Chapter-4: My Work As An Internee

4.1.Brief Introduction Of The Branch:

I did internship from MCB CC&I (chamber of commerce and industry)Building
branch(1409).The branch is situated on Paris road, Sialkot. The branch is well
established and fully equipped with online networking system and offers a wide range of
banking facilities to its customers.
4.1.1.Staff Members Of The Branch:
Following is the detail of the staff members of MCB CC&I branch:

NAME

DESIGNATION

Mr. Aurangzeb

Branch Manager

Mr. Rizwan Saleem

Operation Manager

Mr. Shehzad Ishaq

Credit Manager

Mr. Zulqar Sikander

Foreign Exchange Manager

Mr. Zafarullah Sheikh

NPL Manager

Mr. Kabir Hussain

Passing Officer

Mr. Qaiser Abbas

Internal Control Officer

Mr. Zaheer Abbas

Remittance Incharge

Ms. Naseem

Clearing Incharge

Ms. Aneequa

Account Opening Incharge

Mr. Sheraz

Cash Officer

4.1.2.Departments Of The Branch:
The branch has three main departments:
General Banking
Foreign exchange (FOREX)
Advances/Credit
4.1.2.1.General Banking:
In general banking, following functions are performed:
Clearing:
The function of the clearing department is to accept transfer, transfer delivery and
clearing cheques from the customers of the branch and to arrange for their
collection.Clearing can be inward or outward. In inward clearing, cheques drawn on
the bank presented by other banks for payments are settled while in outward clearing,
cheques and other instruments which are sent by the bank to other banks for payment
on behalf of its own clients are settled.The cheques are sent to NIFT(National
Institutional Facilitation Technologies) pvt.Ltd, which acts as a clearing house.
Accounts Opening/Closing:
This department deals with the opening and closing of various types of accounts as
mentioned earlier in the products/services of MCB.The customer has to fill the KYC
form and an account opening form provided by the bank and has to attach certain
documents, required by the bank , with those forms. Similarly if the customer wants to
close his account, he/she has to visit the same department.

Remittances:
Remittance means transfer of funds. The branch provides the facility of transferring of
funds through following instruments:
Demand Draft (DD) For transfer of funds outside the city
Payment Order (PO) For transfer of funds inside the city
Telegraphic Transfer (TT) For transfer of funds outside the country
4.1.2.2. Foreign Exchange (FOREX):
This department facilitates foreign trade and related transactions. Imports, exports,
inward remittances, outward remittances, foreign demand draft etc.are dealt in this
department. Moreover, it also deals with the foreign currency accounts maintained by
the customers.
4.1.2.3. Credit / Advances:
This department deals with the advancing of loan to the customers. There are various
types of loans offered by MCB including running finance, export refinance, finance
against packing credit, finance against packing credit, demand loans and cash finance
etc. Each type has different requirements and different rates of interests. The
department also provide the customers with bank guarantees, bid bonds and letter of
credit etc.





4.2.Learning As An Internee
During my internship in MCB, I worked in accounts opening, clearing, remittances,
advances and foreign exchange departments respectively. I successfully performed all
the tasks that were assigned to me. Following is the detailed description of my
internship.

Starting Date: 16-08-2010
Ending Date: 27-09-2010

4.2.1.Detail of supervisors:
Following is the detail of my supervisors:

Week

Department

Supervisor

Position

1

Accounts Opening

Miss Aneeqa
Incharge Account
Opening / Closing
2 & 3 Clearing Miss Naseem Clearing Incharge
3 & 4 Remittances Mr. Zaheer Remittance incharge
4 & 5 Advances Mr. Shehzad Credit Manager
6 Foreign Exchange Mr. Sikander FOREX Manager




4.2.2. Weekly Timetable:
Following is the weekly timetable of my learning and working during my internship at
MCB, CCI Building branch, Sialkot.
Week-1
Department : Accounts Opening
Supervisor: Miss Aneeqa
Signature of supervisor:
Description of the department:
In this department, opening and closing of various types of accounts takes place. The
bank maintains the following types of accounts:
Current Account
Basic Banking Account
Savings Account
Foreign Currency Account
Smart Dollar Account
Savings 365 gold
Term Deposit
Savings Xtra Account
Business Account
Smart Savings Account
Khushali Bachat Account
Current Life Account
The features of the above listed accounts have been mentioned earlier.
Procedure For Opening Of An Account:
Following is the procedure for opening of an account with the bank: Anyone
who wants to open any type of account, has to fill up the account opening form provided
by the bank. The form requires the information regarding the following:
Type of Account (Individual or Business )
Nature of Account (Current, Savings, Basic Banking, others etc.)
Personal Account (Single / Joint)
Personal Information (Name, CNIC No., Permanent Address, Phone No. etc.)
Along with the form, following documents are required to be attached:
I. In case of Individuals:
Attested photocopy of CNIC / passport of the person.
In case of salaried person, attested copy of his/her service card or any
other acceptable proof of service.
In case of illiterate person, 2 recent passport size photos besides taking
his left and right thumb impression on the specimen signature card.
II. In case of Joint Stock Companies:
Resolution of Board of Directors indicating the person(s) authorized to
operate the company account.
Memorandum and Article of Association.
Certificate of Incorporation.
Certificate of Commencement of Business.
Attested photocopy of CNIC of all the directors.
List of directors in Form-29 issued for the registrar joint stock companies.
III. In case of Trust Accounts:
Attested copies of CNIC of every trustee.
Attested copy of registration certificate.
Certified copies of Instrument of Trust.
IV. In case of Partnership:
Attested copies of CNIC of all the partners.
Attested copy of Certificate of Registration.
Attested copy of partnership deed duly signed by all the partners.
Authorized letter (SF-67) in original, in favour of the persons, other than
partners authorized to operate on account of the firm.
V. In case of Sole Proprietorship:
In addition to the documentary required for the individuals, following documents
are required:
Application for the opening of the account on the official letter head.
National Tax Number (NTN) / Sales Tax Registration Certificate.
Evidence of membership of Trade Organization / Chamber of Commerce
etc.
List of persons authorized to operate the account and their specimen
signature.
VI. IN case of Clubs, Societies and Associations:
Certified copies of Certificate of Registration.
Resolution of the clubs, societies and associations or executive committee
for opening of account giving authorities to the persons to operate the
account and attested copies of CNIC of the authorized person(s).
An agreement signed by authorized persons on behalf of the institution
mentioning that if any change takes place in the authorities regarding the
operation of account, the bank will be informed immediately.
When the account is opened, following are given to the account holder:
Pay-in-slip:
The pay-in slip is filled each time when payment is deposited in the bank. The
purpose of this book is to provide the customer with the bank's confirmation for
receipt of money to be credited to his/her account.

Cheque book:
A cheque book enables the customer to make withdraw any amount from his/her
account or make payment to various parties through cheques.
Description of my learning and working:

Date

Description



16-08-10

I enquired about different types of accounts offered by the
branch to its customers and learned about the requirements for
the opening and maintenance of those accounts.



17-08-10

I learned how to fill the account opening form, my supervisor
showed me the account opening form and told me about the
documents required by the bank, for the opening of an account,
from the customer.




18-08-10

I learned about the requirements for the issuance of the ATM
card and saw MCB SMART CARD application form.
I learned how to fill the pay-in- slips.
My supervisor authorized me to fill the pay-in-slips for the
customers, so I filled some of the slips.



I filled pay-in-slips for some of the customers.
19-08-10 I learned about the online transfer of funds.
I filled the form required for the online transfer of funds.


20-08-10

I filled some of the forms required for the online transfer of
funds for some of the customers.
I filled pay-in-slips for some of the customers.


Week-2 &3
Department: Clearing
Supervisor: Miss Naseem
Signature Of Supervisor:
Description of the department:
In clearing department, issuance of cheque books, inward , outward, intercity and
sameday clearing and special clearing takes place.
Procedure for the issuance of cheque book:
The procedure for the issuance of cheque book for the new customer is different as
compared to the old customer. Following is the procedure for the issuance of a cheque
book:


For new customer:
If the customer has newly opened an account with the bank and cheque book is being
issued to him/her for the very first time, then there is need of an application from his
side containing the request the bank for the issuance of cheque book. There are two
types of cheque books:
25 leaves cheque book -- for the profit and loss saving account
50 leaves cheque book for the current account
For old customer:
If the old customer wants to re-issue the cheque book, then he/she will simply provide
the requisition slip, which is inserted in the cheque book, to the banker for the issuance
of a new cheque book.
Inward clearing:
In inward clearing, those cheques which are received by the bank from other banks are
cleared. These cheques are drawn by the bank/branchs customers on their account in
favour of other parties. On receipt of the inward clearing, the cheques are posted to the
various accounts on which they are drawn.The accounts of the cheque issuer or drawer
with the bank is debited to the account and the payment is made to the bank presenting
the cheque.
Outward clearing:
In outward clearing, cheques and other instruments, which are sent by the bank to
other banks for payment on behalf of its own clients are settled. The cheques are sent
to NIFT(National Institutional Facilitation Technologies) pvt.Ltd ,which acts as a clearing
house.
There may be intercity clearing or same day clearing.
Intercity clearing:
In intercity clearing, those cheques are settled which are either received from the banks
outside the city or sent to the banks outside the city. The bank who sends cheques or
other instruments to NIFT (National Institute Of Facilitation Technologies), charges a
minor amount from the customer. For intercity clearing ,advices are prepared which
contains the following:
Cheque / any other instrument
Deposit slip
Summary
Bundle cover
Same day clearing:
In same day clearing, cheques which are received from or sent to the branches of the
bank located inside the same city. Usually, customer avails the facility of same day
clearing for some urgent purposes. There are no charges for the same day clearing.
Special clearing:
In special clearing, the cheques of worth Rs.2,00,000 and above are settled out. The
charges for the special clearing are more as compared to the clearing of cheques worth
less than Rs.2,00,000.



Description of my learning and working:


Date Description


23-08-10

I was told about the clearing process by my supervisor.
I learned about the inward and outward clearing.


24-08-10

I learned about the intercity clearing and same day clearing.
I learned about the various stamps required to be forced on different
documents related to clearing.
I also learned about special clearing.



25-08-10

I learned how to prepare an advice for the intercity clearing.
I assisted my supervisor and forced stamps on some of the
instruments and documents related to clearing.

26-08-10

I prepared advices for intercity clearing, for different cities.
I learned about the cheque books for different types of accounts.


27-08-10

I learned how to apply for the cheque books.
I saw a cheque book issuance requisition procedure.
I assisted my supervisor in forcing stamps on various documents.



30-08-10

I separated cheque books for Current account (50 leaves)from those
for PLS Saving account (25 leaves).
I recorded entries in the register which were related to the issuance
of cheque books.


31-08-10
I prepared advices for intercity clearing.
I received cheque book requisition applications from the customers
applying for the first time.


Week-3 &4
Department: Remittances
Supervisor: Mr. Zaheer
Signature of Supervisor:
Description of the department:
Remittances department deals with the sending of money or similar to that, from one
branch to another branch of MCB. Money can be transferred by the way of following
modes:
1) Demand Draft (DD)
2) Pay Order (PO)
3) Telegraphic Transfer (TT)
4) Mail Transfer (MT)
The above mentioned modes are described in detail as follows:

1) DEMAND DRAFT (DD)
A demand draft is an instrument drawn by a bank in favor of any person on a branch of
its own bank or any other bank to pay a certain amount of money which is demanded to
the person named on it. It is used for the transfer of money outside the station. It is one
of the cheapest methods of transferring money within the country. The applicant has to
fill in the application form for availing the facility of demand draft. After depositing the
amount of draft, remittance officer prepares the cheque of demand draft. The banker,
after the issuance of draft to the customer, records customers particulars branch wise.
2) PAY ORDER (PO)
Pay Order (PO) is used as an instrument for transfer of money within station or city. It is
a written order which is issued and received by the same bank or drawn or payable on
same branch. Like demand draft, the applicant has to fill the application form for the pay
order too. There is no need of any account for availing the facility of the pay order. The
bank charges excise duty and flat rate from the applicant.

3) TELEGRAPHIC TRANSFER (TT)
Telegraphic Transfer (TT) is an another alternative used for transferring the funds from
one branch of MCB to another branch of MCB or against some other bank. The bank
obtains the instructions regarding the mode of payment from the applicant. The
remittance officer maintains the record of the outward remittance. Telegram / Fax
charges or commission is charged by the bank on telegraphic transfer.

4) MAIL TRANSFER (MT)
Mail Transfer (MT) is also one of the means to transfer of amount from one branch of
MCB to another branch of MCB via mail or courier services. For availing the facility of
mail transfer , it is necessary that the applicant should be the regular customer or the
account holder of the responding as well as the originating branch.
Description of the my learning and working:

Date Description


01-09-10

I learned about the issuance of payment order (PO) ,demand draft
(DD) and telegraphic transfer (TT) and various requirements for that.





02-09-10

I learned how to make payment against PO and DD which is
received from other branches.
I learned how to make DD, PP and TT.
I learned about the various stamps required to be forced on DD &
PO.



03-09-10

I made incoming and outgoing telegraphic transfer (TT).
I learned to make Debit vouchers against the Telegraphic Transfer,
Pay Order & Demand Draft charges.
I learned to make Credit vouchers (contra) against the Telegraphic
Transfer, Pay Order & Demand Draft charges.


06-09-10

I made Debit vouchers against the TT, PO & DD charges.
I issued Credit Advices against DD.


07-09-10

I made outgoing TT.
I learned about the cancellation of a demand draft.
I learned about making of vouchers for incoming mail transfer.


08-09-10

I made Debit vouchers against PO.
I made credit vouchers against PO and DD.
I made outgoing and incoming TT.


Week- 4 &5
Department: Advances/Credit
Supervisor: Mr. Shehzad
Signature Of Supervisor:
Description of the department:
Advances are the most significant source of earning for the banks. MCB is also giving
maximum attention towards this aspect and it is also obvious from the growing portfolio
of advances and from very low default rate. The credit portfolio of MCB is in a very
much improving shape than other financial institutions of Pakistan and the credit goes to
the management and the staff who are solicitous about the quantity and quality as well.
MCB provides two types of credit facilities to its customers:

a) Fund Based Credit Facilities
b) Non-Fund Based Credit Facilities
These facilities are explained as under:
FUND BASED FACILITIES:
Following are the fund based facilities provided by MCB:
1) Running Finance
Running finance is also known as overdraft. Running finance facility is provided to the
customer allowing withdrawals from their accounts in excess of their credit balance,
maintained by him with the bank. Under this type of financial assistance, the borrower is
required to adjust the finance provided by the bank within the expressed expiry period
(normally one year).
The account may, however, be freely operated, by way of multi-transactions, provided
that the sanctioned limit is not, at any time, exceeded, and the account is operated
strictly in accordance with the approved limit, terms and conditions.
Special precautions:
The bank should ensure that:-
Running finance facility should not be used for long-term financing needs. In this
regard, financing needs of a borrower should be ascertained with regard to its
seasonal cycle / cash flows.
Current utilization level is continually monitored to ensure that the credit limit is not
crossed.
The customer makes periodic adjustments, at least quarterly, unless otherwise
approved.
Charging of mark-up on mark-up is prohibited under NIB system.
No disbursement is made against expired limit.
The finance is disbursed to the customers after taking into accounthis drawing
power.
2) Demand Finance
In demand finance, loan is granted by the bank in lump sum. The borrower withdraws
the whole amount of loan Interest is charged on the whole amount of a loan. In this type
of financing, loan is normally granted:
a) Loan against gold
b) Loan against pledge of stock
3) Cash Finance
Cash finance is a facility where an amount is disbursed against pledge of local / locally
procured goods and / or merchandise. The amount after retaining the prescribed
percentage of margin on stocks is transferred in a separate cash finance account of the
customer. Delivery of pledged stocks is allowed on payment. The facility of cash finance
is usually provided against:
a) Pledge of stock in trade or products
a) Hypothecation on stock of finished goods.
b) Mortgage of property
Special precautions:-
The bank should ensure that:-
The security is of durable goods that are of non-perishable nature.
The goods pledged are in the banks effective control under lock and key under
banks muccadum / guard.
Approved muccadums are hired and deputed, in accordance with banks
muccadumage policy.
Rollover is allowed against fresh stock only.
Proportionate mark-up has been recovered at the time of issuance of each delivery
order and at quarter ends.
Each transhe is adjusted within 90 180 days or earlier, as per approved terms.
4) Finance Against Packing Credit (FAPC)
Finance Against Packing Credit (FAPC) is a pre-shipment or pre-export finance,
extended to the exporters against valid export letter of credit / firm order. The finance
was originally allowed to exporters to meet the cost of packing the goods only. It is now
being extended to meet the expenses listed below:
Freight Charges
Clearing Forwarding Charges
Export Duty, etc.
Handling Charges
Purchase of Goods
Packing Requirement
The facility of packing finance is secured by creating a lien on the irrevocable letter of
credit / firm order and stocks required for the exports thereof. It also entails the signing
up of a buy-back agreement between the exporter and the bank. At times, additional
collaterals are also obtained from the borrower to safeguard banks interest.
Special precautions:-
The L/Cs or contracts shall be checked to the following effects:
Whether goods are permissible for export or not.
Any clause or condition mentioned in the export order / L/C, is difficult due to export
trade regulations or foreign exchange regulations.
A very careful check to be kept on the price of exported goods in the international
market.
Tenor of the bill and that of the L/C is to be taken into account.
Documents of title of goods to be received directly from the clearing agents.
FAPC is adjusted from export proceeds.
A certain percentage is to be kept as margin as per the approval of the competent
authority.
5) Finance Against Foreign Bills (FAFB)
Financing against foreign bills is made on export bills which and are drawn under L/C
and or firm contract and are sent for payment under documentary collection against
documents against payments (DP) basis. A documentary collection consists of export
bills accompanied with documents evidencing the shipment of goods, or in other words,
documents of title to goods.
FAFB is a sale transaction at a price mutually agreed upon between the buyer (bank)
and the seller (exporter). The sale price comprises of value of documents (evidencing
title to goods) and margin of profit by way of mark-up.Financial accommodation
extended against the prime security of a foreign documentary bill is classified under this
head.
Special precautions:-
Before granting finance against foreign bills, bank should take the following precautions:
Before giving finance against foreign bills facility, branch should obtain credit report
of the foreign buyer (importer).
When foreign trade and advances are handled separately, credit vouchers
realization of export proceeds should be delivered to advances department for the
adjustments of outstanding export finance.
6) Export Finance
Under export financing scheme, finance is provided at the stage of pre or post-
shipment, of eligible items under its two parts i.e. part I and II. This facility is available to
banks from State Bank of Pakistan at a concessionary, rate of mark-up. The low mark-
up rate is part of governments policy to offer various incentives to boost the exports of
the country. The period of finance extends to a maximum of 180 days in case of direct
exports and 120 days in case of indirect exports. The period, however, may be
enhanced or reduced on such terms and conditions as may be adviced by State Bank of
Pakistan from time to time.
Branches authorized to handle export finance
Only branches handling foreign exchange are authorized to handle export finance. No
other branch unless specifically authorized by the finance and treasury division,
principal office, Karachi (Head Office Karachi), shall handle export finance scheme.
NON- FUND BASED CREDIT FACILITIES:
MCB provides the following non-fund based credit facilities:
1) Letter Of Credit
Letter of credit is a document issued by the bank on behalf of the customer, authorizing
the beneficiary to draw a draft or sometimes without requirement of a draft, which will be
honoured on presentation by the bank if drawn in accordance with terms and conditions
specified in the letter of credit. It consist of an undertaking by an issuing bank that bills
drawn by the exporter will be duly owner provided, complying with the terms of credit.
The documents include commercial invoice, certificate of origin, transport document
relating to the mode of transport used and other documents required as per terms of
letter of credit.
Parties to Letter of Credit
There are following parties involved in letter of credit:-
The applicant (opener of L / C)
Opening bank (issuing bank)
Advising bank
Beneficiary (exporter)
Confirming bank
Negotiating bank
Reimbursing bank

Types of Documentary Credit / Letter of Credit
There are following types of documentary credit or letter of credit:
Revocable Letter of credit
Irrevocable letter of credit
Irrevocable confirmed letter of credit
Revolving credit
Transferable credit
Back to back credit
Red clause or packing credit
Stand by credit

Modes of payment
Available by negotiation
Available by acceptance
Available by sight payment
Available by deferred payment
Important Aspects Regarding Letter of Credit
The following aspects connected with L/C transactions should be viewed mainly from
credit perspective:
When a customer importing goods from a foreign country desires to open a L/C in
favour of the exporter, also referred as the beneficiary, credit report of the
beneficiary as regards his means and standing should be obtained from the foreign
bank. In case of a new customer, it should be ensured before allowing L/C facility
that the applicant is of undoubted financial standing and reputation.
The L/C should be opened, may be within an approved credit line, covering the type
/ quantum of L/C facility being applied for or the L/C may be a single transaction
approved by the competent sanctioning authority.
The manager of the branch, or appropriate approving authority, would then examine
and appraise the L/C application and decide whether or not to accept the request.

2) Guarantees, Performance / Bid Bonds
A bank guarantee is an irrevocable undertaking of a bank (guarantor) to effect payment
against presentation of a written statement of the guarantee-holder (beneficiary) to the
effect that a given contractually agreed obligation has not been fulfilled. The guarantee
is a unilateral agreement between the bank and the beneficiary, which is concluded on
behalf of a third party.



Parties in a bank guarantee
There are four parties in a bank guarantee:
The Beneficiary
The Principal
The Guarantor
The Instructing Party

Broad Classification of Guarantees
Bank guarantees may be broadly classified under the following heads:-
Performance Guarantees
Bid bonds / Tender Deposit Guarantee
Shipping Guarantees
Security Deposit Guarantees
Guarantees for the payment of dues / Court
Guarantees for Advance Payments / Mobilization Guarantees
Permanent / Open Ended Guarantee
Guarantee expressed in foreign currency

Performance Guarantees
These are generally requested by customers, guaranteeing completion of work or
supplies, as per terms of contract and / or mutual agreement. In such instances,
special care should be exercised by the branch manager / chief manager that
guarantees are not for projects,which are in any way uncertain or speculative. The
contractor / customer is well experienced in his line of work, having executed similar
contracts satisfactorily in the past.

Bid Bonds / Tender Deposit Guarantee
The bank is often requested by its customers to issue Bid Bonds in lieu of deposit of
earnest money against bids for tenders. In case of breach of the terms of the bid
bond, on the customers part, the bank could be called upon to make payment.

Shipping Guarantees
There are instances when exporters need to obtain delivery of goodswithout
production of relevant bill of lading. In such cases, the bank is requested by the
customers (importers) to issue a shipping guarantee in favour of concerned shipping
company.

Security Deposit Guarantees
These guarantees are issued in lieu of security deposit, generally to utiliy service
organizations for connection / supply of electricity, telephone, gas, etc. to customers.

Guarantees for the payment of dues / Court Guarantees
Under these guarantees, there is an unconditional commitment to pay a certain
amount on definite dates. For example, to a landlord, guaranteeing payment of rent,
by the specified due date or to a court for the payment to be made in case the suit is
decided in the favour of the beneficiary.

Guarantees for Advance Payments / Mobilization Guarantees
Under such guarantees, the bank guarantees the performance of a contract or other
work, as specified in the guarantee. The bank guarantees the amount of advance
payment made to the customers in this regard, for satisfactory performance of the
contract. Normally, the beneficiary of the guarantee would undertake the funds
released by the beneficiary against the mobilization guarantee shall be released
through banks. banks should ensure that funds so released are used on the project.

Permanent / Open - Ended Guarantee:
Guarantees where period of validity is not mentioned and which is valid for an
indefinite period of time or where validity is specified with an over riding clause that
the beneficiary can claim extension of the guarantee for any length of time at its
option can be termed as permanent / open-ended guarantee. Bank shall not be
prepared to entertain a proposal for such guarantee. However, may consider against
cash/ liquid collateral for purposes permitted by State Bank of Pakistan.

Guarantee expressed in foreign currency:
Guarantees involving remittance in foreign currency must be backed by valid permits
/ authorizations / State Bank of Pakistans Approval. Sometimes it happens that the
liability entries in respect of guarantees by branches in favour of other banks for
import of machinery still exists at the old rate of exchange even upon devaluation,
although in case of devaluation of Pakistan rupees, our liability is considerably
increased. Cases of such nature should receive proper attention of the issuing
branch and fresh liability entries at the prevailing rate of exchange should
immediately be passed to record increase in our rupee exposure. Usual commission
on enhanced amount of guarantees should also be recovered from the customer.
Guarantees should be for a fixed duration and the bank should receive a forward
cover to keep its exposure fixed by foreign currency deposit. Alternatively, readily
realizable security should provide adequate margin to be further supported by letter
from customer to make up for the risk of exchange fluctuations as well.

Description of my learning and working:


Date

Description



09-09-10

I was given the overview of the basic types of advances provided
by the bank to its customers.
I learned about the banks requirements for advancing various
loans.




I learned about the different documents required for credit
investigation.
I learned about what documents are required by the bank for
10-09-10 different types of financing.



15-09-10

I read the manual given to me by my supervisor regarding various
types of financing.
My supervisor was compiling EE- statements for the purpose of
export refinance to different customers and I observed the order of
documents to be placed.


16-09-10

I assisted my supervisor in compiling EE-statements.
I helped him in stamping various documents related to EE-
statements.


17-09-10

I compiled various EE-statements under the guidance of my
supervisor.


Week- 6
Department: Foreign Exchange (FOREX)
Supervisor: Mr. Sikander
Signature Of Supervisor:
Description of the department:
This department facilitates foreign trade. It offers the following foreign trade products:
1. Imports
2. Exports
3. Inward Remittances
4. Outward Remittances
5. Foreign Demand Draft
These services are explained in detail as under:
IMPORT
Imports of our country are greater than our exports. A major portion of the foreign
exchange is utilized in the imports. Raw oil and arms are the major commodities which
are imported from other countries.MCB facilitates the imports in the following ways:
I. Advance payment
II. Open Account
III. Documentary Collections CAD/DA
IV. Documentary Credits (A/S, D/A, Deferred Payment)
The above mentioned facilities are explained in detail as follows:



I. Advance Payment:
It has following characteristics:
It is allowed upto Usd.10,000/-.
Repatriation is to be arranged by the importer in case of goods not received.
5% penality is charge if the shipment is not received in Pakistan.

II. Open Account:
It has the following characteristics:
Consignment is received directly without the involvement of bank.
No payment is made before the shipment.
Payment is made after the shipment. The importers surrender all the shipping
documents to the bank with a request to transfer the payment against the
documents to close a file.

III. Documentary Collections:
Uniform rules of collection 522 are applied on this type of trade activity. There may be
following types of this collection.
a) CAD
b) D/A
These are explained as under:
a) CAD (Cash Against Documents)
Exporters bank presents the document to MCB with the instruction to credit their
account under advice to them.MCB pays their claim after approval from the importer.
b) DA (Documents Against Acceptance)
In DA, basic payment is made on maturity. This maturity is based on tenor. This tenor
may be from (1 to 180) days. All the process of collection of proceeds is same as in the
CAD basis.
IV. Documentary Credits/Letter Of Credits:
A letter of credit is a written instrument issued by a bank, authorizing the seller to draw
according to certain terms, also indicating legal forms, that all such instruments will be
honoured. It consist of an undertaking by an issuing bank that bills drawn by the
exporter will be duly owner provided, complying with the terms of credit.There may be
following major types of this collection.
a) A/S
b) D/A
c) Deferred Payment
Now these are explained in detail as under:
a) A/S (At Sight)
In this type of letter of credit, documents are prepared by the beneficiary/exporter in
accordance with the L/C. these documents rare presented to the exporters bank. The
exporters bank makes scrutiny of all the documents with the L/C.if there is no
discrepancy, MCB discounts these documents and presents to the L/C issuing bank as
instructed in the L/C.the L/C issuing bank settles the claim of MCB and presents these
documents to the importer.
b) D/A (Documents Against Acceptance)
In this type of documentary credit or letter of credit, the payment is made at maturity
date conveyed by the issuing bank.
c) Deferred Payment
In this type of documentary credit or letter of credit, all the conditions of L/C are same as
that of D/A letter of credit. The only difference occurs that L/C issuing bank can differ
the payment from maturity date to another date. The L/C issuing bank is fully
responsible for payment on maturity date.
EXPORT
Exports are the major source of foreign exchange of our country. It has a major
contribution in reducing the deficit of current account of the country. Our government
offers incentives to the exporters to maximize their exports. These incentives are
rebate, research and development support and duty drawback etc. There are following
ways through which MCB facilitates exports:
I. Advance Payment
II. Documentary Collections (CAD/DA)
III. Documentary Credits (A/S, D/A, Deferred Payment)

INWARD REMITTANCES
A large number of Pakistanis are working in other countries. They save the money and
send this money to Pakistan through banks. This is known as inward remittance/home
remittance. MCB appreciates inward remittance and provides the better options to the
recipients to save their money in the shape of foreign currency accounts and their
amounts are converted at the prevailing foreign currency rates.



OUTWARD REMITTANCES
Outward remittances are those which are transferred to other countries from Pakistan.
The students studying abroad need funds. Their parents or sponsors send them money
to meet their study expenses. There may be some private purpose of these remittances
as well, which is allowed in our country. MCB deals in all of them.
FOREIGN DEMAND DRAFT
Mostly foreign demand draft is required for education fee or for exhibition fee in the
countries other than Pakistan. MCB provides this service to its clients in this matter by
issuing foreign demand draft.
Description of my learning and working:

Date

Description


20-09-10

I learned about various foreign trade facilitating products offered by
the bank.
I learned about different tenors of payment.


21-09-10

I learned about various parties involved in letter of credit.
I learned about documentation for the letter of credit.







I learned about the operation of letter of credit.



22-09-10

I learned about foreign remittances.
I learned about foreign currency deposits.
I learned how to make vouchers for the withdrawal of foreign
currency in the form of cash.


23-09-10

I learned about payment against foreign currency cheques.
I recorded entries in the dak dispatch register.


24-09-10

I learned about the issuance of E-form.
I made vouchers for the withdrawal of foreign currency in cash.