Internship Report On MCB Bank

PRO1ECT REPORT
ON
MUSLIM COMMERCIAL BANK Ltd.

IFTIKHAR HUSSAIN
MBA-28S-635
Cell # 0322-4469323
E-mail. Iftikhar.searchmgmail.com

Department of Business Administration

San Institute of Management Sciences
Affiliated With
Riphah International University. Islamabad

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8lphah lnLernaLlonal unlverslLv lslamabad

PREFACE

The completion oI any empirical study aimed at drawing some conclusion out oI it, always
conIronts certain diIIiculties. This study is no exception. In many cases while searching required
data we had to waste a lot oI time but in certain cases we got the required data very easily.

The choice oI topic was encouraged by Mr. Tanvir Hussain Kazmi, his occasional advice and
suggestion helped us a lot during the initial phase oI this study. I am extremely indebted to him
Ior the keen interest shown by him in this work without which the study could hardly have been
completed within the deIined time Irame.

Iftikhar Hussain
28S-635

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ACKNOWLEDGEMENT

All praises to almighty Allah and our holy prophet Muhammad PBUH who gave me the
courage and patience Ior completion oI this Iinal report.
I wish to acknowledge my gratitude to my inspiring Teacher Syed Tanvir Hussain
Kazmi (HOD) Ior their endless their persistence, support and encouragement, and Ior providing
me a liIetime opportunity to work with Muslim Commercial Bank
I am also thankIul to my parents, Iamily and Iriends that continually oIIered encouraging
support . . .

Iftikhar Hussain
28S-635

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TABLE OF CONTENTS
'PREFACE .......................................................................................................... 2
'ACKNOWLEDGEMENT .................................................................................. 3
'TABLE OF CONTENTS ................................................................................... 4
'EXECUTIVE SUMMARY ................................................................................ 6
INTRODUCTION OF SECTOR ........................................................................... 8
THE MUSLIM COMMERCIAL BANK LIMITED .............................................11
'VISION STATEMENT .....................................................................................13
'MISSION STATEMENT ..................................................................................13
'HEAD OFFICE .................................................................................................14
'CIRCLE OFFICE ..............................................................................................15
'MANAGEMENT OF ORGANIZATION .........................................................16
'ORGANIZATIONAL STRUCTURE ................................................................17
'INFORMATION ABOUT BRANCH ...............................................................21
'GENERAL BANKING .....................................................................................22
'OPERATIONS DEPARTMENT .......................................................................23
'CLEARING DEPARTMENT ...........................................................................30
'REMITTANCE DEPARTMENT ......................................................................34
'OTHER DEPARTMENTS ................................................................................38
'CASH DEPARTMENT .....................................................................................38
'ACCOUNTS DEPARTMENT ..........................................................................40
'TECHNOLOGY DEPARTMENT ....................................................................41
'ADVANCES DEPARTMENT ..........................................................................44
'FINANCIAL ANALYSIS OF MCB .................................................................49
'RATIO ANALYSIS ..........................................................................................49

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ADVANTAGES OF RATIO ANALYSIS: ...........................................................50
LIQUIDITY RATIOS ...........................................................................................50
DEBT RATIO.......................................................................................................51
MARKET RATIOS ..............................................................................................52
'VERTICAL ANALYSIS ...................................................................................59
'HORIZONTAL ANALYSIS .............................................................................62
'SWOT ANALYSIS ...........................................................................................67
'MCB`s SWOT ANALYSIS ..............................................................................68
'STRENGTHS ....................................................................................................68
'WEAKNESSES ................................................................................................71
'OPPORTUNITIES ............................................................................................72
'THREATS .........................................................................................................73
'PEST ANALYSES ............................................................................................75
'APPLICATION OF CLASS ROOM LEARNING ............................................77
'SUGGESTIONS & RECOMMENDATIONS ...................................................78
'IF I WERE MANAGER AT MUSLIM COMMERCIAL BANK ......................80
'REFERENCES & RESOURCES ......................................................................81

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EXECUTIVE SUMMARY

The banking structure in Pakistan comprises oI the Iollowing types, State Bank oI
Pakistan, Commercial Bank oI Pakistan; Exchange Banks, Saving banks, Cooperative banks,
Specialized credit institutions. The state bank oI Pakistan is the Central bank oI the country and
was established on July 01, 1948. The network oI bank branches now covers a very large
segment oI national economy. The State Bank oI Pakistan issues the shares oI these periodically.
Bank employees and other common peoples can also purchase these shares and earn proIit. In
1956, MCB transIerred its Registered oIIice to Karachi, where the Head OIIice is presently
located. In April 1991, MCB became Pakistan`s Iirst privatized bank.
The corporate branch at Shahrah-e-Faisal Karachi (SFK) branch is the corporate branch
oI MCB in Karachi. The bank is using SWIFT Ior transIer oI inIormation 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 oI account opening Iorm to the customer Iile
i.e. customer`s master Iile. BeIore closing any account, bank send letter to the account holder Ior
inIorming him that his account is going to be closed. There is need an approval Iorm 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 proIit on current deposits. The Iollowing are
the Iinancial products/services oI MCB Malay Mail Scheme, PLS Account, Saving 365 Account,
Capital growth certiIicate scheme, Fund Management Scheme, Khushali Bachat Account, Term/
Fixed Deposits and others like night banking, credit cards, traveler cheques.

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In remittance department like any other bank MCB also have instruments Ior transIerring
oI money, Telegraphic TransIer, Mail TransIer. 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 Iollowing sheets, books, and
ledger oI 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 oI Facilitation Technology).
Bank provides this Iacility to the people who need advance money to meet their
requirement. Party dealing with other banks Iinancial condition oI borrower business and as a
Iirst step credit proposal is being made. MCB provides advances, which are two types. Secured
Advances, Unsecured Advances. MCB usually classiIied advances in to Iollowing types
Agricultural Advances, Commercial Advances
Industrial Advances. Commercial Advances are oI Iollowing types
Demand Finance, Cash Finance, Foreign bills purchased, Finance against imported
goods, Finance against Ioreign bills, Export ReIinance 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 oI the country. Farm Credit &
Non Farm Credit.
In Ioreign exchange, MCB is dealing Foreign Currency Accounts, Foreign Remittances,
and Foreign Bills Ior Collection, Imports & Exports
Foreign currency accounts & the Ioreign currency department deals with the Iollowing
types oI accounts, Dollar Khushali account, Current account, Saving bank account, Term
deposit, Prime Currency Scheme. Foreign accounts are convertible on Iloating rate available to
the bank. Letter OI Credit Iacility is being provided by MCB in Ioreign exchange.

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INTRODUCTION OF SECTOR
The word 'Bank' is said to have been derived Irom the words Bancus or Banque or Bank.
This history oI banking is traced to as early as 2000 B.C. Banking in Iact is primitive as human
society, Ior ever since man came to realize the importance oI money as a medium oI exchange,
the necessity oI a controlling or regulating agency or institution was naturally Ielt. The priests in
Greece used to keep money and valuables oI the people in temples. These priests thus acted as
Iinancial agents. The origin oI banking is also traced to early goldsmiths. They used to keep
strong saIes Ior storing the money and valuables oI the people. The Iirst stage in the development
oI modern banking, thus, was the accepting oI deposits oI cash Irom those persons who had
surplus money with them.
The goldsmiths used to issue receipts Ior the money deposited with them. These receipts
began to pass Irom hand to hand in settlement oI transactions because people had conIidence in
the integrity and solvency oI goldsmiths. When it was Iound that these receipts were Iully
accepted in payment oI debts; then the receipts were drawn in such a way that it entitled any
holder to claim the speciIied amount oI money Irom goldsmiths. A depositor who is to make the
payments may now get the money in cash Irom goldsmiths or pay over the receipt to the creditor.
These receipts were the earlier bank notes. The second stage in the development oI banking thus
was the issue oI bank notes.
The goldsmiths soon discovered that all the people who had deposited money with them
do not come to withdraw their Iunds in cash. They Iound that only a Iew persons presented the
receipts Ior encashment during a given period oI time. They also Iound that most oI the money
deposited with them was lying idle. At the same time; they Iound that they were being constantly
requested Ior loan on good security. They thought it proIitable to lend at least some oI the money
deposited with them to the needy persons. This proved a proIitable business Ior the goldsmiths.
They instead oI charging saIe keeping charges Irom the depositors began to give them interest on
the money deposited with them. This was the third stage in the development oI banking.

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At the time oI independence, there were 631 oIIices oI scheduled banks in Pakistan, oI
which 487 were located in West Pakistan alone. As a new country without resources it was very
diIIicult Ior Pakistan to run its own banking system immediately. ThereIore, the expert
committee recommended that the Reserve Bank oI India should continue to Iunction in Pakistan
until 30
th
September 1948, so that problems oI time and demand liability, coinage currencies,
exchange etc. be settled between India and Pakistan.
The non-Muslims started transIerring their Iunds and accounts to India. By the end oI
June 1948 the number oI oIIicers oI scheduled banks in Pakistan declined Irom 631 to 225.
There were 19 Ioreign banks with the status oI small branch oIIices that were engaged solely in
export oI crop Irom Pakistan, while there were only two Pakistani institutions, Habib Bank oI
Pakistan and the Australian Bank. The customers oI the bank are not satisIied with the uncertain
condition oI banking. Similarly the Reserve Bank oI India was not in the Iavor oI Govt. oI
Pakistan. The Govt. oI Pakistan decided to establish a Iull-Iledge central bank. Consequently the
Governor-general oI Pakistan Quaid-I-Azam inaugurated the State Bank oI Pakistan on July 1,
1948. Thus a landmark was made in the history oI banking when the state bank oI Pakistan
assumed Iull control oI banking and currency in Pakistan. The banking structure in Pakistan
comprises oI the Iollowing types.
O State Bank oI Pakistan
O Commercial Bank oI Pakistan
O Saving banks.
O Cooperative banks
O Specialized credit institutions.
Commercial banks have been the most eIIective mobilizers oI savings and have been
providing short-term requirements oI working capitals to trade, commerce and industry.

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Up to December 31, 1973, there were 14 Pakistan commercial banks that Iunctioned all
over the country and in some Ioreign countries through a network oI branches. All these
commercial banks were nationalized in January 1, 1974, and were recognized and merged into
the Iollowing Iive banks:
O National Bank oI Pakistan
O Muslim commercial bank limited
O Habib Bank Limited
O United Bank Limited
O Allied Bank oI Pakistan

The state bank oI Pakistan is the Central bank oI the country and was established on July
1, 1948. The separation oI East Pakistan and its repercussion in the Iorm oI economic depression
has caused a lot oI diIIiculties to the banking system in Pakistan. The network oI bank branches
now covers a very large segment oI national economy. The numbers oI branches have increased
appreciably and there is now on branch oI bank Ior every 3000 heads oI population
approximately. There is done reasonable growth in deposits Irom the establishment oI Pakistan.
Besides this growth, specialized credit and Iinancial institutions have also developed over the
years.
The Government oI Pakistan in the late 90`s introducing the need Ior the privatization oI
state owned banks and companies. The private sector has accepted the challenge and most oI the
banks are privatized today. The State Bank oI Pakistan issues the shares oI these periodically.
Bank employees and other common peoples can also purchase these shares and earn proIit.
Throughout the period oI banking history the banks have been expanding rapidly and achieved
the desired goal oI progress.

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THE MUSLIM COMMERCIAL
BANK LIMITED
HISTORY:
MCB was Iounded by ISFHANI and ADAMJEE Iamilies in Calcutta on July 9, 1947.
MCB is not an overnight success story rather good track oI services are responsible Ior the leaps
and bounds progress. AIter the partition oI the Indo-Pak Subcontinent, the bank moved to Dhaka
Irom where it commenced business in August 1948. In 1956, the Bank transIerred its Registered
oIIice to Karachi, where the Head OIIice is presently located. Thus, the bank inherits a 52-year
legacy oI trust in its customers and the citizens oI Pakistan
The perIormance oI MCB was badly aIIected by bureaucrat government. In January
1974, MCB was nationalized by Bhutto Government Iollowing the bank act 1974 subsequently
in June 1974 Premier Bank Limited merged with MCB.
PRIVATIZATION:
When privatization policy was announced in 1990, MCB was the Iirst to be privatized
upon recommendations oI World Bank and IMF. The reason Ior this choice was the better
proIitability condition oI the organization and less risky credit portIolio which made'' it a good
choice Ior investors. On April 8th, 1991, the management control was handed over to 'National
Group (the highest bidders). Initially only 26 oI shares were sold to private sector at Rs. 56
per share.

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

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VISION STATEMENT

'To be the leading Iinancial services provider, partnering with our customers Ior a more
prosperous and secure Iuture

MISSION STATEMENT

'We are a team oI committed proIessionals, providing innovative and eIIicient Iinancial
solutions to create and nurture long-term relationships with our customers. In doing so, we
ensure that our shareholders can invest with conIidence in us.

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DEVELOPMENTS:
AIter privatization, the growth in every department oI the bank has
been observed. Following are some key developments:
O Launching oI diIIerent deposit schemes to increase saving
level.
O Increased participation on Ioreign trade.
O Betterment oI branches and staII service level.
O Introduction oI Rupee Traveler Cheques & Photo Credit
Card Ior the Iirst time in Pakistan.
Extended use oI inIormation technology which is evident Irom the
Iact that there are 768 Iully automated branches, more than 250- online
branches (integrated networking), 151 ATMS in 27 cities nation wide and a M.C.B continuously
innovate new product.
HEAD OFFICE
Chudrigor Road oI Karachi has same importance in Pakistan`s economy as oI the Wall
Street in world economy. The division working under MCB Head oIIice is as Iollows:
O Administration
O Credit Management
O Investment Banking
O Human Resource

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O InIormation Technology
O Corporate Planning & Budgeting
O Finance & Treasury
O International Division
O Inspection & Audit
O Law Division
O Marketing & Development
O Trustee Division
Under the President an Executive Committee and a Credit Committee works. All the
matter oI the bank ioin to the board oI director are presented to the executive committee which is
responsible Ior daily operation oI the bank .The request Ior credit exceeding the General
Manager power is approved by the Credit Committee. Under the area Executive is the General
Manager who is the in charge oI the Circle OIIice. Under the General Manager is the Zonal
Manager and then the Branch Manager. At present, there are 9 circles, 47 regions and 1400
branches. BeIore privatization there were provincial chieIs Ior all the Iour provinces. But this
management now has abolished the provincial oIIicers and improved the eIIiciency oI the bank.
CIRCLE OFFICE
The working oI circle oIIice is to control and regulate the Iunctions oI branches which are
under in its control. The Iunctions oI circle oIIice are to mobilize the deposits and receive reports
Irom branches. Circle oIIice is like a mini head oIIice. Agents and correspondents oI MCB are in
all commercial cities oI the world. Circle oIIice is divided in the Iollowing division:
O Credit Management
O Audit & Inspection

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O Human Resource
O Marketing & Development

MANAGEMENT OF ORGANIZATION

MANAGEMENT OF BANK:

Mian Mohammad Mansha Chairman
S.M. Muneer Vice Chairman
Mohammad AItab Manzoor President & ChieI Executive
Tariq RaIi Director
Sheikh Mukhtar Ahmed Director
Mohammad Arshad Director
Shahzad Saleem Director
Raza Mansha Director
Sarmad Amin Director
Mian Umer Mansha Director
AUDIT COMMITTEE:
Mian Mohammad Mansha Chairman
Shaikh Mukhtar Ahmed Member

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Shahzad Saleem Member

CHIEF FINANCIAL OFFICER:
Ali Amin
COMPANY SECRETARY:
Tameez-ul-haque

ORGANIZATIONAL STRUCTURE
As MCB is a banking company listed in stock exchange thereIore it Iollows all the
legalities which are imposed by concerned statutes Mian Muhammad Mansha is Chairman oI
the company with a team oI 10 directors and 1 vice chairman to help in the business control and
strategy making Ior the company.
Operational Management oI the bank is being handled by a team oI 10 proIessionals.
This team is also headed by Mr. Muhammad Mansha. The diIIerent operational departments are
Consumer Banking & IT div; Financial & Inter branch div; Banking operations div; HR & Legal
div; Iinancial control & Audit div; Credit management div; Commercial Banking div; Corporate
Banking div; Treasury management & FX Group and lastly Special Assets Management (SAM)
Group.
For eIIective handling oI branches, it has been categorized into three segments with
diIIerent people handling each category. These categories are:
O Corporate Banking
O Commercial Banking

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O Consumer Banking
CORPORATE BANKING:
These are branches which have an exposure oI over Rs. 100 million. Usually includes
multinational & public sector companies
COMMERCIAL BANKING:
The branches which has a credit exposure oI less than Rs. 100 million but having a credit
portIolio oI more than Rs. 20 million (excluding staII loans)
Usually branches in large markets and commercial areas come under this category.
CONSUMER BANKING:
These are the branches which have exposure up to Rs. 20 million and these include all the
branches which are neither corporate nor commercial branches.
Recently the organizational structure was re-designed as Iollows:
Puniab
Sindh 243
NWFP 13
Blochistan 3
Azad J.Kashmir 14
Domestic 14
Overseas 7
Total 1053
Furthermore, the bank has some proposals under consideration to open more branches in
some European countries and as well as in Japan & china

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Chairman
Mian Muhammad Mansha
President
Muhammad Aftab Manzoor
Corporate Banking
Group
Muhammad Shoaib
Qureshi
Commercial Banking
Group - North
Imdad Ali Butt
Commercial Banking
Group - South
Shahid Sattar

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OVERSEAS BRANCHES:

@f n brfnches 7
Colombo
1
Mardana
1
Pettah
1
OBU Bahrain
1
Wellawatte
1
EPZ
1
Kandy
1

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INFORMATION ABOUT BRANCH
I Visited Muslim Commercial Bank Limited Branch. And some important inIormation
about the branch which I observed are as Iollows:
MANAGEMENT OF THE BRANCH:

Branch manager
Accountant
Operational manager
Cashier
Peon
Security Guard

DEPOSITS:
The total deposits oI this about to 207.10 million.
NUMBER OF ACCOUNTS:
Accounts in this branch oI MCB are as Iollows:
CURRENT ACCOUNT:
Total numbers oI current accounts are 1049

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PLS ACCOUNT:
Total numbers oI proIit and loss accounts are 2120.
KHUSHALI BACHAT ACCOUNT:
These are about to 600 accounts.
REMITTANCE:
Total remittance oI this branch is 26.22 million.
RATE OF INTEREST:
The rate oI interest provided by such bank is minimum 4.45 and maximum 9.
GENERAL BANKING
It is backbone oI banking It is one oI the maior department oI MCB. It Iurther consists oI
Iollowing departments:
O Operations Department
O Current Department
O Remittance Department
O Clearing Department
O Cash Department
O Accounts Department
O Technology Department

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O Operations Department
O Clearing Department
O Remittance Department

OPERATIONS DEPARTMENT

TYPES OF ACCOUNTS:
O Single
O [Z`
O S^`ZW^_\
O ^bate Limited
O Public Limited

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SINGLE:
Only one person can operate this a/c. An individual who can IulIill the requirement oI
bank can open this a/c. We can call it a personnel or individual a/c. The requirements Ior this
type are National Identity Card Photocopy, Minimum Deposited Balance, Account Opening
Form, Letter oI Kinship etc.
1OINT:
In case oI ioint a/c applicant mentions that how much person will operate the a/c.
Instruction are given Ior ioint a/c such that the account shall be operated by anyone or more. The
requirements Ior this type are National Identity Card Photocopy, Minimum Deposited Balance,
Account Opening Form, Letter Kinship, Additional Signature Form (For Joint Account),
Declaration regarding the operator oI account.
PARTNERSHIP:
For partnership a/c, along with the application Iorm other requirements needs satisIied.
The requirements Ior this type are National Identity Card Photocopy, Minimum Deposited
Balance, Account Opening Form, Registration certiIicate, agreement among partners and
Commencement oI business and private registration, resolution oI board oI directors,
commencement oI business, memorandum and articles oI association and balance sheet etc.
PRIVATE LIMITED:
Such type oI account is opened in the name oI the businesses having private limited
concern and mostly medium business enterprises open such kind oI accounts. All the board oI
directors have to submit the declaration regarding the account operator on the company pad and
with the rubber stamp with the signature oI the all the members oI the board oI directors. In case
oI any change in directors bank must be inIormed regarding that. In case Iunds are borrowed by
the company all the directors approval is necessary rather not only the authorized partner who
can be the operator oI the account.

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PUBLIC LIMITED:
Public Limited A/C type oI account is opened in the name oI the businesses having
Public limited concern and mostly medium business enterprises open such kind oI accounts. And
terms regarding board oI directors are the same as oI private limited.
NATURE OF ACCOUNTS:
O Current Account
O PLS Saving bank A/C
O Khushali Bachat Account (KBA)
O Saving 365 A/C
O Basic banking A/C (BBA)
CURRENT ACCOUNT:
In this type oI 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 iI he likes. There is
also no restriction oI amount to be deposited or withdrawn. However, there is requirement oI
minimum balance maintenance oI Rs. 1000/-. Usually this type oI account is opened by the
businessmen. No proIit is paid by the bank and no service charges are deducted by the bank on
current deposits account. These types oI deposits are also exempt Irom compulsory deduction oI
Zakat.
PLS SAVING BANK A/C:
This account was started in 1980s aIter the issuing oI banking ordinance in 1980 by Zia
Government to develop Islamic banking in Pakistan. In this case customer would be responsible
Ior bearing proIit as well as loss. The bank would be within its rights to make investment oI
credit balances in the PLS saving accounts in any manner at its sole discretion and to make use

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oI the Iund to the best oI its iudgment in the banking business under the PLS system. For
withdrawal oI larger amount, 7 days notice in writing is required to be given.
O Minimum balance is Rs.500/
O Not more than eight withdrawals in a year allowed
O More than Rs.15000/ are not allowed to draw
O Seven day notice is required Ior big withdrawal
O Zakat deducted on ( 2.5
O ProIit calculated on monthly basis
O ProIit paid on annually basis
SAVING 365 ACCOUNT :
This account is newly developed oI MCB and it provides Ilexibility oI saving account to
business people. ProIit on deposits will be payable on daily product basis on balance oI RS.
500,000/- and above. However, iI balance in the account Ialls below RS. 500,000/- on any day,
the product will be ignored. There will be no restriction on withdrawal Irom the account. Zakat
and withholding Tax is also applicable on the account opened under this scheme.
O Minimum balance is Rs.500,000/
O Below minimum balance, proIit calculation ignored
O ProIit calculated on daily basis
O ProIit paid on annually basis
O 10 Withholding Tax on minimum balance
O Zakat deducted on ( 2.5

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KHUSHALI BACHAT ACCOUNT:
O Saving type account
O Rate oI return is 8 per annum
O ProIit calculated on daily basis
O ProIit paid on halI yearly basis
O Utility bills can be debited through this a/c
O No charges will be debited Ior utility payments
BASIC BANKING A/C (BBA):
O Introduced specially Ior salaried persons.
O Minimum balance is Rs.1000/
O No service charges.
O Only two transactions allowed, in one month.
O For more than two transactions Rs.35/- per transaction.
O Single natured A/C.
ACCOUNT OPENING PROCEDURE:
Following steps are involved in A/C opening,
ACCOUNT OPENING FORM: Firstly the customer Iills the account opening Iorm and
provides all the inIormation as provided above. I experienced to Iill this Iorm

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INTRODUCTION:
An account is needed to be introduced. The introduction oI a current account holder is
accepted Ior the opening oI an account.
O The introducer should be a branch customer or may be account holder oI any
branch oI MCB; however signatures should be veriIied by the banker. In certain
cases, introduction Irom bank other than bank MCB may be allowed.
O Personally known accounts may be introduced by the bank staII.
O Introduction Irom an account holder not personally coming to the bank should be
veriIied by the bank.
STAMPING:
Then it is stamped. Stamps like. BAL sign veriIied, Sign Admitted Stamp, Sign VeriIied
stamps etc are aIIixed.
ACCOUNT NUMBER:
When all the procedures are completed than the Iinal approval is taken Irom the branch
manager. AIter obtaining approval, an account number is allotted to the customer and all the
inIormation is entered in to the computer and KYC is Iilled up. Then that account number is
writing on the Cheque Book, Specimen Signature cards and account opening Iorm.
KNOWING YOUR CUSTOMER:
AIter entering inIormation KYC is Iilled up. It should be ensured that at the time oI
Iilling inIormation in KYC, a customer should be physically present. AIter this all inIormation is
saved in system. I Iilled KYC Iorm also.

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APPROVAL:
This account is Iurther approved by Manager Operations.
SEND FORM TO HEAD OFFICE:
AIter IulIilling all the requirements and veriIying the Iorms Irom operation manager the
account opening Iorm is sent to Head OIIice Karachi and make request to issue the printed
cheque book.
LETTER OF THANKS:
Subsequent to the opening oI an account, letter oI thanks should be sent under registered
post or courier service to the customer and the introducer.
ISSUANCE OF A CHEQUE BOOK:
AIter opening an a/c with the bank, the a/c holder can not immediately start operating
his/ her account. The cheque book is issued, when a customer will submit a copy oI letter oI
acknowledgement duly signed by him, in case oI new account. And Ior subsequent issuance oI
cheque book He/she has to make a request once again in the name oI bank Ior the issuance oI
cheque book and he should mention title oI A/C, A/C number, sign it properly and mention the
number oI leaves requires. Normally a cheque book having at least 25 leaves is issued but it can
also be oI 50 leaves.
CLOSING OF AN ACCOUNT:
There is no. oI reasons oI closing an account. Some are listed below:
O II customer desires to close his account
O In case oI death oI one account holder.

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O Bankruptcy oI the account holder.
O II an account contain nil balance or not up to the requirement oI rules.

BeIore closing any account, bank send letter to the account hold Ior inIorming him that
his account is going to be closed. There is need an approval Iorm higher authority to close any
account.
CLEARING DEPARTMENT
In clearing department I worked under supervision oI Miss Shumaila Malik. In clearing
department and learned about inward and outward clearing and I also learnt about,
MEANING OF CLEARING:
The word clearing has been derived Irom the word 'clear and is deIined as,
'A system by which banks exchange cheques and other negotiable instruments drawn on
each other within a speciIic area and thereby secure payment Ior their clients through the
Clearing House at speciIied time in an eIIicient way.
CLEARING HOUSE
It is a place where cheques are presented, collected
Irom bank branch. It is one oI the services provided by
NIFT to other commercial banks. NIFT acts as a
clearinghouse.
NIFT:
NIFT stands Ior National Institutional
Facilitation Technologies Clearing House oI SBP has
shiIted a tiresome part oI its work to a private institution
named NIFT. NIFT collects cheques. demand drafts. Pay orders. Travelers Cheques. etc.

31

Irom all the branches oI diIIerent banks within city through its carriers and send them to the
branches on which these are drawn Ior clearing. AIter the branches approve the instruments
drawn on them, NIFT prepares a sheet Ior each branch showing the number Ior instruments and
amount

in its Iavor and drawn on it and sends it to each branch. A similar sheet Ior each bank is also sent
to clearing house oI SBP where accounts oI banks are settled in the same manner.
LEARNING IN CLEARING DEPARTMENT
My learning in clearing department was oI Iollowing things:
O Procedure oI clearing a cheque.
O Checking oI cheques.
O Inward and outward clearing.
O DiIIerent reasons oI returning a cheque.
O Types oI clearing stamps.
CLEARING PROCEDURE:
Instruments collected are treated as Transfer. Transfer Delivery. Clearing. and
Cheque collection.
CHECKING OF CHEQUES:
When the instruments are collected Irom the client. Following things are checked
O Cheque date, instrument should be neither stale/ nor post-dated.
O Title
O Amount in Iigures and words should be the same

32

O There should be no cutting and overwriting on the cheque
O Instrument should not bear any unauthorized alternation.
O Cheque is crossed.

TRANSFER:
When the instruments are collected and paid by the same branch, it is called transIer.
TRANSFER DELIVERY:
When instruments are collected and paid by two diIIerent branches oI the same bank
situated in the same city, it is called transIer delivery
A cheque is processed under transIer delivery when it has crossing stamp and is Irom
local branch oI MCB
CLEARING:
Instruments which are drawn on the branches oI some other bank oI the same city or oI
the same area, which is covered by a particular clearing house, are processed Ior clearing.
In outward clearing when cheque is received two copies oI voucher SF-37 are prepared,
one copy and instruments along with clearing stamp, realization stamp, add list and two vouchers
oI clearing summary are sent to NIFT in a sealed bag. And clearing records are recorded in
clearing register.
In Inward clearing instruments received Irom NIFT are posted in Computers aIter
checking.
CHEQUE COLLECTION (C.C):
When cheque is Irom another city then it is grouped as C.C.Such instruments are
processed as cheque Ior collection. In this procedure SF-37 Iorm is used in Cheque collection.

33

Original voucher with cheque, stamped as C.C along with C.C number is sent to main branch oI
the responding city which is Iurther sent to NIFT. Whereas Carbon copy with Pay-In-Slip is
taken by bank Ior record purposes.

PAY-IN-SLIP:
It is used Ior two purposes
O Whenever we want to deposit cash in our account then pay-in-slip is used by
writing amount on it and depositing it to cashier along with money.
O Whenever we have cheque Irom any party to be collected in our account we Iill
pay-in-slip. One part is attached with cheque and another is given to cheque
holder as a receipt.
NOTE:
In inward clearing sometimes cheques are not passed due to some reasons then cheques
are sent back to NIFT along with cheque return memo. Some oI these reasons are,
O Cheque incomplete
O Clearing stamp Required.
O Drawer`s sign incomplete
O Drawer`s sign diIIerent Irom specimen
O Post Dated
O Payment stopped by drawer.
O Amount in words and Iigures diIIer.

34

O InsuIIicient Iunds etc.

REMITTANCE DEPARTMENT

REMITTANCE:
Remittance is transIer oI Iunds Irom one place to another or Irom one person to another.
It is an important service provided by banks to customers as well as non-customers. Since it is
not a Iree service it is a source oI income Ior the bank.
PARTIES INVOLVED IN REMITTANCE
Four parties involved in remittance: -
Remitter. Remittee. Issuing Bank. Paying Bank
REMITTER:
One who initiates, or requests Ior a remittance. The bank charges him a commission Ior
this service. He may or may not be the branch`s customer.
REMITTEE:
A Remittee is also called the beneIiciary, or the payee. The person in whose name the
remittance is made. A Remittee is also the one who receive the payment.
ISSUING BANK:

35

The bank that sends or eIIects the remittance, through demand draIts, telegraphic
transIers, or Mail TransIers.

PAYING BANK:
Paying Bank also knows as the drawee branch. The branch Irom where the instrument is
drawn.
TYPES OF REMITTANCE:
Remittance is classiIied into Iollowing Iour types
O Inward remittance, instruments received Ior payment
O Outward remittance, issuing instrument to the responding branch.
O Inland remittance, with in same country.
O Foreign remittance, Irom one country to another country.
INSTRUMENTS USED IN REMITTANCE:
O Demand DraIt (DD)
O Telegraphic TransIer (TT)
O Pay Order (PO)
O Call Deposit Receipt (CDR)
O Rupees Traveler Cheque (RTC)
DEMAND DRAFT:
DD is a written order given by the branch oI the bank on behalI oI the customer to other
branch oI the same bank to pay the certain amount to the customer.DD are issued Ior the

36

particular place other than place oI issuance. DD applicant or recipient, who might not be an A/C
holder present it to another bank at a diIIerent place requesting it to pay on demand a speciIied
amount oI money which is already received to the person named on it.

DOCUMENTATION:
A printed application Iorm is provided Ior Iilling in completely and signing by the
applicant. AIter depositing an amount oI draIt and commission oI the bank, duly completed and
signed by two authorized oIIicers, then it is handed over the applicant and credit order is
dispatched to drawee branch.
TELEGRAPHIC TRANSFER (TT):
TT is Iund that is transIerred electronically which is
remitted on the order oI a certain person. In this case the
authority is given Irom one bank to other on the behalI oI the
customer through telecommunication to debit their inter oIIice
account through them and credit their parties account mentioned in TT. But it is not practiced
these days Irequently.
PAY ORDER:

37

For this kind oI remittance the payer must have the account in the issuing bank. Pay order
are more liquid as compared to cheques because cheques may be dishonored while PO can`t be.
It is written order issued by the bank drawn and payable on itselI. It is used Ior local transIer oI
money Irom one person to another person.

DOCUMENTATION:
The party who requires a pay order will get a printed application Irom the bank. He will
Iill it and deposits the amount and commission.
CALL DEPOSIT RECEIPT (CDR):
It is an instrument like Cheque issued by the bank on account oI a customer & in Iavor oI
a person, to pay the speciIied amount. CDR`s are issued to make payments, especially when a
company goes Ior some tenders or Ior purchase oI government securities or any contracts with
others.
DOCUMENTATION:
The party who requires a CDR will get a printed application Irom the bank. He will Iill it
and deposits the amount and commission. The bank enioys the beneIit oI keeping Iunds
deposited until the payment is not made.
RUPEES TRAVELER CHEQUE (RTC):
RTC is the traveler cheque are acceptable at all branches
oI MCB, and they carry dozens o I beneIits. Security is always
being an important issue oI concern. TCs provide maximum
security while carrying big amounts.
DOCUMENTATION:

38

First oI all RTC-10 is given to customer. It is Iilled and then cash is deposited to cash
department. One copy is Ior oIIice and one copy is given to the customer and RTC are issued at
that time.
NOTE:
At time oI my stay in remittance department, there was no issue oI CDR, TT, RTC, PO
so I were unable to understand its practical aspects, except clearing.

OTHER DEPARTMENTS
There have been some departments which are conIidential.
1. CASH DEPARTMENT
2. ACCOUNTS DEPARTMENT
3. ADVANCES DEPARTMENT
And in TECHNOLOGY DEPARTMENT I got inIormation about ATM and Online
Banking and iust Iilled their Iorms because computer work was not allowed.

CASH DEPARTMENT

The cash department is the most important department oI the bank. In cash department
both deposits and withdrawals go side by side. This department deals with cash deposits and
payments.
The Iollowing books are maintained in the Cash Department:

39

O Cash Receipt Book
O Cash Payment Book
O Cash Balance Book

The oIIicers in this department are called teller and there were 2 tellers Mr. Nazir and Mr.
Abrash at the counter. This department is involved in two activities: Cash Deposits. Cash
Payments.
CASH RECEIPT BOOK:
The cashier is responsible to receive both the paying-in-slip and cash Irom the depositor.
For depositing the cash into customer`s accounts, there is need to Iill in the paying-in-slip giving
the related details oI the transaction. The cashier check the necessary details provided in the
paying-in-slip and accounts the cash and tallies with the amount declared in the slip then cashier
Iills in the 'Cash voucher received Record Sheet and assigns a voucher no. to both the
transaction being made in the sheet and the slip. The 2
nd
cashier posts the transaction entries in
computer ledger. AIter posting these entries, computer display beIore posting balance and aIter
posting. Cashier assigns the stamp POSTED on the voucher to show voucher transaction
entries are posted.
CASH PAYMENT BOOK:
The only instrument that can be used to
withdraw an amount Irom an account is the
Cheque book. No payments are made by another
instrument. When cheque is valid in all respects,
the cashier enters the necessary inputs in the
computer and posts the entry so that account
balance is updated. When cashier posts these entries, computer automatically display the
balance beIore posting the transaction amount, balance aIter posting.

40

The cashier at the same time maintains the 'Cash Voucher Received Record Sheet.
Then inspects the signature oI the customer, cancellation mark oI checking oIIicer and stamp oI
'POSTED is placed on cheque beIore he hands over the cash to customer.
CASH BALANCE BOOK:
At the end oI the working day cashier is responsible to maintain the cash balance book.
The cash book contains the date, opening balance, detail oI cash payment and received in Iigures,

The consolidated Iigure oI receipt and payment oI cash is entered in the cash book and
the closing balance oI cash is drawn Irom that
i.e.
Opening Balance of Cash + Receipts -
Payments Closing Balance

ACCOUNTS DEPARTMENT
The most important aspect in record keeping oI a bank is its accounting system. The basic
purpose Ior maintaining an accounting system is to ensure consistency in record keeping and
accounts. The basic requirement Ior any accounting system is that it should be in accordance
with the GAAP i.e. Generally Accepted Accounting Principles. There are two choices available
to an organization Ior an accounting system.
Main Functions of Accounts Department:
The maior Iunction oI this department is keeping the record maintenance oI each and
every transaction and prepares reports about the amount oI deposits and advances and sent to
Head oIIice or State Bank oI Pakistan on monthly, quarterly and yearly basis.
Following activities are carried out in Accounts Department.

41

O Budgets and budget review Iorm
O Income & expenditures.
O Reports and Reconciliation.
O Activity checking.

O Depreciation & Maintenance oI
Iixed assets provision.
O Maintenance & depreciation oI
Iixed assets.

TECHNOLOGY

DEPARTMENT

It includes;
O Mobile Banking
O Phone Banking
O Online Banking
O ATM

42

MOBILE BANKING:
It has been launched recently during my internship. It helps in getting accounts details
and making transactions using mobiles.
PHONE BANKING:
"MCB Phone Banking is available to all customers on a countrywide basis. Customers
can dial 111-000-622(without any city code/preIix) Irom their respective cities
Customers enioy 24x7 Round the Clock Phone Banking
Services. MCB is the Iirst bank in Pakistan to oIIer Centralized
connectivity.

ONLINE BANKING:
MCB now oIIers the Iacility oI on-line banking to its
customers through its country wide network oI branches. Customers can use the ATMs or the
banking counters oI any branch Ior day-to-day banking needs, irrespective oI branch where they
maintain their accounts.
There are now more than 250 branches linked through this system and they can
transact with each other directly using computer systems and the soItware named
'SYMBOLS at their own branches.
ATM (Automatic Teller Machine):
ATM stands Ior Automatic Teller Machine. This
machine is used to transact in one's account without
intervention oI humans. These machines are basically
used Ior taking cash, conIirming balances and requesting
statements / cheque books. MCB has the largest ATM
network in the country at the moment with almost one

43

ATM at each online branch and also ATM terminals at International Airports covering 27 cities
oI Pakistan
ATMs are operated through a card issued to the valued customers and by application oI
Personal IdentiIication Number (PIN number). Now MCB has also entered into a contract with
Cirrus which is a subsidiary oI MasterCard. This contract will enable an ATM card holder to
use his account even when he is out oI country at all the ATMs where Cirrus logo is displayed.
Green Cards are ordinary cards with a maximum withdrawal Iacility oI Rs. 10,000/- in a day.
The annual Iee Ior this card is Rs. 300/- only.
Gold Cards are special cars with maximum withdrawal limit oI 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 Iacility according to the standards oI Cirrus.

44

ADVANCES DEPARTMENT
DiIIerent banks provide loan Iacility to general public, companies etc. but MCB provides
two types oI loans that are as under:
O Fund Base Loans
O Non Fund Base Loans
FUND BASE LOANS:
In this type oI loans cash is directly involved. Bank provides loans in shape oI cash. Bank
gives credit or limit Iacility to customers that needed it. In Iund based loans there are two Iurther
classiIications:
Long Term Loans:
O Lease Iacility Ior car
O For Machinery
O For Fixed Assets
Short Term Loans:
Running Finance (R/F)
Cash Finance (C/F)
RUNNING FINANCE:
The MCB provides overdraIt Iacility to the customers Ior the working capital
requirement. These are the loans which are given to those customers whose business runs
through out the year or continuously. Its duration is one year and it is Ior running business.

45

In advances there are two securities one is known primary security and other is secondary
or collateral security.
Hypothecation oI stock is the primary security and mortgage is the secondary or
collateral security.
SECURITIES FOR FUND BASE LOANS:
Hypothecation oI Stock
Mortgage
Pledge
HYPOTHECATION OF STOCK:
In hypothecation oI stock the possession oI goods and the title remains in the Iavour oI
customer. Without the permission oI the bank the customer can't sell the stock. It is the
restriction oI the bank that in god own there should be stock according to the instructions oI bank
every time. The draw back oI this is that there is no check and balance oI stock Irom the bank.
The customer can easily sell his stock.
MORTGAGE:
The bank can mortgage the immovable property like land, building etc as a security. In
mortgage the possession remains to customer and title oI goods remains to bank.
PLEDGE:
In this, bank requires the moveable property oI the customer as a security like stock,
vehicle etc. possession oI goods remains to customer and title in the Iavor oI bank. The bank
hires a muqaddam |Guard| and the key oI store where the stock is pledged is in the security oI
bank. When customer wants to sell the stock then he pays the amount equivalent to stock which
he wants to sell. AIter receiving amount bank releases his stock Ior the same amount

46

NON FUND BASE LOANS:
In non Iund based loans cash is not directly involved but bank gives guarantee on
the behalI oI customer. Bank works as a third party and known as Guarantor. Bank provides a
security to customer when he needs and someone requires Irom the customer.
DOCUMENTS REQUIRED BY BANK FOR ADVANCES:
O Request oI customer
O Credit application Irom bank
O Basic borrower sheet
O Net worth certiIicate
O CIB report
O Financials
O Account statement
O Property evaluation report
O For sale value certiIicate
O Property documents
O Title deed |Iard|
O Property map
O CNIC
O Account opening Iorm

47

O Undertaking

Following steps are there:
O InIormation required by the bank
O Preparation oI credit proposals
O Sanction advice
INITIAL INFORMATION:
Following inIormation is required to be submitted to bank.
O Nature & structure oI borrower business
O Names oI proprietors, partners or directors
O Detail oI all Iirms or companies associated with borrower.
O Financial condition oI borrower business
O An assessment oI his business abilities
O Accurate and up to date Iinancial statements oI last two years Ior comparison
purposes
O Market report on the borrower where borrower has maintained an account with
another bank, a report Irom his bank should also be obtained.
O A report Irom credit standing bureau oI State Bank oI Pakistan
PREPARATION OF CREDIT PROPOSAL:
At Iirst a Iormal application Ior credit approval is obtained Irom the party along with
complete group position. The party`s credibility report is obtained Irom the bank with which the

48

bank is doing its business. The party`s credibility report is also taken Irom the Head oIIice oI
Trade InIormation Division.
For obtaining credit, party has to submit the last two years Balance Sheet and ProIit &
Loss statement duly attested by authorised auditors. II the party is also involved in export or
import business then the bank also considers the data oI three years about import & export.
Current debt and equity ratio is also calculated by the bank. The type oI data required to prepare
the credit proposal is to be gathered Irom the diIIerent departments. Some data is obtained Irom
the Ioreign Exchange department. Some data is available in Advance Department. The purpose
oI obtaining Credit should be explained clearly. The securities oIIered by the party to the bank
are also evaluated. In case oI pledging oI property in shape oI land or building the complete
evaluation oI the property should also be attached.
AIter all the necessary documents Ior applying Ior advance is IulIilled by the party then
the case is sent to Manager Ior approval. II the credit limit is in his range then he can decide over
it otherwise the case is Iorwarded to seniors. II there is any discrepancy then the party is
inIormed oI it.
Sanction Advice:
When the documents required are complete and there is no ambiguity then the party is
advised that their credit or loan is approved and will be available to you soon.
The Iorm contains Iollowing inIormation:
O Nature and amount oI limit.
O Purpose
O Security/ Collateral
O Margin ().
O Mark up/ Charges
O Validity

49

FINANCIAL ANALYSIS OF MCB

RATIO ANALYSIS
Ratio analysis is an important and old technique oI Iinancial analysis. Ratios are
important and helpIul in the reIerence that:
O These simpliIy the comprehension oI Iinancial statement and tell the whole story
oI changes in the Iinancial conditions oI the business.
O These provide data Ior inter-Iirm comparison. The ratios highlight the Iactors
associated with successIul and unsuccessIul Iirms, also reveal strong and weak
Iirms.
O These help in planning and Iorecasting these can assist management in its basic
Iunctions oI Iorecasting, planning, coordination and control.
O These help in investment decision in case oI investor and lending decision in case
oI Bankers etc.
However, the ratios are only indicators, they cannot be taken as Iinal regarding good or
bad Iinancial position oI the business other things have also to be seen.
Great care is needed while calculating meaningIul ratios and in interpreting them.
Although there are several ratios, which an analyst can employ yet the type oI ratios he would,
use entirely depends on the purpose Ior which the analysis is done i.e., a creditor would keep him
abreast about the ability oI a concern to cover up its current obligations and so would care about
current and liquid ratios, Turnover oI receivables, coverage oI interest by the level oI earnings
etc.

50

ADVANTAGES OF RATIO ANALYSIS:
It helps to give comprehensive Iinancial statements in evaluating aspects oI any
undertaking in respect oI Iinancial health, operations eIIiciency and proIitability. It gives a
chance oI inter-Iirm-comparison to measure eIIiciency and helps management to resort to some
remedial measures. It provides a good help in decision making Ior investors and the Iinancial
institutions.
CATEGORIES OF RATIO ANALYSIS:
O Liquidity ratios
O Activity ratios
O Debt ratios
O ProIitability ratios
O Market ratios
LIQUIDITY RATIOS
The liquidity oI a Iirm is measured by its ability to satisIy its short-term obligations as
they come due. Liquidity reIers to the solvency oI the Iirm`s overall Iinancial position i.e. the
ease with which it pays its bills. Due to low or declining liquidity Iirm moves towards Iinancial
distress and bankruptcy.
Liquidity Measures are
O Current ratio
O Quick (acid-test) ratio

51

CURRENT RATIO:
The current ratio, one oI the most commonly cited Iinancial ratios, measure the Iirm`s
ability to meet its short-term obligations. It is expressed as Iollows:
Current assets
Current ratio Current liability

RESULT:
From the above ratios it is clear that the Iirm`s investment in current assets has increased.
In 2010, it is in better position to pay its obligations as they come due. But in three years we can
see that the Iirm has the ability to pay its current liabilities eIIiciently. The standard Ior this ratio
is 2:1 it is calculated by the current assets by total oI the current liabilities.
This ratio is below the standard. The management should take steps to improve the short-
term Iinancial position oI the Iirm.
DEBT RATIO
The debt position oI a Iirm indicates the amount oI other people`s money being used to
generate proIits. In general, the Iinancial analyst is most concerned with long term debts, because
these commit the Iirm to a stream oI payment s over the long run.
Yeurs Z010 Z009 Z00
Current rutio 14Z 10Z 131

52

The debt ratio measures the proportion oI total assets Iinanced by the Iirm`s creditors.
The higher this ratio the greater the amount oI other people money being used to generate proIit.
The ratio is calculated by Iollowing Iormula
Debt ratio Total liabilities
Total assets

Yeurs Z010 Z009 Z00
Debt rutios
049b 00Z7 07707b

RESULT:
The ratio indicates the more than halI oI the assets Iinanced by the debt. This ratio is
almost showing the same trend throughout the previous three years. Debt ratio indicates the
greater the risk and more Iinancial leverage it has. It also shows that Iirm has paid some portion
oI the debt during the year 2010.
MARKET RATIOS

O Return on total assets
O Return on equity
O Earnings per share
RETURN ON TOTAL ASSETS:
It measures the overall eIIectiveness oI management in generating proIits with its
available assets. The higher the Return on total assets better will be the perIormance.

53

Earning available for common stockholders
Return on total assets
Total assets

Yeur Z010 Z009 Z00
ROA b030% bb0b% bZ19%

RESULT:
The return on investment oI the Iirm is 5.03 in 2010. It is less than the previous year. It
shows that Iirm generates Rs.5.03 Ior each Rs.100 oI the investment which is very poor Ior the
company progress.
RETURN ON EQUITY:
Earning available for common stockholders
Return on total assets
Total Equity

Yeur Z010 Z009 Z00
ROE (%) Z313 3473Z3 34441

54

RESULT:
The return on equity oI the Iirm is 28.313 in 2010. It is less than the previous year. It
shows that Iirm generates Rs.28.313 Ior each Rs.100 oI the investment made by the partners or
shareholders oI the company (which are privately owned by Iour brothers).

EARNING PER SHARE:

RESULT:
This ratio indicates the amount oI income earned by the common stockholders. Above
Iigures clearly show the progress oI the company and it maintains this ratio more than Rs.20
which is good Ior the investors.
VERTICAL ANALYSIS:
In vertical analysis each item oI a Iinancial statement is presented as a age oI the total
oI items or some other suitable items.
HORIZONTAL ANALYSIS:
In vertical analysis each item in Iinancial statement oI the last year is considered as a base
oI the same items.

Yeur Z010 Z009 Z00
EPS Z439Z9 Z1947 ZZ9b

55

BALANCE SHEET
AS AT 31 December 2010.2009.2008

Z010 Z009 Z00

(Ps. In 000) (Ps. In 000) (Ps. In 000)
SSE1S

Cash and balances with treasury banks
39,o3I,ZI9 39,o83,883 3Z4ob97o.00
Balances with other banks
4,I0o,bZo 3,8o7,b9I oo49ob9.00
Lending to Iinancial institutions
4,I00,079 I,0bI,37Z ZI08I800.00
Investments
97,790,39I IIb,3b8,b90 o44b07oI.00
Advances
ZoZ,b08,830 ZI8,9b9,78o I98Z3oo8Z.00
operating Iixed assets
I7,3Z0,48b Io,08Z,78I 9073Z7o.00
deIerred tax assets
- - I7488o.00
Other Assets
I9,8Z8,ZZ8 I7,89o,838 II044909.00

44b,Z8b,7b8 4IZ,900,84I 343I77949.00
B1ES

Bills payable

Borrowings Irom Iinancial institutions
I0,bbI,4o8 I0,479,0b8 7089o78
Deposits and other accounts
ZZ,oo3,840 39,40o,83I Z394347o
Sub-ordinate loans
330,Z4b,080 Z9Z,088,347 Zb7I8bII0
Liabilities against assets subiect to
Iinance lease
- 479,Z3Z Ib97440
Other liabilities
440,Z9b I,I83,b8o

56

ZI,ZbZ,94Z II,7Io,4ob III77IZb
E1 SSE1S
38b,Ib3,oZb 3bb,3b3,bI9 30099Z830

o0,I3Z,I33 b7,b47,3ZZ 4ZI8bII9
#EP#ESE1ED BY:

Share capital

Reserves
o,Z8Z,7o8 o,Z8Z,7o8 b4o3Z7o
Unappropriated proIits
3o,77Z,3ZI 34,000,9Z7 Z4ooZ44o

II,0ob,7Z3 7,0b4,47Z oZ78b93
Minority interest
b4,IZ0,8IZ 47,338,Io7 3o4043Ib

o9 o3 bZ
Surplus/ (deIicit ) on revaluation oI
securities
b4,IZ0,88I 47,338,Z30 3o4043o7

o,0II,ZbZ I0,Z09,09Z b7807bZ

o0,I3Z,I33 b7,b47,3ZZ 4ZI8bII9

Income Statement
For the Years 2010.2009.2008

Z010 Z009 Z00

Ps. In
000
Ps. In
000
Ps. In
000
Mark-up /return/ intertest earned
40,049,b0b 3I79I7b4 Zb7848b3
Mark-up/ return/ interest expensed
II,b9Z,9ZZ 78b88I9 4b09I4o

57

Net Mark-up /return/ intertest income
Z8,4bo,b83 Z393Z93b ZIZ7b707
Provision Ior diminution in the value oI
investment - nrt
Z,o83,994 I0bZo9 IZII97
Provision against non-perIorming loans and
advances - net
I,33b,IZ7 Z9b9b83 I0I4b40
Bad debts written oII directly
- I99 47000

4,0I9,IZI 30ob0bI II8Z737
Net mark-up /interest income after provisions
Z4,437,4oZ Z08o7884 Z009Z970
Non-mark-up / interest income

Fee, commission and brokerage income
Z,878,oo3 Z,77Z,oIb Z3ZbI7I
Income earned as trustee to various Iunds
ZI,8o7 b,8b9 483
Dividend income
4bI,3IZ b3b,8I3 74oZ7o
Income Irom dealing in Ioreign currencies
7Z7,bo4 o93,408 o9Z0I0
Gain on sale oI securities - net
748,I39 I,b07,oI0 o0b8ob
Unrealized loss on revaluation oI investments
(99,b3I) (3,3Z9)
classiIied as held Ior trading

Other income - net
I,Z0I,834 I,00Z,Io0 b77703
Total non-mark-up / interest income
b,9Z9,848 o,bI4,I3o 4947b08

30,3o7,3I0 Z7,38Z,0Z0 Zb040478
Non-mark-up / interest expenses

Administrative expenses
7b8030Z b,440,30b ob0bb7o
Other provision / (reversal) - net
I0IZ0 (3,743) II4II

58

Other charges
9Z099I o4Z,780 oo708
Total non-mark-up / interest expenses
8bII4I3 o,079,34Z ob83o9b
Share oI proIit oI associated undertaking
30843 I,ZZ3,o33 474030
Extra ordinary / unusual item
- -
ProIit beIore taxation
ZI88o740 ZZ,bZo,3II I89308I3
Taxation

Current year
738734b o,4o3,bo0 b709I40
Prior years
-8ob344 -IZ94b8o b9390o
DeIerred
Io348 899,898 oIZI3
Share oI tax oI associated undertaking
ZbIo4 Ib,7o9 Zbo7b

obo3bI3 o,084,o4I o389934
ProIit aIter taxation
Ib3Z3ZZ7 Io,44I,o70 IZb40879

Basic and diluted earnings per share - aIter tax
Z4.39 Zo.I7 I9.9o

59

VERTICAL ANALYSIS
BALANCE SHEET
AS AT 31 December 2010

Z010 Z009 Z00
ASSETS
% % %
8.90 9.oI 9.4o
0.9Z 0.94 I.94
Lending to Iinancial institutions
0.9Z 0.Zb o.I4
Investments
ZI.9o Z7.94 I8.78
Advances
b8.9b b3.03 b7.7o
3.89 3.90 Z.o4
deIerred tax assets
0.0b
Other Assets
4.4b 4.33 3.ZZ
total assets
I00.00 I00.00 I00.00
LIABILITIES

Bills payable
Z.37 Z.b4 Z.07
b.09 9.b4 o.98
74.Io 70.74 74.94
Sub-ordianted loans
0.IZ 0.47
DeIerred tax liabilities
0.I0 0.Z9 0.00

60

Other liabilities
4.77 Z.84 3.Zo
total liabilities
8o.b0 8o.0o 87.7I

REPRESENTED BY:

Share capital
I.4I I.bZ I.b9
Reserves
8.Zo 8.Z3 7.I9
Z.49 I.7I I.83
total common stockholder equity
IZ.Ib II.4o I0.oI
Surplus/ (deIicit ) on revaluation oI securities
I.3b Z.47 I.o8
total liabilities & equity
I00.00 I00.00 I00.00

Income Statement
For the Years 2010.2009.2008

Z0I0 Z009 Z008
I00 I00 I00
Z8.9b Z4.7Z I7.49
7I.0b 7b.Z8 8Z.bI
Provision Ior diminution in the value oI investment - nrt
o.70 0.33 0.47
Provision against non-perIorming loans and advances - net
3.33 9.3I 3.93
0.00 0.I8
Total Provisions
I0.04 9.o4 4.b9

61

oI.0Z ob.o4 77.93

0.00 0.00 0.00
0.00 0.00 0.00
7.I9 8.7Z 9.0Z
0.0b 0.0Z 0.00
Dividend income
I.I3 I.o9 Z.89
I.8Z Z.I8 Z.o8
I.87 4.74 Z.3b
0.00 0.00 0.00
-0.Zb -0.0I 0.00
Other income - net
3.00 3.Ib Z.Z4
I4.8I Z0.49 I9.I9

7b.8Z 8o.I3 97.II
0.00 0.00 0.00
I8.93 I7.II Zb.Z3
0.03 -0.0I 0.04
Other charges
Z.30 Z.0Z 0.Zo
ZI.Zb I9.IZ Zb.b3
0.08 3.8b I.84
b4.ob 70.8o 73.4Z
Taxation
0.00 0.00 0.00

62

Current year
I8.4b Z0.33 ZZ.I4
Prior years
-Z.Io -4.07 Z.30
DeIerred
0.04 Z.83 0.Z4
0.0o 0.0b 0.I0

Io.39 I9.I4 Z4.78
38.Zo bI.7Z 48.o4

Z4.39 Zo.I7 I9.9o

HORIZONTAL ANALYSIS

BALANCE SHEET
AS AT 31 December 2010

Z010 Z009 Z00
ASSETS
% % %
IZZ IZZ I00
oZ b8 I00
Lendings to Iinancial institutions
I9 b I00
Investments
IbZ I79 I00
Advances
I3Z II0 I00

63

I9I I77 I00
deIerred tax assets
I00
Other Assets
I80 IoZ I00

I30 IZ0 I00
LIABILITIES

Bills payable
I49 I48 I00
9b Iob I00
IZ8 II4 I00
Sub-ordianted loans
30 I00
Liabilities against assets subiectto Iinance lease
I00
DeIerred tax liabilities
I00
Other liabilities
I90 I0b I00

IZ8 II8 I00
E1 ASSETS
I43 I3o I00

REPRESENTED BY:

Share capital
IIb IIb I00
Reserves
I49 I38 I00
I7o IIZ I00

I49 I30 I00
Minority interest
I33 IZI I00

64

I49 I30 I00
Surplus/ (deIicit ) on revaluation oI securities
I04 I77 I00

I43 I3o I00

Income Statement
For the Years 2010.2009.2008

Z0I0 Z009 Z008

% % %
Ibb.3Z IZ3.30 I00
Zb7.I0 I74.Z9 I00
I33.7b IIZ.49 I00
Provision Ior diminution in the value oI investment - nrt
ZZI4.b7 8o.8o I00
Provision against non-perIorming loans and advances - net
I3I.o0 Z9I.7Z I00
0.4Z I00
Total Provisions
339.8Z Zb9.Ib I00
IZI.oZ I03.8o I00


IZ3.80 II9.Z4 I00
4bZ7.33 IZI3.04 I00
Dividend income
o0.48 7I.80 I00
I0b.I4 I00.Z0 I00

65

IZ3.48 Z48.84 I00


Other income - net
Z08.04 I73.47 I00
II9.8o I3I.oo I00

IZI.Z7 I09.3b I00

IIo.bZ 83.o3 I00
88.o9 -3Z.80 I00
Other charges
I380.o3 9o3.b7 I00
IZ9.Z8 9Z.34 I00
o.bI Zb8.I3 I00
Extra ordinary / unusual item

IIb.oI II8.99 I00
Taxation

Current year
IZ9.40 II3.ZI I00
Prior years
-I4b.70 -ZI7.98 I00
DeIerred
Zo.7I I470.II I00
98.0I oI.4Z I00

I0Z.7Z 9b.ZZ I00
IZZ.I9 I3I.I0 I00

66

IZZ.I9 I3I.II I00

67

RESULT ON THE BASIS OF VERTICAL & HORIZONTAL ANALYSIS:
From the above mentioned analysis Iollowing are my Result about the Operations oI
branches oI MCB Ior the year 2010,
O MCB`s income by operations has been increased by 122.19 than 2009.
O Company`s Total Assets in Pakistan has been increased by 130 than 2009.
O DeIicit has been decreased by 104 in comparison with year 2009
O Due to Iinancial crisis in the world investment activities are slowed down in year 2010
and they are decreased by 152 than year 2009.
O Due to its sound Iinancial policies MCB`s borrowing Irom Iinancial institutions has been
decreased by 95 than year 2009.

SWOT ANALYSIS
The overall evaluation of a company`s strengths. weaknesses. opportunities and threats
Strengths (S) include internal capabilities, resources and positive situational Iactors that
may help the company to serve its customers and achieve its obiectives
Weaknesses include internal limitations and negative situational Iactors that may interIere
with the company`s perIormance.
Opportunities are Iavorable Iactors or trends in the external environment that the
company may be able to exploit to its advantage.
And Threats are unIavorable external Iactors or trends that may present challenges to
perIormance.

68

A scan oI the internal and external environment is an important part oI the strategic
planning process. The SWOT Analysis provides inIormation that is helpIul in matching the
Iirm`s resources and capabilities to the competitive environment in which it operates.

MCB`s SWOT ANALYSIS
STRENGTHS
MCB is the Iirst Pakistani privatized bank and because oI its quality management,
marketing, innovation in products and services. Owing to all such Iactors they have established a
good reputation in the banking market. The name oI MCB makes you recall the highly
cooperative and proIessional individuals ready to serve you with maximum zeal and zest.
The ioining oI experienced people, advanced management, advance setup and Iacilities
gave MCB an edge over its competitors.

69

MUSLIM COMMERCIAL BANK`S IMAGE:
MCB is a reputable Iinancial organization and is well known all over the Pakistan.
Perception is oI producing a high quality services.
CUSTOMER CARE:
The Bank not only provides high quality services but it also look Ior the comIort and
convenience oI the clients, MCB always preIerred their customers.
MARKET SHARE:
MCB has covered much oI the potential market and the net proIit is increasing years aIter
years. Deposits and advances have suIIiciently increased.
LARGE NUMBER OF DIVERSIFY PRODUCTS:
This is also its main strength as it has diversiIied in many products such as:
O Debit Card
O Visa Card
O Car Financing
O Agriculture Financing
BRANCH NETWORK
It is the greatest strength oI the Bank. In 2004, Iive more branches were added to the
network and by the end oI the year 2005 the total number oI branches was raised Irom iust 53 to
143. MCB has also planned to open more branches in next coming years.
SOUND MARKETING:

70

SkillIul marketing oI the products is being achieving countrywide goals oI Muslim
Commercial Bank Limited.

PHONE BANKING:
Every account holder can conIorm its balance on Phone and may ask Ior any query.
There are also 24 hours help lines Ior customers.
MOBILE BANKING:
It has been launched recently. It helps in getting accounts details and making transactions using
mobiles.
HIGHLY AUTOMATED BANK:
MCB in Pakistan is the also in the list oI highly automated banks, about 750, like
Emirates because oI its modern style oI banking through Iully computerized control and twenty
Iour hour banking.
FASTER BANKING SERVICE:
MCB have Iaster banking services that are making it more prominent in the banking
industry especially in operations and Foreign exchange. The customer preIers this bank not only
because oI its Iaster speedy service rather due to reasonable service charges.
INTERNATIONALLY DESIGNED PRODUCTS:
MCB`s products are internationally designed products. These are valuable and
operational in all over the world.
CONTRACT WITH CIRRUS:

71

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

WEAKNESSES
ADVERTISEMENT:
The maiority oI people are not well aware about the products oI MCB. ThereIore it
should advertise extensively especially RTC and Master Cards.
ACCOMMODATE BEHAVIORALLY:
A behavior has been noted that bank tries to Ieel at ease with good looking, rich and
educated people and the poor looking customers Ieel some bit strange in the environment oI the
bank. The bank employees should try to accommodate behaviorally all type oI customers.
MISMANAGEMENT OF TIME:
Mismanagement oI time is another big mistake in MCB branches, the bank oIIicial time
oI closing is 5:30pm but due mismanagement oI time allocation and work the staII is normally
on their seats till 7:00 or 8:00 clock.
AND ALSO.
O Costly documents are required Ior loan sanctioning.
O Some times bank also never meets stated rate oI proIit

72

OPPORTUNITIES
PRIVATIZATION:
As on December 31, 1998, sixty-eight scheduled banks with 9,106 branches are operating
in Pakistan. As on this date, total population oI Pakistan is 140.03 million. Total number oI
personal accounts with all scheduled banks as on December 31,1997, are 28.98 million. II we
consider the population statistics oI working age group as on December 31,1997, it stands to the
Iigure oI 96.64 million. Thus we can say those 28 oI working age people oI Pakistan are
having accounts with banks while 72 are unbanked.
The need oI privatization has made people to switch to banks to satisIy their needs oI
lending and borrowing. This not only increases the deposits but also the credit business.
DIVERSIFICATION:
They may enter in New business or any other consumer-durable product in order to
promote their name, by introducing Loan Ior the students, small businesses, and handicraIt
industry.
SOME MORE OPPERTUNITIES:
O InIormation Technology.
O Credit cards can give more earning.
O Establishing more Ioreign Branches.

73

O They should introduce Student Finance Facility.
O They should also introduce mobile ATM

THREATS
CHANGE IN GOVERNMENT POLICIES:
Change in government policies has aIIected the banking business. Still banks have to wait
to get permission oI state bank. The Ireezing oI Ioreign currency accounts is a vital example oI
letting people not to trust on banks.
COMPETITION:
The Competition has become severe by the entrants oI so many banks, So to exist one
will have to prove himselI in its services through excellent management and will have to satisIy
its shareholders. Otherwise he will be out the market.
LOW INVESTMENT:
The decrease purchasing power oI consumer in the current economic situation oI the
country aIIecting the business activity speed too much and the result is the low investment Irom
the investors in new proiects can create problem Ior the bank because it is working a lot in trade.
STATE BANK REGULATION:
As the Bank introduces unique products so they Iace problem iI State Bank OI Pakistan
employ taxes on them which Iorce them to increase the rate oI Interest.
EXPECTATIONS OF THE PEOPLE:

74

Due to huge competition among those banks and MCB,, people are the basic
beneIiciaries Irom it and thus their expectations tend to increase about the products and the
relative rate oI interest thus creating a threat Ior MCB.
SOME BANKS ARE OFFERING KISAN CARDS.

75

PEST ANALYSES
PEST analyses tell How Political, Economical, Social and technological Iactors aIIect
MCB. These are the external Iactors which aIIects the whole organization.
POLITICO-LEGAL FACTORS:
O Stable government
O Stable policies in Iavor oI business
O Improved relation with outside world
O Law and order.
UNSTABLE GOVERNMENT:
Due to this reason Ioreigners hesitate to invest their savings in banks, as a result oI
economy oI our country is going downward and banks suIIer.
ADVERSE LAW AND ORDER SITUATION:
The situation oI law and order is adverse. The policies are not very handy and beneIicial
Ior the country. The Govt. passes such rules which are not in the Iavour oI bank e.g. The Govt. oI
Pakistan has passed a rule that iI anyone withdraws more than Rs.25000 then he will be charged
0.30 on withdrawal.
ECONOMIC FACTORS:
Pakistan's economy is going weaker and weaker. 9/11 has a great inIluence on the
economic crisis oI all over the world. With economic Iactors the bank inIluenced very much that
are as under:
O Impact oI WTO Iorce to cost reduction methodology.

76

O Low interest rate
O InIlation
O Low GDP growth
O Budget deIicit
O Increase in Govt. duties
O Fluctuation in exchange rates
SOCIAL FACTORS:
Social environment includes Iamily, Iriends, a person's role and status. An individual`s
liIe directly by society and the person acts according to his or her society. Cultural environment
includes norms, values, religion, conception and perception.
O II we see the religion point oI view then interest is not allowed that's why most oI
the people hesitate to invest their savings in banks and yet they are not aware oI
ISLAMIC BANKING.
O Traditional business men do not like the business with bank. They pay their
creditors through cash not through cheque. They do not want to get the bank
Iacilities.
TECHNOLOGICAL FACTORS:
Today is the era oI technology. In the every aspect oI liIe technology plays an important
role.
O Due to rapid change in technology every bank has to change its technology to
compete other ones.
O Increasing issue oI securities due to technology resulted increase in cyber
crime. Cyber crime means manipulation. One person can easily transIer
amount Irom any other's account to his account.

77

APPLICATION OF CLASS ROOM LEARNING

Following are some key points about application oI my class room learning in the
organization:
The knowledge achieved Irom the subiect 'Business Communication helped me in
understanding customer dealing i.e. how to deal with them? How to understand their problems?
etc.
It also helped me in understanding the inter Organizational Communication i.e. circulars,
notices etc.
Also the Knowledge which I got Irom the subiect 'Computer application in Business
also proved very useIul.
Financial Management and Principles oI Accounting helped me in understanding the
accounting terminologies which are used in bank e.g. what is debit and credit vouchers? What
are these Ior? And also in understanding that how entries are made against certain heads.

78

SUGGESTIONS & RECOMMENDATIONS

Following are some suggestions Ior Muslim Commercial Bank, Ltd.
ADVERTISING:
Bank must let potential customers know that all attractions Ior banking exist. This is done
by advertising on television and obtaining press coverage, in coniunction with direct mail,
window displays, leaIlet in branches and in appropriate other locations (such as hotels, shops,
etc.) and including leaIlets in statement oI accounts sent to existing customers in the hope that
they will tell potential customers about the services provided by our bank.
INCREASED ATM`S LOCATIONS:
Some personal sector customers preIer not to come to branch. They increasingly want to
deal with the bank in other ways, such as home banking or use oI Automated Teller Machines
(ATMs), which need to be at every branch or some important shopping plazas and airports etc.
INCREASED SERVICES:
One way to retain the customers is to oIIer a wide range oI services such as tax advice,
Iree liIe insurance equivalent to amount deposited, shares portIolio management, Iund
management Iacility, etc., complimentary to the core services. Banks must have a slightly
diIIerent mix oI services and mean oI providing these such that customers can choose the mix
that suits them best.
MANAGEMENT OF TIME:
There should be a good management oI time Ior the sake oI employees i.e. oIIering them
Iree break hours instead oI making them work in this time as well.

79

GROWTH SCOPE FOR EMPLOYEES:
MCB should provide greater Iacilities to its employees, and give them bonuses Ior their
hard work and Promotions as well. There is a criticism on the banking management that the
salaries oI the employees are decreasing in every succeeding year. And I think this will shake the
conIidence and working habit oI the employees
BANKING PROFESSIONALS:
The bank should hire banking proIessionals having experience in their respective Iields
that will boost the perIormance oI the company as currently MBAs are produced Ior this Iield so
they should be hired Ior enhancing the perIormance oI company.
ATTRACT CUSTOMERS:
The banking company should oIIer such policies which would attract customers which
are denied by other banking in the market.
1OB ROTATION AND PROMOTIONS:
Most oI the bank employees, are sticking to one seat only with the result that they
become master oI one particular iob and loose their grip on other banking operation. In my
opinion all the employees should have regular iob experience all out-look towards banking. The
promotion policy should be adiusted
COMMUNICATION SYSTEM FOR EMPLOYEES:
As such system should be designed that every employee who has some problems with his
oIIicers can communicate it to the higher management and some steps must be taken to improve
that.

80

IF I WERE MANAGER AT MUSLIM COMMERCIAL BANK

II I would be a manager at MCB I`ll take Iollowing steps,
O I will apply such a communication system specially designed Ior employees trough they
can share the problems regarding work environment.
O Complete working and break hours will be oIIered so that employees can work
eIIiciently.
O I will make it sure that some oI the employees should be sent Ior training to other
countries and employees Irom other branches should be brought here.
O I will make promotions, iob rotation and bonuses, an important part oI policies oI MCB.
O At every month`s closing when employees stay at branch even aIter working hours, a
dinner Irom bank will be oIIered.
O To retain potential customers certain services will be provided and let them know with
advertising.
O I will make it sure that Working environment, equipment, Iurniture and staII dressing
should be according to the modern banking style.

81

REFERENCES & RESOURCES

To make this internship report data is taken Irom the Iollowing resources:
ONLINE RESOURCES:
Muslim Commercial Bank, Ltd http://www.mcb.com
Muslim Commercial Bank Pakistan http://www.mcb.com/pakistan/
State Bank oI Pakistan http://www.sbp.org.pk
Statistical Bureau oI Pakistan http://www.Ibs.gov.pk

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