REVOLUTION 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, "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."

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) Pre-Nationalization Era b) Nationalization Era c) 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 banks. 5) Establishment of specialized banks, such as ADBP (1952); a) HBFC (Nov, 1952); b) P1CIC (Oct, 1957) c) IDBP (Aug. 1961); d) NDFC (Jan, 1973). These were the steps, which built a strong banking sector in Pakistan. 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.2300 crore (23,000 million). A bird eye view of 5 top banks was as given below: BANK POSITION IN 1973 BANK NO. OF BRANCHES DEPOSITS HBL 667 6,160 NBP 579 5,660 UBL 497 5,670 MCB 506 1,640 ABL 145 570 B) NATIONALIZATION PERIOD On January 01, 1974 all Pakistani banks were nationalized through Nationalization Act 1974. Under this law all Pakistani banks became a public property. All small banks were merged in bigger banks to create 5 major Pakistani banks Pakistani banks. These banks were to control by Pakistan Banking Council. There are still controversies about this act of government as whether it contributed in success of failure of banks. However the major changes after nationalization were as follows: ¶ Working of banks was extended to under developed areas. ¶ Market expansion for credit and deposits. ¶ Decrease in service level of bank officers.

¶ Decrease in profitability as well. 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. BANK POSITION IN 1992 Bank No. of Branches Deposits (Rs. In Millions) HBL 1926 153,431 NBP 1448 128,679 UBL 1684 87,482 MCB 1288 50,013 ABL 750 33,757 TOTAL 7096 453,362 C) POST NATIONALIZATION ERA In 1990 the government decided to denationalize all the nationalized institutes. Some was also suggested in banking sector. For this purpose, amendments were made to Nationalization Act 1974 and two nationalized banks were privatized. Along with this a permission to open banks in private sector was also granted. The rules regarding establishment of new banks and for incoming foreign banks were also Relaxed. The-three privatized banks are; a) MCB taken up by a private group in April, 1991 b) ABL taken up by its own employees in September, 1991. c) UBL taken up by UAE party in 2002. 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:

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. Before separation of Indo Pak. 14 Investment Banks and Modarbah Companies. 1991. HISTORY This bank was incorporated under companies’ act 1913 on 9th July.640 million. Although. After some time the registered office of the company was shifted to Karachi on August 23rd. Initially only 26% of shares were sold to private sector at Rs. 1947 (just before partition) at Calcutta. the need for more Muslim banks was felt. now recently the Head office of MCB has been transferred to Islamabad in July. 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. Adamjee was appointed its first chairman. 15 million. 1974. 56 per share. 1948 with a delay of almost 1 year. This institute was nationalized with other on January 1st. But due to changing scenario of the region. This was the third Muslim bank in the subcontinent. G. At that time it had 506 branches and deposits amounting to Rs. On April 8th. 1. 1956 through a special resolution. the certificate of incorporation was issued on 17th August. It was incorporated with an authorized capital of Rs. the growth in every department of the bank has been observed. Following are some key developments: 1) Launching of different deposit schemes to increase saving level.M. MUSLIM COMMERCIAL BANK LTD. DEVELOPMENTS After privatization.029 million. the certificate was issued at Chitagong. 35. the management control was handed over to National Group (the highest bidders). 1999 and now Head office is termed as Principle Office.SCHEDULE BANKS Category No. . This was the idea which paved the way for setting up Muslim Commercial Bank Ltd known as MCB. The first Head office of the company was established at Dacca and Mr. (HISTORICAL BACKGROUND) Now let us discuss the historical background of Muslim Commercial Bank Limited. And Muslims having strong financial capacity were thinking to invest in this sector as well. When privatization policy was announced in 1990. MCB was the first to be privatized upon recommendations of World Bank and IMF.287 and deposits amounting to as high as Rs. of Banks Nationalized Commercial Banks 3 Private / Privatized Commerce Banks 18 Public Sector Specialized Banks 4 Foreign Banks 19 Total Schedule Banks 44 In addition to above mentioned scheduled banks there are 7 Development Financial Institutes.

B continuously innovate new product.2) Increased participation on foreign trade. 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.M. 5) Extended use of information technology which is evident from the fact that there are 768 fully automated branches. 4) Introduction of Rupee Traveler Cheques & Photo Credit Card for the first time in Pakistan. Operational Management of the bank is being handled by a team of 10 professionals. Muneer Vice Chairman Mohammad Aftab Manzoor President & Chief Executive Tariq Rafi Director Sheikh Mukhtar Ahmed Director Mohammad Arshad Director Shahzad Saleem Director Raza Mansha Director Sarmad Amin Director Mian Umer Mansha Director AUDIT COMMITTEE Mian Mohammad Mansha Chairman Shaikh Mukhtar Ahmed Member Shahzad Saleem Member CHIEF FINANCIAL OFFICER Ali Amin COMPANY SECRETARY Tameez-ul-haque 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. . 151 ATMS in 27 cities nation wide and a M. MANAGEMENT OF THE ORGANIZATION MANAGEMENT OF THE BANK Mian Mohammad Mansha Chairman S. 243 online branches (integrated networking). 3) Betterment of branches and staff service level.C.

B) COMMERCIAL BANKING. Recently the organizational structure was re-designed as follows: Province wise branches Corporate Consumer Commercial 20 branches 637 branches 383 branches NUMBER OF BRANCHES IN DIFFERENT LOCALITIES Punjab 632 Sindh 232 NWFP 123 Blochistan 34 Azad Kashmir 19 Domestic 1040 Overseas 4 EPZ 1 Total 1045 Sri Lanka 3 Bahrain 1 . 20 million (excluding staff loans) Usually branches in large markets and commercial areas come under this category. Commercial Banking div. it has been categorized into three segments with different people handling each category.This team is also headed by Mr. Banking operations div. Usually includes multinational & public sector companies. C) CONSUMER BANKING These are the branches which have exposure up to Rs. These categories are: a) Corporate Banking b) Commercial Banking c) Consumer Banking A) CORPORATE BANKING: These are branches which have an exposure of over Rs. For effective handling of branches. Financial & Inter branch div. financial control & Audit div. Corporate Banking div. 20 million and these include all the branches which are neither corporate nor commercial branches. Credit management div. Muhammad Mansha. Treasury management & FX Group and lastly Special Assets Management (SAM) Group. HR & Legal div. 100 million. 100 million but having a credit portfolio of more than Rs. The different operational departments are Consumer Banking & IT div. The branches which has a credit exposure of less than Rs.

3) FIELDS OF ACTIVITIES OF MCB The purpose of banks is to provide some services to the general public. 2. 1) Open Different accounts for different peoples 2) Accepting various types of deposits 3) Accepting various types of deposits 4) Granting loans & advances 5) Undertaking of agency services and also general utility functions. GRADE 1.Furthermore. few of those are as .…………………… Zonal Office Branch Manager ………. AVP.... The main functions and services which Muslim Commercial Bank Limited provides to different peoples are as follows. The Muslim Commercial Bank (MCB) is a commercial bank. in modern time commercial banks play a very important role and their functions are manifold. And for this purpose different banks provide different services to the people in different forms.. the bank has some proposals under consideration to open more brances in some European countries and as well as in japan & china HIERARCHY OF MANAGEMENT MEDIOCRE LEVEL MANAGEMENT The organization chart within a department and in different offices is as follows: Divisional Heads ……….…………………… Head Office Regional Head (EVP) ……….…………………… Regional Office Zonal Head (VP) ……….…………………… Branch (VP.

Receiving Cash Book 2. Opening Balance + Receipts . For proper functioning of branches and the over all bank has been divided in different departments. g) Purchasing shares for the customers. therefore. Mostly. 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. The token clerk and the Cashier make entries in the paying book and payment is made to payee. it is entered in the Scroll Book and Receiving Cashier Book. The consolidated figure of receipt and payment of cash is entered in the cash balance book and drawn closing balance of cash. h) Undertaking foreign exchange business. At the close of the day. f) Accepting bills of exchange on behalf of customers. Cash Balance Book When cash is received in counter. i) Furnishing trade information and tendering advice to customers. extra care is taken in this department and nobody is allowed to enter or leave the area freely. All the books maintained in this .under: a) Collecting cheques and bill of exchange for the customers. The general division in a branch is as follows: 1) Cash department 2) Deposit department 3) Advances & credit department 4) Foreign exchange department Technology department (new addition in order to cop with the growing needs of day to day technology requirements) CASH DEPARTMENT The following books are maintained in the Cash Department: 1. Token Book 4. these are balanced with each other. dividend. c) Transfer of money from place to place. ‘Providing safe custody and facilities to keep jewellery. b) Collecting interest due.Payments = closing Balance. Scroll Book 5. This is very important department because cash is the most liquid asset and mostly frauds are made in this department. At the close of day. it is entered in the token book and token is issued to the customer. trustee or attorney for the customers. Paying Cash Book 3. documents or securities. d) Acting an executor. pensions and other sum due to customers. the Token Book and Paying Cashier Book are balanced. e) Issuing of travelers cheques and letters of credit to give credit facilities to travel. When the cheque or any negotiable instrument is presented at counter for payment. cash area is grilled and its door is under supervision of the head of that department.

1000/-. 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. However. 1000/-. High Cost Medium Cost. bank has progressed in both aspects. These deposits are liability of the bank so from point of view of bank we can refer to them as liabilities.department are checked by an officer. Low Cost No Cost. one is the duration in which there funds are expected to be with the bank and second is the cost of getting these funds. a deposit can be classified as any one of following four. deductions. deposits or withdraws money several times in a day if he likes. 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. basis for calculation of profit. Usually this type of account is opened by the businessmen. In the similar fashion. The increase in deposits is also a cause of increase on total number of accounts. No profit is paid by the bank and no service charges are deducted by the bank on current deposits account. 1) Time deposits / liabilities 2) Demand deposits / liabilities And on the basis of the cost to acquire these funds. Zakat & other withholding taxes are deducted as per rules of . DEPOSIT DEPARTMENT Bank deals in money and they are merely mobilizing funds within the economy. Banks has different kinds of deposit schemes in order to induce deposits. There is also no restriction of amount to be deposited or withdrawn. 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. So divide deposits in two classes according to duration of deposits i. TYPES OF DEPOSITS Deposits can be segregated on two bases. Therefore we can rightly state that deposits are the blood of the bank which causes the body of an institution to get to work. This type of account is opened with a minimum deposit of Rs. If a big amount is required a seven days notice is required before the withdrawal. They borrow from one person and lend to another. mode of transaction. there is requirement of minimum balance maintenance of Rs. thus. the difference between the rate of borrowing lending forms their spread or gross profit. eligibility for different groups. 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. These types of deposits are also exempt from compulsory deduction of Zakat.e. PLS SAVING BANK A/C (SA): This type of account is for those persons who want to make small savings'. additional benefits. The profit is paid on these accounts on the minimum balance during a month for the whole of that month. He may.

now bank prefers to accept deposits in local currency rather in foreign exchange. However. So we can say that in this type of account there is a concept of accumulated profits on profit. The distinctive feature of this product is that profit is calculated on monthly basis and charged to account on end of each half /ear. he receives his funds along with profit for the tenor. up to 4 times in a calendar month. Kushali Bachat & PLS 365 saving accounts can be opened in foreign currency also. This increase in cost has left foreign currency account of no use. 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. HAJJ MUBARIK SCHEME: This is also very closely related with Khanum Bachat scheme. NOTE: PLS Saving. Before nuclear tests of 1998 these accounts were opened in four major currencies but now these are only opened in USD ($). Zakat and withholding taxes are deducted as per rules only at the time of maturity while making payment to the customer. PLS 365 SAVING A/C: This is a special type of saving account in which customer maintains a minimum balance of Rs. 300. This ends in getting a heavy return for the depositor at the end of tenor for his small savings.are made by the account holder in this account for a minimum of 10 years. During this time he .the government. 2500/-.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. KUSHALI BACHAT A/C (KBA): This is an advance form of PLS saving a/c. Then profit is also calculated on that amount of profit which is credited to the customer's account. 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. All other rules of saving account are applicable. This was designed to help the persons who are willing to offer Hajj but are unable to save required funds. 1000/. in this type of deposit an account is deposited and monthly payments of Rs. in this type of account. The minimum balance requirement for this type is Rs. 2 or 3 years agreement is entered with a customer.e. KHANUM BACHAT SCHEME: This is a type of term deposit. therefore. 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. After the expiry of term.000. 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. In this deposit schemes. There is also restriction on the number of withdrawals as well. i. This product was actually introduced to promote saving habits in the people.

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. the bank has guaranteed minimum rate of 1% per month but usually this rate is more than 1% per month. profit payment and accounting of all types of deposit schemes. There are two types of SNDs. Different profit rates are applied to different type of TDRs. The following are given to the customers: Pay-in-slip is the proof of deposit.keeps on depositing monthly deposits and his account is charged with the accumulated profits calculated on 6 monthly basis. The Deposit Department handles the account opening. who wants to open any kind of account. Bank usually requires that new depositor must be introduced by some one. Separate account opening forms are used for different types of accounts. If the manager is satisfied. to be deposited in the . the person gets a monthly profit on his deposits. FUNCTIONS This was a brief review of different types of deposit schemes. 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. they are 7 days and 30 days notice deposits. 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. makes the first deposit. These receipts are encashable after expiry of the period for which they were issued. PROCEDURE FOR OPENING: Procedure for opening of account is as follows: A person.on the form and specimen signature card. 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. Under this scheme. However. and issues the cheque book. An introducer can be any person known to the bank but preferably it should be a customer of the bank. free of cost. These are in the form of receipts and profit on these receipts is paid biannually. the manager can open the account by his own introduction. has to fill in a printed form which is provided by the bank. 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. SPECIAL NOTICE DEPOSITS (SND): Under this deposit scheme. The profit is paid on these deposits but it is nearly equivalent to saving account rate. For every payment which is. a deposit is received from the depositor under the condition that he will intimate the bank before a certain period in case of withdrawals. Zakat & withholding tax are calculated as per rules laid down by the government. Zakat & withholding tax are deducted at the time of payment.

the pay-in-slip is to be filled up. Transfer delivery cheques: are those cheques. list of directors and board resolution for opening of account is also obtained from the customer. in small and medium size branches. It enables a customer to make withdrawal from this account or make payment of various parties by issue of cheque. which is covered by a particular clearing . Clearing cheques: are those cheques.bank. The Negotiable Instrument Act. Accounting entries are also made in the respective books of account by this department. 2) In case of companies memorandum and article of association. 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. The object of this book is to provide the customer with the bank's acknowledgment for receipt of money to be credited this account. 1881. 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. It is however an important function of crossed cheques. The products for each deposit scheme are calculated separately and added till the end of 6 month period. Cheque Book contains a number of cheques. CLEARING DEPARTMENT Every banker acts both as a paying as well as a collecting banker. the accountant performs the book keeping duties for all kinds of ledgers. lays down hat drawer or holder of a cheque or draft may cross the instrument generally or specially. A large part of this work is carried out through the bankers clearing house. It further lies down that a crossed cheque can only be paid to a banker. Pass Book is a copy of the customers account as appears in the books of the bank. As the collecting banker runs certain risks in receipt of their ownership the law has provided certain protections to the banks. which are collected and paid by two different branches of the same bank situated in the same city. Executors & Administrators can also be opened but with the prior approval of the Head Office. which are collected and paid by the same branch of bank. However. Balance is recorded in this book by the Clerk. Profit payment & calculation is done in accordance with the rules of each type of deposit scheme-by the deposit department. which are drawn on the branches of some other bank of the same city or of the same area. 3) Accounts of Trusts. NOTE: 1) In case of partnership account partnership deed should be attached. certificate of incorporation. TYPES OF CHEQUES COLLECTED Transfer cheques: are those cheques. certificates for commencement of business. who collects it for a customer in good faith and without negligence. 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.

f) The instrument should be drawn on any local branch. o) If an account is new or the balance or operation of the account is not satisfactory. Pay-slips. j) A cheque payable to one of the joint account holders should not be collected for the joint account without the payee's endorsement. sent for collection by MCB Branches. k) A cheque drawn by a customer in the capacity of agent. satisfy your self about the title of the customers to the instruments before accepting the . like Telegraphic Transfer. To collect amount of cheques drawn on members. and clearing cheques. l) Pay orders. should be collected for a person other payee.house. and the pay-inslip at the counter. transfer delivery. d) The instrument should not be mutilated. m) Do not collect an instrument in the account of an agent or of the servant of the payee or endorsee of the instrument. or consent. FUNCTIONS OF CLEARING SDEPARTMENT: 1. 2. not represented at the local clearing house. SCRUTINY OF CHEQUES a) The instrument should be neither stale/ nor post-dated. or a holder of bearer cheque). Attorney. COMMON PROCEDURE FOR ALL CHEQUES: i) Receiving and scrutinizing the cheques and other deposit instruments. g) If cheque is "crossed Account Payee's" only or "Payee's Account". v) Certificate and confirmation by the officer in charge of the department. To accept Transfer. . sub-member of local clearing house. vi) Separating the cheque into transfer. it should only be accepted for collection for the payee's account. or Manager of his company or firm. which are drawn on the branches of either the same bank or of another bank. ii) Fixing the stamps. and Treasury Receipts. but those branches. h) The cheques or drafts should not be crossed specially to any other bank. c) The Instrument should not bear any unauthorized alternation. although negotiable should not be collected for third parties. i) A cheque payable to a firm should not be accepted for credit to a partner's account. iii) Scrutiny and receipt by the authorized officer. 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. clearing and collection cheques from the customers of the branch and to arrange for their collection. Transfer delivery. e) The amount in words and figures should be same. or Mail Transfer Receipt. 3. b) If the instrument is crossed not negotiable it can be for the third party (an endorsee of an order cheque. are not in the same city or they are not the members of clearing house. should not be collected for credit to his personal account. n) “Not transferable" instruments. iv) Returning the counter file to the depositor. Collection cheques: are those cheques.

Voucher register However. r) If the payee of an instrument is UBL. and no endorsement should be missing. in computerized branches all these ledgers are no more there but only day books are maintained. Register 6. t) All the endorsement should be regular. ADVANCES DEPARTMENT Advances are the most important source of earning for the banks. or the amount of the instrument may be utilized as desired by the drawer in writing. Fix Deposit Register 5. Government Official. q) If the payee is a Government Department. Officer spaceman signature book 11. Profit & Loss Sharing Ledgers 4. Saving Ledgers 2. . or a trust account the instrument cannot be collected.deposits. 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. Cumulative deposit certificate register 8. but for the payee's account. p) Branch agent's permission should be obtained before accepting a third party cheque or draft for the credit of the member. 1) Loans 2) Cash Credits 3) Overdraft 1) LOANS: Loans are monetary assistance by a financial institution to a business. it can be collected for credit of the drawers account. Daily profit and loss summary book 10. Cash book 9.N. s) Cheque payable to a trust.T. The rest of the work is done on computers. The loans are granted by the bank in lump sum. so these types called fixed or demand loans. S. Interest is charged on the whole amount of a fixed loan. account should not be collected for credit to a trustee's account. individual etc.D. Current Ledgers 3. Note: No charges are charged by the bank for this purpose. LEDGERS OF DEPOSIT DEPARTMENT: The following types of ledgers are concerned with deposit departments: 1. Call deposit register 7. 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.

the following precautions are dept in the mind: i) Stock pledged must be readily saleable ii) Products should be readily saleable iii) Advance should be within the borrows means REQUIREMENT FOR LOAN: For granting loan to any party or individual. the gold or ornaments held as security for it. it is very important in making decision about giving him loan. This type of loan is normally granted against security of gold documents. On repayment of loan. sanctioned by the head office. The interest gold loan is to be applied with quarterly. 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. Customer is granted a loan up to a certain limit. In case of demand loans against gold or documents. The rate charged by the bank on cash credit in 46 paisa per thousand on daily basis.The borrower withdraws whole the amount of loan. A) LOAN AGAINST GOLD: Under this type of loan. Feasibility report is on the running or proposed business of the client. B) LOAN AGAINST PLEDGED OF STOCK: In case of advancing such types of loans. In order to avoid the danger of idle fund. cash credit form is taken. ADVANCES AGAINST PLEDGE STOCK IN TRADE OR PRODUCTS When a cash is granted against the pledge of stock or product. even if the customer does not withdraw any amount. the bank charges a certain rate of interest. The report enables the bank to judge the likely return of the business. The credit is usually given against the securities of goods or merchandize as follows: 1. 2) CASH CREDIT Cinder such cash account is opened in the name of the customer who borrows from the bank. a demand promissory note for the amount of loan is taken from the borrower loans are granted under. 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. which is a bank receipt. from the certain products or stock. bank Judges the credibility of the client by his past bank record. After the opening the gold loan account a token is given to the borrower. from which he can draw when he requires and interest is charged on the amount actually utilized by the customer. CBI report etc. the bank checks following particulars of the client: 1) Credibility 2) Feasibility Report By Credibility. 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. This receipts states that he ornaments returned are complete and in order. but the actual pledge is created when the stock or .

3. 3) Legal provisions are same as that of cheque. but it is possible that the borrower may actually resist any attempt. Even though the documents empower the bank to take possession of the goods hypothecated. 4) It is to be ensured that purchaser can at least sign. HYPOTHECATION OF STOCK ON FINISHED PRODUCTS: The difference between pledge and hypothecation is that under a pledge the borrower's goods are placed in the bank's possession under own lock. whereas. 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 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. 2. MORTGAGES OF PROPERTY: Title deeds of immovable property are accepted by the bank only as collateral security or alternatively as unauthorized security. .finished product are placed under the bank's lock or the document of title are duly endorsed to the bank by the borrower. 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.

■ Instruction regarding mode of payment should be obtained. ■ A record in the remittance outward register should be maintained. 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. ■ Mail transfer is not negotiable ■ The procedure is same as for DD ■ All precautions must be observed PAY ORDERS . ■ All the remittance must be controlled through number. ■ Telegraphic transfer is not negotiable ■ The funds are not payable to bearer ■ Minor cannot avail this facility 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.5) Thumb expression is not accepted on DD 6) The following are the parties. A There should be branch where payment is to be made. 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. SCRUTINY OF APPLICATION The DD application must be scrutinized by the counter clerk in respect of following points. B full name of payer should be mentioned C amount in words and figures must be same D 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.

This was only possible with the help of online system. ■ A pay order is written authorization for payment made in a receipt form issued and payable by the bank. ■ Credit voucher should be prepared TECHNOLOGY DEPARTMENT Technological advancements are also affecting the banking industry.■ Pay order is meant for bank own payment but in practice they are also issued to customers. MCB has also introduced the now concept of online banking. ■ A record of all issued and paid should be maintained. 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. ■ Pay order should be prepared like demand draft. These machines are basically used for taking cash. ATMs are operated through a card issued to the valued customers and by application of Personal Identification Number (PIN number). the need for a technology department at each branch is growing. ATM NETWORK: ATM stands for Automatic Teller Machine. a computer division is working in each city to provide service to ad the branches of that area. Now MCB has also entered into a contract with Cirrus which is a subsidiary of . The foreign banks have a competitive edge over all local banks in their technologies' advancements and automated systems. 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. There are more than 1045 branches of MCB all over Pakistan and out of these more than 300 branches are fully computerized Almost all . 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. Now customers do not have to wait long for their transactions and can operate their account through all the online branches. Now a day. This system identifies the card holder and his PIN Number.the branches of big cities are computerized. therefore. This network covers more than the 27 cities of Pakistan including the provincial capitals and large commercial cities of the country. A person can withdraw from any machine across Pakistan with having an account in only one branch of MCB. confirming balances and requesting statements / cheque books. To the person named and address. This machine is used to transact in one's account without intervention of humans. The following are the parties A purchaser B issuing branch C payee ■ Charges must be recovered at prescribed rate.

000/. It's a safe and convenient way to conduct everyday business. targeted to persons with small savings who would desire a regular monthly return on their investment. 10.in a day. business establishments and MCB branches all over Pakistan. MCB WEB SITE MCB has also initiated its own website on internet with the address. Better because with Rupee Travelers Cheques you have the power to purchase and a feeling of security that should you lose them. Gold Cards are special cars with maximum withdrawal limit of Rs. travel agents.only. you will get a refund. hotels. you are better off carrying Travelers Cheques rather than money. 1) MCB RUPEE TRAVELLER CHEQUE: MCB Rupee Travelers Cheques are as good as cash. 500000/.as their average balance. infact better.year fixed Deposit Scheme. MCB Rupee Travelers Cheques are accepted at major shops. 25000/. SALIENT FEATURE: . The annual fee for this card is Rs. 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. At a time when thefts and robberies are on the increase.in a day.MasterCard. Green Cards are ordinary cards with a maximum withdrawal facility of Rs. 300/.mcb. Anybody can purchase them. 2) MAHNAMA KHUSHALI SCHEME: A 5. 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.com. www. These cards are issued to the persons having more than Rs. You don't have to be an MCB account holder to buy the Rupee Traveler Cheques.pk MISCELLANEOUS PRODUCTS AND SERVICES OF MCB Following are some products of MCB that are introduced by Musing Commercial Bank after privatization.

d) Foreign nationals and foreign companies can also open a foreign currency account under the Prime Currency Scheme. If the profit declared by the bank is higher.a) Minimum amount of investment shall be Rs. h) Rupee Loan facility will also available against this account. i) 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. in their name c) The Khushali Certificate will be of five years maturity. c) Average balance and paid half yearly.Cs may be deposited in these accounts. 4) PRIME CURRENCY ACCOUNT SCHEME: Launched to attract deposits in foreign currencies. e) Your foreign currency account can be opened in four global currencies: The United States Dollar. No queues. d) The interim rate of profit offered will be minimum 1% per month.E. Travellers Cheques. b) Khushali Certificates can be purchased by individuals (singly or jointly) or by the Proprietorship/Partnership concerns or Companies.010m and the maximum amount of investment would be Rs. Euro and Japanese Yen. j) The restrictions imposed by the State of Pakistan for the opening of foreign currency accounts in case of passport. Pound Sterling. f) As per Government Directions. Your . telephone and gas) through their account. f) Travellers Cheques and Foreign Currency Notes can also be issued to holders of persona! and Joint accounts. etc. b) You have a choice between opening this account in your personal name and opening it under joint names. the Pound Sterling. MCB Prime Currency Scheme invites all to operate a foreign currency account.0.B. FEATURES: a) Owing foreign currency account under the Prime Currency Scheme allows you to earn attractive rates of interest in foreign currency. 3) MCB KHUSHALI BACHAT ACCOUNT: FEATURES: a) 8% rate of return per annum. tax on the profit / return is to be deducted by MCB branches at the time of payment. No delays.000m. US Dollars. b) Returns calculated on daily. d) Introduced first time in Pakistan. e) Zakat will be deducted wherever applicable on yearly basis whether you will be receiving your profit or encashing your certificates. c) Whether you are a resident or a non-resident Pakistan. the Japanese Yen and the Euro. Foreign Currency Notes and Foreign Exchange generated by encashing F. 1. g) Remittance from abroad. e) The facility of helping account holders pays utility bills (electricity. additional profit will be paid. Work-permit and resident Visa have been withdrawn.

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. Wealth Tax and Zakat deductions. MCB . For the scheme.25000 and minimum Rs. with its expertise. at such centers up to 8.1800 is required. of 2/3 years duration. One of the objectives of the scheme is to develop secondary market for Government Securities. 11) NIGHT BANKING SERVICE: For the convenience of the account holder. 10000 while there is no maximum limit.account will be restriction free. 10) FAX PRESS This product was first of its kind introduced by using modem technology of The Fax Machine. preparing bid documents and arranging finance for the purchase of the unit. Loan will be totally free of mark-up. especially.1200. a monthly deposit of Rs. offers to them specialized service for valuation of the market value of the industrial unit. with case. the minimum amount of deposits is Rs. prospective buyers need professional assistance and MCB. The service guarantees transfer of from one city to another. 5) HAJJ MUBARAK SCHEME A saving scheme. l) MCB Prime Currency Scheme is a world in itself.00PM. 6) CAPITAL GROWTH CERTIFICATE SCHEME: For long term depositors under which the amount deposited almost doubles at the end of 5 years. within an hour. In case of premature encashment of the certificate. for the convenience of persons.committed to working for your convenience . k) The Prime Currency Scheme is exempt from al! forms of taxes including Income Tax. the required monthly deposit is only Rs. 8) CONSULTANCY SERVICES: In the process of privatization of public sector units.offers the foreign currency account facility at more seventy of its branches all over Pakistan. whereas under the 3 years scheme. Under the 2 years scheme.5000 per individual. with a limited income. the depositor will profit at the same rates as that of PL Saving Account. 12) UTILITY BILLS COLLECTION . who desire to perform Hajj was introduced. Traders and other clients can now make deposit. been introduced at busy commercial centers. service has. 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. It facilitates speedy transfer of funds within Pakistan.

technology has a direct relation with your needs. MCB LOCKERS The best protection for your valuables. 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. 15.With the aim of extending this service to wider range of customers. BEST PLACE TO WORK. 16. Murabaha. listening to the needs of the people . it is a means for creating value and convenience for the customer. The forth objective of Muslim Commercial Bank Limited is to bring new and latest technology in the operations of the bank. MCB MOBILE Banking at your fingertips. construction and renovation. 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. which is one of the back bone of the objectives of any well organized and managed organization. penetrating into the local market. CREATING AND MANAGING VALUES. Lockers of different capacities are available nationwide. HUMAN CAPITAL. Objectives of MCB The following are the objectives of Muslim Commercial Bank Limited. Ijara and Istasana. Today it is leading the way in banking technology and setting new standards for the banking industry. 1. 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. 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. ISLAMIC BANKING SERVICES Islamic banking services through exclusive units/branches offering a range of liability and asset based Sharia compliant products like Musharika. 14. At MCB. 17. Islamic Banking Services 13. PYARA GHAR Flexible and competitive home financing facility with options of home purchase. TECHNOLOGY. the number of MCB branches collecting Utility Bills more than 900. MCB Mobile 2. Over the last few years MCB has invested heavily into strengthening its technology backbone. Dial in anytime to get information regarding balance and mini statements.

making a home in their hearts-continuously building relationships on mutual trust and confidence. By responding in a timely manner with a flexible approach. their needs. and this is what we at MCB are continuously striving to provide. it responds to them. . Over the years. thus going towards the way of development and prosperity. banking is all about being there for people. over 151 MCB ATMs in 27 cities nationwide and a network of over 16 banks on the MNET ATM switch. MCB understands the special needs of the business. Understands them. it understands their needs and provides tangible results. a promising team and the right resources. 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. Convenience is what the customer is looking for. Strategically located branches in small towns and cities provide warm services and advice to the small businessmen and local traders. With a strong financial base. MCB speaks their language. UNDERSTANDING CONVENIENCE. MCB continuously innovates new products and services that harness technology for the customer’s benefit. UNDERSTANDING & RELATIONSHIP. MCB has proved to be a reliable partner indeed. UNDERSTANDING RELIABILITY. MCB has fostered strong bonds with its customers. MCB has tailored its products and services to make your life easier. MCB is strongly positioned to lead the banking sector in the new millennium. 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. With over 768 automated branches. MCB knows the particular needs of its diverse customer base d continuously develop products and services that fulfill these needs. BRANCH NETWORK The following is the Branch Network of Muslim Commercial Bank Limited. Whether it is the 24 hours cash convenience of our ATM network or the easy availability of financing requirements or simple opening of account. We understand that relationships are about expectations-our products and services are based on your customers. 243 online branches. partners with them. trading and agricultural sectors. Be it financing for personal or business related needs. it’s their bank. for the purpose of boosting up its values and prosperity in such a competitive environment. You can feel safe in our hands. With a solid foundation of over 50 years in Pakistan and having recently completed 10 successful years of privatization.and educating them of simple financial products and services that create both value and convenience. MCB provides its clients with the reliable financial service and support they require to successfully achieve their business objectives. expectations. The next objective of Muslim Commercial Bank Limited is to make understanding a convenient thing for the whole environment of the bank. grows with them. They feel comfortable with MCB. At MCB. 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. funds transfer and trade related facilities or need for different types of deposit accounts. MCB offers you a variety of products and services customized to satisfy your individual needs. listens to them.

SHAFIQUE JUNIOR CLERCK M.Sector wise position of circle.10 million. As on 30-12-2002 Consumer Sector 810 Branches. NUMBER OF ACCOUNTS: Accounts in this branch of MCB are as follows: CURRENT ACCOUNT: Total numbers of current accounts are 1049.And some important informations about my branch which I observed are as follows: MANAGEMENT OF THE BRANCH BRANCH MANAGER GHULAM MUJTABA ACCOUNTANT MUHAMMAD SADIQUE GRADE ONE OFFICER MALIK TUFAIL CASHIER WAHEED AHMED HEAD CLERCK M. ASIF PEON JAMEEL SECRITY GUARD M. Renala Khurd. . Commercial Sector 210 Branches Corporate Sector 20 Branches Overseas Branches 4 EPZ Branch 1 Total Branches 1045 INFORMATION ABOUT MY BRANCH I did my internship in Muslim Commercial Bank Limited Grain Market Branch. ASLAM SWEEPER IFTIKHAR AHMED TRAINEE ABDUL SATTAR AMIR OTHER GENERAL INFORMATION DEPOSITS: The total deposits of this about to 207.

KHUSHALI BACHAT ACCOUNT: These are about to 600 accounts. WORK DONE BY ME In the Muslim Commercial Bank Ltd. REMITTANCE: Total remittance of this branch is 26. RATE OF INTEREST: The rate of interest provided by such bank is minimum 4.45% Maximum 9% That gives to this year.25 million.PLS ACCOUNT: Total numbers of profit and loss accounts are 2120. NO. .22 million. FINANCING: Mainly. CAPITAL: Capital of branch is treated in its Head Office. the staff of the branch provided me the opportunity to work in the different departments for the sake of practical knowledge. OF VOUCHERS: The vouchers which are transacted in this branch are as follows: TYPES DEBIT CREDIT Transfer 961 901 Clearing 591 810 Cash 1754 1389 Rate of interest 4. because I learnt a lot in that branch. Abdul Sattar. But on my request. It was almost impossible to work in all the departments within that limited time. I really enjoyed working with the staff of Ghalla Mandi Branch Renala Khurd and having a wish to be employee of MCB. During my internship training in the MCB as I early mentioned that I have worked in different departments & seats and learnt the followings. REVENUES: The total revenues of this branch are near to 11.45% and maximum 9%. I feel highly indebted to work in the Renal Khurd Branch on the request of the manager of that branch Ch. the short term financing schemes are being dealt here.

II/31/5186. Signature of the officer receiving the utility bills. 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. 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. vide his ruling on complaint No. The bank charge commission on the bills. After receiving utility bills a list is made on the form which is called Bills scroll form. 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. occupation and the nature of business by the introductory references given at the time of account opening. Basically I think that the opening of an account is the establishment of a contractual relationship between the banker and the customer. the banker did not obtain introduction at the time of opening the account. 1. In Ladbroke & Co. V Todd (1914). duly introduced in the manner provided and on supplying such document. 4.UTILITY BILLS COLLECTION Muslim Commercial Bank Ltd. As per these directions. Then MCB determine the prospective customer’s integrity. 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. Negligence in this informal preliminary investigation may result in serious consequences not only for the banker concerned directly but also for other bankers and the general public who may be affected indirectly. and it was construed a negligence within Section 82 of the Bills of Exchange Act 1882. respectability. Another account holder of the bank should properly introduce the new customer. collects utility bills on behalf of WAPDA. Sui Gas Companies. the Federal Ombudsman of Pakistan. Against submission of the Bank’s prescribed application form. A copy of identity Card is required by Bank. as may be required and account may . The account holder should sign the account opening form in the presence of bank officer and the signature is duly verified. 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. In order to further strengthen and streamline this process. Date of payment. Further I am going to express the basic requirements and steps involved in the opening of an account. 2. By opening an account at a bank a person becomes a ‘customer’ of a bank. 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. 3. and Pakistan Telecommunication Corporation Limited by putting the stamp on the utility bills “Paid”.

Nature of Business 8. Currency of account 7. 3) Signature of Payee. 4) Whether Bearer has cancelled. All information. when a customer wants to open an account. Introducer’s Name. 5) Whether Payee account duly is there. Form also requires the essential documents to be attached by the customer. Signature of the applicant PROCEDURE TO HONOUR A CHEQUE During my internship training in the Muslim Commercial Bank Limited. which is necessary to be known by the bank. 2) Signature of Drawer. 5. If condition 4&5 exist then check the signatures of Drawer. Minimum amount to open an account is required regarding the nature of account. I observed and found Cheques are received for the following purposes. When all above matters are satisfied then come to the Token register and check: 1) Token number. 6) Match the figure and wordily amount of cheque. Special instruction regarding the account 10. Occupation 4. the bank officer gives him an application form. 6. Initial Amount of the Deposit 11.be opened. Address & Signatures 9. . Title of Account 2. 6. The Bank reserves to itself the right to refuse to open and account without assigning any reason. i) For Cash payments ii) For transfer(from one account to another account) iii) For Clearing I) FOR CASH PAYMENTS Cheques which are presented on Bank counter must be checked in the following way: 1) Date. PROCEDURE TO OPEN AN ACCOUNT According to my practice in MCB. Full Name of Applicant 3. are requirements of the application form. Basically following information is required to open an account with MCB 1. Each account shall be allotted a distinct number that is to be quoted in all correspondence with the bank relation to the account. Address 5. Telephone No.

b) Transfer Stamp (face). these cheques are recorded in day book then allotted number and then serial number. CHEQUES FOR CLEARING: There are two stamps put on each cheque. After completing that performa cheque is posted along with performa. • Time of giving token to client. 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. b) Name of bank on whom drawn. c) Branch. sent for clearing: a) Crossing Stamp. First of all. 3) Amount of cheque. d) Cheque number. Only in MCB branches. • Signature of token giver. a) Cash Payment (on the face of cheque). Note: 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. CLEARING Following information is entered in clearing register. CHEQUES IN COLLECTION: When cheques received in clearing are intra city then these are controlled under CC. b) Stamp for Token (on the back of cheque). c) Bank Manager Stamp (back). cheque number. On stamp which is put for token their details are as follows: • Token number. amount. a) Name of favoring party. . b) Manager Stamp. Then a performa is prepared in which Bank on whom was drawn.2) Cheque number. a) Crossing Stamp (face). 4) Particulars. beneficiary name are recorded. Two stamps are put on cheque.

e) Amount.4% Commission and postage charges are also calculated.per cheque and keeps the cheque book ready for the customer. may ask the bank to stock as number of cheque books in their name and to point their name on these cheque books. At the beginning of the day clearing return sheet is received. On the same day.40000 @0. Clearing is sent after entering in register. Following procedure is adopting for the issuance of cheque. i. the first cheque book is given to the customer only when all the required documents are checked. credit vouchers sent for clearing are entered on the sheet's credit side. Such credits are balanced by giving debits to cheques received in clearing from other branches. Bank debits the client’s account for excise duty of Rs. 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.50/. 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. their total amount along with total number of instruments.e. Performa is filled by purchasing party along with cheque or cash payment. However. In clearing register future date and day is putted. Usually only one cheque book is issued at a time. 1% More than Rs. Vouchers are made if 1. DD is also prepared and beneficiary can get payment. When cheque is received it is first posted in computer section in order to check the balance of account. Clearing credit vouchers are entered on clearing sheet. person should also write his full name & address. When a customer opens an account with the bank. A cheque book contains ten. however big concerns who need a number of cheque books at a time. 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. These are paid in cash or otherwise by cheque. The account number for which the cheque book is issued and the number of leaves are also recorded in this register when the . Clearing received is more than clearing delivered then Credit voucher.Payment Order For TT. This slip is duly filled and singed by the customer. The cheque book also carries a requisition slip for the issuance of the new cheque book. Cheques and vouchers are then separated and Cheques are sent for clearing. Telephonic Transfer DD.2. The officer keeps and maintains the cheque book register Cheque book inventory and cheque books issued are recorded in this register. Along with the signature. 2. Cheques are sent to NIFT after taking them on calculator. as on his advice.100000 @0. First of all. Clearing delivered is more than clearing received then Credit voucher. he is provided with cheque book for withdrawals from account. the account of beneficiary must be there in branch.Demand Draft PO. twenty five. Rs. fifty or hundred leaves.

Payment will be credited to account of paying party.100000 Specimen signatures of buyer are taken and clearing slip is in four pages.1000 v Rs. RTCs can be endorsed to other party. RUPEE TRAVELLER CHEQUES: RTCS When RTCs are to be issued payment is received in cash or by cheque. one for bank record and one for client. one copy of deal and ID card copy. FINANCIAL ANALYSIS BALANCE SHEET (ASSETS) AS ON 31ST DECEMBER 2000-01-02 Rupees (000) Item 2000 2001 2002 Cash and balance 12571424 212559900 17867991 Balance with other bank 4757413 3025689 2154190 More at call and short notice 6064332 15470519 33874620 Investment 36480913 55432235 89609821 Advance 86312721 46584120 78923737 Fixed assets 3482950 3659646 3825045 Other assets 13862305 11400906 8883163 Total 174715063 187053515 235138567 .03% is charged id National Tax number is nor available.10000 v Rs. Payment is made.50000 v Rs. If client wants immediate payment of RTCs then he will bring RTCs with two signatures. tax @0. one to RTC division.5000 v Rs. RTCs are issued in consecutive number of face value of v Rs. Once receiving party will pay the RTCs along with credit vouchers in their relevant account with Bank. One is sent to Head office.cheque book issued an entry is passed in the cheque book issue register.

51 Other assets (1803004) (13.58 341775896 61.MUSLIM COMMERCIAL BANK LIMITED BALANCE SHEET (LIABILTY) AS ON 31ST DECEMBER 2000-01-02 Rupees (000) Item 2000 2001 2002 Deposit & other account 135990147 154544451 182705716 Borrowing from bank 5856198 8946624 21987824 Bills payable 7803443 8097178 6261957 Others 8438055 8578240 9045634 Share capital 2202855 2423140 2665455 Preserve 12277630 2278980 3026517 Un-appropriated profit 3185 283940 621985 Surplus on revelation of fixed assets 1188122 1900962 5384934 174715063 187053515 235138567 MUSLIM COMMERCIAL BANK LIMITED BALANCE SHEET (ASSETS) HORIZONTAL ANALYSIS AS ON 31ST DECEMBER 2000-01-02 Rupees (000) Item Increase (Decrease Increase (Decrease) Amount %age Amount %age Cash 8688476 69.55 18404101 118.8 .05 Operating fixed assets 55290 1.11 (339109) (15.65) (2517743) 22.31) 2339617 3.53 165399 4.95) Balance with other bank (1731724) (36%) (871499) (28.65 Advance (9773140) (113.96 Investment 12321288 28.80) Money at call and short notice 4618425 42.

03 13041200 145.5 747537 32.76 Bills payable 293735 3.68 467394 5.44 Share capital 220285 9.99 242315 10 Reserve fund & other reserves 1350 0.40 3483972 183.MUSLIM COMMERCIAL BANK LIMITED BALANCE SHEET (LIABILITIES) HORIZONTAL ANALYSIS AS ON 31ST DECEMBER 2000-01-02 Rupees (000) Item Increase (Decrease) 2000-2001 Increase (Decrease) 2001-2002 Amount %age Amount %age Deposits and other account 18554304 13.05 Surplus on revaluation of fixed assets 791889 71.27 MUSLIM COMMERCIAL BANK LIMITED BALANCE SHEET (ASSETS) VERTICAL ANALYSIS AS ON 31ST DECEMBER 2000-01-02 Rupees (000) .81 Un-appropriated profit 2800775 8814.76 (1835221) 22.64 28161265 1822 Borrowings (7944051) 47.66 Other liabilities 142064 1.9 338045 119.

95 1.02 2.22 1.78 Total 100% 100% 100% MUSLIM COMMERCIAL BANK LIMITED BALANCE SHEET (LIABILITIES) VERTICAL ANALYSIS AS ON 31ST DECEMBER 2000-01-02 Rupees (000) Items 2000 2001 2002 Deposits and other account 77.27 Surplus on revaluation of fixed assets .62% 78.32 2.30 1.83 4.41 Investment 24.32 Total 100% 100% 100% .59 3.15 Reserve fund & other reserves 1.30 Un-appropriated profit .30 1.67 4.47 4.50 41 33.21% 1137% 7.0018 .11 Advance 49.61 0.90 Share capital 1.67 38.84% 82.10 3.07 1.71 29.62 Other assets 7.56 Operating fixed assets 2.63 1.57 6.92 Money at call and short notice 6.60% Balance with other bank 2.85% Borrowings 9.49 Bills payable 4.Items 2000 2001 2002 Cash 7.70 Other liabilities 4.22 7.73 1.78 9.75 14.26 1.15 .

commission 909045 868637 907071 Income from dealing foreign currency 609838 687854 503593 Dividend income 158909 243994 297748 Other income 1085614 400140 881746 Total 16887648 19233850 17976027 MUSLIM COMMERCIAL BANK LIMITED PROFIT AND LOSS ACCOUNTS (EXPENSES) FOR THE PERIOD ENDED DECEMBER 2000-01-02 Rupees (000) Items 2000 2001 2002 Cost / return on deposit 7238680 7544897 6074682 Administrative expense 7128658 7331623 8077395 Provision for diminution the value of investment 46048 62064 Provision against non-performing advance 601799 1704944 Other provisions 30000 40000 Bad debts 483943 448999 721105 Other charges 36725 147 1313 Profit before tax 1321795 2101176 3101020 Taxation 587066 993000 1362426 Total 17474714 20226850 19337941 .MUSLIM COMMERCIAL BANK LIMITED PROFIT AND LOSS ACCOUNTS (INCOME) FOR THE PERIOD ENDED DECEMBER 2000-01-02 Rupees (000) Items 2000 2001 2002 Interest / return earned 1424242 17033225 15385869 Fees.

60 (1647356) (9.11) 481606 120.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 Increase (Decrease) 2001-2002 Amount %age Amount %age Interest / return earned 2908983 20.54 53754 22 Other income (685204) (63. commission etc. (40408) (4.23 (1470215) 19.35 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 Increase (Decrease) 2001-2002 Amount %age Amount %age Cost/return on deposit 306217 4.48 .44) 38434 44.79 (184261) (26.78) Dividend income 85085 53.42 Income from dealing foreign 78016 12.67) Fees.

6% 88.22 272106 606 Profit before tax 779381 58. 5.78 (62064) (100) Provision against non-performing advances 1103145 183.43 2.60% Fees.Administrative expense 202965 2.84 745772 10.04 Income for dealing foreign currency A/C 3.38 4.08 4.17 Provision for diminution 160126 34.66 Other income 6.27 1.91 Total 100% 100% 100% MUSLIM COMMERCIAL BANK LIMITED PROFIT AND LOSS ACCOUNTS (EXPENSES) VERTICAL ANALYSIS AS AT DECEMBER 2000-01-02 .58 Tax 405934 69.94 1.52 5.04 Dividend income 0. commission etc.14 369426 37.30 (1704308) (100) Other provisions 1000 33 (4000) (100) Bad debts (34944) 7.61 3.56% 85.20 MUSLIM COMMERCIAL BANK LIMITED PROFIT AND LOSS ACCOUNTS (INCOME) VERTICAL ANALYSIS AS AT DECEMBER 2000-01-02 Items 2000 2001 2002 Interest earned 83.58 5.96 999844 47.

35 4.44 8.26 0.Items 2000 2001 2002 %age %age %age Cost / return on deposit 41.25 41.76 Provision for diminution the value of investment 0.72 Other charges 0. of accounts 3411427 4463530 BALANCE SHEET (ASSETS) .42 37. contra) 75427 235139 Deposits 62783 182706 Advances 30753 78924 Investments 27864 89610 Imports 32734 48842 Exports 16931 28284 Home remittance 3023 32962 Pre-tax profit 346 3103 No.21 00 .006 Profit before tax 4.56 10.41 Administrative expense 41 36.90 7.30 31.76 2. In million) 1993 2002 Authorized share capital 2000 3500 Paid-up share capital 663 2665 Reserve funds & other reserves 12010 3027 Total assets (excl.42 00 Other provisions 0.35 Taxation 3.05 Total 100% 100% 100% PERFORMANCE 1993-2002 The following figures will give an idea of the progress made after privatization.39 16.306 00 Provision against non-performing advance 3. (Rs.20 00 Bad debts 2.25 3. of employees 13768 10926 No.17 0. of branches 1290 1045 No.

More assets mean that bank has more capacity to pay off its liabilities. so it is alarming sign for the bank. It is common term of finance” more investment more return. MUSLIM COMMERCIAL BANK LIMITED PROFIT AND LOSS A/C HORIZONTAL ANALYSIS . Then bank can purchase more and more fixed assets. it shows that the liquidity position of the bank is going to be weak. Banks pay less rate of interest than receiving the interest from the customers. It is due to purchase of new assets. Therefore it is good sign for the bank. ■ Other assets have a decreasing trend which is not a positive sign. a bank can lend money (per party exposure) equal to the 30% of its assigned capital plus reserves. Assets of the banks are increasing day by day by purchasing the assets. it means that customers of bank are very punctual in making payments. usually banks borrow money at that time when they would have to give it for earning more profit. ■ Borrowing is decreasing in 2001 but there is increasing trend in the year 2002. ■ There is decreasing trend in balance with other banks which is a negative sign. because according to the prudential regulations of State Bank of Pakistan. ■ Bills payable increase in 2001 but decrease in 2002 positive sign. and it is bank is doing. It means that MCB is running very well. ■ Increase in money at call and short notice. I think the Muslim Commercial Bank doing the same thing for increasing its profits. ■ Other liability has an increasing trend not good because increase in liability decreases the liquidity position of the bank. ■ As we know that main source of profit of a bank is the difference between the percentages of interest. There is increasing trend in field of fixed assets. In this case advance to customers very low in 2001 but increase in 2002. ■ Share capital increase that shows the creditability of bank. Therefore bank should take necessary steps according to the position. ■ In the field of investment there is increasing trend with the passage of time. 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.HORIZONTAL ANALYSIS COMMENTS ■ Cash is increased in 2001 but decrease in 2002. Decrease in assets decrease the worth of organization LIABILITIES ■ There is increasing trend in deposits and other accounts which shows the credibility of the bank. ■ The Muslim Commercial Bank Limited is increasing its reserves and Un-appropriated profit in order to increase its lending power. ■ MCB is in a position that it is earning more and more profit with passage of time. which is good sign.

Therefore fee and commission income are increasing which is good and favorable signs. ■ 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. It is not good for a banking company. ■ Other income increase with great proportion good sign. ■ Profit before taxation has increased with greater proportion. ■ Bad debts increased with huge amount not positive sign. tax also increase. ■ Divided income increased but it is very small. ■ Tax increases which are not bad because it is interrelated with profit. ■ Administration expenses are increased but no alarming rate. The banks receive fee and commission after their services. In case bank is taking more fees as compared to previous years. Banks receive fee. VERTICAL ANALYSIS INCOME ■ Interest earned decrease which is negative sign. ■ As we know that banks provide many facilities other than money lending and borrowing. ■ Other income decrease in 2001 but this increase mean positive situation. . EXPENSE ■ Return on deposit decreases which shows good sign and it is due to decrease in return rate. ■ In foreign currency dealing and dividend there is huge increasing trend which shows the investment of bank in healthy organization. ■ Position against non performing loan us zero which show bank have good customer. ■ Profit increased. commission etc. ■ All provision is zero which sows the good credit policy. ■ As we all know that banks provide many services for their customers and also act as a agent of the customer. ■ Bad debt and other charges increased but the situation is not alarming. it is a main source of bank to receive fee and commission from their customers. for these services. This is good for the bank. EXPENSES ■ Return on deposit decrease good sign because it increases the profit. if profit increased.INCOME ■ Interest income decrease in 2002 will great proposition which is not favorable. ■ Tax is increased but it is interrelated with profit.

on similar lines. have since followed in MCB’s footsteps.OVERALL REVIEW The Bank has now completed more than 12 years. planning. since its privatization and it is. MCB has performed well and has sustained its growth in all the major sectors. coordination and control. ¶ These help in investment decision in case of investor and lending decision in case of Bankers etc. The well deserved credit. . for this good performance and progress. RATIOS ANALYSIS Ratio analysis is an important and age-old technique of financial analysis. to the entire MCB team for its dedication. by launching new products and services. For the first time in the history of Pakistan. they cannot be taken as final regarding good or bad financial position of the business other things have also to be seen. However. particularly in introducing a number of innovative banking products and services. ¶ These help in planning and forecasting these can assist management in its basic functions of forecasting. indeed. concerted efforts and excellent team spirit. these multifarious products mostly in the shape of saving schemes have been introduced by MCB with brand names. the ratios are only indicators. must surely go to the Bank’s management. The ratios highlight the factors associated with successful and unsuccessful firms. in no small measure. both local and foreign. 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. MCB has been a pioneer among the banks in Pakistan. also reveal strong and weak firms. ¶ These provide data for inter-firm comparison. its Directors and. This has set the trend and many other banks. gratifying to note that during this period.

57 6. CASH / DEPOSIT RATIO . (000) 2000 2001 2002 13.73% 3. (000) 2000 2001 2002 3. (000) 2000 2001 2002 0. RETURN ON DEPOSIT Rs.54% 0.86% 2. EARNING PER SHARE Rs.33 4.14% 16.09% 14.52 4. RETURN ON EQUITY Rs.42% 0.59% 0.RATIO ANALYSIS 1. (000) 2000 2001 2002 0. RETURN ON ASSETS Rs.71% 0.95% 5.

Rs. (000) 2000 2001 2002 41% 37. (000) 2000 2001 2002 24 times 22 times 15 times 8.33% 6.16 times 20. TOTAL ASSETS / NETWORK Rs. (000) 2000 2001 2002 83% 88% 85% 10.09times 7. INTEREST INCOME / TOTAL INCOME RATIO Rs.23 times 27.30% 31% 9. (000) . RETURN ON DEPOSIT Rs. NET PROFIT MARGIN Rs.25% 2. (000) 2000 2001 2002 2. (000) 2000 2001 2002 31.56% 2. INTEREST EXPENSES / TOTAL EXPENSES RATIO Rs.

but it improved in the year 2001. 2. and it was much good in the year 2002. This ratio has the same trend as the return on the assets. But it again fall down in the year 2002. 1663726 1.2000 2001 2002 4. 3. Here increasing EPS. Here ratio is increased in 2001 but again decrease in 2002. This ratio of the bank was too low in the year 2000. Bank meets all .67% 11. 4. And is improving in the every succeeding year. CASH / DEPOSIT RATIO Cash deposits ratio means liquidity position of the bank. 607214 Rs. RETURN ON DEPOSIT Return on deposit is increasing trend which is favorable. 1044463 Rs. 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. This ratio has the same trend as the above mentioned ratio of return on equity has which is a good sign for the Bank. which will surely increase share price.76% 9. AVERAGE PROFIT PER BRANCH Rs. This ratio is very low means that Bank has no idle fund but even low ratio bank has not liquidity problems. It means the assets of the business are fully utilized in more and efficient way and also shows the favorable trend of the business. 5. RETURN ON ASSETS This ratio has an increasing trend. Increase in return on deposit is positive sign. This ratio shows with the increase of deposit the profit margin also increases. And I think that the Bank improved its return on equity ratio in the year 2001. which is an alarming sign for the Bank. Earning per share is a good measure of profitability when compared with similar other business. EARNING PER SHARE This ratio got really improved as it has gone with the increase in profit.35% 5. (000) 2000 2001 2002 Rs.

NET PROFIT MARGIN This is being improved yearly. The reason is the decrease in the return on deposit.its financial problems. Solvency means the ability to meet its obligation: with the passage of time it is increasing which is good sign. 9. This shows the strategic policy of the bank and efficiency of the bank. 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. AVERAGE PROFIT PER BRANCH The average profit per branch is increasing rapidly every year. Although the rate of markup come down but it has no bad effect on the earnings of the bank. INTEREST INCOME / TOTAL INCOME RATIO A little decrease figure rather than stagnant figure showing same amount of income generation. 11. 10. or it might be due to decrease in the payable interest rate to the lenders. TOTAL ASSETS / NET WORTH This ratio shows the decreasing trend. And it will provide benefit to the Bank in the long run and in the coming years. It is healthy good and encouraging for bank. Because it might be due to increase in the other Income of the bank which is too a Good affect for the bank. INTEREST EXPENSE / TOTAL EXPENSE RATIO A decrease figure shows that deposits are getting low. 8. And I think that this will provide benefit to the bank in the long run. RECOMMENDATION . TOTAL DEPOSIT / NET WORTH This ratio has also decreasing trend but decreasing is due to increase in net worth. But it is not had position because net worth of the bank increasing day by day. SOLVENCY RATIO 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. When decrease return then people prefer to invest in business for more earning. 6. This ratio of the bank shows that it profit of the branches is increasing in the coming years. 7. Increase in net worth shows that bank is on sound footing. This decrease in the interest expenses is due to the decrease in the borrowings of the bank. then it was two time in the year 2001 and three times in the year 2002. 12. This ratio shows that interest income as compared to the total income of the bank is decreasing. But it does not mean that it is a bad effect. if it was one time in the year 2000. Ultimately result is increase in the net profit of the bank. Although bank is earning huge income but its expenses increased quite a bit simultaneously.

qualified and energetic staff. Following are my observation and suggestion to improve the efficiency for the development of the economy. equipment. Working environment. Old and lazy staff should be replaced by young. The employee should be provided the opportunities to attend and participate in seminars and lectures on banking. In my opinion all the employees should have regular job experience all out-look towards banking. Some more reading material should be provided. Recruitments should be strictly on merit basis and induction should be after proper and extensive training. A big portion of the home remittance is sent by Pakistan working capital through Muslim Commercial Bank Limited. Foreign experts can also be called for this purpose. And I think this will shake the confidence and working habit of the employees. Most of the bank employees. The promotion policy should be adjusted. The people motivated to save money by offering the deposit through various investment schemes. induction and training of outgoing officers constitutes to beat till another officer should ready prove this work. Alt the employees should have these courses according to their requirement. Staff turnover particularly of trained staff result in financial and other losses. 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. There is a criticism on the banking management that the salaries of the employees are decreasing in every succeeding year. MUSLIM COMMERCIAL BANK is performing well. Refresher Courses for the staff are most important in any international organization. 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. The controlling body is responsible for the productive performance of the Bank. The amount spent by the bank on employment. 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. As we know a big portion of this amount is wasted purchasing of luxuries. Foreign branches should be opened in order to capture the international market and to earn international repute for 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. furniture and staff dressing should be according to the .From the Quantum of the profit and its financial data it can be easily judged that after privatization. which might not be a good sign for the bank from future prosperity point of view. Its deposits are growing day by day and so its profitability. Every year some of the employees should be sent for training to other countries and employees from other branches should be brought here. The purpose should be to educate the employees with the advance studies in their field. The rate of profit should increase 1% or 2% than other banks and it would be profitable step for bank. The exodus of bank officer in the past has worsened the situation.

The profits of MCB have grown considerably during the last few years and this trend is expected to continue into the future. . 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.modern banking style. which assures the shareholders of wealth maximization. CONCLUSION It is evident from this report and the financial statements of MCB that it is making progress by leaps and bounds. Bank should adopt the global organizational banking structure to meet the international standards of banking sector. development and integrity. we conclude that MCB has a very prosperous present and future. 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. Proper attention should be paid to upgrade customer services. 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. ambitious and diligent condition for the bank. Therefore.

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