. 200,000 to Rs.5,000,000

Debt to Equity

Ratio

60:40 (3:2) 30:70 (3:7) 50:50 (1:1)

Tenure 3 years to 15 years 2 years to 5 years 3years to 15 years

4. Easy Personal Loan

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.

3.1.3 MCB Master Card

Since the beginning of time, people have tried to find more convenient

ways to pay, from gold to paper money and cheques. 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 replace cash and cheques as the money of the future.

3.1.4 MCB Rupee Traveler's Cheques

MCB Rupee Traveler's Cheques were first introduced in 1993 as safe cash

for traveling and travel 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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3.2 Corporate Banking

3.2.1 Cash Management Services

MCBs network of over 900 branches in Pakistan enables it to collect anddisburse payments efficiently with its cash management services. This also

enables it to offer you a choice of paper based or electronic fund transfer solutions

including collection amounts, cross branch online transactions etc.

3.2.2 Working Capital Loans

Based on the customers specific needs, the Corporate Bank offers a

number of different working capital financing facilities including Running

Finance, Cash Finance, Export Refinance, Pre-shipment and Post- shipment etc.

Tailor- made solutions are developed keeping in view the unique requirements of

your business.

3.2.3 Term Loans

MCB offers Short to Medium Term Finance to meet capital expenditure

and short term working capital requirements of our customers. The loans are

structured on the basis of underlying project characteristics and cash flows of the

business.

3.2.4 Trade Finance Services

Under Corporate Banking MCB offers trade finance services that include

an entire range of import and export activities including issuing Letters of Credit

(L/Cs), purchasing export documents, providing guarantees and other support

services.

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3.3 Online Services

3.3.1 MCB ATM Services

With a solid foundation of over 50 years in Pakistan, with more than 750automated branches, 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 at the forefront of the banking industry in Pakistan. This success has

been possible because of a never-ending drive to achieve higher levels of

excellence, constantly striving to raise the level of performance.

3.3.2 MCB Mobile Banking

At the forefront of technological excellence, MCB proudly introduces MCB

MOBILE BANKING. The convenience of accessing your account balance

information and mini statements whenever you want or wherever you may need

them, with comfort and peace of mind.

3.3.3 MCB Call Center

Keeping up with banking services can be tedious but not with MCB Bank,

where phone service is at your fingertips. Just dial our Call Centre from the

comfort of your home or office or wherever you happen to be. It offers basic

banking services for your convenience, eliminating the need for you to make

unwanted trips to your branch.

3.3.4 MCB Smart Card

MCB now brings you MCB Smart Card -a secure and convenient

instrument of payment with unmatched functionalities. It provides 24-hour direct

access to your bank account. The convenience and flexibility of MCB Smart

Card will help you live a smarter life. It not only helps you manage your

expenses, but also eliminates undue interest on your day to day credit card

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transactions. Your balance is always within your reach and you spend

accordingly.

3.3.5 MCB Debit Card

Now MCB brings a secure, convenient and quick payment facility that

enables you to do purchasing by using your existing MCB ATM / MCB Smart

Card as a DEBIT CARD.

3.4 Virtual Banking

MCB Virtual Internet Banking offers you the convenience to manage and

control your banking and finances when you want to, where you want to.

MCBs Virtual Internet Banking facility is simple and secure. And its free of

cost. With MCB Virtual Internet Banking you 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

a. Detaile

d Account Summary of all listed accounts. Mini-statements of each of the listed accounts

showing recent transaction history for that account(s).

b. Statem

ent-by-Period of each of the listed accounts, based on the period specified.

c. Immed

iate or Scheduled Transfer of Funds between your own accounts, as well as to third-party

accounts setup as beneficiaries, maintaining accounts with MCB.

d. Schedu

ling of One-Time as well as Recurring Funds Transfers.

e. Payme

nt of utility bills for registered Utility Companies.

f. Immed

iate or Scheduled Bills Payment. Scheduling of One-Time as well as Recurring bill

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payments. Option for Full or Partial payment based on the payment conditions

specified by a particular Utility Company.

g. Salary

to the corporate employees, who maintain accounts with MCB.

h. Bulk

Funds Transfer for Corporate Customers.

i. Chequ

e Book Request for any of your listed accounts.

j. Payme

nt/Transfer Alerts for reminding, in advance, prior to the processing of specified

payments and transfers. Personal Alerts for reminding of pre-specified events and

occasions.

3.5 Islamic Banking

3.5.1 Deposit Schemes

For customers who are looking for a deposit opportunity where they can

purse their funds and reap halal returns on it, we offer the following products:

1. Al-

Makhraj Saving Account

The minimum deposit requirement for Al-Makhraj Saving Account is only

Rs. 5000 and profits can be earned 6-monthly. Other features associated with this

product are as follows:

a. Minimum Initial Deposit: Rs. 5000

b. Islamic Tools used in designing the product: Mudaraba/ Musharaka

c. Product to be availed by: Individuals & Joint Account Holders (Local)

Companies, Corporate, Trusts, etc

Advantages

a. Withdrawal Facility from ATM/ Debit Card

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b. Online deposit as per bank's policy

c. 6-monthly profit payment on the basis of monthly declared rates

d. Issuance of duplicate statement of account (as per SOBC)

e. Free bank balance certificates (once in 6 months)

f. Taking stop payment/ hold mail/ standing instructions

g. No penalty if balance falls below minimum level.

h. Personal financial consultancy services (regarding Shariah Compliant

products)

i. Utility bill payment via ATM card

j. Choice

of statement frequency (as per Schedule of Charges)

2. Al-

Makhraj Ianat Account

For customers who are looking for a chequing account that gives them the

ease of doing unrestricted number of transactions, we offer Al-Makhraj Ianat

Account. With a minimum of only Rs. 10,000, Ianat Account may be opened.

With all the features and facilities that this product offers, it is highly

recommended for management of business funds.

Details of the product are as follows:

a. Minimum Initial Deposit: Rs. 10,000

b. Product to be availed by: Individuals & Joint Account Holders (Local),


c. Banking Network: IBD's Branch only

Advantages

a. Personalized Cheque books

b. Withdrawal Facility from ATM/ Debit Card

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c. Online deposit as per bank's policy

d. Taking stop payment/ hold mail/ standing instructions

e. Virtual Banking

f. Call center facilities

g. Debit card; Utilities payment via ATM card

3. Al-

Makhraj Term Deposit

A minimum of Rs. 25,000 is required for investment in Al-Makhraj Term

Deposit. Choice of tenors can be made from a list of options namely 1, 3 & 6

months, 1 or 2years. Profit payment options available to customers are monthly,

quarterly and/ or at maturity.

Details of the product are as follows:

a. Minimum Deposit: Rs. 25,000

b. Islamic Tools used in designing the product: Mudaraba/ Musharaka

c. Tenors Available:1 mth, 3 mth, 6 mth, 1 yr or 2 yrs

d. Product to be availed by: Individuals & Joint Account Holders (Local),


Advantages

a. For Customers = Profit Payment Options customized to suit needs of

customers; Minimum Deposit requirements lower than most banks so it is more

accessible/ affordable for people

b. Shariah = Meets requirements for Shariah Compliance

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c. Taking hold mail/ standing instructions for profit payments etc

d. Personal financial consultancy services (regarding Shariah Compliant

products)

3.5.2 Fund Based Facilities

1. Ijarah Products

MCBs Islamic Ijarah, analogous to the English term 'leasing, is based on

the Ijarah waIqtina 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 the asset,

and the customer (lessee) will be given the asset to use for a certain period of time

in return for monthly rental payments. MCB will give a separate unilateral

undertaking that it will offer to sell the asset to the customer (lessee) at the

maturity of the Ijarah agreement at a price that may be equal to the security

deposit amount, hence the term WaIqtina.

Types of Ijarah

a. Car

Ijarah

b. Equip

ment Ijarah

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CHAPTER# 4

DEPARTMENTATION OF MCB

Every organization in banking sector is divided into a number of departments.

MCB is divided into various departments. These are:

4.1 Cash Department

It deals with the flow of cash and records the receiving and paying of cash.

This department also deals with the selling and buying of govt. bonds and

securities. This department is also responsible for deposit and disbursement of

cash through cheques. For disbursement of cash this department accepts cheques.

Opened cheques are paid on the counter after verifying the signature of accounts

holder, which crossed the cheques are sent to clearing department for clearances.

This department on a printed form of MCB accepts, the printed form is signed by

the concern officers. The amount is then created to the account of the customer,

the cheques which does not fulfill the criteria, of MCB is rejected after specifying

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the reason of rejection.

MCB may reject a cheque on the following grounds:

a. NSF

b. Chequ

e post-dated.

c. Chequ

e of outdates

d. Drawer

's signature differs

e. Amou

nts in words and figures differ

f. Payme

nt stopped by drawer.

g. Payee's

endorsement requirement.

h. Chequ

e manipulated.

4.2 Remittances Department

Remittance is the department in the bank through which the customers are

sent their money from one branch to any other branch, or from one bank to any

other bank in the country and with the foreign country banks.

The meaning of remittance of the word remittance is "sending out money". These

remittances are credited or debited to the accounts of customer after verifying the

branch code and the receipt of advice. This has very important for the business

either in the country, anywhere or in abroad.

The MCB remittances are taken place in the following ways:

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4.2.1 Demand Draft

The transfer of money, which is taken place on demand. It is of two kinds.

1. Demand Draft Issues

When any person in Mingora Swat wants to send some amount to another

person anywhere in Pakistan, can use this cham1el. The branch is called

originating and the bank where this draft will be payable is called responding

branch.

Example:

MCB Mingora Swat is originating or issuing branch while Ghala Mindi

Lahore is responding branch where draft will be payable.

a. Proce

dure for Issuance

The person, who wants to send the money through D.D, will fill the

application form, for ail the channels i.e. T.T, MT, and pay order is the same.

Application form should provide the following information's:

Branch

Code, Issuer Bank name, Date of Issuance.

Type

of channels i.e. TT, MT, D.D and P.O.

D.D,

T.T, MT etc are Name of responding branch.

Benefi

ciary name and A/C no. i.e. who will receive the amount of draft, sender name,

address and phone no.

b. Char

ges Section

Commission

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A) Form Rs. 50,000 0.10% minimum Rs. 50/-

And postage charges Rs 75.

Example:

Jan wants to send Rs. 50,000 through demand draft. Commission = 0.10%

(50,000) = 50

Postage charges =75

Total =50,125

In this case the sender has to pay Rs. 50,000 face value of draft and Rs. 125

as charges. After filling application form, draft is filled and draft amount is

written in three places in the figure like Rs. 50,000/- and another in words like

fifty thousand only and on another place figures are printed on machine in Red

colour for safety purpose figures are taped so that if anyone want to make changes

in figures, he cannot done any change.

Now draft will be handed over to the customer. After giving draft to

customer, voucher is kept in DD issue register.

We record DD issue in this manner:

Four vouchers are prepared containing all the information and signature of

authorized person. The bank for office record will keep one copy; and "another

one advice will be sent to the responding branch. At the time of receiving of cashon counter in cash sheet record will be as follow:

Cash 50,000 (Dr)

H.O (G.M Lahore) Cr

30

Date S. No.

Machine

no./series

Purchaser

/

Remitter

Name

Favoring

Beneficiar

y name

Amount Exchange Commission

and postage

15/4/2007 59/14 12345 Jan Khan 50,000 125

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2. Demand Draft Payable

When advice sent by issuing branch reach to the responding branch i.e.,

We record in DD payable in this manner.

Date

Issued

D.D No. Beneficiary

Name

Initial Date Paid Initial Remarks

15/04/2007 12345 Khan a/c

1430

17/04/07

When G.M Lahore branch receives actual Draft, bank will check at with advice

send by issuing bank in order to keep himself safe and avoid any fraud Bank shouldcheck. Issuing date, beneficiary name, amount after this bank will credit the amount to

the account holder, and will pass the entry.

Ho ( Mingora) (Dr) 50,000

Cash (Cr) 50,000.

3. In Case of Demand for Cash

If DD holder wants cash at counter then bank will verify that either DD holder is

the actual beneficiary or not, verification may be 1hrough Identity Card, or guarantee of

some reliable person.

4. In Case of Lost

If some person losses DD, then bank will make payment only after verification or

in major losses amount is credited to the A/C holder name mentioned in the DD.

NOTE:

It is not necessary that the receiver of the draft must have account in that branch.

Such draft may be clear through transfer delivery state bank of Pakistan i.e. clearing

house.

5. Test is Must

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This is secrete code number with bank through which they verify that DD, TT,

MT etc. are free from fraud, this key is only known and available to the concerned

person.

6. Parties involve in DD

a. Purchaser: Is the person, firm, company or local authority. Issuing or Drawing

Branch: The Branch which issues a Draft on another Branch.

b. Drawee Branch: Is the Branch on which a draft is drawn.

c. Payee / Beneficiary

4.2.2 Telegraphic Transfer

It is the fastest transfer of money. All the procedure for filling the

application form deposit cash at counter records in register is the same as for DD,

although there is some basic difference between DD & TT.

TT holder receives receipts as a memorandum from bank, which he has

32

Issuing Branch

Remitter Beneficiary

Drawee Branch

Draft

Draft

Fund

receive

d

Advice

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deposited at the TT amount. In TT two number are mentioned i.e. TT No &

Remittances No.

Note:

TT No, can be extended beyond 100, but remittance a can be extended to

any digit, each year Remittance will start from 1. In TT we record in four books:

1. Day Book

When fax or telephone is received from issuing branch for our own

convenience we record it in this book, so that we could easily give response at

calling of TT Beneficiary that your TT is being received by our branch on dated----

2. TT Payable Register

Entry after recovery from another

H.O 200,000 Dr

TT Payable 200,000 Cr

TT Payable 200,000 Dr

A/C Jan 200,000 Cr

3. TT Received Register

Record in Daily Sheet

Commission and Telephone Charges is Bank Income:

Commission 10%

Telephone Charges Rs. 100/-

Postage's Charges Rs. 75/-

Procedure for records in register is the same as for DD, in TT issues register

all the TT are recorded one by one. So that we know at the end of the month that

many TT issued during the month of.

If T.T beneficiary has no accoUl1t with the bank, the bank will contact him by

Fax, Telephone and will make payment to him.

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Note:

Test information is must even TT is Rs. 1, no excise duty is taken on TT.

4. T.T transfer

TT transfer means amount of TT is not paid in cash on the counter, but

amount is deducted from his account, -such TT issues is not recorded in sheet of

Remittance section, but it will be only recorded in sheet of current and saving

account section entry.

Current Account-Khan 20,000 (Dr)

H.O-MCB Abottabad 20,000 (Cr)

4.2.3 Mail Transfer

Procedure for filling of application form depositing of cash, records, in cash

registers, preparing of voucher and advices in the same as for DD and YT. MT is

sent by post through T.C.S, which is reach to the responding branch within 24

hours. After receiving of advice, the branch will make payment or will give credit

to the account of beneficiary, no excise duty is charged on MY, while text

information is must in MT

If MY will not reach to, the bank, the MY holder will show the

memorandum receipt of the issuing bank.

4.2.4 Pay Order

Pay order is made for local transfer of money. Here no originating and no

responding branch will be shown. The payment will be made at the branch from

where pay order is issue. Pay order also comes for clearing from SBP. MCB

officials check it with register and debit the entry in the register. It is made for

payment of repairs etc.

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Charges:

Pay order charges are fixed where pay order amount is Rs, 10/- or 10,00,000

and above.

For A/C holder Rs 25/- pay order.

For non A/C holder Rs 501- pay order.

1. Draft Payment in Suspense Account

If payment to draft is made only on a presentation of original draft although

advice from issuing branch is still not received, bank is bound to make payment

and record it in suspense a/c as:

DD Paid suspense a/c (Dr)

Cash a/c (Cr)

Entry after receiving advice H.o (Dr)

DD Payable (Cr)

DD Payable (Dr)

DD Paid suspense (Cr)

4.3 Accounting Department

The job of this deptt. is that, it scrutinizes all types of reports. This

department also helps in transfer of cheques and preparation staff salary. The

reconciliation statement of each department is also prepared here.

This department in MCB performs the following main functions:

4.3.1 Staff Salary

After deduction of income tax and provident fund, the staff salary is

prepared on monthly basis by the account depmiment. The account department

also process medical claims. There will be deduction from loaner employee's

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salary in installment with interest. Moreover the following functions are also

performed by account department:

It maintains record of all banking transactions of bank.

a. It daily prepares statement of affairs and the same is sent to the Head office.

b. After receiving the statements from the State Bank through Head office, accounts

department also prepares daily reconciliation statements.

c. It follows a predetermined method of depreciation, as MCB maintains different

types of asset depreciation by the account department.

d. Along with administrative function Account department also performs others

functions, such as scrutiny of reports etc.

4.4 Clearing Department

The clearing process is performed in the State Bank of Pakistan. This

department helps in clearing all those cheques on which they have made payment

on the behalf of other banks. The clearing is done twice in each day. All the

cheques related to MCB are brought in the morning. When the cheques are verified

because of account holder the same is returned in the afternoon session.

There are two types of clearing.

4.4.1 Outward clearing

Outward clearing is to send the cheques to other branch

There are three types of outward clearing

1. Same day clearing

In same day clearing send the cheque in the morning and receive the

payment in the evening,

There are two conditions in the same day clearing

a. Cheque will be 500000 or above

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b. Member of the same day

2. Normal clearing

In normal clearing send the cheque today and receive the payment next

day. No condition will impose in normal clearing like same day clearing.

3. Inter city clearing

Clearing between two cities is called intercity clearing. In inter city

clearing cheque will clear in two or three days.

To understand the process of clearing we first need to understand and comprehend

the workings and the purpose of the state banks institution called NIFT.

4. NIFT (National Institutional Of Facilitation Technology)

In the process of clearing NIFT plays a very important role. NIFT (national

institutional facilitation technology) has a very vital role as it is the middle man

in the purpose of clearing and issuances of cheque books to the customer on

demand of the bank or branch. This institution has been formed by the State Bank

of Pakistan and it performs the duties of receiving all the clearing cheques from all

the branches of all the banks and taking them to the state bank. At the SBP first the

NIFT forms a list of all the cheques from all the banks and then forwards it to the

SBP representative. That person categorizes all these cheques according to their

respective banks and branches and forms another list of his own. Then these sorted

cheques are again given to the NIFT agent and he then takes them to the head

offices of their respective banks and from there they are distributed to the

respective branches also through NIFT. This way NIFT delivers all the cheques to

their parent branch from which they have been issued.

FLOW CHART OF WORKING OF NIFT

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4.4.2 In Ward Clearing

In the morning time I am received the in ward clearing from the NIFT

employee and then I count the instruments which I received and match with the

summery which is also attached with these instruments. Than give these

instruments to the computer operator who posts these instruments, after posting

all these instruments then he again give me the instruments and I enter all these

instruments into the clearing sheet in his Debit side.

1. Memo on Cheques Return

Also prepare the Memo on (S.F 16) in which the details of objections are

given that for purpose we return this instrument, and charge RS 200/- per

instrument

2. Calculate the Difference Vouchers of Clearing

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Difference voucher means the difference between the Out ward Clearing

and In Ward Clearing. If the liabilities are outstanding on our side which means

that our branch will pay this difference amount than I will prepare the H-O Credit

Voucher, and if the Liabilities are outstanding on there side which means that now

we are receiving the difference amount so I will prepare the H-O Debit Voucher.

a. If liabilities are outstanding on our side than made Credit voucher

b. If liabilities are outstanding are on there side than made Debit Voucher

3. Calculate the Difference Vouchers of Clearing Return

I have also made the difference voucher of those cheques which are R.U.P

means Return Un Paid. Means those cheques which our branch is returned and

those cheques which other banks returned our cheques which we send for clearing

and it had been rejected

If liabilities are outstanding on our side than made Credit voucher

If liabilities are outstanding are on there side than made Debit Voucher Than

finally enter all these difference vouchers in to the clearing sheet and

balancing with the computer. So this the complete process of Clearing.

FLOWCHART OF INWARD CLEARING

39

Customer

Gives cheque

Of MCB to

Other party

CHQ holder

Goes where he hashis own

A/C

Bank keeps

CHQ and

Makes

Transaction

At evening

Bank send

That CHQ to

Name is mention

On CHQ

MCB receives

CHQ and checks

The following

Things

Their own branch instrument

Date of instrument

Date of clearing

Over writing

Amount in figures

Amounts in words

NIFT transfer

Amount to the

Drawer bank

MCB Dr. the A/C

Of customer and

Cr. A/C of NIFT

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4.5 Computer Department

The MCB also uses the computers very efficiently. Through networking

from one computer to another. The computer facilities, the communication

facilities, the MCB major branches are greatly full use of computer. Computers

are mostly used in MCB Online Branches. The Melody Branch Islamabad is also

one of the online branches of MCB network.

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4.6 Advances Department

Advance department is one of the most important and sensitive

departments in any bank. The MCB makes profit by advancing loans. Muslim

commercial Bank advances loans to individuals and business for productive

activities. In giving loan the bank keep in consideration the over all condition of

the long term trends, the government policies, the law & order situation and the

need of product for which the loan is required.

4.6.1 Different Types of Advances

Financial accommodation provided by the bank fall into two broad

categories namely:

1. Funded Facilities

Running Finance, Demand Finance, Cash Finance, Payment against

document, Finance against imported merchandise, Finance against Trust Receipt,

Export Finance, Foreign bills purchased and such facilities where funds are

provided to customers depend upon functions of the respective credit lines.

a. Running Finance

Various modes of Bank financing, credit lines afforded to customers under

the above head (Running Finance) are the most commonly used. Withdraws on

the current account are allowed in excess of the credit balance, which the

customer has maintained, thereby creating Running Finance.

In this type of financial accommodation the borrower is required to adjust the

finance provided by the bank with the stipulated expiry period.

b. Cash Finance

Finance is provided on mark up basis on reducing balance system as stated

earlier. It is provided either against pledge or hypothecation of goods, produce or

merchandise.

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c. Demand Finance

A fixed amount of financing accommodation is allowed 10 borrower for a

fixed period under the above classified, repayable either in periodic installmentsor in lump sum at a fixed future date. This accommodation is extended in lump

sum for the mutually agreed period and the borrower has to pay the entire amount

of finance, together with mark-up the agreed rate.

d. Payment Against Documents

The importer has to enter into an agreement with the bank to meet his

obligation to purchase the import documents at marked-up price in the non-

interest based system. The documents as per mark-up agreement would be

purchased by the bank and sold to the importer at marked up price when as import

bill is received and lodged, two types of transactions shall be deemed to have

taken place i.e. purchase and sale of import documents.

e. Finance Against Imported Merchandise

Financing against import is established through letters of credit on the

basis on mark-up for a short period. According to it facilities an available not

exceeding from sixty days.

f. Export Finance

Export refinance facility is available to banks from State Bank of Pakistan

under the Export Refinance Scheme at low rate of mark-up. The government's

policy is low mark-up rate in order to boost the country's exports.

2. Non-Funded Facilities

Non-funded facility is also known as "contingent facilities" e.g. letter of

credit, letter of guarantees and Bonds. MCB formulated various instructions based

upon extracts from various Head office circulars.

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4.7 Foreign Exchange Department

Foreign Exchange business arises primarily from trading and trade related

transactions, although investment monies, dividends and royalty payments as well

as gifts, legacies, loans and interest payments, give rise to very substantial flow of

funds moving from one currency to another. For each international trading

transaction either the importer or the exporter and sometimes, both, will be

involved in a foreign exchange operation, unless one or both maintains a foreign

currency account.

MCB Mardan main Branch deals in foreign exchange. The bank opens

letter of credit for importers and exporter. Letter of Credit is a conditional

undertaking by the bank that it will pay on behalf of the customer to the exporter.

4.7.1 Import4.7.1 Import

This department provides the facility to their customers to import

machinery or products from other countries. It is necessary for the importers to

have the licenses, which is issued by the chief controller of imports and exports.

Before obtaining an import license the license must be registered with the chief

controller of import and export. For having the license, an individual or firm

submits the application through his bank.

Documents Required

a. Filled application form for Register

b. The National Identity Card of the applicant

c. National Tax Certificate issued by the Income Tax department

d. In case of firm or company, the Memorandum and the Article of Association.

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e. Banker issues the letter of credit normally in the response of the Performa

Invoice. The seller sends this invoice to the buyer and it contains seller name,

product quality. Rate, mode of shipment, and other terms and conditions.

1. Letter of Credit

A letter of credit is a written instrument issued by a bank authorising the

seller to draw in accordance with certain terms and stipulating legal forms, that all

such bills will be honoured.

A letter of credit is a: Written undertaking by importers bank to a third party i.e.

the exporter.

That it will be pay or accept draft (letter of credit) drawn upon it up to a started

sum of money within a specified time.

That the payment will only be made to the exporter if he complies with the

specified terms of credit.

a.a. Reasons For L/CReasons For L/C

The exporters are uncertain of the importer capacity to pay.

The importers are unwilling to pay the amount unless the goods are actually

shipped and the documents received by the bank.

In case of non-payment the seller should be assured to legal rights in foreign

country.

There should be an agency, which should meet the sellers need of finance when

the goods are shipped.

The commercial banks come to the help of exporters and importers.

The importers can undertake the obligation to pay to the exporter for the purchase

made by the importer and this is usually done through a letter of credit.

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b. Parties Involved in a Letter of Credit

There are four parties involved in a letter of credit

Account party or Importer

The buyer or the importer on whose account and request the letter of credit

is opened is known as account party.

Issuing party

The bank, which issues or opens a letter of credit at the request of

importer, it is called the issuing bank.

Exporter

The seller or the party in whose favour the letter of credit is draw is the

third party and it is also known as beneficiary.

c. Types of Letter of Credit

Irrevocable letter of credit

It is the one in which the issuing bank gives a lasting undertaking to accept

and in due course to pay bills drawn upon it provided the exporter fulfils the terms

and conditions. It gives a complete protection to the exporter.

Revocable letter of credit

It is the one in which can be modified or cancelled by the issuing bank at

any time without any obligation on its part. They are not acceptable to the

businessman

Confirmed letter of credit

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It is that which has the protection of the credit standing of the importers as

well as the exporters bank. The exporter bank, which confirms the letter of credit,

takes the liability of paying in case the issuing bank fails to make payment to the

exporter.

Unconfirmed letter of credit

It is one under which the exporters bank does not give any guarantee to

the exporter that the bills drawn will be honoured by the issuing bank. It is the

commitment of the issuing bank to honour the draft. From the exporters point of

view, the confirm irrevocable letter of credit is the best form of receiving

payment.

Documentary letter of credit

It is the one of which provides for bills to be accompanied by documents

of title to goods such as the bills of landing, invoice, the policy of insurance etc.

d. Opening of Letter Of Credit in MCB

Before opening of L/C certain requirements are necessary that are

The applicant must has import registration #

He must has account in that bank

He must pledges his security against the L/C amount

He must have IB-8 form, indent or agent form, and performance invoice .

e. Bank Charges

The bank takes commission @ 0.40 % of amount of L/C for one quarter and

0.25% for two or more quarters.

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If L/C amount is low then minimum bank commission is RS 500/-

Postal charges are RS. 1200/-.

Stamp duty is calculated @ 0.50% of L/C amount.

Mark up is calculated at RS 0.50 per day per 1000.

4.7.2 Export

Usually the exporter does not rely on the credit of a banker in the country

of importer, and insist on a confirmation from a banker carrying on business in his

own country. Thus this department of a bank helps the exporters to settle down

their financial affairs. For exporting it is necessary for exporter to get export

license from the chief controller of import and export after registration.

Documents are required for the registration such as N. I. C. Card, income

tax certificate, bank certificate which shows that the exporter is his account holder

and have a good dealing with them. In response to the letter of credit exporter

submit the following documents to the negotiating bank.

a. Bill of exchange

b. Invoice

c. Bill of lading or Airway bill/railway receipt/truck receipt

d. Insurance documents

e. Packing list

f. Any other documents, if so required.

g. The negotiating bank will send the same documents to the issuing bank. Inaccordance with the terms and condition laid down in letter of credit.

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1. Security of Documents

Whether documents received are meant for the opening bank and

specifically for the branch which established the letter of credit. The documents

would be negotiated within the validity of L/C. The goods have been shipped

within the time allowed under L/C. The goods are mentioned in invoice and other

documents (e.g. bill of lading, packing list etc) are in accordance with

merchandise clause L/C. Whether the documents received pertains to L/C,

established by the opening bank and the documents negotiated are within or equal

to L/C amount. In case where the value of documents exceeds the L/C amount,

the foreign bank may negotiate the documents for amount being marginally

excess or sends them on collection, remittance may be allowed in excess subject

to the following conditions.

a. The amount does not exceed 5% of the amount of L/C subject to the

maximum of US$ 500/-

b. The importers hold a valid import license against which the excess amount

is adjusted-provided remittance is affected within 1.5 year from the date of issue

of import license.

c. The name of the importer on the bill of exchange does not differ from that

on the import license.

d. The tenor of the bill should be valid.

e. See that the goods are not shipped prior to the date of opening of L/C or

the documents are not stated.

f. The goods are consigned or endorsed in the favor of the bank only

opening the letter of credit, and in no case it should be consigned to the importer

directly.

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2. Retirement of Documents

When the opening bank against a letter of credit receives documents. The

customer retires the documents under different arrangements e.g.

a. Retirement against payment by the importer

b. Retirement of documents in case of None-payment by the importer

c. Retirement of documents under trust receipt

4.8 Lockers

Basically it is a facility which is provided by the bank to its customers in

order to secure there money gold important property documents etc. before this

locker concept people are very much worried about the lose of there money, gold

and important documents so now the people are very much relax because now

they use this facility quite frequently.

4.8.1 Issuance of LicenseIt is not an easy task to get the licence of opening the locker facility in the

branch for every bank, for this purpose the bank should get permission from State

Bank of Pakistan who is the bankers bank; with out his permission no body can

provide this facility to the customers. The branch who wants to get licence he

must sent a written request letter to State Bank than the state bank officer visit this

branch and see that is there enough place to provide the licence of lockers to this

branch or not? If they are satisfy they charge the licence fee from this branch.

4.8.2 Types of Lockers

Small Size (Rent RS 1400 per Annum) 16% FED Rs.224

(Key Security Rs.2000)

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Medium Size (Rent RS 2200 per Annum) 16% FED Rs.352


Large Size (Rent RS 3500 per Annum) 16% FED Rs.560


4.8.3 Insurance of Lockers

Bank will also pay the insurance on behalf of this lockers so in case of any

bank misshape then the insurance company will accept the certain claim but it

depends open the size of the lockers

Small Size Locker Claim up to RS 500,000/-

Medium Size Locker Claim up to RS 10, 00,000/-

Large Size Locker Claim up to RS 15, 00,000/-

4.8.4 Renewal / Expiry of Lockers

Usually the time period of this facility is one year, at the end of the time

period the bank will ask to the client that weather he will continue this facility or

not if the customer says yes then he will pay the charges again in order to use this

facility which is provided by the bank.

4.8.5 Procedure of Use of Lockers

One key is given to the customer and the other key is handed over to any

bank person who is the authorized person, and the locker is opened with both

keys.

The authorized person who keeps keys He/She note following things

a. Customer name

b. Signatures of customers

c. Time of lockers operating

d. Account number

e. Leaving time

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Customers can use this locker during the banking hour that is 9: Am to 5: P M.

CHAPTER # 5

WORK PERFORMANCE DURING INTERNSHIP

My internship provided me a great opportunity to learn & experience

different banking practices. During the six weeks of my internship I got a good

chance to see what the actual banking is regarding the operations performed at my

branch i.e. account opening, remittance, clearing and deposit department.

5.1 1st Week:

During the first week of my internship, I learnt the following things.

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5.1.1 To open the Account:

During my internship, I opened two types of account;

1. Singl

e Account:

I monitored three types of accounts under this head along with

documentation required for these accounts.

a. Accou

nt of a literate person

b. Accou

nt of a salaried personc. Accou

nt of an illiterate person

2. Joint

Account:

Besides opening this account I was provided with the following

information regarding JOINT ACCOUNT by manager ops.how a joint account is affected by the death of one joint account holder:

3. Partn

ership Account:

I did not open this account personally, but I know the following regarding

PARTNERSHIP ACCOUNT.

a. Docum

ents needed to open this account

b. Moreo

ver the operation manager told me these things regarding the partnership account:

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Death

of a partner:

Admis

sion of new partner

Docum

ents required in case of a new partner

5.1.2Account Maintenance Activities:

Related to the account maintenance activities, i have learnt these things:

1. Chequ

e book issuance to the existing /new account holder:

2. Issuanc

e of smart card (ATM) to the existing/ new account holder:

Other things which I have learnt about ATM involve:

a. ATM

Card Categories

b. ATM

Card Features

c. Fund

Transfer via ATM

d. ATM

Card Charges

e. Deliver

y & Custody of ATM Card

5.2 2nd

Week:My 2nd & 3rd weeks of internship were at remittance department, where I

learnt the following things:

1. Study

of different types of vouchers related to the TRANSFER

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2. To fill

a voucher for online transfer

3. Online

transfer via cheque

4. To

issue a demand draft via cheque

5. To

post the voucher for online transfer & DD

6. Got

some information about pay order from the relevant officer

7. To

make a TT to transfer access money to the head office

5.3 3rd Week:

1. To

make the online transfer voucher via cash

2. To

post these vouchers

3. To

issue a DD via cash

4. To

post the vouchers for this DD

5. Study

of cash book

6. Study

of cash position book

7. Visit to

strong room

8. How

the cash is maintained in strong room

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5.4 4th Week:

My 4th

week was in the cash cabin and I performed following work there:1. How

he checks the daily vouchers related to transfer, cash and clearance departments

2. I have

some idea about the opening & closing of bank but not have a through grip on it.

3. How

the manager ops authorize various transactions

4. I also

have some idea about the DAILY GENERAL LEDGER REPORT

5.5 5th Week:

During the 5th week, I worked with the operation manager and learnt about his

working.

1. Issuanc

e of RTC (Against Cash)

2. Issuanc

e of RTC (Against Account):

3. Encash

ment of RTC

4. Chequ

e deposit & withdrawal through clearing

5.6 6TH Week:

I did miscellaneous work in the last week of internship:

1. What is the function of a feeding/pooling branch?

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2. What is the inter branch Dr/Cr advice

3. Study that how CDRs are issued

4. How an account is made exempted from ZAKAT.

5. Study of key book

CHAPTER# 6

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FINANCIAL ANALYSIS

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6.3 Ratio Analysis

The term ratio means, the relationship between any two variables,

while analysis is a tool, which is used for checking the over all performance of

any organization. In other words, the ratios analysis is used to identify the

financial strengths and weaknesses. For this purpose, we use ratio analysis of

financial statements such as, balance sheet and income statement. However, ratio

analysis is a tool, which involves methods of calculating & interpreting financial

ratios to analyze and monitor the firm performance. There are many ratios such

as liquidity ratios, profitability ratios, debt ratios, activity ratios. For this purpose,

we use data from 2007 to 2009 of annual reports of the MCB, to check the

liquidity, leverage and profitability.

6.3.1 Profitability Ratios

This ratio examines the relationship between the profits made on trading

activities against the sales. It is the indication of business ability to use capital,

labor & management to generate profit. There are many ratios of profitability,

such as ROA, ROE and EPS which is given as under;

1. Return on Assets (ROA):

Net Income / Total Assets * 100

2007 2008 2009

Net Income 4,105,83 4,198,06 1,032,816

Total Assets 82,504,652 85,467,274 93,386,336

Ratio % 0.50% 0.49% 1.11%

Interpretation of Return on Assets (ROA):

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The ROA is gradually increasing from 2007 to 2009 due to increase in the

amount of total assets and total income. The ROA in 2007 is lower from the rest

of the year which is 0.50% that shows a bank can earn less money on more

investment. The ROA is gradually decrease to 0.49% while sharply increase to

1.11% in 2009, that shows a bank can earn more money on less investment. The

Higher the ROA ratio shows that the bank has efficiently managed its assets

portfolio to earn a more money on total assets, achieving economic efficiency &

more opportunities of financing in the year 2009 as compared to the rest of years.

2.

Return on Equity (ROE):

Net Income / stockholders Equity * 100

2007 2008 2009

Net Income 410,853 419,806 1,032,816

Equity 13062397 13600171 14955492

Ratio % 9.29% 8.25% 13.65%

Interpretation of Return on Equity (ROE):

The ROE is moderate in 2007 which is 9.29% & gradually decreased to 8.25% in

2008 due to the lower in income. Any how, the ROE is sharply increased to

13.65% in 2009 due to increase in the amount of total income and stockholders

equity. The highest ROE indicates that bank can earn a high return on less equity is

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generating cash internally. The higher the ROE ratio, the greater will be the

opportunities to earn high return & consider to be favorable while lower the ROE

ratio, the lower will be the opportunities to earn low return & consider to be

unfavorable.

3. Earnings Per Shares (EPS):

Net Income / Total No. of Ordinary Shares * 100

2007 2008 2009

Net Income 4,105,83 4,198,06 1,032,816

Ordinary Shares 1,186,961 1,186,961 1,186,961

Ratio % 34.6% 35.36% 87.0%

Interpretation of EPS:

The EPS from 2007 to 2008 is gradually increasing from 34.6% to 35.36%

respectively. A small increase is seen in 2008 due to increase in net income which

is 419,806. While in 2009, the EPS is sharply increased to 87.0% due to further

increase in net income with same amount of total number of ordinary shares.

Higher the EPS indicates that the MCB can earn on behalf of each share, but not

the amount of earnings actually distributed to shareholders.

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6.3.2 Liquidity Ratios

It is measured by its ability to satisfy short-term obligations when they

become due. There are many ratios of liquidity such as, current ratio, quick ratio

and networking capital, which is given as under;

1. The Current Ratio:

Current Ratio = current assets/ current liabilities = times

2007 2008 2009

Current Assets 75,145,219 75,550,076 82,964,819

Current Liabilities 57,341,925 57,450,253 59,177,412

Ratio(times) 1.31 1.32 1.40

Interpretation:

If we interpret the current ratio of the MCB, it is slowly increasing from 2007

to 2009. The current ratio in 2007 lower than rest of the years which is 1.31 which

means that the bank is able to pay the current liabilities 1.31 times from its current

assets. In 2008, the current ratio is 1.32 and then sharply increased to 1.40 in 2009.

However, the higher the current ratio, the more the bank is considered to be liquid

in order to satisfy short term obligation.

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2. Quick Ratio:

Quick Ratio= Quick Assets / Current Liabilities* 100

2007 2008 2009

Quick Assets 22,219,933 14,711,019 21,651,813Current Liabilities 57,341,925 57,450,253 59,177,412

Ratio% 39 % 26% 37%

Interpretation of Current Ratio:If we interpret the quick ratio of MCB, it is higher in 2007 while lower in 2008.

The quick ratio of 1.0 or greater is occasionally recommended but for the

organizations, the quick ratio cannot provides a better measure of overall

liquidity only when a firms inventory cannot be converted into cash, because

the short term investment is lower than short term financing from 2007 to 2009.

3. Net Working Capital (NWC):

Total Current Assets Total Current Liabilities

2007 2008 2009

T.C.A 75,145,219 75,550,076 82,964.819

T.C.L 57,341,925 57,450,253 59,177,412

N.W.C 17,803,295 18,129,823 23,787,407

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Interpretation of NWC:

TheNWC of the MCB from 2007 to 2009 is increasing gradually and has positive

working capital & considering favorable, because the total current assets are

greater than total current liabilities and the bank is better able to pay its short term

obligation as they become due. On the other hand, if total current assets are lower

than total current liabilities, the firm has negative working capital & considering

unfavorable. In this case the bank is not able to pay its short term obligation as

they become due.

6.3.3 Leverage Ratios:

It measures the firm's ability to repay long-term debt that is used in a firms

capital structure. There are many ratios of leverage; i.e. debt ratio, total debt to net

worth ratio & time interest earned ratio which are given as under;

1.

Debt Ratio:

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Debt Ratio = Total Liabilities / Total Assets * 100

2007 2008 2009

Total Liabilities 69,442,255 71,667,103 78,430,844

Total Assets 82,504,652 85,467,274 93,386,336Ratio % 84.17% 83.85% 84.00%

Interpretation of Debt Ratio:

The debt ratio of the MCB in 2007 is 84.17%, which is a highest from the rest of the

years while lower in 2008 which is 83.50% and then gradually increase to 84% in 2009.

The high the ratio, the more the bank is risky & having more leveraged while low ratio

will leads a firm less risky & having less leveraged. The high leveraged consider to

beunfavrable if the creditors of the bank can start to demand repayment of debt.

2. Total Debt to Net Worth Ratio:

Total Liabilities / Net worth * 100

2007 2008 2009

Total Liabilities 69,442,255 71,667,103 78,430,844

Net Worth 13062397 13600171 14955492

Ratio % 5.32% 5.27% 5.24%

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Interpretation of Total Debt to Net Worth Ratio:

If we interpret the debt to net worth ratio of the MCB, it is gradually decreasing

from 2007 to 2009. In 2007, the debt to net worth ratio is greater form the rest of

the year which is 5.32% while lower in 2009, which is 5.24%. In 2009, the MCB

can improved the debt to net worth ratio, which is 5.24% and is lower &

considered to be favorable from the rest of the years. The higher the debt to net

worth ratio, greater will be the business is considered to be risky and consider to

be unfavorable. The lower the debt to net worth ratio, lower will be the business is

considered to be risky and consider to be favorable. The high leverage usually

indicates the business has a lot of risk because it must meet principal and interest

on its obligations.

3. Time Interest Earned Ratio:

EBIT / interest Expanse = Times

2007 2008 2009

EBIT 5,184,713 5,466,642 5,680,759

Interest Expanse 4,467,677 4,819,839 3,866,247

Ratio (Times) 1.16 1.13 1.47

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Interpretation of Time Interest Earned Ratio:

The time interest earned ratio of the MCB in 2007 is 1.16 which is lower from the

rest of the years while highest in 2009 which is 1.47. The higher the time interest

earned ratio, the bank is better able to fulfill its interest obligation. In 2009, the

time interest earned ratio is improved due to the highest amount of the earning

before interest & taxes as compared to other years.

CHAPTER# 7

SWOT ANLYSIS

A SWOT analysis is an important tool to analyze the overall situation in which

organization is conducting its affairs. Each issue remains relevant and useful for

corporate strategy formulation.

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The Threats, Opportunity, weakness and Strength in summery can be stated for

MCB as below:

STRENGTHS1. MCB is Successive and Market oriented.

2. MCB investing huge sums on HR development and training.

3. Customer default rate is lower as compared to other banks.

4. MCB has the largest ATM network in the country.

5. Meeting the challenges of latest Technology by introducing Smart card

remit express, mobile banking etc.

6. One of the major strengths of MCB is that it has very stable deposit base.

7. MCB is largest private bank in Pakistan with around 1000 branches, which

cover almost every part of Pakistan.

8. The bank enjoys competitive advantage over other banks in Pakistan.

9. The bank enjoys competitive profitability in the industry.

10. MCB has captured majority of potential customers in Pakistan.

11. MCB has the accounts of big organizations like OGDCL, PTCL, EFU,

PTC etc.

WEAKNESSES

1. Low motivational level

2. Employees, dissatisfaction due to ill treatment and improper reward

system.

3. Favoritism and Nepotism in recruitment.

4. High Employees Turnover.

5. Decision making process is very slow.

6. It is not having greater no. of branches abroad.

7. Though ATM network is the largest in Pakistan, still some potential areas

dont have the ATM.

8. MCB RTC is useable only in Pakistan.

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9. Some management positrons needed are not professional.

10. Although most of the branches are computerized now, still some important

branches dont have computers.

11. Less efficiency of SYMBOL System due to disconnectivity

Opportunities

1. Leasing sector is growing in Pakistan for the last two to three years which

provides opportunity to MCB to go ahead in this area as well.

2. MCB is providing Consumer Finances at comparatively lower rates which

paves a way to grab more customers

3. Financing to small/medium cottage industries will definitely increase its

advances and profitability as well.

4. Islamic Trading Based Banking can enhance the business of the bank.

5. Overseas Operations.

6. Launch the more effective and modern banking online system.

THREATS

1. Other private commercial bank with sound profitability is also a threat to

MCB e.g. UBL, Alfalah, HBL etc.

2. For the last of many years, Pakistan is facing economic and political

instability which is a big threat.

3. Afghan war and Iraq war has a deep effect on the economy of Pakistan,

which may affect MCB.

4. Foreign banks are flourishing in field of consumer financing.

5. People dont prefer banking culture. They mostly prefer cash transactions.

6. New competition in Domestic & Foreign Markets.

7. Political instability results in inconsistent bank policies.

8. Cutbacks in Compensations for the employees.

9. Demoralized staff.

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CHAPTER# 8

RECOMMENDATIONS

After doing a deep study and witnessing everything that goes on in a branch, I

would then like to make the recommendations that;

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First of all, the management needs to overlook the major problems that the

organization is currently facing and then develop strategies to eradicate them.

Some of the suggestions that I would like to give at the end are:

1. Promotion and Mass Media Publicity

MCB Bank can improve its Marketing strategies to acquire more promotion and

mass media publicity by the use of effective channels of promotions like TV,

Newspaper Advertisements. It can also improve its magazine publication that it

releases each month.

2. Need introduce friendly Products

In order to compete in the ever-expanding market both nationally and

internationally, introducing new and efficient products is one of its major

requirements.

3. Centralized Structure

Centralized Structure that enables employee involvement needs to be formed.

4. Better Reward System

Better reward system is one of the most important requirements in order to reduce

the problem of Employee retention and improve Employee motivation.

5. Continuous Training of Employees

a. Creation of enhanced performance appraisal system

b. Implementation of enhanced Marketing system

c. Continuous lecture on better communication of staff with customers

6. ATM Machines Maintained

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ATM machine must be maintained properly to make it more convenient for the

customers and to decrease the load of work to the employees of the bank

especially in the salary days.

7. Staff Member

I have observe during working that there need of more staff due to pressure of

work MCB should hire more employees for better performance even any

employee when take leaves Manager has no choice to his work to other employee

so this situation built high pressure.

8. Symbol System

To make the SYMBOL system more efficient and make sure its connectivity all

the time in order to provides more convenience to customers.

9. Job Rotation for Employees

MCB should to make the strategy where make the job rotation of employees

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CHAPTER# 9

IMPLEMENTATION/ACTION PLAN

Every organization has its own strengths, weaknesses and possesses opportunities

for improvements. Nothing is