Evolution of Banking

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. 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 persons who had surplus money found it safe and convenient of deposit their valuables with them. 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 quite 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.

DEFINITION OF A BANK:
The term 'bank' is being used for a long time, yet it has no precise definition. The basic reason is that the commercial banks perform not just one but many types of functions. The term bank has been defined differently by different authors. Some are as follows: According to Crowther,
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"Bank is a dealer in debts—his own and of other people." According to G.W. Gilbert, "A banker is a dealer in capital or more properly a dealer in money. He is an intermediate party between the borrower and the lender. He borrows from one party and lends to another."
According to Banking companies ordinance 1962

u/s3(B) of Banking Companies Ordinance 1962 "Banker means person transacting the business of accepting for the purpose of lending or investment, of deposits of money from the public, repayable on demand or otherwise and withdraw able by cheque, draft, order or otherwise and includes any Post Office Savings Bank."

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Commercial Banking In Pakistan
The interesting point which I observed during the span of mine internship was the historical background of Banking & Financial sector which is the one in which great improvement and growth is observed since the formation of Pakistan. For studying the growth of this sector we can divide it into three stages, which are as follows: a) b) c) Pre-Nationalization Era Nationalization Era Post Nationalization Era

A) PRE NATIONALIZATION PERIOD:
There were only two Muslim banks in Indo Pak before partition, they were; Habib Bank Ltd. (estd. in 1941 at Bombay) & Australia Bank Ltd. (estd. In 1944 at Lahore). All other banks, at that time, were either owned by Hindus or Foreigners. At the time of partition there were 631 bank branches in area which came under Pakistani control. But due to blood shed and violence at large scale, mostly branches were closed and the disparity can be assessed from the fact that on July 1948 there were 195 branches with deposits of Rs.88 crore (880 million) only. Also a factor lagging in Pakistani industry was a central bank of its own, by that time Reserve Bank of India was acting as central bank for both countries and same currency notes were used in both territories. But Reserve Bank of India was biased and Set down Pakistan on many occasions such as the issue of funds transfer etc. In this period drastic steps were taken in government sector for the improvement of overall position. The private sector also responded to these changes and some very positive changes were observed. Some of the steps taken by the government in this regard were as under: 1) Inauguration of State Bank of Pakistan (SBP) on 1st July, 1948. 2) Setting up of National Bank of Pakistan in November, 1949 to control the 'jute' export in East Pakistan and to act as agent of SBP. 3) Larger powers were given to SBP through SBP Act (1956) for controlling purposes. 4) Banking Companies Ordinance 1962 for protection and guidance to
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a) HBFC (Nov. Hailey College Of Commerce .660 5. 1974 all Pakistani banks were nationalized through Nationalization Act 1974.2300 crore (23.000 million).160 5. 1957) c) IDBP (Aug.670 1. b) P1CIC (Oct. These banks were to control by Pakistan Banking Council. 5) Establishment of specialized banks. Decrease in profitability as well. This is also obvious from the facts that by 1973 there were almost 10 foreign banks were working in Pakistan and all over deposit position was around Rs. Under this law all Pakistani banks became a public property. These were the steps.Muslim Commercial Bank Limited Internship Report 8 banks.    Working of banks was extended to under developed Market expansion for credit and deposits. 1961). There are still controversies about this act of government as whether it contributed in success of failure of banks. 1973). OF BRANCHES 667 579 497 506 145 DEPOSITS 6. However the effect of expansion was enormous and it can also be depicted with the help of table 2 which shows the deposit & branch positions of different nationalized banks.640 570 B) NATIONALIZATION PERIOD On January 01. such as ADBP (1952). All small banks were merged in bigger banks to create 5 major Pakistani banks Pakistani banks. Decrease in service level of bank officers. 1952). A bird eye view of 5 top banks was as given below: BANK POSITION IN 1973 BANK HBL NBP UBL MCB ABL NO. However the major changes after nationalization were as follows:  areas. d) NDFC (Jan. which built a strong banking sector in Pakistan.

a) MCB taken up by a private group in April. Hailey College Of Commerce .362 C) POST NATIONALIZATION ERA In 1990 the government decided to denationalize all the nationalized institutes. 1991. In Millions) 1926 1448 1684 1288 750 7096 153. amendments were made to Nationalization Act 1974 and two nationalized banks were privatized.482 50. For this purpose.431 128.757 453.1 c) UBL taken up by UAE party in 2002. 1991 b) ABL taken up by its own employees in September. of Branches Deposits (Rs. of Banks 3 18 4 19 44 In addition to above mentioned scheduled banks there are 7 Development Financial Institutes. The-three privatized banks are. The rules regarding establishment of new banks and for incoming foreign banks were also Relaxed. 1 UBL to her uply a UAE party in 2002.013 33. Along with this a permission to open banks in private sector was also granted. Some was also suggested in banking sector.679 87.Muslim Commercial Bank Limited Internship Report 9 BANK POSITION IN 1992 Bank HBL NBP UBL MCB ABL TOTAL No. After these changes a large number of private and foreign banks started their operations in Pakistan and the present status can be seen from the following figures: SCHEDULE BANKS Category Nationalized Commercial Banks Private / Privatized Commerce Banks Public Sector Specialized Banks Foreign Banks Total Schedule Banks No. 14 Investment Banks and Modarbah Companies.

1947 (just before partition) at Calcutta. Hailey College Of Commerce . 1948 with a delay of almost 1 year. Adamjee was appointed its first chairman. 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. MCB was the first to be privatized upon recommendations of World Bank and IMF. And Muslims having strong financial capacity were thinking to invest in this sector as well. On April 8th. 1999 and now Head office is termed as Principle Office. 56 per share. HISTORY This bank was incorporated under companies’ act 1913 on 9th July. the need for more Muslim banks was felt. It was incorporated with an authorized capital of Rs. now recently the Head office of MCB has been transferred to Islamabad in July. 35. G. the certificate was issued at Chitagong. 1. 1974. Before separation of Indo Pak. the management control was handed over to National Group (the highest bidders). (Historical Background) Now let us discuss the historical background of Muslim Commercial Bank Limited.029 million.287 and deposits amounting to as high as Rs. After some time the registered office of the company was shifted to Karachi on August 23rd. Following are some key developments: 1) Launching of different deposit schemes to increase saving level. At that time it had 506 branches and deposits amounting to Rs. This was the third Muslim bank in the subcontinent. MCB has a reputation of a conservative bank but nationalization also left its effects on this institute as well and by end of year 1991 in which it was privatized the total number of branches were 1. 15 million.640 million. The first Head office of the company was established at Dacca and Mr. This was the idea which paved the way for setting up Muslim Commercial Bank Ltd known as MCB. the certificate of incorporation was issued on 17th August. Although. When privatization policy was announced in 1990. 2) Increased participation on foreign trade. 1991. This institute was nationalized with other on January 1st. Initially only 26% of shares were sold to private sector at Rs. DEVELOPMENTS After privatization. the growth in every department of the bank has been observed.M. 1956 through a special resolution.Muslim Commercial Bank Limited Internship Report 10 Muslim Commercial Bank Ltd. But due to changing scenario of the region.

5) Extended use of information technology which is evident from the fact that there are 768 fully automated branches. Hailey College Of Commerce .B continuously innovate new product. 243 online branches (integrated networking). 151 ATMS in 27 cities nation wide and a M.C. 4) Introduction of Rupee Traveler Cheques & Photo Credit Card for the first time in Pakistan.Muslim Commercial Bank Limited Internship Report 11 3) Betterment of branches and staff service level.

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 CHIEF FINANCIAL OFFICER • Ali Amin COMPANY SECRETARY • Tameez-ul-haque Hailey College Of Commerce .Muslim Commercial Bank Limited Internship Report 12 Management of the organization MANAGEMENT OF THE BANK • • • • • • • • • • Mian Mohammad Mansha S.

financial control & Audit div. These categories are: a) b) c) Corporate Banking Commercial Banking Consumer Banking A) CORPORATE BANKING: These are branches which have an exposure of over Rs. C) CONSUMER BANKING These are the branches which have exposure up to Rs. HR & Legal div. Usually includes multinational & public sector companies. Corporate Banking div. 100 million. The different operational departments are Consumer Banking & IT div. This team is also headed by Mr. Recently the organizational structure was re-designed as follows: Province wise branches Corporate 20 branches Consumer 637 branches Commercial 383 branches Hailey College Of Commerce . 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. 20 million and these include all the branches which are neither corporate nor commercial branches. Credit management div. Banking operations div. Muhammad Mansha is chairman & chief executive 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. The branches which has a credit exposure of less than Rs. B) COMMERCIAL BANKING. Commercial Banking div. Treasury management & FX Group and lastly Special Assets Management (SAM) Group. it has been categorized into three segments with different people handling each category.Muslim Commercial Bank Limited Internship Report 13 ORGANIZATIONAL STRUCTURE As MCB is a banking company listed in stock exchange therefore it follows all the legalities which are imposed by concerned statutes Mr. For effective handling of branches. Financial & Inter branch div. Muhammad Mansha. Operational Management of the bank is being handled by a team of 10 professionals.

the bank has some proposals under consideration to open more brances in some European countries and as well as in japan & china Hailey College Of Commerce .Muslim Commercial Bank Limited Internship Report 14 NUMBER OF BRANCHES IN DIFFERENT LOCALITIES Punjab Sindh NWFP Blochistan Azad Kashmir Domestic Overseas EPZ Total Sri Lanka Bahrain 3 1 632 232 123 34 19 1040 4 1 1045 Furthermore.

Muslim Commercial Bank Limited Internship Report 15 Hierarchy Of Management GRADES OF BANK SEVP ESEVP SVP VP AVP GRADE-1 GRADE-2 GRADE-3 ASSISTANT Clerical staff Cashier Technical Staff Non-clerical staff Messenger Dispatch Rider Hailey College Of Commerce .

…………………… ……….. 2... AVP. GRADE 1. 3) Hailey College Of Commerce .…………………… ………..…………………… Head Office Regional Office Zonal Office Branch (VP.Muslim Commercial Bank Limited Internship Report 16 Mediocre Level Management The organization chart within a department and in different offices is as follows: Divisional Heads Regional Head (EVP) Zonal Head (VP) Branch Manager ……….…………………… ……….

The main functions and services which Muslim Commercial Bank Limited provides to different peoples are as follows. h) Undertaking foreign exchange business. documents or securities. d) Acting an executor. The general division in a branch is as follows: 1) 2) 3) 4) Cash department Deposit department Advances & credit department Foreign exchange department Technology department (new addition in order to cop with the growing needs of day to day technology requirements) Hailey College Of Commerce . dividend. few of those are as under: a) Collecting cheques and bill of exchange for the customers. 1) 2) 3) 4) 5) Open Different accounts for different peoples Accepting various types of deposits Accepting various types of deposits Granting loans & advances Undertaking of agency services and also general utility functions. in modern time commercial banks play a very important role and their functions are manifold. ‘Providing safe custody and facilities to keep jewellery. c) Transfer of money from place to place. f) Accepting bills of exchange on behalf of customers. trustee or attorney for the customers. b) Collecting interest due. For proper functioning of branches and the over all bank has been divided in different departments. g) Purchasing shares for the customers. pensions and other sum due to customers.Muslim Commercial Bank Limited Internship Report 17 Fields of Activities of MCB The purpose of banks is to provide some services to the general public. And for this purpose different banks provide different services to the people in different forms. i) Furnishing trade information and tendering advice to customers. These departments handle different jobs so that division of work is there for improvement of functions and also it is easy to control the situation. e) Issuing of travelers cheques and letters of credit to give credit facilities to travel. The Muslim Commercial Bank (MCB) is a commercial bank.

3. cash area is grilled and its door is under supervision of the head of that department. The consolidated figure of receipt and payment of cash is entered in the cash balance book and drawn closing balance of cash. This is very important department because cash is the most liquid asset and mostly frauds are made in this department. At the close of the day. When the cheque or any negotiable instrument is presented at counter for payment. All the books maintained in this department are checked by an officer. The token clerk and the Cashier make entries in the paying book and payment is made to payee. Hailey College Of Commerce . 2. these are balanced with each other. Mostly. extra care is taken in this department and nobody is allowed to enter or leave the area freely. At the close of day. Opening Balance + Receipts .Payments = closing Balance. the Token Book and Paying Cashier Book are balanced. it is entered in the Scroll Book and Receiving Cashier Book. 4.Muslim Commercial Bank Limited Internship Report 18 Cash Department The following books are maintained in the Cash Department: 1. 5. therefore. Receiving Cash Book Paying Cash Book Token Book Scroll Book Cash Balance Book When cash is received in counter. it is entered in the token book and token is issued to the customer.

Low Cost No Cost. Therefore we can rightly state that deposits are the blood of the bank which causes the body of an institution to get to work. In the similar fashion. Banks has different kinds of deposit schemes in order to induce deposits. He may. deposits or withdraws money several times in a day if he likes. deductions. These schemes are a mixture of the above mentioned two types of deposits with an addition of different services & requirements such as minimum balance' requirement. eligibility for different groups. MCB has a large variety of deposit schemes and some of them are as follows: CURRENT A/C (CD): In this type of accounts the client is allowed to deposit or withdraw money as and when he likes. one is the duration in which there funds are expected to be with the bank and second is the cost of getting these funds.e. So divide deposits in two classes according to duration of deposits i. the difference between the rate of borrowing lending forms their spread or gross profit. a deposit can be classified as any one of following four.Muslim Commercial Bank Limited Internship Report 19 Deposit Department Bank deals in money and they are merely mobilizing funds within the economy. bank has progressed in both aspects. thus. The total deposits of MCB are growing since its inauguration but after privatization there is a sharp incline in over all deposits of the bank. TYPES OF DEPOSITS Deposits can be segregated on two bases. additional benefits. mode of transaction. Usually this type of account is opened by the businessmen. However. there is requirement of minimum balance maintenance of Rs. They borrow from one person and lend to another. 1000/-. The increase in deposits is also a cause of increase on total number of accounts. High Cost Medium Cost. There is also no restriction of amount to be deposited or withdrawn. These deposits are liability of the bank so from point of view of bank we can refer to them as liabilities. basis for calculation of profit. No profit is paid by the bank and no service charges are deducted by the bank on current Hailey College Of Commerce . 1) Time deposits / liabilities 2) Demand deposits / liabilities And on the basis of the cost to acquire these funds.

now bank prefers to accept deposits in local currency rather in foreign exchange. These types of deposits are also exempt from compulsory deduction of Zakat. However.and in turn he gets the benefits of daily profit calculations and also there is no restriction on the maximum number of withdrawals as was there in the case of KBA. There is also restriction on the number of withdrawals as well. KUSHALI BACHAT A/C (KBA): This is an advance form of PLS saving a/c. 1000/-.Muslim Commercial Bank Limited Internship Report 20 deposits account. i. For maintaining this extra balance the customer gets the benefits of profit calculation on daily product basis and also free service of standing instructions of paying utility bills and HBFC installments. in this type of account. 300. If a big amount is required a seven days notice is required before the withdrawal. NOTE: PLS Saving. The minimum balance requirement for this type is Rs. PLS SAVING BANK A/C (SA): This type of account is for those persons who want to make small savings'. Before nuclear tests of 1998 these accounts were opened in four major currencies but now these are only opened in USD ($). The profit is paid on these accounts on the minimum balance during a month for the whole of that month. Kushali Bachat & PLS 365 saving accounts can be opened in foreign currency also. There is also another advantage of this scheme that if balance on a particular day falls below the minimum balance then only the product of that day is ignored whereas in KBA. now bank discourages the opening of foreign currency accounts because no forward cover risk is provided by State Bank of Pakistan (SBP) and all the loss in case of devaluation or depreciation in local currency has to be born by bank himself. 2500/-.000. This increase in cost has left foreign currency account of no use. Hailey College Of Commerce . Zakat & other withholding taxes are deducted as per rules of the government. This type of account is opened with a minimum deposit of Rs. up to 4 times in a calendar month. if balance falls below the minimum limit then all the products for that month are ignored on in other words no profit is paid for that month.e. Under this scheme deposits can be made only up to a-costing amount and withdrawals are allowed twice a week or 8 times a month. therefore. All other rules of saving account are applicable. PLS 365 SAVING A/C: This is a special type of saving account in which customer maintains a minimum balance of Rs.

Then profit is also calculated on that amount of profit which is credited to the customer's account. 1000/. Different profit rates are applied to different type of TDRs. During this time he keeps on depositing monthly deposits and his account is charged with the accumulated profits calculated on 6 monthly basis. the bank has guaranteed minimum rate of 1% per month but usually this rate is more than 1% per month. These receipts are encashable after expiry of the period for which they were issued. SPECIAL NOTICE DEPOSITS (SND): Hailey College Of Commerce . Under this scheme. In this deposit schemes. HAJJ MUBARIK SCHEME: This is also very closely related with Khanum Bachat scheme. This was designed to help the persons who are willing to offer Hajj but are unable to save required funds. So we can say that in this type of account there is a concept of accumulated profits on profit. he receives his funds along with profit for the tenor. MONTHLY KUSHALI SCHEME: This scheme is similar to CGC in the sense that an initial deposit is made in this case also but instead of lump sum payment at the end of the tenor. The distinctive feature of this product is that profit is calculated on monthly basis and charged to account on end of each half /ear. This ends in getting a heavy return for the depositor at the end of tenor for his small savings. PLS TERM DEPOSIT RECEIPTS (TDR’S) This is a type of term deposit in which a receipt is issued for varying tenors ranging from 1 month to 5 years or more. Zakat & withholding tax are deducted at the time of payment. These are in the form of receipts and profit on these receipts is paid biannually.Muslim Commercial Bank Limited Internship Report 21 KHANUM BACHAT SCHEME: This is a type of term deposit. This product was actually introduced to promote saving habits in the people. Zakat and withholding taxes are deducted as per rules only at the time of maturity while making payment to the customer. After the expiry of term.are made by the account holder in this account for a minimum of 10 years. The scheme is so designed that total amount to be received at the end of this scheme comes equal to the anticipated cost of offering Hajj at the end of tenor. in this type of deposit an account is deposited and monthly payments of Rs. Zakat & withholding tax are calculated as per rules laid down by the government. the person gets a monthly profit on his deposits. 2 or 3 years agreement is entered with a customer.

therefore the nature of relation between a banker and customer is of a contractual one and all the conditions applicable to this contract act are also applicable.on the form and specimen signature card. The following are given to the customers: Pay-in-slip is the proof of deposit. PROCEDURE FOR OPENING: Procedure for opening of account is as follows: A person. makes the first deposit. For every payment which is. There are two types of SNDs. a deposit is received from the depositor under the condition that he will intimate the bank before a certain period in case of withdrawals. free of cost. Separate account opening forms are used for different types of accounts. Hailey College Of Commerce . The Deposit Department handles the account opening. The object of this book is to provide the customer with the bank's acknowledgment for receipt of money to be credited this account. An introducer can be any person known to the bank but preferably it should be a customer of the bank. Balance is recorded in this book by the Clerk. It enables a customer to make withdrawal from this account or make payment of various parties by issue of cheque. Pass Book is a copy of the customers account as appears in the books of the bank. FUNCTIONS This was a brief review of different types of deposit schemes.Muslim Commercial Bank Limited Internship Report 22 Under this deposit scheme. However. the pay-in-slip is to be filled up. to be deposited in the bank. has to fill in a printed form which is provided by the bank. If the manager is satisfied. profit payment and accounting of all types of deposit schemes. who wants to open any kind of account. the manager can open the account by his own introduction. NOTE: 1) In case of partnership account partnership deed should be attached. The profit is paid on these deposits but it is nearly equivalent to saving account rate. they are 7 days and 30 days notice deposits. and issues the cheque book. ACCOUNT OPENING: Account opening is an agreement in which customer offers his funds and bank accepts these funds. it will obtain the full signature of the customer. Cheque Book contains a number of cheques. Bank usually requires that new depositor must be introduced by some one.

Accounting entries are also made in the respective books of account by this department. The products for each deposit scheme are calculated separately and added till the end of 6 month period. list of directors and board resolution for opening of account is also obtained from the customer. Then the sum total of these products is multiplied with the respective profit rates which are issued by the Head Office at the end of each half yearly closing. certificate of incorporation.Muslim Commercial Bank Limited Internship Report 23 2) In case of companies memorandum and article of association. Executors & Administrators can also be opened but with the prior approval of the Head Office. However. in small and medium size branches. 3) Accounts of Trusts. The profit provisions for each type of deposits are also calculated on monthly basis by the same department in order to calculate the net profit or loss position of the branch. Profit payment & calculation is done in accordance with the rules of each type of deposit scheme-by the deposit department. Hailey College Of Commerce . certificates for commencement of business. the accountant performs the book keeping duties for all kinds of ledgers.

are not in the same city or they are not the members of clearing house. which is covered by a particular clearing house. Clearing cheques: are those cheques. The Negotiable Instrument Act. To arrange the payment of cheques drawn on the branch and given for collection to any other branch on MCB or any other members or sub member of the local clearing house. which are drawn on the branches of either the same bank or of another bank. which are collected and paid by two different branches of the same bank situated in the same city. Transfer delivery cheques: are those cheques.Muslim Commercial Bank Limited Internship Report 24 Clearing Department Every banker acts both as a paying as well as a collecting banker. who collects it for a customer in good faith and without negligence. sent for collection by MCB Branches. clearing and collection cheques from the customers of the branch and to arrange for their collection. sub-member of local clearing house. lays down hat drawer or holder of a cheque or draft may cross the instrument generally or specially. not represented at the local clearing house. A large part of this work is carried out through the bankers clearing house. Collection cheques: are those cheques. FUNCTIONS OF CLEARING SDEPARTMENT: 1. 2. 1881. TYPES OF CHEQUES COLLECTED Transfer cheques: are those cheques. As the collecting banker runs certain risks in receipt of their ownership the law has provided certain protections to the banks. which are drawn on the branches of some other bank of the same city or of the same area. which are collected and paid by the same branch of bank. 3. A clearing house is a place where representative of all banks of the city get together and settle the receipts and payment of cheques drawn on each other. but those branches. It further lies down that a crossed cheque can only be paid to a banker. Transfer delivery. Hailey College Of Commerce . To collect amount of cheques drawn on members. To accept Transfer. It is however an important function of crossed cheques.

or consent. A cheque payable to one of the joint account holders should not be collected for the joint account without the payee's endorsement. like Telegraphic Transfer. Do not collect an instrument in the account of an agent or of the servant of the payee or endorsee of the instrument. or a holder of bearer cheque). and the pay-in-slip at the counter. The instrument should not be mutilated. If cheque is "crossed Account Payee's" only or "Payee's Account". Scrutiny and receipt by the authorized officer. Returning the counter file to the depositor. The instrument should be drawn on any local branch. The cheques or drafts should not be crossed specially to any other bank. A cheque payable to a firm should not be accepted for credit to a partner's account. The amount in words and figures should be same. and clearing cheques. ii) iii) iv) Fixing the stamps. A cheque drawn by a customer in the capacity of agent. v) Certificate and confirmation by the officer in charge of the department. “Not transferable" instruments. vi) Separating the cheque into transfer. although negotiable should not be collected for third parties. Pay orders. it should only be accepted for collection for the payee's account. should not be collected for credit to his personal account. transfer delivery. . If the instrument is crossed not negotiable it can be for the third party (an endorsee of an order cheque. The Instrument should not bear any unauthorized alternation. SCRUTINY OF CHEQUES a) b) The instrument should be neither stale/ nor post-dated. or Manager of his company or firm.Muslim Commercial Bank Limited Internship Report 25 COMMON PROCEDURE FOR ALL CHEQUES: i) Receiving and scrutinizing the cheques and other deposit instruments. Attorney. or Mail Hailey College Of Commerce c) d) e) f) g) h) i) j) k) l) m) n) .

N.Muslim Commercial Bank Limited Internship Report 26 Transfer Receipt. account should not be collected for credit to a trustee's account. Saving Ledgers 2. Daily profit and loss summary book 10. Branch agent's permission should be obtained before accepting a third party cheque or draft for the credit of the member. Cumulative deposit certificate register 8. o) If an account is new or the balance or operation of the account is not satisfactory. and no endorsement should be missing. Voucher register However. Current Ledgers 3. should be collected for a person other payee. it can be collected for credit of the drawers account. Register 6. Pay-slips. If the payee is a Government Department. in computerized branches all these ledgers are no more there but only day books are maintained. or the amount of the instrument may be utilized as desired by the drawer in writing. The rest of the work is done on computers. and Treasury Receipts.D. Profit & Loss Sharing Ledgers 4. p) q) r) s) t) Note: LEDGERS OF DEPOSIT DEPARTMENT: The following types of ledgers are concerned with deposit departments: 1. No charges are charged by the bank for this purpose. Cash book 9. Cheque payable to a trust. If the payee of an instrument is UBL.T. Call deposit register 7. satisfy your self about the title of the customers to the instruments before accepting the deposits. Fix Deposit Register 5. or a trust account the instrument cannot be collected. but for the payee's account. Government Official. S. Officer spaceman signature book 11. Hailey College Of Commerce . All the endorsement should be regular.

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Advances Department
Advances are the most important source of earning for the banks. MCB is also giving full attention towards this aspect and it is also obvious from the growing portfolio of advances and from very low delinquency rate. The credit portfolio of this institution is in a very much better shape than other financial institutions of Pakistan and the credit goes to the management and the staff who are concerned about the quantity and quality as well. 1) 2) 3) Loans Cash Credits Overdraft

1)

LOANS:

Loans are monetary assistance by a financial institution to a business, individual etc. The loans are granted by the bank in lump sum, so these types called fixed or demand loans. Interest is charged on the whole amount of a fixed loan. The borrower withdraws whole the amount of loan. This type of loan is normally granted against security of gold documents. In case of demand loans against gold or documents, a demand promissory note for the amount of loan is taken from the borrower loans are granted under;

A)

LOAN AGAINST GOLD:

Under this type of loan, which is granted to the borrower the Head Cashier estimates the value of Gold or Gold ornaments through an agent (Gold smith) and keeps a margin of 40 to 50 percent. After the opening the gold loan account a token is given to the borrower, which is a bank receipt. On repayment of loan, the gold or ornaments held as security for it, together with the demand promissory note duly discharged is returned to the borrower and his receipt for the gold ornament taken in the demand loan ledger. This receipts states that he ornaments returned are complete and in order. Part delivery of ornaments is given against part payment of a loan but care is taken that the ornaments still in banks possession fully covers the balance of the loan outstanding. The interest gold loan is to be applied with quarterly.

B)

LOAN AGAINST PLEDGED OF STOCK:
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In case of advancing such types of loans, the following precautions are dept in the mind: i) ii) iii) Stock pledged must be readily saleable Products should be readily saleable Advance should be within the borrows means

REQUIREMENT FOR LOAN:
For granting loan to any party or individual, the bank checks following particulars of the client: 1) 2) Credibility Feasibility Report

By Credibility, bank Judges the credibility of the client by his past bank record, CBI report etc. it is very important in making decision about giving him loan. Feasibility report is on the running or proposed business of the client. The report enables the bank to judge the likely return of the business.

2)

CASH CREDIT

Cinder such cash account is opened in the name of the customer who borrows from the bank. Customer is granted a loan up to a certain limit, sanctioned by the head office, from which he can draw when he requires and interest is charged on the amount actually utilized by the customer. In order to avoid the danger of idle fund, the bank charges a certain rate of interest, even if the customer does not withdraw any amount. The rate charged by the bank on cash credit in 46 paisa per thousand on daily basis. The credit is usually given against the securities of goods or merchandize as follows:

1. ADVANCES AGAINST PLEDGE STOCK IN TRADE OR PRODUCTS
When a cash is granted against the pledge of stock or product, cash credit form is taken, from the certain products or stock, but the actual pledge is created when the stock or finished product are placed under the bank's lock or the document of title are duly endorsed to the bank by the borrower.

2. HYPOTHECATION OF STOCK ON FINISHED PRODUCTS:
The difference between pledge and hypothecation is that under
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a pledge the borrower's goods are placed in the bank's possession under own lock, whereas, under a hypothecation, they remain in the possession of the borrower or guarantor and are merely charged to the bank under documents signed by them. Even though the documents empower the bank to take possession of the goods hypothecated, but it is possible that the borrower may actually resist any attempt.

3.

MORTGAGES OF PROPERTY:

Title deeds of immovable property are accepted by the bank only as collateral security or alternatively as unauthorized security.

MODES OF CREDIT FACILITIES
There are two types of facilities

A FUNDED FACILITY
1) Running finance 2) Cash finance 3) Demand finance 4) Payment against documents 5) Finance against imported merchandise 6) Finance against trust receipt 7) Export finance 8) Foreign bill purchased 9) Others

NON FUNDED FACILITY
1) Letter of credit 2) Letter of guarantees 3) Bid bonds 4) Performance bonds 5) Other facilities

Hailey College Of Commerce

a) purchaser b) issuing branch c) drawee branch d) payee A demand draft may be issued against the written request of the customer before issuing it must be seen that the demand draft is in order. 5) Thumb expression is not accepted on DD 6) The following are the parties. 4) It is to be ensured that purchaser can at least sign. SCRUTINY OF APPLICATION The DD application must be scrutinized by the counter clerk in respect of following points. Telegraphic transfer is not negotiable The funds are not payable to bearer Minor cannot avail this facility Hailey College Of Commerce . A B C D There should be branch where payment is to be made. 3) Legal provisions are same as that of cheque.Muslim Commercial Bank Limited Internship Report 30 Remittances DEMAND DRAFT 1) Demand draft is a written order drawn by a branch of a bank upon the branch of same or any other bank to pay certain sum of money to or to the order of specified person 2) Demand draft is a negotiable instrument. full name of payer should be mentioned amount in words and figures must be same application to be signed by the purchaser TELEGRAPHIC TRANSFER ■ ■ ■ ■ Transfer of funds from one branch to another branch of the same bank or upon other bank under special arrangements.

■ ■ ■ Instruction regarding mode of payment should be obtained. A pay order is written authorization for payment made in a receipt form issued and payable by the bank. Credit voucher should be prepared Hailey College Of Commerce . MAIL TRANSFER ■ ■ ■ ■ Transfer of funds from one branch to another branch of the same bank with in or out side the city is called mail transfer. Pay order should be prepared like demand draft.Muslim Commercial Bank Limited Internship Report 31 PARTIES Following are the parties involved ■ ■ ■ ■ Applicant Drawing branch Drawee branch Beneficiary Full name of the beneficiary or account number should be mentioned in the application form. A record of all issued and paid should be maintained. To the person named and address. Mail transfer is not negotiable The procedure is same as for DD All precautions must be observed PAY ORDERS ■ ■ Pay order is meant for bank own payment but in practice they are also issued to customers. A record in the remittance outward register should be maintained. The following are the parties A B C ■ ■ ■ ■ purchaser issuing branch payee Charges must be recovered at prescribed rate. All the remittance must be controlled through number.

Now MCB has also entered into a contract with Cirrus which is Hailey College Of Commerce . There are more than 1045 branches of MCB all over Pakistan and out of these more than 300 branches are fully computerized Almost all . therefore.the branches of big cities are computerized.Muslim Commercial Bank Limited Internship Report 32 Technology Department Technological advancements are also affecting the banking industry. ATMs are operated through a card issued to the valued customers and by application of Personal Identification Number (PIN number). This machine is used to transact in one's account without intervention of humans. These machines are basically used for taking cash. This system identifies the card holder and his PIN Number. MCB has also introduced the now concept of online banking. ATM NETWORK: ATM stands for Automatic Teller Machine. There are now more than 250 branches linked through this system and they can transact with each other directly using computer systems at their own branches. The foreign banks have a competitive edge over all local banks in their technologies' advancements and automated systems. 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. In this system all the machines are linked to central banking host at IRM division Karachi through either satellite or telephone controller. This network covers more than the 27 cities of Pakistan including the provincial capitals and large commercial cities of the country. Now customers do not have to wait long for their transactions and can operate their account through all the online branches. This was only possible with the help of online system. Now a day. A person can withdraw from any machine across Pakistan with having an account in only one branch of MCB. Local banks have also realized the gravity oil this situation and are striving to add computerized systems to their branches MCB is ahead of all other local banks in this field and now it is in a position to even compete with foreign banks. a computer division is working in each city to provide service to ad the branches of that area. the need for a technology department at each branch is growing.

Gold Cards are special cars with maximum withdrawal limit of Rs. The annual fee for this card is Rs.pk Hailey College Of Commerce .in a day.Muslim Commercial Bank Limited Internship Report 33 a subsidiary of MasterCard. 25000/.000/. www. 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. These cards are issued to the persons having more than Rs. Green Cards are ordinary cards with a maximum withdrawal facility of Rs.in a day.mcb. MCB WEB SITE MCB has also initiated its own website on internet with the address. 10. 300/only. 500000/. 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.as their average balance.com.

targeted to persons with small savings who would desire a regular monthly return on their investment. At a time when thefts and robberies are on the increase.010m and the maximum amount of investment would be Rs. Better because with Rupee Travelers Cheques you have the power to purchase and a feeling of security that should you lose them. If the profit declared by the bank is higher. you will get a refund. The interim rate of profit offered will be minimum 1% per month. Zakat will be deducted wherever applicable on yearly basis whether you will be receiving your profit or encashing your certificates. etc. MCB Rupee Travelers Cheques are accepted at major shops. travel agents. infact better. you are better off carrying Travelers Cheques rather than money.000m. c) d) e) f) Hailey College Of Commerce . 1. Khushali Certificates can be purchased by individuals (singly or jointly) or by the Proprietorship/Partnership concerns or Companies. SALIENT FEATURE: a) b) Minimum amount of investment shall be Rs. You don't have to be an MCB account holder to buy the Rupee Traveler Cheques. Anybody can purchase them. additional profit will be paid.0. As per Government Directions. hotels. It's a safe and convenient way to conduct everyday business. 1) MCB RUPEE TRAVELLER CHEQUE: MCB Rupee Travelers Cheques are as good as cash. in their name The Khushali Certificate will be of five years maturity. 2) MAHNAMA KHUSHALI SCHEME: A 5. tax on the profit / return is to be deducted by MCB branches at the time of payment.Muslim Commercial Bank Limited Internship Report 34 Miscellaneous PRODUCTS AND SERVICES OF MCB Following are some products of MCB that are introduced by Musing Commercial Bank after privatization. business establishments and MCB branches all over Pakistan.year fixed Deposit Scheme.

FEATURES: a) Owing foreign currency account under the Prime Currency Scheme allows you to earn attractive rates of interest in foreign currency. The facility of helping account holders pays utility bills (electricity. 4) PRIME CURRENCY ACCOUNT SCHEME: Launched to attract deposits in foreign currencies. Average balance and paid half yearly. Travellers Cheques and Foreign Currency Notes can also be issued to holders of persona! and Joint accounts. Your account will be Hailey College Of Commerce b) c) d) e) f) g) h) i) j) . Travellers Cheques. No delays. telephone and gas) through their account. Remittance from abroad. You have a choice between opening this account in your personal name and opening it under joint names. Foreign nationals and foreign companies can also open a foreign currency account under the Prime Currency Scheme. Rupee Loan facility will also available against this account.Cs may be deposited in these accounts. the Japanese Yen and the Euro. The restrictions imposed by the State of Pakistan for the opening of foreign currency accounts in case of passport. Returns calculated on daily. Your foreign currency account can be opened in four global currencies: The United States Dollar. Whether you are a resident or a non-resident Pakistan. You can draw any amount of foreign exchange from your foreign currency account and transfer or remit the amount freely to any part of the world without any restrictions. No queues.E. Work-permit and resident Visa have been withdrawn. Pound Sterling. Euro and Japanese Yen. US Dollars. the Pound Sterling. Foreign Currency Notes and Foreign Exchange generated by encashing F. MCB Prime Currency Scheme invites all to operate a foreign currency account. Introduced first time in Pakistan.Muslim Commercial Bank Limited Internship Report 35 3) MCB KHUSHALI BACHAT ACCOUNT: FEATURES: a) b) c) d) e) 8% rate of return per annum.B.

Loan will be totally free of mark-up. MCB Prime Currency Scheme is a world in itself. One of the objectives of the scheme is to develop secondary market for Government Securities. the depositor will profit at the same rates as that of PL Saving Account. 7) FUND MANAGEMENT SCHEME This scheme is offered to corporate and customers and is aimed at providing better rate of return up to 15% per annum. prospective buyers need professional assistance and MCB. 9) SELF SUPPORTING SCHEME: For the benefits of genuine worker/borrowers who are poor and needy and for small entrepreneur the bank as evolved a self supporting scheme: maximum amount of loan Rs. who desire to perform Hajj was introduced. for the convenience of persons. whereas under the 3 years scheme. Under the 2 years scheme. preparing bid documents and arranging finance for the purchase of the unit.offers the foreign currency account facility at more seventy of its branches all over Pakistan. k) l) The Prime Currency Scheme is exempt from al! forms of taxes including Income Tax. the minimum amount of deposits is Rs. of 2/3 years duration. with a limited income.committed to working for your convenience . MCB . 6) CAPITAL GROWTH CERTIFICATE SCHEME: For long term depositors under which the amount deposited almost doubles at the end of 5 years. a monthly deposit of Rs. offers to them specialized service for valuation of the market value of the industrial unit. with its expertise.Muslim Commercial Bank Limited Internship Report 36 restriction free. 5) HAJJ MUBARAK SCHEME A saving scheme. In case of premature encashment of the certificate. the required monthly deposit is only Rs. Hailey College Of Commerce .1800 is required.1200. Wealth Tax and Zakat deductions. For the scheme. 8) CONSULTANCY SERVICES: In the process of privatization of public sector units.25000 and minimum Rs. 10000 while there is no maximum limit.5000 per individual.

MCB Mobile Islamic Banking Services 13. Ijara and Istasana. construction and renovation. The service guarantees transfer of from one city to another. at such centers up to 8. MCB CAR CASH Car financing and leasing at competitive rates with flexible options Carcash finances both semi-commercial and non-commercial vehicles for personal and business use. Hailey College Of Commerce . MCB MOBILE Banking at your fingertips. with case. 11) NIGHT BANKING SERVICE: For the convenience of the account holder. 17. within an hour. 12) UTILITY BILLS COLLECTION With the aim of extending this service to wider range of customers. 16. 2. been introduced at busy commercial centers. MCB LOCKERS The best protection for your valuables. especially. 14. the number of MCB branches collecting Utility Bills more than 900. Murabaha. 1. Traders and other clients can now make deposit. PYARA GHAR Flexible and competitive home financing facility with options of home purchase. 15.00PM. Dial in anytime to get information regarding balance and mini statements. Lockers of different capacities are available nationwide. ISLAMIC BANKING SERVICES Islamic banking services through exclusive units/branches offering a range of liability and asset based Sharia compliant products like Musharika. service has. It facilitates speedy transfer of funds within Pakistan.Muslim Commercial Bank Limited Internship Report 37 10) FAX PRESS This product was first of its kind introduced by using modem technology of The Fax Machine.

They feel comfortable with MCB. The fifth and very important objective of Muslim Commercial Bank Limited is to create such an environment which is suitable for creating understanding and relationship between the employees. over 151 MCB ATMs in 27 cities nationwide and a network of over 16 banks on the MNET ATM switch. The forth objective of Muslim Commercial Bank Limited is to bring new and latest technology in the operations of the bank. BEST PLACE TO WORK. UNDERSTANDING & RELATIONSHIP. technology has a direct relation with your needs. MCB continuously innovates new products and services that harness technology for the customer’s benefit. Over the years. At MCB. The third objective of Muslim Commercial Bank Limited is to make it a place which is much feasible and comfortable for employees of the bank. thus going towards the way of development and prosperity. Hailey College Of Commerce . The second objective of Muslim Commercial Bank is to take care of the Human capital which is a necessary thing for the development and prosperity of any well established organization. listening to the needs of the people and educating them of simple financial products and services that create both value and convenience. Understands them. CREATING AND MANAGING VALUES. HUMAN CAPITAL. MCB has fostered strong bonds with its customers.Muslim Commercial Bank Limited Internship Report 38 Objectives of MCB The following are the objectives of Muslim Commercial Bank Limited. their needs. which is one of the back bone of the objectives of any well organized and managed organization. Over the last few years MCB has invested heavily into strengthening its technology backbone. TECHNOLOGY. it is a means for creating value and convenience for the customer. penetrating into the local market. Today it is leading the way in banking technology and setting new standards for the banking industry. MCB’s strength lies in providing a technological base at the grass roots level of the society with a challenge to educate and assimilate such systems across vast cultural and economic backgrounds. With over 768 automated branches. The MCB is always conscious in developing such place where employees of the bank feel easiness. The first objective of Muslim Commercial Bank Limited is to create and mange the values. 243 online branches.

and this is what we at MCB are continuously striving to provide. With a solid foundation of over 50 years in Pakistan and having recently completed 10 successful years of privatization. trading and agricultural sectors. funds transfer and trade related facilities or need for different types of deposit accounts. partners with them. MCB is strongly positioned to lead the banking sector in the new millennium. At MCB. it understands their needs and provides tangible results. MCB has proved to be a reliable partner indeed. Be it financing for personal or business related needs. MCB offers you a variety of products and services customized to satisfy your individual needs. Hailey College Of Commerce . Whether it is the 24 hours cash convenience of our ATM network or the easy availability of financing requirements or simple opening of account. By responding in a timely manner with a flexible approach. expectations. listens to them. a promising team and the right resources. The last but not least objective of Muslim Commercial Bank Limited is to make an environment which have an understanding of reliability in the whole structure of the bank. grows with them.Muslim Commercial Bank Limited Internship Report 39 it’s their bank. it responds to them. MCB speaks their language. With a strong financial base. UNDERSTANDING CONVENIENCE. for the purpose of boosting up its values and prosperity in such a competitive environment. Strategically located branches in small towns and cities provide warm services and advice to the small businessmen and local traders. UNDERSTANDING RELIABILITY. The next objective of Muslim Commercial Bank Limited is to make understanding a convenient thing for the whole environment of the bank. MCB understands the special needs of the business. making a home in their hearts-continuously building relationships on mutual trust and confidence. MCB knows the particular needs of its diverse customer base d continuously develop products and services that fulfill these needs. MCB has tailored its products and services to make your life easier. You can feel safe in our hands. We understand that relationships are about expectations-our products and services are based on your customers. banking is all about being there for people. MCB provides its clients with the reliable financial service and support they require to successfully achieve their business objectives. Convenience is what the customer is looking for.

As on 30-12-2002 Consumer Sector 810 Area Head South 180 Branches Area Head Centre 360 Branches Branches.Muslim Commercial Bank Limited Internship Report 40 Branch Network The following is the Branch Network of Muslim Commercial Bank Limited. Sector wise position of circle. Area Head North 370 Branches Commercial Sector 210 Area Head Karachi 40 Branches Area Head South 45 Branches Branches Area Head Central Punjab 70 Branches Area Head North 54 Branches Corporate Sector 20 South Karachi 9 Branches North Islamabad Branches Main Karachi 1 Branch Central Lahore 7 Branches 3 Branches Overseas EPZ Total Branches Branch Branches 4 1 1045 Hailey College Of Commerce .

And some important informations about my branch which I observed are as follows: MANAGEMENT OF THE BRANCH BRANCH MANAGER ACCOUNTANT GRADE ONE OFFICER CASHIER HEAD CLERCK JUNIOR CLERCK PEON SECRITY GUARD SWEEPER TRAINEE GHULAM MUJTABA MUHAMMAD SADIQUE MALIK TUFAIL WAHEED AHMED M. ASLAM IFTIKHAR AHMED ABDUL SATTAR AMIR OTHER GENERAL INFORMATION DEPOSITS: The total deposits of this about to 207.Muslim Commercial Bank Limited Internship Report 41 Information About My Branch I did my internship in Muslim Commercial Bank Limited Grain Market Branch. SHAFIQUE M. ASIF JAMEEL M.10 million. PLS ACCOUNT: Total numbers of profit and loss accounts are 2120. NUMBER OF ACCOUNTS: Accounts in this branch of MCB are as follows: CURRENT ACCOUNT: Total numbers of current accounts are 1049. KHUSHALI BACHAT ACCOUNT: These are about to 600 accounts. Hailey College Of Commerce . Renala Khurd.

22 million. Hailey College Of Commerce .45% and maximum 9%. CAPITAL: Capital of branch is treated in its Head Office. OF VOUCHERS: The vouchers which are transacted in this branch are as follows: TYPES Transfer Clearing Cash Rate of interest Maximum That gives to this year. FINANCING: Mainly. NO. REVENUES: The total revenues of this branch are near to 11.Muslim Commercial Bank Limited Internship Report 42 REMITTANCE: Total remittance of this branch is 26. DEBIT 961 591 1754 4.25 million.45% 9% CREDIT 901 810 1389 RATE OF INTEREST: The rate of interest provided by such bank is minimum 4. the short term financing schemes are being dealt here.

Muslim Commercial Bank Limited Internship Report 43 Work done by me In the Muslim Commercial Bank Ltd. But on my request. One copy of the scroll is with the bank for evidence whereas the original copy with the receipt of the bills is sent to the billing department of the respective corporation. It was almost impossible to work in all the departments within that limited time. the staff of the branch provided me the opportunity to work in the different departments for the sake of practical knowledge. collects utility bills on behalf of WAPDA. The bank charge commission on the bills. I really enjoyed working with the staff of Ghalla Mandi Branch Renala Khurd and having a wish to be employee of MCB. Sui Gas Companies. Abdul Sattar. Then MCB determine the prospective customer’s integrity. OPENING NEW ACCOUNT BASICS During the span of mine internship in MCB I learned and observed a lot of about the opening of an account. respectability. By opening an account at a bank a person becomes a ‘customer’ of a bank. I feel highly indebted to work in the Renal Khurd Branch on the request of the manager of that branch Ch. occupation and the nature of business by the introductory references given at the time of account opening. Further I am going to express the basic requirements and steps involved in the opening of an account. Negligence in this informal preliminary investigation may result in serious consequences not only for the banker concerned Hailey College Of Commerce . Basically I think that the opening of an account is the establishment of a contractual relationship between the banker and the customer. INVESTIGATION Before opening an account MCB as like the other banks in Pakistan ascertain whether or not the person who is going to open the account is a desirable customer or not. and Pakistan Telecommunication Corporation Limited by putting the stamp on the utility bills “Paid”. Date of payment. Signature of the officer receiving the utility bills. UTILITY BILLS COLLECTION Muslim Commercial Bank Ltd. After receiving utility bills a list is made on the form which is called Bills scroll form. During my internship training in the MCB as I early mentioned that I have worked in different departments & seats and learnt the followings. because I learnt a lot in that branch.

As per these directions. the Federal Ombudsman of Pakistan. In order to further strengthen and streamline this process. In Ladbroke & Co. Minimum amount to open an account is required regarding the nature of account. Basically following information is required to open an account with MCB 1. Another account holder of the bank should properly introduce the new customer. Against submission of the Bank’s prescribed application form. V Todd (1914). are requirements of the application form. the bank officer gives him an application form. has directed the banks to retain with the account opening form a Photostat copy each of the National Identity Cards of the person desiring to open an account as well as that of the introducer. and it was construed a negligence within Section 82 of the Bills of Exchange Act 1882. which is necessary to be known by the bank. 2. Full Name of Applicant Hailey College Of Commerce . 4. Each account shall be allotted a distinct number that is to be quoted in all correspondence with the bank relation to the account. when a customer wants to open an account.Muslim Commercial Bank Limited Internship Report 44 directly but also for other bankers and the general public who may be affected indirectly. the banker did not obtain introduction at the time of opening the account. as may be required and account may be opened. the concerned Branch Managers are required to obtain the original National Identity Cards along with their Photostat copies and then return the original after attesting the authenticity of the retained copy. 1. All information. Form also requires the essential documents to be attached by the customer. The Bank reserves to itself the right to refuse to open and account without assigning any reason. vide his ruling on complaint No. PROCEDURE TO OPEN AN ACCOUNT According to my practice in MCB. 5. 3. Title of Account 2. HOW TO OPEN AN ACCOUNT (IN GENERAL) Before opening an account in MCB I observed that the following points must be considered in this regard. duly introduced in the manner provided and on supplying such document. II/31/5186. A copy of identity Card is required by Bank. 6. The account holder should sign the account opening form in the presence of bank officer and the signature is duly verified.

6) Match the figure and wordily amount of cheque. 2) Signature of Drawer. Introducer’s Name. 3) Amount of cheque. a) Cash Payment (on the face of cheque). 6. Address & Signatures 9. If condition 4&5 exist then check the signatures of Drawer. 5) Whether Payee account duly is there. Address 5. Signature of the applicant PROCEDURE TO HONOUR A CHEQUE During my internship training in the Muslim Commercial Bank Limited. 2) Cheque number. Initial Amount of the Deposit 11. 4) Whether Bearer has cancelled. Two stamps are put on cheque. Nature of Business 8. i) ii) iii) For Cash payments For transfer(from one account to another account) For Clearing I) FOR CASH PAYMENTS Cheques which are presented on Bank counter must be checked in the following way: 1) Date.Muslim Commercial Bank Limited Internship Report 45 3. 4) Particulars. Special instruction regarding the account 10. On stamp which is put for token their details are as follows: Hailey College Of Commerce . I observed and found Cheques are received for the following purposes. Occupation 4. b) Stamp for Token (on the back of cheque). When all above matters are satisfied then come to the Token register and check: 1) Token number. Currency of account 7. Telephone No. 3) Signature of Payee.

cheque number. CHEQUES FOR CLEARING: a) b) There are two stamps put on each cheque. Amount. Manager Stamp. amount. After completing that performa cheque is posted along with performa. Name of favoring party. Cheques and vouchers are then Hailey College Of Commerce . Branch. Transfer Stamp (face). In clearing register future date and day is putted. sent for clearing: Crossing Stamp. CLEARING a) b) c) d) e) Following information is entered in clearing register. II) CHEQUE FOR TRANSFER: When cheques are presented to be sent for collection and drawn on bank situated within the city then there are three stamps to be put on face as well as on back of cheque. Time of giving token to client. beneficiary name are recorded. CHEQUES IN COLLECTION: When cheques received in clearing are intra city then these are controlled under CC. Name of bank on whom drawn. Clearing is sent after entering in register. Then a performa is prepared in which Bank on whom was drawn. First of all. Payment is also made when cheques of same branch account is presented for transfer to other account in same ranch along with cheque for payment. a) b) c) Crossing Stamp (face). these cheques are recorded in day book then allotted number and then serial number. Bank Manager Stamp (back).Muslim Commercial Bank Limited Internship Report 46 • • • Note: Token number. Signature of token giver. Only in MCB branches. Cheque number.

This slip is duly filled and singed by the customer. Following procedure is adopting for the issuance of cheque. DD is also prepared and beneficiary can get payment. the account of beneficiary must be there in branch. the first cheque book is given to the customer only when all the required documents are checked.Muslim Commercial Bank Limited Internship Report 47 separated and Cheques are sent for clearing. Clearing delivered is more than clearing received then Credit voucher. Clearing credit vouchers are entered on clearing sheet. person should also write his full name & address. After posting the bank officer calculate tax if National Tax number is not there. A summary is prepared and sealed after noting the number of seal in summary. credit vouchers sent for clearing are entered on the sheet's credit side. On the same day. At the beginning of the day clearing return sheet is received. The signature of the customer is verified by the bank and new cheque book is issued to the customer and serial numbers of the cheque are duly entered in the book of the bank. Usually only one cheque book is issued at a time. i. Along with the signature. Such credits are balanced by giving debits to cheques received in clearing from other branches. Vouchers are made if 1. Clearing received is more than clearing delivered then Credit voucher.Payment Order For TT. their total amount along with total number of instruments. When a customer opens an account with the bank.4% Commission and postage charges are also calculated. The cheque book also carries a requisition slip for the issuance of the new cheque book. Rs.e. Telephonic Transfer DD. Cheques are sent to NIFT after taking them on calculator.40000 @0. however big Hailey College Of Commerce . A cheque book contains ten. However. When cheque is received it is first posted in computer section in order to check the balance of account. 2. 1% More than Rs. fifty or hundred leaves. he is provided with cheque book for withdrawals from account. twenty five. First of all. These are paid in cash or otherwise by cheque. Performa is filled by purchasing party along with cheque or cash payment.100000 @0.Demand Draft PO. ISSUANCE OF CHEQUE BOOK During my period of internship in MCB i observed that when a account is opened then a cheque is issued to thecustomer for drawing his money at per rules.

50/.5000  Rs. tax @0.2. Bank debits the client’s account for excise duty of Rs. Payment is made. Hailey College Of Commerce .100000 Specimen signatures of buyer are taken and clearing slip is in four pages. one copy of deal and ID card copy. If client wants immediate payment of RTCs then he will bring RTCs with two signatures. RTCs are issued in consecutive number of face value of  Rs. RTCs can be endorsed to other party. Once receiving party will pay the RTCs along with credit vouchers in their relevant account with Bank.03% is charged id National Tax number is nor available. One is sent to Head office. as on his advice.10000  Rs. RUPEE TRAVELLER CHEQUES: RTCS When RTCs are to be issued payment is received in cash or by cheque.Muslim Commercial Bank Limited Internship Report 48 concerns who need a number of cheque books at a time. The account number for which the cheque book is issued and the number of leaves are also recorded in this register when the cheque book issued an entry is passed in the cheque book issue register. may ask the bank to stock as number of cheque books in their name and to point their name on these cheque books. one to RTC division. Payment will be credited to account of paying party.1000  Rs.per cheque and keeps the cheque book ready for the customer. one for bank record and one for client. The officer keeps and maintains the cheque book register Cheque book inventory and cheque books issued are recorded in this register.50000  Rs.

Muslim Commercial Bank Limited Internship Report 49 Financial Analysis BALANCE SHEET (ASSETS) AS ON 31ST DECEMBER 2000-01-02 Rupees (000) Item Cash and balance Balance with other bank More at call and short notice Investment Advance Fixed assets Other assets Total 2000 12571424 4757413 6064332 36480913 86312721 3482950 13862305 174715063 2001 212559900 3025689 15470519 55432235 46584120 3659646 11400906 187053515 2002 17867991 2154190 33874620 89609821 78923737 3825045 8883163 235138567 Hailey College Of Commerce .

Muslim Commercial Bank Limited Internship Report 50 MUSLIM COMMERCIAL BANK LIMITED BALANCE SHEET (LIABILTY) AS ON 31ST DECEMBER 2000-01-02 Rupees (000) Item Deposit & other account Borrowing from bank Bills payable Others Share capital Preserve Un-appropriated profit Surplus on fixed assets revelation of 2000 135990147 5856198 7803443 8438055 2202855 12277630 3185 1188122 174715063 2001 154544451 8946624 8097178 8578240 2423140 2278980 283940 1900962 187053515 2002 182705716 21987824 6261957 9045634 2665455 3026517 621985 5384934 235138567 Hailey College Of Commerce .

96 61.65 3.31) 1.65) Increase (Decrease) Amount (339109) (871499) 18404101 341775896 2339617 165399 (2517743) %age (15.95) (28.8 Hailey College Of Commerce .51 22.58 (113.Muslim Commercial Bank Limited Internship Report 51 MUSLIM COMMERCIAL BANK LIMITED BALANCE SHEET (ASSETS) HORIZONTAL ANALYSIS AS ON 31ST DECEMBER 2000-01-02 Rupees (000) Item Increase (Decrease Amount Cash Balance with other bank Money at call and short notice Investment Advance Operating fixed assets Other assets 8688476 (1731724) 4618425 12321288 (9773140) 55290 (1803004) %age 69.80) 118.53 (13.55 28.05 4.11 (36%) 42.

40 Increase (Decrease) 2001-2002 Amount 28161265 13041200 (1835221) 467394 242315 747537 338045 3483972 %age 1822 145.27 Hailey College Of Commerce .05 183.5 8814.9 71.99 0.76 1.64 47.68 9.Muslim Commercial Bank Limited Internship Report 52 MUSLIM COMMERCIAL BANK LIMITED BALANCE SHEET (LIABILITIES) HORIZONTAL ANALYSIS AS ON 31ST DECEMBER 2000-01-02 Rupees (000) Item Increase (Decrease) 2000-2001 Amount Deposits and other account Borrowings Bills payable Other liabilities Share capital Reserve fund & other reserves Un-appropriated profit Surplus on revaluation of fixed assets 18554304 (7944051) 293735 142064 220285 1350 2800775 791889 %age 13.44 10 32.66 5.03 3.81 119.76 22.

62 3.78 100% Hailey College Of Commerce .57 100% 2001 1137% 1.22 24.41 38.07 7.56 1.Muslim Commercial Bank Limited Internship Report 53 MUSLIM COMMERCIAL BANK LIMITED BALANCE SHEET (ASSETS) VERTICAL ANALYSIS AS ON 31ST DECEMBER 2000-01-02 Items Cash Balance with other bank Money at call and short notice Investment Advance Operating fixed assets Other assets Total 2000 7.10 100% Rupees (000) 2002 7.95 6.11 33.71 49.73 6.75 29.92 14.21% 2.67 41 1.60% 0.50 2.61 7.

26 1.30 1.30 .83 1.30 .70 3.78 4.47 4.32 4.27 2.0018 .Muslim Commercial Bank Limited Internship Report 54 MUSLIM COMMERCIAL BANK LIMITED BALANCE SHEET (LIABILITIES) VERTICAL ANALYSIS AS ON 31ST DECEMBER 2000-01-02 Items Deposits and other account Borrowings Bills payable Other liabilities Share capital Reserve fund & other reserves Un-appropriated profit Surplus on revaluation of fixed assets Total 2000 77.85% 9.59 1.67 4.22 .49 2.62% 4.63 100% 2001 82.15 1.32 100% Hailey College Of Commerce .90 1.02 100% Rupees (000) 2002 78.84% 9.15 1.

Muslim Commercial Bank Limited Internship Report 55 MUSLIM COMMERCIAL BANK LIMITED PROFIT AND LOSS ACCOUNTS (INCOME) FOR THE PERIOD ENDED DECEMBER 2000-01-02 Items Interest / return earned Fees. commission Income from dealing foreign currency Dividend income Other income Total 2000 1424242 909045 609838 158909 1085614 16887648 2001 17033225 868637 687854 243994 400140 19233850 Rupees (000) 2002 15385869 907071 503593 297748 881746 17976027 Hailey College Of Commerce .

Muslim Commercial Bank Limited Internship Report 56 MUSLIM COMMERCIAL BANK LIMITED PROFIT AND LOSS ACCOUNTS (EXPENSES) FOR THE PERIOD ENDED DECEMBER 2000-01-02 Items Cost / return on deposit Administrative expense Provision for diminution the value of investment Provision against nonperforming advance Other provisions Bad debts Other charges Profit before tax Taxation Total 2000 7238680 7128658 46048 601799 30000 483943 36725 1321795 587066 17474714 2001 7544897 7331623 62064 1704944 40000 448999 147 2101176 993000 20226850 Rupees (000) 2002 6074682 8077395 721105 1313 3101020 1362426 19337941 Hailey College Of Commerce .

etc.60 (4.67) 44.78) 22 120.35 Income from dealing foreign Dividend income Other income Hailey College Of Commerce .79 53.54 (63. commission 2908983 (40408) 78016 85085 (685204) %age 20.42 (26.11) Increase (Decrease) 2001-2002 Amount (1647356) 38434 (184261) 53754 481606 %age (9.Muslim Commercial Bank Limited Internship Report 57 MUSLIM COMMERCIAL BANK LIMITED PROFIT AND LOSS ACCOUNTS (INCOME) HORIZONTAL ANALYSIS FOR THE PERIOD ENDED DECEMBER 2000-01-02 Rupees (000) Item Increase (Decrease) 2000-2001 Amount Interest / return earned Fees.44) 12.

30 Increase (Decrease) 2001-2002 Amount (1470215) 745772 (62064) (1704308) %age 19.14 (4000) 272106 999844 369426 (100) 606 47.17 (100) (100) 1000 (34944) 779381 405934 33 7.84 34.22 58.78 183.96 69.58 37.Muslim Commercial Bank Limited Internship Report 58 MUSLIM COMMERCIAL BANK LIMITED PROFIT AND LOSS ACCOUNTS (EXPENSES) HORIZONTAL ANALYSIS FOR THE PERIOD ENDED DECEMBER 2000-01-02 Rupees (000) Item Increase (Decrease) 2000-2001 Amount Cost/return on deposit Administrative expense Provision for diminution Provision against non-performing advances Other provisions Bad debts Profit before tax Tax 306217 202965 160126 1103145 %age 4.48 10.23 2.20 Hailey College Of Commerce .

56% 4. Income for dealing currency A/C Dividend income Other income Total foreign 2000 83. commission etc.61 0.6% 5.04 5.38 3.60% 5.04 1.52 3.66 4.94 6.08 100% 2002 85.58 1.91 100% Hailey College Of Commerce .Muslim Commercial Bank Limited Internship Report 59 MUSLIM COMMERCIAL BANK LIMITED PROFIT AND LOSS ACCOUNTS (INCOME) VERTICAL ANALYSIS AS AT DECEMBER 2000-01-02 Items Interest earned Fees.43 100% 2001 88.27 2.

306 8.42 0.76 0.006 16.35 7.30 36.Muslim Commercial Bank Limited Internship Report 60 MUSLIM COMMERCIAL BANK LIMITED PROFIT AND LOSS ACCOUNTS (EXPENSES) VERTICAL ANALYSIS AS AT DECEMBER 2000-01-02 2000 Items Cost / return on deposit Administrative expense Provision for diminution the value of investment Provision against nonperforming advance Other provisions Bad debts Other charges Profit before tax Taxation Total %age 41.39 4.21 4.72 .05 100% Hailey College Of Commerce .25 0.35 100% 2001 %age 37.44 0.76 00 00 00 3.41 41.20 2.26 3.25 00 10.56 3.17 2.90 100% 2002 %age 31.42 41 0.

(Rs. of branches No.Muslim Commercial Bank Limited Internship Report 61 PERFORMANCE 1993-2002 The following figures will give an idea of the progress made after privatization. of employees No. In million) 1993 Authorized share capital Paid-up share capital Reserve funds & other reserves Total assets (excl. of accounts 2000 663 12010 75427 62783 30753 27864 32734 16931 3023 346 1290 13768 3411427 2002 3500 2665 3027 235139 182706 78924 89610 48842 28284 32962 3103 1045 10926 4463530 Hailey College Of Commerce . contra) Deposits Advances Investments Imports Exports Home remittance Pre-tax profit No.

Then bank can purchase more and more fixed assets. In this case advance to customers very low in 2001 but increase in 2002. and it is bank is doing. MCB is in a position that it is earning more and more profit with passage of time. it means that customers of bank are very punctual in making payments. so it is alarming sign for the bank. There is decreasing trend in balance with other banks which is a negative sign. It means that MCB is running very well. Other assets have a decreasing trend which is not a positive sign. As we know that main source of profit of a bank is the difference between the percentages of interest. Therefore bank should take necessary steps according to the position. It is common term of finance” more investment more return.Muslim Commercial Bank Limited Internship Report 62 BALANCE SHEET (ASSETS) HORIZONTAL ANALYSIS COMMENTS ■ Cash is increased in 2001 but decrease in 2002. Therefore it is good sign for the bank. Increase in money at call and short notice. In the field of investment there is increasing trend with the passage of time. More assets mean that bank has more capacity to pay off its liabilities. it shows that the liquidity position of the bank is going to be weak. There is increasing trend in field of fixed assets. It is due to purchase of new assets. Banks pay less rate of interest than receiving the interest from the customers. Decrease in assets decrease the worth of organization ■ ■ ■ ■ ■ ■ Hailey College Of Commerce . Assets of the banks are increasing day by day by purchasing the assets.

which is good sign. Bills payable increase in 2001 but decrease in 2002 positive sign. Other liability has an increasing trend not good because increase in liability decreases the liquidity position of the bank. a bank can lend money (per party exposure) equal to the 30% of its assigned capital plus reserves. ■ ■ ■ ■ Hailey College Of Commerce . Although it is seeing that bank’s borrowing is increasing with the passage of time which is not a good sign but there is a positive thing in this behalf. I think the Muslim Commercial Bank doing the same thing for increasing its profits. usually banks borrow money at that time when they would have to give it for earning more profit. The Muslim Commercial Bank Limited is increasing its reserves and Un-appropriated profit in order to increase its lending power. Share capital increase that shows the creditability of bank.Muslim Commercial Bank Limited Internship Report 63 LIABILITIES ■ ■ There is increasing trend in deposits and other accounts which shows the credibility of the bank. Borrowing is decreasing in 2001 but there is increasing trend in the year 2002. because according to the prudential regulations of State Bank of Pakistan.

This is good for the bank. Bad debts increased with huge amount not positive sign. ■ ■ ■ EXPENSE ■ ■ Return on deposit decreases which shows good sign and it is due to decrease in return rate. As we all know that banks provide many services for their customers and also act as a agent of the customer. if profit increased.Muslim Commercial Bank Limited Internship Report 64 MUSLIM COMMERCIAL BANK LIMITED PROFIT AND LOSS A/C HORIZONTAL ANALYSIS INCOME ■ Interest income decrease in 2002 will great proposition which is not favorable. Adm and diminution and provision against non performing loan decreasing turned that is favorable. It means that interest received by the bank is decreasing with the passage of time. In foreign currency dealing and dividend there is huge increasing trend which shows the investment of bank in healthy organization. Other income decrease in 2001 but this increase mean positive situation. Profit before taxation has increased with greater proportion. Tax increases which are not bad because it is interrelated with profit. In case bank is taking more fees as compared to previous years. it is a main source of bank to receive fee and commission from their customers. It is not good for a banking company. The banks receive fee and commission after their services. ■ ■ ■ Hailey College Of Commerce . tax also increase.

Banks receive fee. Divided income increased but it is very small. Therefore fee and commission income are increasing which is good and favorable signs. for these services. Bad debt and other charges increased but the situation is not alarming. Other income increase with great proportion good sign. Profit increased. Position against non performing loan us zero which show bank have good customer.Muslim Commercial Bank Limited Internship Report 65 VERTICAL ANALYSIS INCOME ■ ■ Interest earned decrease which is negative sign. commission etc. As we know that banks provide many facilities other than money lending and borrowing. ■ ■ ■ ■ ■ ■ Hailey College Of Commerce . Tax is increased but it is interrelated with profit. ■ ■ EXPENSES ■ Return on deposit decrease good sign because it increases the profit. Administration expenses are increased but no alarming rate. All provision is zero which sows the good credit policy.

Muslim Commercial Bank Limited Internship Report 66 Overall Review The Bank has now completed more than 12 years. these multifarious products mostly in the shape of saving schemes have been introduced by MCB with brand names. since its privatization and it is. particularly in introducing a number of innovative banking products and services. in no small measure. for this good performance and progress. This has set the trend and many other banks. MCB has performed well and has sustained its growth in all the major sectors. have since followed in MCB’s footsteps. concerted efforts and excellent team spirit. Hailey College Of Commerce . on similar lines. must surely go to the Bank’s management. its Directors and. For the first time in the history of Pakistan. indeed. The well deserved credit. gratifying to note that during this period. by launching new products and services. MCB has been a pioneer among the banks in Pakistan. to the entire MCB team for its dedication. both local and foreign.

T × 100 Share holder equtiy 2001 1108176 100 × 6887022 Rs. coordination and control. planning. RETURN ON EQUITY 2000 N. EARNING PER SHARE Hailey College Of Commerce . The ratios highlight the factors associated with successful and unsuccessful firms. (000) 2002 0.Muslim Commercial Bank Limited Internship Report 67 Ratios Analysis Ratio analysis is an important and age-old technique of financial analysis.59% 0. Ratios are important and helpful in the reference that:  These simplify the comprehension of financial statement and tell the whole story of changes in the financial conditions of the business.  These help in investment decision in case of investor and lending decision in case of Bankers etc. (000) 2002 1738594 100 × 11698891 734729×100 5592743 13. RETURN ON ASSETS 734729×100 5592743 N . also reveal strong and weak firms.  These provide data for inter-firm comparison. the ratios are only indicators. RATIO ANALYSIS 1.73% 3.42% 0.P.86% 2. they cannot be taken as final regarding good or bad financial position of the business other things have also to be seen.A .14% 16.A.09% 14.P .T ×1 0 0 T ta a s ts o l se 2000 1108176 100 × 187053515 2001 1738594 100 × 235138567 Rs.  These help in planning and forecasting these can assist management in its basic functions of forecasting. However.

P. INTEREST INCOME / TOTAL INCOME RATIO 2000 2001 Rs.56% 6.09times Rs.57 173859400 266545483 Rs.T No. of outstanding shares 73472900 220285500 2000 3.23 times 27. (000) 2002 31% 8.A.95% Rs.30% 9.33 1108176 00 242314075 2001 4. RETURN ON DEPOSIT 734729×100 135990147 N.33% Rs. CASH / DEPOSIT RATIO 3484511 100 × 135990147 Cash Deposit 2000 39845132 100 × 154544451 2001 4261259 100 × 182705716 2. 2.25% 2.A. RETURN ON DEPOSIT 135990147 5592743 2000 154544451 6887022 2001 182705716 11698891 24 times 22 times 15 times Rs. (000) 2002 TOTAL ASSETS / NETWORK 174715063 5592743 Total assets Network ratio 2000 187055394 6887022 2001 25357 3186 1689 1981 31.Muslim Commercial Bank Limited Internship Report 68 N.54% 0. (000) 2002 7.52 4.P. (000) 2002 Hailey College Of Commerce .T Total Deposit 2000 1108176 100 × 6887022 2001 1738594 100 × 182705716 Rs. (000) 2002 0. (000) 2002 6. INTEREST EXPENSES / TOTAL EXPENSES RATIO 723680×100 17474714 Intrest Expenses Total Expenses 2000 41% 7544897 100 × 20226850 2001 6074682 100 × 19337941 37. (000) 2002 5.16 times 20.71% 0.

Muslim Commercial Bank Limited IntrestIncome Total Income 1424242 100 × 16887648 17033225 100 × 19233850 Internship Report 15385896100 × 17976027 69 83% 88% 85% Rs. (000) 2002 11. 1663726 Hailey College Of Commerce .P.76% 9. AVERAGE PROFIT PER BRANCH 74200 3790 11 20 Profit Net No. NET PROFIT MARGIN 734729×100 16887648 N.67% Rs.35% 5. 1044463 Rs.T × 100 Total Income 2000 1108176 100 × 19233850 2001 1738594 100 × 17976027 4.A. 607214 Rs. of Branches 2000 74870 5490 16 01 2001 1738594000 1045 Rs. (000) 2002 10.

But it again fall down in the year 2002. Earning per share is a good measure of profitability when compared with similar other business.40% 0. It means the assets of the business are fully utilized in more and efficient way and also shows the favorable trend of the business.00% 0. And I think that the Bank improved its return on equity ratio in the year 2001. And is improving in the every succeeding year.80% Percentage 2. This ratio shows with the increase of deposit the profit margin also increases. Earning per Share 7 3.20% 0.00% 6. Return on Assets 0.Muslim Commercial Bank Limited Internship Report Return on Equity 18.00% Percentage 12. which will surely increase share price.00% 8.60% 0. but it improved in the year 2001.00% 2000 2001 Ye ar s 2002 70 1. Increase in return on deposit is Hailey College Of Commerce . RETURN ON EQUITY This ratio is more meaningful for share holders who are interested to know the profit earned by the company because the dividend paid from available profit higher ratio means factor of production fully utilized and good position.00% 0.80% Percentage 0.00% 2. Here increasing EPS.20% 0.50% 0.00% 10. 4.00% 2000 2001 Ye ars 2002 assets.00% 4. RETURN ON DEPOSIT Return on deposit is increasing trend which is favorable.10% 0.70% 0.00% 14. which is an alarming sign for the Bank. This ratio of the bank was too low in the year 2000. and it was much good in the year 2002.40% 0.00% 16.00% 2000 2001 Years 2002 This ratio has an increasing trend.60% 0.30% 0. This ratio has the same trend as the return on the Return on Deposits 1. EARNING PER SHARE Rupees 6 5 4 3 2 1 0 2000 2001 Years 2002 This ratio got really improved as it has gone with the increase in profit. RETURN ON ASSETS 0. Here ratio is increased in 2001 but again decrease in 2002.

Bank meets all its financial problems. This ratio is very low means that Bank has no idle fund but even low ratio bank has not liquidity problems. Percentage Total Assets/Net Worth 35 30 25 20 15 10 5 0 2000 2001 Years 2002 7.50% 2. TOTAL DEPOSIT / NET WORTH This ratio has also decreasing trend but decreasing is due to increase in Interest Expenses/Total Expenses net worth. 40% Percentage 8.60% 2. Solvency means the ability to meet its obligation: with the passage of time it is increasing which is good sign. TOTAL ASSETS / NET WORTH This ratio shows the decreasing trend. Increase in net worth shows that bank is on sound footing. SOLVENCY RATIO 30% 20% 10% 0% 2000 2001 Years 2002 9. Percentage Cash/Deposit Ratio 2. And it will provide benefit Ratio to the Bank in the long run and in 50% the coming years. INTEREST EXPENSE / Percentage This ratio shows that the assets of the bank have increased more as compared to its liability which is good effect on the solvency of the bank. This ratio has the same trend as the above mentioned ratio of return on equity has which is a good sign for the Bank. But it is not had position because net worth of the bank increasing day by day.30% 2. Inte re st Incom e /Tota l Incom e Ra tio 89% 88% 87% 86% 85% 84% 83% 82% 81% 80% 2000 2001 Ye ar s 2002 Hailey College Of Commerce .20% 2.00% 2000 2001 Years 2002 6.40% 2. And I think that this will provide benefit to the bank in the long run.10% 2.Muslim Commercial Bank Limited Internship Report 71 positive sign. CASH / DEPOSIT RATIO Cash deposits ratio means liquidity position of the bank. This shows the strategic policy of the bank and efficiency of the bank. 5.

But it does not 0. Recommendation Hailey College Of Commerce Percentage . Net Profit Margin Although the rate of markup come 12. The reason is the decrease in the return on deposit.00% 4.00% bank is decreasing. Ultimately result is increase in the net profit of the bank. This ratio 8.00% compared to the total income of the 2.00% earnings of the bank.00% shows that interest income as 6. 11. or it might be due to decrease in the payable interest rate to the lenders. This ratio of the bank shows that it profit of the branches is increasing in the coming years. 10.Muslim Commercial Bank Limited Internship Report 72 TOTAL EXPENSE RATIO A decrease figure shows that deposits are getting low. 12. Although bank is earning huge income but its expenses increased quite a bit simultaneously. if it was one time in the year 2000. NET PROFIT MARGIN Average Profit per Branch 2000000 1500000 Rupees 1000000 500000 0 2000 2001 Ye ars 2002 This is being improved yearly. And it means that bank has an improving trend from the point of view of the income and will be improving in the coming years.00% down but it has no bad effect on the 10. then it was two time in the year 2001 and three times in the year 2002. Because Years it might be due to increase in the other Income of the bank which is too a Good affect for the bank. This decrease in the interest expenses is due to the decrease in the borrowings of the bank. It is healthy good and encouraging for bank.00% 2000 2001 2002 mean that it is a bad effect. When decrease return then people prefer to invest in business for more earning. AVERAGE PROFIT PER BRANCH The average profit per branch is increasing rapidly every year. INTEREST INCOME / TOTAL INCOME RATIO A little decrease figure rather than stagnant figure showing same amount of income generation.

• A big portion of the home remittance is sent by Pakistan working capital through Muslim Commercial Bank Limited. • Most of the bank employees. The exodus of bank officer in the past has worsened the situation. The rate of profit should increase 1% or 2% than other banks and it would be profitable step for bank. • There is a criticism on the banking management that the salaries of the employees are decreasing in every succeeding year. The people motivated to save money by offering the deposit through various investment schemes. And I think this will shake the confidence and working habit of the employees. MUSLIM COMMERCIAL BANK is performing well. As we know a big portion of this amount is wasted purchasing of luxuries. The controlling body is responsible for the productive performance of the Bank. • There is another recommendation about the bank that there is no proper timing of the bank and there is made an unnecessary delay in the banking transactions. induction and training of outgoing officers constitutes to beat till another officer should ready prove this work. Its deposits are growing day by day and so its profitability. which might not be a good sign for the bank from future prosperity point of view. 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. • Staff turnover particularly of trained staff result in financial and other losses. The amount spent by the bank on employment. In my opinion all the Hailey College Of Commerce . Following are my observation and suggestion to improve the efficiency for the development of the economy.Muslim Commercial Bank Limited Internship Report 73 From the Quantum of the profit and its financial data it can be easily judged that after privatization.

• Every year some of the employees should be sent for training to other countries and employees from other branches should be brought here. Alt the employees should have these courses according to their requirement. • Working environment. qualified and energetic staff. Hailey College Of Commerce . • Foreign branches should be opened in order to capture the international market and to earn international repute for the bank. Some more reading material should be provided. furniture and staff dressing should be according to the modern banking style. The purpose should be to educate the employees with the advance studies in their field. • Bank should give some more incentive to its employees in order to remove the conflict between lower and higher officers and should try to improve the working condition of the bank. • Old and lazy staff should be replaced by young. equipment.Muslim Commercial Bank Limited Internship Report 74 employees should have regular job experience all out-look towards banking. The employee should be provided the opportunities to attend and participate in seminars and lectures on banking. The promotion policy should be adjusted. • Refresher Courses for the staff are most important in any international organization. • Recruitments should be strictly on merit basis and induction should be after proper and extensive training. Foreign experts can also be called for this purpose. • 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.

The profits of MCB Hailey College Of Commerce . Bank should adopt the global organizational banking structure to meet the international standards of banking sector. conclusion It is evident from this report and the financial statements of MCB that it is making progress by leaps and bounds.Muslim Commercial Bank Limited Internship Report 75 • • Proper attention should be paid to upgrade customer services.

Hailey College Of Commerce . development and integrity. which assures the shareholders of wealth maximization. And with the above mentioned sentences I think there is too fault of the customers and in order to make the proper working of the bank the customers should also cooperate with the bank which will be really a good. Side by side of it I think that if bank would be able to cover and control on the above mentioned recommendations then it would be in such a situation that will really lead it towards the road of prosperity. we conclude that MCB has a very prosperous present and future. ambitious and diligent condition for the bank.Muslim Commercial Bank Limited Internship Report 76 have grown considerably during the last few years and this trend is expected to continue into the future. Therefore. And then bank will be really in such a situation and position to compete its competitors in the country as well as on international level.

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