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MCB Internship Report

Muslim Commercial Bank is one of the leading banks of Pakistan
with a deposit base of about Rs. 280 billion and total assets of
around Rs.300 billion. Incorporated in 1947, MCB soon earned
the reputation of a solid and conservative financial institution
managed by expatriate executives. In 1974, MCB was nationalized
along with all other private sector banks. This led to deterioration
in the quality of the Banks loan portfolio and service quality.
Eventually, MCB was privatized in 1991.
During the last fifteen years, the Bank has concentrated on growth
through improving service quality, investment in technology and
people, utilizing its extensive branch network, developing a large
and stable deposit base and managing its non-performing loans
via improved risk management processes.

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

Mission Statement
We are a team of committed professionals, providing innovative
and efficient financial solutions to create and nurture long-term
relationships with our customers. In doing so, we ensure that our
shareholders can invest in us with confidence.

Our Values

These are the standards and principles which determine our

behavior and how we interact with our customers and each other:

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 .
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 initiatives.

Departments of MCB

I did internship in Gulshan market branch which had the

following departments. There was staff shortage hence a few
persons were performing all duties. Therefore, there was
overlapping of duties.

Organizational Structure of the

MCB Branch

However there were following departments.

Current Saving Department

Accounts Department

Remittance Department

Clearing Department

Cash Department


Customer Relation Department

Account Opening
Application Form
The customer would like to open his account is required to meet
with the manager or second officer, who will give him an

Specimen Card
As I have already mentioned about Signature Specimen Card.
This card contains two signatures of an applicant, applicant A/c
no, A/c type, branch code, title of A/c, it will be
attached with an application form. Banker uses this card at the
time when he receives the cheque; he compares customers
signature with the signature on the cheque for avoiding fraud.
Manager has every right not to accept this contract if he is not
satisfied by the details provided by the customer.

Account Opening Register

The manager records the necessary details into this register and
allots an a/c number from this a/c opening register. This register
is maintained for each type of account and the a/c numbers are
allotted serially. After opening a saving and current account every
applicants data is entered into the computer to maintain a safe
record and application form is properly filled so that it can be
available when necessary.

Cheque Book
Cheque book is issued to the customer when. the bank accepts
the A/C opening application form and letter of thanks is received

Types Of Customers

Only one person can operate this a/c. We can call it a

personnel or individual a/c.
Followings are required to open it.

Signature of customer on back of AOF.

N.I.C photocopy attached

Mention next of kin (nominee)

In case of joint A/c, applicant mentions that how much person
will operate the A/c. Instruction are given for joint A/c such that
the account shall be operated by
Any one of us or survivor

In first case if one of the a/c holders died then the other can
operate the a/c individually.

Any two/All of us jointly

In second case if one of the a/c holders died then the other
partner cant operate this a/c individually without having
permission from the court.


Sign of both customers on back of AOF

Sign on joint A/C # mandate

Name and A/C # of introducer

NIC copies of both members.

Mode of operation.

Partnership A/C
For partnership a/c, along with the application form
signature card.Other documents are also needed such as

Partnership deed certified copy

NIC photocopies of all partners.

Partnership mandate for account signed by all the partners

A letter duly signed by all the partners containing the

operating instructions of the account also has to be taken.

In case of addition or withdrawal of any partner a new

agreement will be required.

Company Account

Letter of Thanks
For company accounts following documents are required: Copy of certificate of incorporation
Memorandum of Association
List of Directors
Copy of board resolution
Certificate of Commencement of Business
Copies of NIC of Directors
Companys Balance Sheet
Bank prepares Letter Of Thanks for the new customer. This act
promotes good will among the customer.

PayIn Slip
This slip is used for depositing the additional amount. The bank
will accept the Pakistanis notes. All cheques and other
instruments should be crossed before they are deposited for credit
into the account. There shall be no restriction on number of
withdrawals in current account. An account holder wishing to
close his account must surrender the unused cheques to the bank.
The current account is computerized, thus it generate the
statement of account for all account holders periodically.
Incidental charges of Rs.50 are beard by the account holder if its
credit balance is less than Rs.10000.

Closing of an Account

There are no. of reasons of closing an account. Some are listed


If customer desires to close his account

In case of death of one account holder
Bankruptcy of the account holder
If an account contain nil balance or not up to the
requirement of rules.
Before closing any account, bank send letter to the account
hold for informing him that his account is going to be closed.
There is need an approval form higher authority to close any

Payment of Cheques
The first work that was assigned to me was Scrutiny of
cheques. It is considered, as the simplest work in consumer
banking operations, but actually it is not that simple. The
cheques that are presented for either payment or for deposit
are the main points where most of the frauds occur. There
are few points to be noted while scrutinizing a cheque for
payment or deposit,
Date of the cheque
Signatures of drawer
Signature of Presenter
Amount in figures and words
Branch stamp

Account number of the drawer

Crossing in favor of any other person
The cheques which are presented for deposit in accounts of
customers for them a pay-in-slip is to be filled in and the
cheque is presented along with that slip. As the cheques are
taken for deposit in customers account, a Cheques Receipt
Summary is prepared in which cheques are entered
according to their category, i.e., Transfer Delivery, Clearance
or Collection.
Call Deposit Receipts are also issued to the customers
especially before the holy month of Ramzan. The reason is
that customers convert their savings from saving account to
the PLS account. The reason for this activity is that the
customers want to take out there money from the accounts in
order to skip the deduction of Zakat. For this purpose, CDRs
were issued having both applicant and beneficiary the same
CDRs are issued to the contractors favoring building
departments in order to get tenders for various buildings.

Types of Accounts
Current Account
The current account is the most common account and the most
preferred amongst business concerns. The theoretical explanation
for this would be that they can function more efficiently but since
in reality there are no restrictions on any with drawl the only
reason we could think of is that current account facilitates online
banking which saves time (which in this ultra competitive
business world the most precious resource) to a considerable
extent. In case of a current account the client does not earn any

interest. Current account enables the client to do cash

transactions in a more efficient manner.

A sum of Rs. 10000/= in cash as initial deposit is required for
opening a current account and the same may be maintained as
minimum average running credit balance. No profit is paid on
credit balances held in current accounts. The bank reserves the
right to allow opening of current a/c at its description. All
deposits and withdrawal from a current a/c takes place only at the
branch where the account is being maintained. Current a/c cannot
be overdrawn, except by prior agreed agreements with the bank.
The correspondence relating to current A/Cs should be addressed
to manager of the branch where the account is being maintained.
The account holder can draw sums from his account by means of
cheque supplied to him by the bank for that particular account.
Account holder should take well care of the chequebooks issued to

Saving Account
Individuals who wish to earn profit/interest on their investment
normally maintain the profit and loss sharing account but in order
to earn interest the client is required to keep his/her deposits with
the bank for some time. In theory there are some restrictions on
withdrawal of money from a Profit and Loss Sharing account but
in general banking practice there is no restriction on any with
drawl from a Profit and Loss Sharing account. The interest/profit
is paid half yearly.

Profit and Loss Sharing Account

PLS saving account having a running minimum credit balance of
RS.10000. The bank would be within its rights to make
investment of credit balances in the PLS saving accounts in any

manner at its sole discretion and to make use of the fund to the
best of its judgment in the banking business under the PLS

The profit/loss will be credited/debited on the basis of its net
working results at the end of each half-year. Calculation of
products on PLS saving A/c will be made for each calendar month
on the lowest credit balance of an account between the close of
business on the 6th day and the last day of the month.

Rules for PLS

Account holder can only withdraw sums from his account by

means of cheques supplied to him by the bank for that
particular account.
Post dated and stale cheques willl not be paid.

The bank reserve to itself the rights to close any account

without previous notice any account which has not
satisfactory account credit balance.

If the account holder withdrawals the money under 7 days

notice, the profit loss earning products will be computed on
the monthly minimum balance. Zakat is deducted every year
on non-exempted accounts.

Saving 365 Gold

This account is newly developed of MCB and it provides

flexibility of saving account to business people. Profit on
deposits will be payable on daily product basis on balance of
RS. 500,000/- and above. However, if balance in the account
falls below RS. 500,000/- on any day, the product will be
ignored. There will be no restriction on withdrawal from the
account. Zakat and withholding Tax is also applicable on the
account opened under this scheme.

Minimum balance is Rs.500,000/=

Below minimum balance, profit calculation ignored

Profit calculated on daily basis

Profit paid on annually basis

Zakat deducted on @ 2.5%

The higher the balance, higher the rate is offered.

Profit calculated on daily basis.

Profit paid into your account every month

Term Deposits
Term deposits are fixation of certain amount of money for a
specific span of time. The instrument term deposit is like a slip
containing issuing bank name, a/c # to operate on computer, deal
#, customer name, reference #, date of issue, amount, rate
maturity date etc.

Accounts Department
Every transaction which takes place recorded in the
computer so all transactions in different departments are
forwarded to account department. Since all vouchers from

different departments are forwarded to accounts department

so this department tallies all such transactions with current
department after maintaining the ledger of each department.
The branch where I worked Mr Azeem-ud-din Bukhari was
performing these activities. I was not allowed to use software
but I observed all the fuctions performed by him. Following
are different functions performed by this department:

Preparation of Financial Statements for different time span

Maintain all accounts of different departments

Calculation of profit on different schemes

Calculation of markup on different advances

Preparation Different types of reports for State Bank

Daily position of cash & every accounts

Matching daily summaries of all departments with ledger

As swift software is used therefore all these tasks have
become quite simple just it requires posting and then all
tasks can be performed by giving computer commands.

The need of remittance is commonly felt in commercial life
particularly and in every day life general. A major function of
any banking system is the transfer of funds from one client
or one place to another. By providing this service to the
customer the bank earns a lot of income in the form of
service charges. This department deals with local currency
remittance i.e. remittance from one city to another without
actually carrying the currency. MCB uses following

instrument for transferring of money:

Demand Drafts (DD)
Pay Order (PO)
Telegraphic Transfer (TT)
Mail Transfer (MT)

Demand Drafts (DD)

DD is a written order given by the branch of the bank on behalf of
the customer to other branch of the same bank to pay the certain
amount to the customer. DD are issued for the particular place
other than place of issuance. A drafts is a Cheque drawn by a bank
on its own branch or any other branch of another bank at a
different place requesting it to pay on demand a specified amount
of money which is already received to the person named on it. DD
is of following two types:
DD payable
DD Paid Suspense a/c
In the first type as advice reaches for payment the
immediately pay to the customer while in later as DD
presented by the customer, it is paid and the suspense
account is debited.

A printed application form is provided for filling in
completely and signing by the applicant. After depositing an
amount of draft and commission of the bank, duly completed
and signed by two authorized officers, then it is handed over
the applicant and credit order is dispatched to drawer
branch. Following are the pre-requisites for the processing of

Bank Serial No
No. of DD
Central No
Test Key

Pay Order
For this kind of 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 cant be. It is
written order issued by the bank drawn and payable on itself. It is
used for local transfer of money from one person to another
person. It is also used by the public for depositing money with
Government or Semi Government department.

The party who requires a pay order will get a printed
application from the bank. He will fill it and deposits the
amount and commission. The bank charges are same as on
demand draft.
Bank Serial No.
No. of PO

Telegraphic Transfer (TT)

In this case the authority is given from one bank to other on
the behalf of the customer through telecommunication to
debit their inter office account through them and credit their
parties account mentioned in TT. It is an inter bank

transaction. Telegraphic transfer is an instant transfer of

funds. Through this method applicant can transfer money
from one place to another place. There are two types of TT,
Both types of TT are maintained in separate registers, test is
applied by the manager of every amount of TT.
Incoming TT
Outgoing TT
Applicant has to fill a form along with depositing amount to
be transferred and bank commission. MCB charges the
commission at the same rate as in the case of demand drafts.

Issuing Branch Name & Code

Mail Transfer (Mt)

Beneficiary Branch Name & Code
No. of TT
Amount in words & Figur
Test key
As the name shows, it is transfer of money in the shape of
document through mail. Procedure is like TT. The transfer of
funds from one place to another by mail is called Mail Transfer
(MT). The MT can be foreign or domestic. The applicant who is

desiring to remit the funds by way of Mail Transfer can either

deposit cash or ask the bank to debit his/her account with the cost
of MT including the bank charges. These all measures are for safe
transfer of funds.

Issuing Branch Name & Code
Beneficiary Branch Name & Code
Number of MT
Amount in words & Figure
Test key

All the external functions of clearing are carried by NIFT
(National Institute of Facilitation Technology) while the internal
operations are performed by clearing department. It is just like
any courier service which takes the cheques of other banks and
delivers the cheques of that branch to it.
Clearing is a system by which banks exchange cheques and other
negotiable instruments drawn on each other within a specified
area and thereby securing the payment for its clients through the
clearing house. A clearing house is a general organization of the
banks at a given place, Its main purpose is offsetting the cross
obligation in the form of cheques. When there are many banks in
the country each will receive a number of cheques drawn on other
banks, deposited within for collection. A clearing house is an
organization where these cheques are brought and the mutual
claims of each bank on the other are offset and a settlement is
made by the payment of differences. The representatives off all

the banks in Pakistan attend office of the bank which is

performing these duties of clearing house, on each business day at
a fixed time. They deliver cheques that their bank may have
negotiated and receive in exchange cheques drawn on their bank
negotiated by other bank. The responsibility of smooth
cooperation of the clearing function lies with the State Bank of
The operation of clearing refers to the collection of cheques drawn
on other banks. These cheques may be drawn on UBL, HBL, NBP,
or any other bank of Pakistan. The respective officer collects all
cheques and enter them in clearing Register. Then he affix a
stamps on these cheques and sorts out cheques of different banks
and prepares schedule for them. These cheques are sent to
clearing house. Exchange of cheques takes place through NIFT.
Further they settle their account. State Bank of Pakistan
representative will work out the balances and will settle their
account from their balances with State Bank of Pakistan.

It is another major department of the branch. Bank provides
this facility to the people who need advance money to meet
their requirements. For getting the advances, the first step is
the preparation of credit proposal. Some principles of
lending are considered whenever financing being is made.
These principles are:


Required Information
An assessment of his business abilities
Accurate & up-to-date financial statements
Market reports about the borrower
Party dealing with other banks
Nature and structure of borrower business
Names of proprietors, partners or Directors
Detail of companies associated with borrower business
Financial condition of borrower business

Preparation Of Credit Proposal

At first, a formal application for credit approval is obtained from
the party along with complete group position. The parties
credibility report is also obtained from the banks from which the
party has been doing the business. The party creditability report is
also taken from the head office of Trade information Division.
For obtaining credit, party has to submit the last two years
Balance Sheet and Profit & Loss Statement duly attested but
authorized auditors. If the party also involve in export or import
business then the bank also consider the data of three years about
imports and exports.
The Current and Debt equity ratio is also calculated by the bank.
Then recommendations are made the type of data required to
prepare the credit proposal is to be gathered from different

departments. Some data is obtained from the foreign exchange

department. Some data is obtained from current account
department and some data is available in Advance Department.
The purpose for which the financing is required should be
explained very clearly. The securities offered by the party to the
bank is also evaluated. In case of pledging of the property in shape
of land or building the complete evaluation of the property should
also be attached.
After all the requirements and necessary documents for applying
for advances is fulfilled by the party then, the case is sent to the
Chief Manager for approval. If the manager find any
discrepancies, he may write on these documents. If the credit
limit is in his range, he may approve the party for credit. If the
amount is exceeding the Chief Manager send the case is forward
to the Circle Office for approval and here the same procedure is
repeated and if the credit amount is in the range of GM, he can
approve and if the credit amount is very large from Circle Office,
the case is then sent to Head Office and if it is a real big then is to
be decided by Board of Director. MCB provides advances which
are two types.
These are two types of advances:

Secured Advances
Unsecured Advances
In secured advances, the bank takes any security against the
loans while in case of unsecured advance no security is taken
by the bank.
MCB divided the advances in to two major types:
Fund Based
Non Fund Based
In the fond base advances, the funds of MCB is involved and in Non Fund
based only guarantee is given by the bank.

Fund Base Advance

MCB have following Fund base facilities of advance in its

corporate branches. The details of these types would be later.
These are as follows:
Demand Finance (DF)
Cash Finance (CF)
Running Finance (RF)

Demand Finance
This is a type of secured loan and demand loan never allowed
without security. It is a type of long term financing. MCB also
gives loan under the head of demand finance to individuals,
industrial units commercial business etc.

Cash Finance
In this, the borrower gives a specific reason for the need of cash.
MCB gives the facility of cash credit to business. The amount is
passed through voucher and credit to the party account. Normally
0.60 paisa per thousand is charged on daily basis to customer .

Running Finance
These finances as evident by the name are given to the business to
meet their daily needs. The mark up is charged on daily balances.
This type of advances are given to trade, commerce and
manufacturing for general purpose. Normally 0.60 paisa per
thousand is charged is charged on daily basis. It is drawn through

Letter of Credit

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

authorizing the seller to draw in accordance with certain terms
and stipulating legal forms, that all such bills will be honored .

How a letter of credit is opened?

Application for a letter of credit
Line of credit
Opening of the letter of credit
Handling of the documents
Payment by the importer to the bank
Liability of the issuing bank

Application for a letter of credit

An importer prepares an application on the prescribed form
available from the bank. The information which are supplied in
the application are based on the contract of sale and include only
the importer feature of contract such as the value of the
merchandise, port of shipment, port of unloading, expiry date of
the papers and brief description of the goods. If the bank is
satisfied with the applications, it will signed and acceptance
agreement with the importer.

Line of credit
Before issuing a letter of credit, bank takes all necessary
precautions for securing its credit. The bank first examines the
customers credit standing, the type of goods to be imported, the
market demand for the goods, the collateral offered to cover the
credit. Then it establishes the amount i.e. the line of credit.

Opening of letter of credit

The letter of credit can be opened by mail or by cable. When it is
opened by mail, the issuing bank sends letter of credit and to
carbon copies to the importer. The importer then dispatches the
letter of credit to the exporter in foreign country by mail. One
carbon copy is kept for the record. The second carbon copy after
signing is sent to the bank by the importer. If an importer directs
the bank to open letter of credit by cable, the importers bank
sends a cable to the corresponding bank in the foreign country
with a request to notify the exporter.

Handling of the documents

When the exporter receives a letter of credit, he presents the
required documents and the draft to the bank in his own country
after shipping of documents. If the bank is satisfied with the
documents in the importing country and pays the exporter at
official ratein the currency of his own country.

Payment by importer to the bank

When a bank approves the application of a customer for opening
letter of credit, it does not lend money to the importer. The bank
only lends the importer to use the credit standing of the bank to
the exporter in the foreign country. The bank makes a contract
with the importer that when the draft if send by the negotiating
bank for payment the importer will make the payment to the bank
not later then the day only the bank is to honour the obligation. In
case of a sight letter of credit the payment to the corresponding
bank is to be made on the day the draft and documents are
received. When the time of letter of credit is used the importer is
to arrange the payment not later than the day on which the draft
is to mature.

Opening of Letter Of Credit In MCB

Before opening of L/C certain requirements are necessary

that are
The applicant must has import registration number
He must has account in that bank
He must pledges his security against the L/C amount

Cash Department
In cash department both deposits and withdrawals go side by
side. This department works under the accounts department
and deals with cash deposits and payments. This department
maintains the following sheets, books, ledger of account:
Cash received voucher sheet.
Cash paid voucher sheet.
Cheque Book
Cash balance book

Cash Paid Sheet

The only instrument that can be used to withdraw an amount
from an account is the book. No payments are made by another
instrument. Cheques can be of two types, they may be presented
at the counter and encashed and the others are clearing or
transfer cheques.
Cashier manually inspect the Cheque for following:
Signature & date

Cross cutting
Drawees a/c title
Amounts in words & figures
Two signatures at the back
The cheques should not be stated as post dated. If in the
Cheque there may discrepancy regarding any of the aspects
described above the cheque is returned to the customer for
rectification. On other hand if the cheque is valid in all
respects, the cashier enters the necessary inputs in the
computer and post the entry so that account balance is
When cashier posts these entries, computer automatically
display the balance before posting the transaction amount,
balance after posting. The cashier easily and quickly see
whether the amount being withdrawn so exceed the balance
or within the balance. If the amount does exceed the balance
then it is upon the discretion of the manager to allow an
overdraft and not depending upon the customers reputation.
If he does not allow an over draft, the procedure is repeated
again as described for the mismatch of the signature Cheque
is return.
The detail of notes (currency) is written on the back side of
the Cheque. The cashier at the same time maintain the Cash
Voucher Received Record Sheet. Then once again inspect
the signature of the customer cancellation mark of checking
officer and stamp of POSTED is placed on cheque before
hand over the cash to customer.

Cash Received
For depositing the cash into customers accounts, there is
need to fill in the paying-in-slip giving the related details
of the transaction. This paying-in-slip contains the date,
a/c/no, a/c title, particulars, amount
being deposited and details of the cash. There are two
portion of the paying-in-slip. The depositor signs the one
part of the paying-in-slip one is retained by the bank to
show an acceptance of the entries made in the slip.
The different colored paying-in-slip are used for all the
types of deposits. Only the slips related to a particular
type of a/c is acceptable by the bank. For example
current paying-in-slip for current a/c and saving paying-inslips for saving a/c etc. The paying-in-slip serves as a
voucher to update to computerized transaction ledger.
The transaction ledger is only updated by paying-in-slip
and Cheque. The cashier responsible to receive both the
paying-in-slip and cash from the depositor. The cashier
check the necessary details provided I the paying-in-slip
and accounts the cash and tallies with the amount
declared in the slip. If the amount does not tally with the
cash given, the deposit is not entertained until the
customer remove the discrepancy.
On the other hand if the two amounts tally, the cashier
fills in the Cash voucher received Record Sheet and
assigns a voucher no. to both the transaction being made
in the sheet and the slip. This voucher no. starts with one
and continue by serial increments of one for each day till

the closing of the sheet, the cashier fills the voucher no,
an account, cash day till the closing of the sheet. The
cashier fills in the voucher no, an account of, cash entry
in the related type of a/c and he post his initials on both
part of the voucher. Then the cashier send both to the
accountant who verifies all the entries in the two
documents, if the entries in the two documents, if the
entries in the two documents tally with one another, the
accountant authenticates the two by singing on the two
documents and posting stamps on the slip. One part of
the slip is then returned to the customer and other is
given to the computer operator. A very important check is
that the dates mentioned into the two documents must
be the same.
The cashier posts the transaction entries in computer
ledger. This ledger contains the a/c no, a/c title, voucher
no, voucher date, transaction code, transaction amount.
After posting these entries, computer display before
posting balance and after posting. On every transaction
computer generates an output of transaction ledger. He
assigns the stamp POSTED on the voucher to show
voucher transaction entries are posted. Checking officer
receive this voucher and the compute output transaction
ledge, he manually inspects the entries of ledger and
voucher. If both are tallied, he then signs the ledger and
put a mark of cancellation on the voucher. After the
verifications from the checking officer, cashier receives
the voucher.
Cash Book Balance

At the end of the working day cashier is responsible to maintain

the cash balance book. The cash book contain the date, opening
balance, detail of cash payment and received in figures, closing
balance, denomination of government notes (Currency). It s
checked by manager. The consolidated figure of receipt and
payment of cash is entered in the cash book and the closing
balance of cash is drawn from that i.e.
Opening Balance of Cash + Receipts - Payments = Balance

Cheque book is issued to the customer when. the bank accepts the
A/C opening application form and letter of thanks is received
book is issued to the customer when. the bank accepts the A/C
opening application form and letter of thanks is received
The closing balance of today will be the opening balance of
tomorrow. This department is one of the most important
department of the bank. All the books maintained in this
department are checked by office

Financial Results MCB



Cash Dividend
Stock Dividend
Right Issue
Book Value Per
Deposits per share


Annual Annual

















Total Assets
Share Capital
Reserves & Unapp.
Surplus on
revaluation Total


























































Profit & Loss

Mark-up / return /
interest earned
Mark-up / return /
interest expensed
Net mark-up /
interest income
Provision against
loans & adv.
Other Provision/
Fee, commission
Dividend income
Capital Gains
expenses etc
Profit before
Profit after taxation



Advances to
Deposits Ratio
Tax Rate

Financial Analysis of MCB for 2007 results

MCB posted an after tax profit of Rs15.26b with earnings per
share of Rs 24.30 in FY07 as compared to profit after tax of
Rs12.14b with earnings per share of Rs 19.33 in FY06, depicting a
significant growth of 26.0% in FY07. Net interest income
increased by 13% to Rs23.9b from Rs21.2b in FY06. The gross
interest income grew by 23%, while the interest expense grew by
74%, depicting an increase in the cost of raising funds. The nonmark-up income increased by 20% to Rs 6 billion. The major
contribution came from a 148% increase from the capital gained
on sale of securities.
The asset base increased by 20% from 342 billion to 420 billion in
2007 as compared to 2006.Deposits showed a steady increase of
13% to bring the figure to Rs 292 billion as compared to Rs 257.4
billion in FY06. Advances increased by 10% to Rs218b, while the
investments increased by 78% to Rs 113 billion.

Recent Results
MCB Bank Limited posted profit after tax of Rs4.1b with an
earnings per share of Rs 6.55 in 1Q'08 vis-a-vis of Rs 3.7 billion
with an earnings per share of Rs 5.93 in 1Q'07, depicting a growth
of 10.3% during the period despite dismal performance of banking
sector during 1Q'08.
Net interest income of the bank grew by just 2.5% during the
period to Rs 6.1 billion as compared to Rs 6.0 billion in the
corresponding period of last year. High cost of deposits was the
main reason behind.

Swot Analysis

The strengths of MCB are as:
MCB is the first Pakistani privatized bank and because of its
quality management, marketing, innovation in products and
services is performing well in financial market.
Has established a good reputation in the banking market
Strict adherence with the banking procedures requirements,
SBPs prudential regulation requirements and
its SROs and international banking requirement as well as to
its own set policies
Strong and its attractive products
Better focus on customer services and customization
Flexibility with the changing environment
Induction of the highly qualified professionals to change
overall set up


The noted weaknesses of MCB are as:

The majority of people are not well aware about the

products of MCB.
Therefore it should advertise extensively especially RTC
and Master Cards.
A behavior has been noted that bank tries to feel at ease with
good looking, rich and educated people and the poor looking
customers feel some bit strange in the environment of the
bank. The bank employees should try to accommodate

behaviorally all type of customers.

In MCB there is lack of specialized skill because of job
rotation policy of human resource department. The bank
should concentrate upon increasing its abilities on individual
service basis.
Mismanagement of time is another big mistake in MCB
branches, the bank official time of closing is 5:30pm but due
mismanaging of time allocation and work the staff is
normally on their seats till 7:00 or 8:00 clock.
Process of development is bit slow due to its conservative
Never prefer to be a leader and prefer to be a follower of
Slow improvement and acceptance of technological changes
More emphasis on deposit accumulation and less on their

Greater potential and opportunities for Credit Division if
Liberal Policies being adopted.
Can grab more market share for its RTCs, remittances and
forex department through effective promotional and liberal
Inclusion of highly qualified professional can change the
whole scenario and position of the bank if they have given
the due liberty in performing their duties.

Adoption of information technology will improve the

customer services.
More mobilization of accumulated deposit is possible
through innovative financing to
Agro Based Sector
Personalized Financing


Change in government policies has affected the banking

business. Still banks have to wait to get permission of state
bank. The freezing of foreign currency accounts is a vital
example of letting people not to trust on banks.

The Competition has become severe by the entrants of so

many banks, So to exist one will have to prove himself in its
services through excellent management and will have to
satisfy its shareholders. Otherwise he will be out the market.

Employees unions have been allowed if not managed

properly can affect performance.

The decrease purchasing power of consumer in the current

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

Introduction of credit marketing by local and foreign banks

is badly affecting the mobilization of the MCBs deposits due
to the non presence of such department in it.

Introduction and adoption of information technology as well

as promotion of the computer culture by the local as well as

foreign banks will definitely affect the services and business

of the MCB.

Pest Analysis

Employment practices are expected to change.

Unions, Associations are being allowed to work effectively
which can affect the performance of the company both
positively or negatively.
Political interference regarding policies is expected to
increase as current government is in race of power gain.
Due to lack of confidence on government investor is
reluctant so mobilization of funds is going to decrease.

Inflation is very high which will decrease the demand as
purchasing power is decreasing.
Staff cost is increasing as basic wage rate has increased and
inflation has compelled to will compel to increase salaries.
Operating costs are increasing due to inflation.
Interest rate is increasing so loan taking has decrerased.
Value of rupee is decreasing which is pressurizing the

Social And Cultural

Lack of experts is in our country regarding management
hence innovative activities are slow and conventional
methods are adopted.
Cultural strain to savings is the reason due to which
investment remains low .

Declining work ethics is also our problem which is mainly

due to poverty, lack of training.
Inadequate Accountability ,lack of good governance and lack
of good infrastructure helps creditor to cheat and heavy bad
debts occur. Same situation is hoped to prevail.
Inadequate Empowerment is also a usual problem in our
organization as every person want to get more power hence
there is less delegation of authority and decision making.

MCB has computerized its most of the branches but still

some are manual there is need to computerized otherwise

customers will get bad image.
Now a days computerized system is used by banks whis is

very effective. But MCB will have to improve its

computerized technology as some fake transactions occur by
Shortage of electricity is a big problem,

Employees of each organization need IT training and

organization has this trend. MCB will have to follow it.

Recommendations and Suggestion

From the quantum of the profit and its financial data it can easily
judged the after privatization Muslim Commercial Bank is
performing well. Its deposits are growing day-by-day and so its
profitability. The controlling body is responsible for the
productive performance of the bank.Following are my
observations and suggestion to improve the efficiency for the
development of the bank.

Increase In Profits
People can be motivated to save money by offering the deposit
through various investment schemes. The rate of profit should
increase 1% or 2 % it would be profitable step for bank.

Increase Salaries
MCB is making good profits but giving less pay to their employees
as compared to their competitors. So their salaries should be

Change The Nature Of Work

Most of the bank employees are sticking to one seat only with the
result that they become master of one particular job and loose
their grip on other banking operation. In my opinion all the
employees should have regular job experience all out-look
towards banking. Their promotion policy should be adjusted

Every year some of the employees should be sent for training to
other countries and employees from other branches should be
brought here. Some more reading material should be provided the
purpose should be to educate the employees with the advance
studies in their field. The employee should be provided the

opportunities to attend and participate in seminars and lectures

on banking.

Incentive To Employees
Bank should give some more incentive to its employees in order to
remove the conflict between lower and higher officers and should
try to improve the working condition of the bank. Such system
should be designed that every employee who has some problems
with his officers can communicate to the higher management and
some steps must be taken to improve that.

Performance And Reward

Smart, educated, skilled, well spoken and well versed staff
personals should be rewarded and appreciated, while on the other
hand lazy, lethargic, heard, rough-dealers and ill mannered must
be warned and penalized but this all should be on merit and
considering the policy of honesty is the best policy and not due to
some personal liking, disliking prejudice and patrimonial. It is
therefore suggested certain schemes and checks may be
introduced in banks to increase efficiency through reward and
punishment system.

Over Employed
During my internship period I felt that at some place the Muslim
Commercial Bank Limited is over employed which is causing in
expenditure. I think that the best way out for this problem is to
pen new branches.

Promotion And Advertising

Bank must let potential customers know that all attractions for
banking exist. This is done by advertising on television and
obtaining press coverage, in conjunction with direct mail, window

displays, leaflet in branches and in appropriate other locations

(such as hotels, shops, etc.) and including leaflets in statement of
accounts sent to existing customers in the hope that they will tell
potential customers about the services provided by our bank.

More Focus on Salary Accounts

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

Internship Facilities
The period of internship should be divided in to the number of
department of the Muslim Commercial Bank Ltd. The internee
should be given timetable mentioning the number of days he has
to work at different places in the bank. On the first 4 days in each
department internee should be given a lecture the officer of the
department concerned about working of the department.

What Were My Duties and What I

In first weak I assisted Mr Mahboob in Scrutiny of cheques.
It is considered, as the simplest work in consumer banking
operations, but actually it is not that simple. The cheques

that are presented for either payment or for deposit are the
main points where mostof the frauds occur.
I learned whole process of account opening of individuals
practically. I remained involved very much in practical
activities of account opening as Miss Uzma whos duty was
account opening would remain very busy as number of
customers coming for account opening and getting
information was high. So I assisted her I havent issued any
cheque book personally, but the procedure is very simple for
I observed the process.
I filled many applications form for remittances. I
prepared remittance slips and learned to apply tests
on TT and MT.
I processed the Inward cheques for collection and
clearance, and have also prepared vouchers
Every transaction which takes place recorded in the
computer so all transactions in different departments
are forwarded to account department. The branch
where I worked Mr Azeem-ud-din Bukhari was
performing these activities. I was not allowed to use
software but I observed all the fuctions performed by
Miss Maria was credit officer who explained me the
procedure of advances. Mostly work is done through
computer. I was not able to perform activities by
myself as access to software is not allowed. I
observed how the application is processed. I think it
sufficient to know the procedure.
In cash department I observed the process of
deposits, filled deposit slips, and learned how the
cash registers are maintained. In this department I

did little work practically as it was not allowed.

During my internship I dealt with many customers
and employees, this was a great experience to learn
how to deal with customers
how to work under pressure i.e in rush hours.
how to manage an office.
My communication skills were improved.
I observed some signs of mismanagement which I
think can be removed if branch manager take more
I observed the practical application of many
accounting concepts.