INTERNSHIP REPORT ON

MCB BANK LIMITTED

Chatter Domail branch Muzaffarabad

(1504)

BY
ABAD HASSAN

BBA
Session (2017-2021)

Department of Management Sciences

MIRPUR UNIVRSITY OF SCIENCE AND TECHNOLOGY

ii
 INTERNSHIP REPORT ON
MCB BANK LIMITTED

Chatter Domail branch Muzaffarabad

(1504)

BY
ABAD HASSAN

BBA
Session (2017-2021)
Submitted to: MUST in partial fulfillment the requirements for the degree of BBA
Department of Management Sciences
MIRPUR UNIVERSITY OF SCIENCE AND TECHNOLOGY

iii
In the name of ALLAH, the most merciful and the most beneficent. ALLAH says in the Holy
Quran, and we split the earth in fragments, in produce their in corn and grapes and nutritious
plants and Olives and Dates and enclosed gardens dense with lofty trees, fruits and fodder for
use and convenience to you and your cattle's.

(Al-Quran, Sur-e-Abbas 80, Ayat 25-32)

iv
I dedicate whole of my education along with my life to my beloved parents and
respected teachers, who were always kind to me.
May God Bless Them (Ameen)

v
 PREFACE

Banking sector owes a pivotal importance in the economy of any country through its
variant functions. This basic motivator that stressed me to join any bank for Internship
Training. Moreover, the experience and practice learned during this tenure also prove very
helpful and facilitating in the forthcoming professional life.
This report is the result of almost Eight week experience with MCB Bank Limited, Chatter
Domail Branch MZD. The motive behind selecting this bank is that it is one of the Top 10
Asia, Bank‘s. The fact remains that MCB bank, possess an excel/ cut and historical
importance being the most senior and leading in terms fluids and services to Pakistan at all
ages of life.

I had with the strong belief that this report will guide and facilitate the readers to
understand the functioning of banking system and more importantly have good knowledge
about MCB bank.

Abad hassan

vi
 ACKNOWLEDGEMENT

In the name of Allah, the Most Gracious and the Most Merciful Alhamdulillah, all praises
to Allah for the strengths and His blessing in completing this report.

I would like to express my gratitude and appreciation to all those who gave me the
possibility to complete this report.
A special thanks to our Regional Operations Manager Mr. Kaleem Abbasi and Credit
Analyst Syed Intekhab Gardazi and Madam Ambreen, whose help, stimulating
suggestions and encouragement, helped me to coordinate my project especially in writing
this report.
I would also like to acknowledge with much appreciation the crucial role of the staff of
Regional Office of MCB Bank who gave the permission to use all required machinery and
the necessary material to complete the Differential Simulation.

Last but not least I wish to thank my parents & friends for their support and
encouragement throughout my study.

Abad hassan

vii
 EXECUTIVE SUMMARY

MCB Bank Limited (Formerly Muslim Commercial Bank Limited) has a solid foundation
of over 60 years in Pakistan, with a network of over 1174 branches.

In the domestic banking industry of Pakistan MCB bank of Pakistan possesses a unique
position. MCB was incorporated in 1997 and was later privatized by the Government of
Pakistan. The Nishat Group bought the majority shares of the bank and so got the rights to
control the bank’s operations. Since the privatization of the bank, MCB has implement
different policies to make it one of the best banks of Pakistan, which included introducing
new products and services and increase its operations by opening new branches in
Pakistan.

MCB’s operations continued to be streamlined with focus on rationalization of expenses,

re-alignment of back-end processing to increase productivity, enhancement of customer
service standards, process efficiency and controls. The bank has taken the lead in
introducing the innovative concept of centralizing Trade Services in the country by
providing centralized foreign trade services to branches with a view to improve efficiency,
expertise and reduce delivery cost.

During my internship/work in MCB I worked in Remittances, Advances, Foreign and

Customer Service Office department and I successfully completed all the tasks/duties that
were assigned to me. During the course of internship/work I learned about different
functions performed by Remittances, Advances, Foreign Exchange and Customer Service
Office departments and bank as a whole. I also learned bank’s correspondence with their
customers and within branches. I learned about documentation requirements and record
keeping for different activities and processes, especially the documentation requirement for
different kinds of financing facilities. At last I make some recommendation for the
betterment of this prestigious organization.

Abad hassan

viii
 CONTENTS

INTRODUCTION TO REPORT...................................................................................1
1 INTRODUCTION...................................................................................................1
BACKGROUND OF STUDY...................................................................................1
PURPOSE..................................................................................................................1
OBJECTIVES................................................................................................1
METHODOLOGY.....................................................................................................2
OVERVIEW OF THE ORGANIZATION....................................................................3
2 BANK 3
CHARACTERISTICS / FEATURES OF A BANK..............................................3
Dealing in Money...................................................................................................................3
Individual / Firm / Company..................................................................................................3
Giving Advances....................................................................................................................3
Acceptance of Deposit................................................................................................3
A bank lends out money in the form of loans to those who require it for different
purposes......................................................................................................................3
Payment and Withdrawal............................................................................................4
Agency and Utility Services........................................................................................4
Profit and Service Orientation.....................................................................................4
Ever increasing Functions...........................................................................................4
Connecting Link..........................................................................................................4
Banking Business.......................................................................................................4
HISTORY OF MCB..................................................................................................4
FUNCTIONS OF MCB BANK LIMITED................................................................5
ROLE OF MCB IN PAKISTAN’S ECONOMY.......................................................6
Mobilization of Saving...........................................................................................................6
Mobilization of Hidden Money..............................................................................................6
Development of Industry........................................................................................................6
Trade and Commerce.............................................................................................................7
MCB is a commercial bank. It has been providing facilities in trade in commerce. It
has played its significance role in the commerce and trade in Pakistan. It has been
financing for traders for short period, for the payment of their dues and working
capital.

ix
Education 7
Health Sector..........................................................................................................................7
Environment7
Foreign Trade.........................................................................................................................7
Foreign Remittance................................................................................................................8
Tourism......................................................................................................................8
Employment...............................................................................................................8
Islamic banking..........................................................................................................8
MCB Virtual Banking................................................................................................8
PROFITABILITY OF MCB......................................................................................9
INFORMATION TECHNOLOGY...............................................................9
2.6 MCB AWARDS................................................................................................10
STRUCTURE OF MCB BANK LIMITED.................................................................11
3.1 BOARD OF DIRECTORS................................................................................11
ORGANIZATIONAL STRUCTURE..........................................................14
NUMBER OF BRANCHES....................................................................................15
AREAS OF OPERATION...........................................................................15

GROUPS IN MCB................................................................................................15
Retail Banking Group:.........................................................................................16
TREASURY & FOREX GROUP:.......................................................................17
Departments of MCB Bank Limited........................................................................18
Remittance Department:...........................................................................................19
Clearing Department................................................................................................20
Information Technology Department:.............................................................................20
Cash Department...............................................................................................................20
Foreign Exchange department..........................................................................................21
Functions..................................................................................................................21
Credit /Advances department...........................................................................................21
Types of Financing.............................................................................................................22
PRODUCT AND SERVICES OF MCB BANK LIMITED........................................23
4.1 PRODUCT AND SERVICE PROVIDED BY MCB........................................23
Working Capital Loans................................................................................25
Term Loans..................................................................................................25
Trade Finance Services................................................................................25
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 Cash Management........................................................................................25
Investment Banking.....................................................................................25
MCB Master Card....................................................................................................26
MCB Remit Express....................................................................................26
MCB LOCKERS..........................................................................................26
ISLAMIC BANKING..................................................................................27
VISION OF ISLAMIC BANKING.........................................................................27
FINANCIAL STATEMENTS.....................................................................................28
CONSOLIDATED STATEMENT OF FINANCIAL POSITION..........................28
ANALYSIS OF FINANCIAL STATEMENTS......................................................29
COMMENTS ON VERTICAL ANALYSIS OF BALANCE SHEET & PROFIT
AND LOSS ACCOUNT..........................................................................................30
SWOT ANALYSIS OF MCB BANK LIMITED........................................................31
SWOT ANALYSIS...............................................................................................31
STRENGTHS........................................................................................................31
WEAKNESSES.....................................................................................................31
FINDING AND RECOMMENDATIONS PROPOSAL TO BOOST THE MCB
BANK......................................................................................................................32
PROFITABILITY.................................................................................................32
HUMAN RESOURCE MANAGEMENT............................................................33
INTERNATIONAL BANKING GROUP............................................................33
BIBLIOGRAPHY....................................................................................................34
INTERNET..............................................................................................................34

xi
 CHAPTER 01

INTRODUCTION TO REPORT

1. INTRODUCTION:

Chapter one is about introduction of report. As a part of requirement master degree

internship is necessary for student. This chapter includes background, purpose, scope,
objectives and methodology of the study.

BACKGROUND OF STUDY

Internship training program during Master is necessary for the partial fulfillment of
the completion of Degree of Master in economics. It is necessary for me to complete an
internship session of about 8 weeks in some manufacturing or service industry relevant to
my area of interest and specialization. So, I choose the banking field because I have the
interest in this sector because my study background is related with this sector.

PURPOSE

Internship is the capstone experience that provides me with hands-on, real-world

experience in a work sitting. Ideally, internship will enable interns to:

a) integrate and use my knowledge and skills from the classrooms,

b) discover where further competence is needed,

c) take steps to gain that competence under educational supervision, and

d) Become better acquainted with the types of work settings in which such
competence can be applied.

12
OBJECTIVES

I worked as an internee in MCB Chatter Domail branch Muzaffarabad. The main

objectives to study in MCB were:

 To get some experience I working with well reputed organization.

 To gain knowledge about the professional environment of the bank.

 To know about the technology utilized in the banks.

 To deal and manage with the situation of stress.

METHODOLOGY
There are mainly two methods that are used for the collection o data.

Primary Data:

 Observation of functions of Branch operations on the spot.

 Observation of different processes of Branch on the spot.

Secondary Data:

 Internet is very helpful for me to study more about banking sector of Pakistan.

 Different type of booklets of the Bank.

 Annual reports

 Journals

 Newspapers

13
 CHAPTER 02
OVERVIEW OF THE ORGANIZATION

2. BANK

A bank is a financial institution which deals with deposits and advances and other
related services. It receives money from those who want to save in the form of
deposits and it lends money to those who need it.

CHARACTERISTICS / FEATURES OF A BANK

Dealing in Money

Bank is a financial institution which deals with other people's money i.e. money given by
depositors.

Individual / Firm / Company

A bank may be a person, firm or a company. A banking company means a company which
is in the business of banking.

Giving Advances

Acceptance of Deposit

A bank accepts money from the people in the form of deposits which are usually repayable
on demand or after the expiry of a fixed period. It gives safety to the deposits of its
customers. It also acts as a custodian of funds of its customers.
A bank lends out money in the form of loans to those who require it for different
purposes.

Payment and Withdrawal

14
A bank provides easy payment and withdrawal facility to its customers in the form of
cheques and drafts; it also brings bank money in circulation. This money is in the form of
cheques, drafts, etc.
Agency and Utility Services

A bank provides various banking facilities to its customers. They include general utility
services and agency services.

Profit and Service Orientation

A bank is a profit seeking institution having service oriented approach.

Ever increasing Functions

Banking is an evolutionary concept. There is continuous expansion and diversification as

regards the functions, services and activities of a bank.

Connecting Link

A bank acts as a connecting link between borrowers and lenders of money. Banks collect
money from those who have surplus money and give the same to those who are in need of
money.

Banking Business
A bank's main activity should be to do business of banking which should not be subsidiary
to any other business.

HISTORY OF MCB
MCB bank was established on July 7, 1947 at Calcutta. Quaid-e-Azam M.A. Jinnah was
very intent in the formation of MCB because of his apprehensions about the future of
banking industry in Pakistan. Adam Jee Daud was the promoter of the bank,

15
who commenced the venture with authorized capital of Rs. 300,000. After the partition of
Indo Pak Subcontinent the head office of the Bank was shifted to Dhaka, capital of
Bangladesh (formally known as East Pakistan). In 1956, the bank moved its registered
office to Karachi. Until 1974, private management operated the Bank. In 1974, with the
promulgation of Nationalization of Banks Act, the Bank was merged with the Premier
Bank Ltd. and was handed over to Government. Under the Government umbrella most of
the enterprises could not do well.
After the Government’s decision to privatize government owned entities in 1992, the MCB
was first bank to be privatized. Privatization was the milestone in the progress of the Bank.
Since privatization, MCB’s growth has been phenomenal. Today, MCB in one of the
largest foreign banks in Sri Lanka, the first bank in Pakistan to launch Global Depository
Receipts (GDR) in 2006, has strategic foreign partnership with Maybank of Malaysia
which holds 20% shares in MCB through its wholly owned subsidiary Mayban
International Trust (Labuan) Berhad since 2008, has international indirect regional
presence in Dubai (UAE), Bahrain, Azerbaijan, Hong Kong and Sri Lanka and serving
through a domestic network of over 1,190 branches and 700 ATMs across Pakistan with a
customer base of 5.00 million (apprx.)
MCB is reputed as one of the most sound financial institution and as one of the leading
banks in Pakistan with a deposit base of PKR. 500 bln (apprx.) and total assets of PKR
605 bln (apprx.). The bank is versed as one of the oldest and most responsible banks in
Pakistan and has played pivotal role in representing the country on global platforms while
being one of the few institutions that are recognized and traded in the international market.
The bank has also been acknowledged though prestigious recognition and awards by Euro
money, MMT, Asia Money, SAFA (SAARC), The Asset and The Asian Banker.

FUNCTIONS OF MCB BANK LIMITED

MCB BANK LIMITED performs following functions

 Agency services

 General Utility Services

16
  Underwriting of loans raised by the Government or public bodies and trading by
corporations etc.

 Providing specialized services to customers, and

 Hajj-related services. & many more

ROLE OF MCB IN PAKISTAN’S ECONOMY

Mobilization of Saving

MCB has been playing a significant part in mobilization the saving of the country. It
introduced different schemes during its career and in 2004 total value of its deposit was
more than 219,966 million.

Mobilization of Hidden Money

MCB has been introducing different schemes to mobilize hidden money of Pakistan
society such as crore Patti deposit certificate for fixed deposits MCB Rupee traveler
cheaques and MCB monthly income scheme etc.

Development of Industry

MCB has been planning a very significant role in development of industry in Pakistan. It
provides a medium and short –term loan to the industrial sector of Pakistan.

Trade and Commerce

MCB is a commercial bank. It has been providing facilities in trade in commerce. It has
played its significance role in the commerce and trade in Pakistan. It has been financing for
traders for short period, for the payment of their dues and working capital.

17
Education
MCB is also playing its role in education sector of Pakistan. It has been provided Qaraz-E-
Hasna since 1997 and three abroad scholar ship for higher education in commerce and
administration.

Health Sector
The MCB is also conscious of the inadequate health available in developing countries like
Pakistan in order to play its due part in development of this vital sector: it has contributed a
lot on this sector too.

Environment
MCB is the forefront of effort aimed at protecting the environment from degradation. In
cooperation with Pakistan environment protection council it is a part of overall plan for the
affirmation of more than Rs .1,12,00,00 MCB has taken his responsibility for greening of
designated areas in different district of Pakistan through campaign of tree plantation.

Foreign Trade
MCB has been playing its vital role in import and export through providing different
facilities such as leather of credit and other facilities to the exporter.

Foreign Remittance
MCB has 8 branches to provide the adequate facilities to person who are working abroad.

Tourism
MCB has issued the credit card and traveler’s cheques to facilitate the traveler and
development the tourism industry in Pakistan.

Employment
MCB has a great part to eliminate the unemployment in Pakistan. At recent time thousands
of people are employed at different posts and it has provided billion of loans to
unemployed man power of Pakistan.

Islamic banking
Islamic Banking Division was formed with effect from 1st January 2003, which in a short
span of time, has developed sufficient expertise, necessary infrastructure, information
18
technology, and manpower to run Islamic Banking Operations and offer Islamic Banking
Products.

MCB Virtual Banking

MCB Virtual Internet Banking offers you the convenience to manage and
control your bank account and finances; when you want and where you want.
MCB’s Virtual Internet Banking facility is:

-Simple

-Secure

- Free of cost.

MCB Virtual Internet Banking allows customers to access banking services, 24

hours a day, 7 days a week and throughout the year.

19
PROFITABILITY OF MCB

MCB is Pakistan’s fourth largest bank by assets having an asset base of USD 7 Billion as
at Q1, 2012, and the largest by market capitalization having a market capitalization
recorded at USD 1.2 billion at year end 2011 which was comparatively lower than USD
1.8 billion the year before, mainly on account of lower market value.

The Bank has a customer base of approximately 5 million and a nationwide distribution
network of 1200 branches including 22 Islamic banking branches (December 31, 2012)
within Pakistan and 4 branches outside the country (December 31, 2012 including the
Karachi Export Processing Zone Branch), and over 700 ATMs in 115 cities, in a market
with a population of over 210 million.

In 2011, MCB reported a profit after tax of PKR 19.4 billion (appx.USD 205 million) and
generated a return on average equity of 26.23% and a return on assets of 3.18% (2010:
3.13%) The Bank’s asset quality is strong with a gross NPL ratio of 8.64%. During the last
two decades, the Bank has concentrated on growth through improving service quality,
investment in technology and people, utilizing its extensive branch network, developing a
large and stable deposit base and managing its non-performing loans via improved risk
management processes.

MCB has 1200 branches (December 31, 2012) including local branches, and business
establishments in SriLanka and Bahrain including newly established Rep. Office in Dubai,
UAE. The Bank has also formed a private company in Hong Kong (fully owned subsidiary
of MCB) in partnership with Standard Chartered Bank, handling trade transactions of
select countries in the Asia-Pacific region. MCB has been successful in turning around its
operations since its privatization and is moving forward to set high performance standards
with the continuous support of its customers and leadership in banking technology.

INFORMATION TECHNOLOG
MCB’s name is synonymous with ATM facility in the country as the Bank has been a
pioneer in introducing 24-hour cash withdrawal facility and on-screen transactions. MCB
ATM/Debit Card, the most multifunctional card of the country, with its collaboration with
VISA can be used globally. The Bank also pioneered the idea of sharing its ATM network
with other banks by establishing an electronic platform for

20
enhanced network accessibility and secured online transactions. This step has also played
an important role in interconnecting all ATMs of the country.
MCB selects SYMBOLS v8 for Major Core Banking Project

PAKISTAN, SINGAPORE, OCTOBER 24, 2002 – MCB Bank largest private bank in
Pakistan and System Access, a leading global universal banking solutions provider, are
pleased to announce the signing of agreements to select SYMBOLS to run the bank's
business operations.

The Bank will be implementing the full suite of the latest version of SYMBOLS Version 8.
MCB Bank will run SYMBOLS e Finance modules to deliver personalized services to its
customers over multiple delivery channels, while SYMBOLS Enterprise Operations Center
will serve as its core banking transaction processing engine.

2.6 MCB AWARDS

The MCB Bank has proven its great success as it stands tall by winning not one, but two
precious awards every year. Below mentioned award recognizes MCB Bank’s record of
strong organic growth, as well as our contribution to the economy and society in Pakistan.
The Asset Triple A Award
Triple A
2012
National forum for environment & BEST CSR BUSSINESS

Health (NFEH)-2012 EXCELLENCE Award

BEST DEAL OF THE YEAR
Financial times 2012
Award
BEST BANK IN THE
Euro money 2012 .
PAKISTAN
2011 CFA Association Pakistan Most stable bank of the year
2011 CFA Association Pakistan Best bank of the year
2011 Euro money Best bank in Pakistan
BCR Award 2010 Banking
2011 ICAP/ ICMAP
sector

21
 CHAPTER 3
STRUCTURE OF MCB BANK LIMITED
An organizational structure consists of activities such as task allocation, coordination
and supervision, which are directed towards the achievement of organizational aims. It can
also be considered as the viewing glass or perspective through which individuals see their
organization and its environment

BOARD OF DIRECTORS

In 1991 MCB was privatized and its affairs were managed and controlled by the board of
directors, which were elected in the annual general meeting of shareholders.

Mian Mohammad Mansha Chairman

Vice
Mr. S. M. Muneer
Chairman

Mr. Tariq Rafi Director

Mr. Shahzad Saleem Director

Mr. Sarmad Amin Director

Mr. Mian Raza Mansha Director

Mr. Mian Umer Mansha Director

Mr. Aftab Ahmad Khan Director

Mr. Imran Maqbool

22
KEY MANAGEMENT

Audit Committee Members

Tariq Rafi – Chairman
Dr. Muhammad Yaqub
Dato’ Mohammed Hussein
Aftab Ahmad Khan
Muhammad Ali Zeb
Malik Abdul Waheed

Human Resource
Mian Mohammad Mansha
Chairman
Mian Raza Mansha
Mr. Imran Maqbool

Committee on Physical Planning, IT Systems and Contingency

Arrangements
Members
Mr. Sarmad Amin Chairman

Mian Raza Mansha

Mr. Tariq Rafi
S. M. Muneer
SBP Report Compliance Monitoring Committee Members

Dr. Muhammad Yaqub

Mr. Aftab Ahmad Khan
Mr. Imran maqbool
Chief Financial Officer
Mr. Salman Zafar Siddiqi
Company Secretary

Mr. Abdus S. Sami

23
ORGANIZATIONAL STRUCTURE

24
NUMBER OF BRANCHES
According to annual report 2017 the total numbers of branches of MCB bank limited is
more than 1300

AREAS OF OPERATION
MCB has wide range of branches inside and outside of country.

Summaries of Branches

NO.OF
GROUPS CIRCLE REGIONS
BRANCHES
CBBG- SOUTH 5 9 226
CBBG – EAST 3 8 250
CBBG- CENTRAL 4 13 374
4 11 288

……….CBBG-NORTH
WHOLE SALE BANKING - - 10
ISLAMIC BANKING - - 25
PRIVILLAGE BANKING - - 9
TOTAL 16 41 1182
OVERSEAS - - 7
EPZ - - 1
GRAND TOTAL 16 41 1190

GROUPS IN MCB

I have learnt about different groups regarding compensation and benefits.

 Retail Banking Group (RBG)

 Audit Group (AG)

 Consumer banking Group (CBG)

 Treasury and Forex Group (try and fx)

25
  Special Asset Management Group (SAMG)

 Wholesale Banking Group (WBG)

 Strategic Planning & Investments Group (SPIG)

Retail Banking Group:

The pledge to bring improvement and development in banking services offered by MCB,
made by made by the management on the eve of taking over the reins of bank in April
1991 stands largely fulfilled. Improvement of branches and development of its network
formed the mainstay of pledge. CBBG has been in the forefront of implementing its core
values of integrity, Respect, Excellence, Customer Centricity and Innovation. Taking the
above values as given, CBBG has translated them into a rapidly moving the wheel of
dynamism, whose constituents the following:

 Know your portfolio

 Circular Liquidity

 Branch visit

 Monthly review meeting

 Service quality

 Operational Excellence
Operations Group:
Since privatization MCB Bank operations has been instrumental in managing various
functions of the bank. Operations of the bank were managed by the several head office
divisions. These divisions played a vital role in managing daily affairs of bank these
operations include managed manually, real time online banking, MCB master cards and
ATMs.
Audit Group:
Internal audit function is maintenance of the fundamental “checks and balances” for sound
corporate governance. Adequate internal controls within the effective internal audit
function that independently evaluate the control system within the banking

26
institutions. This paper addresses the journey of MCB’s internal audit function over the
past two decades.

Consumer Banking Group:

Consumer banking Group was formally structure in 2002 and started its operations in
2002. It has involved into an important pillar in MCB’s overall banking structure through
its valuable presence.
This group is provided under the following services:
 Lending

 Remote banking

 Investment services

 Rupee traveler cheques

 Service quality

TREASURY & FOREX GROUP:

This group deals all foreign currency accounts network. It
also deals the following
 Managing the banks liquidity across the entire branch

 Ensuring liquidity in foreign currency account

 Maintain reserve with state bank

 Trading in Forex

 Interest rate risk

 Trading in government securities

 Treasury bills

 Pakistan investment bonds

27
Special Assets Management Group:

The primary business of this group is to optimize recovery yield in the loss classified
segment of the loans assets. These loans primary pertain to the commercial banking,
corporate banking, and Islamic banking groups also.

Strategic Planning and Investment Group:

This group makes the future strategic planning for the bright future of MCB.

Wholesale Banking Group:

This group started its working in 2005 the roles performed by this group are as under:
 To raw control and manage investment banking

 To control and manage transaction banking

 Collections

 Payments

 Channel financing

 Local rupee Drawing arrangement

 Home remittances

 Trade products

Departments of MCB Bank Limited

For proper functioning of branches and the overall bank has been divided in different
departments. Division in a branch is as follows:
• Account opening department of MCB Bank Limited

• Remittance department of MCB Bank Limited

• Clearing department of MCB Bank Limited

• Cash department of MCB Bank Limited

28
 • ATM department of MCB Bank Limited

• Foreign exchange department MCB Bank Limited

• Information Technology department of MCB

• Advances department

Account Opening Department:

Account opening department as it name suggests deals with opening new deposits accounts
for customers. To open an account the customer have to meet the general banking manager
with an introducer (the person who is going go introduce that person in the bank) and get
an application form used for account opening.

A card for specimen signature is also supplied to customer. Manager has every right not to
accept this contract if he is not satisfied by the details provided by the customer. MCB
Bank currently offers following types of account

• Basic Banking account

• Current account

• Saving account

• Foreign currency account

• Smart dollar account

• Flexi deposit mahana profit

• Business account

• Saving extra account

• Current life account

• Smart saving account

• Saving maximizer account

29
Remittance Department:
A major function of any banking system is the transfer of funds from one client or one
place to another. By providing this service to the customer the bank earns a lot of income
in the form of service charges. This department deals with local currency remittance i.e.
remittance from one city to another without actually carrying the currency.
MCB uses following instrument for transferring of money:
• Demand Drafts (DD)

• Pay Order (PO)

• Cress Branch Transaction /Online (CBT)

• Foreign Remittance (MCB Payments , X-press Money & Money Gram etc…)
Clearing Department:

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. As the collecting banker
runs certain risks in receipt of their ownership the law has provided certain protections to
the banks.
The Negotiable Instrument Act, 1881, lays down hat drawer or holder of a Cheques or
draft may cross the instrument generally or specially. It further lies down that crossed
Cheques can only be paid to a banker, who collects it for a customer in good faith and
without negligence.
There are four types of clearing:-

• Inward Clearing

• Outward Clearing

• Intercity Clearing

Information Technology Department:

Information Technology (IT) refers to techniques used in business for transmitting, storing,
manipulating and retrieving all kinds of data, including speech, text, movie, graphics and

30
reports of events such as equipment malfunction, intrusion etc. Typically, Information
Technology relates to the hardware and software that businesses use to manage and operate
a range of business processes.

Cash Department

Cash department of MCB is given complete responsibility of handling all receipts and
disbursement of cash, as a result transaction in both local, foreign currencies & near cash
items. Cash Department plays a vital role in the operational activities of the branch, mainly
by concentrating on counter, in order to provide cash and cash related services to the
customers. Responsibilities of this department are as under:

i. Cash Receipts/deposit

ii. Cash Payments

iii. ATM cash replenish

iv. RTC Dealing (cash dealing )

v. Collection of Utility Bills

Foreign Exchange department

All forex transactions payments and receipts on behalf of customers are dealt with this
department. Only those branched can deal forex which are approved by SBP. Banks have
to get a license before they can start dealing in FOREX. There are 2 types of licenses,
Restricted and Unrestricted License.
Functions
1. FC Payment & receipt

2. FC remittance Inward & Out word

3. Foreign exchange department of Mcb deals in following currencies

 USD

 GBP

 EURO

31
Credit /Advances department
The bank is profit seeking institution. It attracts surplus balance from the customer at low
rate of interest and makes advances at a higher rate of interest to the individuals and
business firms. Credit extensions are the most important activity of all the financial
institutions, because it is the main source of earnings. Advances department is one of the
most sensitive and important department of the bank. The major portion of the profit is
usually earned through this department. The job of this department is to make proposals
about the loans; the credit management division of head office directly controls all the
advances. The advances Department receive application from intending borrowers. After
receiving application the advance department processes it further. After analyzing and
detailed investigation, they decide whether to approve the loan or not. Some loan approvals
are made by the Manager of the branch within his powers as prescribed by the bank’s
higher authorities, while some loan applications are submit to higher authorities for their
approval.

Some advances are of the following nature

• Loan against Gold

• Agriculture advance to farmers

• Medium term advance for working capital

• Long term advance for setting industry

• Short term advance to businessman
Types of Financing
Running Finance:

Among the various modes of bank financing credit line extended to customers under
the head of R/F are the most commonly used. With drawls on the current accent are
allowed in excess of the credit balance which the customer has maintained, thereby
creating a R/F.
Under this type of financial accommodation the borrower is required to adjust
the finance provided by the bank with in the stipulated expiry period. The account
may, however, be freely operated by way of multi transaction provided that the
sanctioned limit is not, at any time exceeded and also provided that the account is
operated strictly in accordance with the approved limit terms and conditions.

32
Cash Finance:

Cash Finance is also provided on mark up basis on reducing balance system, as explained
in case of R/F. It is provided either against pledge or hypothecation of goods or
merchandise. The customer is required to adjust the advance with in the expiry period but
could operate the account freely, with in the sanctioned limit.

33
 CHAPTER 4

PRODUCT AND SERVICES OF MCB BANK LIMITED

4.1 PRODUCT AND SERVICE PROVIDED BY MCB

Product / Services

The MCB bank offers a whole range of banking products/ services that can be
broadly divided into following categories:

Online Services Accounts Loans Cards

Smart Card
ATMs
Basic Account Business
Debit Card
Mobile Banking Current Account Sarmaya MCB Visa Card

Call Centre
Saving Account Personal Loan
Bill Payments
Pyara Ghar
Foreign Currency
MCB Lite
Account
Virtual Banking Smart Dollar Car4U
Account

Savings 365 Gold

Special Rupee Term
Business Account
Saving Extra Account
Current Life Account

34
 Call now for answer to
your queries, banking
services, ATM services,
The Largest network of over 1190 on-line mobile banking
branches in the country and growing. Providing services, RTC services,
customers with 24x7 real time on-line tele banking services
transaction facilities. and MCB product
information.

35
 Cash management
services for corporate
customers. Helps
The nation's largest network of over 700 customers substantially
ATMs and growing. Get 24 hour convenience reduce their receivable
of cash withdrawal, mini statement, bill collection time frame,
payment and funds transfer services. improve cash flow and
business management.

Islamic banking

services through
exclusive units /

A secure instrument of payment,offering CASH branches offering a

FREE convenience. It is the most powerful range of liability and
Debit and ATM Card providing 24 hour direct asset based Sharia

access to your bank compliant products like

Musharika, Murabaha,
Ijara .

36
Working Capital Loans

Based on the customers specific need the corporate bank offers a number of different
working capital financing facilities including running finance cash export refinance pre
shipment and post shipment etc.

Term Loans
MCB offers shorts to medium term finance to meet capital expenditure and short term
working capital requirement of its customer. The loans are structured on the basis of
underlying project characteristics and cash flow of the business.

Trade Finance Services

The corporate bank offers trade finance services that induce an entire range of import and
export activities including issuing letter of credit (L/CS) purchasing export document
providing guarantees and other support services.

Cash Management
MCB network of about 946 branches in Pakistan enables its customer to collect and
disperse payment efficiently with MCB cash services. This also enables MCB to offers its
customer a choice of paper based or electronic fund transfer solution including collection
amount cross branch on line transaction etc.

Investment Banking
MCB investment banking team has emerged as a leading player in Pakistan Investment
banking area. The team handles advisory corporate finance and capitals market related
transaction. Within these areas, the team has developed expertise in:

• Private Placement

• Debit / Equity Underwriting

• Term Finance Certificate

• Loan Syndication
37
 • Arrangement of Non-Fund Facilities

• Mergers and Acquisition

• Privatization

MCB Master Card

MCB master card international has expended globally in more location in the world than
any other card. The card was introduced by Muslim commercial bank limited in 1995 and
now offers card member over 15 million outlet in 223/ countries.
MCB Remit Express
Fasts to Pakistan Anywhere in Pakistan
The fast way of getting MCB customer money across the Pakistan. Remit express offers
low – cost remittance from U.A.E and Saudi Arabia customer related friends or business
associate receive draft within 72 hours MCB remits express has been specifically designed
to meet the needs of expatriate Pakistan community residing in the gulf countries.

Easy Personal Loan

MCB easy personal loan provides its customer with the financial advantage to do thing
they have always wanted to but never had the sufficient fund for. Take that much needed
holiday but a car, refurnished house, purchase a new TV, and finance a better education for
children.

MCB LOCKERS
MCB lockers are the best protection for valuables. Lockers of different capacities are
available nationwide.
Branches all over the country offer Safe Deposit Lockers facility to their customers. The
lockers are invariably to be installed in the Strong Room of the Branch to ensure maximum
security against burglary, theft and riots. Each locker irrespective of its size has a separate
number and is fitted with a double key lock which cannot be except with the two keys, one
being Master Key under the custody of Manager/Authorized

38
Officer and the other possessed by the customer. The relationship subsisting between Bank
and Person to whom locker is rented out will be that of a Licensee and a Licensor and not
that of a customer and banker.

ISLAMIC BANKING
With the help of Shariah specialists, lawyers and professional commercial bankers, MCB
Islamic Banking provides Riba Free and Shariah Compliant solutions to various customer
segments in a growing number of cities.

VISION OF ISLAMIC BANKING

To play a dynamic role in promotion of Islamic Banking and win customers trust by

providing sharia compliant financial services.

MISSION OF ISLAMIC BANKING

To become a leader among Islamic Banks of the country in the coming years capturing
major share of the domestic Islamic financial market.1
 Deposit Schemes

For customers who are looking for a deposit opportunity where they can purse their
funds and reap halal returns on it, MCB offer the following products:
Al-Makhraj Saving Account
Al-Makhraj Ianat Account
PRIVILEGE BANKING
A first from a local bank, MCB Privilege through its dedicated, world class Privilege
Centers offers a higher level of personalized services, more rewarding in-branch
experiences and a wide array of deposit and investment products that are tailored to meet
the financial expectations for affluent clientele. As members of MCB Privilege, customers
experience unparalleled advantages that put them ahead of others. MCB’s dedicated
Privilege Centers a wait to welcome you in Karachi, Lahore, Islamabad and Multan, with
plans to expand to more locations.

39
 CHAPTER 5

FINANCIAL STATEMENTS

CONSOLIDATED STATEMENT OF FINANCIAL

POSITION.
2018 2017 2016 2015
ASSETS
Cash and balance with
53122620 45407264 38774871 39631219
treasury banks Balances
2357418 1551518 6077354 4106526
with
other banks Lending 955087 4401781 3000000 4100079
319005983 215747844 169484647 98165391
to 225794738 254565471 253248265 262133830
financial Institution
22418450 21061787 18099010 17320485
Investment - Net
Advances - Net - - - -
32670511 27746198 23057731 19828228
Operating fixed 656324807 570481863 511741878 445285758
assets
Differed Tax
Assets - Net
Other assets -Net
LIABILITIES
9466818 10265537 8201090 10551468
Bills payable 39100627 25684593 44662088 22663840
Borrowings Deposits
491146798 431295499 367581075 330152549
and other accounts
Sub-ordinated - - - -
loans
Liabilities against - - - -
assets subject to 564670502 488482736 3201756 440295
finance lease 18459162 16090374 15782589 21345473
439428598 385153625
Differed tax
91654305 81999127 72313280 60132133
liabilities - Net
Other Liabilities

40
ANALYSIS OF FINANCIAL STATEMENTS

2018 2017 2016 2015

% % % %
ASSETS
Cash and balance with
treasury banks 8% 8% 8% 9%
Balances with other
Banks 0.30% 0.30% 1% 1%
Lending to financial
Institution 0.10% 1% 1% 1%
Investment – Net 48% 38% 33% 22%
Advances – Net 35% 45% 50% 59%
Operating fixed assets 3% 4% 4% 4%
Differed Tax Assets - Net 5% 5% 5% 4%
Other assets -Net 5% 5% 5% 4%
100% 100% 100% 100%

LIABILITIES
Bills payable 1% 2% 2% 2%
Borrowings 6% 5% 9% 5%
Deposits and other
Accounts 75% 76% 72% 74%
Sub-ordinated loans
Differed tax liabilities –
Net 1% 1% 1% 0%
Other Liabilities 3% 3% 3% 5%
86% 86% 86% 87%

Net Assets 14% 14% 14% 13%

41
 Represented by
Share capital 1% 1% 1% 1%
Reserves 6% 7% 8% 8%
Un appropriated profit 4% 4% 3% 2%
Surplus on revaluation
of assets - net of tax 2% 2% 2% 1%
14% 14% 14% 13%

COMMENTS ON VERTICAL ANALYSIS OF BALANCE

SHEET & PROFIT AND LOSS ACCOUNT

Vertical analysis is an analysis of percentage financial statements where all the

balance sheet items are divided by total assets and profit and loss account items are
divided by net revenue.

In vertical analysis of balance sheet of MCB bank limited, we see that over the five
year span, the percentages of cash balance is decreasing from 2008 to 2011and
investment made by bank increases from 28% to 48%. It shows about 20% increase
in investment. A decreasing trend is also seen in liabilities. Which decrese from 87%
to 86 %, consequently the net asset %age is increasing from 2008 to 2011. The
shareholder account is almost same percentage with slightly change in amount of
shareholder account.

Similarly, in profit and loss account of MCB bank net markup is decreasing from 65%
to 60% and shows decreasing trend. Non markup interest income also decreased from
86% to 72%.there is a significant decrease in profit after taxation i.e. 70.86% to
45.92% similarly profit after taxation is also decreased from57.72 % to 28.30%
The decrease in net profit ratio is may be because of increasing general and
administrative expenses. A good control over administrative expenses can improve
net profit ratio.

42
 CHAPTER 6

SWOT ANALYSIS OF MCB BANK LIMITED

SWOT ANALYSIS
The bank along with its subsidiaries is engaged in providing a wide range of banking
products and services to retail clients, and small and medium enterprises in Pakistan, Asia
Pacific and the Middle East. It offers various deposit products, including fixed deposits,
savings deposits, term deposits, current accounts, margin accounts and foreign currency
accounts. MCB also offers personal loans, auto loans, working capital loans, and term loan
SWOT analysis is a strategic planning method used to evaluate the Strengths,
Weaknesses/Limitations, Opportunities, and Threats involved in an organization.

STRENGTHS
The strengths of MCB are as:

 MCB is the first Pakistani privatized bank and because of its quality management,
marketing, innovation in products and services is performing well in financial
market
 Has established a good reputation in the banking market.

 Strict adherence with the banking procedures requirements, SBP’s prudential

regulation requirements and its SROs and international banking requirement as well
as to its own set policies.
 Strong and its attractive products.

 Better focus on customer services and customization.

 Flexibility with the changing environment.

 Induction of the highly qualified professionals to change overall set up.

43
WEAKNESSES
The noted weaknesses of MCB are as:

 The majority of people are not well aware about the products of MCB.

 Therefore it should advertise extensively especially RTC and Master Cards.

 A behavior has been noted that bank tries to feel at ease with good looking, rich
and educated people and the poor looking customers feel some bit strange in the
environment of the bank. The bank employees should try to accommodate
behaviorally all type of customers.
 In MCB there is lack of specialized skill because of job rotation policy of human
resource department. The bank should concentrate upon increasing its abilities on
individual service basis.
 Mismanagement of time is another big mistake in MCB branches, the bank official
time of closing is 5:30pm but due mismanaging of time allocation and work the
staff is normally on their seats till 7:00 or 8:00 clock.
 Process of development is bit slow due to its conservative approach.

 Never prefer to be a leader and prefer to be a follower of other.

 Slow improvement and acceptance of technological changes.

 More emphasis on deposit accumulation and less on their mobilization

 The bank has large number of employees who are simple graduate with no banking
background.

FINDING AND RECOMMENDATIONS PROPOSAL TO BOOST THE MCB

BANK

Commercial bank is the back bone of Pakistan economy. One of the major problems
is high tax rate about 62% traveling cheques are also major parts of commercial banks
which has some impact on the economy. SBP has imposed excise duty at the rate of
10% to improve the business of traveling cheques. With privatize political
interference and corruption was reduced. The Govt. only monitors the affairs of the
commercial banks through State Bank of Pakistan.

44
PROFITABILITY

Profitability of MCB has been better for the last decade. It is because of availability of low
cost fund. In the 1998 the yields of advances was reduce mainly due to decrease

in the mark up rates by NCBS on the instruction of P.M. now MCB focus on the new
investments.

HUMAN RESOURCE MANAGEMENT

For the success of any organization in the competitive environment, HRD becomes very
important but unfortunately MCB human resource is among the most de- motivated lot in
the banking industry. But MCB is completely ignorant of this fact virtually there is no HR
development but HR destruction. But this is also true that MCB has achieved deposit
growth previously but in the changing of banking industry awareness among the customer..

INTERNATIONAL BANKING GROUP

It is often say that our banks are not sufficient to transfer the money from abroad MCB
should commonly used the telephone transfer on minimum changes. More branches of
MCB should be open at those places of the world where reasonable no. of Pakistani have
been moving.

45
BIBLIOGRAPHY

 MCB annual report 2015& 16

 MCB annual reports 2013 & 2014

 Operational Manual of MCB Bank

 Managerial Finance (Lawrence J. Gitmann)

 Khan Rana, Sadsf Hussain (1991) Banking Currency and finance, ilmi Kutab
kahana Lahore
 Klein, johanf (1998) money and economic, McGrath hill, New York

 Meeni,S A (1992) Money Banking in Pakistan Habib Publisher Multan

 Siddiqi Asrar (1998) practical and law Banking in Pakistan, Habib Publisher
Mulatan
 If flan, Charles & Languet on Pierre (1996) International Banking, Lwin Book Co
New York
 Fundamentals of Financial Management (James C.V Horne)

 Branches & booklets

INTERNET

 www.mcb.com.pk

 www.investopedia.com

 www.wikipedia.com

 www.google.com

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