INTERNSHIP REPORT

ON
MUSLIM COMMERCIAL BANK Ltd.









SITARA MUZZAMIL
MBA
MBS-08-13






Sahiwal Campus
Department of Business Administration
Bahauddin Zakariya University


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³PREFACE´

It is the requirement of the MBA course Bahauddin Zakariya University, Multan that
all students of MBA have to spend six or eight weeks in any organization to get practical
exposure and to get familiarized with the ways to live in the organizational environment which is
dramatically different from the educational environment. That two months period called
³Internship Period ³, if spent properly and sincerely, enables the students to be more confident,
more knowledgeable, more responsible and, above all, more committed to its work in the
practical field. I have also been assigned to do internship of eight weeks period in MCB Kot
Farid Branch Sahiwal.
It has enabled me to understand the practical scenario and sharpen our decision
making power and utilizing the resources in an effective manner, so that our resources generate
maximum profit.
In preparing this report, I have put all of my best efforts and tried my level best to give
maximum knowledge. Despite of my all the coherent efforts, I do believe that there will always
be a room for improvement in the efforts of learner like me.


Sitara Muzzamil
MBS-08-13


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³ACKNOWLEDGEMENT´

All praises to almighty Allah and our holy prophet Muhammad PBUH who gave me the
courage and patience for completion of this final report.
I wish to acknowledge my gratitude to my inspiring Teachers for their endless their
persistence, support and encouragement, and for providing me a lifetime opportunity to work
with Muslim Commercial Bank
I am also very thankful to Muslim Commercial Bank Ltd. Kot Farid Branch, Sahiwal
and the Branch Manager Mr. Yasin Tahir who gave me opportunity to work with experienced
persons in their organization.
I am also thankful to my parents, family and friends that continually offered encouraging
support « « «



Sitara Muzzamil
MBS-08-13




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³TABLE OF CONTENTS´
³PREFACE´ .......................................................................................................... 2
³ACKNOWLEDGEMENT´ .................................................................................. 3
³TABLE OF CONTENTS´ ................................................................................... 4
³EXECUTIVE SUMMARY´ ................................................................................ 6
INTRODUCTION OF SECTOR ........................................................................... 8
THE MUSLIM COMMERCIAL BANK LIMITED .............................................11
³VISION STATEMENT´ .....................................................................................12
³MISSION STATEMENT´ ..................................................................................12
³HEAD OFFICE´ .................................................................................................13
³CIRCLE OFFICE´ ..............................................................................................14
³MANAGEMENT OF ORGANIZATION´ .........................................................15
³ORGANIZATIONAL STRUCTURE´ ................................................................16
³INFORMATION ABOUT BRANCH´ ...............................................................20
³GENERAL BANKING´ .....................................................................................21
³DEPARTMENTS WHERE INTERNSHIP WAS CARRIED OUT´ ...................22
³OPERATIONS DEPARTMENT´ .......................................................................22
³CLEARING DEPARTMENT´ ...........................................................................29
³REMITTANCE DEPARTMENT´ ......................................................................33
³OTHER DEPARTMENTS´ ................................................................................37
³CASH DEPARTMENT´ .....................................................................................37
³ACCOUNTS DEPARTMENT´ ..........................................................................39
³TECHNOLOGY DEPARTMENT´ ....................................................................40
³ADVANCES DEPARTMENT´ ..........................................................................42
³FINANCIAL ANALYSIS OF MCB´ .................................................................47
³RATIO ANALYSIS´ ..........................................................................................47


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ADVANTAGES OF RATIO ANALYSIS: ...........................................................48
LIQUIDITY RATIOS ...........................................................................................48
DEBT RATIO.......................................................................................................49
MARKET RATIOS ..............................................................................................50
³VERTICAL ANALYSIS´ ...................................................................................57
³HORIZONTAL ANALYSIS´ .............................................................................60
³SWOT ANALYSIS´ ...........................................................................................64
³MCB¶s SWOT ANALYSIS´ ..............................................................................65
³STRENGTHS´ ....................................................................................................65
³WEAKNESSES´ ................................................................................................68
³OPPORTUNITIES´ ............................................................................................69
³THREATS´ .........................................................................................................70
³PEST ANALYSES´ ............................................................................................71
³APPLICATION OF CLASS ROOM LEARNING´ ............................................73
³WHAT I HAVE LEARNT IN MCB´ .................................................................74
³SUGGESTIONS & RECOMMENDATIONS´ ...................................................75
³IF I WERE MANAGER AT MUSLIM COMMERCIAL BANK´ ......................77
³REFERENCES & RESOURCES´ ......................................................................78



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³EXECUTIVE SUMMARY´

The banking structure in Pakistan comprises of the following types, State Bank of
Pakistan, Commercial Bank of Pakistan; Exchange Banks, Saving banks, Cooperative banks,
Specialized credit institutions. The state bank of Pakistan is the Central bank of the country and
was established on July 01, 1948. The network of bank branches now covers a very large
segment of national economy. The State Bank of Pakistan issues the shares of these periodically.
Bank employees and other common peoples can also purchase these shares and earn profit. In
1956, MCB transferred its Registered office to Karachi, where the Head Office is presently
located. In April 1991, MCB became Pakistan¶s first privatized bank.
The corporate branch at Shahrah-e-Faisal Karachi (SFK) branch is the corporate branch
of MCB in Karachi. The bank is using SWIFT for transfer of information about imports and
exports. MCB SFK branch has Currently Following three Departments General Banking
Department, Advances Department & Foreign Exchange Department.
To open an account the customer has to meet the general banking manager with an
introducer. The procedure begins with the punching of account opening form to the customer file
i.e. customer¶s master file. Before closing any account, bank send letter to the account holder for
informing him that his account is going to be closed. There is need an approval form higher
authority to close any account. Current deposits are those which are payable to bank whenever
demanded by the customer. Bank does not pay any profit on current deposits. The following are
the financial products/services of MCB Malay Mail Scheme, PLS Account, Saving 365 Account,
Capital growth certificate scheme, Fund Management Scheme, Khushali Bachat Account, Term/
Fixed Deposits and others like night banking, credit cards, traveler cheques.





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In remittance department like any other bank MCB also have instruments for transferring
of money, Telegraphic Transfer, Mail Transfer. In cash department both deposits and
withdrawals go side by side. This department works under the accounts department and deals
with cash deposits and payments. This department maintains the following sheets, books, and
ledger of account cash received voucher sheet, cash paid voucher sheet, Paying-in-slip, Cheque
book, Cash balance book. The clearing in Karachi at MCB or other banks is being done through
NIFT (National Institute of Facilitation Technology).
Bank provides this facility to the people who need advance money to meet their
requirement. Party dealing with other banks financial condition of borrower business and as a
first step credit proposal is being made. MCB provides advances, which are two types. Secured
Advances, Unsecured Advances. MCB usually classified advances in to following types
Agricultural Advances, Commercial Advances
Industrial Advances. Commercial Advances are of following types
Demand Finance, Cash Finance, Foreign bills purchased, Finance against imported
goods, Finance against foreign bills, Export Refinance Part I (Pre Shipment) & others. Banks
Agriculture division deals with the agriculture advances. Bank provides the Agriculture
Advances in order to enhance and support the agriculture sector of the country. Farm Credit &
Non Farm Credit.
In foreign exchange, MCB is dealing Foreign Currency Accounts, Foreign Remittances,
and Foreign Bills for Collection, Imports & Exports
Foreign currency accounts & the foreign currency department deals with the following
types of accounts, Dollar Khushali account, Current account, Saving bank account, Term
deposit, Prime Currency Scheme. Foreign accounts are convertible on floating rate available to
the bank. Letter Of Credit facility is being provided by MCB in foreign exchange.




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



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At the time of independence, there were 631 offices of scheduled banks in Pakistan, of
which 487 were located in West Pakistan alone. As a new country without resources it was very
difficult for Pakistan to run its own banking system immediately. Therefore, the expert
committee recommended that the Reserve Bank of India should continue to function in Pakistan
until 30
th
September 1948, so that problems of time and demand liability, coinage currencies,
exchange etc. be settled between India and Pakistan.
The non-Muslims started transferring their funds and accounts to India. By the end of
June 1948 the number of officers of scheduled banks in Pakistan declined from 631 to 225.
There were 19 foreign banks with the status of small branch offices that were engaged solely in
export of crop from Pakistan, while there were only two Pakistani institutions, Habib Bank of
Pakistan and the Australian Bank. The customers of the bank are not satisfied with the uncertain
condition of banking. Similarly the Reserve Bank of India was not in the favor of Govt. of
Pakistan. The Govt. of Pakistan decided to establish a full-fledge central bank. Consequently the
Governor-general of Pakistan Quaid-I-Azam inaugurated the State Bank of Pakistan on July 1,
1948. Thus a landmark was made in the history of banking when the state bank of Pakistan
assumed full control of banking and currency in Pakistan. The banking structure in Pakistan
comprises of the following types.
y State Bank of Pakistan
y Commercial Bank of Pakistan
y Saving banks.
y Cooperative banks
y Specialized credit institutions.
Commercial banks have been the most effective mobilizers of savings and have been
providing short-term requirements of working capitals to trade, commerce and industry.




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Up to December 31, 1973, there were 14 Pakistan commercial banks that functioned all
over the country and in some foreign countries through a network of branches. All these
commercial banks were nationalized in January 1, 1974, and were recognized and merged into
the following five banks:
y National Bank of Pakistan
y Muslim commercial bank limited
y Habib Bank Limited
y United Bank Limited
y Allied Bank of Pakistan

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



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THE MUSLIM COMMERCIAL
BANK LIMITED
HISTORY:
MCB was founded by ISFHANI and ADAMJEE families in Calcutta on July 9, 1947.
MCB is not an overnight success story rather good track of services are responsible for the leaps
and bounds progress. After the partition of the Indo-Pak Subcontinent, the bank moved to Dhaka
from where it commenced business in August 1948. In 1956, the Bank transferred its Registered
office to Karachi, where the Head Office is presently located. Thus, the bank inherits a 52-year
legacy of trust in its customers and the citizens of Pakistan
The performance of MCB was badly affected by bureaucrat government. In January
1974, MCB was nationalized by Bhutto Government following the bank act 1974 subsequently
in June 1974 Premier Bank Limited merged with MCB.
PRIVATIZATION:
When privatization policy was announced in 1990, MCB was the first to be privatized
upon recommendations of World Bank and IMF. The reason for this choice was the better
profitability condition of the organization and less risky credit portfolio which made'' it a good
choice for investors. On April 8th, 1991, the management control was handed over to ³National
Group´ (the highest bidders). Initially only 26% of shares were sold to private sector at Rs. 56
per share.
MCB besides being money financial organization have rendered invaluable services in
the economics and social developments of our country. MCB today, represents a bank that has
grown with time, experience and Pakistan. A major financial institution, in scope and size, it
symbolizes a fully-grown tree. Evergreen, Strong, and firmly rooted.



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³VISION STATEMENT´

³To be the leading financial services provider, partnering with our customers for a more
prosperous and secure future´

³MISSION STATEMENT´

³We are a team of committed professionals, providing innovative and efficient financial
solutions to create and nurture long-term relationships with our customers. In doing so, we
ensure that our shareholders can invest with confidence in us.´



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DEVELOPMENTS:
After privatization, the growth in every department of the bank has
been observed. Following are some key developments:
y Launching of different deposit schemes to increase saving
level.
y Increased participation on foreign trade.
y Betterment of branches and staff service level.
y Introduction of Rupee Traveler Cheques & Photo Credit
Card for the first time in Pakistan.
Extended use of information technology which is evident from the
fact that there are 768 fully 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.
³HEAD OFFICE´
Chudrigor Road of Karachi has same importance in Pakistan¶s economy as of the Wall
Street in world economy. The division working under MCB Head office is as follows:
y Administration
y Credit Management
y Investment Banking
y Human Resource
y Information Technology
y Corporate Planning & Budgeting


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y Finance & Treasury
y International Division
y Inspection & Audit
y Law Division
y Marketing & Development
y Trustee Division
Under the President an Executive Committee and a Credit Committee works. All the
matter of the bank join to the board of director are presented to the executive committee which is
responsible for daily operation of the bank .The request for 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 of the Circle Office. Under the General Manager is the Zonal
Manager and then the Branch Manager. At present, there are 9 circles, 47 regions and 1400+
branches. Before privatization there were provincial chiefs for all the four provinces. But this
management now has abolished the provincial officers and improved the efficiency of the bank.
³CIRCLE OFFICE´
The working of circle office is to control and regulate the functions of branches which are
under in its control. The functions of circle office are to mobilize the deposits and receive reports
from branches. Circle office is like a mini head office. Agents and correspondents of MCB are in
all commercial cities of the world. Circle office is divided in the following division:
y Credit Management
y Audit & Inspection
y Human Resource
y Marketing & Development


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³MANAGEMENT OF ORGANIZATION´

MANAGEMENT OF BANK:

Mian Mohammad Mansha Chairman
S.M. Muneer Vice Chairman
Mohammad Aftab Manzoor President & Chief Executive
Tariq Rafi 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
Shahzad Saleem Member



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

³ORGANIZATIONAL STRUCTURE´
As MCB is a banking company listed in stock exchange therefore it follows all the
legalities which are imposed by concerned statutes Mian Muhammad Mansha is Chairman of
the company with a team of 10 directors and 1 vice chairman to help in the business control and
strategy making for the company.
Operational Management of the bank is being handled by a team of 10 professionals.
This team is also headed by Mr. Muhammad Mansha. The different operational departments are
Consumer Banking & IT div; Financial & Inter branch div; Banking operations div; HR & Legal
div; financial control & Audit div; Credit management div; Commercial Banking div; Corporate
Banking div; Treasury management & FX Group and lastly Special Assets Management (SAM)
Group.
For effective handling of branches, it has been categorized into three segments with
different people handling each category. These categories are:

y Corporate Banking
y Commercial Banking
y Consumer Banking



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CORPORATE BANKING:
These are branches which have an exposure of over Rs. 100 million. Usually includes
multinational & public sector companies
COMMERCIAL BANKING:
The branches which has a credit exposure of less than Rs. 100 million but having a credit
portfolio of more than Rs. 20 million (excluding staff 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 follows:
Punjab
650
Sindh
243
NWFP
103
Blochistan
36
Azad J.Kashmir
14
Domestic
1046
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:














Total no. of branches 7
Colombo 1
Mardana 1
Pettah 1
OBU Bahrain 1
Wellawatte 1
EPZ 1
Kandy 1


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³INFORMATION ABOUT BRANCH´
I did my internship in Muslim Commercial Bank Limited Kot Farid Branch, Sahiwal.
And some important information about my branch which I observed are as follows:
MANAGEMENT OF THE BRANCH:

Branch manager Mr. Yasin Tahir
Accountant Ms. Shumaila Malik
Operational manager Mr. Ayaz
Cashier Mr. Nazir
Peon Khalid
Secrity guard Haidar

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




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PLS ACCOUNT:
Total numbers of profit and loss accounts are 2120.
KHUSHALI BACHAT ACCOUNT:
These are about to 600 accounts.
REMITTANCE:
Total remittance of this branch is 26.22 million.
RATE OF INTEREST:
The rate of interest provided by such bank is minimum 4.45% and maximum 9%.

³GENERAL BANKING´
It is backbone of banking It is one of the major department of MCB. It further consists of
following departments:
y Operations Department
y Current Department
y Remittance Department
y Clearing Department
y Cash Department
y Accounts Department
y Technology Department


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³DEPARTMENTS WHERE INTERNSHIP WAS CARRIED OUT´
y Operations Department
y Clearing Department
y Remittance Department

³OPERATIONS DEPARTMENT´
In Operations department I was under supervision of Mr. Ayaz, Operational manager.
And I learnt to open accounts of different types and nature which are as follows,




TYPES OF ACCOUNTS:
y Single
y Ioint
y ƒ”tne”•Šip
y ”ivate Limited
y Public Limited



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SINGLE:
Only one person can operate this a/c. An individual who can fulfill the requirement of
bank can open this a/c. We can call it a personnel or individual a/c. The requirements for this
type are National Identity Card Photocopy, Minimum Deposited Balance, Account Opening
Form, Letter of Kinship etc.
JOINT:
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 anyone or more. The
requirements for 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 of account.
PARTNERSHIP:
For partnership a/c, along with the application form other requirements needs satisfied.
The requirements for this type are National Identity Card Photocopy, Minimum Deposited
Balance, Account Opening Form, Registration certificate, agreement among partners and
Commencement of business and private registration, resolution of board of directors,
commencement of business, memorandum and articles of association and balance sheet etc.
PRIVATE LIMITED:
Such type of account is opened in the name of the businesses having private limited
concern and mostly medium business enterprises open such kind of accounts. All the board of
directors have to submit the declaration regarding the account operator on the company pad and
with the rubber stamp with the signature of the all the members of the board of directors. In case
of any change in directors bank must be informed regarding that. In case funds are borrowed by
the company all the directors approval is necessary rather not only the authorized partner who
can be the operator of the account.


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PUBLIC LIMITED:
Public Limited A/C type of account is opened in the name of the businesses having
Public limited concern and mostly medium business enterprises open such kind of accounts. And
terms regarding board of directors are the same as of private limited.
NATURE OF ACCOUNTS:
y Current Account
y PLS Saving bank A/C
y Khushali Bachat Account (KBA)
y Saving 365 A/C
y Basic banking A/C (BBA)
CURRENT ACCOUNT:
In this type of accounts the client is allowed to deposit or withdraw money as and when
he likes. He may, thus, deposits or withdraws money several times in a day if he likes. There is
also no restriction of amount to be deposited or withdrawn. However, there is requirement of
minimum balance maintenance of Rs. 1000/-. Usually this type of account is opened by the
businessmen. No profit is paid by the bank and no service charges are deducted by the bank on
current deposits account. These types of deposits are also exempt from compulsory deduction of
Zakat.
PLS SAVING BANK A/C:
This account was started in 1980s after the issuing of banking ordinance in 1980 by Zia
Government to develop Islamic banking in Pakistan. In this case customer would be responsible
for bearing profit as well as loss. 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


25



of the fund to the best of its judgment in the banking business under the PLS system. For
withdrawal of larger amount, 7 days notice in writing is required to be given.
y Minimum balance is Rs.500/=
y Not more than eight withdrawals in a year allowed
y More than Rs.15000/= are not allowed to draw
y Seven day notice is required for big withdrawal
y Zakat deducted on @ 2.5%
y Profit calculated on monthly basis
y Profit paid on annually basis
SAVING 365 ACCOUNT :
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.
y Minimum balance is Rs.500,000/=
y Below minimum balance, profit calculation ignored
y Profit calculated on daily basis
y Profit paid on annually basis
y 10% Withholding Tax on minimum balance
y Zakat deducted on @ 2.5%


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




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INTRODUCTION:
An account is needed to be introduced. The introduction of a current account holder is
accepted for the opening of an account.
y The introducer should be a branch customer or may be account holder of any
branch of MCB; however signatures should be verified by the banker. In certain
cases, introduction from bank other than bank MCB may be allowed.
y Personally known accounts may be introduced by the bank staff.
y Introduction from an account holder not personally coming to the bank should be
verified by the bank.
STAMPING:
Then it is stamped. Stamps like. BAL sign verified, Sign Admitted Stamp, Sign Verified
stamps etc are affixed.
ACCOUNT NUMBER:
When all the procedures are completed than the final approval is taken from the branch
manager. After obtaining approval, an account number is allotted to the customer and all the
information is entered in to the computer and KYC is filled up. Then that account number is
writing on the Cheque Book, Specimen Signature cards and account opening form.
KNOWING YOUR CUSTOMER:
After entering information KYC is filled up. It should be ensured that at the time of
filling information in KYC, a customer should be physically present. After this all information is
saved in system. I filled KYC form also.




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APPROVAL:
This account is further approved by Manager Operations.
SEND FORM TO HEAD OFFICE:
After fulfilling all the requirements and verifying the forms from operation manager the
account opening form is sent to Head Office Karachi and make request to issue the printed
cheque book.
LETTER OF THANKS:
Subsequent to the opening of an account, letter of thanks should be sent under registered
post or courier service to the customer and the introducer.
ISSUANCE OF A CHEQUE BOOK:
After 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 of letter of
acknowledgement duly signed by him, in case of new account. And for subsequent issuance of
cheque book He/she has to make a request once again in the name of bank for the issuance of
cheque book and he should mention title of A/C, A/C number, sign it properly and mention the
number of leaves requires. Normally a cheque book having at least 25 leaves is issued but it can
also be of 50 leaves.
CLOSING OF AN ACCOUNT:
There is no. of reasons of closing an account. Some are listed below:
y If customer desires to close his account
y In case of death of one account holder.
y Bankruptcy of the account holder.
y If an account contain nil balance or not up to the requirement of rules.


29



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
account.
³CLEARING DEPARTMENT´
In clearing department I worked under supervision of 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 from the word ³clear´ and is defined as,
³A system by which banks exchange cheques and other negotiable instruments drawn on
each other within a specific area and thereby secure payment for their clients through the
Clearing House at specified time in an efficient way.´
CLEARING HOUSE
It is a place where cheques are presented, collected from bank branch. It is one of the
services provided by NIFT to other commercial banks. NIFT acts as a clearinghouse.
NIFT:
NIFT stands for National Institutional
Facilitation Technologies. Clearing House of SBP has
shifted a tiresome part of its work to a private institution
named NIFT. NIFT collects cheques, demand drafts, Pay
orders, Travelers Cheques, etc. from all the branches of
different banks within city through its carriers and send
them to the branches on which these are drawn for
clearing. After the branches approve the instruments drawn
on them, NIFT prepares a sheet for each branch showing the number for instruments and amount


30



in its favor and drawn on it and sends it to each branch. A similar sheet for each bank is also sent
to clearing house of SBP where accounts of banks are settled in the same manner.
LEARNING IN CLEARING DEPARTMENT
My learning in clearing department was of following things:
y Procedure of clearing a cheque.
y Checking of cheques.
y Inward and outward clearing.
y Different reasons of returning a cheque.
y Types of clearing stamps.
CLEARING PROCEDURE:
Instruments collected are treated as Transfer, Transfer Delivery, Clearing, and
Cheque collection.
CHECKING OF CHEQUES:
When the instruments are collected from the client. Following things are checked
y Cheque date, instrument should be neither stale/ nor post-dated.
y Title
y Amount in figures and words should be the same
y There should be no cutting and overwriting on the cheque
y Instrument should not bear any unauthorized alternation.
y Cheque is crossed.


31



TRANSFER:
When the instruments are collected and paid by the same branch, it is called transfer.
TRANSFER DELIVERY:
When instruments are collected and paid by two different branches of the same bank
situated in the same city, it is called transfer delivery
A cheque is processed under transfer delivery when it has crossing stamp and is from
local branch of MCB
CLEARING:
Instruments which are drawn on the branches of some other bank of the same city or of
the same area, which is covered by a particular clearing house, are processed for clearing.
In outward clearing when cheque is received two copies of voucher SF-37 are prepared,
one copy and instruments along with clearing stamp, realization stamp, add list and two vouchers
of clearing summary are sent to NIFT in a sealed bag. And clearing records are recorded in
clearing register.
In Inward clearing instruments received from NIFT are posted in Computers after
checking.
CHEQUE COLLECTION (C.C):
When cheque is from another city then it is grouped as C.C.Such instruments are
processed as cheque for collection. In this procedure SF-37 form is used in Cheque collection.
Original voucher with cheque, stamped as C.C along with C.C number is sent to main branch of
the responding city which is further sent to NIFT. Whereas Carbon copy with Pay-In-Slip is
taken by bank for record purposes.



32



PAY-IN-SLIP:
It is used for two purposes
y 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.
y Whenever we have cheque from any party to be collected in our account we fill
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 of these reasons are,
y Cheque incomplete
y Clearing stamp Required.
y Drawer¶s sign incomplete
y Drawer¶s sign different from specimen
y Post Dated
y Payment stopped by drawer.
y Amount in words and figures differ.
y Insufficient funds etc.





33



³REMITTANCE DEPARTMENT´



REMITTANCE:
Remittance is transfer of funds from one place to another or from one person to another.
It is an important service provided by banks to customers as well as non-customers. Since it is
not a free service it is a source of income for the bank.
PARTIES INVOLVED IN REMITTANCE
Four parties involved in remittance: -
Remitter, Remittee, Issuing Bank, Paying Bank
REMITTER:
One who initiates, or requests for a remittance. The bank charges him a commission for
this service. He may or may not be the branch¶s customer.
REMITTEE:
A Remittee is also called the beneficiary, or the payee. The person in whose name the
remittance is made. A Remittee is also the one who receive the payment.
ISSUING BANK:
The bank that sends or effects the remittance, through demand drafts, telegraphic
transfers, or Mail Transfers.



34



PAYING BANK:
Paying Bank also knows as the drawee branch. The branch from where the instrument is
drawn.
TYPES OF REMITTANCE:
Remittance is classified into following four types
y Inward remittance, instruments received for payment
y Outward remittance, issuing instrument to the responding branch.
y Inland remittance, with in same country.
y Foreign remittance, from one country to another country.
INSTRUMENTS USED IN REMITTANCE:
y Demand Draft (DD)
y Telegraphic Transfer (TT)
y Pay Order (PO)
y Call Deposit Receipt (CDR)
y Rupees Traveler Cheque (RTC)
DEMAND DRAFT:
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. DD applicant or recipient, who might not be an A/C
holder present it to 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.


35



DOCUMENTATION:
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 drawee branch.
TELEGRAPHIC TRANSFER (TT):
TT is fund that is transferred electronically which is remitted on the order of a certain
person. 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. But it
is not practiced these days frequently.
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 can¶t 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.


36



DOCUMENTATION:
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.
CALL DEPOSIT RECEIPT (CDR):
It is an instrument like Cheque issued by the bank on account of a customer & in favor of
a person, to pay the specified amount. CDR¶s are issued to make payments, especially when a
company goes for some tenders or for purchase of government securities or any contracts with
others.
DOCUMENTATION:
The party who requires a CDR will get a printed application from the bank. He will fill it
and deposits the amount and commission. The bank enjoys the benefit of keeping funds
deposited until the payment is not made.
RUPEES TRAVELER CHEQUE (RTC):
RTC is the traveler cheque are acceptable at all branches
of MCB, and they carry dozens o f benefits. Security is always
being an important issue of concern. TCs provide maximum
security while carrying big amounts.
DOCUMENTATION:
First of all RTC-10 is given to customer. It is filled and then cash is deposited to cash
department. One copy is for office and one copy is given to the customer and RTC are issued at
that time.
NOTE:
At time of my stay in remittance department, there was no issue of CDR, TT, RTC, PO
so I were unable to understand its practical aspects, except clearing.


37



³OTHER DEPARTMENTS´
There have been some departments in which internship was not allowed, these
departments were
1. CASH DEPARTMENT
2. ACCOUNTS DEPARTMENT
3. ADVANCES DEPARTMENT
And in TECHNOLOGY DEPARTMENT I got information about ATM and Online
Banking and just filled their forms because computer work was not allowed to internees.

³CASH DEPARTMENT´

The cash department is the most important department of the bank. In cash department
both deposits and withdrawals go side by side. This department deals with cash deposits and
payments.
The following books are maintained in the
Cash Department:
y Cash Receipt Book
y Cash Payment Book
y Cash Balance Book




38



The officers 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 from the depositor.
For depositing the cash into customer¶s accounts, there is need to fill in the paying-in-slip giving
the related details of 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
fills in the ³Cash 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. After posting these entries, computer display before posting balance and after
posting. Cashier assigns the stamp ³POSTED´ on the voucher to show voucher transaction
entries are posted.
CASH PAYMENT BOOK:
The only instrument that can be used to withdraw an amount from 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 before posting the transaction amount, balance after posting.
The cashier at the same time maintains the ³Cash Voucher Received Record Sheet´.
Then inspects the signature of the customer, cancellation mark of checking officer and stamp of
³POSTED´ is placed on cheque before he hands over the cash to customer.
CASH BALANCE BOOK:
At the end of the working day cashier is responsible to maintain the cash balance book.
The cash book contains the date, opening balance, detail of cash payment and received in figures,


39



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 = Closing Balance

³ACCOUNTS DEPARTMENT´
The most important aspect in record keeping of a bank is its accounting system. The basic
purpose for maintaining an accounting system
is to ensure consistency in record keeping and
accounts. The basic requirement for 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 for an
accounting system.
Main Functions of Accounts Department:
The major function of this department is keeping the record maintenance of each and
every transaction and prepares reports about the amount of deposits and advances and sent to
Head office or State Bank of Pakistan on monthly, quarterly and yearly basis.
Following activities are carried out in Accounts Department.
y Budgets and budget review form
y Income & expenditures.
y Reports and Reconciliation.
y Activity checking.


40



y Depreciation & Maintenance of fixed assets provision.
y Maintenance & depreciation of fixed assets.

³TECHNOLOGY DEPARTMENT´

It includes;
y Mobile Banking
y Phone Banking
y Online Banking
y ATM
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/prefix) from their
respective cities
Customers enjoy 24x7 Round the Clock Phone
Banking Services. MCB is the first bank in Pakistan to
offer Centralized connectivity.


41



ONLINE BANKING:
MCB now offers the facility of on-line banking to its customers through its country wide
network of branches. Customers can use the ATMs or the banking counters of any branch for
day-to-day banking needs, irrespective of 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 software named
³SYMBOLS´ at their own branches.
ATM (Automatic Teller Machine):
ATM stands for Automatic Teller Machine. This machine
is used to transact in one's account without intervention of
humans. These machines are basically used for taking cash,
confirming balances and requesting statements / cheque books.
MCB has the largest ATM network in the country at the moment with almost one ATM at each
online branch and also ATM terminals at International Airports covering 27 cities of Pakistan
ATMs are operated through a card issued to the valued customers and by application of
Personal Identification Number (PIN number). Now MCB has also entered into a contract with
Cirrus which is a subsidiary of MasterCard. This contract will enable an ATM card holder to
use his account even when he is out of country at all the ATMs where Cirrus logo is displayed.
Green Cards are ordinary cards with a maximum withdrawal facility of Rs. 10,000/- in a day.
The annual fee for this card is Rs. 300/- only.
Gold Cards are special cars with maximum withdrawal limit of Rs. 25000/- in a day. These
cards are issued to the persons having more than Rs. 500000/- as their average balance.
International Cards are issued in collaboration with Cirrus and are useable all over the world
with maximum withdrawal facility according to the standards of Cirrus.



42



³ADVANCES DEPARTMENT´
Different banks provide loan facility to general public, companies etc. but MCB provides
two types of loans that are as under:
y Fund Base Loans
y Non Fund Base Loans
FUND BASE LOANS:
In this type of loans cash is directly involved. Bank provides loans in shape of cash. Bank
gives credit or limit facility to customers that needed it. In fund based loans there are two further
classifications:
Long Term Loans:
y Lease facility for car
y For Machinery
y For Fixed Assets
Short Term Loans:
Running Finance (R/F)
Cash Finance (C/F)
RUNNING FINANCE:
The MCB provides overdraft facility to the customers for 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 for running business.



43



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



44



NON FUND BASE LOANS:
In non fund based loans cash is not directly involved but bank gives guarantee on
the behalf of customer. Bank works as a third party and known as Guarantor. Bank provides a
security to customer when he needs and someone requires from the customer.
DOCUMENTS REQUIRED BY BANK FOR ADVANCES:
y Request of customer
y Credit application from bank
y Basic borrower sheet
y Net worth certificate
y CIB report
y Financials
y Account statement
y Property evaluation report
y For sale value certificate
y Property documents
y Title deed [fard]
y Property map
y CNIC
y Account opening form
y Undertaking


45



Following steps are there:
y Information required by the bank
y Preparation of credit proposals
y Sanction advice
INITIAL INFORMATION:
Following information is required to be submitted to bank.
y Nature & structure of borrower business
y Names of proprietors, partners or directors
y Detail of all firms or companies associated with borrower.
y Financial condition of borrower business
y An assessment of his business abilities
y Accurate and up to date financial statements of last two years for comparison
purposes
y Market report on the borrower where borrower has maintained an account with
another bank, a report from his bank should also be obtained.
y A report from credit standing bureau of State Bank of Pakistan
PREPARATION OF CREDIT PROPOSAL:
At first a formal application for credit approval is obtained from the party along with
complete group position. The party¶s credibility report is obtained from the bank with which the
bank is doing its business. The party¶s credibility report is also taken from the Head office of
Trade Information Division.


46



For obtaining credit, party has to submit the last two years Balance Sheet and Profit &
Loss statement duly attested by authorised auditors. If the party is also involved in export or
import business then the bank also considers the data of three years about import & export.
Current debt and equity ratio is also calculated by the bank. The type of data required to prepare
the credit proposal is to be gathered from the different departments. Some data is obtained from
the foreign Exchange department. Some data is available in Advance Department. The purpose
of obtaining Credit should be explained clearly. The securities offered by the party to the bank
are also evaluated. In case of pledging of property in shape of land or building the complete
evaluation of the property should also be attached.
After all the necessary documents for applying for advance is fulfilled by the party then
the case is sent to Manager for approval. If the credit limit is in his range then he can decide over
it otherwise the case is forwarded to seniors. If there is any discrepancy then the party is
informed of 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 form contains following information:
y Nature and amount of limit.
y Purpose
y Security/ Collateral
y Margin (%).
y Mark up/ Charges
y Validity



47



³FINANCIAL ANALYSIS OF MCB´

³RATIO ANALYSIS´
Ratio analysis is an important and old technique of financial analysis. Ratios are
important and helpful in the reference that:
y These simplify the comprehension of financial statement and tell the whole story
of changes in the financial conditions of the business.
y These provide data for inter-firm comparison. The ratios highlight the factors
associated with successful and unsuccessful firms, also reveal strong and weak
firms.
y These help in planning and forecasting these can assist management in its basic
functions of forecasting, planning, coordination and control.
y These help in investment decision in case of investor and lending decision in case
of Bankers etc.
However, the ratios are only indicators, they cannot be taken as final regarding good or
bad financial position of the business other things have also to be seen.
Great care is needed while calculating meaningful ratios and in interpreting them.
Although there are several ratios, which an analyst can employ yet the type of ratios he would,
use entirely depends on the purpose for which the analysis is done i.e., a creditor would keep him
abreast about the ability of a concern to cover up its current obligations and so would care about
current and liquid ratios, Turnover of receivables, coverage of interest by the level of earnings
etc.




48



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




49



CURRENT RATIO:
The current ratio, one of the most commonly cited financial ratios, measure the firm¶s
ability to meet its short-term obligations. It is expressed as follows:
Current assets
Current ratio = Current liability



RESULT:
From the above ratios it is clear that the firm¶s investment in current assets has increased.
In 2008 it is in better position to pay its obligations as they come due. But in three years we can
see that the firm has the ability to pay its current liabilities efficiently. The standard for this ratio
is 2:1 it is calculated by the current assets by total of the current liabilities.
This ratio is below the standard. The management should take steps to improve the short-
term financial position of the firm.
DEBT RATIO
The debt position of a firm indicates the amount of other people¶s money being used to
generate profits. In general, the financial analyst is most concerned with long term debts, because
these commit the firm to a stream of payment s over the long run.
The debt ratio measures the proportion of total assets financed by the firm¶s creditors.
The higher this ratio the greater the amount of other people money being used to generate profit.
The ratio is calculated by following formula
Debt ratio = Total liabilities
Total assets
Years 2008 2007 2006
Current ratio 1.42 1.02 1.31


50




Years 2008 2007 2006
Debt ratios
0.864958 0.860627 0.877075

RESULT:
The ratio indicates the more than half of the assets financed 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 financial leverage it has. It also shows that firm has paid some portion
of the debt during the year 2008.
MARKET RATIOS

y Return on total assets
y Return on equity
y Earnings per share
RETURN ON TOTAL ASSETS:
It measures the overall effectiveness of management in generating profits with its
available assets. The higher the Return on total assets better will be the performance.

Earning available for common stockholders
Return on total assets =
Total assets




51




Year 2008 2007 2006
ROA 5.030% 5.505% 5.219%

RESULT:
The return on investment of the firm is 5.03 % in 2008. It is less than the previous year. It
shows that firm generates Rs.5.03 for each Rs.100 of the investment which is very poor for the
company progress.
RETURN ON EQUITY:
Earning available for common stockholders
Return on total assets =
Total Equity


Year 2008 2007 2006
ROE (%) 28.313 34.73238 34.448881

RESULT:
The return on equity of the firm is 28.313% in 2008. It is less than the previous year. It
shows that firm generates Rs.28.313 for each Rs.100 of the investment made by the partners or
shareholders of the company (which are privately owned by four brothers).




52



EARNING PER SHARE:




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

Year 2008 2007 2006
EPS 24.38929 26.16947 22.95


53


BALANCE SHEET
AS AT 31 December 2008,2007,2006

2008 2007 2006

(Rs. In '000') (Rs. In '000') (Rs. In '000')
ASSETS

Cash and balances with treasury banks 39,631,219 39,683,883 32465976.00
Balances with other banks 4,106,526 3,867,591 6649659.00
Lending to financial institutions 4,100,079 1,051,372 21081800.00
Investments 97,790,391 115,358,590 64450761.00
Advances 262,508,830 218,959,786 198236682.00
operating fixed assets 17,320,485 16,082,781 9073276.00
deferred tax assets - - 174886.00
Other Assets 19,828,228 17,896,838 11044909.00
445,285,758 412,900,841 343177949.00
LIABILITIES

Bills payable
Borrowings from financial institutions 10,551,468 10,479,058 7089678
Deposits and other accounts 22,663,840 39,406,831 23943476
Sub-ordinate loans 330,245,080 292,088,347 257185110
Liabilities against assets subject to
finance lease - 479,232 1597440
Other liabilities 440,295 1,183,586


54


21,252,942 11,716,465 11177125
NET ASSETS
385,153,625 355,353,519 300992830
60,132,133 57,547,322 42185119
REPRESENTED BY:

Share capital
Reserves 6,282,768 6,282,768 5463276
Unappropriated profits 36,772,321 34,000,927 24662446
11,065,723 7,054,472 6278593
Minority interest 54,120,812 47,338,167 36404315
69 63 52
Surplus/ (deficit ) on revaluation of
securities 54,120,881 47,338,230 36404367
6,011,252 10,209,092 5780752
60,132,133 57,547,322 42185119

Income Statement
For the Years 2008,2007,2006

2008 2007 2006

Rs. In
'000'
Rs. In
'000'
Rs. In
'000'
Mark-up /return/ intertest earned 40,049,505 31791754 25784853
Mark-up/ return/ interest expensed 11,592,922 7858819 4509146


55


Net Mark-up /return/ intertest income 28,456,583 23932935 21275707
Provision for diminution in the value of
investment - nrt 2,683,994 105269 121197
Provision against non-performing loans and
advances - net 1,335,127 2959583 1014540
Bad debts written off directly - 199 47000
4,019,121 3065051 1182737
Net mark-up /interest income after provisions
24,437,462 20867884 20092970
Non-mark-up / interest income

Fee, commission and brokerage income 2,878,663 2,772,615 2325171
Income earned as trustee to various funds 21,867 5,859 483
Dividend income 451,312 535,813 746276
Income from dealing in foreign currencies 727,564 693,408 692010
Gain on sale of securities - net 748,139 1,507,610 605865
Unrealized loss on revaluation of investments (99,531) (3,329)
classified as held for trading
Other income - net 1,201,834 1,002,160 577703
Total non-mark-up / interest income 5,929,848 6,514,136 4947508
30,367,310 27,382,020 25040478
Non-mark-up / interest expenses
Administrative expenses 7580302 5,440,305 6505576
Other provision / (reversal) - net 10120 (3,743) 11411


56


Other charges 920991 642,780 66708
Total non-mark-up / interest expenses 8511413 6,079,342 6583695
Share of profit of associated undertaking 30843 1,223,633 474030
Extra ordinary / unusual item - -
Profit before taxation 21886740 22,526,311 18930813
Taxation
Current year 7387345 6,463,560 5709140
Prior years -865344 -1294586 593906
Deferred 16348 899,898 61213
Share of tax of associated undertaking 25164 15,769 25675
6563513 6,084,641 6389934
Profit after taxation 15323227 16,441,670 12540879

Basic and diluted earnings per share - after tax 24.39 26.17 19.96




57



³VERTICAL ANALYSIS´
BALANCE SHEET
AS AT 31 December 2008

2008 2007 2006
ASSETS % % %
Cash and balances with treasury banks 8.90 9.61 9.46
Balances with other banks 0.92 0.94 1.94
Lending to financial institutions 0.92 0.25 6.14
Investments 21.96 27.94 18.78
Advances 58.95 53.03 57.76
operating fixed assets 3.89 3.90 2.64
deferred tax assets 0.05
Other Assets 4.45 4.33 3.22
total assets 100.00 100.00 100.00
LIABILITIES

Bills payable 2.37 2.54 2.07
Borrowings from financial institutions 5.09 9.54 6.98
Deposits and other accounts 74.16 70.74 74.94
Sub-ordianted loans 0.12 0.47
Deferred tax liabilities 0.10 0.29 0.00


58


Other liabilities 4.77 2.84 3.26
total liabilities 86.50 86.06 87.71

REPRESENTED BY:

Share capital 1.41 1.52 1.59
Reserves 8.26 8.23 7.19
Unappropriated profits 2.49 1.71 1.83
total common stockholder equity 12.15 11.46 10.61
Surplus/ (deficit ) on revaluation of securities 1.35 2.47 1.68
total liabilities & equity 100.00 100.00 100.00



Income Statement
For the Years 2008,2007,2006

2008 2007 2006.00
Mark-up /return/ intertest earned 100 100 100
Mark-up/ return/ interest expensed 28.95 24.72 17.49
Net Mark-up /return/ intertest income 71.05 75.28 82.51
Provision for diminution in the value of investment - nrt 6.70 0.33 0.47
Provision against non-performing loans and advances - net 3.33 9.31 3.93
Bad debts written off directly 0.00 0.18
Total Provisions 10.04 9.64 4.59


59


Net mark-up /interest income after provisions
61.02 65.64 77.93
0.00 0.00 0.00
Non-mark-up / interest income
0.00 0.00 0.00
Fee, commission and brokerage income 7.19 8.72 9.02
Income earned as trustee to various funds 0.05 0.02 0.00
Dividend income 1.13 1.69 2.89
Income from dealing in foreign currencies 1.82 2.18 2.68
Gain on sale of securities - net 1.87 4.74 2.35
Unrealized loss on revaluation of investments 0.00 0.00 0.00
classified as held for trading -0.25 -0.01 0.00
Other income - net 3.00 3.15 2.24
Total non-mark-up / interest income 14.81 20.49 19.19
75.82 86.13 97.11
Non-mark-up / interest expenses
0.00 0.00 0.00
Administrative expenses 18.93 17.11 25.23
Other provision / (reversal) - net 0.03 -0.01 0.04
Other charges 2.30 2.02 0.26
Total non-mark-up / interest expenses 21.25 19.12 25.53
Share of profit of associated undertaking 0.08 3.85 1.84
Profit before taxation 54.65 70.86 73.42
Taxation 0.00 0.00 0.00


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Current year 18.45 20.33 22.14
Prior years -2.16 -4.07 2.30
Deferred 0.04 2.83 0.24
Share of tax of associated undertaking 0.06 0.05 0.10
16.39 19.14 24.78
Profit after taxation 38.26 51.72 48.64

Basic and diluted earnings per share - after tax 24.39 26.17 19.96

³HORIZONTAL ANALYSIS´

BALANCE SHEET
AS AT 31 December 2008

2008 2007 2006
ASSETS % % %
Cash and balances with treasury banks 122 122 100
Balances with other banks 62 58 100
Lendings to financial institutions 19 5 100
Investments 152 179 100
Advances 132 110 100
operating fixed assets 191 177 100


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deferred tax assets 100
Other Assets 180 162 100
130 120 100
LIABILITIES

Bills payable 149 148 100
Borrowings from financial institutions 95 165 100
Deposits and other accounts 128 114 100
Sub-ordianted loans 30 100
Liabilities against assets subjectto finance lease 100
Deferred tax liabilities 100
Other liabilities 190 105 100
128 118 100
NET ASSETS
143 136 100

REPRESENTED BY:

Share capital 115 115 100
Reserves 149 138 100
Unappropriated profits 176 112 100
149 130 100
Minority interest 133 121 100
149 130 100


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Surplus/ (deficit ) on revaluation of securities 104 177 100
143 136 100

Income Statement
For the Years 2008,2007,2006

2008 2007 2006

% % %
Mark-up /return/ intertest earned 155.32 123.30 100
Mark-up/ return/ interest expensed 257.10 174.29 100
Net Mark-up /return/ intertest income 133.75 112.49 100
Provision for diminution in the value of investment - nrt 2214.57 86.86 100
Provision against non-performing loans and advances - net 131.60 291.72 100
Bad debts written off directly 0.42 100
Total Provisions 339.82 259.15 100
Net mark-up /interest income after provisions
121.62 103.86 100

Non-mark-up / interest income

Fee, commission and brokerage income 123.80 119.24 100
Income earned as trustee to various funds 4527.33 1213.04 100
Dividend income 60.48 71.80 100
Income from dealing in foreign currencies 105.14 100.20 100
Gain on sale of securities - net 123.48 248.84 100


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Unrealized loss on revaluation of investments
classified as held for trading
Other income - net 208.04 173.47 100
Total non-mark-up / interest income 119.86 131.66 100
121.27 109.35 100
Non-mark-up / interest expenses

Administrative expenses 116.52 83.63 100
Other provision / (reversal) - net 88.69 -32.80 100
Other charges 1380.63 963.57 100
Total non-mark-up / interest expenses 129.28 92.34 100
Share of profit of associated undertaking 6.51 258.13 100
Extra ordinary / unusual item
Profit before taxation 115.61 118.99 100
Taxation
Current year 129.40 113.21 100
Prior years -145.70 -217.98 100
Deferred 26.71 1470.11 100
Share of tax of associated undertaking 98.01 61.42 100
102.72 95.22 100
Profit after taxation 122.19 131.10 100
Basic and diluted earnings per share - after tax 122.19 131.11 100



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RESULT ON THE BASIS OF VERTICAL & HORIZONTAL ANALYSIS:
From the above mentioned analysis following are my Result about the Operations of
branches of MCB for the year 2008,
y MCB¶s income by operations has been increased by 122.19% than 2007.
y Company¶s Total Assets in Pakistan has been increased by 130% than 2007.
y Deficit has been decreased by 104 % in comparison with year 2007
y Due to financial crisis in the world investment activities are slowed down in year 2008
and they are decreased by 152% than year 2007.
y Due to its sound financial policies MCB¶s borrowing from financial institutions has been
decreased by 95 % than year 2007.

³SWOT ANALYSIS´
³The overall evaluation of a company¶s strengths, weaknesses, opportunities and threats´
Strengths (S) include internal capabilities, resources and positive situational factors that
may help the company to serve its customers and achieve its objectives
Weaknesses include internal limitations and negative situational factors that may interfere
with the company¶s performance.
Opportunities are favorable factors or trends in the external environment that the
company may be able to exploit to its advantage.
And Threats are unfavorable external factors or trends that may present challenges to
performance.



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A scan of the internal and external environment is an important part of the strategic
planning process. The SWOT Analysis provides information that is helpful in matching the
firm¶s resources and capabilities to the competitive environment in which it operates.


³MCB¶s SWOT ANALYSIS´
³STRENGTHS´
MCB is the first Pakistani privatized bank and because of its quality management,
marketing, innovation in products and services. Owing to all such factors they have established a
good reputation in the banking market. The name of MCB makes you recall the highly
cooperative and professional individuals ready to serve you with maximum zeal and zest.
The joining of experienced people, advanced management, advance setup and facilities
gave MCB an edge over its competitors.



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MUSLIM COMMERCIAL BANK¶S IMAGE:
MCB is a reputable financial organization and is well known all over the Pakistan.
Perception is of producing a high quality services.
CUSTOMER CARE:
The Bank not only provides high quality services but it also look for the comfort and
convenience of the clients, MCB always preferred their customers.
MARKET SHARE:
MCB has covered much of the potential market and the net profit is increasing years after
years. Deposits and advances have sufficiently increased.
LARGE NUMBER OF DIVERSIFY PRODUCTS:
This is also its main strength as it has diversified in many products such as:
y Debit Card
y Visa Card
y Car Financing
y Agriculture Financing
BRANCH NETWORK
It is the greatest strength of the Bank. In 2004, five more branches were added to the
network and by the end of the year 2005 the total number of branches was raised from just 53 to
143. MCB has also planned to open more branches in next coming years.
SOUND MARKETING:
Skillful marketing of the products is being achieving countrywide goals of Muslim
Commercial Bank Limited.



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PHONE BANKING:
Every account holder can conform its balance on Phone and may ask for any query.
There are also 24 hours help lines for 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 of highly automated banks, about 750, like
Emirates because of its modern style of banking through fully computerized control and twenty
four hour banking.
FASTER BANKING SERVICE:
MCB have faster banking services that are making it more prominent in the banking
industry especially in operations and Foreign exchange. The customer prefers this bank not only
because of its faster speedy service rather due to reasonable service charges.
INTERNATIONALLY DESIGNED PRODUCTS:
MCB¶s products are internationally designed products. These are valuable and
operational in all over the world.
CONTRACT WITH CIRRUS:
Now MCB has also entered into a contract with Cirrus which is a subsidiary of
MasterCard. This contract will enable an ATM card holder to use his account even when he is
out of country at all the ATMs where Cirrus logo is displayed.



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³WEAKNESSES´
ADVERTISEMENT:
The majority of people are not well aware about the products of MCB. Therefore it
should advertise extensively especially RTC and Master Cards.
ACCOMMODATE BEHAVIORALLY:
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.
MISMANAGEMENT OF TIME:
Mismanagement of time is another big mistake in MCB branches, the bank official time
of closing is 5:30pm but due mismanagement of time allocation and work the staff is normally
on their seats till 7:00 or 8:00 clock.
AND ALSO,
y Costly documents are required for loan sanctioning.
y Some times bank also never meets stated rate of profit







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³OPPORTUNITIES´
PRIVATIZATION:
As on December 31, 1998, sixty-eight scheduled banks with 9,106 branches are operating
in Pakistan. As on this date, total population of Pakistan is 140.03 million. Total number of
personal accounts with all scheduled banks as on December 31,1997, are 28.98 million. If we
consider the population statistics of working age group as on December 31,1997, it stands to the
figure of 96.64 million. Thus we can say those 28% of working age people of Pakistan are
having accounts with banks while 72% are unbanked.
The need of privatization has made people to switch to banks to satisfy their needs of
lending and borrowing. This not only increases the deposits but also the credit business.
DIVERSIFICATION:
They may enter in New business or any other consumer-durable product in order to
promote their name, by introducing Loan for the students, small businesses, and handicraft
industry.
SOME MORE OPPERTUNITIES:
y Information Technology.
y Credit cards can give more earning.
y Establishing more foreign Branches.
y They should introduce Student Finance Facility.
y They should also introduce mobile ATM




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³THREATS´
CHANGE IN GOVERNMENT POLICIES:
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.
COMPETITION:
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.
LOW INVESTMENT:
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.
STATE BANK REGULATION:
As the Bank introduces unique products so they face problem if State Bank Of Pakistan
employ taxes on them which force them to increase the rate of Interest.
EXPECTATIONS OF THE PEOPLE:
Due to huge competition among those banks and MCB,, people are the basic
beneficiaries from it and thus their expectations tend to increase about the products and the
relative rate of interest thus creating a threat for MCB.
SOME BANKS ARE OFFERING KISAN CARDS.



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³PEST ANALYSES´
PEST analyses tell How Political, Economical, Social and technological factors affect
MCB. These are the external factors which affects the whole organization.
POLITICO-LEGAL FACTORS:
y Stable government
y Stable policies in favor of business
y Improved relation with outside world
y Law and order.
UNSTABLE GOVERNMENT:
Due to this reason foreigners hesitate to invest their savings in banks, as a result of
economy of our country is going downward and banks suffer.
ADVERSE LAW AND ORDER SITUATION:
The situation of law and order is adverse. The policies are not very handy and beneficial
for the country. The Govt. passes such rules which are not in the favour of bank e.g. The Govt. of
Pakistan has passed a rule that if 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 influence on the
economic crisis of all over the world. With economic factors the bank influenced very much that
are as under:
y Impact of WTO force to cost reduction methodology.
y Low interest rate


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y Inflation
y Low GDP growth
y Budget deficit
y Increase in Govt. duties
y Fluctuation in exchange rates
SOCIAL FACTORS:
Social environment includes family, friends, a person's role and status. An individual¶s
life directly by society and the person acts according to his or her society. Cultural environment
includes norms, values, religion, conception and perception.
y If we see the religion point of view then interest is not allowed that's why most of
the people hesitate to invest their savings in banks and yet they are not aware of
ISLAMIC BANKING.
y 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
facilities.
TECHNOLOGICAL FACTORS:
Today is the era of technology. In the every aspect of life technology plays an important
role.
y Due to rapid change in technology every bank has to change its technology to
compete other ones.
y Increasing issue of securities due to technology resulted increase in cyber
crime. Cyber crime means manipulation. One person can easily transfer
amount from any other's account to his account.



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³APPLICATION OF CLASS ROOM LEARNING´

During my internship of eight weeks in Muslim Commercial Bank, Ltd. Kot Farid
Branch, Sahiwal the knowledge given by my respected and devoted teachers proved to be very
helpful in understanding the environment in the organization and working practically.
Following are some key points about application of my class room learning in the
organization:
The knowledge achieved from the subject ³Business 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 from the subject ³Computer application in Business´
also proved very useful.
Financial Management and Principles of Accounting helped me in understanding the
accounting terminologies which are used in bank e.g. what is debit and credit vouchers? What
are these for? And also in understanding that how entries are made against certain heads.
I could do this only with the help of the knowledge provided to me in my two semesters
of MBA at Bahauddin Zakariya University, Sub Campus Sahiwal.



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³WHAT I HAVE LEARNT IN MCB´

In Muslim Commercial Bank Ltd. I really enjoyed working with the staff of Kot Farid
Branch, Sahiwal having a wish to be employee of MCB. It was almost impossible to work in all
the departments within that limited time. But the staff of the branch provided me the opportunity
to work in the different departments for the sake of practical knowledge. I feel highly indebted to
work in the Kot Farid Branch with the manager of that branch Mr. Yasin Tahir, because I learnt a
lot in that branch.
During my internship training in the MCB as I early mentioned that I have worked in
different departments & seats and learnt the following things,

y How to deal with different types of customers.
y Account opening.
y Cheque book issuance.
y Outward clearing.
y Cheque for Collection.
y Different forms and vouchers filling.
y Experience of working in a well reputed organization.



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³SUGGESTIONS & RECOMMENDATIONS´

Following are some suggestions for Muslim Commercial Bank, Ltd.
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.
INCREASED ATM¶S LOCATIONS:
Some personal sector customers prefer not to come to branch. They increasingly want to
deal with the bank in other ways, such as home banking or use of Automated Teller Machines
(ATMs), which need to be at every branch or some important shopping plazas and airports etc.
INCREASED SERVICES:
One way to retain the customers is to offer a wide range of services such as tax advice,
free life insurance equivalent to amount deposited, shares portfolio management, fund
management facility, etc., complimentary to the core services. Banks must have a slightly
different mix of services and mean of providing these such that customers can choose the mix
that suits them best.
MANAGEMENT OF TIME:
There should be a good management of time for the sake of employees i.e. offering them
free break hours instead of making them work in this time as well.



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GROWTH SCOPE FOR EMPLOYEES:
MCB should provide greater facilities to its employees, and give them bonuses for their
hard work and Promotions as well. There is a criticism on the banking management that the
salaries of the employees are decreasing in every succeeding year. And I think this will shake the
confidence and working habit of the employees
BANKING PROFESSIONALS:
The bank should hire banking professionals having experience in their respective fields
that will boost the performance of the company as currently MBAs are produced for this field so
they should be hired for enhancing the performance of company.
ATTRACT CUSTOMERS:
The banking company should offer such policies which would attract customers which
are denied by other banking in the market.
JOB ROTATION AND PROMOTIONS:
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. The
promotion policy should be adjusted
COMMUNICATION SYSTEM FOR EMPLOYEES:
As such system should be designed that every employee who has some problems with his
officers can communicate it to the higher management and some steps must be taken to improve
that.




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³IF I WERE MANAGER AT MUSLIM COMMERCIAL BANK´

If I would be a manager at MCB I¶ll take following steps,
y I will apply such a communication system specially designed for employees trough they
can share the problems regarding work environment.
y Complete working and break hours will be offered so that employees can work
efficiently.
y I will make it sure that some of the employees should be sent for training to other
countries and employees from other branches should be brought here.
y I will make promotions, job rotation and bonuses, an important part of policies of MCB.
y At every month¶s closing when employees stay at branch even after working hours, a
dinner from bank will be offered.
y To retain potential customers certain services will be provided and let them know with
advertising.
y I will make it sure that Working environment, equipment, furniture and staff dressing
should be according to the modern banking style.



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³REFERENCES & RESOURCES´

To make this internship report data is taken from the following resources:
ONLINE RESOURCES:
Muslim Commercial Bank, Ltd http://www.mcb.com
Muslim Commercial Bank Pakistan http://www.mcb.com/pakistan/
State Bank of Pakistan http://www.sbp.org.pk
Statistical Bureau of Pakistan http://www.fbs.gov.pk
Interview with key persons at MCB, Kot Farid Branch Sahiwal.

³PREFACE´

It is the requirement of the MBA course Bahauddin Zakariya University, Multan that all students of MBA have to spend six or eight weeks in any organization to get practical exposure and to get familiarized with the ways to live in the organizational environment which is dramatically different from the educational environment. That two months period called ³Internship Period ³, if spent properly and sincerely, enables the students to be more confident, more knowledgeable, more responsible and, above all, more committed to its work in the practical field. I have also been assigned to do internship of eight weeks period in MCB Kot Farid Branch Sahiwal. It has enabled me to understand the practical scenario and sharpen our decision making power and utilizing the resources in an effective manner, so that our resources generate maximum profit. In preparing this report, I have put all of my best efforts and tried my level best to give maximum knowledge. Despite of my all the coherent efforts, I do believe that there will always be a room for improvement in the efforts of learner like me.

Sitara Muzzamil MBS-08-13

2

³ACKNOWLEDGEMENT´

All praises to almighty Allah and our holy prophet Muhammad PBUH who gave me the courage and patience for completion of this final report. I wish to acknowledge my gratitude to my inspiring Teachers for their endless their persistence, support and encouragement, and for providing me a lifetime opportunity to work with Muslim Commercial Bank I am also very thankful to Muslim Commercial Bank Ltd. Kot Farid Branch, Sahiwal and the Branch Manager Mr. Yasin Tahir who gave me opportunity to work with experienced persons in their organization. I am also thankful to my parents, family and friends that continually offered encouraging support « « «

Sitara Muzzamil MBS-08-13

3

......22 ³CLEARING DEPARTMENT´ ...............................37 ³CASH DEPARTMENT´ ......................................................................................22 ³OPERATIONS DEPARTMENT´ ........................................................................................................................................................³TABLE OF CONTENTS´ ³PREFACE´ ........................................................................................................... 8 THE MUSLIM COMMERCIAL BANK LIMITED .......... 4 ³EXECUTIVE SUMMARY´ ............................................................................................33 ³OTHER DEPARTMENTS´ ......................37 ³ACCOUNTS DEPARTMENT´ .............................................................................................................................................16 ³INFORMATION ABOUT BRANCH´ ..................................................................................................12 ³MISSION STATEMENT´ .......................47 4 ...................................42 ³FINANCIAL ANALYSIS OF MCB´ ....................................................14 ³MANAGEMENT OF ORGANIZATION´ .....................15 ³ORGANIZATIONAL STRUCTURE´ .......................11 ³VISION STATEMENT´ .................................................... 6 INTRODUCTION OF SECTOR ......................................................................................12 ³HEAD OFFICE´ ........39 ³TECHNOLOGY DEPARTMENT´ ........... 2 ³ACKNOWLEDGEMENT´ .............................................................................13 ³CIRCLE OFFICE´ ....................................................................40 ³ADVANCES DEPARTMENT´ ..........................................................................................................................................................................................................21 ³DEPARTMENTS WHERE INTERNSHIP WAS CARRIED OUT´ .................................................................................................................................................................47 ³RATIO ANALYSIS´ ...................29 ³REMITTANCE DEPARTMENT´ ..............................................................................................................................20 ³GENERAL BANKING´ ..................................................................................... 3 ³TABLE OF CONTENTS´ ............................................................................

........................................................................................................................................................................................................................................................................................................77 ³REFERENCES & RESOURCES´ ................................69 ³THREATS´ .................70 ³PEST ANALYSES´ ..........................................48 DEBT RATIO.........................................65 ³WEAKNESSES´ .................48 LIQUIDITY RATIOS .................49 MARKET RATIOS ..............................................................................................................................................................................................................75 ³IF I WERE MANAGER AT MUSLIM COMMERCIAL BANK´ .......68 ³OPPORTUNITIES´ ................65 ³STRENGTHS´ ...............................................................................................................................................................................57 ³HORIZONTAL ANALYSIS´ .....................................78 5 ..........................................74 ³SUGGESTIONS & RECOMMENDATIONS´ ...............................71 ³APPLICATION OF CLASS ROOM LEARNING´ ...............................................64 ³MCB¶s SWOT ANALYSIS´ .............................................................................................................................................................................................73 ³WHAT I HAVE LEARNT IN MCB´ ...............................60 ³SWOT ANALYSIS´ ............................................................50 ³VERTICAL ANALYSIS´ ........................ADVANTAGES OF RATIO ANALYSIS: .......................................................................................

The State Bank of Pakistan issues the shares of these periodically. The procedure begins with the punching of account opening form to the customer file i. Cooperative banks. Term/ Fixed Deposits and others like night banking. traveler cheques. PLS Account.³EXECUTIVE SUMMARY´ The banking structure in Pakistan comprises of the following types. Fund Management Scheme. MCB SFK branch has Currently Following three Departments General Banking Department. Current deposits are those which are payable to bank whenever demanded by the customer. In April 1991. MCB became Pakistan¶s first privatized bank. In 1956. The following are the financial products/services of MCB Malay Mail Scheme. credit cards. Before closing any account. State Bank of Pakistan. The state bank of Pakistan is the Central bank of the country and was established on July 01. Advances Department & Foreign Exchange Department. Bank employees and other common peoples can also purchase these shares and earn profit. There is need an approval form higher authority to close any account. The bank is using SWIFT for transfer of information about imports and exports. The network of bank branches now covers a very large segment of national economy. Exchange Banks. Capital growth certificate scheme. bank send letter to the account holder for informing him that his account is going to be closed. customer¶s master file. Commercial Bank of Pakistan.e. The corporate branch at Shahrah-e-Faisal Karachi (SFK) branch is the corporate branch of MCB in Karachi. Saving 365 Account. To open an account the customer has to meet the general banking manager with an introducer. Khushali Bachat Account. Specialized credit institutions. where the Head Office is presently located. MCB transferred its Registered office to Karachi. 6 . 1948. Saving banks. Bank does not pay any profit on current deposits.

Telegraphic Transfer. Paying-in-slip. Imports & Exports Foreign currency accounts & the foreign currency department deals with the following types of accounts. Banks Agriculture division deals with the agriculture advances. The clearing in Karachi at MCB or other banks is being done through NIFT (National Institute of Facilitation Technology). Term deposit. MCB is dealing Foreign Currency Accounts. Export Refinance Part I (Pre Shipment) & others. In foreign exchange. Letter Of Credit facility is being provided by MCB in foreign exchange. MCB provides advances. In cash department both deposits and withdrawals go side by side. Foreign Remittances. Prime Currency Scheme. Foreign bills purchased. and Foreign Bills for Collection. and ledger of account cash received voucher sheet. 7 . cash paid voucher sheet. books. Farm Credit & Non Farm Credit. This department works under the accounts department and deals with cash deposits and payments. This department maintains the following sheets. Commercial Advances Industrial Advances. Foreign accounts are convertible on floating rate available to the bank. Unsecured Advances. Party dealing with other banks financial condition of borrower business and as a first step credit proposal is being made. Cheque book. Bank provides this facility to the people who need advance money to meet their requirement.In remittance department like any other bank MCB also have instruments for transferring of money. Finance against imported goods. Dollar Khushali account. Saving bank account. MCB usually classified advances in to following types Agricultural Advances. Bank provides the Agriculture Advances in order to enhance and support the agriculture sector of the country. Secured Advances. Finance against foreign bills. Cash balance book. Current account. Commercial Advances are of following types Demand Finance. which are two types. Mail Transfer. Cash Finance.

These receipts were the earlier bank notes. was the accepting of deposits of cash from those persons who had surplus money with them. The goldsmiths soon discovered that all the people who had deposited money with them do not come to withdraw their funds in cash. they found that they were being constantly requested for loan on good security. This history of banking is traced to as early as 2000 B. These priests thus acted as financial agents. for ever since man came to realize the importance of money as a medium of exchange. This proved a profitable business for the goldsmiths. Banking in fact is primitive as human society. thus. The priests in Greece used to keep money and valuables of the people in temples. When it was found that these receipts were fully accepted in payment of debts. 8 . The first stage in the development of modern banking. A depositor who is to make the payments may now get the money in cash from goldsmiths or pay over the receipt to the creditor. The second stage in the development of banking thus was the issue of bank notes. then the receipts were drawn in such a way that it entitled any holder to claim the specified amount of money from goldsmiths. They thought it profitable to lend at least some of the money deposited with them to the needy persons. They used to keep strong safes for storing the money and valuables of the people. This was the third stage in the development of banking. The goldsmiths used to issue receipts for the money deposited with them. The origin of banking is also traced to early goldsmiths.INTRODUCTION OF SECTOR The word 'Bank' is said to have been derived from the words Bancus or Banque or Bank. They also found that most of the money deposited with them was lying idle.C. At the same time. These receipts began to pass from hand to hand in settlement of transactions because people had confidence in the integrity and solvency of goldsmiths. They instead of charging safe keeping charges from the depositors began to give them interest on the money deposited with them. the necessity of a controlling or regulating agency or institution was naturally felt. They found that only a few persons presented the receipts for encashment during a given period of time.

By the end of June 1948 the number of officers of scheduled banks in Pakistan declined from 631 to 225. there were 631 offices of scheduled banks in Pakistan. 1948. There were 19 foreign banks with the status of small branch offices that were engaged solely in export of crop from Pakistan. The Govt. the expert committee recommended that the Reserve Bank of India should continue to function in Pakistan until 30th September 1948. while there were only two Pakistani institutions. Consequently the Governor-general of Pakistan Quaid-I-Azam inaugurated the State Bank of Pakistan on July 1. Therefore. coinage currencies. Thus a landmark was made in the history of banking when the state bank of Pakistan assumed full control of banking and currency in Pakistan. so that problems of time and demand liability.At the time of independence. of Pakistan decided to establish a full-fledge central bank. y y y y y State Bank of Pakistan Commercial Bank of Pakistan Saving banks. of which 487 were located in West Pakistan alone. As a new country without resources it was very difficult for Pakistan to run its own banking system immediately. The banking structure in Pakistan comprises of the following types. The customers of the bank are not satisfied with the uncertain condition of banking. be settled between India and Pakistan. commerce and industry. Commercial banks have been the most effective mobilizers of savings and have been providing short-term requirements of working capitals to trade. The non-Muslims started transferring their funds and accounts to India. Cooperative banks Specialized credit institutions. of Pakistan. 9 . Similarly the Reserve Bank of India was not in the favor of Govt. Habib Bank of Pakistan and the Australian Bank. exchange etc.

The Government of Pakistan in the late 90¶s introducing the need for the privatization of state owned banks and companies. 1948. 10 . The private sector has accepted the challenge and most of the banks are privatized today. Bank employees and other common peoples can also purchase these shares and earn profit. there were 14 Pakistan commercial banks that functioned all over the country and in some foreign countries through a network of branches. The State Bank of Pakistan issues the shares of these periodically. The network of bank branches now covers a very large segment of national economy. 1974. The numbers of branches have increased appreciably and there is now on branch of bank for every 3000 heads of population approximately. The separation of East Pakistan and its repercussion in the form of economic depression has caused a lot of difficulties to the banking system in Pakistan. 1973.Up to December 31. All these commercial banks were nationalized in January 1. Throughout the period of banking history the banks have been expanding rapidly and achieved the desired goal of progress. and were recognized and merged into the following five banks: y y y y y National Bank of Pakistan Muslim commercial bank limited Habib Bank Limited United Bank Limited Allied Bank of Pakistan The state bank of Pakistan is the Central bank of the country and was established on July 1. specialized credit and financial institutions have also developed over the years. There is done reasonable growth in deposits from the establishment of Pakistan. Besides this growth.

Initially only 26% of shares were sold to private sector at Rs. represents a bank that has grown with time. In 1956. and firmly rooted. MCB besides being money financial organization have rendered invaluable services in the economics and social developments of our country. MCB today. MCB was nationalized by Bhutto Government following the bank act 1974 subsequently in June 1974 Premier Bank Limited merged with MCB. it symbolizes a fully-grown tree. 56 per share. In January 1974. Strong. MCB was the first to be privatized upon recommendations of World Bank and IMF. The reason for this choice was the better profitability condition of the organization and less risky credit portfolio which made'' it a good choice for investors. the bank moved to Dhaka from where it commenced business in August 1948. Evergreen. On April 8th. 11 . in scope and size. 1947. A major financial institution. the management control was handed over to ³National Group´ (the highest bidders). experience and Pakistan. the Bank transferred its Registered office to Karachi. 1991. MCB is not an overnight success story rather good track of services are responsible for the leaps and bounds progress. Thus. PRIVATIZATION: When privatization policy was announced in 1990. where the Head Office is presently located. the bank inherits a 52-year legacy of trust in its customers and the citizens of Pakistan The performance of MCB was badly affected by bureaucrat government.THE MUSLIM COMMERCIAL BANK LIMITED HISTORY: MCB was founded by ISFHANI and ADAMJEE families in Calcutta on July 9. After the partition of the Indo-Pak Subcontinent.

we ensure that our shareholders can invest with confidence in us. partnering with our customers for a more prosperous and secure future´ ³MISSION STATEMENT´ ³We are a team of committed professionals.³VISION STATEMENT´ ³To be the leading financial services provider. In doing so. providing innovative and efficient financial solutions to create and nurture long-term relationships with our customers.´ 12 .

151 ATMS in 27 cities nation wide and a M.online branches (integrated networking). ³HEAD OFFICE´ Chudrigor Road of Karachi has same importance in Pakistan¶s economy as of the Wall Street in world economy.B continuously innovate new product. The division working under MCB Head office is as follows: y y y y y y Administration Credit Management Investment Banking Human Resource Information Technology Corporate Planning & Budgeting 13 . the growth in every department of the bank has been observed.DEVELOPMENTS: After privatization. Introduction of Rupee Traveler Cheques & Photo Credit Card for the first time in Pakistan. y y y Increased participation on foreign trade. Betterment of branches and staff service level. more than 250. Extended use of information technology which is evident from the fact that there are 768 fully automated branches.C. Following are some key developments: y Launching of different deposit schemes to increase saving level.

Circle office is like a mini head office. At present. Before privatization there were provincial chiefs for all the four provinces. ³CIRCLE OFFICE´ The working of circle office is to control and regulate the functions of branches which are under in its control. The functions of circle office are to mobilize the deposits and receive reports from branches.y y y y y y Finance & Treasury International Division Inspection & Audit Law Division Marketing & Development Trustee Division Under the President an Executive Committee and a Credit Committee works. 47 regions and 1400+ branches. But this management now has abolished the provincial officers and improved the efficiency of the bank. Under the area Executive is the General Manager who is the in charge of the Circle Office. All the matter of the bank join to the board of director are presented to the executive committee which is responsible for daily operation of the bank . there are 9 circles. Circle office is divided in the following division: y y y y Credit Management Audit & Inspection Human Resource Marketing & Development 14 . Agents and correspondents of MCB are in all commercial cities of the world.The request for credit exceeding the General Manager power is approved by the Credit Committee. Under the General Manager is the Zonal Manager and then the Branch Manager.

M. Muneer Mohammad Aftab Manzoor Tariq Rafi Sheikh Mukhtar Ahmed Mohammad Arshad Shahzad Saleem Raza Mansha Sarmad Amin Mian Umer Mansha Chairman Vice Chairman President & Chief Executive Director Director Director Director Director Director Director AUDIT COMMITTEE: Mian Mohammad Mansha Shaikh Mukhtar Ahmed Shahzad Saleem Chairman Member Member 15 .³MANAGEMENT OF ORGANIZATION´ MANAGEMENT OF BANK: Mian Mohammad Mansha S.

This team is also headed by Mr. The different operational departments are Consumer Banking & IT div. For effective handling of branches. Commercial Banking div. financial control & Audit div. Credit management div. Financial & Inter branch div. These categories are: y y y Corporate Banking Commercial Banking Consumer Banking 16 .CHIEF FINANCIAL OFFICER: Ali Amin COMPANY SECRETARY: Tameez-ul-haque ³ORGANIZATIONAL STRUCTURE´ As MCB is a banking company listed in stock exchange therefore it follows all the legalities which are imposed by concerned statutes Mian Muhammad Mansha is Chairman of the company with a team of 10 directors and 1 vice chairman to help in the business control and strategy making for the company. it has been categorized into three segments with different people handling each category. HR & Legal div. Corporate Banking div. Banking operations div. Muhammad Mansha. Operational Management of the bank is being handled by a team of 10 professionals. Treasury management & FX Group and lastly Special Assets Management (SAM) Group.

Recently the organizational structure was re-designed as follows: Punjab Sindh NWFP Blochistan Azad J. Usually includes multinational & public sector companies COMMERCIAL BANKING: The branches which has a credit exposure of less than Rs.Kashmir Domestic Overseas Total 650 243 103 36 14 1046 7 1053 Furthermore. CONSUMER BANKING: These are the branches which have exposure up to Rs.CORPORATE BANKING: These are branches which have an exposure of over Rs. 20 million and these include all the branches which are neither corporate nor commercial branches. 100 million. 20 million (excluding staff loans) Usually branches in large markets and commercial areas come under this category. the bank has some proposals under consideration to open more branches in some European countries and as well as in Japan & china 17 . 100 million but having a credit portfolio of more than Rs.

South Shahid Sattar 18 .Chairman Mian Muhammad Mansha President Muhammad Aftab Manzoor Corporate Banking Group Muhammad Shoaib Qureshi Commercial Banking Group .North Imdad Ali Butt Commercial Banking Group .

of branches Colombo Mardana Pettah OBU Bahrain Wellawatte EPZ Kandy 7 1 1 1 1 1 1 1 19 .OVERSEAS BRANCHES: Total no.

10 million. Sahiwal. Yasin Tahir Ms. Nazir Khalid Haidar DEPOSITS: The total deposits of this about to 207.³INFORMATION ABOUT BRANCH´ I did my internship in Muslim Commercial Bank Limited Kot Farid Branch. And some important information about my branch which I observed are as follows: MANAGEMENT OF THE BRANCH: Branch manager Accountant Operational manager Cashier Peon Secrity guard Mr. NUMBER OF ACCOUNTS: Accounts in this branch of MCB are as follows: CURRENT ACCOUNT: Total numbers of current accounts are 1049 20 . Shumaila Malik Mr. Ayaz Mr.

RATE OF INTEREST: The rate of interest provided by such bank is minimum 4. REMITTANCE: Total remittance of this branch is 26. KHUSHALI BACHAT ACCOUNT: These are about to 600 accounts. It further consists of following departments: y y y y y y y Operations Department Current Department Remittance Department Clearing Department Cash Department Accounts Department Technology Department 21 .45% and maximum 9%.PLS ACCOUNT: Total numbers of profit and loss accounts are 2120. ³GENERAL BANKING´ It is backbone of banking It is one of the major department of MCB.22 million.

Operational manager. And I learnt to open accounts of different types and nature which are as follows.³DEPARTMENTS WHERE INTERNSHIP WAS CARRIED OUT´ y y y Operations Department Clearing Department Remittance Department ³OPERATIONS DEPARTMENT´ In Operations department I was under supervision of Mr. TYPES OF ACCOUNTS: y y y y y Single ‘‹– ƒ”–‡”•Š‹’ ”‹˜ate Limited Public Limited 22 . Ayaz.

SINGLE: Only one person can operate this a/c. Instruction are given for joint a/c such that the account shall be operated by anyone or more. agreement among partners and Commencement of business and private registration. Minimum Deposited Balance. Minimum Deposited Balance. commencement of business. PRIVATE LIMITED: Such type of account is opened in the name of the businesses having private limited concern and mostly medium business enterprises open such kind of accounts. Account Opening Form. PARTNERSHIP: For partnership a/c. Additional Signature Form (For Joint Account). Declaration regarding the operator of account. Account Opening Form. The requirements for this type are National Identity Card Photocopy. Registration certificate. An individual who can fulfill the requirement of bank can open this a/c. The requirements for this type are National Identity Card Photocopy. All the board of directors have to submit the declaration regarding the account operator on the company pad and with the rubber stamp with the signature of the all the members of the board of directors. Letter of Kinship etc. memorandum and articles of association and balance sheet etc. 23 . We can call it a personnel or individual a/c. JOINT: In case of joint a/c applicant mentions that how much person will operate the a/c. Account Opening Form. resolution of board of directors. along with the application form other requirements needs satisfied. Minimum Deposited Balance. The requirements for this type are National Identity Card Photocopy. In case funds are borrowed by the company all the directors approval is necessary rather not only the authorized partner who can be the operator of the account. Letter Kinship. In case of any change in directors bank must be informed regarding that.

Usually this type of account is opened by the businessmen. He may. In this case customer would be responsible for bearing profit as well as loss. There is also no restriction of amount to be deposited or withdrawn.PUBLIC LIMITED: Public Limited A/C type of account is opened in the name of the businesses having Public limited concern and mostly medium business enterprises open such kind of accounts. thus. NATURE OF ACCOUNTS: y y y y y Current Account PLS Saving bank A/C Khushali Bachat Account (KBA) Saving 365 A/C Basic banking A/C (BBA) CURRENT ACCOUNT: In this type of accounts the client is allowed to deposit or withdraw money as and when he likes. 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 24 . deposits or withdraws money several times in a day if he likes. there is requirement of minimum balance maintenance of Rs. No profit is paid by the bank and no service charges are deducted by the bank on current deposits account. However. And terms regarding board of directors are the same as of private limited. These types of deposits are also exempt from compulsory deduction of Zakat. 1000/-. PLS SAVING BANK A/C: This account was started in 1980s after the issuing of banking ordinance in 1980 by Zia Government to develop Islamic banking in Pakistan.

7 days notice in writing is required to be given. However.5% Profit calculated on monthly basis Profit paid on annually basis SAVING 365 ACCOUNT : This account is newly developed of MCB and it provides flexibility of saving account to business people. There will be no restriction on withdrawal from the account. the product will be ignored.500/= Not more than eight withdrawals in a year allowed More than Rs. if balance in the account falls below RS. 500. y y y y y y Minimum balance is Rs. Zakat and withholding Tax is also applicable on the account opened under this scheme.500.000/= Below minimum balance.000/. For withdrawal of larger amount.5% 25 .000/. 500.of the fund to the best of its judgment in the banking business under the PLS system. profit calculation ignored Profit calculated on daily basis Profit paid on annually basis 10% Withholding Tax on minimum balance Zakat deducted on @ 2.on any day.15000/= are not allowed to draw Seven day notice is required for big withdrawal Zakat deducted on @ 2. Profit on deposits will be payable on daily product basis on balance of RS. y y y y y y y Minimum balance is Rs.and above.

35/. Minimum balance is Rs. For more than two transactions Rs. I experienced to fill this form 26 .1000/= No service charges. in one month.per transaction. ACCOUNT OPENING FORM: Firstly the customer fills the account opening form and provides all the information as provided above. Only two transactions allowed. Single natured A/C. ACCOUNT OPENING PROCEDURE: Following steps are involved in A/C opening.KHUSHALI BACHAT ACCOUNT: y y y y y y Saving type account Rate of return is 8% per annum Profit calculated on daily basis Profit paid on half yearly basis Utility bills can be debited through this a/c No charges will be debited for utility payments BASIC BANKING A/C (BBA): y y y y y y Introduced specially for salaried persons.

y y Personally known accounts may be introduced by the bank staff. an account number is allotted to the customer and all the information is entered in to the computer and KYC is filled up. Stamps like. After obtaining approval. Introduction from an account holder not personally coming to the bank should be verified by the bank. The introduction of a current account holder is accepted for the opening of an account. ACCOUNT NUMBER: When all the procedures are completed than the final approval is taken from the branch manager. KNOWING YOUR CUSTOMER: After entering information KYC is filled up. however signatures should be verified by the banker. I filled KYC form also. STAMPING: Then it is stamped. In certain cases. Specimen Signature cards and account opening form. introduction from bank other than bank MCB may be allowed. BAL sign verified. After this all information is saved in system.INTRODUCTION: An account is needed to be introduced. Sign Admitted Stamp. Then that account number is writing on the Cheque Book. a customer should be physically present. y The introducer should be a branch customer or may be account holder of any branch of MCB. 27 . It should be ensured that at the time of filling information in KYC. Sign Verified stamps etc are affixed.

sign it properly and mention the number of leaves requires. Bankruptcy of the account holder. in case of new account. SEND FORM TO HEAD OFFICE: After fulfilling all the requirements and verifying the forms from operation manager the account opening form is sent to Head Office Karachi and make request to issue the printed cheque book. of reasons of closing an account. Normally a cheque book having at least 25 leaves is issued but it can also be of 50 leaves. when a customer will submit a copy of letter of acknowledgement duly signed by him. The cheque book is issued. CLOSING OF AN ACCOUNT: There is no.APPROVAL: This account is further approved by Manager Operations. ISSUANCE OF A CHEQUE BOOK: After opening an a/c with the bank. 28 . Some are listed below: y y y y If customer desires to close his account In case of death of one account holder. If an account contain nil balance or not up to the requirement of rules. LETTER OF THANKS: Subsequent to the opening of an account. And for subsequent issuance of cheque book He/she has to make a request once again in the name of bank for the issuance of cheque book and he should mention title of A/C. A/C number. letter of thanks should be sent under registered post or courier service to the customer and the introducer. the a/c holder can not immediately start operating his/ her account.

collected from bank branch. from all the branches of different banks within city through its carriers and send them to the branches on which these are drawn for clearing. demand drafts. NIFT collects cheques. In clearing department and learned about inward and outward clearing and I also learnt about. ³A system by which banks exchange cheques and other negotiable instruments drawn on each other within a specific area and thereby secure payment for their clients through the Clearing House at specified time in an efficient way.´ CLEARING HOUSE It is a place where cheques are presented.Before closing any account. After the branches approve the instruments drawn on them. bank send letter to the account hold for informing him that his account is going to be closed. etc. NIFT: NIFT stands for National Institutional Facilitation Technologies. NIFT prepares a sheet for each branch showing the number for instruments and amount 29 . There is need an approval form higher authority to close any account. It is one of the services provided by NIFT to other commercial banks. Pay orders. Clearing House of SBP has shifted a tiresome part of its work to a private institution named NIFT. MEANING OF CLEARING: The word clearing has been derived from the word ³clear´ and is defined as. NIFT acts as a clearinghouse. ³CLEARING DEPARTMENT´ In clearing department I worked under supervision of Miss Shumaila Malik. Travelers Cheques.

CLEARING PROCEDURE: Instruments collected are treated as Transfer. Types of clearing stamps. Cheque is crossed. and Cheque collection. Checking of cheques. CHECKING OF CHEQUES: When the instruments are collected from the client. instrument should be neither stale/ nor post-dated. Transfer Delivery. Title Amount in figures and words should be the same There should be no cutting and overwriting on the cheque Instrument should not bear any unauthorized alternation.in its favor and drawn on it and sends it to each branch. Different reasons of returning a cheque. LEARNING IN CLEARING DEPARTMENT My learning in clearing department was of following things: y y y y y Procedure of clearing a cheque. 30 . Following things are checked y y y y y y Cheque date. Inward and outward clearing. Clearing. A similar sheet for each bank is also sent to clearing house of SBP where accounts of banks are settled in the same manner.

it is called transfer delivery A cheque is processed under transfer delivery when it has crossing stamp and is from local branch of MCB CLEARING: Instruments which are drawn on the branches of some other bank of the same city or of the same area. stamped as C. And clearing records are recorded in clearing register. which is covered by a particular clearing house. Whereas Carbon copy with Pay-In-Slip is taken by bank for record purposes. CHEQUE COLLECTION (C. In Inward clearing instruments received from NIFT are posted in Computers after checking.C): When cheque is from another city then it is grouped as C. are processed for clearing.Such instruments are processed as cheque for collection. TRANSFER DELIVERY: When instruments are collected and paid by two different branches of the same bank situated in the same city. add list and two vouchers of clearing summary are sent to NIFT in a sealed bag.C along with C.TRANSFER: When the instruments are collected and paid by the same branch. it is called transfer.C. 31 . one copy and instruments along with clearing stamp. In outward clearing when cheque is received two copies of voucher SF-37 are prepared. In this procedure SF-37 form is used in Cheque collection. realization stamp.C number is sent to main branch of the responding city which is further sent to NIFT. Original voucher with cheque.

PAY-IN-SLIP: It is used for two purposes y 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. y y y y y y y y Cheque incomplete Clearing stamp Required. 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. 32 . Amount in words and figures differ. Some of these reasons are. One part is attached with cheque and another is given to cheque holder as a receipt. Insufficient funds etc. y Whenever we have cheque from any party to be collected in our account we fill pay-in-slip. Drawer¶s sign incomplete Drawer¶s sign different from specimen Post Dated Payment stopped by drawer.

ISSUING BANK: The bank that sends or effects the remittance. It is an important service provided by banks to customers as well as non-customers. Paying Bank REMITTER: One who initiates. or the payee. The bank charges him a commission for this service. or Mail Transfers. telegraphic transfers. or requests for a remittance. The person in whose name the remittance is made. Remittee. He may or may not be the branch¶s customer. A Remittee is also the one who receive the payment.³REMITTANCE DEPARTMENT´ REMITTANCE: Remittance is transfer of funds from one place to another or from one person to another. Issuing Bank. through demand drafts. 33 . REMITTEE: A Remittee is also called the beneficiary. Since it is not a free service it is a source of income for the bank. PARTIES INVOLVED IN REMITTANCE Four parties involved in remittance: Remitter.

Foreign remittance. Inland remittance. issuing instrument to the responding branch. The branch from where the instrument is drawn. 34 . INSTRUMENTS USED IN REMITTANCE: y y y y y Demand Draft (DD) Telegraphic Transfer (TT) Pay Order (PO) Call Deposit Receipt (CDR) Rupees Traveler Cheque (RTC) DEMAND DRAFT: 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. from one country to another country. with in same country. TYPES OF REMITTANCE: Remittance is classified into following four types y y y y Inward remittance. DD applicant or recipient.DD are issued for the particular place other than place of issuance.PAYING BANK: Paying Bank also knows as the drawee branch. instruments received for payment Outward remittance. who might not be an A/C holder present it to 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.

It is used for local transfer of money from one person to another person. 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. After depositing an amount of draft and commission of the bank. duly completed and signed by two authorized officers.DOCUMENTATION: A printed application form is provided for filling in completely and signing by the applicant. Pay order are more liquid as compared to cheques because cheques may be dishonored while PO can¶t be. But it is not practiced these days frequently. It is written order issued by the bank drawn and payable on itself. PAY ORDER: For this kind of remittance the payer must have the account in the issuing bank. TELEGRAPHIC TRANSFER (TT): TT is fund that is transferred electronically which is remitted on the order of a certain person. then it is handed over the applicant and credit order is dispatched to drawee branch. 35 .

PO so I were unable to understand its practical aspects. except clearing. 36 . to pay the specified amount. One copy is for office and one copy is given to the customer and RTC are issued at that time. CALL DEPOSIT RECEIPT (CDR): It is an instrument like Cheque issued by the bank on account of a customer & in favor of a person. DOCUMENTATION: First of all RTC-10 is given to customer. Security is always being an important issue of concern. RUPEES TRAVELER CHEQUE (RTC): RTC is the traveler cheque are acceptable at all branches of MCB. He will fill it and deposits the amount and commission. TT. TCs provide maximum security while carrying big amounts. NOTE: At time of my stay in remittance department. there was no issue of CDR. and they carry dozens o f benefits. DOCUMENTATION: The party who requires a CDR will get a printed application from the bank. He will fill it and deposits the amount and commission. CDR¶s are issued to make payments. especially when a company goes for some tenders or for purchase of government securities or any contracts with others. The bank enjoys the benefit of keeping funds deposited until the payment is not made.DOCUMENTATION: The party who requires a pay order will get a printed application from the bank. RTC. It is filled and then cash is deposited to cash department.

This department deals with cash deposits and payments. In cash department both deposits and withdrawals go side by side. CASH DEPARTMENT 2. The following books are maintained in the Cash Department: y y y Cash Receipt Book Cash Payment Book Cash Balance Book 37 . these departments were 1. ACCOUNTS DEPARTMENT 3. ADVANCES DEPARTMENT And in TECHNOLOGY DEPARTMENT I got information about ATM and Online Banking and just filled their forms because computer work was not allowed to internees.³OTHER DEPARTMENTS´ There have been some departments in which internship was not allowed. ³CASH DEPARTMENT´ The cash department is the most important department of the bank.

balance after posting. After posting these entries.The officers in this department are called teller and there were 2 tellers Mr. CASH RECEIPT BOOK: The cashier is responsible to receive both the paying-in-slip and cash from the depositor. No payments are made by another instrument. CASH BALANCE BOOK: At the end of the working day cashier is responsible to maintain the cash balance book. Cashier assigns the stamp ³POSTED´ on the voucher to show voucher transaction entries are posted. The cashier at the same time maintains the ³Cash Voucher Received Record Sheet´. computer automatically display the balance before posting the transaction amount. For depositing the cash into customer¶s accounts. to both the transaction being made in the sheet and the slip. 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 fills in the ³Cash voucher received Record Sheet´ and assigns a voucher no. 38 . This department is involved in two activities: Cash Deposits. Cash Payments. CASH PAYMENT BOOK: The only instrument that can be used to withdraw an amount from an account is the Cheque book. there is need to fill in the paying-in-slip giving the related details of the transaction. When cheque is valid in all respects. The cash book contains the date. The 2nd cashier posts the transaction entries in computer ledger. opening balance. 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 display before posting balance and after posting. Then inspects the signature of the customer. cancellation mark of checking officer and stamp of ³POSTED´ is placed on cheque before he hands over the cash to customer. Nazir and Mr. detail of cash payment and received in figures. Abrash at the counter.

e. Opening Balance of Cash + Receipts .e. The basic requirement for any accounting system is that it should be in accordance with the GAAP i.Payments = Closing Balance ³ACCOUNTS DEPARTMENT´ The most important aspect in record keeping of a bank is its accounting system. Following activities are carried out in Accounts Department. Generally Accepted Accounting Principles. quarterly and yearly basis.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. There are two choices available to an organization for an accounting system. Main Functions of Accounts Department: The major function of this department is keeping the record maintenance of each and every transaction and prepares reports about the amount of deposits and advances and sent to Head office or State Bank of Pakistan on monthly. 39 . The basic purpose for maintaining an accounting system is to ensure consistency in record keeping and accounts. Activity checking. Reports and Reconciliation. y y y y Budgets and budget review form Income & expenditures.

Maintenance & depreciation of fixed assets.y y Depreciation & Maintenance of fixed assets provision. 40 . PHONE BANKING: "MCB Phone Banking´ is available to all customers on a countrywide basis. Customers can dial 111-000-622(without any city code/prefix) from their respective cities Customers enjoy 24x7 Round the Clock Phone Banking Services. It helps in getting accounts details and making transactions using mobiles. y y y y Mobile Banking Phone Banking Online Banking ATM MOBILE BANKING: It has been launched recently during my internship. ³TECHNOLOGY DEPARTMENT´ It includes. MCB is the first bank in Pakistan to offer Centralized connectivity.

in a day. Gold Cards are special cars with maximum withdrawal limit of Rs. 41 . The annual fee for this card is Rs. Green Cards are ordinary cards with a maximum withdrawal facility of Rs. irrespective of branch where they maintain their accounts. This contract will enable an ATM card holder to use his account even when he is out of country at all the ATMs where Cirrus logo is displayed. This machine is used to transact in one's account without intervention of humans. 25000/. 10. International Cards are issued in collaboration with Cirrus and are useable all over the world with maximum withdrawal facility according to the standards of Cirrus. MCB has the largest ATM network in the country at the moment with almost one ATM at each online branch and also ATM terminals at International Airports covering 27 cities of Pakistan ATMs are operated through a card issued to the valued customers and by application of Personal Identification Number (PIN number). These machines are basically used for taking cash. ATM (Automatic Teller Machine): ATM stands for Automatic Teller Machine. Customers can use the ATMs or the banking counters of any branch for day-to-day banking needs.as their average balance. confirming balances and requesting statements / cheque books.ONLINE BANKING: MCB now offers the facility of on-line banking to its customers through its country wide network of branches.000/. 500000/. 300/. These cards are issued to the persons having more than Rs.in a day. There are now more than 250 branches linked through this system and they can transact with each other directly using computer systems and the software named ³SYMBOLS´ at their own branches.only. Now MCB has also entered into a contract with Cirrus which is a subsidiary of MasterCard.

These are the loans which are given to those customers whose business runs through out the year or continuously. companies etc. Its duration is one year and it is for running business. Bank gives credit or limit facility to customers that needed it. In fund based loans there are two further classifications: Long Term Loans: y y y Lease facility for car For Machinery For Fixed Assets Short Term Loans: Running Finance (R/F) Cash Finance (C/F) RUNNING FINANCE: The MCB provides overdraft facility to the customers for the working capital requirement. 42 . but MCB provides two types of loans that are as under: y y Fund Base Loans Non Fund Base Loans FUND BASE LOANS: In this type of loans cash is directly involved. Bank provides loans in shape of cash.³ADVANCES DEPARTMENT´ Different banks provide loan facility to general public.

Hypothecation of stock is the primary security and mortgage is the secondary or collateral security. It is the restriction of the bank that in god own there should be stock according to the instructions of bank every time. When customer wants to sell the stock then he pays the amount equivalent to stock which he wants to sell. PLEDGE: In this. bank requires the moveable property of the customer as a security like stock. After receiving amount bank releases his stock for the same amount 43 . The customer can easily sell his stock. vehicle etc. SECURITIES FOR FUND BASE LOANS: Hypothecation of Stock Mortgage Pledge HYPOTHECATION OF STOCK: In hypothecation of stock the possession of goods and the title remains in the favour of customer. MORTGAGE: The bank can mortgage the immovable property like land. building etc as a security. The bank hires a muqaddam [Guard] and the key of store where the stock is pledged is in the security of bank. In mortgage the possession remains to customer and title of goods remains to bank.In advances there are two securities one is known primary security and other is secondary or collateral security. possession of goods remains to customer and title in the favor of bank. Without the permission of the bank the customer can't sell the stock. The draw back of this is that there is no check and balance of stock from the bank.

Bank works as a third party and known as Guarantor. Bank provides a security to customer when he needs and someone requires from the customer.NON FUND BASE LOANS: In non fund based loans cash is not directly involved but bank gives guarantee on the behalf of customer. DOCUMENTS REQUIRED BY BANK FOR ADVANCES: y y y y y y y y y y y y y y y Request of customer Credit application from bank Basic borrower sheet Net worth certificate CIB report Financials Account statement Property evaluation report For sale value certificate Property documents Title deed [fard] Property map CNIC Account opening form Undertaking 44 .

a report from his bank should also be obtained. y y y y y y Nature & structure of borrower business Names of proprietors. The party¶s credibility report is obtained from the bank with which the bank is doing its business. The party¶s credibility report is also taken from the Head office of Trade Information Division. 45 .Following steps are there: y y y Information required by the bank Preparation of credit proposals Sanction advice INITIAL INFORMATION: Following information is required to be submitted to bank. Financial condition of borrower business An assessment of his business abilities Accurate and up to date financial statements of last two years for comparison purposes y Market report on the borrower where borrower has maintained an account with another bank. y A report from credit standing bureau of State Bank of Pakistan PREPARATION OF CREDIT PROPOSAL: At first a formal application for credit approval is obtained from the party along with complete group position. partners or directors Detail of all firms or companies associated with borrower.

If there is any discrepancy then the party is informed of it. After all the necessary documents for applying for advance is fulfilled by the party then the case is sent to Manager for approval. party has to submit the last two years Balance Sheet and Profit & Loss statement duly attested by authorised auditors. Some data is available in Advance Department. Some data is obtained from the foreign Exchange department. If the party is also involved in export or import business then the bank also considers the data of three years about import & export. The type of data required to prepare the credit proposal is to be gathered from the different departments. 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. If the credit limit is in his range then he can decide over it otherwise the case is forwarded to seniors. The securities offered by the party to the bank are also evaluated. Mark up/ Charges Validity 46 . Current debt and equity ratio is also calculated by the bank. The purpose of obtaining Credit should be explained clearly.For obtaining credit. In case of pledging of property in shape of land or building the complete evaluation of the property should also be attached. The form contains following information: y y y y y y Nature and amount of limit. Purpose Security/ Collateral Margin (%).

a creditor would keep him abreast about the ability of a concern to cover up its current obligations and so would care about current and liquid ratios. Although there are several ratios. y These provide data for inter-firm comparison.e. they cannot be taken as final regarding good or bad financial position of the business other things have also to be seen. the ratios are only indicators. 47 . also reveal strong and weak firms.³FINANCIAL ANALYSIS OF MCB´ ³RATIO ANALYSIS´ Ratio analysis is an important and old technique of financial analysis. The ratios highlight the factors associated with successful and unsuccessful firms. use entirely depends on the purpose for which the analysis is done i.. coverage of interest by the level of earnings etc. y These help in planning and forecasting these can assist management in its basic functions of forecasting. Ratios are important and helpful in the reference that: y These simplify the comprehension of financial statement and tell the whole story of changes in the financial conditions of the business. planning. Turnover of receivables. However. coordination and control. y These help in investment decision in case of investor and lending decision in case of Bankers etc. Great care is needed while calculating meaningful ratios and in interpreting them. which an analyst can employ yet the type of ratios he would.

Due to low or declining liquidity firm moves towards financial distress and bankruptcy. CATEGORIES OF RATIO ANALYSIS: y y y y y Liquidity ratios Activity ratios Debt ratios Profitability ratios Market ratios LIQUIDITY RATIOS The liquidity of a firm is measured by its ability to satisfy its short-term obligations as they come due. the ease with which it pays its bills. It provides a good help in decision making for investors and the financial institutions. It gives a chance of inter-firm-comparison to measure efficiency and helps management to resort to some remedial measures. operations efficiency and profitability. Liquidity refers to the solvency of the firm¶s overall financial position i.e.ADVANTAGES OF RATIO ANALYSIS: It helps to give comprehensive financial statements in evaluating aspects of any undertaking in respect of financial health. Liquidity Measures are y y Current ratio Quick (acid-test) ratio 48 .

the financial analyst is most concerned with long term debts. The management should take steps to improve the shortterm financial position of the firm.31 RESULT: From the above ratios it is clear that the firm¶s investment in current assets has increased.42 2007 1. DEBT RATIO The debt position of a firm indicates the amount of other people¶s money being used to generate profits. The standard for this ratio is 2:1 it is calculated by the current assets by total of the current liabilities. The higher this ratio the greater the amount of other people money being used to generate profit. The debt ratio measures the proportion of total assets financed by the firm¶s creditors. The ratio is calculated by following formula Debt ratio = Total liabilities Total assets 49 . measure the firm¶s ability to meet its short-term obligations. In general. because these commit the firm to a stream of payment s over the long run. But in three years we can see that the firm has the ability to pay its current liabilities efficiently.CURRENT RATIO: The current ratio. one of the most commonly cited financial ratios.02 2006 1. This ratio is below the standard. It is expressed as follows: Current assets Current ratio = Current liability Years Current ratio 2008 1. In 2008 it is in better position to pay its obligations as they come due.

This ratio is almost showing the same trend throughout the previous three years. MARKET RATIOS y y y Return on total assets Return on equity Earnings per share RETURN ON TOTAL ASSETS: It measures the overall effectiveness of management in generating profits with its available assets.877075 RESULT: The ratio indicates the more than half of the assets financed by the debt.864958 0. The higher the Return on total assets better will be the performance. Earning available for common stockholders Return on total assets = Total assets 50 .860627 0. Debt ratio indicates the greater the risk and more financial leverage it has. It also shows that firm has paid some portion of the debt during the year 2008.Years Debt ratios 2008 2007 2006 0.

219% RESULT: The return on investment of the firm is 5. It shows that firm generates Rs.313% in 2008. 51 .73238 2006 34.313 for each Rs. It shows that firm generates Rs.448881 RESULT: The return on equity of the firm is 28.100 of the investment which is very poor for the company progress. It is less than the previous year.030% 2007 5.Year ROA 2008 5.313 2007 34.100 of the investment made by the partners or shareholders of the company (which are privately owned by four brothers).5. It is less than the previous year.28.03 for each Rs. RETURN ON EQUITY: Earning available for common stockholders Return on total assets = Total Equity Year ROE (%) 2008 28.03 % in 2008.505% 2006 5.

20 which is good for the investors. HORIZONTAL ANALYSIS: In vertical analysis each item in financial statement of the last year is considered as a base of the same items. VERTICAL ANALYSIS: In vertical analysis each item of a financial statement is presented as a % age of the total of items or some other suitable items.95 RESULT: This ratio indicates the amount of income earned by the common stockholders. Above figures clearly show the progress of the company and it maintains this ratio more than Rs.38929 2007 26.16947 2006 22. 52 .EARNING PER SHARE: Year EPS 2008 24.

2007.867.758 LIABILITIES Bills payable Borrowings from financial institutions Deposits and other accounts Sub-ordinate loans Liabilities against assets subject to finance lease Other liabilities 10.228 445.831 292. In '000') 440.896.841 32465976.551.828.051. In '000') 2006 (Rs.232 1.183.2006 2008 (Rs.058 39.00 64450761.00 174886.508.838 412.591 1.079 97.285.526 4.295 479.781 17.840 330.786 16.631.320.479.900.468 22.00 9073276.358.088. In '000') ASSETS Cash and balances with treasury banks Balances with other banks Lending to financial institutions Investments Advances operating fixed assets deferred tax assets Other Assets 39.245.00 343177949.082.100.391 262.00 198236682.00 11044909.219 4.590 218.830 17.00 2007 (Rs.372 115.959.BALANCE SHEET AS AT 31 December 2008.663.883 3.080 10.00 21081800.485 19.347 7089678 23943476 257185110 39.406.683.790.586 1597440 53 .106.00 6649659.

133 REPRESENTED BY: Share capital Reserves Unappropriated profits 6.927 7. In '000' 25784853 4509146 40.092 57.625 60.465 355.881 6.772.322 11177125 300992830 42185119 6. In '000' Mark-up /return/ intertest earned Mark-up/ return/ interest expensed 2007 Rs.065.282.252 60.922 7858819 54 .011.519 57.133 47.321 11.252.209.054.768 36.547.592.547.2006 2008 Rs.723 Minority interest 54.132.322 36404367 5780752 42185119 Income Statement For the Years 2008.472 47.049.2007.21.716.153.167 63 5463276 24662446 6278593 36404315 52 54.338.230 10.353.942 NET ASSETS 385.132.120.338.812 69 Surplus/ (deficit ) on revaluation of securities 11.282. In '000' 2006 Rs.000.120.505 31791754 11.768 34.

437.net Total non-mark-up / interest income 24.net Unrealized loss on revaluation of investments classified as held for trading Other income .net 7580302 5.127 4.440.310 1.867 451.382. commission and brokerage income Income earned as trustee to various funds Dividend income Income from dealing in foreign currencies Gain on sale of securities .531) 2.121 2959583 199 3065051 1014540 47000 1182737 Net mark-up /interest income after provisions Non-mark-up / interest income Fee.615 5.329) 2325171 483 746276 692010 605865 1.020 25040478 Non-mark-up / interest expenses Administrative expenses Other provision / (reversal) .139 (99.743) 6505576 11411 55 .201.408 1.305 10120 (3.772.507.848 30.456.514.929.335.312 727.610 (3.878.002.462 20867884 20092970 2.136 577703 4947508 27.160 6.663 21.994 105269 121197 1.nrt Provision against non-performing loans and advances .583 23932935 21275707 2.834 5.net Bad debts written off directly 28.683.859 535.813 693.367.019.564 748.Net Mark-up /return/ intertest income Provision for diminution in the value of investment .

560 -865344 -1294586 16348 25164 6563513 899.526.079.084.342 30843 1.223.769 6.780 8511413 6.Other charges Total non-mark-up / interest expenses Share of profit of associated undertaking Extra ordinary / unusual item Profit before taxation Taxation Current year Prior years Deferred Share of tax of associated undertaking - 920991 642.39 26.670 Basic and diluted earnings per share .633 21886740 22.641 5709140 593906 61213 25675 6389934 12540879 Profit after taxation 15323227 16.after tax 24.463.17 19.898 15.96 56 .311 66708 6583695 474030 18930813 7387345 6.441.

³VERTICAL ANALYSIS´ BALANCE SHEET AS AT 31 December 2008 2008 ASSETS Cash and balances with treasury banks Balances with other banks Lending to financial institutions Investments Advances operating fixed assets deferred tax assets Other Assets total assets LIABILITIES Bills payable Borrowings from financial institutions Deposits and other accounts Sub-ordianted loans Deferred tax liabilities 0.74 0.78 57.00 4.96 58.89 2007 % 9.47 0.90 2006 % 9.14 18.45 100.22 100.37 5.92 21.33 100.76 2.98 74.10 2.25 27.94 6.94 0.09 74.46 1.05 3.29 2.07 6.03 3.90 0.95 3.54 9.64 0.16 2.00 57 .12 0.92 0.00 4.94 0.54 70.00 % 8.61 0.94 53.

2006 2008 Mark-up /return/ intertest earned Mark-up/ return/ interest expensed Net Mark-up /return/ intertest income Provision for diminution in the value of investment .52 8.49 82.23 1.72 71.64 58 .77 86.46 2.05 75.00 Income Statement For the Years 2008.00 1.00 1.50 2.18 4.49 12.93 0.59 28.2007.19 1.35 100.26 87.31 0.33 0.51 0.71 REPRESENTED BY: Share capital Reserves Unappropriated profits total common stockholder equity Surplus/ (deficit ) on revaluation of securities total liabilities & equity 1.41 8.68 100.84 86.59 7.83 10.71 11.nrt Provision against non-performing loans and advances .26 2.15 1.47 100.00 100 17.33 9.70 3.06 3.Other liabilities total liabilities 4.95 24.28 6.net Bad debts written off directly Total Provisions 10.61 1.47 3.00 9.04 100 2007 100 2006.

82 86.11 -0.69 2.net Other charges Total non-mark-up / interest expenses Share of profit of associated undertaking Profit before taxation Taxation 0.82 1.30 21.02 0.86 0.net Total non-mark-up / interest income 0.00 0.49 75.00 0.net Unrealized loss on revaluation of investments classified as held for trading Other income .18 4.87 0.64 0.05 1.00 0.68 2.00 0.19 0.72 0.84 73.01 2.53 1.23 0.03 2.25 3.15 77.13 0.89 2.93 0.04 0.01 3.00 0.00 8.00 25.85 Non-mark-up / interest expenses Administrative expenses Other provision / (reversal) .00 9.65 70.13 1.25 0.02 65.00 Non-mark-up / interest income Fee.42 0.02 1.24 19.00 17.00 -0.81 20.93 0.00 -0.00 59 .00 2.35 0.19 97.00 2.12 3.00 7.74 0.26 25.08 54.11 0.Net mark-up /interest income after provisions 61.00 18. commission and brokerage income Income earned as trustee to various funds Dividend income Income from dealing in foreign currencies Gain on sale of securities .02 19.00 14.

64 Profit after taxation 38.14 2.39 -4.26 Basic and diluted earnings per share .10 24.05 19.16 0.24 0.83 0.72 22.Current year Prior years Deferred Share of tax of associated undertaking 18.96 ³HORIZONTAL ANALYSIS´ BALANCE SHEET AS AT 31 December 2008 2008 ASSETS Cash and balances with treasury banks Balances with other banks Lendings to financial institutions Investments Advances operating fixed assets % 122 62 19 152 132 191 2007 % 122 58 5 179 110 177 2006 % 100 100 100 100 100 100 60 .33 -2.17 19.04 0.after tax 24.39 26.30 0.14 51.45 20.78 48.06 16.07 2.

deferred tax assets Other Assets 180 130 LIABILITIES Bills payable Borrowings from financial institutions Deposits and other accounts Sub-ordianted loans Liabilities against assets subjectto finance lease Deferred tax liabilities Other liabilities 190 128 NET ASSETS 143 105 118 136 149 95 128 148 165 114 30 162 120 100 100 100 100 100 100 100 100 100 100 100 100 REPRESENTED BY: Share capital Reserves Unappropriated profits 115 149 176 149 Minority interest 133 149 115 138 112 130 121 130 100 100 100 100 100 100 61 .

14 123.42 259.nrt Provision against non-performing loans and advances .82 121.80 100.net 123.72 0.62 155.48 119.2006 2008 % Mark-up /return/ intertest earned Mark-up/ return/ interest expensed Net Mark-up /return/ intertest income Provision for diminution in the value of investment .net Bad debts written off directly Total Provisions Net mark-up /interest income after provisions 339.24 1213.29 112.32 257.2007.80 4527.33 60.30 174.86 291.60 2007 % 123.86 2006 % 100 100 100 100 100 100 100 100 Non-mark-up / interest income Fee.04 71.49 86.10 133.57 131.Surplus/ (deficit ) on revaluation of securities 104 143 177 136 100 100 Income Statement For the Years 2008.75 2214.48 105.20 248.84 100 100 100 100 100 62 . commission and brokerage income Income earned as trustee to various funds Dividend income Income from dealing in foreign currencies Gain on sale of securities .15 103.

52 88.19 113.66 109.42 95.01 102.19 122.61 118.40 -145.11 100 100 100 100 100 100 100 115.51 83.after tax 122.35 100 100 100 63 .57 92.71 98.70 26.net Total non-mark-up / interest income 208.72 Profit after taxation Basic and diluted earnings per share .63 -32.27 Non-mark-up / interest expenses Administrative expenses Other provision / (reversal) .69 1380.10 131.Unrealized loss on revaluation of investments classified as held for trading Other income .21 -217.28 6.47 131.86 121.11 61.80 963.net Other charges Total non-mark-up / interest expenses Share of profit of associated undertaking Extra ordinary / unusual item Profit before taxation Taxation Current year Prior years Deferred Share of tax of associated undertaking 129.99 100 116.13 100 100 100 100 100 173.22 131.98 1470.04 119.63 129.34 258.

resources and positive situational factors that may help the company to serve its customers and achieve its objectives Weaknesses include internal limitations and negative situational factors that may interfere with the company¶s performance. Deficit has been decreased by 104 % in comparison with year 2007 Due to financial crisis in the world investment activities are slowed down in year 2008 and they are decreased by 152% than year 2007. ³SWOT ANALYSIS´ ³The overall evaluation of a company¶s strengths. y y y y MCB¶s income by operations has been increased by 122.19% than 2007. And Threats are unfavorable external factors or trends that may present challenges to performance. Opportunities are favorable factors or trends in the external environment that the company may be able to exploit to its advantage. 64 . opportunities and threats´ Strengths (S) include internal capabilities. y Due to its sound financial policies MCB¶s borrowing from financial institutions has been decreased by 95 % than year 2007. Company¶s Total Assets in Pakistan has been increased by 130% than 2007. weaknesses.RESULT ON THE BASIS OF VERTICAL & HORIZONTAL ANALYSIS: From the above mentioned analysis following are my Result about the Operations of branches of MCB for the year 2008.

65 . marketing. innovation in products and services. The joining of experienced people. ³MCB¶s SWOT ANALYSIS´ ³STRENGTHS´ MCB is the first Pakistani privatized bank and because of its quality management. Owing to all such factors they have established a good reputation in the banking market. The name of MCB makes you recall the highly cooperative and professional individuals ready to serve you with maximum zeal and zest. The SWOT Analysis provides information that is helpful in matching the firm¶s resources and capabilities to the competitive environment in which it operates. advance setup and facilities gave MCB an edge over its competitors. advanced management.A scan of the internal and external environment is an important part of the strategic planning process.

five more branches were added to the network and by the end of the year 2005 the total number of branches was raised from just 53 to 143. MARKET SHARE: MCB has covered much of the potential market and the net profit is increasing years after years. SOUND MARKETING: Skillful marketing of the products is being achieving countrywide goals of Muslim Commercial Bank Limited. CUSTOMER CARE: The Bank not only provides high quality services but it also look for the comfort and convenience of the clients. MCB has also planned to open more branches in next coming years.MUSLIM COMMERCIAL BANK¶S IMAGE: MCB is a reputable financial organization and is well known all over the Pakistan. Perception is of producing a high quality services. Deposits and advances have sufficiently increased. MCB always preferred their customers. LARGE NUMBER OF DIVERSIFY PRODUCTS: This is also its main strength as it has diversified in many products such as: y y y Debit Card Visa Card Car Financing y Agriculture Financing BRANCH NETWORK It is the greatest strength of the Bank. 66 . In 2004.

like Emirates because of its modern style of banking through fully computerized control and twenty four hour banking. CONTRACT WITH CIRRUS: Now MCB has also entered into a contract with Cirrus which is a subsidiary of MasterCard. These are valuable and operational in all over the world. FASTER BANKING SERVICE: MCB have faster banking services that are making it more prominent in the banking industry especially in operations and Foreign exchange. It helps in getting accounts details and making transactions using mobiles. This contract will enable an ATM card holder to use his account even when he is out of country at all the ATMs where Cirrus logo is displayed. HIGHLY AUTOMATED BANK: MCB in Pakistan is the also in the list of highly automated banks. 67 . There are also 24 hours help lines for customers.PHONE BANKING: Every account holder can conform its balance on Phone and may ask for any query. INTERNATIONALLY DESIGNED PRODUCTS: MCB¶s products are internationally designed products. MOBILE BANKING: It has been launched recently. The customer prefers this bank not only because of its faster speedy service rather due to reasonable service charges. about 750.

³WEAKNESSES´ ADVERTISEMENT: The majority of people are not well aware about the products of MCB. AND ALSO. the bank official time of closing is 5:30pm but due mismanagement of time allocation and work the staff is normally on their seats till 7:00 or 8:00 clock. The bank employees should try to accommodate behaviorally all type of customers. Therefore it should advertise extensively especially RTC and Master Cards. rich and educated people and the poor looking customers feel some bit strange in the environment of the bank. ACCOMMODATE BEHAVIORALLY: A behavior has been noted that bank tries to feel at ease with good looking. Some times bank also never meets stated rate of profit 68 . MISMANAGEMENT OF TIME: Mismanagement of time is another big mistake in MCB branches. y y Costly documents are required for loan sanctioning.

As on this date. They should introduce Student Finance Facility.1997. it stands to the figure of 96. small businesses.106 branches are operating in Pakistan.64 million.1997. The need of privatization has made people to switch to banks to satisfy their needs of lending and borrowing. sixty-eight scheduled banks with 9. Thus we can say those 28% of working age people of Pakistan are having accounts with banks while 72% are unbanked. and handicraft industry. total population of Pakistan is 140. If we consider the population statistics of working age group as on December 31. Total number of personal accounts with all scheduled banks as on December 31. They should also introduce mobile ATM 69 . DIVERSIFICATION: They may enter in New business or any other consumer-durable product in order to promote their name.03 million. SOME MORE OPPERTUNITIES: y y y y y Information Technology. are 28. Establishing more foreign Branches. This not only increases the deposits but also the credit business. by introducing Loan for the students. 1998. Credit cards can give more earning.98 million.³OPPORTUNITIES´ PRIVATIZATION: As on December 31.

people are the basic beneficiaries from it and thus their expectations tend to increase about the products and the relative rate of interest thus creating a threat for MCB. So to exist one will have to prove himself in its services through excellent management and will have to satisfy its shareholders. 70 . Otherwise he will be out the market. The freezing of foreign currency accounts is a vital example of letting people not to trust on banks. Still banks have to wait to get permission of state bank. LOW INVESTMENT: 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.³THREATS´ CHANGE IN GOVERNMENT POLICIES: Change in government policies has affected the banking business. STATE BANK REGULATION: As the Bank introduces unique products so they face problem if State Bank Of Pakistan employ taxes on them which force them to increase the rate of Interest. COMPETITION: The Competition has become severe by the entrants of so many banks.. EXPECTATIONS OF THE PEOPLE: Due to huge competition among those banks and MCB. SOME BANKS ARE OFFERING KISAN CARDS.

UNSTABLE GOVERNMENT: Due to this reason foreigners hesitate to invest their savings in banks. passes such rules which are not in the favour of bank e.30% on withdrawal. Social and technological factors affect MCB. Economical. The Govt. With economic factors the bank influenced very much that are as under: y y Impact of WTO force to cost reduction methodology. POLITICO-LEGAL FACTORS: y y y y Stable government Stable policies in favor of business Improved relation with outside world Law and order. as a result of economy of our country is going downward and banks suffer. The policies are not very handy and beneficial for the country. Low interest rate 71 . The Govt. ECONOMIC FACTORS: Pakistan's economy is going weaker and weaker. of Pakistan has passed a rule that if anyone withdraws more than Rs. These are the external factors which affects the whole organization. ADVERSE LAW AND ORDER SITUATION: The situation of law and order is adverse.g.25000 then he will be charged 0. 9/11 has a great influence on the economic crisis of all over the world.³PEST ANALYSES´ PEST analyses tell How Political.

conception and perception. They pay their creditors through cash not through cheque. values. y If we see the religion point of view then interest is not allowed that's why most of the people hesitate to invest their savings in banks and yet they are not aware of ISLAMIC BANKING. y Increasing issue of securities due to technology resulted increase in cyber crime. a person's role and status. They do not want to get the bank facilities. In the every aspect of life technology plays an important role. Cultural environment includes norms. Cyber crime means manipulation. duties Fluctuation in exchange rates SOCIAL FACTORS: Social environment includes family. y Traditional business men do not like the business with bank. TECHNOLOGICAL FACTORS: Today is the era of technology. y Due to rapid change in technology every bank has to change its technology to compete other ones. religion. 72 . friends.y y y y y Inflation Low GDP growth Budget deficit Increase in Govt. One person can easily transfer amount from any other's account to his account. An individual¶s life directly by society and the person acts according to his or her society.

³APPLICATION OF CLASS ROOM LEARNING´

During my internship of eight weeks in Muslim Commercial Bank, Ltd. Kot Farid Branch, Sahiwal the knowledge given by my respected and devoted teachers proved to be very helpful in understanding the environment in the organization and working practically. Following are some key points about application of my class room learning in the organization: The knowledge achieved from the subject ³Business 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 from the subject ³Computer application in Business´ also proved very useful. Financial Management and Principles of Accounting helped me in understanding the accounting terminologies which are used in bank e.g. what is debit and credit vouchers? What are these for? And also in understanding that how entries are made against certain heads. I could do this only with the help of the knowledge provided to me in my two semesters of MBA at Bahauddin Zakariya University, Sub Campus Sahiwal.

73

³WHAT I HAVE LEARNT IN MCB´

In Muslim Commercial Bank Ltd. I really enjoyed working with the staff of Kot Farid Branch, Sahiwal having a wish to be employee of MCB. It was almost impossible to work in all the departments within that limited time. But the staff of the branch provided me the opportunity to work in the different departments for the sake of practical knowledge. I feel highly indebted to work in the Kot Farid Branch with the manager of that branch Mr. Yasin Tahir, because I learnt a lot in that branch. During my internship training in the MCB as I early mentioned that I have worked in different departments & seats and learnt the following things,

y y y y y y y

How to deal with different types of customers. Account opening. Cheque book issuance. Outward clearing. Cheque for Collection. Different forms and vouchers filling. Experience of working in a well reputed organization.

74

³SUGGESTIONS & RECOMMENDATIONS´

Following are some suggestions for Muslim Commercial Bank, Ltd.

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.

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

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

MANAGEMENT OF TIME:
There should be a good management of time for the sake of employees i.e. offering them free break hours instead of making them work in this time as well.

75

There is a criticism on the banking management that the salaries of the employees are decreasing in every succeeding year. and give them bonuses for their hard work and Promotions as well. ATTRACT CUSTOMERS: The banking company should offer such policies which would attract customers which are denied by other banking in the market. And I think this will shake the confidence and working habit of the employees BANKING PROFESSIONALS: The bank should hire banking professionals having experience in their respective fields that will boost the performance of the company as currently MBAs are produced for this field so they should be hired for enhancing the performance of company. The promotion policy should be adjusted COMMUNICATION SYSTEM FOR EMPLOYEES: As such system should be designed that every employee who has some problems with his officers can communicate it to the higher management and some steps must be taken to improve that. 76 . 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. JOB ROTATION AND PROMOTIONS: Most of the bank employees.GROWTH SCOPE FOR EMPLOYEES: MCB should provide greater facilities to its employees. In my opinion all the employees should have regular job experience all out-look towards banking.

y I will make it sure that some of the employees should be sent for training to other countries and employees from other branches should be brought here. furniture and staff dressing should be according to the modern banking style. y I will apply such a communication system specially designed for employees trough they can share the problems regarding work environment.³IF I WERE MANAGER AT MUSLIM COMMERCIAL BANK´ If I would be a manager at MCB I¶ll take following steps. job rotation and bonuses. y Complete working and break hours will be offered so that employees can work efficiently. equipment. 77 . an important part of policies of MCB. a dinner from bank will be offered. y I will make it sure that Working environment. At every month¶s closing when employees stay at branch even after working hours. y To retain potential customers certain services will be provided and let them know with advertising. y y I will make promotions.

Ltd http://www.pk Statistical Bureau of Pakistan http://www.gov.sbp.³REFERENCES & RESOURCES´ To make this internship report data is taken from the following resources: ONLINE RESOURCES: Muslim Commercial Bank.pk Interview with key persons at MCB.com Muslim Commercial Bank Pakistan http://www.com/pakistan/ State Bank of Pakistan http://www.mcb. Kot Farid Branch Sahiwal. 78 .mcb.fbs.org.

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