fini619 marked internship report on mcb virtual university

Virtual University of Pakistan

Evaluation Sheet for Internship Report Fall 2010

FINI619: Internship Report (Finance) Credit Hours: 3

Name of Student: MUHAMMAD BASIT SALEEM

Student’s ID: MC070401877

Start preparing for presentation & viva voce and improve your work. Also read lesson # 7 of this course.

Evaluation Criteria Result

Report writing Pass

Presentation & Viva voceFinal Result

Internship Report

Your concepts regarding your internship work and ratio analysis must be very strong for delivering an effective presentation

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Internship Report


Evaluation Sheet for Internship Report Fall 2009

FINI619: Internship Report (Finance) Credit Hours: 3

Name of Student: MUHAMMAD BASIT SALEEM

Student’s ID: MC070401877

Supervisor:

Evaluation Criteria Result

Report writing Pass

Presentation & Viva voceFinal Result

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Submitted To:


Submitted By:MUHAMMAD

BASIT SALEEM

ID: MC070401877

Fall-2008

Submitted Date

22-03-2010

Internship Report

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LETTER OF UNDERTAKING

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SCAND COPY OF INTERNSHIP CERTIFICATE

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DEDICATION

I dedicate this internship report to my parents, especially elder

brother WAJID FARAZ and MALIK NOOR HASSAN. Because

of their prayers and encouragement I have been able to complete

this report.

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ACKNOWLEDGEMENT

Praise is to Allah, the most Gracious and Merciful, who blessed me with the knowledge

and wisdom and enabled me to overcome this task. Heartiest gratitude to my parents

without their continuous encouragement and love I could not have accomplished this

task.

I am very grateful to all the staff members at MCB Khayaban Sarwar Branch, Dera Ghazi

Khan. Mrs. Aasma, Mrs Azara, & Mr. Maqsood Ahmed for their guidance and

encouragement.

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EXECUTIVE SUMMERY

MCB is one of the leading banks of Pakistan with a deposit base of about Rs. 280 billion

and total assets of around Rs.300 billion. Incorporated in 1947, 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 1,053 domestic branches, 7 international branches and over 450 ATMs in the

market. The number of employees increasing and the increase in the number of

employees joining MCB Bank shows that people feel confident in MCB Bank as a

prospect employer.

MCB operates in 3 directions Consumer, Corporate and Commercial banking with a large

number of products and services. The financial ratios analysis shows that the financial

position of the bank is strong and MCB is working well in the Banking sector. Also its

horizontal and vertical analysis of Balance Sheet and Profit and Loss account shows that

MCB is one strongest banking organization in Pakistan.

The stock prices and earning per share of the bank have also increased over the years.

MCB Bank promotes its products and services through print and electronic media. MCB

Bank also promotes itself by sponsoring different events.

During the course of internship I learned about documentation requirements and record

keeping for different activities and processes, especially the documentation requirement

for different kinds of financing facilities, and documents for the product and services.

MCB has strengths and opportunities. But there is also weakness and threats. That could

be control by improving the total management. All the report is consist on original data.

The mostly data get from MCB official website.

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TABLE OF CONTENT

TITLE PAGE.........................................................................................................................i

LETTER OF UNDERTAKING............................................................................................ii

SCAND COPY OF INTERNSHIP CERTIFICATE.............................................................iii

DEDICATION....................................................................................................................iv

ACKNOWLEDGEMENT.....................................................................................................v

EXECUTIVE SUMMERY...................................................................................................vi

TABLE OF CONTENT......................................................................................................vii

ORGANIZATION BUSINESS SECTOR OVERVIEW..........................................................1

(A) BANKING SECTOR OVERVIEW....................................................................2

(B) ORGANIZATION BUSINESS SECTOR...........................................................3

OVERVIEW OF ORGANIZATION......................................................................................7

(A) BRIEF HISTORY................................................................................................8

(B) NATURE OF THE ORGANIZATION.............................................................13

(C) BUSINESS VOLUME......................................................................................18

(D) PRODUCT LINE...............................................................................................19

(E) COMPETITORS...............................................................................................39

ORGANIZATION STRUCTURE........................................................................................44

(A) HIERARCHY OF MANAGEMENT................................................................45

(B) NO. OF EMPLOYEE........................................................................................48

(C) MAIN OFFICES................................................................................................48

(D) INTRODUCTION OF ALL DEPARTMENTS................................................49

PLAN OF INTERNSHIP PROGRAM................................................................................55

(A) INTRODUCTION OF THE BRANCH.............................................................56

(B) DURATION OF MY INTERNSHIP.................................................................61

(C) DEPARTMENTS IN WHICH I GOT TRAINING...........................................61

TRAINING PROGRAM.....................................................................................................62

(A) ACTIVITIES PERFORMED BY THE DEPARTMENTS OF BRANCH.......63

(B) DESCRIPTION OF TASKS THAT I COMPLETED.......................................76

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STRUCTURE OF THE FINANCE DEPARTMENT..........................................................79

(A) DEPARTMENTAL HIERARCHY...................................................................80

(B) NO. OF EMPLOYEE WORKING IN FINANCE DEPARTMENT................81

(C) FINANCE AND ACCOUNTING OPERATION.............................................82

FUNCTION OF FINANCE DEPARTMENT.....................................................................84

(A) FINANCE SYSTEM OF THE ORGANIZATION...........................................85

(B) FINANCE AND ACCOUNTING SYSTEM OF THE ORGANIZATION......87

(C) SOURCE OF FUNDS.......................................................................................93

(D) ALLOCATION OF FUNDS.............................................................................95

CRITICAL ANALYSIS........................................................................................................97

(A) RATIO ANALYSIS........................................................................................100

(B) HORIZONTAL & VERTICAL ANALYSIS..................................................115

(C) INDUSTRY ANALYSIS................................................................................119

(D) FUTURE PROSPECTS OF THE ORGANIZATION....................................121

SWOT ANALYSIS OF ORGANIZATION.........................................................................122

CONCLUSION................................................................................................................126

RECOMMENDATIONS...................................................................................................127

REFERENCES AND SOURCES......................................................................................129

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ORGANIZATION BUSINESS SECTOR

OVERVIEW

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(A) BANKING SECTOR OVERVIEW

Pakistan’s banking and finance sector grew by over 21 percent from July 2004 March

2005 amid the eight percent expansion in the services sector in Pakistan. Financial sector

in Pakistan is going through a fast paced transition as new groups were buying out

foreign banks’ operations in Pakistan. The number of listed banks is also increasing.

While the income from core banking activity has increasing due to higher business

volume, earnings are also expected to improve due to ventures into consumer finance,

housing finance and enhanced lending to the agriculture sector.

In just four years the banking industry has expanded tremendously and now there are

more than two dozen commercial and investment banks operating in the country.

Commercial banks in the private sector had performed well since their inception,

registering overall growth in the deposit base and profits. The banks also managed to

maintain a healthy credit portfolio.

Foreign banks have a strong presence in all major cities and are targeting high net worth

individuals and blue chip companies. Their strategy is quite successful as they account

for about 34 percent of total sector profits, despite having only 15 percent of deposits and

16 percent of advances.

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(B) ORGANIZATION BUSINESS SECTOR

For effective handling of branches, it has categorized into segments with different people

handling each category, these categories are:

a) COMMERCIAL BANKING

b) CORPORATE BANKING

c) CONSUMER BANKING

a) COMMERCIAL BANKING

The branches which has a credit exposure of less than Rs. 100 million but having a credit

portfolio of more than Rs. 20 million (excluding staff loans). Usually branches in large

markets and commercial areas come under this category.

b) CONSUMERS BANKING

These are the branches which have exposure up to Rs. 20 million and these include all the

branches, which are neither corporate nor commercial branches.

Specialized Products / Facilities and Accounts:

MCB provides different saving accounts with attractive returns and Investment products

that give the monthly profits as well as the convenient payment instruments to save the

purpose of safety in high valuable transactions, having high acceptance around the world.

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a. Specialized Products.

MCB products are designed to cater to all your financial needs. They include:

Convenient 24 hours banking services through the largest ATM network

in Pakistan.

The MCB PAK RUPEE TRAVELLERS CHEQUES are the safest way

to carry cash for high value cash transactions.

The MCB MASTER CARD is the future of money with over 12 million

merchants welcoming the card globally for you to buy without paying

cash on the spot. You have never seen convenience like this before.

MCB REMIT EXPRESS is the fastest way of getting your money across

to Pakistan, through the bank service, which saves your previous time.

b. Specialized Accounts:

MCB provide its customers to open an account that fits their requirements and life style

in best way.

MCB RUPEE MAXIMIZER ACCOUNT provides an opportunity to convert your

foreign currency account in to Pak.

In Pak. Rupee or foreign currency accounts the bank provide with a selection of

accounts suiting your needs.

The KHUSHALI BACHAT or DOLLAR KHUSHALI ACCOUNT, both

require a low minimum income deposits plus you receive profit on daily product

basis.

Under SAVING 365 ACCOUNT, MCB offers you’re a saving account with

current account facilities.

The CAPITAL GROWTHINVESTMENT provides you an opportunity to

double your amount and also receive monthly profits through monthly

KHUSHALI.

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MBC MALAMAL DEPOSIT also provide the customer with incentive of

different prizes along with saving of their amount for a particular period at a

predetermined rate of profit.

More over the MCB’s policies relating too customer with innovative saving schemes,

products and services. Its ATM network is largest in Pakistan and Pak Rupee Travelers

cheques are market leaders. MCB also claims to be the first to introduce the photo card

with the introduction of MCB Master Card for adding additional security to its customers.

c) MCB CORPORATE BANKING

These are branches which have an exposure of over Rs. 100 million. Usually includes

multinational & public sector companies.

MCB corporate banking is providing its customers with professional financial advisor

that give personal attention to your banking needs. They are specialists in connection

with the services like under writing corporate advisory, project finance, equity

placements and a lot more. The Bank’s experienced corporate banking team assures you

to be assisted with all your financial needs and requirements by offering different

exclusive schemes and credit policies with the objectives to:

Help the process of industrialization in the country.

Provide employment opportunities to skilled and unskilled labor.

Encourage local and overseas Pakistanis for investment.

Increase production and boost exports.

MCB INVESTMENT BANKINGGROUP

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The Investment Bank Group (IBG) has emerged as a leading player in Pakistan’s

investment banking area. The group handles advisory, corporate finance, project finance

and capital market related transactions.

CAPITAL MARKETS

The Capital Markets (CM) teams participate in some of the largest capital markets

transactions emanating from Pakistan. IBG has been involved in all major corporate bond

transactions as Lead Manager or Lead Underwriter.

CORPORATE FINANCE

The Corporate Finance (CF) team is involved in some of the major Merger and

Acquisition transactions taking place in Pakistan. The team identifies potential targets or

acquires and arranges funds for the merger or acquisitions.

PROJECT FINANCE

The team at Muslim Commercial Bank is trained in conducting comprehensive risk

analysis of the projects under consideration, devise the financing in structure according to

the needs and cash flows of the project and arranges the required funds through

syndication.

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OVERVIEW OF ORGANIZATION

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(A) BRIEF HISTORY

At the time of independence in 1947 the banks services were very badly affected and by

June 30, 1948, the number of offices of scheduled banks came down to only 81 in 2 the

territories comprising Pakistan; but by December 31, 1973 there were following 14

scheduled Pakistani commercial banks with 3323 offices all over the Pakistan and 74

offices in foreign countries.

1. National Bank of Pakistan

2. Habib Bank Limited.

3. Habib bank (Overseas) Limited.

4. United Bank Limited.

5. Muslim Commercial Bank Limited.

6. Commerce bank limited.

7. Standard bank Limited.

8. Australasia bank limited.

9. Bank of Bahawalpur Limited.

10. Premier bank limited

11. Pak bank limited.

12. Sarhad Bank limited

13. Lahore commercial banks limited.

14. Punjab Provincial Cooperative bank limited.

MCB was founded by ISFHANI and ADAMJEE families in Calcutta on July 9, 1947.

MCB is not an overnight success story rather good track of services are responsible for

the leaps and bounds progress. After the partition of the Indo-Pak Subcontinent, the bank

moved to Dhaka from where it commenced business in August 1948.In 1956,the Bank

transferred its registered office to Karachi, where the Head Office is presently located.

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Thus, the bank inherits a 52 year legacy of trust in its customers and the citizens of

Pakistan.

MCB Bank Limited is one of the leading banks of Pakistan and continuously awarded

“Best Domestic Bank in Pakistan” from 2002-2007 and also ranked in AA + Rating. The

Management of the Bank maintained its strategy of concentrating on growth through

improvement in quality services, investment in technology & 3 people, utilizing its

extensive branches network, large & stable deposit base and managing its non-

performing loans.

MCB Bank Limited is the only Bank in Pakistan who listed on London Stock Exchange

and issued Global Depository Receipts (GDRs) worth 150 Million Dollars. MCB Bank is

first ever in the history of the country to be listed on the London Stock Exchange for

trading on the Professional Securities Market which is now being followed by NBP &

Others. The Bank’s Registered Office is at MCB Building, F-6/G-6 Jinnah Avenue,

Islamabad.

Province wise Branches detail

Province Branches Sub-Branches

Punjab 656 5

Sindh 243 1

N.W.F.P 103 -

Balochistan 36 -

Azad J. Kashmir 15 -

Domestic Total 1053 6

Overseas 7 -

Grand Total 1060 6

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Overseas Operations

Colombo 1

Kandy 1

Maradana 1

Pettah 1

Wellawatte 1

Bahrain 1

EPZ 1

Dubai (Rep. Office) 1

Summery

Group Circle Region Branches Sub-Branches

CBBG South 4 7 199 1

CBBG East 3 8 229 -

CBBG Central 4 12 327 4

CBBG North 3 11 332 1

Consumer Banking

Group

- 3 44 -

Whole sales and Islamic

Banking Group

- - 21 -

WBG Cash Management - - 1 -

Total 14 41 1053 6

Overseas - - 7 -

Grand Total 14 41 1060 6

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SUBSIDIARIES

The bank has two subsidiaries:

1. Adamjee Insurance Company Ltd.

2. First Women Bank Ltd

In the late 1990 after long period of time newly established Democratic Government of

Pakistan have decided to sell nationalized assets of country for better utilization.

In April 1991, MCB became Pakistan’s first privatized bank. The government of

Pakistan transferred the management of the Bank to National Group, a group of leading

industrialists of the country by selling 26% shares of the bank. In terms of agreement

between the Government of Pakistan and the National Group, the group, making their

holding 50% has purchased additional 24% shares. Now, 25% is purchased by the

Government, which shall be sold in the near future.

The name of bank has been changed from MUSLIM COMMERCIAL BANK LTD to

MCB BANK LTD. The name to change was felt due to the reasons that bank was mainly

known and popular as a MCB BANK.

MCB PHILOSOPHY

MCB Bank knows the best to deal with its customers and thus has a customer oriented

philosophy. The MAB philosophy in their words is described below.

“For us, you are not just a set of numbers; you are a valued customer whom we know by

name. This helps us serve you exactly the way you want us to that’s the difference! We

offer effective solutions derived from our personal knowledge of all your banking

requirements which are met when we meet you…by name.”

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MCB’S PERFORMANCE OVERVIEW

Based on continuing growth and consistently outstanding performance, MCB has once

again received the Euromoney Award 2005 for the “Best Bank in Pakistan”. MCB has

become the only bank to receive the Euromoney Award for Excellence for the fifth time

in last six years.

In addition, Asia Money has also declared MCB as “The Best Domestic Commercial

Bank in Pakistan” for the year 2005.

AWARDS

MCB Bank has won many awards, which is a clear proof of its good performance. It has

won Euromoney awards and Asia Money awards.

Euromoney Awards

Best Bank In Pakistan Award 2007




Euromoney Award 2003 for the "Best Bank in Pakistan".


Best Domestic Bank Award 2000

Asia Money Awards

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(B) NATURE OF THE ORGANIZATION

MCB is one of the leading banks of Pakistan with a deposit base of about Rs. 280 billion

and total assets of around Rs.300 billion. Incorporated in 1947, MCB soon earned the

eputation 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 1,053 domestic branches, 7 international 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.

OBJECTIVES OF ORANIZATION

The following are the objectives of Muslim Commercial Bank Limited.

CREATING AND MANAGING VALUES

The first objective of Muslim Commercial Bank Limited is to create and mange the

values, which is one of the back bone of the objectives of any well organized and

managed organization.

HUMAN VALUES

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The second objective of Muslim Commercial Bank is to take care of the Human capital

which is a necessary thing for the development and prosperity of any well established

organization.

BEST PLACE TO WORK

The third objective of Muslim Commercial Bank Limited is to make it a place which is

much feasible and comfortable for employees of the bank. The MCB is always conscious

in developing such place where employees of the bank feel easiness.

TECHNOLOGY

The forth objective of Muslim Commercial Bank Limited is to bring new and latest

technology in the operations of the bank. At MCB, technology has a direct relation with

your needs; it is a means for creating value and convenience for the customer. Over the

last few years MCB has invested heavily into strengthening its technology backbone.

Today it is leading the way in banking technology and setting new standards for the

banking industry; penetrating into the local market, listening to the needs of the people

and educating them of simple financial products and services that create both value and

convenience. MCB’s strength lies in providing a technological base at the grass roots

level of the society with a challenge to educate and assimilate such systems across vast

cultural and economic backgrounds. MCB continuously innovate new products and

services that harness technology for the customer’s benefit.

UNDERSTANDING RELATIONSHIPS

The fifth and very important objective of Muslim Commercial Bank Limited is to create

such an environment which is suitable for creating understanding and relationship

between the employees, thus going towards the way of development and prosperity. Over

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the years, MCB has fostered strong bonds with its customers. Understands them; their

needs. They feel comfortable with MCB; it’s their bank; it responds to them; listens to

them; partners with them; grows with them. At MCB, banking is all about being there for

people, making a home in their hearts-continuously building relationships on mutual trust

and confidence. We understand that relationships are about expectations-our products and

services are based on your customers, expectations. Be it financing for personal or

business related needs, funds transfer and trade related facilities or need for different

types of deposit accounts, MCB offers you a variety of products and services customized

to satisfy your individual needs.

UNDERSTANDING CONVENIENCE

The next objective of Muslim Commercial Bank Limited is to make understanding a

convenient thing for the whole environment of the bank, for the purpose of boosting up

its values and prosperity in such a competitive environment. Convenience is what the

customer is looking for; and this is what we at MCB are continuously striving to provide.

Whether it is the 24 hours cash convenience of our ATM network or the easy availability

of financing requirements or simple opening of account, MCB has tailored its products

and services to make your life easier. MCB knows the particular needs of its diverse

customer base d continuously develop products and services that fulfill these needs.

UNDERSTANDING RELIABILITY

The last but not least objective of Muslim Commercial Bank Limited is to make an

environment which have an understanding of reliability in the whole structure of the

bank. With a strong financial base, a promising team and the right resources, MCB has

proved to be a reliable partner indeed. MCB understands the special needs of the

business, trading and agricultural sectors. Strategically located branches in small towns

and cities provide warm services and advice to the small businessmen and local traders.

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MCB speaks their language; it understands their needs and provides tangible results. By

responding in a timely manner with a flexible approach, MCB provides its clients with

the reliable financial service and support they require to successfully achieve their

business objectives. With a solid foundation of over 50 years in Pakistan and having

recently completed 10 successful years of privatization, MCB is strongly positioned to

lead the banking sector in the new millennium. You can feel safe in our hands.

VISION STATEMENT

“Challenging and Changing the Way you Bank”.

MISSION STATEMENT

“MCB Bank’s team of committed professionals is dedicated to maintaining long term

customer relationships through outstanding service and convenience”.

OUR VALUES

Trust

“We are the trustees of public funds and serve with integrity & commitment. Ethical

behavior is of critical importance to us. We adopt full compliance with internal and

external policies and procedures, operating within the legal framework”.

Customer Focus

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‘We continuously seek to exceed our customer’s expectations, forging and maintaining

long term relationships”

Innovation

“We strive to be the market leaders in innovative products and services offering

customized financial solutions with flawless execution”

Teamwork

“The diversity of our people is our strength. We inspire and challenge each other working

together to achieve synergy”

Achievement

“Our people are our most valuable asset. We are committed to a result oriented culture.

Our goals are clear and merit is the only criterion for reward”

Social Responsibility

“As responsible citizens we contribute to the social welfare of the community we live in.”

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(C) BUSINESS VOLUME

Business volume of MCB

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(D) PRODUCT LINE

PERSONAL BANKING

Deposit Accounts

Khushali Bachat Account

Khushali Bachat Account, a Rupee savings account is one of MCB Bank’s most popular

products. Due to the low initial deposit, the account can be opened by people from all

walks of life and still avail the facility of daily product profit calculation.

Mahana Khushali Bachat

MCB Monthly Khushali Scheme provides you with a steady income every month. Just

purchase a Monthly Khushali Certificate and you will enjoy a steady income of your total

deposit every month.

Pak Rupee Savings Account

MCB’s Pak Rupee Savings Account offers you attractive returns on your Pak Rupee

investment. In addition, you have access to a countrywide ATM network convenient cash

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accessibility 24 hours a day. The facility also provides you with unlimited daily

transactions with a limit on maximum withdrawal amount through the ATM machines.

Pak Rupee Current Account

MCB’s Pak Rupee 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

number of transactions you make in a day plus you can avail finance facility up to 75% of

the total deposit. In addition, you have access to a countrywide ATM network convenient

cash accessibility 24 hours a day. The facility also provides you with unlimited daily

transactions with a limit on maximum withdrawal amount through the ATM machines.

Pak Rupee Term Deposit

MCB Pak Rupee Term Deposit gives a higher rate of return. It gives you choice of 1

month, 3 months, 6 months, 1 year, 2 years, 3 years, 4 years and 5 year term deposits.

Saving 365

The MCB Saving 365 calculates profits on a daily product basis and gives you the facility

of unlimited withdrawals.

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FOREIGN CURRENCY SAVINGS ACCOUNT

Foreign Currency Savings Account

MCB’s Foreign Currency Savings Account offers you attractive returns on your Foreign

Currency investment. You can invest in any of the four currencies i.e. US Dollar, UK

Pound Sterling, Japanese Yen or Euro. Your foreign currency account is exempted from

Zakat and withholding tax

Foreign Currency Current Account

MCB’s 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 number of transactions you make in a day.

MCB Foreign Currency Term Deposit

MCB Foreign Currency Term Deposit gives a higher rate of return. It gives the choice of

1 month, 3 months, 6 months, 1 year, 2 years, 3 years, 4 years and 5 year term deposits.

Dollar Khushali Account

The Dollar Khushali Account, a Dollar based account was introduced in 1993 at selected

MCB Bank branches. Today, you can open a Dollar Khushali Account at over 200

ranches in Pakistan.

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LOAN PRODUCTS

MCB Business Sarmaya

“MCB Business Sarmaya” is the best Running Finance facility against your residential

property which empowers you to manage your business dealings better. So act today and

get MCB Business Sarmaya and thus improve your business, avail lucrative opportunities

and expand your business, with absolute satisfaction of cash flows.

MCB Car4u

Life is like a chess board. You plan your career options. You analyze your business

moves. But when you really want to improve your life, you make a power move. MCB

CAR4U Auto Finance is the power move that assists you in more ways than you ever

imagined. It is affordable, with lowest mark up, flexible conditions, easy processing and

above all, no hidden costs.

MCB Pyara Ghar

Some destinations require a long wait. Like waiting for a home of your own. But with

MCB Pyara Ghar it is now easy to step into your home and start living a real life. MCB

Pyara Ghar is an ideal Home Finance from your own bank that lets you Purchase,

Renovate or Construct your home the way you have always wanted. Having your own

home was never so easy.

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Easy Personal Loan

MCB Easy Personal Loan provides you with the financial advantage to do things you've

always wanted to but never had the sufficient funds for. Take that much‐needed holiday.

Buy a car. Refurnish your house. Purchase a new TV. Finance a better education for your

children.

MCB Master Card

Since the beginning of time, people have tried to find more convenient ways to pay, from

gold to paper money and cheques. Today, money is moving away from distinct hard

currencies and towards universal payment products that transcend national borders, time

zones, and, with the Internet, even physical space. Plastic or "virtual" money, credit,

debit, and electronic cash products, inevitably will replace cash and cheques as the

money of the future.

MCB Rupee Traveler's Cheques

MCB Rupee Traveler's Cheques were first introduced in 1993 as safe cash for traveling

and travel related purposes. The product has been extremely popular and is preferred over

cash by customers while traveling and in all walks of life. MCB Rupee Traveler's

Cheques” The safest way to Carry Cash”

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CORPORATE BANKING

Cash Management Services

MCB’s network of over 900 branches in Pakistan enables it to collect and disburse

payments efficiently with its cash management services. This also enables it to offer you

choice of paper based or electronic fund transfer solutions including collection amounts,

cross branch on‐ line transactions etc.

Working Capital Loans

Based on the customer’s specific needs, the Corporate Bank offers a number of different

working capital financing facilities including Running Finance, Cash Finance, Export

Refinance, Pre‐shipment and Post‐ shipment etc. Tailor‐ made solutions are developed

keeping in view the unique requirements of your business.

Term Loans

MCB offers Short to Medium Term Finance to meet capital expenditure and short term

working capital requirements of our customers. The loans are structured on the basis of

underlying project characteristics and cash flows of the business.

Trade Finance Services

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Under Corporate Banking MCB offers trade finance services that include an entire range

of import and export activities including issuing Letters of Credit (L/Cs), purchasing

export documents, providing guarantees and other support services.

VIRTUAL BANKING

MCB Virtual Internet Banking offers you the convenience to manage and control your

banking and finances – when you want to, where you want to. MCB’s Virtual Internet

Banking facility is simple and secure. And its free of cost. With MCB Virtual Internet

Banking you can access any of the banking services, 24 hours a day, 7 days a week and

throughout the year.

MCB Virtual Internet Banking offers a wide range of online services which makes your

banking accessible anytime and from anywhere.

Detailed Account Summary of all listed accounts.

Mini statements of each of the listed accounts showing recent transaction history

for that account(s).

Statement by Period of each of the listed accounts, based on the period specified.

Immediate or Scheduled Transfer of Funds between your own accounts, as well as

to third party accounts setup as beneficiaries, maintaining accounts with MCB.

Scheduling of ‘One‐Time’ as well as ‘Recurring’ Funds Transfers.

Payment of utility bills for registered Utility Companies.

Immediate or Scheduled Bills Payment. Scheduling of ‘One Time’ as well as

‘Recurring’ bill payments. Option for ‘Full’ or ‘Partial’ payment based on the

payment conditions specified by a particular Utility Company.

Bulk Salary Transfer for Corporate Customers, to facilitate them in paying salary

to the corporate employees, who maintain accounts with MCB.

Bulk Funds Transfer for Corporate Customers.

Cheque Book Request for any of your listed accounts.

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Payment/Transfer Alerts for reminding, in advance, prior to the processing of

specified payments and transfers.

Personal Alerts for reminding of pre specified events and occasions.

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ISLAMIC BANKING

Deposit Schemes

For customers who are looking for a deposit opportunity where they can purse their funds

and reap halal returns on it, we offer the following products:

Al Makhraj Saving Account

Al Makhraj Ianat Account

Al Makhraj Term Deposit

Fund Based Facilities

Ijarah Products

MCB’s Islamic Ijarah, analogous to the English term 'leasing’, is based on the ‘Ijarah wa

Iqtina’ concept which means the sale of the asset to the lessee after the Ijarah has

matured. Under this scheme, MCB will be the owner of the asset, and the customer

(lessee) will be given the asset to use for a certain period of time in return for monthly

rental payments. MCB will give a separate unilateral undertaking that it will offer to sell

the asset to the customer (lessee) at the maturity of the Ijarah agreement at a price that

may be equal to the security deposit amount, hence the term ‘Wa Iqtina’.

Types of Ijarah

Car Ijarah

Equipment Ijarah

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OTHERS PRODUCTS

Flexi Life

a. Optional benefits available through unit deductions

i. Family Income Benefit

ii. Critical Illness Benefit

iii. Permanent Total Disability

b. Optional benefits available through additional premium

i. Accidental Death

ii. Accidental Death or Dismemberment

iii. Waiver of Premium

iv. Hospitalization Cash Reimbursement

LifePartner

Protection Benefit

a. Accidental Death

b. Accidental Death or Dismemberment

c. Waiver of Premium

d. Hospitalization Cash Reimbursement

Additional Benefits

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Flexibility of Choice

Inflation Protection

Additional Top-Ups (Ad-hoc Feature)

Additional benefits are subject to terms and conditions.

Access to Your Savings

a. Partial Withdrawal

b. Complete Surrender

Free-Look Period

The plan offers you a free-look period of 14 days, in which you can cancel your policy by

contacting NJI Life, and have your premium refunded. However, as per law, NJI Life

reserves the right to deduct the expenses incurred on medical examination(s) of the Life

Assured in connection with the issuance of this Policy.

EDUCARE

BENEFITS:

Education Continuation” Benefit

Education Support” Benefit

Accidental Death and Disability Benefit

Fund Acceleration Premium



Additional Benefits:

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Plan Maturity Benefit

a. Income Benefit

b. Waiver of Premium

c. Additional Term Assurance

Free-Look Period

The plan offers you a free-look period of 14 days, in which you can cancel your policy by

contacting EFU life, and have your premium refunded. However, as per law, certain

charges will be deducted related to any medical examination that you may have

undergone during the application stage.

DREAM WEDDING

BENEFITS:

Marriage Continuation” Benefit

Engagement Support” Benefit

Accidental Death and Disability Benefit

Fund Acceleration Premium (Ad-hoc Feature)



Plan Maturity Benefit


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a. Income Benefit

b. Waiver of Premium

c. Additional Term Assurance

Free-Look Period

The plan offers you a free-look period of 14 days in which you can cancel your policy by

contacting EFU Life and have your premium refunded. However, as per law, certain

charges will be deducted related to any medical examination that you may have

undergone during the application stage.

CAPITALSURE

BENEFITS:

Partial Withdrawal

Guaranteed Maturity

Protection Benefit

Complete Surrender

Loan

Premium Escalation

Additional benefits

a. Level Term Insurance Rider (LTR)

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b. Income Benefit Rider (IBR)

c. Accident Care Benefit (ACB)

d. Family Protection Rider (FPR)

Free-Look Period

CapitalSure offers a free look period of 14 days during which you can review your policy

terms and conditions and cancel the policy. Your premium will be refunded on receipt of

written request within 14 days from the date of receipt of policy document. ALICO

reserves the right to deduct the expenses incurred on medical examination.

RETIREEASY

BENEFITS:

FLEXIBILITY OF CHOICE

Conservative Strategy

Balanced Strategy

Aggressive Strategy

Guaranteed Loyalty Bonus

Policy year Loyalty Bonus Unit Allocation as % of Basic Premium

5 15%

10 25%

15 and every 5 years thereafter 25%

Account Value Acceleration Premiums

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Guaranteed Death Benefit

Partial Withdrawal

Complete Surrender

Maturity Benefit

Premium Escalation


a. Level Term Insurance Rider (LTR)

b. Family Protection Rider (FPR)

c. Income Benefit Rider (IBR)

d. Accident Care Benefit (ACB)

Free-Look Period

IncomeMax offers free look period of 14 days during which you can review your policy

terms and conditions and cancel the policy. Your premium will be refunded on receipt of

written request within 14 days from the date of receipt of policy document. Alico

reserves the right to deduct the expenses incurred on medical examination.

STEPUP

BENEFITS:

Protection Benefit

Accidental Death Benefit

Waiver of Premium (Accidental disability only)

Policy Loan

Complete Surrender

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Policy Payouts:

If you survive and continue to pay premiums, you will receive a fixed amount to meet

mid-term/short-term needs.

Year % of sum assured

7 25%

14 25%

21 50%

Guaranteed Bonus:

In addition to the policy payouts, you are also provided guaranteed bonuses. If the

policyholder dies after the bonus has been announced, the bonus will be added to the

death benefit.

Year % of sum assured

6 12.5%

13 75%

Bonus payable only at maturity

Free-Look Period:

The plan offers a free-look period of 14 days, in which you can cancel your policy by

contacting Adamjee Life, and have your premium refunded. However, as per law,

Adamjee Life reserves the right to deduct the expenses incurred on medical

examination(s) of the Life Assured in connection with the issuance of this Policy.

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SERVICES

MCB Mobile Banking

At the forefront of technological excellence, MCB proudly introduces MCB MOBILE

BANKING. The convenience of accessing your account balance information and mini

statements whenever you want or wherever you may need them, with comfort and peace

of mind.

MCB SMS BANKING

Now, MCB SMS Banking gives you quick and easy access to your account(s) round the

clock, at our convenience.

At the forefront of technological excellence, MCB proudly introduces MCB SMS

Banking service.

This service is available to all MCB Account Holders anytime, anywhere.

For more information call our Help Line 111-000-622 (MCB).

Banking at your Fingertips

MCB SMS Banking allows you to avail the following services:

Account Balance Inquiry.

Account Mini Statement (last 5 transactions).

View Credit Card(s) minimum payment.

View Credit Card(s) outstanding balance.

View Credit Card(s) bill.

A Free Service

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MCB SMS Banking is a free service for all MCB account holders. However, standard

SMS charges levied by your service provider are applicable.

MCB Call Center

Keeping up with banking services can be tedious but not with MCB Bank, where phone

service is at your fingertips. Just dial our Call Centre from the comfort of your home or

office or wherever you happen to be. It offers basic banking services for your

convenience, eliminating the need for you to make unwanted trips to your branch.

MCB Smart Card

MCB now brings you MCB Smart Card a secure and convenient instrument of payment

with unmatched functionalities. It provides 24hour direct access to your bank account.

The convenience and flexibility of MCB Smart Card will help you live a smarter life. It

not only helps you manage your expenses, but also eliminates undue interest on your day

to day credit card transactions. Your balance is always within your reach and you spend

accordingly.

MCB Debit Card

Now MCB brings a secure, convenient and quick payment facility that enables you to do

purchasing by using your existing MCB ATM / MCB Smart Card as a DEBIT CARD.

ATM Network

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ATM stands for Automatic Teller Machine. This machine is used to transact in one’s

account without intervention of humans. These machines are basically used for taking

cash, confirming balances and requesting statements/Cheque books.

The nation’s largest network of over 400 ATMs and growing. Get 24 hour convenience

of cash withdrawal; mini‐statement, bill payment and funds transfer services.

ONLINE BANKING:

Providing customers with 24 * 7 real time online transaction facilities.

Full Day Banking:

Enjoy the convenience of extended banking hours from 9 to 5, even on Saturdays, for

satisfying your banking needs at all MCB Full Day Banking branches across the country

where you are now served with a wide range of services throughout the day.

MNET

MCB has provided the nation's largest operating switch with the highest transaction

volume in the form of MNET. MNet is basically MCB’s Network for Electronic

Transactions; it is an electronic hub for ATM sharing plus other touch points. MNET

enables all the member banks (members of Muslim Commercial bank) to share their

electronic networks. This means customers of all member banks can use each other's

ATMs. ATM machines of MNET member banks accept cards issued by:

• MCB Bank

• Citibank

• Standard Chartered

• HSBC

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• Bolan Bank

• Bank of Punjab

• Prime Commercial Bank

• Saudi Pak Bank Limited

• Habib Bank AG Zurich

• Metropolitan Bank

• Bank of Khyber

• American Express

• KASB

• My Bank Ltd

• NDLCIFIC Bank Ltd

MNET customers can use over 600,000 ATMs worldwide that carry the Cirrus logo and

shop at over 5 million outlets (POS) that carry the Maestro logo

MCB Lockers

The best protection for your valuables. Lockers of different capacities are available

nationwide.

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(E) COMPETITORS

List of MCB competitors is given below

CENTRAL BANK

State Bank of Pakistan

NATIONALIZED SCHEDULED BANKS

First Women Bank Limited

National Bank of Pakistan

SPECIALIZED BANKS

Industrial Development Bank

Zarai Taraqiati Bank Limited[1]

Punjab Provincial Cooperative Bank

SME Bank

PRIVATE SCHEDULED BANKS

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Habib Bank, Karachi

Allied Bank of Pakistan, Karachi

Arif Habib Limited, Karachi -

Askari Bank, Rawalpindi

Atlas Bank, Karachi (Corporate Website)

Bank AL Habib, Karachi

Bank Alfalah, Karachi

Barclays Bank,Karachi

Faysal Bank, Karachi [1]

Habib Metropolitan Bank, Karachi

JS Bank

KASB Bank, Karachi

MCB Bank Limited (formerly Muslim Commercial Bank), Islamabad

Mybank Limited, Karachi

NIB Bank, Karachi

SAMBA Bank Limited, Karachi

Silkbank Limited

Soneri Bank

United Bank Limited, Karachi

Bank Of Punjab, Lahore

Citibank,Islamabad

Standard chartered Bank Ltd,Karachi

Royal Bank of Scotland Ltd,Karachi

HSBC Ltd,Lahore

khushali bank of Pakistan

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DEVELOPMENT FINANCIAL INSTITUTIONS

Pak China Investment Company Limited, Islamabad

Pak Kuwait Investment Company Limited, Karachi

Pak Libya Holding Company Limited, Karachi

Pak Iran Joint Investment Company Limited, Karachi

Pak-Oman Investment Company Limited, Karachi

Saudi Pak Industrial and Agricultural Investment Company (Pvt) Limited,

Islamabad

House Building Finance Corporation, Karachi

Investment Corporation of Pakistan, Karachi

Pak Brunaei Investment Company Limited, Islamabad

INVESTMENT BANKS

Al-Towfeek Investment Bank Limited

Invest Capital Investment Bank Limited

Atlas Investment Bank Limited

Crescent Investment Bank Limited

Escorts Investment Bank Limited

First Credit and Investment Bank Limited

IGI Investment Bank Limited

Fidelity Investment Bank Limited

Islamic Investment Bank Limited

AMZ Securities

Orix Investment Bank (Pakistan) Limited

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Prudential Investment Bank Limited

Trust Investment Bank Limited

DISCOUNT AND GUARANTEE HOUSES

First Credit & Discount Corp Limited

Prudential Discount & Guarantee House Limited

National Discounting Services Limited

Speedway Fordmetall (Pakistan) Limited

HOUSING FINANCE COMPANIES

Asian Housing Finance Limited

Citibank Housing Finance Company Limited

House Building Finance Corporation

International Housing Finance Limited

VENTURE CAPITAL COMPANIES

Pakistan Venture Capital Limited

Pakistan Emerging Ventures Limited

AMZ Ventures

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MICRO FINANCE BANKS

NRSP Micro Finance Bank Limited

The First Micro Finance Bank Limited

Khushali Bank Limited

Karakuram Bank

Network Micro Finance Bank

Pak Oman Micro Finance Bank

Rozgar Micro Finance Bank, Karachi

Tameer Microfinance Bank Limited

Kashf Foundation Limited

ISLAMIC BANKS

Dawood Islamic Bank Limited

Dubai Islamic Bank Pakistan limited

Meezan Bank Premier Islamic Bank In Pakistan

AlBaraka Islamic Bank

BankIslami Pakistan Limited

Emirates Global Islamic Bank

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ORGANIZATION STRUCTURE

46

SEVP

ESEVP

VP

AVP

Assistant

OG-1

OG-3

OG-2

SVP

Clerical Staff

Cashier

Technical Staff

Non clerical staff

Messenger

Dispatch Rider

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(A) HIERARCHY OF MANAGEMENT

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MANAGEMENT COMMITTEEBoard of Directors

Mian Mohammad Mansha Chairman

S.M.Muneer Vice Chairman

Tariq Rafi Member

Shahzad Saleem Member

Sarmad Amin Member

Dr. Muhammad Yaqub Member

Mian Raza Mansha Member

Dato' Mohammad Hussein Member

Aftab Ahmad Khan Member

Atif Bajwa President / CEO

Audit Committee

Tariq Rafi Chairman





Human Resources Committee




Shahzad Saleemn Member

President Member

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Risk Management & Portfolio Review Committee

Shahzad Saleem Chairman

Tariq Rafi Member

Sarmad Amin Member



Committee on Physical Planning, IT System & Contingency Arrangements

Sarmad Amin Chairman

S. M. Muneer Member


President Member

Business Strategy & Development Committee


S. M. Muneer Member

Shahzad Saleem Member




President Member

Chief Financial Officer

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Ali Munir

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(B) NO. OF EMPLOYEE

Employees: 12,256 (appro.)

Shareholders: 43290Shareholding: 628276843

(C) MAIN OFFICES

Registrar Office

MCB Building F-6/G-6

Jinnah Avenue, Islamabad

Principal Office

MCB 15 Main Gulberg, Lahore

Registrar's and Share Registration Office

MCB 15 Main Gulberg, Lahore

M/s. THK Associates (Pvt.) Limited

State Life Building No.3,

Dr. Ziauddin Ahmed Road,

Karachi

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(D) INTRODUCTION OF ALL DEPARTMENTS

DEPARTMENTION IN MCB

In MCB there is departmentation by function. There are twenty divisions working under

Head Office, each of which is having his own field of work, these divisions are:

1. AGRICULTURE DIVISION.

This division work for the development of agriculture in the country. It advances loans

for agricultural purpose and recovers all loans already given for the said purpose. This

division also assists World Bank and other donors in their agriculture development

project.

2. AUDIT DIVISION.

Previously IT was called inspection and Audit Division. It conducts audit in Bank’s

branches and it delegated enough authority from the Board of Directors so OTB that it

can work without any fear. It appoints audit teams and all the irregularities are reported to

this division.

3. BUSINESS DEVELOPMENT & MARKETING DIVISION.

This is the most important division working under H.O, the main function of this division

is business development. This division on the basis of market survey introduces new

schemes and all the marketing activities for the promotion of the new products are carried

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out by this division. Changes in the existing connection with bank & customer scheme is

also the responsibility of this division.

4. CENTRAL ACCOUNTS DIVISION.

The main responsibility of this division is to keep accounts of branches and record of all

inter branch transitions and of branches with HO. Calculation of profit on the accounts of

branches maintained with HO is also the responsibility of this division.

5. CORPORATE AFFAIR DIVISION.

It deals with the affairs of public and private limited companies. It includes financing of

large and specialized corporations, projects. In short it manages the corporate financing.

It also directly controls those branches which are designated as corporate branches.

6. CREDIT MANAGEMENT DIVISION.

Main function of this division is to form credit rules and regulation in accordance with

the prudential rules and regulation framed by SBP. It deals with all credit proposals

submitted by advances departments of different branches and defines their limits of loans.

Marketing activities about the loan is also carried out by this division. This division keeps

contacts with all valuable clients and considers their view about he loans/advances

procedure and tries to make the procedures as simple as possible. Action necessary for

the recovery of loan is also taken by this division.

7. FINANCE AND TREASURY DIVISION.

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This division manages all the assets of MCB Management of income tax and central

excise duty is the function of this division. The most important function it performs is the

announcement of profit rate On different schemes from time to time.

8. FOREIGN TRADE AND EXCHANGE OPERATION DIVISION.

The main function of this division is to arrange foreign currency reserves, for day to day

requirements of bank. It frames all rules and regulations regarding foreign exchange and

L/C opening in the light of prudential rules and regulations of SBP, and instructions of

Export Promotion Bureau (EPB) and Ministry of Commerce and Industry.

9. GENERAL SERVICE SECTION.

This division deals with construction and maintenance of branches, purchase and

maintenance of vehicles and lasing of bank’s property. The supply of stationery and

equipment’s is also the responsibility of this division.

10. HUMAN RESOURCES DEVELOPMENT DIVISION.

It is the most important division of HO. Dealing with the most important asset of the

bank i.e Human Resource. It deals with all the personnel functions of recruitment,

transfer, promotion, resignation, and separation. It settles all salary matters and matters

relating to increments, bonuses and fringe benefits. It maintains records of employees and

conducts performance appraisal and disciplinary actions.

11. INFORMATION MANAGEMENT DIVISION.

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It is fully computerized division, which provides all sorts of information to top

management. This division monitors the information system of all branches and is

playing s a very important role in computerization of MCB.

12. INDUSTRIAL CREDIT DIVISION.

Previously it was part of Credit Management division, but now it works under the said

division. It deals only with the advances to industrial units.

13. INTERNATIONAL DIVISION.

It looks after all the matters relating to foreign banks including the branches of MCB

abroad. It looks after all deals which Muslim Commercial Bank carries out with banks

and financial institution of foreign countries. Management of Umra and Hajj operations is

also the responsibility of this division. The management and conditions of seminars and

training programs outside the country and to send its officials for the training abroad is

the responsibility of this division.

14. INVESTMENT BANKING GROUP.

It is the unit which under takes investment with respect to the product of the banks. It

deals with capital market at national and international level and also manager’s

syndicates in case of issuing of shares etc.

15. ISLAMIZATION DIVISION.

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This division was established in Zia regime, after the introduction of Islamic Banking in

Pakistan. This division administers Zakat deductions, Iqra surcharge and Qarze Hasna

mode of financing. This division also gives suggestions on the adoption of interest free

banking in Pakistan.

16. LEGAL AFFAIR DIVISION.

This division deals with the legal affairs if the back, it handles all the cases filed against

someone and to defend all the cases filed against MCB. It alsi five suggestions in framing

of new rules and regulations to other divisions.

17. ORGANIZATION AND METHOD DIVISION

This division firms methods and procedures to be adopted by different branches. This

division is also responsible for construction and review of organizational structure of

MCB as a whole and the braches. The division collects data and suggestions or MCB as a

whole and the branches. This division collects data and suggestions for the improvement

of his organizational structure and procedures.

18. RUPEES TRAVELER CHEQUE AND CREDIT CARD DIVISION

This division is responsible fir maintaining all records to Rupees travelers’ cheque and

master card.

19. SPECIAL ASSETS MANAEMENT DIVISION

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This division is created to give suggestions and fins new ways and means to recover the

stuck up loans of bank.

20. TRAINING DIVISION.

The division is responsible for arranging training fir all level of employees. It administers

the staff colleges of MCB. This division keeps aware itself from the introduction of new

banking techniques, and provides a full opportunity to its employees to learn what ever

new.

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PLAN OF INTERNSHIP PROGRAM

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(A) INTRODUCTION OF THE BRANCH

I did my internship in MCB Bank limited KABAYAN-E- SARWAR, branch Dera

Ghazi Khan.

In the MCB Bank limited, I really enjoyed working with the staff of Khayaban-e-Sarwar,

Branch, Dera Ghazi Khan and having a wish to be employee of MCB. It was almost

impossible to work in all the departments within that limited time. But on my request, the

staff of the branch provided me the opportunity to work in the different departments for

the sake of practical knowledge. I feel highly indebted to work in the Khayaban-e-Sarwar

Bach on the request of the manager of that branch Maqsood Ahmed, because I learnt a lot

in that branch.

Some important information about my branch which I observed is as follows.

Address: (Khabayan-e-Sarwar, Multan Road, Dera Ghazi Khan)

Branch Code 1493

It is deposit branch, did not give the loan. (But deal Short term finance)

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GENERAL INFORMATION ABOUT MY BRANCH

DEPOSITS

The total deposits of this about to 15, 00, 00,000 Rs.

NUMBER OF ACCOUNTS

Accounts in this branch of MCB are as follows

CURRENT ACCOUNT:

Total numbers of current accounts are 1200 Nos.

PLS ACCOUNT

Total numbers of profit and loss accounts 2100 Nos.

REMITTANCE

Total remittance of this branch is 3,00,00,000 Rs. Per month.

NO. OF VOUCHERS

The vouchers which are transacted in this branch are 220 to 230 daily

Types

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Transfer

Clearing

Cash

Rate of interest

Maximum

That gives to this year.

RATE OF INTEREST

The rate of interest provided by such bank is 5 % on saving

FINANCING

Mainly, the short term financing schemes are being deal here.

CAPITAL

Capital of branch is treated in its head office

REVENUES

The total revenues of this branch are near to 5 Millions (last year)

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MANAGEMENT OF THE BRANCH

Branch Manager Maqsood Ahmed

(Working as Sales / Deposited, collect deposit, contact parties for

depositing and Supervision of the working of Staff)

Operation Manager Miss Aasma

(Over all working and Supervisor, and Supervision of operations)

Custom Service Mrs. Aara

(Opening Account, and others issued relating to opening the

account matter)

Remittances Officers Mis Irram

(T.T., DP, Check deposit, mean Check department)

Cashier Mr. Muhammad Rahil

(Cash payment, Cash Receive and others relating to cash matters)

Collective Department Miss Aasma/Mrs. Aara/Miss Irma

These employee randomly work in this Department.

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(On daily basis , they check the cheque from the other banks and

after checking they submit them in the head office every day)

Office Boy Muhammad Kaleem

(Working as a peon, do the services to the customers.)

Security guards

Muhammad Imtiaz (Morning Duty)

Manzar Hayat (Morning Duty)

Talib Hussain (Evening Duty)

(They provide the security to the branch)

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(B) DURATION OF MY INTERNSHIP

Start Date: 05 October 2009

End Date: 05 December 2009

(C) DEPARTMENTS IN WHICH I GOT TRAINING

Name of Department Duration

Remittance department 05-10-2009 to 20-10-2009

General banking department/clearing department 20-10-2009 to 10-11-2009

Accounts and Deposit Department 11-11-2009 to 25-11-2009

Cash department 26-11-2009 to 05-12-2009

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TRAINING PROGRAM

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(A) ACTIVITIES PERFORMED BY THE DEPARTMENTS OF BRANCH

DEPARTMENTS OF BRANCH

The departments functioning at, MCB KHAYABAN-E-SARWAR 1493 branch Dera

Ghazi Khan are discussed below.

Cash department

Accounts and Deposit Department

Remittance department

General banking department/clearing department

CASH DEPARTMENT

The following books are maintained in the Cash Department:

Receiving Cash Book

Paying Cash Book

Token Book

Scroll Book

Cash Balance Book

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When cash is received in counter, it is entered in the Scroll Book and Receiving Cashier

Book. At the close of the day, these are balanced with each other. When the cheque or

any negotiable instrument is presented at counter for payment, it is entered in the token

book and token is issued to the customer. The token clerk and the Cashier make entries in

the paying book and payment Cashier Book are balanced. The consolidated figure of

receipt and payment of cash is entered in the cash balance book and drawn closing

balance of cash.

Opening Balance + Receipts – Payments = closing Balance.

This is very important department because cash is the most liquid asset and mostly frauds

are made in this department, therefore, extra care is taken in this department and nobody

is allowed to enter or leave the area freely. Mostly, cash area is grilled and its door is

under supervision of the head of that department. All the books maintained in this

department are checked by an officer.

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ACCOUNTS DEPARTMENT

The function of Accounts department is to post daily activities of each and every section.

Every department is sending the detailed report of daily progress to the Account

Department for posting the same in the cash book, also allowed the clean cash register.

The transaction then will be shifted to their appropriate heads. Accounts department deals

in two types of registers.

In the income ledger the transactions relating to the income of the bank are to be posted,

like commission from parties, maintenance etc. all the development expenses of the bank

including salaries expenses of the staff, rent expenses etc are to be posted in the expense

ledger. Accounts department also maintains the deposits, and also prepares the weekly

and daily statements of the affairs of the branch. It is just like a balance sheet.

THE DEPOSITS SECTION

The deposits are one of the most fundamental sections of any bank. This section had been

set up with a view to accept deposits from general public and which was also a central

idea to create a bank. It will not wrong to say that the banking starts from this section.

FUNCTIONS OF THE SECTION

The deposits section carries out many significant functions, besides providing other

required facilities and information to its customers. Some of key functions are given

under:

OPENING NEW ACCOUNT

Opening of new account is like a contract between the banker and customer. It is the

preliminary function of the deposits section to open various types of account, by allotting

those numbers.

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Types of Accounts

Keeping in view the purpose and duration for which deposits are to be kept with the

deposits section in the bank, the deposits can be classified into two categories, Demand

deposits and Time or Fixed Deposits. The demand deposits are ones which are payable

by the bank whenever demanded y the depositors. This category includes current and

savings deposits accounts.

While on the other hand the deposits which are accepted by the bank under the condition

that they will not be payable on demand but will be payable on a fixed or predetermined

future time or date are called Time or Fixed Deposits.

Following are the types of accounts the deposits department opens.

1. Current Accounts

These are running accounts and are opened by the individuals/businessmen, public

institutions and groups, that make deposits and withdrawals frequently. The deposits and

withdrawals can be made through cheques, demands drafts, pay orders, etc, drawn on the

branch. As these accounts are payable whenever the depositors demand and the Bank by

accepting these deposits incurs the obligation of paying all types of orders to the extent of

the credit balance in the depositor’s accounts. These deposits represent current liabilities

of the bank. So, the bank has to keep sufficient funds in its hand to meet the requirements

of the depositors of these deposits.

Furthermore the businessmen, who require money frequently, open current accounts. The

bank can not apply the proceeds of such expenses, fees, commission, and markup etc

arising out of any dealing or services with the branch. The account holder is expected to

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maintain a minimum balance of Rs.500/- in his account or whatever the minimum

amount is prescribed for the purpose. These accounts are completely exempted from

withholding tax and zakat deduction.

2. PLS Saving Accounts

These are also one kind of demand deposits and are kept to develop the saving sense in

the citizens of the country. These accounts are opened mainly by those customers whose

banking transactions are not frequent and numerous. Lower and middle income groups,

small traders, professionals, farmers and other salaried classes usually make such

deposits, so as to save small amounts for the small or big needs, like purchase of

television, refrigerator, car or house. Funds can be deposited frequently through cash,

cheques, demand drafts, pay orders, telegraphic transfers, and other such instruments. But

the withdrawals are restricted to twice a week.

From the bank’s point of view a considerably percentage of such deposits can safely be

invested and the Bank need not keep larger reserves to satisfy the daily demand upon

such deposits. At the same time the bank pays the profit at competitive rates on such

deposits in long period investments. The bank can, on the request of its depositors, pay

their utility and other bills out of their accounts. The profit is not paid on these deposits.

As a result the bank earns maximum profit from these kinds of accounts. Providing

banking investment with the proceeds of these deposits and providing, under an

agreement, overdraft facilities to the depositors are the main proposes of the bank by

keeping such deposits.

SALIENT FEATURE

To maintain requirement for opening account is rs.500/-

There is no limit for maximum deposit.

No limit of deposits and withdrawals is defined.

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The deposits can be lodged in both local as well as foreign currencies.

The bank collects cheques, demand drafts, etc and pays all the bills, cheques, pay

orders, etc, on the behalf of its depositors.

The current accounts can be made by:

Individuals (single or jointly) Proprietorship, Proprietorship, and companies in

their names. Such other groups and organization.

All cheques and other instruments should be crossed, before they are deposited

for credit into account.

The bank would not require any prior permission from the account holder for

debiting his/her account for charging deposits, which varies from time to time

usually after every six months. The objectives of the bank to keep deposits are to

earn maximum profit by investing the proceeds of the deposits, to help small

savers, to fulfill their banking needs and to provide assistance in uplifting the

economy.

3 (PLS) TERMS DEPOSITS

The deposit which is acceptable by the bank under the condition that it will not be

payable on demand, but will be payable on a fixed or predetermined future time or date,

is called fixed deposit. But after the illumination of banking system in 1985, its name has

been changed from fixed to PLS Terms Deposit.

These deposits represent such surplus funds of the depositors, which are not required by

them for sufficiently long periods. The bank needs not to keep greater reserves in respect

of such deposits. The bank can make long-term investments from the credit balances of

such deposits. The deposits are accepted for the range from 3 months to above. Of course,

the longer the period, the higher is the rate of profit offered. People generally deposit

larger amounts of money in these accounts. The bank can advance loan to businessmen

out of these deposits because they are fixed for a particular period. But for the premature

withdrawal of amount a prior notice to the bank is necessary. For the amount placed on

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the term deposit, the bank issues a deposit certificate (receipt), which states the amount

received, the name of the depositor and the period for which the deposit is placed. Being

a deposit receipt it cannot be negotiated or transferred. The bank accepts these deposits

with the purposes, to make minimum profit by using the proceeds of such deposits, to

appeal customers by offering them a high rate of return, to meet their entire banking

needs, and to help economy to grow.

SALIENT FEATURE

The minimum deposits is accepted by the bank with the sum of Rs.1000/-

The maximum deposit has got no limit.

The deposits are accepted for the period form three months maximum to above.

The PLS term depositors would be eligible for sharing profit/loses with the bank

at true rate determined by the bank.

Where profits and losses would be distributed on half yearly basis.

On the maturity, the depositors shall have an option either to draw the deposit and

the amount of his profit share if any or renew the deposit.

Incase of premature withdrawal a prior notice must be given by the depositor to

the bank on which bank is eligible to maximize the profit ratio of depositor or to

deduct some charges of its services.

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REMITTANCE DEPARTMENT

According to concerned officer of this department, the bank promoted the facility of

remitting the funds within certain limits. Remittance department here consists of two

major sections.

Inland remittance

Foreign remittance

INLAND REMITTANCE

The term inland remittance means transfer of funds from one branch too another within

the country through following banking instruments.

i. Demand draft.

ii. Telegraph transfer.

iii. Mail transfer.

iv. Pay order.

i. Demand draft (DD)

It is written drawn by one branch of a bank upon another branch of the same bank or

upon branch of any other bank working with in the country under special arrangement to

pay certain sum of money to or to the order of specified person. MCB deals with two

types of dd.

Open DD1

Open DD is one which is payable directly at the counter and there is no need of crediting

to the account.

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Cross DD2

Cross DD is one whose payment is done through account, the amount of the DD is

credited to the favoring accounts and then he can transact in ordinary way through

cheque.

ii. Telegraph Transfer (TT)

Transfer of funds form one branch to another of the same bank or upon other banks under

special arrangements for the payment to beneficiary, through telegram, telex, and fax is

allied telegraph transfer.

iii. Mail Transfer

Transfer of funds from one branch of the same bank inside or outside the country through

mail/courier service is called. Mail transfer are same as for telegraph transfer, but if a

person’s account is not existed in the said branch, in this case the sending branch will

shift the amount to the concerned branch and advice will be sent to the other bank in

which his account exists. In suspense account the party will have to prove identity.

iv. Pay Order

A pay order is a written authorization for payment made in a receipt from issued and

payable by the bank to the person named and addressed there, on this giving a proper

discharge there on. Pay order can be made for the branch of same bank with in the same

city. There is option to change bank (name) but that bank’s branch should be in the same

city. The Bank’s commission is fixed as 5% for any amount.

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FOREIGN REMITTANCE

The bank provides the facilities of foreign remittance to the domestic residential and

foreigners to send money from one country to another. The bank also provides foreign

exchange in the shape of traveler’s cheques to intending visitors. Traveler’s cheque is an

order drawn by the bank in favor of travelers upon specific bank to pay him specific

amount on demand after proper identification abroad. The travelers first pay the amount

of money to the issuing bank, which is responsible to pay the amount to the foreign bank

upon which it is drawn.

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GENERAL BANKING DEPARTMENT

Clearing Department

Every banker acts both as paying as well as a collecting banker, It is however an

important function of crossed cheques. A large part of this work is carried out through the

bankers clearing house. 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 t the banks.

The Negotiable Instrument Act, 1881, lays down hat drawer or holder of a cheque or

draft may cross the instrument generally or specially. It further lies down that a crossed

cheque can only be paid to a banker, who collects it for a customer in good faith and

without negligence.

The functions of clearing department is under

Receiving the instruments deposited by customers

Posting the amount of instruments in credit of customer’s account

If cheque returns from the concerned bank, the customer account is debited.

Crossing stamp is put on the instrument and slip given to customer on receipt of

the instrument. Clearing stamp and “payee account credited” are put on the

instrument and the voucher.

As we know that, one of the basic economic functions of commercial banks is to receive

deposits and to honor cheques drawn upon them. So, cheque is a most commonly used

instrument for making payments by account holder. Along with the cheques, there are

some other negotiable instruments like PO, DD, TC, PS, CDR etc. (discussed in the next

part) that are used for making payments and are drawn upon a bank. The question arises

that how these cheques & other negotiable instruments drawn on one bank are deposited

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in other banks and money is transferred from one bank to another. Clearing House has

provided this facility. Clearing house facilitates different banks, on one city, to get their

cheques drawn upon other banks to be cleared. Cheques lodged in clearing constitute two

types of clearing:

Outward Clearing

Inward Clearing

Lodgment of Cheques in Outward Clearing

When cheques, TC’s and other negotiable instruments drawn upon their banks like MCB,

ABN‐AMRO of the same city (as Lahore) is presented in MCBBANK LIMITED Ltd. To

deposit them in the respective payee’s accounts, these instruments are lodged in outward

clearing.

Clearing Stamp:

After the cheques have been crossed specially, clearing stamp is put on the cheques and

other instruments, with the following day’s date, as these cheques should have to be

presented in their concerned drawee banks on the subsequent day.

Endorsement Stamp:

The word endorsement is derived from Latin word ‘indorsum’ which means ‘on the

back’. Ordinarily, it means anything written or printed upon the back of an instrument.

So, at the end, the cheques are endorsed in full (endorsed specially) by putting the stamp

with words describing “Payee’s account Credit5ed in BAL Circular road, Lahore” After

putting these three stamps on cheques & other negotiable. Instruments, they are sent to

NIFT (National Institutional Facilitation Authority) with Add List. NIFT after

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segregating the cheques of different banks delivers them to their concerned banks, which

constitute the inward clearing for those drawee banks.

Accounting Procedure:

After lodgment of all cheques in outward clearing, Payee’s accounts are credited by the

amount of their vouchers. Drawee banks will debit the drawer’s accounts in their inward

clearing (discussed later). As main branch Of BAL deals with other banks through inter‐

bank accounts and we deal with our main branch. So, we (BAL Circular road) debit our

main Br. Account, maintained with us, by the total amount of outward clearing and an

IBDA (inter branch debit advise) with a debit voucher is sent to main branch. Local

Clearing Main branch Debit Payee’s Account Credit

Return In Outward Clearing:

Some of the cheques lodged in o/q clearing are dishonored by the concerned branches

due to some deficiencies and returned back through NIFT. This process is carried out

under main branch’s governance. Either, these cheques are again lodged in outward

clearing or returned to customers by canceling bank’s all stamps, based on the reasons.

Now, the accounting entries opposite to first are passed i.e. Payee’s accounts are debited

& main branch’s account is credited.

Inward Clearing

Cheque and other negotiable instruments (PO, DD, PS, CDR Etc.) drawn on MCBBANK

LIMITED Circular Road, sent by other banks, constitute the inward clearing of BAL.

After having all the stamps and dates of cheques confirmed, the concerned drawer’s

accounts are debited (in BAL Circular Road) and main branch’s account is credited by

the total amount. DEBIT Drawer’s Accounts CREDIT Local Clearing Main branch.

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(B) DESCRIPTION OF TASKS THAT I COMPLETED

LEARNING AS A STUDENT

The duties that I performed and the thing I learned in 2 months are given as follows:

UTILITY BILLS COLLECTION

MCB Bank Limited collects utility bills on behalf of WAPDA, Sui Gas Companies, and

Pakistan Telecommunication Corporation Limited by putting the stamp on the utility bills

“Paid”, Date of payment, Signature of the officer receiving the utility bills. After

receiving utility bills a list is made on the form, which is called Bills scroll form. One

copy of the scroll is with the bank for evidence whereas the original copy with the receipt

of bills is sent to the billing department of the respective corporation. The bank charge

commission on the bills.

OPENING NEW ACCOUNT BASICS

During the span of my internship in MCB I learned and observed a lot of about the

opening of an account. Basically I think that the opening of an account is the

establishment of a contractual relationship between the banker and the customer. By

opening an account at a bank, a person becomes a ‘customer’ of a bank.

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DEMAND DRAFT AND PAY ORDER SLIP

Demand Draft (DD) is a written order drawn by the branch of the same bank to another

branch of the same bank to pay an amount. DD is used in the same city or in other city

branches. Bank charges commission on it.

Pay order can be issued to the customers but in practice. Commonly pay orders used for

banks own payment purpose only.

During my Internship I filled these documents for customers.

Documents that required for Demand Draft or pay order are:

Name and Address of the customer

ID card number of the customer

Amount

Place where demand draft drawn

DEPOSIT SLIPS

Customers used deposit slips to deposit the money into their account. I also worked for

many days in this section. I fill the deposit slips for customers and then they deposit the

money into their account.

ISSUING CHEQUE BOOK

When Customers open new accounts then they need a Cheque Book to withdraw their

money. Or an exiting customer needs a Cheque Book when his first Cheque Book is end.

I issued Cheque Book to the Customers during My Internship.

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TRAINING IN DIFFERENT DEPARTMENTS

During my Internship I worked in different departments. The Bank Manager attached me

in different departments with in charge of the Department.

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STRUCTURE OF THE FINANCE DEPARTMENT

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(A) DEPARTMENTAL HIERARCHY

Branch Manager Maqsood Ahmed

(Working as Sales / Deposited, collect deposit, contact parties for

depositing and Supervision of the working of Staff)

Operation Manager Miss Aasma

(Over all working and Supervisor, and Supervision of operations)

Custom Service Mrs. Aara

(Opening Account, and others issued relating to opening the

account matter)

Remittances Officers Mis Irram

(T.T., DP, Check deposit, mean Check department)

Cashier Mr. Muhammad Rahil

(Cash payment, Cash Receive and others relating to cash matters)

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(B) NO. OF EMPLOYEE WORKING IN FINANCE DEPARTMENT

These person works randomly in Finance Department.

MAQSOOD AHMED

MISS AASMA

MRS. AARA

MIS IRRAM

MR. MUHAMMAD RAHIL

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(C) FINANCE AND ACCOUNTING OPERATION

The function of Accounts department is to post daily activities of each and every section.

Every department is sending the detailed report of daily progress to the Account

department for posting the same in the cash book, also allowed the clean cash register.

The transaction then will be shifted to their appropriate heads. Accounts department deals

in two types of registers.

In the income ledger the transactions relating to the income of the bank are to be posted,

like commission from parties, maintenance etc. all the development expenses of the bank

including salaries expenses of the staff, rent expenses etc are to be posted in the expense

ledger. Accounts department also maintains the deposits, and also prepares the weekly

and daily statements of the affairs of the branch. It is just like a balance sheet.

Accounting Procedure:

After lodgment of all cheques in outward clearing, Payee’s accounts are credited by the

amount of their vouchers. Drawee banks will debit the drawer’s accounts in their inward

clearing (discussed later). As main branch Of BAL deals with other banks through inter‐

bank accounts and we deal with our main branch. So, we (BAL Circular road) debit our

main Br. Account, maintained with us, by the total amount of outward clearing and an

IBDA (inter branch debit advise) with a debit voucher is sent to main branch. Local

Clearing Main branch Debit Payee’s Account Credit

Return In Outward Clearing:

Some of the cheques lodged in o/q clearing are dishonored by the concerned branches

due to some deficiencies and returned back through NIFT. This process is carried out

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under main branch’s governance. Either, these cheques are again lodged in outward

clearing or returned to customers by canceling bank’s all stamps, based on the reasons.

Now, the accounting entries opposite to first are passed i.e. Payee’s accounts are debited

& main branch’s account is credited.

Inward Clearing

Cheque and other negotiable instruments (PO, DD, PS, CDR Etc.) drawn on MCBBANK

LIMITED Circular Road, sent by other banks, constitute the inward clearing of BAL.

After having all the stamps and dates of cheques confirmed, the concerned drawer’s

accounts are debited (in BAL Circular Road) and main branch’s account is credited by

the total amount. DEBIT Drawer’s Accounts CREDIT Local Clearing Main branch.

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FUNCTION OF FINANCE DEPARTMENT

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(A) FINANCE SYSTEM OF THE ORGANIZATION

The finance department (FIN) is responsible for policies, planning, mobilization and

administration of the Bank’s financial resources. The department manages the Bank’s

financial relation with the objectives of providing loans to borrowing member countries

on a cost-effective basis, while maintaining the bank’s AAA/AA ratings and safeguarding

its resources.

MAIN RESPONSIBILITIES

Achieving cost-effective Treasury operations.

Raising funds in the international capital markets to support the bank’s lending

operations.

Managing the bank’s liability portfolio.

Providing proactive financial policy, timely strategic financial planning and risk

management.

Ensuring that all financial obligations are met and collections made.

Producing prompt and accurate financial reporting and producing audited

financial statements for the Bank’s Annual Report.

Overseeing internal controls in the processing of financial transactions.

Managing the MCB Capital, including resource replenishments, new member

countries subscriptions and monitoring of member countries. Voting rights.

Performing Loan Management functions to administer monitor and control the

Bank’s loan and technical cooperation portfolios, including management of the

Operation Framework for lending in Local Currency.

Audited financial statements of the MCB are published each year in the Bank’s Annual

Report.

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FUNCTIONS OF DEPARTMENT

Maintenance of books of accounts and preparation of financial statements of the

Bank in accordance with the IAS, as adopted by the Bank.

Coordination and facilitations for Business planning and budgeting function in the

bank and periodic reporting to the management and to the Board.

Maintenance of foreign currency accounts/ investments and execution of

International payments and receipts.

Maintenance of accounts relating to International Organizations and Donor

Agencies Like IMF, IBRD, ADB, Asian Clearing Union (ACU) et.

Currency issuance and it’s over all management.

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(B) FINANCE AND ACCOUNTING SYSTEM OF THE ORGANIZATION

The Finance Department is responsible to perform and mange the functions detailed on

pre-page. It controls the working of the Officers under the provisions of issue and

Banking Department Manuals. Issue Department deals with management of currency

operations, which includes designing, printing of currency notes and its circulation.

Banking Department relates to the operation of offices of the Bank, maintenance of

Federal and Provincial Government Accounts, booking of financial transactions in the

books of accounts of Central Directorate and issue of weekly Statement of Affairs and

required under the provisions of SBP Act, 1956, preparation of Profit and loss Account

and Balance Sheet on yearly basis, formulation of budget estimates of revenue and capital

expenditure. Management of General Provident Fund and Provident Fund balances of all

employed of the bank. Operational control of working of offices by framing policies and

procedures under the provisions of Banking/ Issue Department Manuals, Sale/ purchase

of foreign currencies, maintenance of foreign reserves of the country. To achieve the

above objectives, the Department has been divided into seven divisions as detailed

below:-

FINANCIAL ACCOUNTS DIVISION (FAD)

Financial Accounts Division performs the following functions:-

Preparation of Annual Financial Statements Accounting Policies for the bank.

Preparation of Weekly Statement of Affairs for issuance in the Government

Gazette as provided in the State bank of Pakistan Act, 1956.

Quarterly profit updates to the Central Board of Directors.

Maintenance of GL to provide information for informed decision-making.

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Monitoring of contraction and expansion of Currency operations.

Consolidation of Departmental Budgets.

Preparation of daily balance position and communication thereof to the Federal

Finance Division and Provincial Finance Departments.

FOREX, SECURITIES & INVESTMENT DIVISIONS (FSID)

Maintenance and recording of Cash Reserve Requirement, SCR Requirements,

MCR, foreign debt payments, FE-2 Deposits etc.

FCY payments of Government of Pakistan (Defense, Privatization Commission,

TCP etc) and SBP.

Short/ medium term investment and Swap deposits and maintenance of Foreign

Currency Accounts and revaluation of foreign currency Assets & Liabilities.

Special US Dollar Government Bonds. Payment of Profit and principal payment

on redemption

Purchase, repurchase, acquisition of SDR, and revaluation of IMF loans/ facilities.

Payments to executing agencies/ parties under various Loans/ Grants of

International Donor agencies Viz IBRD/IDA/ ADB etc.

Transactions of Sale/ Purchase of Currencies & Settlement of ACU Account

under ACU Arrangement.

Transactions of the Foreign Funded Projects including TABS et.

Monthly Abstract, Daily Reserves and weekly review reporting.

SYSTEM AND PROCEDURE DIVISIONS (SPD)

Systems & Procedures Divisions (SPD) acts as a liaison between functional user & ISD

to ensure effective systems development, implementation, and usage. Major

responsibilities are;

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Representation of Finance Department, SBP, in various automation projects under

development/ implementation (RTGS & ate ware House)

Recommend continuous business process refinement in coordination with

business units of fiancé Department SBP and SBP BSC.

Participate in automated solutions development/ configuration for SBP is

financial areas.

PAYMENT CONTROLLER DIVISION (PCD)

This division responsible for :-

Making of payments to external suppliers and employees of the bank after

independent verification of transaction documents on the basis of bills/ invoices/

claims approved by the processing units.

Checking and verifying the selected financial transactions/ cases referred by the

Director Finance to ensure accuracy and compliance to respective rules and

regulations.

ASSET MANAGEMENT DIVISION (ADM)

Assets Management division is responsible for

Assets capitalization, assets transfers and overall responsibility to manage and

maintain, assets physical inventory, keeping track of physical location of assets.

Maintaining the financial information of the assets, cost evaluation and

retirements, Disposal

To ensue the smooth and unhampered running of the Fixed Assets Management

functions.

To record all the expenses regarding repair/ maintenance and rent taxes for SBP

buildings and equipments.

CURRENCY MANAGEMENT DIVISION (CMD)

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Currency Management division is responsible for :

Policy making and management of currency related matters.

Issuance of Statements of Affairs of Issue Department on Weekly, Monthly and

Quarterly Basis.

Preparation of Balance Sheet of Issue Department at very financial year-end.

SUPPORT SERVICES DIVISION (SSD)

Support Services Division performs the function as follow:-

To deal with various administrative matters arising in the Finance Department.

To provide a healthy and sound environment to officers of Finance Department.

To respond to various queries raised from various internal and external sources.

Dissemination of any revising in laws, policy and regulation matters to relevant

quarters.

ROLE OF CFO IN THE BANK

The Chief Accountants used to perform several tasks which were preparing accounts.,

preparing budgets, operational reporting and interpreting, evaluating operating results,

preparing income tax returns, establishing internal control procedures to safe-guard the

companies assets.

TRANSITION FROM CHIEF ACCOUNTANT TO CHIEF FINANCIAL

OFFICER

Due to increased governance requirement there arises a need to empower the Chief

accountant and to make him responsible by requiring him to sign the accounts. There

comes the code of corporate governance, which makes the Chief accountant powerful and

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more responsible. With the new role, Chief Accountant becomes Chief Financial Officer

(CFO)

APPOINTMENT AND APPROVAL REQUIREMENT

The appointment, removal and remuneration terms and conditions of employment of the

Chief financial officer of a listed company shell be determined by the Chief Executive

Officer with the approval of the Board of Directors.

QUALIFICATION REQUIREMENT

The qualification requirement is defined under the code of corporate governance that is

the person appointed as the Chief Financial Officer must be Member of recognized body

of professional accountants or a graduate from a recognized university or equivalent,

hang at least 5 years experience in handing financial and corporate affairs of a listed

company.

INTERNAL AND EXTERNAL REPORTING

Chief Financial Officer now has extensive responsibilities for internal and external

reporting. All the information required for decision-making by the Board of Directors and

Chief Executive is processed and furnished by the Chief Financial Officer. Apart from

this, external reporting requirement is fulfilled by Chief financial Officer, the accounts

and financial statements are signed by the Chief Financial Officer before they are sent to

concerned authorities.

CGG requires that the listed companies submit their quarterly accounts to the

shareholders within one month of the close of the first and their quarter of year of

account.

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The CCG does not prescribe the time for submitting half yearly accounts to the

shareholders. Here we can refer to section 245 of companies ordinance 1984 for this

purpose, which requires half yearly account to be submitted within two months of the

close of first half. The CCG required a limited review of half yearly accounts by external

auditor.

Annual audited accounts are now required to be submitted within four months of the

close of financial year.

The Securities and Exchange Commission of Pakistan is exercising strict vigilance to

ensure compliance of 4th and 5th schedule of the Companies Ordinance, 1984 and timely

submission of accounts by companies. It has recently imposed penalties on Directors of

nine listed companies who failed to prepare and circulate the quarterly accounts.

Furthermore, fines have been imposed on Chief Executives.

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(C) SOURCE OF FUNDS

The Bank industry witnessed a volatile year in 2008 in terms of profitability, with every

quarter depicting a different picture. The total profitability improved from the first

quarter to the second quarter but after the amendment in SBP’s regulation regarding NPL

and FSV, banks became more prudent in lending and total profitability declined.

Non interest income grew significantly by 43 % during the period under review. The net

interest income earned by the banking sector in FY08, also posted a growth of 17.4 %

and reached at Rs. 280 billion as compared to Rs. 203 billion in FY07. The major reason

behind this growth was the high level of spreads throughout the year. Which remained at

7.29 % on average, despite the SBP,s further tightening of the monetary policy in July 07,

SBP raised the discount rate by another 0.5 % in January 2008, raising its benchmark

policy rate to 10.5 %. The lending rates increased while deposit rates were maintained by

the banks.

The increasing lending rates not only deteriorated the debit servicing capacity of

borrowers (both corporate and consumers) but also subdued the credit demand by the

private sector resulting in slower advances growth, also the country’s large scale

manufacturing activity slowed down. Due to this the banks are shifting from advances to

investments as the key source of funds/ income for the banks.

Growth in investment by banks during the first nine month of 2008 was about 9 times of

the increase in the advances in this period. It recorded an increase of PK Rs. 476 , nearly

80 % of assets increase during January, to September 2008. As a result, the assets mix of

the banks showed a slight shift from the previous trend.

Banks are now introducing new products for general public in the market to attract fresh

deposits and increase in the weighted average deposit rates of the banking system, (4.14

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% at the end of October, 2008 up by 16 basis points from June, 2008.) Moreover, the

asset quality of the banks has been improving through strict policies and effective credit

management.

Financial performance (FY’03-FY’ 08) MCB bank Limited (MCB) posted profit after tax

of Rs. 15.26 b with earnings per share of Rs. 24.30 in FY’ 08 as compared to profit after

tax of Rs. 12.1b with earnings per share of Rs. 19.33 in FY’06 depicting a significant

growth of 26.0 % during the year.

However, considering the size and operations of the bank, this is not a significant growth.

An upsurge of 92 % in the interest earned on the investments in available for sale

securities and a 15 % increase on the interest earned on the customers’ loan were the

major drivers behind the said growth.

Non-interest income also supported the bottom line growing by 20.4 % to Rs. 6.b in FY’

08 from Rs. 4.9b in FY’07 on the back of capital gain received on the sale of securities.

Major contribution also came from a 14 % surge in fee commission and brokerage

income.

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(D) ALLOCATION OF FUNDS

The recent Discount Rate hike to 13 % and 100bp increase each in CRR and SLR to 9 %

and 19 % respectively would translate into an increase in market interest rates and firmly

restrain credit expansion. On the flip side, it is likely to have a positive impact on deposit

mobilization as the banks struggle for liquidity, which has already started to become

scarce.

Despite the concretionary monetary policy stance of SBP, the banking spread has

increased by 20bps to 7.34 % in May 2008 compared to 7.14 % December, 2007.

However, the imposition of 5 % minimum deposit rates on interest bearing checking

accounts from July’08 onwards would squeeze NIM and result potentially higher credit

costs (due to asset quality deterioration), thereby potentially rimming net interest income

and reducing MCB’s future profitability.

Higher than average ROE posted by MCB seems sustainable over next few years.

Overall, the risk profile and asset quality of MCB has vastly improved over the years.

However, the possibility of rising NPLs/advances ratio in FY’08 could be rules out. To

cater to this, the bank has pursued stringent policies and made adequate provisioning,

thus, the future profitability of the bank will not be impacted so greatly.

Another positive sign for the bank in Malaysian May bank’s plans to acquire another 5%

stake in MCB Bank by August 2008. The 5% option is part of the initial deal for

acquisition of 20 % stake in MCB Bank. May bank has already acquired 15 % stake in

MCB from Nishat group in May 2008 and was required to acquire the remaining within a

period of 12 months.

At an agreed price of Rs. 490/share, an upside of 82 % from MCB’s current market

value, the incremental 5 % stake in MCB, Maybank would generate foreign inflow of US

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$218mn. Moreover, partnership with Maybank is expected to add more value to MCB

going forward. The deal could have al long run positive impact with technology transfer

and infrastructure investment bossing depositor density and improving loan penetration in

trade financing, Islamic Banking and SME Business.

With SBP raising the upper limit of retail exposure to PKR 75 mn (not be more than 2 %

of gross retail portfolio of the bank) in case of consumer loans and small business loans.

MCB has increased its penetration this high margin segment. Despite the challenges of

declining demand & rising NPLs due to higher interest rate vulnerability and late entry

along with established brand equity of existing players like UBL. Consumer financing

continues to be a profitable niche for MCB.

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CRITICAL ANALYSIS

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CRITICAL ANALYSIS

I have critically analyzed according to the theoretical knowledge and would like to

comments in below.

a). KNOWLEDGE OF RISK MANAGEMENT IS MISSING.

The main purpose of financial and banking organization is to create valuable system by

interacting with its environment, customers, constituents, suppliers, technology,

competition, economy, government, etc. A valuable system is created by the conversion

of available resources i.e. human, financial, physical, and intangible assets into goods and

services that fulfill the needs of the customers and save the best interests of the banking

and financial organization. Risk management performs all these diversified but integrated

work to achieve maximum out-put,. Managing risk is actually managing the

organizations: planning, organizing, directing, and controlling organization systems and

resources to achieve objectives. Managing risk must come from within and act to change

the organization and its response to changes in the environment.

Now many domestic banks are hiring experts of risk management to secure their precious

assets. National bank of Pakistan has also created risk management group at head office

and as well as regional level to save the best interests of the bank and enhance the

chances of investments.

b). TOTAL QUALITY MANAGEMENT

Ours is the age of cutthroat competition, scarcity of resources, technological

advancement, and integration of financial services, Expansion of economic markets and

cultural diversity. In these complicated and conflicting financial and economic scenarios

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the need of TQM in the ranks of domestic banking industry is indispensable. The middle

management should need to have basic understandings about complicated management

processes, crises management tools, marketing/ product strategies, financial and treasury

management techniques, financial discipline, soundness and transparency of banking

system, human resource administration and above all genuine leadership qualities to

adequately operate within a highly sensitive and complicated industry.

There is urgent need of having TQM in the realms of banking industry of the country. At

the dawn of WTO and increasing chances of investment banking among the SARRC

countries the TQM in the need of the hour. Our commercial banks must pay attention to

this shift and start thinking strategically for providing high quality products and services

to customers. According to a study from Business Communications Company Inc, The

changing Global Commercial Banking Industry Structure, total commercial banking

assets are expected to climb.

The banking industry should determine where improvement is needed, how service can e

improved and where operating system breakdowns occur, why they occur and how they

can be avoided

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(A) RATIO ANALYSIS

Financial analysis, while varying according to the particular interest of the analyst,

always involves the use of various financial statements - primarily the balance sheet and

income statement and the cash flow statement. Financial analysis involves the use of

various financial statements.

The balance sheet summarizes the assets, liabilities, and owners' equity of a business at a

point in time, while the income statement summarizes revenues and expenses of a firm

over a particular period of time and about cash flow it tells the cash generated by the

bank. A conceptual framework for financial analysis provides the analyst with an inter-

locking means for structuring the analysis. For example, in the analysis of external

financing, one is concerned with the firm's funds needs, its financial condition and

performance, and its business risk. Upon analysis of these factors, one is able to

determine the firm's financing needs and to negotiate with outside suppliers of capital.

Ratio analysis involves methods of calculating and interpreting financial ratios to analyze

and monitor the bank’s performance.

INTERESTED PARTIES

Ratio analysis of a firm, s financial statements is of interest to shareholders, creditors and

the firm’s own management. Both present and prospective shareholders are interested in

the firm’s current and future level of risk and return, which directly affect share price.

The firm’s creditors are interested primarily in the short term liquidity of company and its

ability to make interest and principal payments. A secondary concern of creditors is the

firm’s profitability; they want assurance that the business is healthy. Management is

concerned with all aspects of the firm’s financial situation and its attempts to produce

financial ratios that will be considered favorable by both owners and creditors.

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LIQUIDITY RATIOS

Liquidity ratios measure a firm’s ability to meet its current obligations.

These include:

Current Ratio

Acid Test Ratio

Sales to Working Capital

Working capital

Current Ratio

Formula to calculate current ratio:

Current ratio = current assets / current liabilities.

Current ratio definition and explanation:

The current ratio is used to evaluate the liquidity, or ability to meet short term debts.

High current ratios are needed for companies that have difficulty borrowing on short term

notice.

The generally acceptable current ratio is 2:1

The minimum acceptable current ratio is 1:1

Current ratio = = 477,743,510,000 / 340,825,623,000

Year 2008 = 0.14%

Year 2007 = 412,900,841,000/355,353,519,000

= 0.33%

Year 2006 = 343,177,949,000/300,992,830,000

= 0.34%

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ACID TEST RATIO

Acid Test Ratio = (cash + marketable securities) / current liabilities

Acid test ratio definition and explanation:

The acid test ratio measures the immediate amount of cash immediately available to satisfy short term debt.

Acid Test Ratio = 43,674,272,000+15,058,126,000/385,179,850,000

Year 2008 = 0.039

Year 2007 = 43,491,402,000+ (-52,951,926,000)/355,865,842,000

= 0.107

Year 2006 = 39,115,635,000+(-13,324,929,000)/300,992,830,000

= 0.085

SALES TO WORKING CAPITAL RATIO Sales to Working Capital = sales / working capital

A high ratio may indicate inadequate working capital, which reflects negatively on liquidity.

Sales to Working Capital = 15,374,600,000/52,244,865,000

Year 2008 = 29.42%

Year 2007 = 15,265,562,000/45,414,156,000

= 33.6%

Year 2006 = 12,540,879,000/36,404,315,000

= 34.4%

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Working Capital Ratio

Working Capital Ratio = current assets / current liabilities

The working capital ratio is also referred to as the current ratio. See current ratio

definition and explanation.

Working capital definition and explanation:

Working capital is the liquid reserve available to satisfy contingencies and uncertainties.

A high working capital balance is needed if the business is unable to borrow on short

notice.

Banks look at working capital over time to determine a company's ability to weather

financial crises.

Loans often specify minimum working capital requirements.

Working Capital Ratio = 443,615,904,000/385,179,850,000

Year 2008 = 1.151

Year 2007 = 412,900,841,000/355,353,519,000

= 1.161

Year 2006 = 343,177,949,000/300,992,830,000

= 1.140

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LEVERAGE RATIOS

Leverage ratios measure the degree of protection of suppliers of long

term funds. These include:

• Time Interest Earned

• Fixed Charge Coverage

• Debt Ratio

• Debt / Equity Ratio

• Debt to Tangible Net worth Ratio

• Current Worth / Net worth Ratio

• Total Capitalization Ratio

• Fixed Asset Ratio / Equity Ratio

• Long term Assets versus Long term Debt

Times Interest Earned Ratio

Formula to calculate times interest earned: Times Interest Earned Ratio = (net income + interest) / interest.

Times interest earned definition and explanation

The times interest earned ratio indicates the extent of which earnings are available to

meet interest payments.

A lower times interest earned ratio means less earnings are available to meet interest

payments and that the business is more vulnerable to increases in interest rates.

Times Interest Earned Ratio = 15,374,600,000+ 28,484,083,000/28,484,083,000

Year 2008 = 1.53

Year 2007 = 16,441,670,000 + 23,932,935,000/ 23,932,935,000

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= 1.68

Year 2006 = 12,540,879,000 + 21,275,707,000/21,275,707,000

= 1.58

Fixed Charge Coverage Ratio

Formula to calculate fixed charge coverage ratio:

Fixed Charge Coverage Ratio = (Net Income before Interest and Taxes + interest + fixed

costs) / fixed costs.

Fixed charge coverage ratio definition and explanation

The fixed charge coverage ratio indicates the risk involved in ability to pay fixed costs

when business activity falls.

The fixed charge coverage ratio is included in the financial statement ratio analysis

spreadsheets highlighted in the left column, which provide formulas, definitions,

calculation, charts and explanations of each ratio.

Fixed Charge Coverage Ratio = 45, 35,264,000+ 28,484,083,000

Year 2008 = 33019347000

Year 2007 = 39,092,587,000 + 23,932,935,000

= 63025522000

Year 2006 = 31,206,391,000 + 21,275,707,000

= 21306913391

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Debt Ratio Debt Ratio = liabilities / assets

The debt ratio is also known as the debt to capital ratio, debt to equity ratio or financial

leverage ratio.

The debt ratio shows the reliance on debt financing.

A high debt ratio is unfavorable because it indicates that the company is already

overburdened with debt.

Debt Ratio = 385,179,850,000/443,615,904,000

Year 2008 = 86.82%

Year 2007 = 355,353,519,000 /412,900,841,000

= 86.06%

Year 2006 = 300,992,830,000 /343,177,949,000

= 87.70%

Debt to Equity Ratio (Financial Leverage Ratio)

Formula to calculate debt to equity ratio (financial leverage ratio):

Debt to Equity Ratio = Short Term Debt + Long Term Debt /Total Shareholders Equity

Debt to equity ratio definition and explanation:

Debt to Equity Ratio is also referred to as Debt Ratio, Financial Leverage Ratio or

Leverage Ratio. The debt to equity (debt or financial leverage) ratio indicates the extent

to which the business relies on debt financing.

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Upper acceptable limit of the debt to equity (debt or financial leverage) ratio is usually

2:1, with no more than one-third of debt in long term.

A high financial leverage or debt to equity ratio indicates possible difficulty in paying

interest and principal while obtaining more funding.

Total Debt to Tangible Net Worth

If your business is growing, track this ratio for insight into the distributive source of

funds used to finance expansion.

Debt Ratio Current + Long-Term Debt = Debt Ratio

Total Assets

What percentage of total funds is provided by creditors? Although creditors tend to prefer

a lower ratio, management may prefer to lever operations, producing a higher ratio.

The capitalization ratio

Measures the debt component of a company's capital structure, or capitalization (i.e., the

sum of long-term debt liabilities and shareholders' equity) to support a company's

operations and growth

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PROFITABILITY RATIOS

Profitability ratios measure the earning ability of a firm.

These include:

Net Profit Margin

Return on Assets

DuPont Return on Assets

Operating Income Margin

Operating Assets Turnover

Return on Operating Assets

Sales to Fixed Assets

Return on Investment (ROI)

Return on Total Equity

Gross Profit Margin

Profit Margin Ratios

Formulas to calculate profit margin ratios:

Net Profit Margin Ratio (After Tax Margin Ratio) = net profit after tax / sales.

Profit Margin Ratios definitions and explanations:

These three profit margin ratios state how much profit the company makes for every

dollar of sales.

The net profit margin ratio is the most commonly used profit margin ratio.

A low profit margin ratio indicates that low amount of earnings, required to pay fixed

costs and profits, and is generated from revenues.

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A low profit margin ratio indicates that the business is unable to control its production

costs.

The profit margin ratio provides clues to the company's pricing, cost structure and

production efficiency.

The profit margin ratio is a good ratio to benchmark against competitors.

Net Profit Margin Ratio = 15,374,600,000/6,853,911,000

Year 2008 = 2.24

Year 2007 = 16,441,670,000 / 10,248,222,000

= 1.60

Year 2006 = 12,540,879,000 /7,149,009,000

= 1.75

Return on Assets Ratio

Formula to calculate return on assets:

Return on Assets = net profit before taxes / total assets.

Return on assets ratio definition and explanation:

The return on assets ratio provides a standard for evaluating how efficiently financial

management employs the average dollar invested in the firm's assets, whether the dollar

came from investors or creditors.

A low return on assets ratio indicates that the earnings are low for the amount of assets.

The return on assets ratio measures how efficiently profits are being generated from the

assets employed.

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A low return on assets ratio compared to industry averages indicates inefficient use of

business assets.

Return on assets ratio =

2008 3.47%

2007 3.98%

2006 3.65%

Return on Assets Du Pont is a financial ratio

That shows how the return on assets depends on both asset turnover and profit margin.

The Du Pont method breaks out these two components from the return on assets ratio in

order to determine the impact of each on the profitability of the company.

Return on assets Du Pont can be expressed as

ROA Du Pont = (Net income / Sales) x (Sales / Total Assets)

This ratio helps to highlight the impact of changes in asset turnover and profit margin.

ROA Du Pont = 15,374,600,000/443,615,904,000

Year 2008 = 3.46%

Year 2007 = 16,441,670,000/412,900,841,000

= 3.98%

Year 2006 = 12,540,879,000 /343,177,949,000

= 3.65%

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Market Ratio

Market ratios are commonly used by the investors to assess the

performance of a business as an investment and also the cost of

issuing stock.

These include:

Dividend per share

Earning per Share

Price/Earning Ratio

Percentage of Earnings Retained

Dividend Payout

Dividend Yield

Book Value per Share

Earning per Share

Before tax

2006 2007 2008

33.85 33.92 34.81

After tax

2006 2007 2008

23.40 24.30 24.47

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Dividend Payout

2006 2007 2008

37.39% 51.45% 51.06%

Dividend Yield

2006 2007 2008

0.03 0.03 0.09

Price/Earning Ratio

2006 2007 2008

05.41 16.46 10.52

Dividend per share

2006 2007 2008

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07.25 12.50 11.50

Capital Adequacy Ratio

2006 2007 2008

18.75% 16.65% 16.41%

Advance/Deposit Ratio

2006 2007 2008

77.00% 73.96% 79.48%

Miscellaneous

Income Expenses Ratio

2006 2007 2008

2.78 : 1 2.58 : 1 2.78 : 1

PBT/Total Income Ratio

2006 2007 2008

70.49% 70.16% 63.80%

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Net Markup income / Gross income (Gross

spread)

2006 2007 2008

82.44% 75.26% 71.13%

Return on Everage (ROE)

2006 2007 2008

45.00% 37.66% 31.49%

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(B) HORIZONTAL & VERTICAL ANALYSIS

HORIZONTAL ANALYSIS BALANCE SHEET

ParticularsIncrease or (decrease)

2006 vs. 2007Increase or (decrease)

2007 vs. 2008

Amount %age Amount %age

AssetsCash and balance with treasury bankBalances with other banksLending to the financial institutionInvestments-netAdvances-netOperating fixed assetsDeferred taxed assets-netOther assets-netTotal Assets

7,217,907

(2,769,498)(20,030,428)49,602,94720,721,4436,969,967

(11,031,450)68,377,274

22.23%

-42.10%-95.01%78.13%10.45%76.98%

19.98%

(52,711)

235,5813,048,707

(20,832,389)43,549,8721,239,610

-1,941,7153,313,0387

-0.13%

6.18%289.9%-18.42%19.88%7.73%

10.86%8.07%

LiabilitiesBill payableBorrowingDeposits and other accountsSub-ordinate loanLiabilities against asset, finance leaseDeferred tax liabilities-netOther liabilitiesTotal Liabilities

Net Assets

3,389,37915,463,35534,636,228(1,118,208)

-1,180,162550,996

54,101,913

14,275,061

47.80%64.58%13.45%-70%

4.93%17.95%

34.94%

72,430(16,742,991)38,176,089

479,232

-(743,025)9,530,75729,814,008

3,316,379

0.69%(42.48%)13.06%

-62.95%81.30%8.38%

6.01%Represented By:Share capital ReservesUnappropriated profit

819,4929,338,214(400,223)9,757,481

150.8%37.86%-7.23%27.36%

03,768,1278,682,5826,830,709

11.08%169.2%15.04%

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VERTICAL ANALYSIS OF BALANCE SHEET

2006 2007 2008AssetsCash and balance with treasury bankBalances with other banksLending to the financial institutionInvestments-netAdvances-netOperating fixed assetsDeferred taxed assets-netOther assets-netTotal Assets

9.489%2.250%7.212%2.171%57.946%3.724%0.050%3.773%100%

9.667%.927%4.315%27.550%53.341%6.577%4.352%

-100%

8.933%.911%0.924%20.796%59.175%3.891%

-4.465%100%

LiabilitiesBill payableBorrowingDeposits and other accountsSub-ordinate loanLiabilities against asset, finance leaseDeferred tax liabilities-netOther liabilitiesTotal Liabilities

Net Assets

2.07%6.99%75.25%0.46%

--

3.26%88.06%

-11.93%

2.55%9.60%71.15%0.134%

-0.11%2.85%

86.57%-

13.42%

2.37%5.10%74.45%

--

0.09%4.79%

86.82%-

13.17%Represented byShare capital ReservesUnappropriated profit

Surplus on revaluation of assets-net of tax

1.59%7.20%1.61%10.42%1.51%11.93%

1.53%8.28%1.24%11.06%2.36%13.42%

1.53%8.51%2.07%11.7%1.39%13.17%

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PROFIT AND LOSS ACCOUNT

HORIZONTAL ANALYSIS

ParticularsVariance in %age

2006 Vs 2007Variance in %age

2007 Vs 2008Mark up/ returned/ interest earnedMarkup/ Returned/ Interest expensesNet Mark up/ interest income

Provision for diminutionProvision against loansBad debts written off

Net mark up/ interest income after provision

23.30%73.81%12.55%

-13.14%191.7%-99.57%159.1%

3.91%

25.97%47.23%19.07%

154.9%-54.88%

100%31.12%

17.29%Non mark up/ Interest incomeFee, commission & brokerage incomeDividend IncomeIncome dealing in foreign currencyGain on sale of securities-netUnrealized loss on revolutionClassified aid held for tradingOther income-netTotal non markup/ Interest income

13.99%-34.42%0.20%147.7%

-100%

75.30%29.18%8.94%

8.81%16.01%4.92%

-50.66%--

-5.77%-10.18%10.69%

Non mark up/ Interest expensesAdministrative expensesTotal non markup/ Interest expensesExtra ordinary / unusual item

Profit before taxation

Taxation-Current year -Prior year -Deferred year

Profit after taxation

-16.29%-8.57%

-

15.17%

-4.96%

25.72%

39.08%39.83%

-

2.71%

7.45%

0.71%

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Vertical Analysis of profit and loss accountParticulars 2006 2007 2008

Mark up/ returned/ interest earnedMarkup/ Returned/ Interest expensesNet Mark up/ interest income

Provision for diminutionProvision against loansBad debts written off

Net mark up/ interest income after provision

100%17.55%82.44%

0.47%3.93%0.18%4.58%

77.85%

100%24.74%75.25%

0.33%9.31%0.06%9.64%

65.61%

100%28.92%71.07%

6.70%3.33%

-10.03%

61.09%Non mark up/ Interest incomeFee, commission & brokerage incomeDividend IncomeIncome dealing in foreign currencyGain on sale of securities-netUnrealized loss on revolutionClassified aid held for tradingOther income-netTotal non markup/ Interest income

8.96%3.14%2.68%2.35%

--

2.21%19.36%

97.21%

8.28%1.67%2.18%4.72%

--

3.14%20.28%

85.89%

7.15%1.54%1.81%1.84%

--

2.35%14.46%

75.55%Non mark up/ Interest expensesAdministrative expensesOther provision/ (reversal)-netOther chargesTotal non markup/ Interest expensesExtra ordinary / unusual item

Profit before taxation

Taxation-Current year -Prior year -Deferred year

Profit after taxation

25.14%0.04%0.25%25.45%

71.76%

24.66%

47.10%

17.07%-

1.80%18.87%

-

67.03%

19%

48.02%

18.84%0.02%2.07%20.94%

54.65%

16.21%

38.39%

Unappropriated profit brought forwardTransfer from surplus on revolution fixed asset

Profit available for appropriation

Basic & diluted earning per share-after tax

19.35%0.12%19.47%66.58%

17.40%0.03%17.43%65.46%

12.81%0.05%12.86%51.26%

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(C) INDUSTRY ANALYSIS

Listed, which are Habib Bank, United Bank, Allied Bank of Pakistan, Dawood Bank,

Standard Chartered Bank. Citibank, Deutsche Bank and ABN AMRO Bank are main

foreign banks in the country. These four banks continue to enjoy a significant share in the

market, both in terms of deposits and advances. All the foreign banks of the country are

busy to invest heavily in the field technology and e-commerce in order to overcome

branch limitation. All the foreign banks have been busy to introduce new products and

idea to grab larger proportion of the local markets.

Foreign banks are carrying major proportion of local business in credit cards, consumer

fiancés and housing finance. Many domestic banks have increased their general

standards. Ours is the age of plastic money. Internet-based service is constantly

increasing the number of ATM machines, either by installing their own machines or

making arrangements with other networks. The number of Debit Cards has also been

increasing at an unprecedented rate. All the domestic and foreign banks vigorously

institutionalized consumer financing in the country and earned handsome profits. The

borrowing to private sector has also increased which ultimately boosted the profitability

of all the domestic banks of the country. In the last 3 to 4 years many domestic banks

have been suffering from surplus liquidity crisis mainly due to low demand for credit and

slowdown of manufacturing sector in the country. Almost all the banks are now by to

invest in capital markets to increase their exposure in equities. To stop that risky trend the

State Bank of Pakistan.

Issued the instructions to follow the Prudential Regulations in letter and spirit and not

invest in the capital markets beyond the limits. The domestic bank’s lending under

consumer finance and housing finance has also been growing. The analysis of Annual

Reports of banks shows that their income from core banking activities has been growing.

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The other positive point is that there are growing expectations for increase in interest

rates.

The growth in advances has started matching growth in deposits. The quality of asset as

well liability products have been improving. The rations of non-performing loans have

decreased. The SBP29 Scheme has benefited the banks as well as the borrowers to pay-

off their long standing dues. Bank Alfalah is the first to opt for the listing policy of the

government and also offered its share to general public. Two of the state-owned banks,

Habib Bank and United Bank have been privatized but the Government still holds a

substantial stake in these banks.

Allied Bank of Pakistan was privatized in early nineties. But due to many internal and

external reasons it continues to suffer. Some meaningful senior managerial changes

would be better at the earliest. Dawood bank has come into existence as a result of

acquisition of Pakistan operations of a Sri Lankan bank by a local business group. It is

also not listed at the local stock exchanges. Meezan bank is the first bank of the country,

which is carrying complete Islamic banking.

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(D) FUTURE PROSPECTS OF THE ORGANIZATION

The bank has now completed more than 19 years, since its privatization and it is, indeed,

gratifying to note that during this period, MCB has performed well and has sustained its

growth in all the major sectors. The well deserved credit, for this good performance and

progress, must surely go to the Bank’s management, its Directors and, in no small

measure, to the entire MCB team for its dedication, concerted efforts and excellent team

spirit.

MCB has been a pioneer among the Banks in Pakistan, particularly in introducing a

number of innovative banking products and services. For the first time in the history of

Pakistan, these multifarious products mostly in the shape of saving schemes have been

introduced by MCB with brand names. This has set the trend and many other banks, both

local and foreign, have since followed in MCB’s footsteps, by launching new products

and services, on similar lines.

It should be kept in mind that an investor can conduct as many precautionary tests as

possible in order to diversify the risks of investing; however, he or she cannot completely

get rid of the risks. Some risks are diversifiable but others are not. Therefore, although

are current analysis of MCB showed that its stock may yield capital gains for those who

invest in it, this notion is not 100% accurate. Also, keeping in mind that due to the

political and economic instability in Pakistan, the stock market’s performance and MCBs

share price can be significantly be affected.

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SWOT ANALYSIS OF ORGANIZATION

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SWOT ANALYSIS

SWOT (Strength, Weakness, Opportunities, and Threats) means internal strengths and

weaknesses, and external opportunities and threats. It is important for any company,

organization, business, product, services and even for non profit organizations. It show

that where we are strong and where we are weak and also shows us that what the benefits

industry has that are useful for company and what is harmful for overall industry that

harms the company. SWOT Analysis for Muslim Commercial bank is described as

under.

STRENGTH

MCB is the first privatized bank in Pakistan. Customers can easily trust on it

because of its good reputation. Public confidence is its most powerful tool.

MCB has a sound and healthy financial position in industry. Its profitability is

increasing every year. And also profit earning per share is increasing.

Markup rates are less from others banks. And because of the peoples willing to

take loan from MCB.

MCB bank is multinational bank. It is also its strength.

Mobile banking, a new system for consumers. Consumer can easily pay bills

through their mobile phones. This feature is not available in most other banks.

And people like this system very much and opened new accounts only because

of this new system.

Employee turn over is low in MCB. Low turn over shows that employee are

loyal with MCB.

MCB website for online customers is user-friendly and its interface looks cool.

A new user doesn’t face problems to use its website.

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Pakistan is an Islamic country. Many peoples hesitate to deposit in bank

because of interest. Because it is forbidden in Islam. MCB get the solution of

this by introducing Islamic Banking system.

WEAKNESSES

The recruitment process is not fair in MCB. And because of this low

knowledgeable persons are working in MCB.

Low salaries of workers dishearten them. So they do not show their

effectiveness.

No proper training for workers is also its weakness.

Another weakness of the bank is absence of proper advertisement. There is no

proper advertisement of the products. And because of this many people don’t

know about bank product.

Absence of branches in small cities and towns. Where there is a need of bank

there is no bank like in towns. MCB branches are in large cities. They need to

established branches in town to get competitive advantages.

There are no seating arrangements for customer in many branches.

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OPPORTUNITIES

IT is growing in Pakistan. MCB has also this opportunity.

Taking loan of customer from banks in Pakistan is common. When companies

start their new project or people start new business then they need money. Then

they don’t hesitate to take loan from banks. So working in this environment is

an opportunity for banks.

The trend of Islamic banking is also growing because Pakistan is an Islamic

country.

THREATS

Economic condition in Pakistan is going down with every passing day.

Many foreign investors do not invest in Pakistan due to the hanging

condition of Pakistan economic condition.

Pakistan political condition is also threat for industry. Because army rolled

more then common public as a government. This situation is harmful for

Pakistan’s economic. World political condition also influences the whole

industry.

As the industry is growing, competition is also growing. Many others

banks are establishing so competition is high. Every bank tries to make

more profit by introducing new product and services. So other competitor

must do according to that.

Increasing the interest rate is losing the value of money market. People try

to invest in stock market instead of investing in money market.

Lack of skilled people in Pakistan is also a threat. Local skilled people want

to do work in foreign countries because of high salaries.

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CONCLUSION

Working as an internee in MCB and according to the Financial Statement of the bank I

think that MCB is making progress by leaps and bounds. The profit of the bank is

increasing every year. Also the MIS (Management Information System) enhanced the

efficiency of the Bank. The bank pays a low Interest rate on deposits which less attractive

for its customers. Also problem with bank is too lengthy formalities and procedures

involved in mortgage of properties offered as collateral to the bank.

Bank needs to control mentioned below recommendation for increasing their profit. MCB

has no branches in towns. If the Bank established branches in town then its progress will

be more then now. Installation of ATM in most of branches is also a competitive edge for

the bank. Customers easily withdraw cash from ATM 24/7. Changes in top management

also have a positive effect on Bank. It is also recorded that after privatization MCB made

more progress. Its profit increased every year.

I am not satisfied with MCB customer care. MCB must care and respect their customer as

the customers are assets for the bank. But there is less control over Customer care.

According to my point if view MCB has a bright future if MCB control over its SWOT.

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RECOMMENDATIONS

After observation, learning in MCB, reading Bank financial statement more deeply and

knowing more about banking sector I suggest some recommendations that if MCB cover

them then MCB can stay at its position and make more progress.

The salaries are not enough according to bank workers job. Some time they

work more until late night to maintain their record but they do not paid by the

bank for their extra time. Management should increase their salaries and also

paid them for working extra hours.

As we know that there is a dramatic change in technologies. Competition

among industries increasing day by day. So bank management must arrange

training for their employee especially in MIS. Every worker must be a

computer literate.

MCB management should expend their ATM network to more branches and

also this facility should be available in town. Because this is a competitive edge

for MCB

Their should be a job rotating system. Every worker must know the work of all

departments of branch. So that every worker will be capable to do work in case

of emergency or in case of job rotating.

New workers selection should be made at merit system and lazy staff should be

removed to meet the globalization. So management should first remove the lazy

staff and then select a new staff only on merit basis. Selected staff will work

more effectively to make their job permanent.

Their should be an incentive plan on yearly basis so that worker be encouraged

to do work hard. When management gives incentives to their worker then the

workers that do not work hard, they try to work hard to get incentives. This

thing creates competition among workers and encourages work to do work

hard.

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Foreigner trainer should be hired to train the top management. And should also

be a training program for workers after some period.

Customer care service should be improved. In this environment, where a large

number of competitors are present. Customers need satisfaction. They will go

there where they get respect.

MCB should establish branches in towns to get competitive advantages.

Because mostly bank don’t give attention to the small city. If MCB give

attention to small cities and town then it will be a positive step to increasing the

over all profit.

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REFERENCES AND SOURCES

Websites

www.mcb.com.pk

www.wikipedia.com

Reports

http://mcb.com.pk/quick_links/economic_reports.asp

http://mcb.com.pk/ir/annual_final_result_08.asp

http://mcb.com.pk/ir/MCB%20A-Report2007.pdf

http://mcb.com.pk/mcb/financial_contant/MCB%20A-Report%20FINAL%2006-

04-07.pdf

Books

Financial Statement Analysis, Handouts of Virtual University

Allen Louis A, “Management and Organization” IST Ed, Tokyo McGraw Hill,

Kogakusha Ltd.

Others

Staff of MCB branch Khayaban Sarwar Branch Dera Ghazi Khan

Personal Observations

Reading different Banks report

Reading Previous MCB Internship Reports

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http://mcb.com.pk/mcb/financial_contant/MCB%20A-Report%20FINAL%2006-04-07.pdf

http://mcb.com.pk/mcb/financial_contant/MCB%20A-Report%20FINAL%2006-04-07.pdf

http://mcb.com.pk/ir/MCB%20A-Report2007.pdf

http://mcb.com.pk/ir/annual_final_result_08.asp

http://mcb.com.pk/quick_links/economic_reports.asp

http://www.wikipedia.com/

http://www.mcb.com.pk/

fini619 marked internship report on mcb virtual university

Documents

mcb bank

internship work

course of internship

mcb khayaban sarwar

financial ratios analysis

ratio analysis

number of employees

banking sector