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INTERNSHIP REPORTS ON MCB BANK Ltd.
ALI NAWAZ KHAN
(9830)
Submitted in partial fulfillment of the requirements for the degree of Master in Business
Administration
At
National University of Modern Languages
Islamabad, Pakistan
September 2010
Copyright by ALI NAWAZ KHAN 2010
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NATIONAL UNIVERSITY OF MODERN LANGUAGES
Faculty of Management Sciences
It is hereby certified that the report has been thoroughly and carefully read and
Recommended to the Faculty of Management Sciences for acceptance of Final
Internship Report. By Ali Nawaz Khan Roll No. 9830, Session (Aug
2008 to Jun 2010) /Eve, in partial fulfillment of the requirements for the degree of
Master of Business Administration of National University of Modern
Languages Islamabad.
Dated: Sep. 2010
Supervisor Name ____________________________
Supervisor Signature ____________________________
Panel Member Name ____________________________
Panel Member Signature____________________________
Head of Department: _________________________
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Acknowledgement
First of all I would like to thanks to Allah on this occasion also want to show my gratitude
To my loving parents and humble teachers who make me able to be At this position.
I also thankful to all the staff of MCB I-9 Branch Islamabad especially Mr. Abid Rafiq
Dogar (Branch Manager) and Muhammad Yasin for their cooperation in my work.
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DEDICATION
This Report is dedicated to my parents and especially my brothers Qasir and Tabassum
whose supports and prayers give the result to me in the shape of MBA.I am also thank full to my teachers especially Sir Javad Jawad Sb. Whose support and guide me for preparation of this Report.
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Executive Summary
MCBBank Limited Has a solid foundation of over 50 years in Pakistan, with
network of over 1000 branches, over 850 of which are Automated Branches, over 350
MCB ATMs in 41 cities nationwide and of over 12 banks on the MNET ATM Switch.
MCB's operations continued to be streamlined with focus Rationalization of expenses,
realignment of backend processing to increase productivity, enhancement of customer
service standards, process efficiency and controls. The Bank has taken the lead in
introducing the innovative concept centralizing Trade Services in country by providing
centralized foreign trade services to branches a view to improve efficiency, expertise and
reduce delivery cost.
During my internship in MCB I worked in Remittances, Advances, Foreign Exchange and
Customer Service department and I successfully completed all the task that were assigned
to me.
During the course of internship I learned about different functions performed
Remittances, Advances, Foreign Exchange Customer Service Office department and bank
as a whole. I also learned banks correspondence with their customers and within
branches. I learned about documentation requirements record keeping for different
activities and processes, especially the documentation requirement for different kinds
financing facilities.
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Table of Content:
Title Page i
REGISTRATION FORM ii
Acknowledgement iii
Dedication iv
Executive Summary v
Table of Content vi
CHAPTER # 1 01
INTRODUCTION 01
BACKGROUND OF THE STUDY 01
LIMITATION OF THE STUDY 02
OBJECTIVES 02
METHODOLOGY 02
ORGANIZATION 03
SUMMARY 04
CHAPTER # 2 ROLE OF SECTOR ANDORGANIZATION 05
INTRODUCTION: 05
HISTORY OF BANKING IN PAKISTAN 05
ROLE OF THE ORGANIZATION IN PAKISTAN 08
OVERALL ORGANIZATION AND FUNCTION OF OR IN PAK.09
Vision Statement 10
Mission Statement 11
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VALUES 12
FUNCTIONS 13
FINANCING 14
Auxiliary function 16
ORGANIZATION OFFICE IN, WHICH YOU ARE WORKING 18
SUMMERY 19
CHAPTER # 3 HISTORY OF ORGANIZATION 20
BRIEF HISTORY OF ORGANIZATION 20
NATIONALIZATION
PRIVATIZATION 21
Awards of MCB 22
Present Status 22
RELATIONSHIP OF HEAD OF TO BRANCHES 24
MAIN DEPARTMENTS AND THEIR JOBS 24
INWARD CLEARINGS 27
OUTWARD CLEARINGS 27
ISSUANCE OF CHECQUE BOOKS 28
CANCILATION OF ATM CARDS 29
PAYMENT OF RETIREMENTS 30
FOREIGN REMITTANCES 30
ADVANCES/CREDITS 31
BASIC BANKING ACCOUNTS 32
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PAK RUPEE OR FOREIGN CURRENCY DEPOSITS 32
SAVINGS ACCOUNTS 32
MCB RUPEE MAXIMIZER ACCOUNT 33
CURRENT ACCOUNT 33
KHUSHALI BACHAT ACCOUNTS 33
MCB ENHANCED SAVING ACCOUNT 34
MCBS PARTNERS IN BILL PAMENT 35
INVESTMENT BANKING 35
ABOUT REMIT EXPRESS 36
OFFICES OR FIELD OFFICES 37
MCB BRANCH NETWORKS 37
CURRENT STAFF 37
WORKLOAD 39
RESPONSIBILITIES 39
CRITICAL ANALUSIS OF THE BRANCH 40
PERFORMANCE 40
SUMMERY 41
CHAPTER # 4 POLICIES 42
INTRODUCTION 42
POLICIES 42
RISK MANAGEMENT 43
SUMMERY 47
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CHAPTER # 5 DIFFERENT MODELS 48
INTRODUCTION 48
SWOT ANALYSIS 48
POLITICAL AND LEGAL ENVIRONMENT 50
ECONOMIC TRENDS 50
TECHNOLOGICAL FACTORS 51
RATIO ANALYSIS 52
Interpretation 54
CHAPTER # 6 RECOMMEND
ATION 55
SHORTAGE OF STAFF 55
STAFF IS NOT ADEQUATLY TRAINED 55
OTHERS 56
OVER ALL SUGGESTION FOR IMPROVEMENT 56
Introduce variance profitable Investments Schemes 56
Training Staff 57
Change The Nature Of Work 57
Special Training In Abroad 57
Incentive to Employees 58
Others 58
Reward and Punishment 59
Survival Of The Fittest 59
REFERENCES 60
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Chapter # 1 Introduction
Introduction:
Chapter one is about introduction of report. As a part of requirement of MBA degree
eight weeks internship is necessary for student. This chapter includes background,
purpose, scope, objectives and methodology of the study. It also include introduction
of organization
Background of the study:
Internship training program during Master in Business administration Program is
necessary for the partial fulfillment of the completion of Degree of Master in Business
Administration. 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 setting. Ideally, internship will enable interns to:
(a) integrate and use my knowledge and skills from the classroom
discover where further competence is needed
take steps to gain that competence under educational supervision, and
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(d) Become better acquainted with the types of work settings in which such competence
can be applied.
Scope
This study will facilitate the students regarding the working of Banking sector of Pakistan
because most of the teachers during their lectures use the examples of Banks like MCB,
National Bank, UBL, Bank Alfalah and many others students should study this
report so that they must grasp the functioning of such Banks
Limitation of the Study:
The study is done with the sole purpose of doing the best work but There was certain
limitation faced during the internship period. The most Important limitation from which
the study suffers is the non-availability of Information in a manner required for analysis
and the secrecy of the bank. Another important limitation of the study is time and space
constraint.
Objectives
I worked as an internee in MCB Industrial Area branch, I-9 Islamabad. The main
Objectives to study in MCB were:
To get some experience in 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 of data.
Primary Data:
Observation of functions of Branch operations on the spot
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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
Organization:
MCB is one of the leading banks of Pakistan with a deposit base of About Rs. 368 billion
and total assets of around Rs.500 billion. Incorporated in1947, MCB soon earned the
reputation of a solid and conservative financial Institution managed by expatriate
executives. In 1974, MCB was nationalized Along with all other private sector banks.
The Bank has a customer base of approximately 4 million, a Nationwide distribution
network of over 1,000 branches and over 450 ATMs in The market.
During the last fifteen years, 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.
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Summary
This is the first chapter of the report containing the detail introduction
Of the report. Internship training program during Master in Business
Administration Program is necessary for the partial fulfillment of the
Completion of Degree of Master in Business Administration. Internship will Enable
interns to integrate and use my knowledge and skills from the
Classroom. This study will facilitate the students regarding the working of
Banking sector of Pakistan. Collection that is primary sources and secondary sources for
that purpose. Internship report I required some kind of data, I used both methods of data
For achieving my purposes, objectives and for the preparation of the report.
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Chapter # 2 Role of Sector and Organization
INTRODUCTION:
This chapter will summarize that whats the current situation of the Banking sector in
Pakistan. What elaborate the importance of MCB in the Banking sector of Pakistan? This
chapter will explore the role of MCB in the Economic & social development of Pakistan.
Moreover this will also tells you About the functions thats the organization is performing
and about the Internship office.
Overall respective sectors in Pakistan:
Banking is one of the most sensitive businesses all over the world Banks play very
important role in the economy of a country and Pakistan is no Exemption. Banks are
custodian to the assets of the general masses. The Banking sector plays a significant role in
a contemporary world of money and Economy. It influences and facilitates many different
but integrated economic Activities like resources mobilization, poverty elimination,
production and Distribution of public finance.
HISTORY OF BANKING IN PAKISTAN:
At the time of independence, commercial banking facilities were Provided fairly
well here. There were 487 offices of schedule banks in the Territories now constituting
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Pakistan. An Expert committee was appointed The committee recommended that the
reserves bank of India should continue Their function in Pakistan until 30 September.
1948, and Pakistan would take Over the management of public debt and exchange control
from reserve bank Of India on April 1948 and that Indian notes would continue to be legal
tender Having their registered office in Pakistan transferred them to India in order to Bring
a collapse of a new state. By 30 June 1948 the number of the offices of Scheduled banks
in Pakistan declined from 487 to only 195.In order to make Necessary arrangement for the
assumption of control and expert committee Was appointed to recommend necessary
steps, including the required Legislation to establish a central bank for Pakistan. The
governor-general of Pakistan Quaid-e-Azam Muhammad Ali Jinnah inaugurated the State
Bank of Pakistan order was promulgated on May 12, 1948. The first Pakistani notes Were
issued in October 1948 in the State Bank of Pakistan withdrew the Reserves Bank of India
notes of the value of Rs.125.02 crores with the help The Pakistan notes.
On 1st January 1947 all Pakistani banks were nationalized through Nationalization Act
1974. Under this law all Pakistani Banks become a public Property. All small banks were
merged in bigger banks to create five major Pakistani banks. These banks were to control
by Pakistani Banking Council There are still controversies about this act of Govt. 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
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_ Decrease in profitability as well.
In 1990 the govt. decided to denationalize all the nationalized institutions It 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 two privatized banks are:
MCB Taken up by a private group in April, 1991 & ABL taken up by its own Employees
in September 1991. After these changes a large number of private And foreign banks
started their operation in Pakistan.
Now, Pakistan has a well-developed banking system, which consists of a Wide
variety of institutions ranging from a central bank to commercial banks And to
specialized agencies to cater for special requirements of specific Sectors. The country
started without any worthwhile banking network in 1947 But witnessed phenomenal
growth in the first two decades. By 1970, it had Acquired a flourishing banking sector.
Pakistan s banking sector has remained remarkably strong and resilient During the
world financial crisis in 200809, a feature which has served to Attract a substantial
amount of FDI in the sector. Stress tests conducted on June 2008 data indicate that the
large banks are relatively robust, with the Medium and small-sized banks positioning
themselves in niche markets Banking sector turned profitable in 2002. Their profits
continued to rise for the Next five years and peaked to Rs 84.1 ($1.1 billion) billion in
2006.
During the fiscal year of 2008-2009, total assets of all the scheduled banks Increased
by Rs 574. 7 billion. Total assets grew by 6.4 per cent from Rs 8861 Billion in June 2008
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to Rs 9436 billion in June 2009. During the fiscal year of2008-09, there was also an
increase of Rs 248 billion in the net advances of The scheduled banks. Net advances grew
by 8.67 percent from Rs 2873 billion In June 2008 to Rs 3128 billion in June 2009.
Role of the organization in Pakistan
MCB Bank Limited Formerly known as the Adamjee Group incorporated Muslim
Commercial Bank Limited On July 9, 1947 in Kolkata In Bengal, under the Indian
Companies Act, VII of 1913 as a limited Company`. But due to changing scenario of the
region, the certificate of Incorporation was issued on 17 August 1948 with a delay of
almost 1 year, The certificate was issued at Chittagong. The first Head office of the
company Was established at Dacca and Mr. G.M. Adamjee was appointed its first
Chairman. It was incorporated with an authorized capital of Rs. 15 Million. The
Bank transferred its registered/Head office from Dhaka to Karachi on August 23, 1956
through a special Resolution The bank was established with a view to provide banking
facilities to The business community of the South Asia. The bank was nationalized in
1974 During the government of Zulfiqar Ali Bhutto. This was the first bank to be
Privatized in 1991 and a consortium of Pakistani purchased the bank Corporate groups led
by Nishat Group.
MCB is Pakistans fourth largest bank by assets having an asset base of US$6.7 billion,
and the largest by market capitalization having a market Capitalization of US$4.1 billion.
The Bank has a customer base of Approximately 4 million and a nationwide distribution
network of 1,026 Branches, including 8 Islamic banking branches, and over 300 ATMs,
in a Market with a population of 160 million.
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In 2008 the head office of MCB was shifted from Karachi to Lahore in A newly
constructed building, namely MCB House located at Sharea Ghous Ul-Azam, commonly
known as Jail Road
Overall organization and functions of org. in Pakistan:
MCB is one of the leading banks of Pakistan with a deposit base of About Rs 368
billion and total assets of around Rs.500 billion. Incorporated in1947, MCB soon earned
the reputation of a solid and conservative financial Institution managed by expatriate
executives. In 1974, MCB was nationalized Along with all other private sector banks.
The Bank has a customer base of approximately 4 million, a Nationwide distribution
network of over 1,000 branches and over 450 ATMs in The market.
During the last fifteen years, 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.
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Vision Statement
To be the leading financial services provider, partnering with our Customers for a
more prosperous and secure future.
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Mission Statement:
We are a team of committed professionals, providing innovative And efficient
financial solutions to create and nurture long-term Relationships with our
customers. In doing so, we ensure that our Shareholders can invest with confidence
in us.
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VALUES:
INTEGRITY
We are the trustees of public funds and serve our community with Integrity. We believe
in being the best at always doing the right thing We deliver on our responsibilities and
commitments to our customers As well as our colleagues.
RESPECT
We respect our customers values, beliefs, culture and history. We Value the equality of
gender and diversity of experience and education That our employees bring with them.
We create an environment where Each individual is enabled to succeed.
EXCELLENCE
We take personal responsibility for our role as leaders in the pursuit of Excellence. We
are a performance driven, result oriented organization Where merit is the only criterion
for reward.
CUSTOMER CENTRICITY
Our customers are at the heart of everything we do. We thrive on the Challenge of
understanding their needs and aspirations, both realized And unrealized. We make every
effort to exceed customer expectations through superior services and solutions.
INNOVATION
We encourage and reward people who challenge the status quo and Think beyond the
boundaries of the conventional. Our teams work Together for the smooth and efficient
implementation of ideas and Initiatives.
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Functions:
Basically there are two basic categories on the basis of functioning of MCB Bank, which
are.
Principal Function
Auxiliary Function
Principal function
The principal functions are basically the core functions of the bank that is there Lifeblood
of bank, which are
Acceptance of deposits
Financing
Deposits
There are basically two types of deposits and their nature vary due to time Factor, which
are
Demand deposits
The demand deposits have no legal restriction on drawing of the Deposited amount and
the cash is readily available on demand without Any conditions.
Demand deposits are further classified into two categories
Current deposits
The current deposits are non-interest bearing deposits and Earn the most for banks as there
is no cost for the banks but the Depositor can claim no interest whatsoever.
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Saving deposits
The saving deposits are the interest bearing deposits and although There are no such
restrictions but it is mostly preferred for saving and Salaried class and similar class clients
deposit in this category to earn Interest so no regular withdrawal takes place in this type of
deposits.
Time deposits
On the contrary the time deposits are deposits for a particular Period of time and cannot be
easily withdrawn on demand and if the Amount is withdrawn certain penalty is levied on
withdrawal before Time. Time deposits are further categorized into two categories that are
Notice time deposits:
The opposite is a Demand deposit or a sight deposit, which can Be withdrawn at any time,
without any notice or penalty; e.g. Money deposited in a checking account or savings
account in a bank.
Fixed term deposits:
A deposit held at a financial institution that has a fixed term These are generally
short-term with maturities ranging anywhere from a month to a few years.
FINANCING:
The second important function of the MCB is to provide finances to the individuals
and businesses against securities at a certain fixed rate of interest. As the different
types of accounts in accepting deposits MCB also have the different types of
account in which it provide the loan to its customers. Following are the different types
of the accounts in which loan is made.
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Demand Finances
Demand Finances are those finances, which are given on demand. It is a single
transaction. It can be long, medium and short term. Markup is also charged. Here the
amount can be withdrawn once at the time of disbursement.
Running Finances
It is always a short-term loan i. e., one-year. It can be withdrawn at any time and
deposited at any time. It is basically for running day today business operations.
This type of loan is provided to the person who has the strong relation with the
bank.
Cash Finances
Cash finances are for a limited period of time i.e., one year. It is advanced to
people to complete the working process.
Fixed Asset Financing
This type of account is provided to the business for the purchase of fixed assets
and the assets is considered as the security.
Overdraft
This type of loan is provided to the individual that has very healthy position and
they are allowed to draw up to the limit if there is no balance in the account. The
rate of interest is charged on the daily basis.
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Auxiliary function
These are the functions that have the secondary position in the bank point of view.
These functions are cause to attract the customer. Banks performs this kind of
functions as per demand on the extra charges.
Collection of Cheques
MCB acts as an agent to its customers in the collection and payment of Cheques, bills and
promissory notes. This is done on the behalf of the customer and MCB charges the
commission.
Locker:
MCB also provides locker facility to its valuable clients. where of people can be
kept their precious ornaments.
Collection of Dividends
The bank provides a very useful service in the collection of dividends or interest
earned on stocks and shares held by his customers. The customer is simply to inform
the issuer of the securities that the interest on the securities is to be credited to his account
in the bank.
Purchase and Sale of Securities
MCB is authorized by the customer, purchase or sale securities on his behalf
and thus adds other benefits to his portfolio.
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Transfer of Funds
MCB also transfer funds of the customer s from one bank to another bank. If the
transfer is at one station, they dont charge any commission and even if they charge,
they charge on reduce rate.
Issue of Travelers Cheques
The bank has introduced the schemes of Rupee Travelers Cheques and issues them for
the convenience of travelers and charges a nominal commission. In addition to this
bank also performs a number of functions and activities for and on behalf of its
clients with the sole purpose of serving them to the best of its capabilities and
potentialities.
DISCOUNTING BILLS OF EXCHANGE
The bank utilizes their surplus funds in another important way. They discount the
bills of exchange at their market worth, i.e., the pay to the holders of the bill an amount
equal to their face value after deducting interest at the current market rate for the
period the bill has to mature. The bills of exchange are a very liquid asset for a
bank to hold. These bills are usually drawn for three months and are used for
financing internal as well as external trade.
Acts as a Referee
MCB provides a useful service to his customers by acting as a referee for his
credit worthiness. The information is supplied in almost secrecy and is based
impartially on the respectability and financial standing of the client.
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Foreign Exchange Business
MCB transacts foreign exchange business by discounting foreign bills of exchange
and thus provides facilities for financing the foreign trade.
Organization office in which you are working
I have completed internship in MCB Industrial Area branch(1301),I-9 Islamabad. This
is main and very important branch of this area facilitating their customers by providing
quality ser vices. They provided different services to their customer. To fully satisfy
their customer, and for efficient working, they assign different services to
different departments. Few of these given below:
_ Cash Department
_ Deposit Department
_ Advance & Credit Department
_ Remittance Department
_ Foreign Exchange Department
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Summary:
Banking started in Pakistan after the bold and emergent decision of formulation of
SBP on July 1, 1948. Thereafter this sector has witnessed enormous growth. In
1974 banks were nationalized, in the hope that new era of growth could be achieved
through it. However the process is reverse since1991, up till now MCB, ABL, and
UBL have been privatized and HBL is in the process of its privatization. Pakistan's
banking sector has remained the process of its privatization. Pakistan's banking
sector has remained remarkably strong and resilient during the world financial crisis
in 200809 During the fiscal year of 2008-2009, total assets of all the scheduled
banks increased by Rs 574.7 billion. During the fiscal year of 2008-09, there was
also an increase of Rs 248 billion in the net advances of the scheduled banks The
principal functions of MCB are acceptance of deposits & financing and auxiliary
functions of MCB are Collection of Cheques, Locker, Collection of Dividends,
Purchase and Sale of Securities & etc.
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Chapter # 3 History of Organization
Introduction:
Chapter three is about the introduction to the MCB Bank Limited. In Chapter three is
about the introduction to the MCB Bank Limited. In information about the brief
history of the organization. When the bank was established and who starts it.
Banks have a proper communication system through which the head office
communicate to the branch offices. The details of communication system followed
by head office are included in chapter three.
Brief History of the organization:
MCB Bank Limited formerly known as Muslim Commercial Bank Limited was
incorporated by the Adamjee Group on July 9, 1947 in Kolkata in Bengal, under the
Indian Companies Act, VII of 1913 as a limited company But due to changing scenario
of the region, the certificate of incorporation was issued on 17 August, 1948 with a
delay of almost 1 year; the certificate was issued at Chittagong. The first Head
office of the company was established at Dacca and Mr. G.M. Adamjee was
appointed its first chairman. It was incorporated with an authorized
capital of Rs. 15 million. The Bank transferred its registered/Head office from
Dhaka to Karachi on August 23, 1956 through a special Resolution.
NATIOINALIZATION:
In January 1974, the government of Pakistan nationalized MCB following the
banks (Nationalization) Act 1974, subsequently, in June 1974 Premier Bank limited
merged with MCB.
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PRIVATIZATION:
A wave of economic reforms swept Pakistan in the late 1990s introducing the
need for privatization of state owned banks and companies in April 1991, MCB
because Pakistans first privatized Bank, the government of Pakistan transferred the
management of the Bank to Nishat Group of leading industrialists of the country by
selling 26% shares of the Bank. With a view to broaden equity holding the
government sold 25% of the paid up capital to the general public. In terms of
agreement between the government of Pakistan and the Nishat Group additional 24%
shares have been purchased by the group making their holding 50%. As of June 2008,
the Nishat Group owns a majority stake in the bank. 25% was retained by the
government Now it is fully privatized.
Mian Mohammad Mansha is the Chairman of the group (and also MCB) and has
played instrumental role in its success. In recognition of Mr. Manshas
contribution, the Government of Pakistan has conferred him with"Sitara-e-Imtiaz",
one of the most prestigious civil awards of the country.
MCB is Pakistans fourth largest bank by assets having an asset base ofUS$6.7 billion,
and the largest by market capitalization having a market capitalization of US$4.1
billion. The Bank has a customer base of approximately 4 million and a
nationwide distribution network of 1,026 branches, including 8 Islamic banking
branches, and over 300 ATMs, in a market with a population of 160 million.
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Awards of MCB:
MCB has become the only bank to receive the Euro money award for the seventh time
and Asia money award for fifth time in the last ten years MCB won Best Bank in Asia
award in 2008. MCB also won the Best Bank in Pakistan award in 2008, 2006, 2005,
2004, 2003, 2001, 2000 In addition, MCB also has the distinction of winning the Asia
Money award in2009, 2008, 2006, 2005 & 2004 for being " The Best Domestic
Commercial Bank in Pakistan.
Present Status:
In 2007, MCB reported a profit after tax of PKR16.4 billion (US$270 million) and
generated a return on average equity of 38% and a net interest margin of 8.08%.
The Banks asset quality is strong with a gross NPL ratio of4.7% and provision
coverage of 100%.
During the last fifteen years, 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.
In 2005, the management of the bank abbreviated its name from Muslim
Commercial Bank Limited to MCB Bank Limited to explore international markets;
they were facing resistance due to the word Muslim specially from Western
Countries to avail license. In 2008 the head office of MCB was shifted from
Karachi to Lahore in a newly constructed building, namely MCB House located at
Sharea Ghous-Ul-Azam, commonly known as Jail Road.
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The MCB Tower in Karachi serves as the MCB's headquarters, and is also the tallest
building in Pakistan MCB advised by Merrill Lynch, became the fourth Pakistani
company (the other three being Hubco, PTCL and Chakwal Cement - they all
have been delisted) to list on the London Stock Exchange when it raised US$150
million global depositary receipts.
In May 2008 Malaysian bank, Maybank and MCB signed an agreement, whereby
Maybank will acquire up to 20% of the ordinary shares in MCB from Nishat Group.
The acquisition is in-line with Maybanks strategy as Malaysias financial services
leader in the region, to build its presence in key growth markets across the region.
It also paves the way for MCB, one of Pakistans premier financial services groups,
to engage Maybank as its exclusive foreign commercial bank strategic partner.
Maybank initially acquired from Nishat Group 94,241,527 ordinary shares in MCB,
representing a 15% stake in the Bank, for a cash price of PKR470 per share. The
total consideration paid was approximately US$686 million. The purchase price
represented a 11.4% premium to MCBs closing share price of PKR 422 on May
2, 2008, and a premium of 12.9% to the average closing share pr ice for MCB
over the 30 trading days immediately preceding the date of this announcement.
Based on MCBs December 31, 2007 audited book value, the purchase price represents
an implied price to book value multiple of 5.13x, a price to2007 earnings
multiple of 18.0x and a price to 2008 earnings multiple of15.2x. In July 2008
Maybank exercised its right to increase its stake to 20%.
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The stake in MCB allows Maybank the right to appoint two Directors to represent its
interest on the Board of MCB. One of these Director s was to be appointed immediately
and the second Director will be appointed upon completion of the term of the
existing Board, scheduled to be on March 27, 2009.
As part of the transaction, Maybank and MCB are also expected to enter into a
business cooperation arrangement which will include, among others, Islamic
banking, retail banking, credit cards, asset management and SME banking.
Leveraging Maybanks leadership and experience in these segments coupled with
MCBs brand and broad distribution network Maybank and MCB believe that
significant revenue synergies can be attained Both Maybank and MCB are also
expected to benefit from increased business ties and trade flows between Pakistan and
Malaysia.
Relationship of head office to the branch offices:
In MCB decision, strategies, policies are made by the top level management and
these are implemented in each branch. Top level management dont involve the
lower management in decision making process.
MCB is the pioneer of computerization, as far as it has a very developed and
fastest network. So the head office and all of its branches are linked through a
electronic network, that make possible easy and in time transformation of the
important information.
MAIN DEPARTMENTS AND THEIR JOBS
There are three main departments in any branch of MCB
_ GENERAL BANKING
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These are also noted by computerized system and a serial number is issued from
the computer system.
MAIL TRANSFER
Mail Transfer is made with in the city for transfer of amount An advice is also
made for the confirmation of the draft send. These are also approved and safe
way of sending amount to the beneficiary These are also noted by computerized
system and a serial number is issued from the computer system.
TELEGRAPHIC TRANSFER
Telegraph Transfer is telegram message for transferring the amount from one
branch to other branch. A message advice and a confirmation advice both are
made with TT numbers that are issued for TEST. TEST depends on two steps.
First TEST is on Day, Date and Code Number of branch
Second TEST is on Currency, whether Pak rupees or foreign. currency, amount
and TT number issued from manual registers and confirmed from computerized
system.
PAYMENT OF PAY-ORDER ANDDEMANDDRAFT
Pay-Order and Demand Draft both could be paid in shape of physical payment of
cash and in case transfer of amounts; the amount could be transferred in the
beneficiary account. In case of physical payment authorized signature of beneficiary
are taken for the proof of amount being paid to him and in case of transferring of
amount authorized signature of the beneficiary are checked and verified for
reducing risks.
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CANCELLATION OF PAY-ORDER AND DEMAND FRAFT
Any type of Pay-Order / Demand Draft is cancelled by the permission and
instructions made by the beneficiary. The customer could only cancel the pay
order/ demand draft as the verified signatures of beneficiary are present on the advice.
VOUCHERS
Vouchers are made for records and they should be completed in all respects, the
amount, date, its head, particulars, amount in words authorized signatures and
contra advice or voucher should be present Vouchers are advice either debit or credit
slips. They are contra of each other. If any voucher of debit is passed its contra credit
voucher should also be passed for the balancing of accounts, their respective sheets.
INWARD CLEARING
It depends on those checks that are cleared inter branch and with in the city. As
the concerned branch receive any type of clearing check first of all physical
checking is taken place. For clearing procedure there should be two days margin.
These Cheques have their vouchers and the amount of the Cheques and voucher
should be identical. Than these Cheques are stamped and noted on receiving sheet as
well as feed in to the computerized system.
OUTWARD CLEANING
It depends on those Cheques that are cleared out side the city For outward
clearing Cheques are send because the home branch has there accounts but checks
are of other banks. Contras of these Cheques are vouchers that are recorded in the
home branch.
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ISSUANCE OF CHEQUE BOOKS
Any account holder that has opened the account he/she could credit his/her
account and for this purposethere should be a Cheques book, so he/she could be
able to credit the needed amount whatever he/she wishes. For the issuance of the
Cheques book a person is advised to fill a requisite slip with his/her full names and
the account number with two verified signatures. These signatures are checked and
then another requisite slip prepared by the bank staff send to the NIFT, and it issues the
printed cheque books after completion of the procedure in two or three days.
Account holder can take it by singing on the issuance register or if the absence of
the account holder another person could also take the cheque book only if he/she
has authorized signature of the account holder. When the cheque books are issued
they are feed in the computer system from the requisite slip so when the Cheques are
given transfer for the credit of amount they could checked. In this way neither the
Cheques could be repeated nor could the invalid Cheques be claimed.
ISSUANCE OF ATM CARDS
Head office issues ATM (Auto Teller Machine) cards with their PIN (Personal
Identification Number) codes and when the customer claims for their ATM card
they are checked from the list that is also issued from the head office, and the claim
is checked from the list and if the name is found than the cards are issued by taking a
signature and their PIN codes are given to them by taking signatures on their
ATM card for ms. The AT M card has been activated by the number provided at or
with the specific card.
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CANCELLATION OF ATM CARDS
The Cancellation of ATM Cards becomes necessary in the following conditions;
_ If folded or damaged
_ Stolen
_ PIN code missed or forgotten
_ Card captured by the machine and expired
_ If requested by the customer
_ The cancellation or inactivity of the card is being processed by the request or
instructions provided from the customer.
SHORT NOTICE TERM DEPOSIT
There are short times either for seven days or for thirty days and the profit is
calculated by the given percentage from the head office at the payment time. If
the customer fails to complete the duration of seven days or thirty days then no
profit is given. If any amount is outstanding, only in case of automatic continuity,
then the profit is calculated for the whole period by the rate given from the head office
multiplying from the numbers of days divided by the 365 for the one-day profit
AMOUNT, RATE, NUMBER OF DAYS / 365 DAYS
Profit is calculated for the six months only for outstanding SND. Zakat is also
deducted but if Zakat deduction form is submitted to the bank, no Zakat will be
deducted then, 10% with holding tax is also deducted from the profit to calculate net
profit.
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CALL DEPOSIT
It is highly liquid instrument, it can be cashed at any time when needed. This
instrument bears no profit on it. It is mostly used for the purpose of tenders.
FOREIGN EXCHANGE
LCS ESTABLISHMENT
Any company can provide its documents containing e-form bill of lading, short
shipment notice in case of short shipment, packaging list etc. The information
provided from the documents is recorded in the LC
establishment portion or section in the computer.
PAYMENT OR RETIREMENT
When the transactions have been completed then approved documents from the
concerned bank are sent to the home bank for the payment or retirement of the LC.
These transactions have recorded in the payment or retirement section of the
computer.
FOREIGN CURRENCY DEPOSITS
The Foreign Currency Deposit relates with the foreign currency accounts, cash deposit or
credit and foreign remittances.
FOREIGN REMITTANCES
In this we received the messages through SWIFT for foreign remittances, which
we record in their respective accounts, if these are relates with Pak rupees than it
was transferred in Pak rupees with the latest rate and if this relates to the foreign
currency than it is dealt with accordingly. The amount has been credited to the
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respective account office and the head has been debited against it. After crediting
the amount to the respective account. All the subsequent entries have been made in
the registers and also in the computer record as the system now have been
upgraded on computers. As we are reporting daily to the head office, so an
annexure has been maintained and faxed to the head office.
ADVANCES / CREDIT
This department deals with the approval of different kinds of loans different
business entities. The loans, which are being approved by the department, are kept
with some securities such as bonds, properties and any other type of asset, which is
equally valuable or more than this as a guarantee Every branch has its own limit, if
the amount of loans is with in the limit of the branch then it is being approved by
the branch but if the amount of loan is exceeding the limit then it has to make it
approved by the head office. In this case the branch stored all the required papers
and sent them to the head office for necessary action. If the head office approved
the loan then mostly the period contains a year. And if the party requires more loan
than after a year the loan has been re-approved required that they should have the
limit. In case if the head office do not approve the loans then the return letter came
back with the reasons of not approval of loan and if the reasons have been made
approved by the concerned party then it could be sent again for approval. This whole
process is recorded in the back remain with the bank until the party has not refunded
all the amount of loan and bank has the authority to liquidate those assets for
preventing it from loss.
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BASIC BANKING ACCOUNT
In compliance with the directives of State Bank of Pakistan via BDP Circular No. 30,
issued on 29th November 2005, the Basic Banking Account has been launched
with effect from 27th February2006. This product has been introduced to facilitate
the low income group as well as the existing account holders who wish to convert their
regular savings or current account into Basic Banking Account The Basic Banking
Account is a current account and can be opened with a minimum initial deposit
of Rs. 1000/- only. Account holders will be allowed 2 deposit transactions (each
cash or through clearing) and 2 withdrawals (cash or clearing) each month. All
customer initiated transactions over and above this limit will be charged a
transaction fee. However unlimited free charge cash withdrawals are allowed
through MCBs own ATMs.
PAK RUPEE OR FOREIGN CURRENCY ACCOUNTS
SAVING ACCOUNT
MCBs Foreign Currency Savings Account offers you attractive returns on your
foreign currency investment. Unlimited transaction facility, profit credited to your
account on a half yearly basis. You can avail a credit facility up to 75% of the
total deposits value. A foreign currency account can be opened at any of our foreign
exchange dealing branches.
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MCB RUPEE MAXIMIZER ACCOUNT
MCB Rupee Maximizer Account provides you an opportunity to convert youre
the recent changes in the economic scenario MCB launched the Rupee Maximizer
Account exclusively for its Foreign Currency Account Holders. MCB Foreign
Currency Account holders now have an opportunity to convert their Foreign
Currency Account balances into Pak Rupees and earn a profit at the rate of 12.6%
per annum.
Other features include profits calculated on a daily product basis, no restrictions on
the number of the withdrawals, no minimum deposit required. Special benefits
include one free ATM card and locker facility free of cost. MCB Rupee
Maximizer Account is being advertised in leading daily newspaper as well as local
papers Foreign Currency Account into Pak Rupee and earn profit at the rate of 12.6%
per annum.
CURRENT ACCOUNT
MCBs Foreign Currency Current Account offers you the convenience of unlimited
withdrawals i. e. access to your funds whenever you want without any notice.
There is no limit on the whenever you want without any notice. There is no limit
on the number of transactions you make in a day.
KHUSHALI BACHAT ACCOUNT
Open a Khushali Bachat or Dollar Khushali Account, both require low minimum
income deposits plus you receive profit on daily product basis. Get a saving with
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current account facilities through saving 365 or double your investment through
capital growth and receive monthly profits through monthly Khushali.
MCB ENHANCED SAVING ACCOUNT
Keeping in view the small savers, looking for higher returns on their savings, MCB
introduces the Enhanced Saving Account (ESA). This account can be operated via all
the channels available at the MCB such as Cheques, Virtual Banking, Mobile
Banking, MCB Smart Card and ATMs/Point of sales all across Pakistan. MCB
ESA, governed under PLS rules, can be opened with a minimum initial deposit of
Rs5000 and the profit shall be calculated on an average basis maintained by the
customer during that month.
Following shall be the slabs used for profit calculation.
_ If average balance is greater than Rs. 20,000 standard PLS rates will apply.
_ If average balance less than Rs. 20,000 (or equal to 20,000) with up to 4 withdrawal
transactions per month (excluding ATMs, PSO and VB) 4.0% p.a.
_ If average balance is less than Rs.20,000 (or equal to 20,000) with over 4
withdrawal transactions per month (excluding AT Ms, PSO and VB) then standard
PLS rates will apply.
The rates mentioned above are expected and shall be revised at least every six
months. Average account balances can exceed Rs20,000 during a month. However,
in that case, they shall be paid profit as per the standard PLS rates, as mentioned in
slabs above. Profit shall be calculated on average basis and shall be credited to the
account after each calendar quarter.
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Offices or field offices
Offices means the Head office which is situated in MCB House located at Sharea
Ghous-ul-Azam, commonly known as Jail Road. Field offices mean the Branches.
MCB has the forth largest domestic branch network in Pakistan The bank has a
network of over 1000 branches in Pakistan and 6 branches worldwide in 6
countries.
MCB BRANCH NETWORKS
PROVINCE WISE
Province Branches Sub Brs. Total
Punjab 665 7 672
Sindh 248 1 249
N. W.F.P. 106 106
Balochistan 37 37
Azad J. Kashmir18 18
Domestic Total 1,074 8 1,082
Overseas 6 6
EPZ 1 1
Grand Total 1,081 8 1,089
Current staff
MCB Industrial Area branch I-9 has the 28 staff member in which 6 security
guards are also included, which are as fellows;
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Abid Rafiq Dogar Manager
Ch. Mubark Ali Operatinal Manager
Nasir ALI
Mohammad Mumtaz Credit Officer
Ch. Zamir Cashier
Kala Khan Cash
Current staff of branch according to qualification and experience:
Mostly the staff of the Bank has not the lot of experience but their qualification
is high because mostly employees are young. Lets see the brief introduction of the
Banks staff experience and their qualification.
Abid Rafiq Dogar MBA 7 years
Amjid Farooq MBA 4 years
Ms Hifsa MBA 4 years
Tauqeer Abbas MBA 4 years
Muhammad Amir MBA 1 year
Mohammad Yasin B.com 3 years
Training received by number of employees
For the efficient working training is an important part and it clears the direction of
the employees towards attaining the organizational goals. In banks every employee
received the basic course of training of the banking system in which overall view of
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all the bank work is provided and than every person get the training in his
particular job that is assigned to him. So in banks no one can be appointed with out
the basic training.
Workload
The work load of the bank staff is based upon on the daily system. The office timing
starts from 9.00 am to 5. 00 pm (Monday to Friday) and 9.00 am to 1.00 pm on
Saturday for the customers. After the bank timing the staff fulfill the daily
vouchers transaction and made the entries on the net system and then counted the
cash, put it in the safe. The banking staff should finished their word on daily basis
whether there work is short or long.
Responsibilities
Responsibilities of staff depend upon the scale of the staff members Higher the
rank of the staff higher will be the responsibility on it. For example the Branch Manager
responsibility is higher than the Operational Manager.
Branch Manager has the responsibility to deal with the Branch customer and with
the outsider parties also while all the remaining staff is responsible to deal with
the Branch customers only. Branch Manager is responsible for the internal and
external environment and the remaining staff is responsible for internal environment
only.
Operational Manager has the responsibility to check the activities of his
subordinates. Cashier is responsible for all the cash transactions which occur in the
Bank. Customer Relation officer is responsible to deal the customers well and
provide them the necessary information if required.
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Physical facilities
The branch where I have done my internship is MCB Industrial Area branch, here
the physical facilities available to the customers are sufficient proper sitting
arrangement is available, and gas heater in winter and air conditioners for summer
is also available. The facilities for the employees is also sufficient, employees have
the separate tables for their work and two rooms for the employees.
Critical analysis of the branch
Although the bank is performing their function very well but mostly the staff of
the bank is young. They have very less experience and low banking knowledge.
The banking staff always worries about for increasing the deposit of the bank
rather than improving the customers services.
The attitude of Branch operational manager is not good with customers as well as With
employees working in the branch.
Every morning the Branch Manager gives the Branch report to the Regional
Manager on the telephone meeting which has no logic because Branch Manager
always worries for the deposit.
Performances
In term of customer s satisfaction
The customers are very satisfied with the performance of the bank. The bank is provided
latest banking ser vices to the customers so that they can easily access to their
accounts. T he bank is also providing the internet facility to theirs customers through
this they can access to their accounts on the net and they can check their balance
with out going to Bank. The Bank also provides the door to door services to those
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customers who transactions are daily occurs that why those customers are very
satisfied with the Bank and this thing also helps to the Banks for increasing their
accounts holders.
Interm of accounts and budgets
The performance of the Banks is increasing day by day. The accounts holders are
very satisfied with the facilities which they provides.
Summary:
In this chapter basically organizational attitude towards its employees and
employees satisfaction and attachment is discussed. MCB performs several
functions and have many departments in order to retain and maintain their
customers some of these departments are the collections department Advance
department, Bill department, Clearing department etc.To motivate the employees
MCB provide many allowances and facilities to its employees such as medical
facility, huge amount of bonuses and also motivate the employees through
promotions. The branch in which I have done my internship is providing the very
satisfactory services to its customers and large numbers of customers are satisfied with
the attitude and the services provided the branch.
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Chapter # 4 Policies
Introduction
Chapter four is about policies of MCB. It include brief introduction of policies of
MCB.
Policies:
Internship Policy:
MCB is the bank that serves all type of customer s and makes its policies according to
their needs and demands here the MCB has the policy to serve the students that is
eight weeks internship.
MCB has no gender bias
For the selection of the employee MCB focus on merit rather than gender. There
is no any kind of discrimination on the basis of male or female, a person having
the skills and knowledge and is perfect of that particular job can be selected as the
employee.
Opening account policy
Prior to establishing a relationship with new customer MCB obtains basic
information i.e. business, source of income, expected level of activity in the account
and reasons for opening the account.
Training of employees
MCB has the program through which all the employees of the bank get proper
training and then work for the achieving the goals.
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Revenue Recognition
MCB recognized its revenue on accrual basis. For example if MCB invest in
some different securities and entitled for the profit yet not received, the profit is
recorded as when it earned not when it received.
Investments Policy
MCB also invest its money other than the advances, while investing in the securities
MCB has the following policy to invest in;
Held for trading
Held to maturity
In the light SBP regulations quoted securities are shown at market values and any
changes arising are taken to profit and loss account only upon actual realization.
RISK MANAGEMENT
The bank is primarily subject to interest rate, credit and currency risks The bank has
designated and implemented a frame work of controls to identify, monitor and
manage these risks are as follow;
Currency Risk Management
To handle with currency risk, MCB enters into futures and swaps transactions in
the inter-bank market and with the State Bank of Pakistan in order to hedge its assets
and liabilities and cover its foreign exchange position.
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Credit Risk Management
In order to manage the credit risk MCB has a good policy the bank first scan the
information about the person who wants to obtain the loan and then assign the
limit of sanctioned amount that is decided on the critical analysis of the persons
income and resources. MCB is government backed bank thats why it provide the loan
only against the security.
Interest rate Risk Management
To hedge with the interest rate MCB also focus on to make the interest rate swap
and other documents.
MCB s Competitive Strategies
To be competitive the Bank has further reinforced its position in the Consumer banking
area by streamlining and re-launching the consumer financing products and
introducing more convenience based solutions. With the re-launch of auto finance and
house finance products, the Bank pushed the products with full thrust. The Bank has
also launched a running finance facility against mortgage of property.
Technology continued to play an important role in improving and expanding
product offerings. The Bank introduced more IT based products to cater to the
changing lifestyles and needs of the customers.
MCB Virtual-Internet Banking was launched with wide ranging banking solutions
for the customers ranging from individual to corporate customers and it has
become the most preferred Internet banking solution in the country.
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MCB also had the privilege of being the first Bank in Pakistan to launch the
comprehensive bill payment facility through its alternate delivery channels which
include Internet Banking, AT Ms and MCB Call Centre currently with six payment
partners. Similarly, the Bank also took initiatives to increase the usage of debit
facility. T o provide timely and updated information, MCB has also provided a
new look to its website which is user friendly and considerably easy to browse.
The Islamic Banking initiative has been very successful in attracting new customer,
both individuals and companies. Similarly, those relationships which were confined only
to current account facility, have grown into stronger business relationships. The branch
network was expanded to Lahore and Multan during the last year and recently
been extended to Hyderabad and Faisalabad. The Bank plans to further expand its
Islamic Banking branch network to other metropolitan areas and also to introduce
new sharia compliant banking solutions to a wider range of customers for satisfying
their individual and business needs.
Some wide-ranging new strategic initiatives were also taken up which will be
important for the Bank in years to come. A private company has been formed 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. It is projected to ear n US$ 1 million in its first year of operations. To
increase its international presence, the Bank will be opening its representative office
in Dubai and entering into major strategic alliances with banks in the UAE/ especially
for marketing our consumer banking products to non-resident Pakistanis.
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Furthermore, feasibility is also being carried out for entering other international
markets. 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.
Management of Human Resources has been one of our core focus areas. MCB is
committed towards attracting, retaining and motivating outstanding people. Challenge
for MCB is to provide an environment in which employees can better realize their
potential
MCB is also strongly committed to training its staff at all levels. The Bank will
also 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. By
implementing SYMBOLS, MCB Bank aims to raise the level of its customer service and
its time to market in new product offerings for its three core banking businesses in
Corporate, Commercial and Consumer Banking retaining its market leadership as
Pakistan's progressive Bank.
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Summary
This chapter discuss about policies of MCB. MCB has the policy to serve the
students that is six weeks internship. MCB focus on merit rather than gender. To be
competitive the Bank has further reinforced its position in the Consumer banking area by
streamlining and re-launching the consumer Consumer banking area by streamlining
and re-launching the consumer.
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Chapter # 5 Different Models
Introduction
In this chapter have some models that analysis and explain the real situation about
the MCB. For gathering the real information about the opportunities and the
threats that are facing the MCB this chapter include four models that are following;
SWOT Analysis
PEST Analysis
Ratios Analysis
SWOT ANALYSIS
The overall evaluation of a companys strength, weakness opportunities, and threats
is called SWOT analysis
STRENGTH:
The main strength of the bank lies in its services. The other fact that contributes
is approaching to each segment of society. Another positive issue that because the
strength its innovation. Some others are as follows;
Bank reputation
Technical management skills
Customer satisfaction
Promotion effectiveness
Team based approach
Continuous improvement
Quest for quality
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Employees respect and dignity
Good corporate citizenship
WEAKNESS
Competition pressure: bank has tough competition pressure. We are having very
well established and well reputed competitor in the market having addressing the same
community as we are dealing and is having good services Financial pressure: no doubt
MCB has a lot of finance but due to competition pressure they have a need of finance.
OPPORTUNITIES:
For more amelioration there is a need of new market. Extra advertising support will
enable us to improve our services.
Almost every organization has the tendency to grow in size. We also have this
opportunity.
THREATS:
Weak economic conditions of Pakistan Unregistered business concerns.
PEST ANALYSIS AND ENVIRONMENTAL
SCAN
A broad view of market is important when management is interested in introducing
better services for customers. Rapid technological change global competition and
the diversity of buyers preferences in many markets require the constant attention
of the market vouchers to identify promises business opportunities, see the shifting
requirements of the buyer s, evaluate changes in competitors positioning and guide
the choice of which buyers to target and classify them according to respective
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segments. Identification of external and macro factors that influence buyers and thus
change the size and composition of market overtime involves initially building
customer profiles.
These influences include:
Political and legal environment
Economic trends
Socio cultural environment
Technological factors
POLITICAL AND LEGAL ENVIRONMENT
Banks are strongly affected by the political and legal considerations. This
environment is composed of regulatory agencies and government law that influence and
limit various organizations and individuals. Mostly these laws create new
opportunities for business.
Business legislation has following main purposes
To protect banking companies from unfair competition
To protect consumers from unfair business practices adopted by banking companies.
To protect the interest of the society from unbridled business behavior.
ECONOMIC TRENDS
A banking market requires better consumer market in volume along with higher
borrowing power. The available borrowing power depends on
Consumer income
Saving rates
Consumption patrons
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Rates of interest
Budget deficit
Exchange rates
Cost of living
Inflation
SOCIO-CULTURAL ENVIRONMENT
A society is shaped by beliefs, norms and values. People in a society consciously
and unconsciously interact with.
Themselves
Others
Organization
Society.
TECHNOLOGICAL FACTORS
Forces of technological advancement have played the most dramatic role in
shaping the lives of people. The rate of change of technology has greatly affected
the rate of growth of economy. New technology is creating deep rooted affects
which could be observed in long run. The improvement techniques involved in on
line banking. In brief PEST analysis affects the overall banking companies and
provides us the information about the external macro condition.
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Ratio Analysis of the MCB
An index that relates two accounting numbers and is obtained by dividing one
number by other.
Ratio Analysis is an important and age-old technique of financial analysis. It
simplifies the comprehension of financial statements. Ratios tell the whole story of
changes in the financial condition of business. It provides data fro inter firm
comparison. They also reveal strong fir ms and weak firms over- valued and
undervalued firms.
Ratio analysis also makes possible comparison of the performance of different
divisions of the firm. The ratios are helpful in decision about their efficiency of
other wise in the past and likely performance in future. Ratios also help in
Investment decisions in the investors and lending decisions in the case of bankers etc.
Following are the main types of rat ios that I am going to calculate in this report
to compare and highlight the financial performance of MCB in2009 with 2008.
Variance compared to
2009 2008 Amount %
Mark-up / return / interest Rs.M 51,616 11,572 29%
Mark-up / interest expensed 15,841 4,281 37%
Net mark-up / interest income 35,775 7,291 26%
Provisions & write off 7,465 3,423 85%
Non-mark-up / interest income 5,643 (149) -3%
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Non-mark-up / interest expenses 10,797 2,433 29%
Profit before taxation " 23,155 1,287 6%
Taxation " 7,660 1,167 18%
Profit after taxation " 15,495 121 1%
EPS Rupees 22.42 0.17 1%
Interpretation
The past two years data shows an increase in all return (i.e. interest earned,
interest income, Profit after taxation) which is a positive sign. But mostly expenses
(i.e. interest expensed, Provisions, Taxation) are also increase which show negative
sign of business. The Bank should have to review its policies to decrease expenses.
FINANCIAL RATIOS 2009 2008
Profit before tax ratio(PBT/ total income) 55.91% 63.80%
Gross Spread (NIM/Int Income) 69.31% 71.13%
Income/ expense ratio Times 3.84 4.10
Return on average equity 27.35% 31.49%
Return on average assets 3.25% 3.60%
Return on Capital 27.35% 31.49%
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When MCB started their online banking, there were only one or two banks (foreign
Banks) doing this practice because of having a larger network as compared to all
other domestic banks MCB started doing this practice but not successful in it because
of the above two problems.
Others
A lot of productive time is wasted by the staff in unproductive pursuits and tea and
launch breaks are got voluntarily extended and the time spent in corridors, depends
on the staff will. This tendency of late must be eliminated which reflect adversely on
the image of the institution and has posed a serious problem.
No proper allocation of duties, suitable person for suitable job Distribution of work
is not on equity basis, work has not been allocated properly some workers have to
work hard in late hours without any extra reward. So I suggest that steps should be
taken to allocate the work properly No periodic increase on salaries of employees.
Overall Suggestions For Improvement
From the quantum of the profit and its financial data it can easily judged that after
privatization MCB is performing well. Its deposits are growing day-by-day and so is
profitability. The controlling body is responsible for the productive performance of the
bank Following are my observation and suggestion to improve the efficiency for the
development of the economy.
Introduce Various Profitable Investment Schemes
A big portion of the home remittance is sent by Pakistan working capital through
MCB Limited. As we know a big portion of this amount is wasted purchasing of
luxuries. The people motivated to save money by offering the deposit through
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various investment schemes. The rate of profit should increase 1% or 2% than the
other banks and it would be profitable step for bank.
Training Staff
Staff turnover particularly of trained staff result in financial and other losses. The
amount spent by the bank on employment, induction and training of an outgoing
officer constitutes to beat till another officer should ready prove his work. The
exodus of bank officer in the past has worsened the situation.
Change The Nature Of Work
Most of the bank employees are sticking to one seat only with the result that they
become master of one particular job and loose their grip on other banking operation.
In my opinion all the employees should have regular job experience all out-look
towards banking. The promotion policy should be adjusted.
Refresher Courses
Refresher courses for the staff are most important in any international organization.
All the employees should have these courses according to their requirement. Foreign
experts can also be called for this purpose.
Special Training In Abroad
Every year some of the employees should be sent for training to other countries and
employees from other branches should be brought here. Some more reading material
should be provided the purpose should be to educate the employees with the advance
studies in their field. The employees should be provided the opportunities to attend
and participate in seminars and lectures on banking.
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Incentive to Employees
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.
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.
Others
The period of internship should be divided into the number of department of the
MCB. The internee should be given timetable mentioning the number of days he has
to work at different places in the bank. On the 1st 4 day in each department internee
should be given a lecture by the officer of the department concerned about working of
the department.
A lot of productive time is wasted by the staff in unproductive pursuits and tea and
lunch breaks are got voluntarily extended and the time spent in corridors,
courtyards, depends on the staff will. This tendency of late must be eliminated
which reflect adversely on the image of the institution and has posed a serious
problem.
Distribution of work is not on equity basis, work has not been allocated properly
some workers have to work hard and have to work in late hours without any extra
reward. So I suggest that steps should be taken to allocate the work properly.
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Reward and Punishment
It is human nature one goes behind reward and incentives while and try to avoid from
punishment. Likewise in commercial institution like bank this system be introduced
with full force means active smart, educated skilled, self spoken and well versed staff
personal, should be reward and appreciates on the other hand lazy, lethargic, heared,
rough dealers and ill manner ed must be warned penalized and punished. But this all
should be on merit and considering the policy of honesty is the best policy and
mot due to some personal liking, disliking prejudice and patrimonial. It is therefore
suggest certain schemes and checks may be introduced in banks to increase efficiency
through reward and punishment system.
Survival Of The Fittest
It is not nearly a sentence or idiom right man for the right job according to his
qualification to his qualification, profession skills and experience with the job
specification must be considered while posting and placing the employees.
It should not be like that a person who may be a very good worker but possessing lack of
managerial capabilities should be posted as manager. But as second place in command or
some heavy working department wished persons together with managerial qualities
and manners in the same fashion should be posted and placed as manager.
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REFERENCES
Janjua, M. A. (2003). History of the Slate Bank of Pakistan (vol. 111, pp. 790-800).
Karachi, State Bank of Pakistan.
Ansari, A. J., Naeem, M., & Zubari, J. (2008). Financial Management in Pakistan (1st
Ed.). Lahore publisher Lahore.
Retrieved Sep. 13, 2010, from http://en.wikipedia.org/wiki/Banking_in_Pakistan
Retrieved Sep. 13, 2010, from http://www.oppapers.com/ essays/Pakistans-Banking-
Sector-Industry A nalysis/181995
Retrieved Sep. 05, 2010, from http://www.sbp.org.pk/ reports/annual/a
rfy09/annex_index.htm
Retrieved Sep. 01, 2010, from http://en.wikipedia.org/ wiki/Muslim_Commercial_Ba nk
Retrieved Sep. 01, 2010, from http://
www.mcb.com.pk/.../Annual%20Standalone%20Accounts%20-%202009.pdf
Mcb virtul banking. (2010). Banking through Internet (1stEd. ) [Brochures]. MCB
Bank:Author.