Submitted by: Khalid Ahmed Bhutto

Department: Public Administration

Semester: seventh

University: Shah Abdul Latif university Khairpur mirs

Internship tenure: 18/6/2019 to 31/7/2019

Submitted to: HR Department MCB Sukkur

 Preface
It is requirement of my degree in public administration at Shah Abdul Latif university Khairpur mirs that
the all student of public administration spend have to six weeks in any organization to get the practical
work because practical work is different from the education through the practical work a person get a
more knowledge through practical .on the one and half month if person give the full consideration on
their six week internship practically the get more things they boost their self-confidant ,communication
and how to deal with the customer or the people at different place and different type of the people .I
have also been assigned to do internship of six weeks in MCB Daharki branch 0104.

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

In preparing my internship report, I have put my all possible effort to make my report good one and
also different from others students , I have believe on myself to do this with effetely and learn new
things to make my internship report.
 Acknowledgement

I offer my foremost and humblest thanks to ALMIGHTY ALLAH, The most Beneficent, the Most
Considerate and the entire source of all knowledge and wisdom. I thank ALMIGHTY ALLAH, who
gave me the aptitude to prepare this Internship report efficiently and successfully. With prayers of
my parents and support of my teachers it became possible form to formulate this report; I pay high
regards to them. The account of acknowledgement will be incomplete if I do not express my
appreciation to the staff of MCB Daharki Branch (0104) as they guided me and assisted me to
perform different productive activities during the entire period I am also thankful to my friends and
other family members who were always here to encourage and help me design this report to its
present form.

Contents

Perforce …………………

Acknowledgement...................

Table of contents……………………

Executive summary……………….

1: Introduction .........................

2: History of Bank …………………

3) mission statement ………………

4) vision .........................................

5: mission ………………………………….

6: core value ..................................

6.1: Integrity ……………………

6.2: Innovation………………...

6.3: Excellence………………….

6.4: Customer centricity……

6.5: Respect …………………….

 7)Hierarchy……………………………….

8) Departments management In MCB Bank..............................

8.1.1) Account Opening Department…………………

8.1.2) Current Accounts...............................

8.1.3) Saving Accounts………………………….………

8.1.4) Account Opening Procedure……………

8.1.5) Specimen Signature Card (SSC)………

8.1.6) Knowing Your Customer (KYC)……………

8.1.7) Documentation requirements for account opening...

8.1.8) Stamping……………………………………………

8.1.9) Issuance of Cheque Book……………………

8.1.10) Cheque Book Entries…………………………

8.1.11) Closing of an Account…………………………

8.2) Clearing Department……………………………………….

8.2.1) Outward clearing…………………………………….

❖ Normal clearing……………………
❖ Intercity clearing…………………...
8.2.2) Inward clearing……………………………………….…………

8.2.3) Checking Of Clearing Cheques…………………

8.2.4) Memo on Return Clearing Cheque……………

8.3) Remittances Department………………………………………

8.3.1) Payment Order (PO)……...............................

8.3.2) Demand Draft (DD)……………………………………

8.3.3) Rupee Traveler’s Cheques (RTC)……………………………

8.4) Cash Department....................................................

8.4.1) Cash Receipt Book

8.4.2) Cash Payment Book

8.4.3) Cash Balance Book

9) Key concern…………………………………………………….

10) Organization culture………………………………………

11) purpose of internship…………………………………….

12) key operation of the group ………………………….

13) Personal objectives ……………………………………….

14) Flied activity………………………………………………….

14.1.1) reporting duties ………………………………………

14.1.2) Job performed …………………………………………

14.1.3) overview of process…………………………………

14.1.4) Product and services ………………………………

14.1.5) Self-Assessment …………………………………….

15) what have I done …………………………………………

16) SWOT Analysis………………………………………………….

17) Problem identification ……………………………………

18)Suggestions for improvement and solution recommendation…….

19) Reference………………………………...………………………………………….

ii
EXECUTIVE SUMMARY
iii

MCB Bank Limited (Formerly Muslim Commercial Bank Limited) has a solid foundation of over 60
years in Pakistan, with a network of over 1400 branches, over 1350 MCB ATMs nationwide and a
network of banks on the MNET ATM Switch. MCB's operations continued to be streamlined with
focus on rationalization of expenses, re-alignment of back-end processing to increase productivity,
enhancement of customer service standards, process efficiency and controls. The Bank has taken
the lead in introducing the innovative concept of centralizing Trade Services in the country by
providing centralized foreign trade services to branches with a view to improve efficiency, expertise
and reduce delivery cost. During my internship in MCB I mainly worked in account, Clearing
Remittances and cash department. During the course of internship, I learned about different
functions performed by Remittances, accounts, Clearing and cash department and by the bank as a
whole. I also learnt bank’s correspondence with their customers and within branches. I learnt about
documentation requirements and record keeping for different activities and processes, especially
the documentation required for different kinds of remittance i.e., pay order and demand draft. This
report includes the introduction of Banking, Banking in Pakistan, the brief history of MCB Bank
Limited, mission and vision of MCB Bank, organizational structure, working of various divisions and
departments including the tasks performed by the intern, SWOT and finally end with conclusion and
references

INTRODUCTION
MCB Bank Limited is the largest private sector bank in Pakistan with over 1400+ branches
nationwide and ATM over 1350. Currently MCB is the largest issuer of cards in Pakistan, with
an astounding card base of 2.5 million cards (debit, credit, prepaid and smart cards) in the
market. MCB has been in the card acquiring business since 2003 and currently has a merchant
base of around 10,000 where all international & local Visa/ MasterCard/ China Union Pay credit
& debit cards are accepted.
MCB now offers payment gateway for the rising Pakistani e-Commerce Industry, by providing
our existing and new merchants with a secure and efficient card processing service online
through MCB gate. MCB gate is a service designed to offer online shopping convenience to the
card holders and merchants whereby, card holders can make online real-time purchases
through the merchant’s website. A cardholder can use any Visa or MasterCard issued by any
bank both locally or international for making payments to the online merchants. MCB gate is
backed by MIGs (MasterCard Internet Gateway Services) that provides 3D secure solution.
HISTORY OF MCB BANK
MCB Bank Limited, is one of the oldest and leading banks in Pakistan. It was incorporated on
July 9 in 1947. MCB Bank was nationalized along with other private banks in 1974 as part of
Government of Pakistan's economic reform movement and was later privatized in 1991. The
Bank has journeyed a remarkable tenure of more than half a century of competitively edged and
well positioned heights of success by deploying quality banking, heads on technological
developments, professionally leading management and prudent and ethical work
methodologies.

MCB Bank in one of the largest foreign banks in Sri Lanka; the first bank in Pakistan to launch
Global Depository Receipts (GDR) in 2006 and has strategic foreign partnership with Maybank
of Malaysia which holds 20% shares in MCB Bank through its wholly owned subsidiary
Maybank International Trust (Labuan) Berthed since 2008.

The Bank is versed as one of the oldest and most responsible Banks in Pakistan and has
played pivotal role in representing the country on global platforms while being one of the few
institutions that are recognized and traded in the international market.

MCB Bank is actively involved in various CSR activities as well and constantly strives to
contribute towards the country’s betterment. It has played a key role in enhancing the role and
value of service and technology in the banking industry through its customer centric objectives.
The Bank has also been acknowledged though prestigious recognition and awards by
Euromoney, World Finance, MMT, Asia Money, SAFA (SAARC), The Asset Triple A, Finance
Asia, NFEH, CFA, Pakistan Centre of Philanthropy and The Asian Banker.

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

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

Integrity

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

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

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

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

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

Branch hierarchy
Branch manager Saleh Mohammed Bhutto

Operation manager Ghulam Mohammed

General banking officer shah Nawaz Bhutto and Manzoor panhwar

Teller services officers Samiullah, Arshad, Sardar

Cash setter Nasseeb ali

Tea boy Tahir Ahmed

Peon Obaidullah Ahmed

Security guard Luqman and Ramzan ali

Department management
Account opening

Cash management

Remittance

Cleaning management

Account opening
The MCB currently offer the following accounts:

There are two types of the account current and saving account and then in these accounts have another

type of accounts .

Saving account: In this account the account holder deposits his/her Money in their
accounts and get the profit according to their account term and conditions some customer get the profit
mahana after six month and others get their profit after 12 months.

The benefit of this account to increase their money from their initial deposit ,they get the profit
according to the fix rate of saving to according .The big company or business man investment their
money in these types of accounts in the MCB commercial bank limited to get profit through this type of
accounts and then invest these money in their business .

There are many types of the saving accounts

1: MCB PLS savings accounts

2: MCB Smart savings account

3: MCB 365 Savings Gold account

4: MCB 365 Savings account

5: MCB Khushali bachat account

6: MCB savings extra account

7: MCB maximizer account

8: MCB salary club account

9: MCB fun club account

10: MCB Pensioners account

11: MCB Senior citizen account

12: Smart saving foreign currency account

13: New foreign currency saving accounts

Current account
MCB offer to the people current account those people who have everyday need of transaction money
one place to another place anywhere of whole country allow to them to transfer their money one place
another place over 1400 branches .

Types of the current account

1: MCB Current account

2: MCB basic banking account

3: MCB current life account

4: MCB business account

5: MCB Fun club account

6: MCB Asaan current account

7: MCB One current account

8: MCB Ladies account

9: MCB pensioners account

10: MCB Senior citizen account

11: Motherland account

12: MCB salary club account

13: MCB smart business account

14: MCB Asaan remittance account

15: MCB Burqraftaar remittance account

16: New foreign currency current account

Feature
1: Initial deposit is require for new opening account 1000.

2: MCB will not paid profit on deposit balance in current account.

3: All deposits and withdraw from a current account takes place where only your account maintains.

4: current account has limit in some accounts the cannot drawn over the limit.

Account opening procedure

The people who would like to open his/her account at MCB first meet branch manager or second office
who have knowledge about how to open account in MCB bank , Who will guide to them in opening
account ,first give them a form in which complete information about customer or who has opening
account then other important form like ATM request form issues of cheque book specimen card and
deposit slip then bio-metric of concern or person.

Specimen card
This is card contain two signatures of an applicant , applicant account no which types of account branch
name and code and title of account holder will be attached with the applicant form , This card will be
used when ever the account holder pass the his/her cheque in the branch to verify the signature of the
account holder .If signature is differ then cheque will be not pass .

Knowing the customer

Means when you are filling the customer information, It should be ensure that time your customer must
be present in your branch, After collect all information which is require then information must be saved

in the bank system .

Documentation requirement for opening all new
accounts.
1: Duly fill the account opening form

2: Specimen Card

3: Nadra issued documents like (cnic and signature which is held in the cnic, and Cnic must be valued
means not expire of due date)

4: bio-metric is must now days

5: Cnic of next king.com

6: obtain all photocopies of the require documents from individual customer (person) must be stamps of
the branch manager to see original documents along with AS/IBS number under the stamps of manager
and also signature.

7: While the opening accounts authorized officer should be check the customer original CNIC signature
in the case of differ of the signature then undertaking form is must be attracted with other documents.

8: When the customer(people) is not educated then then thumb on the place of signature both right
.
and lift

Stamps
After BM and BOM signature on the form the stamps is very important on the form.

Posting the account on the system

When the collect full information then the concern person or office customers application and all
concern document scan toward the head office.

Issuance of cheque
After the opening of account the issue of cheque ,cheque request form will be apply by operation
manager , When then account holder take his/her cheque book from concern branch then one resident
on his/her account they can not collect money whenever resident on cheque book , The GBO remove
the resident on his/her account then the account holder can collect money any branch .
When one cheque book is completed then one request page is attached with cheque book from the
circle office through again the account holder can apply and on this the signature of account holder on

this. Normally a cheque book having at least 25 pages and also issued the 50 and 100 pages .

Stop of cheque
In the any condition the customer lost his/her fill cheque then they can stop his/her cheque with the

request form MCB branch with the cheque no .

Cheque book entries

Every entry of cheque book was containing following information

1: Apply date and receiving date of cheque book

Account title of cheque book

Account number and the entry date

Closing of account

There are number of reasons of closing an account some are listed below

If customer desire to close an account

In case of death of an account holder

Bankruptcy of the account holder

If an account contains nil balance or not up to the requirement of rules

Clearing department
The word clearing has been derived from the word clear´ and is defined as,

A 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.

Funds transfer between two banks and branches via cheques is called clearing
Types of clearing
There are two mainly types of clearing

Outward
Normal clearing

Intercity clearing

Inward clearing

Outward clearing
Outward clearing is to send cheques to other branches. When the account holder of our bank receive
payment from an other party in the form of cheque and that cheque not of our bank or branch and
account holder deposit in the MCB account then that cheque has to pass from the process of outward
clearing .The cheque has been send to NIFT to clear the cheque , Nift send to concern bank to pass or
clear it .

Normal clearing
In the normal clearing the cheque sent in present day before 12:00pm and its payment will be received
next day, No term and condition

Intercity clearing
The intercity is a new concept in the banking sector ,which means when a cheque from another bank
branch in the another region the cheque will be clear from state bank of Pakistan in the two or three

days that concept known as a intercity clearing .

Inward clearing
In the morning the time banker receives the inward clearing from the concern person of the nift count
the instrument which are match it with the summary which is also attached with these instruments.
Then GBO posts these instruments. After posting all these instruments, They Are record manually
entered in the sheet of clearing in its deposit side and sheet will be attached in file of inward clearing.
 Checking of clearing cheques
When they collect the instruments from the client. Thing are given bellow.
1: Cheque date and instrument should be neither stale or non-post dated.

2: Title of account holder.

3: Amount of the cheque in figures and also in words.

4: No any type of cutting on cheque and not also overwriting on both sides back and front side of
cheque.

5: Cheque cross.

Memo on return of the cheque

1: Signature differ.

2: Amount stop by account holder.

3: Amount differ in words or in figures.

4: funds insufficient.

5: Past date.

6: The stamp of clearing unclear.

7: Cheque incomplete.

Remittance department
Remittance is the transfer funds or money one place to another place or one person to and other person
, It transfer the money from another countries in another countries , does people who working in
different country and send money to their families , this change the money and convert it in concern
country like Saudi arabia in Pakistan . It is an important service provide by the bank to their customer or
non-account holder in bank.

MCB home remittance is service free and instant throughout MCB network of international send-agents
through the moneygram, Xpress money.
MCB burqraftaar transfer (straight to account holder) they live in any other country to credit
service to account.

MCB Burqraftaar cash (cash in hand) means the people collect their money any MCB b branch in
Pakistan through their pin code and cnic, no account number is requiring for this type of transition .

The parties involved in remittance

There are four party involved in the remittance

Remitter, Remittee, Issuing Bank, Paying bank

Remitter
One who initiates or request for remittance, the bank charges him a commission for this service, the
requester are account holder or it maybe he/she non account holder in the bank or branch.

Remittee
The remittee who is beneficiary, the payee, the person in whose name the remittance is made, or also
Remittance who received the payment or money

Issuing bank

The

Remittance instrument used

1: Demand draft

2: Telephone transfer

3: Pay order

4: Rupees travel cheques

1: Demand draft
Demand draft is written order by the branch of the bank on the behalf of the customer to other branch
of same bank to pay certain amount of the customer , demand draft is issued for the particular place
other than place 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.
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 hand over the applicant and credit order is dispatched to drawee branch.

2: Telephone transfer
The customer transfer their money from their own mobile phone through the using the MCB mobile
app in the all over the world they can easily transfer their money through mobile.

3: Pay order
This type of remittance the customer must have a account where /issuing the bank .means it more
liquid as a compared bank cheques because of banks cheques may be disponed can’t be , but the pay
order it is a written order /issued by customer on itself , and the pay order will be pay concern person
which name party order so made and it is local transition one person to an other person or one party to
another party.

Documentation
The party is requiring the pay order then they take a print from bank and filled it according to paying
and deposit the amount which is require and commission.

4: Rupees travel cheques

RTC is also like BC, IT IS like to cash, one person can deliver to other, the MCB are issued 10000
denomination in the service, and security also provide TCs when it is carrying big amount.

Documentation
The first 10 RTC is given to the customer and filled to it, and then the cash deposit in cash department
one slip taken by bank office and one slip given to customer and then the RTC is issued that time.

Cash department
The cash department is most important department in bank, in cash department deposit and withdraw
it dell with the only on cash.

The Some instrument /book used in the cash department are given bellow.

1: cash receipt

2: cash balance book

3: cash payment
The cash department the officer who working that known as a teller service officer in Daharki branch
cashier is Mr: Sardar Ahmed, Arshad Ali and Mr: semiullah the work of casher is deposit and payment
the cash through cash and cheques.

1: Cash receipt: -
The cash officer is the responsible both receiving and deposit ,when the depositor deposit the cash then
two page slip is given to them and the account holder or depositor fill it completely ,then the cashiers
responsible to check it carefully there is any type mistake are not in the slip and also full information
depositor name ,mobile number and also in which account they deposit the money account holder
name and also account number is correct one .

2: Cash balance book: -

IN the closing of the working day the cashier officer is responsible to maintain everything how much the
was cash deposit and how much is payment whole day and the contain date of the day and total
amount/figure receiving and payment whole day and also opening balance which is already is present at
the branch.

3: Cash payment: -
The payment is only one instrument to used to withdraw money ,it is cheque book , In all time that only
on cheque book is instrument to withdraw the money in the banks, in all respect the cheque is vailed
date is not next day and also the before 6 month if date is before six month that type of cheque is expire
,when the customer /person take a cheque in bank on the counter then the cashiers responsible to
check the necessary things like signature ,amount ,amount in words and figures both , and other
important things and then put in the computer and then when the cashier put entry on the system then
the all update information amount balance and when the cashier entry the all things then the computer
display everything/full information before posting balance transactions .

And that same time the cashier officer maintains the record of receiving and make voucher and the
signature of cancellation mark checking officer and the stamp of posted before the he cashes hand over
the customer before the cashier verified everything is ok then then they cash hand over to concern
person/customer.

Key operation of the concern

1: To provide lending to their customer

2: Saving money of people.

3: Transact money one place to another place.

4: Insurance policy provide.

5: Provide debt to the company.

6: Credit cards.

7: Asset deposit (account opening)

1: To provide lending to their customer

Means provide loan to the people (customers) and provide personal loan to the people and provide the
home loan to their employees .and also provide the car loan

2: Saving money:
Save the money to their people (customer) from robbers and also the give interest to people.

3: Transact money one place to another place:

Means transfer the money of their customer one city to another city or one country to another country.

4: Insurance policy provide

Means provide to insurance to the people (customer) to save their life and provide to them to plan for
their children for study.

5: Provide debt to companies

Means provide the money (loan) to the companies to run their organization.

6: Credit cards
Provide the credit card to their customer for 50days credit anywhere in the world they used credit card
,after 50days the bank return the their money if the customer did not return the money on time the
interest will be apply on the money which customer was use through credit card and customer have
opportunity to return the money in instalment.

7:Asset deposit(account opening)

Means the MCB Bank ltd is open the account of a person and then deposit their asset in their account .
Organizational Culture
organizational culture is a system of shared thoughts and meanings held by organizational
members and it can vary from organization to organization, Culture can be characterized by
seven primary components on the basis of those characteristics I have observed MCB Banks
ltd.’s culture during my tenure of internship.

Creativity and Risk taking – In MCB bank ltd employees are creatives but they avoid taking
risks due to nature of their Jobs, secrecy is most important in banking sector.

Attention to Detail -I found employees very attentive towards accuracy, analysis and details.

Outcome Oriented -as I have done my internship in a branch of MCB bank ltd I found
management (branch manager and branch operation manger) very focused towards the targets
that they were assigned by top management their efforts were always result oriented

People Oriented -Decision making system that I found in MCB Bank ltd was people oriented in
every decision they consider their employees and customer. Bank consider all the stakeholders
while taking a decision.

Team Oriented -All the employees working at MCB Bank ltd branch daharki was working as a
team and helping each other in their routine work and were taking efforts collectively for the
betterment of the branch.

Aggressiveness -As competition in banking is very high in Pakistan so the employees of MCB
Bank ltd daharki branch was aggressive in their approach in dealing with their customers,
Manager was personally in contact with customers and was visiting them at their homes or
offices to brief them about bank’s products and services.

Stability – Environment that I found at MCB Bank ltd was stable attention was given towards
targets and focus of the employees was always towards their targets.

Purpose of internship
Reason of choosing
I choose MCB bank ltd because it is one of the largest bank in the Pakistan in terms of profit and market
shares and their services is very good for their customer and my father operates account in the MCB
Bank ltd some time I also visit MCB Bank ltd and I was very impress their environment and their
services that why I was choose MCB Bank ltd and I want to be a bank officer .

Key operation of the group

1: To provide lending to their customer

2: Saving money of people.

3: Transact money one place to another place.

4: Insurance policy provide.

5: Provide debt to the company.

6: Credit cards.

7: Asset deposit (account opening)

1: To provide lending to their customer

Means provide loan to the people (customers) and provide personal loan to the people and provide the
home loan to their employees .and also provide the car loan

2: Saving money:
Save the money to their people (customer) from robbers and also the give interest to people.

3: Transact money one place to another place:

Means transfer the money of their customer one city to another city or one country to another country.

4: Insurance policy provide

Means provide to insurance to the people (customer) to save their life and provide to them to plan for
their children for study.
5: Provide debt to companies
Means provide the money (loan) to the companies to run their organization.

6: Credit cards
Provide the credit card to their customer for 50days credit anywhere in the world they used credit card
,after 50days the bank return the their money if the customer did not return the money on time the
interest will be apply on the money which customer was use through credit card and customer have
opportunity to return the money in instalment.

7: Asset deposit (account opening)

Means the MCB Bank ltd is open the account of a person and then deposit their asset in their account.

Personal objective
To know the working environment of the banking sector and to work and learn how to behave in
professional environment

To deal with different types of customer

To lean learn punctuality and discipline of office work

To full fill my degree requirement

Flied of activity
Reporting duties
Fil Account opening form

Dealing with customers

Fill the deposit slips

Remittance

Clearing

Stamps

Job performed
Fill Account opening form

Dealing with customers

Remittance

Clearing

stamps

overview of process
when the customer is visiting the MCB Bank ltd branch Daharki guide to them in the filling the deposit
and account opening form and work under the office and learn their assign jobs.

Products and services

1: Provide lending

2: Credits cards

3: Car finance

Self-assessment
I have learned a lot of things in the MCB Bank ltd daharki branch, I learn how to deal with customer in
the professional systems

And I have learned how to open account.

I have learned how to fill the deposit slip and also cheque

What have I done

I Have done how to deal with different type of people with their different type of nature

I have learned how to open account in MCB Bank ltd

Fill the deposit slip

Different types of account opening form

I have learned how to fill the cheque

I have learned how to work in under the presser

I have learned how to work under the managers

I have learned how to work with team and groups

Swot
Size of the Balance Sheet:

First of all, a fundamental advantage that Muslim Commercial Bank has is the size of its balance
sheet. The per party exposure limit is set according to the size of the balance sheet. So large
balance sheet size allows Muslim Commercial Bank to lend Blue Chip clients and lend them
huge amounts, there by restricting its exposure to less creditworthy clients .

Customer Loyalty:

Another advantage for Muslim Commercial Bank is that it has been around for some time, as a
result it has developed a loyal clientele. This is especially a major advantage in today’s troubled
and highly competitive market.

Low Cost of Capital:

The bank enjoys a low cost of funds of around 7% and has a spread of around 3%. MCB here is
better placed due to very strong basic earnings power, which shows up in gross spreads. As the
spreads tighten, Muslim Commercial Bank also has one of the lowest costs of capital. One
major reason for this is its huge branch network.

Leader in RTCs Market:

MCB is also the pioneer in Travelers’ Checks market. Currently Muslim Commercial Bank is the
leader of the market with 80% market share .

Largest ATM Network:

Muslim Commercial Bank also has the largest ATM network in the country. It is a leader with 70
ATMs in five major cities of Pakistan.

Huge Branch Network:

With these cut-throat competition among banks to attract deposits and other corporate and
Investment banking activities, the largest bank normally has a best chance of survival. The
larger the deposit base, the easier it is to attract more deposits, and the larger the equity base,
the higher the per party exposure limit. MCB scores on both counts. Based on a total equity of
Rs. 3.9bn in 1997, its per party limit is RS770million. Maximum exposure allowed to any party is
30% of the bank’s equity. Among the Pakistani banks MCB ranks fourth in terms of per party
exposure limit.
A way of remaining profitable is to cut costs. Costs as a % of deposits for MCB is 6.7%. MCB
has a network of more than 1450 branches, unmatched by any private or foreign bank, enabling
it to raise deposits at low costs. Around 60% of its deposits come from small towns and villages
where competition from other local and foreign banks is virtually nonexistent. As a result, it
raises deposits at around 2-2.5% lower than other private banks.

Low Forex; Account to total Deposits:

Another advantage is that Muslim Commercial Bank has one of the lowest Foreign exchange
accounts to total deposit ratios in the market. This has saved Muslim Commercial Bank from
taking any major hit in the foreign exchange turmoil that the market has gone through.

Liability Advantage:

On the liability side MCB has per branch deposits of 98million, compared to the other newly
privatized banks, RS686million for ABL and RS1287million per branch for FBL. So, MCB has a
lot of potential to increase its deposits without investing in network.

Trade Financing Advantage:

It is important for a bank to look at the proportion of non-interest expenses from the non-interest
income, which can be very important when corporate activities slow down. MCB financed 52%
of its costs from fee-based income. So, MCB has an advantage in trade financing compared to
its peers due to its size and does not stand to lose much on its treasury operations .

Loan Recovery:

MCB has made a significant progress on the loan recovery. During 1997, it recovered RS1.77
billion of bad loans, exceeding its target of RS1.5 billion.

Diverse Product Range:

MCB, at present, is offering a wide variety of financial products, which serve a diverse customer
base. It serves not only common households through schemes like Mahana Khushali
Scheme and Khanum Bachat Scheme to Blue-chip clients through MCB Saving Instant and MCB
Instant Financing. This gives MCB a competitive advantage over its competitors.

WEAKNESSES

Over Staffing:
The problem of poor human resource management has been created during the nationalization
era when recruiting and placement decisions were mainly done on criteria other than merit.
Today, when MCB has to compete against 43 commercial banks and over 120 NBFIs, it should
seriously analyze the inventory of its human resources. The consumers, who come to MCB after
experiencing services from any foreign or private commercial bank, have felt that the service
quality is very bad. Along with poor service quality, MCB has been overstaffed mainly due to
political reasons. In 1996 MCB had almost 14,800 employees to manage its 1450 branches.
The overstaffing resulted in lower earnings for the bank. Although MCB has shed off almost
2000 employees by offering Golden Handshake Scheme to its employees. It still maintains a
little more than ten employees per branch. This results in high operating expenses. Despite
having one of the lowest costs of capital of 7.9%, total costs absorb 94% of total revenues.

Un-banked Areas:

MCB has over one hundred branches in areas where there is no other branch in a radius of 3
miles. These branches cannot be closed under SBP regulation. Most of these branches do not
generate sustainable profits and result in high operating expenses.

High Administration Cost:

Even after privatization, the management has not been able to decrease its operating costs, As
a result, despite enjoying one of the highest spreads in the industry, MCB’s profitability
remained low. MCB has a very low deposits per branch of 8million deposits per employee as
compared to Faysal Bank which has 21million and Askari has 18 million per employee.

Under-Capitalization:
 State Bank of Pakistan requires all banks to maintain equity equal to at least 8% of total
assets. The Capital Adequacy Ratio for MCB in 1997 was 6.13%. however, the equity is
inclusive of revaluation on assets. Excluding this amount CAR comes down to 4.2%. This low
capital adequacy decreases the cushion for depositors and thus increases risk.

In-efficient Top Managers:

It’s an interesting fact that the reports of various financial and brokerage houses that we
consulted were almost unanimous in saying that a new president with more professional
approach must be inducted so as to increase the productivity of the bank .

Lower Revenues to Assets:

MCB has lowest total revenue to assets ratio in the industry. Even after privatization, the
management has not been able to decrease its operating costs, As a result, despite enjoying
one of the highest spreads in the industry, MCB’s profitability remained low.

Cost Income Ratio:

The cost to income ratio for MCB is the highest in the industry of private local banks after Schon
Bank.

Low Investment in Research:

Although MCB has formed BDMD for the development of new schemes and strategies to cope
up with ever-changing market but due to the fact that the Pakistani environment is too volatile so
BDMD needs more investment for research purposes which is now-a-days facing under-
investment.

Low Deposits Per Branch:

MCB has a very low deposits per branch of 8million deposits per employee as compared to
Faysal Bank which has 21million and Askari has 18 million per employee.

OPPORTUNITIES

Low Awareness:
The official savings rate has been hovering between 13 to 15 percent. Low saving rates coupled
with high level of informal economy makes our economy an Un-Bank economy compared to
other countries. This can be tipped as a great opportunity for banks to capitalize upon. Banking
industry can increase its efforts to create awareness among people about the usefulness and
the advantages of banking services can increase their customer base and find ways to grow
sustainably.
In the current situation when, the deposit growth efforts of the industry has seriously been
hampered by the changes in the political environment, the banks can change their focus to
increasing the number of services and creating awareness about them. For example, banks can
make increased efforts to create awareness about credit cards and Rupee Travelers Cheques,
which have a great potential to grow.

Long Term Relationships:

Having an old history, MCB has potential opportunities to exploit its long term relationships with
its customers that have been built during last fifty years.

Potential in Foreign Operations:

MCB can also exploit its foreign operations by expanding them to Middle East and Central
Europe which not only have a big credit market but also a remittance market for Pakistan.

Potential in Joint Venture:

MCB can also count upon its joint ventures that it has started in various countries with different
financial institutions to increase its profitability.

Rupee Fixed Deposit Schemes:

In the current state of the deposits market, with the FCAs being frozen, people are inclined
towards keeping their savings in Rupee fixed deposits. In this situation, MCB can, should, and is
introducing rupee fixed deposit schemes with high rates of interest.

THREATS
Political Turbulence:

In a third world country like Pakistan, where it is the fourth elected government in the last ten
years (three of which could not complete their terms), it becomes difficult to operate smoothly.
Every time the government changes, the newer one revises immediately the policies and
reforms by the last government. There is no consistent fiscal policy of the government. Political
unrest, terrorism and riots are a matter of routine in most parts of the country. In such a
situation, keeping in view the slump in the economy, the banks being directly related to the state
of the economy face serious threats. The autonomy of the State Bank of Pakistan has, however,
eased up the situation a little.

Narrowing Spreads:

Because of the high degree of competition in both the deposits and credit markets, the interest
spread is growing narrower and causing serious risks to the bank’s profitability.

Bad Loans:

The bad debts of MCB as reported in the balance sheet fore the year 1997 were Rs.
153,804,000 as compared with the total credit advancements of Rs. 64,365,285,000, out of
which, Rs. 709,975,000 have been defaulted. This amount shows a risk to the bank’s
profitability having a high potential being translated into a loss.

Forex Control:

Strict foreign exchange regulations by the government especially the recent freezing of foreign
currency accounts make it difficult for the bank to operate in foreign currency transactions. The
foreign currency deposits as well as the remittances by over-seas Pakistanis are a major part of
the bank’s revenues. Any strict regulation by the government concerning the foreign currency
can affect a part of the bank’s operations.

Political Interference:

In Pakistan, where there is a high rate of corruption and a number of loans are sanctioned on
political pressures, which generally go bad. This political interference is a serious threat to the
operation of the bank and as well as a smooth flow of currency in the economy.
Un-stable Government Policies:

As discussed earlier, there is a great deal of political unstability in the

country and there is no consistency in the Government’s economic policies.
This results in uncertainty in the economy and the behaviour of the credit and
deposits markets, which makes it difficult for the bank to operate and to plan
its investment portfolio in the optimum way.

Problem identification
Shortage of employees as compare to customer basic.

Suggestions for improvement and solution

The MCB gives modern environment to the employees of the MCB Bank.

The MCB bank should give the credit cards machine in every city of the Pakistan.

The MCB Bank gives the training to their employees according to new techniques to improve their
working skills

If I am a branch manager, I was given them good talking skills to deal with different types of people.

MCB Bank should increase the ATM machine in the Pakistan.

MCB Bank should increase the employees according to branch require.

Reference
1: The first important thing is the discussion with the Staff of MCB bank Daharki branch

2: www.google.com

3: www.mcb.com.pk

4: Operation manual book of MCB

5: Different reports of MCB Bank