Internship Report On MCB BAnk 2010 PDF

INTERNSHIP REPORT ON MCB BANK LIMITED
IN THE NAME OF ALLAH, THE BENEFICENT, THE MERCIFUL
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DEDICATION
I dedicate my internship report of MCB Bank Limited to my
Respectable parents
And
Honorable teachers
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ACKNOWLEDGEMENT
By the Grace of Almighty, the most Merciful, the most Beneficial, I'm today
submitting my internship report, at the end of my first pragmatic experience and
I'm glad to have it with MCB, where you come first, only if you're the customer.
Thirst of learning is inside you, and whatever the environment, if you're willing
to learn, you do. At MCB, I had a new, challenging, yet a perfect environment to
learn. My parents' prayers and their teachings were always with me and hereby I
will like to take this opportunity to show my gratitude to all those who made my
internship an adventurous outwit.
Ghulam Farid
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PREFACE
Banking sector owes a pivotal importance in the economy of any country
through its vibrant functions. This is the deep seated motivator that geared up me
to join any bank for internship. Moreover, the practice and familiarity learned
during this tenure would also attest very helpful and alleviating in the awaiting
proficient life.
This report is an upshot of my internship in United Bank Limited, Main Branch

Pattoki. MCB Bank Limited posses an imperative importance in the banking
sector of Pakistan. It always remains the center of hustles in business activities. It
always endows with great covenant of rally round in terms of funds and services
at all epochs of its dynamism.
Although, a derisory period of my internship is not enough to learn the complex

operations of MCB Bank Limited yet I made industrious efforts to converse them
comprehensively in this report. Particularly, I have remunerated more accents on
study of distinguishing features and services of MCB Bank Limited. I have made
maximum venture to elaborate this report with the material read, listened and
observed.
I have strong belief that this report will guide and ease the readers to understand
the operations of banking system and more prominently have good knowledge
about MCB Bank Limited, one of the most trusty and leading banks in Pakistan.
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Chapter – 1
INTRODUCTION
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INTRODUCTION
The study is about the general operations and management of MCB bank
Limited Main Branch pattoki.
Every student of BBA (Hons.) has to under to an internship program of Eight
weeks in any organization to get exposure the real time business environment
and to know what sort of changes information technology brings in management
activities. The Real purpose of this internship program is to provide an
opportunity to the students to see the practical applications and approach of their
background professions studies
The report is a reflection on my experience when I was internee in MCB bank
Ltd.
OBJECTIVE OF STUDYING THE ORGANIZATION
Following are the main objectives of selecting MCB Bank Limited for studying.
 To observe the finance system of the bank, to know how banks

support the economy of the country.
 To implement theoretical knowledge in practical field.
 To understand the management system of the bank which consists

of experienced professionals of the bank.
 Want to scrutinize newly and highly integrated computerized system
for doing banking transactions.
 To know banks activities i.e. its services and products.
The bank is certainly one of the leading banks in Pakistan, the reason
being I selected it for Internship and learning purpos
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HISTORY OF THE MCB BANK LIMITED
Before separation of Indo Pak, the need for more Muslim banks was felt. And
Muslims having strong financial capacity were thinking to invest in this sector as
well. This was the idea which paved the way for setting up MCB Bank Ltd
known as MCB. This was the third Muslim bank in the subcontinent.
HISTORY
This bank was incorporated under companies’ act 1913 on 9th July, 1947 (just
before partition) at Calcutta. But due to changing scenario of the region, the
certificate of incorporation was issued on 17th August, 1948 with a delay of
almost 1 year; the certificate was issued at Chitagong. The first Head office of
the company was established at Dacca and Mr. G.M. Adamjee was appointed its
first chairman. It was incorporated with an authorized capital of Rs. 15 million.
After some time the registered office of the company was shifted to Karachi on
August 23rd, 1956 through a special resolution, now recently the Head office of
MCB has been transferred to Islamabad in July, 1999 and now Head office is
termed as Principle Office.
This institute was nationalized with other on January 1st, 1974. At that time it
had 506 branches and deposits amounting to Rs. 1,640 million. Although. MCB
has a reputation of a conservative bank but nationalization also left its effects on
this institute as well and by end of year 1991 in which it was privatized the total
number of branches were 1.287 and deposits amounting to as high as Rs. 35,029
million.
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Vision Statement
CHALLENGING AND CHANGING THE WAY YOU BANK
Mission Statement
To become the preferred provider of quality financial services in our

country with the profitability and responsibility and to be best place to work
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Our Core Values
CUSTOMER FOCUS
We treat each of our customer equality & as the most important person while we
interact with him/her. We must ensure that we do everything to meet and exceed
the customers expectations with perfect to times, accuracy & quality services.
EMPLOYEE RESPECT & DIGNITY

We treat each of our employees with fairness, which includes giving constructive
feedback for their development. We celebrate diversity and seek suggestions
from all employees for improvement. We ensure that responsibility & fairness in
all our decision-making.
TEAM BASED APPROACH

We work towards achievement of our vision & mission as a combines group. We
encourage inter & intra-departmental communications. We treat our colleagues
as our internal customers & ensure that the requirements of internal customer
focus are always met.
QUEST FOR QUALITY

We ensure that each moment of our time is spent on value adding activity. We
always seek ways for exceeding expectations of customers & colleagues. We
also ensure that we do things right, first time every time.
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GOOD CORPORATE CITIZENSHIP

We ensure that we contribute our due share to the Govt. we realize that we have
a responsibility to the society in which we operate & we seek ways of playing a
positive role for the betterment of the community at large.
NATURE OF THE ORGANIZATION
MCB is in it’s over 50 years of operation. It has a network of over 1026 branches
all over the country with business establishments in Sri Lanka and Bahrain. The
branch break-up province wise is
 Punjab (57%)
 Sindh (21%)
 NWFP (19%)
 Baluchistan (3%) respectively
Over 750 of which are automated branches, Over 197 MCB ATMs in 35 cities
nationwide and a network of Over 12 banks on the MNET ATM switch.
In 2005 the total No. of Employees are 9,377 and No. of Accounts are 4,248,399.
In (2005, 2004, 2003, and 2001) MCB has received the Euro money award for
the 4th time in the last 5 years. MCB won the "Best Bank in Pakistan".
In 2000 and 2007 win the award of “Best Domestic Bank.” In 2004, 2005 also
has win Asia Money awards for being "The Best Domestic Commercial Bank in
Pakistan.
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Business volume of Muslim Commercial Bank:
Rupees in million 2003 2004 2005 2006 2007
Profits
Operating profit 6,656 6,746 13,830 20,069 20,856
Profit before taxation 3,612 4,057 13,018 18,500 21,308
Profit after taxation 2,230 2,431 8,922 12,142 15,266
Balance sheet
Shareholders fund 11,108 14,552 23,307 40,844 55,120
Deposits from customers 211,511 221,069 229,345 257,461 292,098
Investments 128,276 67,194 69,481 63,486 113,089
Advances to customers 97,200 137,317 180,322 198,239 229,732
Total assets 272,323 259,173 298,776 342,108 410,485
Information per ordinary shares
Earnings (Rs) 7.28 7.21 21.36 23.40 24.30
Cash dividend (Rs) 1.25 1.50 1.50 2.00 2.50
Dividend payout ratio (%) 37.80 34.65 19.22 32.61 51.45
Net asset value at the year end(Rs) 36.24 43.16 55.64 74.76 87.73
Market value at the year end (Rs) 51.40 58.70 167.80 246.10 399.95
Capital adequacy ratio (%) 0.00 9.64 12.54 18.65 17.88
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NUMBER OF EMPLOYEES
MCB bank since its incorporation has the more potential bank not only for its
customers but also for its employees. MCB bank offering great working
opportunities for all the people who are interested to do job in MCB bank and
with passage of time employees is increasing as its business volume is increasing
because MCB bank provide enhanced career opportunities with dynamic work
employees are motivated with higher salaries according to their education and
experience level currently round about 9946 employees are working in MCB
bank including contractual and permanent staff
Total numbers of employees = 9946
STAFF OF THE BRANCH CONSISTS OF 13 MEMBERS
DESIGNATION NO OF EMPLOYEES
Branch Manager 01 Grade I
Operation Manager 01 Grade I
Customer Service Officer 01
Credit Manager 01 Grade III
General Banking Officer 02 Grade III
Cashier 01 Grade III
Cash Officer 01
System Administrator 01
Gun Man 02
Peons 02
PRODUCTS AND SERVICES

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MCB ATM Services
(a) MCB ATM Card
MCB ATM Network is the largest and most advanced of its kind in the country,
and is part of MCB's continuing efforts to provide customers with convenience
that suits all requirements most. MCB ATM has operated globally.
Card Categories
MCB ATM Regular Card
The MCB ATM Regular Card allows withdrawal of up to Rs. 10,000 per day
and a maximum of 3 withdrawals per day per card.
MCB ATM Gold Card
The MCB ATM Gold Card allows withdrawal up to Rs. 25,000 per day and a
maximum of 6 withdrawals per day per card. The cardholder has to make at
least two transactions to withdraw the full amount of Rs. 25,000
BILL PAYMENTS:
MCB easy bill pay offers unmatched convenience to pay utility and mobile
phone bills or re-charge prepaid mobile phone accounts.
MCB is the only bank that offers coustomers, 3 convenient options of making
bill payments to PTCL, SSGC, KESC, Mobilink, and Ufone. MCB Smart Card
or MCB ATM Card Holder can easily pay their bills or re-charge their prepaid
mobile phone account.
ACCOUNTS
Saving Account
MCB’s Rupee Savings account is the most convenient way to manage savings.
Its basic features are:
 Low average balance required
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 Profit is paid on customers account on a half yearly basis
 Cash deposit and withdrawal facility at hundreds of MCB

branches across Pakistan (conditions apply)
 Withdraw cash through Pakistan’s largest ATM network.
 Customer can use an account to pay bills 24 hours a day, 7 days a

week through Virtual Banking
Current Account
MCB’s Rupee Savings account is the most convenient way to manage savings.
Its features are given as below:
 Low average balance is required. Unlimited free of cost transaction

facility at concern branch. Profit is paid on account on a half yearly
basis.
Term Deposit
A MCB term deposit scheme is also valuable to suit customer’s requirement.

Customer can avail on choice of 01 month, 3 months, 1 year, 2 years, 3 years, 4
years, and 05 years term deposit. Its benefit includes half yearly profit payment.
Customer can avail credit facility up to 75% of total deposit.
Basic Banking Account
In compliance with the directives of State Bank of Pakistan via BDP Circular
No. 30, issued on November 29, 2005, the Basic Banking Account has been
launched with effect from February 27, 2006. This product has been introduced
to facilitate the low income group as well as the existing account holders who
wish to convert their regular savings or current account into Basic Banking
Account.
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The Basic Banking Account is a current account and can be opened with a
minimum initial deposit of Rs. 1000/- only. Account holders will be allowed 2
deposit transactions (either cash or through clearing) and 2 withdrawals (cash or
clearing)
each month. All customer-initiated transactions over and above this limit
will be
charged a transaction fee.
Foreign Currency Accounts
This account offers very attractive returns on Foreign Currency investment.
Customer can open a foreign currency Savings account in any of the four
currencies i.e. US Dollar, UK Pound Sterling, and Euro. Its features are as
below:
 Unlimited transaction facility.

 Low balance requirement.
 Profit credited to account on a half yearly basis.
 Account holder can avail a credit facility up to 75% of the total

deposit value.
A foreign currency account can be opened at any of MCB foreign exchange

dealing branches.
SMART CARD / DEBIT CARDS
By using of this product customer can manage expenses. MCB is the only bank
to introduce a debit card that gives the option to choose from domestic and
international cards for local and global usage respectively.
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MCB VISA:
It provides the conventional credit card services in a manner that is superior in

comparison. MCB Visa is the most secure, affordable and rewarding credit card.
MCB Visa is accepted at all ATMs across Pakistan as well as at 27 million
acceptance locations worldwide.
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.
LOANS
Term Loans:
An individual can gain and benefit the most through MCB Consumer Banking.
MCB provide friendly, efficient and attentive personalized banking services - a
unique banking relationship experienced by each MCB client.
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.
FINANCING
Trade Finance
MCB corporate banking provides a finance services that include an entire range
of import and export activities including issuing Letters of Credit(L/Cs),
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purchasing export documents, providing guarantees and other support services.
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INVESTMENT BANKING
MCB’s Investment Banking Team has emerged as a leading player in Pakistan's

Investment Banking arena. The Team handles advisory, corporate finance and
capital markets related transactions. Within these areas, the team has developed
expertise in:
 Private Placements
 Debt/Equity Underwriting
 Term Finance Certificates
 Loan Syndication
 Arrangement of Non- Fund Facilities


 Mergers and Acquisitions
 Corporate Advisory
MCB VIRTUAL BANKING
MCB Virtual Internet is to manage and control customer’s banking and finances
– when they want to, where they want to. MCB’s Virtual Internet Banking
facility is
 Simple
 Secure

 Free of cost.
Individual Users/ Corporate Users
MCB Virtual Banking - is a safe and convenient way to manage and control
banking and finances. This service meets customer’s both (individual’s and
corporate) essential banking needs.
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Chapter – 2
INTRODUCTION TO
ORGANIZATIONAL
STRUCTURE
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ORGANIZATIONAL STRUCTURE
MCB relies on strong, lasting relationship with its customers and on its
reputation for stability and security for its continued process. MCB extends its
philosophy to its technology strategy but not perusing technology for
technology's sake. However, MCB learns from the mistakes of others especially
in "consumer banking". We let others get in first, take the hit, and find out the
flows. Said MCB officials - and has installed efficient and effective system for
processing and delivering information. Some directors are the personnel of the
MCB Bank and others are successful business person and executives of other
major organization. Nineteen members are included in board of directors.
2.2 MAIN OFFICE DEPARTMENTS (HEAD OFFICE)
The head office is operationally in charge of central affairs including the

delegation of powers and authority to the regional head quarters throughout the
country. All the senior management team works in the Head office of MCB bank
is situated in Karachi. And it’s all branches, regional offices, corporate branches
and overseas branches and online branches and representative offices work
according to rules and regulation set by the head office.
Following are the departments that are working at head office:
 Administration
 Credit Management
 Investment Banking
 Human Resource
 Information Technology
 Corporate Planning & Budgeting
 Finance & Treasury
 International Division
 Inspection & Audit
 Law Division
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MANAGEMENT COMMITTEE
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Board of Directors
Mian Mohammad Mansha Chairman
S.M. Muneer Vice Chairman
Mohammad Aftab Manzoor President & Chief Executive
Tariq Rafi Director
Sheikh Mukhtar Ahmed Director
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Mohammad Arshad Director
Shahzad Saleem Director
Mian Umer Mansha Director
Sarmad Amin Director
Audit Committee
Mian Mohammad Mansha Chairman
Shaikh Mukhtar Ahmed Member
Shahzad Saleem Member
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Chief Financial Officer
Ali Amin
Company Secretary
Tameez-ul-haque
Auditor
A.F.Ferguson & co
Chartered accountants
M.Yousuf Adil Saleem & co
Chartered accountants
Legal Advisor
Chartered accountants mandiwalla & zafar
Advocates & legal consultants

Shariah Advisor
Dr. Muhammad Zubair Usmani
Registered Office
MCB building, F-6/G-6
Jinnah Avenue, Islamabad

Principle Office
Adamjee house 2nd floor
I.I chudrigar road Karachi
Registrar and Share Registration Office
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THK associates (pvt) Ltd.
Shares department, ground floor sheikh sultan trust building no 2, Beaumont road
KarachI
ORGANIZATIONAL HIERARCHY OF MCB
PRESIDENT
SENIOR EXECUTIVE
VICE PRESIDENT
EXECUTIVE VICE
PRESIDENT
SENIOR VICE
PRESIDENT
VICE PRESIDENT
ASSISTANT VICE
PRESIDENT
OFFICERS GRADE
I II III
ASSISTANTS
CASHIER
PEONS
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Chapter – 3
INTRODUCTION TO
THE DEPARTEMENTS
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FIELDS OF ACTIVITIES
The purpose of banks is to provide some services to the general public. And for this
purpose different banks provide different services to the people in different forms.
The MCB Bank is a commercial bank, in modern time commercial banks play a
very important role and their functions are manifold. The main functions and
services which MCB Bank Limited provides to different peoples are as follows.
1) Open Different accounts for different peoples

2) Accepting various types of deposits
3) Accepting various types of deposits
4) Granting loans & advances
5) Undertaking of agency services and also general utility functions, few of
those are as under
• Collecting cheques and bill of exchange for the customers.

• Collecting interest due, dividend, pensions and other sum due to
customers.
• Transfer of money from place to place.
• Acting an executor, trustee or attorney for the customers. ‘Providing
safe custody and facilities to keep jewellery, documents or securities.
• Issuing of travelers cheques and letters of credit to give credit facilities
to travel.
• Accepting bills of exchange on behalf of customers.

• Purchasing shares for the customers.
• Undertaking foreign exchange business.
• Furnishing trade information and tendering advice to customers.
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For proper functioning of branches and the over all bank has been divided in
different departments. These departments handle different jobs so that division of
work is there for improvement of functions and also it is easy to control the
situation. The general division in a branch is as follows:
1. Cash department
2. Deposit department
3. Advances & credit department
4. Remittance department
5. Foreign exchange department
6. Technology department (new addition in order to cop with the growing
needs of day to day technology requirements)
CASH DEPARTMENT
The following books are maintained in the Cash Department:
• Receiving Cash Book
• Paying Cash Book
• Token Book
• Scroll Book
• Cash Balance Book
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.
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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 is made to payee. At
the close of day, the Token Book and Paying 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.
DEPOSIT DEPARTMENT
Bank deals in money and they are merely mobilizing funds within the economy.
They borrow from one person and lend to another, the difference between the rate
of borrowing lending forms their spread or gross profit. Therefore we can rightly
state that deposits are the blood of the bank which causes the body of an institution
to get to work. These deposits are liability of the bank so from point of view of
bank we can refer to them as liabilities.
The total deposits of MCB are growing since its inauguration but after privatization
there is a sharp incline in over all deposits of the bank. The increase in deposits is
also a cause of increase on total number of accounts; bank has progressed in both
aspects.
TYPES OF DEPOSITS
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Deposits can be segregated on two bases, one is the duration in which there funds
are expected to be with the bank and second is the cost of getting these funds. So
divide deposits in two classes according to duration of deposits i.e.
1) Time deposits / liabilities
2) Demand deposits / liabilities
And on the basis of the cost to acquire these funds, a deposit can be classified as
any one of following four, High Cost Medium Cost, Low Cost No Cost.
Banks has different kinds of deposit schemes in order to induce deposits. These
schemes are a mixture of the above mentioned two types of deposits with an
addition of different
services & requirements such as minimum balance' requirement, mode of

transaction, basis for calculation of profit, deductions, additional benefits,
eligibility for different groups.
In the similar fashion, MCB has a large variety of deposit schemes and some of
them are as follows:
CURRENT ACCOUNT
In this type of accounts the client is allowed to deposit or withdraw money as and
when he likes. He may, thus, deposits or withdraws money several times in a day if
he likes. There is also no restriction of amount to be deposited or withdrawn.
However, there is requirement of minimum balance maintenance of Rs. 1000/-.
Usually this type of account is opened by the businessmen. No profit is paid by the
bank and no service charges are deducted by the bank on current deposits account.
These types of deposits are also exempt from compulsory deduction of Zakat.
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PLS ACCOUNT
This type of account is for those persons who want to make small savings'. This
type of account is opened with a minimum deposit of Rs. 1000/-. Under this scheme
deposits can be made only up to a-costing amount and withdrawals are allowed
twice a week or 8 times a month. If a big amount is required a seven days notice is
required before the withdrawal. The profit is paid on these accounts on the
minimum balance during a month for the whole of
that month. Zakat & other withholding taxes are deducted as per rules of the
government.
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KHUSHALI BACHAT ACCOUNT
This is an advance form of PLS saving a/c, in this type of account. The minimum
balance requirement for this type is Rs. 2500/-. There is also restriction on the
number of withdrawals as well, i.e. up to 4 times in a calendar month. For
maintaining this extra balance the customer gets the benefits of profit calculation
on daily product basis and also free service of standing instructions of paying
utility bills and HBFC installments. All other rules of saving account are
applicable.
PLS 365 GOLD
This is a special type of saving account in which customer maintains a minimum

balance of Rs. 300,000- and in turn he gets the benefits of daily profit calculations
and also there is no restriction on the maximum number of withdrawals as was
there in the case of KBA. There is also another advantage of this scheme that if
balance on a particular day falls below the minimum balance then only the product
of that day is ignored whereas in KBA, if balance falls below the minimum limit
then all the products for that month are ignored on in other words no profit is paid
for that month.
Khaunm Bachat Scheme
This is a type of term deposit, in this type of deposit an account is deposited and
monthly payments of Rs. 1000/- are made by the account holder in this account for
a minimum of 10 years. After
the expiry of term, he receives his funds along with profit for the tenor. The
distinctive feature of this product is that profit is calculated on monthly basis and
charged to account on end of each half /ear. Then profit is also calculated on that
amount of profit which is credited to the customer's account. So we can say that in
this type of account there is a concept of accumulated profits on profit. This ends in
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getting a heavy return for the depositor at the end of tenor for his small savings.
This product was actually introduced to promote saving habits in the people. Zakat
and withholding taxes are deducted as per rules only at the time of maturity while
making payment to the customer.
Term Deposits Receipts
This is a type of term deposit in which a receipt is issued for varying tenors ranging
from 1 month to 5 years or more. These are in the form of receipts and profit on
these receipts is paid biannually. These receipts are encashable after expiry of the
period for which they were issued. Different profit rates are applied to different
type of TDRs.
Under this deposit scheme, a deposit is received from the depositor under the
condition that he will intimate the bank before a certain period in case of
withdrawals.
FUNCTIONS OF DEPOSIT DEPARTMENT
This was a brief review of different types of deposit schemes. The Deposit
Department handles the account opening, profit payment and accounting of all
types of deposit schemes.
Account Opening
Account opening is an agreement in which customer offers his funds and bank
accepts these funds, therefore the nature of relation between a banker and customer
is of a contractual one and all the conditions applicable to this contract act are also
applicable.
Profit payment & calculation
Profit payment & calculation is done in accordance with the rules of each type of
deposit scheme-by the deposit department. The products for each deposit scheme
are calculated separately and added till the end of 6 month period. Then the sum
total of these products is multiplied with the respective profit rates which are issued
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by the Head Office at the end of each half yearly closing. The profit provisions for
each type of deposits are also calculated on monthly basis by the same department
in order to calculate the net profit or loss position of the branch.
Accounting Entries
Accounting entries are also made in the respective books of account by this
department. However, in small and medium size branches, the accountant performs
the book keeping duties for all kinds of ledgers.
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CLEARING DEPARTMENT
Every banker acts both as a 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 to 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.
Types of Cheques
• Transfer cheques: are those cheques, which are collected and paid
by the same branch of bank.
• Transfer delivery cheques: are those cheques, which are collected

and paid by two different branches of the same bank situated in the
same city.
• Clearing cheques: are those cheques, which are drawn on the

branches of some other bank of the same city or of the same area,
which is covered by a particular clearing house.
• Collection cheques: are those cheques, which are drawn on the

branches of either the same bank or of another bank, but those
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branches, are not in the same city or they are not the members of
clearing house.
Functions of Clearing Department
• To accept Transfer, Transfer delivery, clearing and collection cheques from

the customers of the branch and to arrange for their collection.
• To arrange the payment of cheques drawn on the branch and given for
collection to any other branch on MCB or any other members or sub
member of the local clearing house.
• To collect amount of cheques drawn on members, sub-member of local

clearing house, sent for collection by MCB Branches, not represented at the
local clearing house
• Receiving and scrutinizing the cheques and other deposit instruments, and
the pay-in-slip at the counter.
• Fixing the stamps.
• Scrutiny and receipt by the authorized officer.
• Returning the counter file to the depositor.
• Certificate and confirmation by the officer in charge of the department. ,
• Separating the cheque into transfer, transfer delivery, and clearing cheques.
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CLEARING PROCESS (FLOW CHART)
Cheque with slip given Slip is asked & filled
Cheque along with slip checked, signed &

received by officer
Entries in daybooks are made
Entries checked & verified by another officer

after banking hours by officer
Cheques collected at the day end by Main

Branch’s Officials
Cheques are sent to respective banks next

day after posting in computer by Main Branch
The same day not honored cheques are

returned to Main Branch
The day after tomorrow the banks are

informed about dishonored cheques
Provisional entries for returned cheques are

debited again in both computer & daybooks
Party is informed about returned cheques

through Phone or personal contact
Cheques are mailed through TCS in case of

no personal contact the same day
(If there is any availability)
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ADVANCES DEPARTMENT
Advances are the most important source of earning for the banks. MCB is also
giving full attention towards this aspect and it is also obvious from the growing
portfolio of advances and from very low delinquency rate. The credit portfolio of
this institution is in a very much better shape than other financial institutions of
Pakistan and the credit goes to the management and the staff who are concerned
about the quantity and quality as well.
• Loans
• Cash Credits
• Overdraft
LOANS
Loans are monetary assistance by a financial institution to a business, individual

etc. The loans are granted by the bank in lump sum, so these types called fixed or
demand loans. Interest is charged on the whole amount of a fixed loan.
The borrower withdraws whole the amount of loan. This type of loan is normally
granted against security of gold documents.
In case of demand loans against gold or documents, a demand promissory note for
the amount of loan is taken from the borrower loans are granted under;
38
LOAN AGAINST GOLD
Under this type of loan, which is granted to the borrower the Head Cashier
estimates the value of Gold or Gold ornaments through an agent (Gold smith) and
keeps a margin of 40 to 50 percent. After the opening the gold loan account a token
is given to the borrower, which is a bank receipt.
On repayment of loan, the gold or ornaments held as security for it, together with
the demand promissory note duly discharged is returned to the borrower and his
receipt for the gold ornament taken in the demand loan ledger. This receipts states
that he ornaments returned are complete and in order. Part delivery of ornaments is
given against part payment of a loan but care is taken that the ornaments still in
banks possession fully covers the balance of the loan outstanding. The interest gold
loan is to be applied with quarterly.
LOAN AGAINST PLEDGE OF STOCKS
In case of advancing such types of loans, the following precautions are kept in the
mind:
• Stock pledged must be readily saleable
• Products should be readily saleable
• Advance should be within the borrows means
39
REQUIREMENTS OF LOAN
For granting loan to any party or individual, the bank checks following particulars
of the client:
 Credibility
 Feasibility Report
By Credibility, bank Judges the credibility of the client by his past bank record,
CBI report etc. it is very important in making decision about giving him loan.
Feasibility report is on the running or proposed business of the client. The report
enables the bank to judge the likely return of the business.
CASH CREDIT
Such cash account is opened in the name of the customer who borrows from the
bank. Customer is granted a loan up to a certain limit, sanctioned by the head
office, from which he can draw when he requires and interest is charged on the
amount actually utilized by the customer. In order to avoid the danger of idle fund,
the bank charges a certain rate of interest, even if the customer does not withdraw
any amount. The rate charged by the bank on cash credit in 46 paisa per thousand
on daily basis.
The credit is usually given against the securities of goods or merchandize as

follows:
ADVANCE AGAINST PLEDGE OF STOCKS
When cash is granted against the pledge of stock or product, cash credit form is
taken, from the certain products or stock,
40
but the actual pledge is created when the stock or finished products are placed
under the bank's lock or the document of title is duly endorsed to the bank by the
borrower.
HYPOTHECATION OF STOCKS
The difference between pledge and hypothecation is that under a pledge the
borrower's goods are placed in the bank's possession under own lock, whereas,
under a hypothecation, they remain in the possession of the borrower or guarantor
and are merely charged to the bank under documents signed by them. Even though
the documents empower the bank to take possession of the goods hypothecated, but
it is possible that the borrower may actually resist any attempt.
MORTGAGE OF PROPERTY
Title deeds of immovable property are accepted by the bank only as collateral
security or alternatively as unauthorized security.
REMITTANCE DEPARTMENT
Remittance department performs following functions:
• Mail Transfer (MT)
• Telegraphic Transfer (TT)
• Demand Drafts (DD)
MAIL TRANSFER (MT)
When a customer requests the bank to transfer his money from one branch of bank
41
to another branch of the same bank or from one city to another city to the same
bank or any other bank. Customer fills the form given by bank. If the customer has
an account with that amount as mentioned in the application form then concerned
officer will undertake the following procedure to make the mail transfer complete.
1. Branch Mail transfer form

2. Receiving Branch Register copy
3. Issuing branch register Copy
4. beneficiary advice
5. advice to customer
In case where the customer is not account holder of the bank then the customer will
have to deposit the amount which he wants to transfer under Mail. Then the above
said procedure will be done.
TELEGRAPHIC TRANSFER (TT)
This type of transfer is simple. After filling the application form the concerning
officer shall fill the telegraphic transfer form. Then it is sent to the required bank
which on receiving it immediately makes the payment to the customer and
afterwards the voucher are sent to that bank by ordinary mail.
DEMAND DRAFT (DD)
Demand draft is just like cheques and issued when the customer wants to take cash
with him personally. The idea behind is to avoid the risk and burden of currency
notes in huge quantity. Demand draft can easily be handled whatever amount it has
and the money can easily be taken from the bank when it is presented. In fact, the
bank persuades the customer to transfer money by drafts and avoid the risk of
frauds involves in MT and T.T. Draft is only issued when the bank knows customer
and bank has the confidence in him
42
In case of transfer of money by drafts, the customer has to fill an application form.
Then the concerned officer fills the following forms:
1. Customer’s advice
2. Customer’s debit form
3. Register copy
4. Cover Advice
FOREIGN DEMAND DRAFT

Foreign Demand Draft is just like demand draft. The only difference is that a bank
issues FDD to the bank of another country. It requires foreign exchange and it
involves seven forms, which are to be filled.
Bank Charges (July-December 2006)
S. # Item Rate
1 Telegram on TT Actual-MinimumRs.75
2 Postage on MT Actual-MinimumRs.50
3 Cancellation of DD/Pay order Rs.50 far Account holder
Rs.100 far non Account

holder
4 Issuance of Cheque Book Rs. 3 per leaf
5 Account closing Cost Rs.250 for LCY
6 Issuance of duplicate Draft Rs.200 far Account holder

holder
7 Issuance of duplicate FDD Rs.300
8 Issuance of duplicate Pay order Rs.100 far Account holder

holder
9 Issuance of RTC Rs.5 per piece
10 Stop payment charges Rs.150
43
11 Issuance of fresh statement Rs.25

12 Issuance of duplicate statement Rs 50
TECHNOLOGY DEPARTMENT
Technological advancements are also affecting the banking industry. The foreign
banks have a competitive edge over all local banks in their technologies'
advancements and automated systems. Local banks have also realized the gravity
oil this situation and are striving to add computerized systems to their branches
MCB is ahead of all other local banks in this field and now it is in a position to
even compete with foreign banks. There are more than 1045 branches of MCB all
over Pakistan and out of these more than 300 branches are fully computerized
Almost all .the branches of big cities are computerized; therefore, the need for a
technology department at each branch is growing. Now a day, a computer division
is working in each city to provide service to ad the branches of that area.
MCB has also introduced the now concept of online banking. There are now more
than 250 branches linked through this system and they can transact with each
other directly using computer systems at their own branches. Now customers do not
have to wait long for their transactions and can operate their account through all the
online branches.
ATM NETWORK
44
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.
MCB has the largest ATM network in the country at the moment with almost one
ATM at each online branch and also ATM terminals at International Airports. This
network covers more than the 27 cities of Pakistan including the provincial capitals
and large commercial cities of the country.
ATMs are operated through a card issued to the valued customers and by
application of Personal Identification Number (PIN number). A person can
withdraw from any machine across Pakistan with having an account in only one
branch of MCB. This was only possible with the help of online system. In this
system all the machines are linked to central banking host at IRM division Karachi
through either satellite or telephone controller. This system identifies the card
holder and his PIN Number.
Now MCB has also entered into a contract with Cirrus which is a subsidiary of
MasterCard. This contract will enable an ATM card holder to use his account
even when he is out of country at all the ATMs where Cirrus logo is displayed.
Green Cards are ordinary cards with a maximum withdrawal facility of

Rs. 10,000/- in a day. The annual fee for this card is Rs. 300/- only.
Gold Cards are special cars with maximum withdrawal limit of Rs.
25000/- in a day. These cards are issued to the persons having more than Rs.
500000/- as their average balance.
International Cards are issued in collaboration with Cirrus and are

useable all over the world with maximum withdrawal facility according to the
standards of Cirrus.
INFORMATION ABOUT MY BRANCH
45
I did my internship in MCB Bank Limited Pattoki Branch. Some important

information about my branch which I observed is as follows:
MANAGEMENT OF THE BRANCH
Branch Manager Ch. Sabir Hussain
Operational Manager Muhammad Munir
Accountant Fozan ul Qamer
Credit Manager Farruk Afrooz
Forex Manager Majid Iqbal
Chief Cashier Khursheed Ahmed
Cashier Muhammad Usman
Billing Cashier Miss Farwa Asif
CSO Miss Sumera
OTHER GENERAL INFORMATION OF THE BRANCH
46
Deposits
The total deposits of this about to 322.734 million. In deposit there is increasing
trend.
Deposits
25
20
Amount in Million
15
10
0
2003 2004 2005
Years
47
Profit
Total remittance of this branch is 2157.319 million in 2005.there is also incrasing

CASH TRANFER
Month DEBIT CREDIT DEBIT CREDIT Total

January 2521 2303 2140 1967 8911
February 2209 2268 1835 1725 8037
March 2753 2508 2141 2395 9797
April 3079 2569 1982 2040 9670
May 3433 2726 1944 2018 10121
June 2813 2578 1962 1972 9325
July 3555 2229 2021 2123 9928
August 3784 2123 1928 2030 9865
September 4134 2114 2078 2135 10461
October 4923 1980 2337 2350 11590
November 6427 1968 2871 2720 13986
December 2808 2312 2992 2925 14037
trend in profit from 2003 to 2005 because of higher mark up rate charged on the
finances.
No. of vouchers
48
The vouchers which are transacted in this branch in 2005 are as follows:
Financing & Advances
Mainly, the short term financing such as cash finance, running finance, Demand
finance,
ERF II, FAFB, FBP are being dealt here.
Number of accounts
Accounts in this branch of MCB are as follows:

Current account
Total numbers of current accounts are 1236.
PLS account
Total numbers of profit and loss accounts are 3950.
Khushali bachat account:

These are about to 301 accounts
Basic Banking Account (Newly Introduced by SBP for salaried person)

There are about to 19 accounts.
Foreign Currency Accounts:

MCB 365 Gold Account

49
ACCOUNT OPENING DEPARTMENT
Account opening and closing is the function of accounts departments. Bank’s

customers may be individuals (Single or Joint), firms (partnership/proprietorship),
F
Autonomous corporations, Limited Companies, Charitable Institutions,
Associations Educational Institutions or Local Bodies.
I
R
BASICS TO OPEN AN ACCOUNT
S
Tobserved a lot of about
During the span of mine internship in MCB, I learned and
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.
T
By opening an account at a bank a person becomes a ‘customer’ of a bank. Further
W
I am going to express the basic requirements and steps involved in the opening of
an account.
O
INTRODUCTION AND PRELIMINARY INVESTIGATION
W
Before opening an account MCB as like the other banks in Pakistan ascertain
whether or not the person who is going to open the account is a desirable customer
or not. Then MCB determine the prospective customer’sEintegrity, respectability,
occupation and the nature of business by the introductoryEreferences given at the
K
time of account opening. Negligence in this informal preliminary investigation may
result in serious consequences not only for the banker concerned directly but also
S indirectly.
for other bankers and the general public who may be affected
In order to further strengthen and streamline this process, the Federal Ombudsman
of Pakistan, vide his ruling on complaint No. II/31/5186, has directed the banks to
retain with the account opening form a Photostat copy each of the National Identity
50
Cards of the person desiring to open an account as well as that of the introducer. As
per these directions, the concerned Branch Managers are required to obtain the
original National Identity Cards along with their Photostat copies and then return
the original after attesting the authenticity of the retained copy.
Preliminary investigation is necessary because of the following reasons:
Avoid Frauds: In this regard I learned that if a banker does not make the necessary
inquiries mentioned above he may enable dishonest persons to possess cheque
books for fraudulent purposes. If any such person happens to be an undercharged
bankrupt, the banker might be placed in an awkward position for having allowed
such a person to open and open a bank account.
Safeguard against unintended overdrafts: Sometimes due to a mistake an

account may be given an overdraft, For instance, the ledger keeper, misreading the
balance of an account honors a cheque for an amount larger than the balance.
Similarly a credit entry belonging to a customer may be made by mistake in
another customer’s account. In such situations the excess amount withdrawn by the
customer can only be realized if the customer is a respectable person.
Inquiries about clients: Being a banker I think MCB has a business obligation to
respond to inquiries from other banks etc. about his customer’s financial position.
Though the banker gives only a general ideal about the financial standing of his
customer, it should nevertheless have the necessary information available with him.
51
Specimen Signature
When an account is opened with MCB customer provides to the bank a specimen
of the form of signature which would appear on all his cheques to express his
authority for the payment of cheques drawn on his banker. This specimen is taken
generally on a card specially designed for this purpose, and rule for the customers,
full name, and account number are entered on it.
If the bank has reasons to doubt the genuineness of a signature, he should either get
it confirmed for his satisfaction or return the cheque with the remark ‘Signature
differs’. If the signature of the customer is forged the banker cannot escape his
liability because he has actually acted on his customer’s mandate.
HOW TO OPEN AN ACCOUNT (GENERAL)
Before opening an account in MCB I observed that the following points must be
considered in this regard.
• Another account holder of the bank should properly introduce the new
customer.
• The account holder should sign the account opening form in the presence of
bank officer and the signature is duly verified.
• A copy of identity Card is required by Bank.
• Against submission of the Bank’s prescribed application form, duly

introduced in the manner provided and on supplying such document, as
may be required and account may be opened. The Bank reserves to itself
the right to refuse to open and account without assigning any reason.
• Each account shall be allotted a distinct number that is to be quoted in all

correspondence with the bank relation to the account.
52
• Minimum amount for opening and continued maintenance of various types

of accounts is as follows:
Rs.
Saving 500
Current 500
Term Deposit 1000
The bank reserves the right to change the above mentioned minimum balance
requirement at any time without any notice.
PROCEDURE TO OPEN AN ACCOUNT
According to my practice in MCB, when a customer wants to open an account, the

bank officer gives him an application form. All information, which is necessary to
be known by the bank, are requirements of the application form. Form also requires
the essential documents to be attached by the customer.
Basically following information is required to open an account with MCB.
• Title of Account
• Full Name of Applicant
• Occupation
• Address
• Telephone No.
• Currency of account
• Nature of Business
53
• Introducer’s Name, Address & Signatures
• Special instruction regarding the account
• Initial Amount of the Deposit

• Signature of the applicant
DOCUMENTS TO BE ATTACHED
Further I learned that if you wanted to open an account with MCB then you should
attach the following documents with your application form which are different for
different categories.
SOLE PROPRIETOR’S ACCOUNT
In order to open an account with MCB Sole Proprietors have to submit their
business registration certificate number.
PRIVATE / JOINT ACCOUTS
For individual or private or joint accounts National Identity Card is required.
JOINT STOCK COMPANY
Before an account of a Public Limited Company is opened MCB must ask the
person authorized to do so to submit the certified copies or the following
documents
• Certified true copy of the Memorandum and Articles of Association of the

company.
• Certified true copy of the resolution of the board of directors / managing

committee / governing body regarding conduct of the account.
54
• Certified list containing names and signatures of the directors / office

bearers.
• Certified true copy of the certificate of incorporation or registration.
• Certified true copy of the certificate of commencement of business (in case

of public limited companies).
• Balance Sheet
• I.D. Card copy of each director
• Original is also enclosed for inspection and return
• List of persons authorized to operate the account.
• Power of Attorney in favor of the person opening account.
PARTNERSHIP FIRM ACCOUNT
Information which is required to be submitted to MCB by a partnership firm in this

case is as follows:
• Full Names
• Address
• Specimen of signatures of the partners
• Certified true copy of partnership deed

• Registration No. if the Partnership is registered
SOCIETIES / CLUBS AND ASSOCIATIONS ACCOUNT
MCB is authorized to open the accounts of the societies/clubs and associations,

These are non-trading organizations, formed for the promotion of culture, science,
education, recreational activities and charitable purposes etc. some of these
55
institution are registered under the Societies Registration Act, 1866, and are issued
a certificate of registration after they have been found fit for registration.
ISSUANCE OF CHEQUE BOOK
When a customer opens an account with the bank, he is provided with cheque book
for withdrawals from account. However, the first cheque book is given to the
customer only when all the required documents are checked. A cheque book
contains ten, twenty five, fifty or hundred leaves. The cheque book also carries a
requisition slip for the issuance of the new cheque book. This slip is duly filled and
singed by the customer. The signature of the customer is verified by the bank and
new cheque book is issued to the customer and serial numbers of the cheque are
duly entered in the book of the bank. Along with the signature, person should also
write his full name & address.
Usually only one cheque book is issued at a time, however big concerns who need
a number of cheque books at a time, may ask the bank to stock as number of
cheque books in their name and to point their name on these cheque books.
Bank debits the client’s account for excise duty of Rs.2.50/- per cheque and keeps
the cheque book ready for the customer, as on his advice.
The officer keeps and maintains the cheque book register Cheque book inventory
and cheque books issued are recorded in this register. The account number for
which the cheque book is issued and the number of leaves are also recorded in this
register when the cheque book issued an entry is passed in the cheque book issue
register.
In case of loss of cheque book or requisition slip on cheque book the customer has
to fill the Form No. 216-B to obtain a new cheque book.
56
UTILITY BILLS COLLECTION
I worked in the utility bills collection department as the MCB collects utility bills
on behalf of WAPDA, Sui Gas Companies, and Pakistan Telecommunication
T
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
H
bills a list is made on the form which is called Bills scroll form. One copy of the
I copy with the receipt of
scroll is with the bank for evidence whereas the original
R
the bills is sent to the billing department of the respective corporation. The bank
charge commission on the bills.
D
W
E
E
K
57
CASH MANAGEMENT
The most important department of MCB which deals in money (receiving deposits
F
at lower rates and lend them out at higher rates of interest). This department also
called as Chest Department and manager of it is called Cash Manager or Chest
Manager. In those branches where this department is not Oseparately existed, the
branch manager performs the duties of the Chest Manager.
R
T
H
The excess cash (More than its insured limit by the insurance company) of the
branches of the region is collected by the main branch. The main branch is also
bound to send its excess cash (more than its insured limit) to the State Bank of
W
Pakistan. No branch can have cash its safe more than its insurance at any time at
the time of closing cash, if it is so the manager will be responsible (not the
E office (exception to
insurance company) whether or not he informed to the regional
the limit which is insured for the day). E
K
New Notes and Prize Bonds are also part and parcel of the Cash Management.
Keys of the Safe lockers are with the three authorized persons each one of them is
responsible for cash as at the time of closing the cash the officers including Cash
officer presented and lock the safe after counting and scrutinize the cash. The cash
officer maintain its daily cash book with specification of notes (Bonds are also
recorded in the books in
relation with cash) and other vouchers, after being satisfied the manager
authenticates the books and vouchers regarding cash with stamp and signature. at
58
the end I would like to conclude that the cash management is being done in the
MCB very effectively.
ADVANCES DEPARTMENT
On my first day of Internship, Manager gives me some advice and told me the ways
to success. He told me that if some one wants to get success in banking career then
L
he must have the knowledge of the one major department of the bank. I.e.
A in advances department
Advances. So from very first day I was interested to work
S
and at my request bank offer me opportunity to work in this department last two
weeks
Bank adopts the following procedure in order to grant T

a loan. A customer applies
for a loan to the manager, who says him to give details of his property. The details
T
of the proposal and the photocopies of the document to the title of property are sent
to the legal advisor of bank. The legal advisor gives his legal opinion upon the
Wreceived from the legal
documents. The branch manager, in the light of the opinion
O
advisor, discusses the proposal with the advancing manager whether to give or not
the loan to the applicant. If manager allows granting the loan all the documents
along with request letter are sent to regional office for approval. In the regional
W
office the proposal is analyzed and if the office is satisfied a consent letter prepared
E
which is signed by the regional controller credit. This letter is sent to the branch
manager. After receiving it the manager finance reviews the consent letter, and
E DAC can be made only
prepares a DAC (Disbursement Authorization Certificate).
for people who have a bank account.
K
S
The following documentation is made for loan.
• An application or request letter for loan by the customer
59
• Legal opinion of the legal advisor of the bank (for the title deeds)
• Consent letter from the regional office
• Vetting Certificate (includes consent No., Facility whether fund based or

no-fund based, addresses etc.)
• Valuation of property any consultant or any panel of consultants approved

by State Bank of Pakistan
• Original title deed or sale deed
• Affidavit
• General power of attorney (made by advocate for the person/owner taking

loan for the company)
• Mortgage deed
• Mutation document made
• Verification of the property by the bank from the competent authority
• Hypothecation of stock certificate (Running is to be given against 75%

margin of stock)
• IB-25R Letter of hypothecation (duly signed by the party)
• IB-12 , DP Note/Promissory Note (Bank prepared itself, duly signed by the

party, revenue stamps of Rs. 100 put on it)
• IB-6R Agreement of finance mark up (Contract with party for taking mark
up on quarterly basis)
• IB-24 (used for title deed)
• IB-29 (used for guarantee from party)
• IB-26 (used for pledge of stock, margin is different for different goods)
• No. IB-28 (used for lien) etc.
60
After that Loan is sanctioned to the party fulfilling all the terms and conditions for
the purpose. The procedure given above is for both short and long term loans. The
thing which is most important here is that the banks first keeps in mind and
analyzes according to the rules prudential regulations of the State Bank of Pakistan.
Following finances in which Pattoki Branch is dealing.
• Running Finance
• Cash Finance (Against Pledge of Stocks of wheat & rice)
• Demand Finance (against Lien On DSC’s)
• Tractor Finance
• Foreign Bills Purchased
• Finance Against Foreign Bills
• Export Refinance I
• Export Refinance II
The exposure of Pattoki Branch is more than 500 Million.
I have learnt about the documentation required for the financing. Major focus on
the financing is depending on the account turnover and collateral offered.
While financing to the fresh client the credit proposal of the client is elevated to the
higher office. The bank’s official get the applications form the customer and
prepare the case for getting approval for the higher office.
SECURITIES HELD AGAINST FINANCING
FOR RUNNING FINANCE
Hypothecation of Stocks (50% Margin)
Collateral security (house, land, factory etc..)
61
FOR CASH FINANCE
Pledge of stocks (20 to 25% Margin)
Collateral security (house, land, factory etc..)
FOR DEMAND FINANCE
Lien over Defense Savings Certificate
Lien over Deposits (TDR)
Lien over Foreign Currency deposits
FOR TRACTOR FINANCING
Joint ownership of the Tractor
Collateral security (Agri land)
FOR EXPORT REFINANCE PART I
Lien over export bills drawn under firms order or contracts
Collateral security (house, land, factory etc...)
FOR EXPORT REFINANCE PART II
Hyp & Pledge of Stocks
Lien over EE statement
FOR FOREIGN BILLS PURCHASED

62
Lien over export bills drawn under LCs
FOR FINANCE AGAINST FOREIGN BILLS
Lien over export bills drawn under firm order and contracts
FOR BANK GUARANTEE
Cash Margin (As Per Approval of Finance)
63
Chapter – 4
FINANCIAL ANALYSIS
64
65
BALANCE SHEET
4.2 FINANCIAL ANALYSIS:

BALANCE SHEET
Financial Statement
Muslim Commercial Bank Limited
Balance Sheet
As on 31st December
2003 2004 2005 2006 2007
(Rupees '000)
A ssets
Cash and balances
with treasury banks 24,053,669 23,833,253 23,665,549 32,465,976 39,683,883
Balances with other
banks 1,302,592 5,708,323 1,469,333 6,577,017 3,807,519
Lending to financial
intuitions 10,430,450 10,965,297 9,998,828 21,081,800 1,051,372
Investments 128,276,842 67,194,971 69,481,487 63,486,316 113,089,261
Advances 97,200,179 137,317,773 180,322,753 198,239,155 218,960,598
Operating fixed assets 4,582,823 7,999,821 8,182,454 9,054,156 16,024,123
Deferred tax assets - - 191,967 172,373 -
Other assets 6,477,064 6,154,370 5,464,426 11,031,450 17,868,761
272,323,619 259,173,808 298,776,797 342,108,243 410,485,517
Liabilities
Bills payable 8,396,320 7,566,684 8,536,674 7,089,679 10,479,058
Borrowings 32,627,951 7,590,864 27,377,502 23,943,476 39,406,831
Deposits and Other
accounts 211,511,393 221,069,158 229,345,178 257,461,838 292,098,066
Sub-ordinated loans 1,599,360 1,598,720 1,598,080 1,597,440 479,232
Liabilities against assets- - - - -
subject to finance lease
Deffered tax
liabilities 707,306 269,499 - - 1,180,162
Other liabilities 6,372,596 6,525,999 8,611,600 11,171,496 11,722,493
261,214,926 244,620,924 275,469,034 301,263,929 355,365,842
Net assets 11,108,693 14,552,884 23,307,763 40,844,314 55,119,675

Represented by:
Share capital 3,065,273 3,371,800 4,265,327 5,463,276 6,282,768
Reserves 4,379,255 5,661,553 13,408,005 24,662,426 34,000,638
Unappropriateed
profit 281,636 165,208 210,662 5,530,973 5,130,750
7,726,164 9,198,561 17,883,994 35,656,675 45,414,156
Surplus on
revaluation of assets 3,382,529 5,354,323 5,423,769 5,187,639 9,705,519
11,108,693 14,552,884 23,307,763 40,844,314 55,119,675
66
PROFIT & LOSS ACCOUNT
PROFIT AND LOSS

Financial Statement
Muslim Commercial Bank Limited
Profit and Loss Account
As on 31st December
2003 2004 2005 2006 2007
(Rupees '000)
Markup/ return/ interest earned 10,369,994 9,083,863 17,756,232 25,778,061 31,786,595
Mark up/ return/ interest expense 2,932,693 2,057,640 2,781,468 4,525,359 7,865,533
Net mark up/ interest income 7,437,301 7,026,223 14,974,764 21,252,702 23,921,062
- Provision for dimininution in (150,000) (172,876) (98,982) 121,197 105,269
the value of investment
- Provision against loans and
advances 705,787 442,595 1,242,153 1,014,540 2,959,583
- Provision for potential lease862 1,200 - - -
losses
- Bad debts written off directly 224,432 8,771 1,184 47,000 199
781,081 279,690 1,144,355 1,182,737 3,065,051
Total non mark up interest4,531,811 4,232,988 5,413,071 4,991,416 6,011,291

income
11,188,031 10,979,521 19,243,480 25,061,381 26,867,302
Non mark up/interest expense
- Administrative expenses 6,587,369 7,244,200 6,459,490 6,482,592 5,022,416
- Restructuring expenses 878,704 - - - -
- Other proposition/write off 50,000 149,593 (72,740) 11,411 (3,743)
-O ther charges 59,034 41,864 178,841 66,708 540,594
Total non mark up/ interest
expense 7,575,107 7,435,657 6,565,591 6,560,711 5,559,267
Extra ordinary/unusual items - 513,852 340,598 - -
Profit before taxation 3,612,924 4,057,716 13,018,487 18,500,670 21,308,035
Taxation-Current year 1,212,579 1,555,764 4,611,359 5,701,443 6,442,356

-Prior years - - (149,763) 593,497 (1,294,473)
-Defferd 170,200 70,420 (365,524) 63,332 894,590
1,382,779 1,626,184 4,096,072 6,358,272 6,042,473
Profit after taxation 2,230,145 2,431,532 8,922,415 12,142,398 15,265,562
Unappropriate profit brought
forward 621,985 195,966 165,208 4,990,260 5,530,973
Transfer from surplus on 25,012 25,839 83,749 32,166 11,855
revaluation of fixed assets
646,997 221,805 248,957 5,022,426 5,542,828
Profit available for 2,877,142 2,653,337 9,171,372 17,164,824 20,808,390
appropriation
Basic/diluted earning per share7.28 7.21 21.36 23.40 24.30
67
RATIOS ANALYSIS
Liquidity Ratios
1. Current Ratio:
The current ratio measures the number of items of the firm s current assets
cover its current liabilities.
Current ratio=current asset/ current liabilities
Current Ratio
Years 2003 2004 2005 2006 2007
Percentage 102.81% 103.02% 106.80% 111.00% 110.00%
Current Ratio
112.00%
110.00%
108.00%
106.00%
Current Ratio
104.00%
102.00%
100.00%
98.00%
2003 2004 2005 2006 2007
Analysis of current ratios of MCB:
Current ratio shows a firm’s ability to cover its current liabilities with its current
assets. It is obtained by dividing current assets of the firm by its current liabilities.
Current ratio does not show the true picture of the organization. Sometimes it
shows that organization has ability to pay its obligations but its profitability ratio
tells that it has not ability to pay its obligation.
68
2. Quick ratios:
Quick ratio shows a firm’s ability to meets it current liabilities with its current assets
excluding inventories and prepaid expenses, which are least liquid portion of the
current assets. Since banks don’t have any sorts of inventories, therefore only prepaid
expenses are subtracted from the current assets of the bank.
Quick ratio= current assets-inventories/current liabilities
Years 2003 2004 2005 2006 2007

Percentage 52.33% 74.77% 80.74% 89.06% 76.94
100
90
80
70
60
50
40
30
20
10
0
2003 2004 2005 2006 2007
69
Cash and cash equality/total assets
Cash and equality are the most liquid assets. The cash ratio shows the
proportion of the assets held in the most liquid possible form.
It is used to check the liquidity of the organization.
Years 2003 2004 2005 2006 2007

Percentage 9.31% 11.40% 8.41% 11.41% 10.60%
Cash ratio
12.00%
10.00%
8.00%
6.00% Cash ratio
4.00%
2.00%
0.00%
2003 2004 2005 2006 2007
Analysis of cash ratios of MCB:

Higher cash ratio also shows the higher rate of satisfaction like other liquidity ratios.
Cash ratio is more important liquidity ratio. In 2003 cash ratio was 9.31%, it
increased very quickly in 2004 by 11.40%, but in 2005 it declined by 2.99. 2006 was
the best year as it shows 11.41% ratio, In 2007, it declined by 10.60%.
In short working capital and cash ratio are more realistic and more important ratios, which
describe the true picture of any organization. In MCB 2006 is the year in
70
which the liquidity ratios are shown better than other years. So 2006 is mentioned a
good year of the Muslim Commercial Bank.
Leverage Ratios:
Leverage ratios of a firm show the extent to which a firm finances its operation
from the outside sources and money. The leverage can be determined from analysis
of owner equity in business, total liabilities, current and long-term liabilities, long-
term assets and total assets of the business. Following are the common leverage
ratios to show the degree of leverage the bank is using to finance its activities and
assets by liabilities.
5. Debt-To-Total-Assets Ratio
It shows that how much assets have been financed by liabilities and it also shows
the margin of protection available for the creditors.
Debt ratio
Debt ratio=Total debt/ Total assets
Debt ratio
Years 2003 2004 2005 2006 2007
Percentage 95.92% 94.38% 92.20% 88.06% 86.57%
Debt ratio
100.00%
95.00%
90.00% Debt ratio
85.00%
80.00%
2003 2004 2005 2006 2007
71
Analysis of leverage ratio:
Financial leverage is the extent to which a firm is financed with debt. The
amount of the debt a firm uses has both positive and negative effects. The more
debt the more it is that the firm will have trouble meeting its obligations. Thus
the more debts higher profitability of the financial distress and even bankruptcy.
Further more the chance of the financial distress and debt obligation generally
may create conflicts of interest among the stakeholders. In Muslim Commercial
bank, year 2003 was heavily financed because debt was the major source of
financing in 2003. Debt also had lower transaction cost. But better year was 2007
because Muslim Commercial Bank in this year was not heavily financed and had
not trouble to pay its obligations.
6. Debt-To-Equity Ratio:
Debt-to-Equity ratio shows the extent to which debt financing is used

relative to equity financing. Debt equity is calculated by dividing total
liabilities of the bank by the total owner equity.
Total debt divided by shareholders equity

Debt to equity ratio=Total debt / shareholders equity or Debt ratio/1-
Debt ratio
Debt to equity ratio

Years 2003 2004 2005 2006 2007
Percentage 85.22 72.55 64.58 55.14 56.56
100
80
60
40
20
0
2003 2004 2005 2006 2007
72
Analysis of the Debt to equity ratio:

The debt equity ratio is a simple rearranged of the debt ratio. Debt equity ratio shows
how the firm’s stockholder bears the risk of the firm. Greater the debt greater risk for
the firm s shareholders .In 2006 risk for the share holders was very low as compared
to the other years decrease debt to equity ratio was very small on the contrast risk was
very high in 2003 because of heavy financing
73
8 Interest Coverage Ratio:
Interest coverage ratio shows the ability of a firm to cover up its interest charges on the
income before interest and taxes. The ratio is obtained through dividing earning before
interest and taxes (EBIT) of the bank by its interest expenses.
EBIT divided by interest expense

Interest coverage ratio=EBIT/Interest expense
Interest coverage ratio

Years 2003 2004 2005 2006 2007
Percentage 107.85% 197.20% 468.04% 408.82% 270.90%
500.00%
400.00%
300.00%
200.00%
100.00%
0.00%
2003 2004 2005 2006 2007
Analysis of the interest coverage ratio:
Coverage ratio shows the number of the times a firm can recover or meet particular
financial obligations. The interest coverage ratio, which is also called the time interest
earned ratio, measure the coverage of the firm s interest expense.2005 is the best
comparative better coverage of its interest and fixed charged obligations. After 2005,
2006 is better than other three but 2003 is worst than all.
University of the Education, Okara Campus

74
Profitability Analysis:
Profitability ratios are of two types those showing profitability in relation to sales and
those showing profitability in relation to investment. Together, these ratios indicate
the bank’s overall effectiveness of operation. It creates a relationship between income
statement and balance sheet of the firm. Following are the some typical profitability
ratios used to analyze the profits of firms.
9. Cost To Sales Ratio:
Cost to sales ratio determines the cost incurred in generating the sales of the bank. The net
sales of banks are its interest/mark up earned while costs of sales are its interest/mark up
expense incurred. The ratio is obtained by dividing cost of sales by net sales. The following
table shows the cost of sales of MCB over five years of operations.
Interest or mark up expensed divided by interest or mark up earned
Cost to sales ratio

Years 2003 2004 2005 2006 2007
Percentage 28.28% 22.65% 15.66% 17.56% 24.74%
Cost to sales ratio
30.00%
25.00%
20.00%
15.00% Cost to sales ratio
10.00%
5.00%
0.00%
2003 2004 2005 2006 2007

75
Cost to sales ratio shows the cost incurred in generating the sales of the bank. In 2003
the cost to generate the sales is higher with respect to other financial years. After 2003,
2007 had also higher cost. Year 2005 is best one for MCB but 2003 is worst than all.
10. Return On Investment:
Return on investment measure the ratio of profit generated in relation to the total assets
employed. Net profit after tax divided by total assets gives the return on investment.
Return on investment is an indicator of how profitable a company is. By using this ratio
annually, we compare business' performance to industry's norms.
Net profit after tax divided by Total assets
Return on investment= Net profit after tax/Total assets
Return on investment
Years 2003 2004 2005 2006 2007
Percentage 0.82% 0.94% 2.99% 3.55% 3.72%
4.00%
3.50%
3.00%
2.50%
Return on investment
2.00%
Series2
1.50%
1.00%
0.50%
0.00%
2003 2004 2005 2006 2007
Analysis of the return on investment ratio
Profitability ratios focus on the profit generating performance of the firm. These ratios
measure how effectively the firm is generating its profit. They reflect its performance, its
risk ness and the effect of leverage. Muslim commercial bank was heavily financed in
2007 that financing was used in investment that’s why return on investment is high in
2005 as compare to the other years.

76
11. Return On Equity:
Return on equity is another summary measure of overall bank’s performance. It can

be calculated by dividing the net profit by the owner equity. This ratio tells us the
earning power on shareholder’s book value investment and is frequently used in
comparing two or more firms in any industry. A high return one quite often reflects
the firm’s acceptance of strong investment opportunities and effective expense
management.
Return on Equity
Years 2003 2004 2005 2006 2007
Percentage 72.76% 72.11% 209.18% 222.25% 242.98%
Return on equity
300.00%
250.00%
200.00%
150.00% Return on equity
100.00%
50.00%
0.00%
2003 2004 2005 2006 2007
Analysis of Return on Equity of MCB:

Return on equity is an indicator of how profitable a company is. Use this ratio annually to
compare your business' performance to your industry's norms. In year 2007, MCB has a
strong investment opportunities’ which reflects a high return, after this 2006 and 2005 also
depicts a high return, whereas, 2003 and 2004 are not satisfied.

77
12. Market value ratios:
1-P/E ratio
Price earning ratio=Market price per share/ earning per share
Price earning ratio

Years 2003 2004 2005 2006 2007
Percentage 706.04% 814.15% 785.58% 1051.71% 1645.88%
Price earning ratio
2000.00%
1500.00%
1000.00% Price earning ratio
500.00%
0.00%
2003 2004 2005 2006 2007
Price earning ratio of MCB bank is high in 2007 as compared to the other years. Because the
market price per share is high in 2007. Because in this year MCB generate an excellent
profit. 2006 is also good but 2003 is worst all of them.

78
13 Earning yield:
Earning yield=Earning per share/Market price per share
Earning yield
Years 2003 2004 2005 2006 2007
Percentage 14.16% 12.28% 12.73% 9.51% 6.08%
Earning yield
16.00%
14.00%
12.00%
10.00%
8.00% Earning yield
6.00%
4.00%
2.00%
0.00%
2003 2004 2005 2006 2007
Analysis of the earning yield:

Earning yield of MCB bank is high in 2003 as compared to the other years. Because the
market price per share and earning per share is low in 2003. Earning yield in 2004 and 2005 is
also high. Earning yield is unsatisfied in 2007.

79
14 Earning Per Share:
This ratio determines the amount of income that has been earned on each share
outstanding. Net profit after tax divided by total numbers of shares outstanding gives the
amount earned on each share.
Net profit after tax divided by total number of shares outstanding
Earning per share=Net profit after tax/ Total no of shares
Earning per share

Years 2003 2004 2005 2006 2007
Percentage 7.28 7.21 21.00 22.23 24.30
30
25
20
Earning per share
15
Series2
10
0
2003 2004 2005 2006 2007

80
Chapter – 5
HORIZONTAL AND
VERTICAL ANALYSIS

81
In trend analysis we done two types of analysis, these are
Horizontal Analysis
It is conducted by setting consecutive balance sheet, income statement or statement of cash

flow side-by-side and reviewing changes in individual categories on a year-to-year or
multiyear basis.
A comparison of statements over several years reveals direction, speed and extent of a
trend(s). The horizontal financial statements analysis is done by restating amount of each
item or group of items as a percentage.
Vertical Analysis
Like horizontal analysis this can also done for balance sheet and income statement. Here
we assign 100% value to any key item of balance sheet or income statement and then see
portion of other items in this percentage.

82

83
Particulars 2002 2003 2004 2005

ASSETS
Cash 100% 134% 133% 132%
Balance with other banks 100% 60% 264% 68%
Lending to financial institutions 100% 30% 32% 30%
Investments_ net 100% 143% 75% 78%
Advances – net 100% 123% 174% 228%
Operating fixed assets 100% 120% 209% 214%
Other assets_net 100% 73% 69% 72%
Deferred tax assets_net 100% 0% 0% 191967%
100% 116% 110% 127%
LIABILITIES
Deposits and other accounts 100% 116% 121% 126%
Borrowings from financial inst. 100% 148% 35% 125%
Bills payable 100% 134% 121% 136%
Other liabilities 100% 70% 72% 95%
Deferred tax liabilities 100% 38% 15% 0%
Sub ordinated loans 100% 99.9% 99.9% 99.8%
Liabilities against assets 100% 0% 0% 0%
100% 117% 109% 123%
NET ASSETS 100% 94% 124% 199%
REPRESENTED BY
Share capital 100% 115% 126% 160%
Reserve 100% 145% 187% 443%
Unappropriated profit 100% 45% 26% 34%
100% 122% 146% 283%
Surplus on revaluation of assets 100% 62% 99% 101%
100% 94% 124% 199%

84
2002 2003 2004 2005
250%
200%
150%
100%
50%
0%
Total Assets Total Liabilities Equity
The horizontal analysis of the balance sheet of the bank over all give the positive trend
.The result of the balance sheet depict that there is a constant increasing trend in cash, total
assets, total liability and equity. There is extraordinary high trend in 2005 in all factors of
balance sheet as compare to 2002.
The trend of cash is increasing to upward with 32%. The trend of Total asset is also
increasing to upward with 27%, and the trend of total liabilities is also increasing with 23%
to upward. Equity is increased by 99%.

85

86
Particulars 2002 2003 2004 2005

Mark-up/return/interest earned 100% 67% 59% 115%
Mark-up/return/interest expensed 100% 48% 34% 46%
Net mark-up/interest income 100% 80% 75% 161%
Provision against non-performing loans and 100% 705787% 442575% 1242153%
advances
Provision for diminution in the value of investments 100% -150000% -172876% -98982%
Bad debts written off directly 100% 31% 1.2% 0.16%
Provision for potential lease losses 100% 168% 234% 0%
100% 108% 39% 159%
Net mark-up/interest income after provisions 100% 77% 79% 161%
NON MARK-UP/INTEREST INCOME
Fee commission and brokerage income 100% 115% 220% 270%
Dividend income 100% 125% 127% 161%
Income from dealing in foreign currencies 100% 66% 193% 106%
Other income 100% 149% 116% 217%
Gain on Investments 100% 532% 209% 226%
Gain / Loss on trading in government securities 100% 0% -11440% -851%
Total non-mark-up/interest income 100% 175% 163% 209%
100% 100% 92% 172%
NON MARK-UP/INTEREST EXPENSES
Administrative expenses 100% 87% 96% 87%
(Reversal) / Other provisions 100% 50000% 149593% -72740%
Other charges 100% 4496% 3189% 13468%
Total non-mark-up/interest expenses 100% 94% 92% 81%
Compensation on delayed tax refund 100% 0% 513852% 340596%
PROFIT BEFORE TAXATION 100% 117% 130% 420%
Taxation – current year 100% 79% 102% 301%
Prior years 100% 0% 0% -149763%
Deferred 100% -101% -42% 216%
PROFIT AFTER TAXATION 100% 128% 140% 513%
Unappropriated profit brought forward 100% 219% 69% 58%

Transferred from surplus on revaluation of fixed 100% 41% 42% 137%
Assets
Profit available for appropriation 100% 126% 116% 402%
APPROPRIATIONS
Transfer to
Statutory reserve 100% 128% 146% 256%
General reserve 100% 1000000% 800000% 5500000%
Capital reserve 100% 0% 0% 0%
Reserve for issue of bonus shares 100% 77% 84% 213%
Interim cash dividend Rs 1.75 per share 100% 69% 51% 97%
Interim cash dividend Rs 1.50 per share 100% 383159% 50577% 639799%
100% 157% 156% 541%
University
Unappropriated profit carried forward of the Education,
100% Okara
45% Campus
26% 34%
87
2002 2003 2004 2005
180%
160%
140%
120%
100%
80%
60%
40%
20%
0%
Mark up Income Mark up Net mark up Net mark up after
Expense before provision provision
2002 2003 2004 2005
600%
500%
400%
300%
200%
100%
0%
Net Profit before tax Net Profit after tax

88
According to horizontal analysis of profit and loss account there is increasing trend. In
2005 there is increase in all factors such as interest income interest income interest income
after provision and profit before and after tax because the trust of people on banks is
increasing day by day. The increase in profit in 2005 is almost 5 times as compare to 2002.

89

90
Particulars 2002 2003 2004 2005

ASSETS 100% 100% 100% 100%
Cash 8% 9% 9% 8%
Balance with other banks 0.92% 0.5% 2.2% 2.8%
Lending to financial institutions 14% 3.8% 4% 3.3%
Investments_ net 38% 47% 26% 23%
Advances – net 34% 36% 53% 60%
Operating fixed assets 1.08% 1.3% 2% 27%
Other assets_net 4% 2.4% 3.8% 0.4%
Deferred tax assets_net 0% 0% 0% 0%
100% 100% 100% 100%
LIABILITIES 100% 100% 100% 100%
Deposits and other accounts 82% 81% 90% 83%
Borrowings from financial inst. 10% 12.5% 3% 10%
Bills payable 2.8% 3.2% 3% 3%
Other liabilities 4% 2.4% 2.6% 3.4%
Deferred tax liabilities 0.48% 0.3% 0.8% 0%
Sub ordinated loans 0.72% 0.6% 0.6% 0.6%
Liabilities against assets 0% 0% 0% 0%
100% 100% 100% 100%
NET ASSETS 100% 100% 100% 100%
REPRESENTED BY
Share capital 23% 28% 23% 18%
Reserve 26% 29% 39% 58%
Unappropriated profit 5% 3% 1% 1%
54% 70% 63% 77%
Surplus on revaluation of assets 46% 30% 37% 23%
100% 100% 100% 100%
Assets
Cash and balances

w ith treasury banks
Deferred tax assets Balances w ith other
Operatig fixed
banks
assets
Other assets
Lendings to financial
institutions
Investments

Advances
91
Deferred tax
Liabilities against liabilities
Unappropriated
assets subject to
Other liabilities profit
finance lease Reserves
Share capital Borrowings from

Bills payable
Sub-ordinated loans financial institutions
Deposits and other

accounts
INTERPRETATION
In balance sheet of bank the most important item is earning assets. There are four earning
assets. Bank has strong earning assets like advances investments and lending to financial
institutions has major percentage in of assets of bank. In liability and equity analysis the
Borrowings from financial institutions and deposits have major portion and reserve and
share capital has major portion in equity

92

93

94
Particulars 2002 2003 2004 2005

Mark-up/return/interest earned 100% 100% 100% 100%
Mark-up/return/interest expensed 39% 28% 23% 16%
Net mark-up/interest income 61% 72% 77% 84%
Provision against non-performing loans and 0% -1.44% -1% -0.55%
advances
Provision for diminution in the value of 0% 7% 5% 7%
investments
Bad debts written off directly 4.6% 0.008% 0.01% 0%
Provision for potential lease losses 0.003% 2.2% 0.09% 0.006%
5% 8% 4% 6%
Net mark-up/interest income after provisions 56% 64% 72% 78%

95
Particulars 2002 2003 2004 2005

NON MARK-UP/INTEREST INCOME 100% 100% 100% 100%
Fee commission and brokerage income 35% 23% 47% 45%
Dividend income 11% 8.2% 9% 9%
Income from dealing in foreign currencies 19% 7.3% 12% 10%
Other income 15% 45% 14% 16%
Gain on Investments 30% 16.5% 19% 19.9%
Gain / Loss on trading in government securities 0% 0% -1.1% 0.01%
Total non-mark-up/interest income 100% 100% 100%% 100%%
NON MARK-UP/INTEREST EXPENSES 100% 100% 100% 100%
Administrative expenses 93% 87% 97% 98%
(Reversal) / Other provisions 6.5% 12.4% 2% -1%
Other charges 0.5% 0.6% 1% 3%
Total non-mark-up/interest expenses 100% 100% 100% 100%
INTERPRETATION
In vertical analysis of profit and loss account the interest expense has decreasing trend from
2002 to 2005 but in 2005 there little bit increase in net interest income but almost have
same trend. According to this analysis fee, commission and brokerage income has some
worth in our income statement its almost one fourth or one fifth of our interest income and
it has increasing trend.
The administrative expenses are also increasing from 2002 to 2005 but overall management
is able to reduce expenses, so due to which there is continuous increase in profit before and
after tax.

96
Chapter – 6
SWOT ANALYSIS

97
SWOT ANALYSIS
The overall evaluation of an organization’s strengths,
weakness, opportunities & threats is called SWOT
Analysis. It is a strategic planning tool used to evaluate
the strengths, weakness, opportunities & threats and
involves specifying the objective of the organization and
identifying the internal and external factors that are
favorable and unfavorable to achieving that objective. A
SWOT analysis is designed to help an organization &
provide you with information that helps in making decisions about your future. Before
conducting a SWOT analysis, 1st you defining and agreeing upon an objective.The key
steps in conducting a SWOT analysis include:
1. Brainstorming lists of strengths, weaknesses, opportunities & threats

2. Take the list of ideas and reduce them
3. Review each idea separately and discuss each of these ideas.
4. Remember that the ideas with SWOT analysis is to gain a Better Understanding of the
any organization’s strengths and weakness.
5. In final step, categorize those steps which are helpful for the org. such as strength in
internal environment & opportunities in the external environment, while categorize
those steps which are harmful for the org. such as weaknesses in the internal
environment & threats in the external environment. We avoid & exploit these two
factors.

98
STRENGTH
 Promoting Savings and Investments

 Not excellent but good faculties are given to employees.
 For maintaining the employees, the MCB Commercial Bank provides the facility
of health, employee relations….etc
 All staff members are well mannered in communications, & the ethics.
 Abundance of manpower.(Permanent & contingent employees )
WEAKNESS
 Centralization Organization Structure
 Information system needed for cards may not be compatible with legacy systems.
 The big problem is liquidity risk which reflects the corporations’s inability to rise
funds.
OPPORTUNITEIS
 Large market potential.
 Favorable demographic changes in society
 All the opportunities of the 21st century are to be availed in the information
technology. Information technology is the future of this dynamic world. Therefore
MCB should emphasize much on IT, especially on E-Banking. Bank can design a
universal account like other foreign banks, to enhance online facilities.
 The bank is large & expanding day by day because customer accepts it. Its network
expanded to 240 branches.
 The MCB Commercial Bank involves in creating public relations that will increase
the profitability of the bank. Often, public relations are conducted through the
media that is, newspapers, T.V, magazines, internet….etc that’s attract a large
number of customers.

99
 The MCB Commercial Bank can increase the extensive advertisements of new
products, services, vacancies, in order to increase customers & heir competent
employees.
THREATS
 MCB is facing a strong competition by its competitors, Business of all these Banks are
growing at very high pace.
 Huge competition with local and foreign banks
 Rapid technological advancements have become challenge for MCB Bank Ltd.

100
Chapter –7
CONCLUSIONS
RECOMENDATIONS

101
CONCLUSIONS
The time spent for the project at MCB Bank Limited were no doubt a source of great
Learning for me about many things particularly working of different departments in bank.
This practical project does help me attain loads of knowledge about the predominant
Functions performed by banking companies, but also impart a lot of training as regards the
set of behavioral traits which distinguish a particular person from the rest of the lot in a
Professional environment.
MCB Bank is newly born financial institution. Yet it is backed by the powerful
international investors. It is not hidden from anyone the banking sector of Pakistan
experienced tremendous growth over the couple of years. It is expected the same trend will
continue as the middle class is being empowered in the country and there are many areas
where investments can be employed depending on the country’s political and economic
situation. Despite there is a meltdown in the global economy and the foreign investment
which is shifting away from Pakistan, there is still hope that in the near future not much
people will loose the opportunity to reap the benefits from the banking sector with
flourishing prospects. In the micro sense the bank organization is able to go further ahead
and cross the further grounds of progress. Its merger with the PICIC, and its other asset
management and insurance arms with a larger branch network plus great assets worth can
be very profitable to it. The MCB Bank should try to finance its assets not with the
liabilities but by the issuance of right shares. It should also try to reduce costs. The
emphasis on consumer and SME financing should also be enhanced as these can be very
profitable areas for the bank. As the Stare Bank is pursuing tight policies the MCB should
keep itself always ready to deal with the squeezing policies.

102
RECOMMENDATIONS
During my employment at MCB Bank Ltd I observed some areas that need attention for the
management like:
Assessment of performance of employees:

There are no proper criteria for assessment of performance of employees and most of the
time it is on the personal judgment of the manager who forward the assessment sheets of all
employees to area office for their promotions.
Problem with information system:

MCB Bank Ltd information system is not very good and most of the time online
transaction service of the Bank network is down, which occurs to be a big issue in smooth
working, management really needs to work on it.
No rotation of employees from department to department:
There is not any rotation of employees within departments and cross departments.
Therefore, the top management should immediately start thinking in terms of rotating the
employees in various departments, as this alter work force into human capital.
Implementation of management policy:

MCB Bank Ltd Limited should develop a very serious management policy to attract multi
MCB corporations as its clients. This action, if actualized, would not only prove to be
highly profit generating, but it would also contribute a lot towards MCB Bank Ltd’s image
building.

103
Advertisements/marketing:
Bank needs to use more marketing channels to make public aware of its products and
services. In the presence of intense competition MCB Bank Ltd has to realize the
importance of marketing.
Distribution of work:
Management should distribute work equally among different employees. Some of the
employees are overburdened while some sections are overstaffed.
Staff training & improvement in processes:

To keep staff well equipped and updated with enormous changes in current banking
environment, training are an important part of survival. Especially for the customer service
staff and phone banking department as they are at front end and need more efficient
performance for having satisfied customers.

104
References
1. www.howstuffworks.com
2. www.sbp.org.pk
3. www.mcb.pk.com
4. MCB information booklet. 30/06/2009
5. Schedule of bank charges and services.
6. www.kse.com.pk
7. MCB bank’s annual report. (2008)
8. quarterly report of MCB bank ( march 31, 2009)
9. www.wikipedia.com

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INTERNSHIP REPORT ON MCB BANK LIMITED

IN THE NAME OF ALLAH, THE BENEFICENT, THE MERCIFUL

I dedicate my internship report of MCB Bank Limited to my

submitting my internship report, at the end of my first pragmatic experience and

internship an adventurous outwit.

This report is an upshot of my internship in United Bank Limited, Main Branch

Although, a derisory period of my internship is not enough to learn the complex

OBJECTIVE OF STUDYING THE ORGANIZATION

 To observe the finance system of the bank, to know how banks

 To implement theoretical knowledge in practical field.

 To understand the management system of the bank which consists

HISTORY OF THE MCB BANK LIMITED

CHALLENGING AND CHANGING THE WAY YOU BANK

To become the preferred provider of quality financial services in our

Our Core Values

EMPLOYEE RESPECT & DIGNITY

TEAM BASED APPROACH

QUEST FOR QUALITY

GOOD CORPORATE CITIZENSHIP

 Baluchistan (3%) respectively

Business volume of Muslim Commercial Bank:

Rupees in million 2003 2004 2005 2006 2007

Operating profit 6,656 6,746 13,830 20,069 20,856

Profit before taxation 3,612 4,057 13,018 18,500 21,308

Profit after taxation 2,230 2,431 8,922 12,142 15,266

Shareholders fund 11,108 14,552 23,307 40,844 55,120

Deposits from customers 211,511 221,069 229,345 257,461 292,098

Investments 128,276 67,194 69,481 63,486 113,089

Advances to customers 97,200 137,317 180,322 198,239 229,732

Total assets 272,323 259,173 298,776 342,108 410,485

Information per ordinary shares

Earnings (Rs) 7.28 7.21 21.36 23.40 24.30

Cash dividend (Rs) 1.25 1.50 1.50 2.00 2.50

Dividend payout ratio (%) 37.80 34.65 19.22 32.61 51.45

Capital adequacy ratio (%) 0.00 9.64 12.54 18.65 17.88

Total numbers of employees = 9946

STAFF OF THE BRANCH CONSISTS OF 13 MEMBERS

Branch Manager 01 Grade I

Operation Manager 01 Grade I

Customer Service Officer 01

Credit Manager 01 Grade III

General Banking Officer 02 Grade III

Cashier 01 Grade III

PRODUCTS AND SERVICES

MCB ATM Services

(a) MCB ATM Card

MCB ATM Regular Card

MCB ATM Gold Card

 Profit is paid on customers account on a half yearly basis

 Cash deposit and withdrawal facility at hundreds of MCB

 Withdraw cash through Pakistan’s largest ATM network.

 Customer can use an account to pay bills 24 hours a day, 7 days a

 Low average balance is required. Unlimited free of cost transaction

A MCB term deposit scheme is also valuable to suit customer’s requirement.

deposit transactions (either cash or through clearing) and 2 withdrawals (cash or

Foreign Currency Accounts

This account offers very attractive returns on Foreign Currency investment.

 Unlimited transaction facility.

 Profit credited to account on a half yearly basis.

 Account holder can avail a credit facility up to 75% of the total

A foreign currency account can be opened at any of MCB foreign exchange

SMART CARD / DEBIT CARDS

It provides the conventional credit card services in a manner that is superior in