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INTERNSHIP REPORT

ON

MUSLIM COMMERCIAL BANK Ltd.

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SITARA MUZZAMIL
MBA
MBS-08-13

Sahiwal Campus
Department of Business Administration
Bahauddin Zakariya Universityc
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It is the requirement of the MBA course  


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all students of MBA have to spend six or eight weeks in any organization to get practical
exposure and to get familiarized with the ways to live in the organizational environment which is
dramatically different from the educational environment. That two months period called
³Internship Period ³, if spent properly and sincerely, enables the students to be more confident,
more knowledgeable, more responsible and, above all, more committed to its work in the
practical field. I have also been assigned to do internship of eight weeks period in MCB Kot
Farid Branch Sahiwal.

It has enabled me to understand the practical scenario and sharpen our decision
making power and utilizing the resources in an effective manner, so that our resources generate
maximum profit.

In preparing this report, I have put all of my best efforts and tried my level best to give
maximum knowledge. Despite of my all the coherent efforts, I do believe that there will always
be a room for improvement in the efforts of learner like me.

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All praises to almighty  and our holy prophet 


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courage and patience for completion of this final report.

I wish to acknowledge my gratitude to my inspiring )+  for their endless their
persistence, support and encouragement, and for providing me a lifetime opportunity to work
with Muslim Commercial Bank

I am also very thankful to Muslim Commercial Bank Ltd. Kot Farid Branch, Sahiwal
and the Branch Manager ,c- c)  who gave me opportunity to work with experienced
persons in their organization.

I am also thankful to my parents, family and friends that continually offered encouraging
support « « «

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³PREFACE´ .......................................................................................................... 2
³ACKNOWLEDGEMENT´ .................................................................................. 3
³TABLE OF CONTENTS´ ................................................................................... 4
³EXECUTIVE SUMMARY´ ................................................................................ 6
INTRODUCTION OF SECTOR ........................................................................... 8
THE MUSLIM COMMERCIAL BANK LIMITED .............................................11
³VISION STATEMENT´ .....................................................................................12
³MISSION STATEMENT´ ..................................................................................12
³HEAD OFFICE´ .................................................................................................13
³CIRCLE OFFICE´ ..............................................................................................14
³MANAGEMENT OF ORGANIZATION´ .........................................................15
³ORGANIZATIONAL STRUCTURE´ ................................................................16
³INFORMATION ABOUT BRANCH´ ...............................................................20
³GENERAL BANKING´ .....................................................................................21
³DEPARTMENTS WHERE INTERNSHIP WAS CARRIED OUT´ ...................22
³OPERATIONS DEPARTMENT´ .......................................................................22
³CLEARING DEPARTMENT´ ...........................................................................29
³REMITTANCE DEPARTMENT´ ......................................................................33
³OTHER DEPARTMENTS´ ................................................................................37
³CASH DEPARTMENT´ .....................................................................................37
³ACCOUNTS DEPARTMENT´ ..........................................................................39
³TECHNOLOGY DEPARTMENT´ ....................................................................40
³ADVANCES DEPARTMENT´ ..........................................................................42
³FINANCIAL ANALYSIS OF MCB´ .................................................................47
³RATIO ANALYSIS´ ..........................................................................................47

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ADVANTAGES OF RATIO ANALYSIS: ...........................................................48


LIQUIDITY RATIOS ...........................................................................................48
DEBT RATIO.......................................................................................................49
MARKET RATIOS ..............................................................................................50
³VERTICAL ANALYSIS´ ...................................................................................57
³HORIZONTAL ANALYSIS´ .............................................................................60
³SWOT ANALYSIS´ ...........................................................................................64
³MCB¶s SWOT ANALYSIS´ ..............................................................................65
³STRENGTHS´ ....................................................................................................65
³WEAKNESSES´ ................................................................................................68
³OPPORTUNITIES´ ............................................................................................69
³THREATS´ .........................................................................................................70
³PEST ANALYSES´ ............................................................................................71
³APPLICATION OF CLASS ROOM LEARNING´ ............................................73
³WHAT I HAVE LEARNT IN MCB´ .................................................................74
³SUGGESTIONS & RECOMMENDATIONS´ ...................................................75
³IF I WERE MANAGER AT MUSLIM COMMERCIAL BANK´ ......................77
³REFERENCES & RESOURCES´ ......................................................................78
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The banking structure in Pakistan comprises of the following types, State Bank of
Pakistan, Commercial Bank of Pakistan; Exchange Banks, Saving banks, Cooperative banks,
Specialized credit institutions. The state bank of Pakistan is the Central bank of the country and
was established on July 01, 1948. The network of bank branches now covers a very large
segment of national economy. The State Bank of Pakistan issues the shares of these periodically.
Bank employees and other common peoples can also purchase these shares and earn profit. In
1956, MCB transferred its Registered office to Karachi, where the Head Office is presently
located. In April 1991, MCB became Pakistan¶s first privatized bank.

The corporate branch at Shahrah-e-Faisal Karachi (SFK) branch is the corporate branch
of MCB in Karachi. The bank is using SWIFT for transfer of information about imports and
exports. MCB SFK branch has Currently Following three Departments General Banking
Department, Advances Department & Foreign Exchange Department.

To open an account the customer has to meet the general banking manager with an
introducer. The procedure begins with the punching of account opening form to the customer file
i.e. customer¶s master file. Before closing any account, bank send letter to the account holder for
informing him that his account is going to be closed. There is need an approval form higher
authority to close any account. Current deposits are those which are payable to bank whenever
demanded by the customer. Bank does not pay any profit on current deposits. The following are
the financial products/services of MCB Malay Mail Scheme, PLS Account, Saving 365 Account,
Capital growth certificate scheme, Fund Management Scheme, Khushali Bachat Account, Term/
Fixed Deposits and others like night banking, credit cards, traveler cheques.

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In remittance department like any other bank MCB also have instruments for transferring
of money, Telegraphic Transfer, Mail Transfer. In cash department both deposits and
withdrawals go side by side. This department works under the accounts department and deals
with cash deposits and payments. This department maintains the following sheets, books, and
ledger of account cash received voucher sheet, cash paid voucher sheet, Paying-in-slip, Cheque
book, Cash balance book. The clearing in Karachi at MCB or other banks is being done through
NIFT (National Institute of Facilitation Technology).

Bank provides this facility to the people who need advance money to meet their
requirement. Party dealing with other banks financial condition of borrower business and as a
first step credit proposal is being made. MCB provides advances, which are two types. Secured
Advances, Unsecured Advances. MCB usually classified advances in to following types
Agricultural Advances, Commercial Advances

Industrial Advances. Commercial Advances are of following types

Demand Finance, Cash Finance, Foreign bills purchased, Finance against imported
goods, Finance against foreign bills, Export Refinance Part I (Pre Shipment) & others. Banks
Agriculture division deals with the agriculture advances. Bank provides the Agriculture
Advances in order to enhance and support the agriculture sector of the country. Farm Credit &
Non Farm Credit.

In foreign exchange, MCB is dealing Foreign Currency Accounts, Foreign Remittances,


and Foreign Bills for Collection, Imports & Exports

Foreign currency accounts & the foreign currency department deals with the following
types of accounts, Dollar Khushali account, Current account, Saving bank account, Term
deposit, Prime Currency Scheme. Foreign accounts are convertible on floating rate available to
the bank. Letter Of Credit facility is being provided by MCB in foreign exchange.

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The word 'Bank' is said to have been derived from the words Bancus or Banque or Bank.
This history of banking is traced to as early as 2000 B.C. Banking in fact is primitive as human
society, for ever since man came to realize the importance of money as a medium of exchange,
the necessity of a controlling or regulating agency or institution was naturally felt. The priests in
Greece used to keep money and valuables of the people in temples. These priests thus acted as
financial agents. The origin of banking is also traced to early goldsmiths. They used to keep
strong safes for storing the money and valuables of the people. The first stage in the development
of modern banking, thus, was the accepting of deposits of cash from those persons who had
surplus money with them.

The goldsmiths used to issue receipts for the money deposited with them. These receipts
began to pass from hand to hand in settlement of transactions because people had confidence in
the integrity and solvency of goldsmiths. When it was found that these receipts were fully
accepted in payment of debts; then the receipts were drawn in such a way that it entitled any
holder to claim the specified amount of money from goldsmiths. A depositor who is to make the
payments may now get the money in cash from goldsmiths or pay over the receipt to the creditor.
These receipts were the earlier bank notes. The second stage in the development of banking thus
was the issue of bank notes.

The goldsmiths soon discovered that all the people who had deposited money with them
do not come to withdraw their funds in cash. They found that only a few persons presented the
receipts for encashment during a given period of time. They also found that most of the money
deposited with them was lying idle. At the same time; they found that they were being constantly
requested for loan on good security. They thought it profitable to lend at least some of the money
deposited with them to the needy persons. This proved a profitable business for the goldsmiths.
They instead of charging safe keeping charges from the depositors began to give them interest on
the money deposited with them. This was the third stage in the development of banking.

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At the time of independence, there were 631 offices of scheduled banks in Pakistan, of
which 487 were located in West Pakistan alone. As a new country without resources it was very
difficult for Pakistan to run its own banking system immediately. Therefore, the expert
committee recommended that the Reserve Bank of India should continue to function in Pakistan
until 30th September 1948, so that problems of time and demand liability, coinage currencies,
exchange etc. be settled between India and Pakistan.

The non-Muslims started transferring their funds and accounts to India. By the end of
June 1948 the number of officers of scheduled banks in Pakistan declined from 631 to 225.
There were 19 foreign banks with the status of small branch offices that were engaged solely in
export of crop from Pakistan, while there were only two Pakistani institutions, Habib Bank of
Pakistan and the Australian Bank. The customers of the bank are not satisfied with the uncertain
condition of banking. Similarly the Reserve Bank of India was not in the favor of Govt. of
Pakistan. The Govt. of Pakistan decided to establish a full-fledge central bank. Consequently the
Governor-general of Pakistan Quaid-I-Azam inaugurated the State Bank of Pakistan on July 1,
1948. Thus a landmark was made in the history of banking when the state bank of Pakistan
assumed full control of banking and currency in Pakistan. The banking structure in Pakistan
comprises of the following types.

ëc State Bank of Pakistan

ëc Commercial Bank of Pakistan

ëc Saving banks.

ëc Cooperative banks

ëc Specialized credit institutions.

Commercial banks have been the most effective mobilizers of savings and have been
providing short-term requirements of working capitals to trade, commerce and industry.
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Up to December 31, 1973, there were 14 Pakistan commercial banks that functioned all
over the country and in some foreign countries through a network of branches. All these
commercial banks were nationalized in January 1, 1974, and were recognized and merged into
the following five banks:

ëc National Bank of Pakistan

ëc Muslim commercial bank limited

ëc Habib Bank Limited

ëc United Bank Limited

ëc Allied Bank of Pakistan


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The state bank of Pakistan is the Central bank of the country and was established on July
1, 1948. The separation of East Pakistan and its repercussion in the form of economic depression
has caused a lot of difficulties to the banking system in Pakistan. The network of bank branches
now covers a very large segment of national economy. The numbers of branches have increased
appreciably and there is now on branch of bank for every 3000 heads of population
approximately. There is done reasonable growth in deposits from the establishment of Pakistan.
Besides this growth, specialized credit and financial institutions have also developed over the
years.

The Government of Pakistan in the late 90¶s introducing the need for the privatization of
state owned banks and companies. The private sector has accepted the challenge and most of the
banks are privatized today. The State Bank of Pakistan issues the shares of these periodically.
Bank employees and other common peoples can also purchase these shares and earn profit.
Throughout the period of banking history the banks have been expanding rapidly and achieved
the desired goal of progress.

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MCB was founded by ISFHANI and ADAMJEE families in Calcutta on July 9, 1947.
MCB is not an overnight success story rather good track of services are responsible for the leaps
and bounds progress. After the partition of the Indo-Pak Subcontinent, the bank moved to Dhaka
from where it commenced business in August 1948. In 1956, the Bank transferred its Registered
office to Karachi, where the Head Office is presently located. Thus, the bank inherits a 52-year
legacy of trust in its customers and the citizens of Pakistan

The performance of MCB was badly affected by bureaucrat government. In January


1974, MCB was nationalized by Bhutto Government following the bank act 1974 subsequently
in June 1974 Premier Bank Limited merged with MCB.

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When privatization policy was announced in 1990, MCB was the first to be privatized
upon recommendations of World Bank and IMF. The reason for this choice was the better
profitability condition of the organization and less risky credit portfolio which made'' it a good
choice for investors. On April 8th, 1991, the management control was handed over to ³Nationalc
Group´ (the highest bidders). Initially only 26% of shares were sold to private sector at Rs. 56
per share.

MCB besides being money financial organization have rendered invaluable services in
the economics and social developments of our country. MCB today, represents a bank that has
grown with time, experience and Pakistan. A major financial institution, in scope and size, it
symbolizes a fully-grown tree. Evergreen, Strong, and firmly rooted.

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³To be the leading financial services provider, partnering with our customers for a more
prosperous and secure future´

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³We are a team of committed professionals, providing innovative and efficient financial
solutions to create and nurture long-term relationships with our customers. In doing so, we
ensure that our shareholders can invest with confidence in us.´

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After privatization, the growth in every department of the bank has


been observed. Following are some key developments:

ëc Launching of different deposit schemes to increase saving


level.

ëc Increased participation on foreign trade.

ëc Betterment of branches and staff service level.

ëc Introduction of Rupee Traveler Cheques & Photo Credit


Card for the first time in Pakistan.

Extended use of information technology which is evident from the


fact that there are 768 fully automated branches, more than 250- online
branches (integrated networking), 151 ATMS in 27 cities nation wide and
a M.C.B continuously innovate new product.

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Chudrigor Road of Karachi has same importance in Pakistan¶s economy as of the Wall
Street in world economy. The division working under MCB Head office is as follows:

ëc Administration

ëc Credit Management

ëc Investment Banking

ëc Human Resource

ëc Information Technology

ëc Corporate Planning & Budgeting

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ëc Finance & Treasury

ëc International Division

ëc Inspection & Audit

ëc Law Division

ëc Marketing & Development

ëc Trustee Division

Under the President an Executive Committee and a Credit Committee works. All the
matter of the bank join to the board of director are presented to the executive committee which is
responsible for daily operation of the bank .The request for credit exceeding the General
Manager power is approved by the Credit Committee. Under the area Executive is the General
Manager who is the in charge of the Circle Office. Under the General Manager is the Zonal
Manager and then the Branch Manager. At present, there are 9 circles, 47 regions and 1400+
branches. Before privatization there were provincial chiefs for all the four provinces. But this
management now has abolished the provincial officers and improved the efficiency of the bank.

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The working of circle office is to control and regulate the functions of branches which are
under in its control. The functions of circle office are to mobilize the deposits and receive reports
from branches. Circle office is like a mini head office. Agents and correspondents of MCB are in
all commercial cities of the world. Circle office is divided in the following division:

ëc Credit Management

ëc Audit & Inspection

ëc Human Resource

ëc Marketing & Development

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Mian Mohammad Mansha Chairman

S.M. Muneer Vice Chairman

Mohammad Aftab Manzoor President & Chief Executive

Tariq Rafi Director

Sheikh Mukhtar Ahmed Director

Mohammad Arshad Director

Shahzad Saleem Director

Raza Mansha Director

Sarmad Amin Director

Mian Umer Mansha Director

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Mian Mohammad Mansha Chairman

Shaikh Mukhtar Ahmed Member

Shahzad Saleem Member

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As MCB is a banking company listed in stock exchange therefore it follows all the
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the company with a team of 10 directors and 1 vice chairman to help in the business control and
strategy making for the company.

Operational Management of the bank is being handled by a team of 10 professionals.


This team is also headed by Mr. Muhammad Mansha. The different operational departments are
Consumer Banking & IT div; Financial & Inter branch div; Banking operations div; HR & Legal
div; financial control & Audit div; Credit management div; Commercial Banking div; Corporate
Banking div; Treasury management & FX Group and lastly Special Assets Management (SAM)
Group.

For effective handling of branches, it has been categorized into three segments with
different people handling each category. These categories are:

ëc Corporate Banking

ëc Commercial Banking

ëc Consumer Banking

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These are branches which have an exposure of over Rs. 100 million. Usually includes
multinational & public sector companies

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The branches which has a credit exposure of less than Rs. 100 million but having a credit
portfolio of more than Rs. 20 million (excluding staff loans)

Usually branches in large markets and commercial areas come under this category.

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These are the branches which have exposure up to Rs. 20 million and these include all the
branches which are neither corporate nor commercial branches.

Recently the organizational structure was re-designed as follows:

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Furthermore, the bank has some proposals under consideration to open more branches in
some European countries and as well as in Japan & china

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I did my internship in Muslim Commercial Bank Limited Kot Farid Branch, Sahiwal.
And some important information about my branch which I observed are as follows:

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The total deposits of this about to 207.10 million.

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Accounts in this branch of MCB are as follows:

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Total numbers of current accounts are 1049

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Total numbers of profit and loss accounts are 2120.

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These are about to 600 accounts.

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Total remittance of this branch is 26.22 million.

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The rate of interest provided by such bank is minimum 4.45% and maximum 9%.

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It is backbone of banking It is one of the major department of MCB. It further consists of


following departments:

ëc Operations Department

ëc Current Department

ëc Remittance Department

ëc Clearing Department

ëc Cash Department

ëc Accounts Department

ëc Technology Department

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ëc Operations Department

ëc Clearing Department

ëc Remittance Department

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In Operations department I was under supervision of Mr. Ayaz, Operational manager.


And I learnt to open accounts of different types and nature which are as follows,

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ëc Singleš

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ëc $ šš

ëc $ate Limited

ëc Public Limited

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Only one person can operate this a/c. An individual who can fulfill the requirement of
bank can open this a/c. We can call it a personnel or individual a/c. The requirements for this
type are National Identity Card Photocopy, Minimum Deposited Balance, Account Opening
Form, Letter of Kinship etc.

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In case of joint a/c applicant mentions that how much person will operate the a/c.
Instruction are given for joint a/c such that the account shall be operated by anyone or more. The
requirements for this type are National Identity Card Photocopy, Minimum Deposited Balance,
Account Opening Form, Letter Kinship, Additional Signature Form (For Joint Account),
Declaration regarding the operator of account.

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For partnership a/c, along with the application form other requirements needs satisfied.
The requirements for this type are National Identity Card Photocopy, Minimum Deposited
Balance, Account Opening Form, Registration certificate, agreement among partners and
Commencement of business and private registration, resolution of board of directors,
commencement of business, memorandum and articles of association and balance sheet etc.

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Such type of account is opened in the name of the businesses having private limited
concern and mostly medium business enterprises open such kind of accounts. All the board of
directors have to submit the declaration regarding the account operator on the company pad and
with the rubber stamp with the signature of the all the members of the board of directors. In case
of any change in directors bank must be informed regarding that. In case funds are borrowed by
the company all the directors approval is necessary rather not only the authorized partner who
can be the operator of the account.

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Public Limited A/C type of account is opened in the name of the businesses having
Public limited concern and mostly medium business enterprises open such kind of accounts. And
terms regarding board of directors are the same as of private limited.

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ëc Current Account

ëc PLS Saving bank A/C

ëc Khushali Bachat Account (KBA)

ëc Saving 365 A/C

ëc Basic banking A/C (BBA)

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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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This account was started in 1980s after the issuing of banking ordinance in 1980 by Zia
Government to develop Islamic banking in Pakistan. In this case customer would be responsible
for bearing profit as well as loss. The bank would be within its rights to make investment of
credit balances in the PLS saving accounts in any manner at its sole discretion and to make use

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of the fund to the best of its judgment in the banking business under the PLS system. For
withdrawal of larger amount, 7 days notice in writing is required to be given.

ëc Minimum balance is Rs.500/=

ëc Not more than eight withdrawals in a year allowed

ëc More than Rs.15000/= are not allowed to draw

ëc Seven day notice is required for big withdrawal

ëc Zakat deducted on @ 2.5%

ëc Profit calculated on monthly basis

ëc Profit paid on annually basis

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This account is newly developed of MCB and it provides flexibility of saving account to
business people. Profit on deposits will be payable on daily product basis on balance of RS.
500,000/- and above. However, if balance in the account falls below RS. 500,000/- on any day,
the product will be ignored. There will be no restriction on withdrawal from the account. Zakat
and withholding Tax is also applicable on the account opened under this scheme.

ëc Minimum balance is Rs.500,000/=

ëc Below minimum balance, profit calculation ignored

ëc Profit calculated on daily basis

ëc Profit paid on annually basis

ëc 10% Withholding Tax on minimum balance

ëc Zakat deducted on @ 2.5%

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ëc Saving type account

ëc Rate of return is 8% per annum

ëc Profit calculated on daily basis

ëc Profit paid on half yearly basis

ëc Utility bills can be debited through this a/c

ëc No charges will be debited for utility payments

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ëc Introduced specially for salaried persons.

ëc Minimum balance is Rs.1000/=

ëc No service charges.

ëc Only two transactions allowed, in one month.

ëc For more than two transactions Rs.35/- per transaction.

ëc Single natured A/C.

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Following steps are involved in A/C opening,

$#)c $ #/#(c $1c Firstly the customer fills the account opening form and
provides all the information as provided above. I experienced to fill this formc

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An account is needed to be introduced. The introduction of a current account holder is


accepted for the opening of an account.

ëc The introducer should be a branch customer or may be account holder of any


branch of MCB; however signatures should be verified by the banker. In certain
cases, introduction from bank other than bank MCB may be allowed.

ëc Personally known accounts may be introduced by the bank staff.

ëc Introduction from an account holder not personally coming to the bank should be
verified by the bank.

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Then it is stamped. Stamps like. BAL sign verified, Sign Admitted Stamp, Sign Verified
stamps etc are affixed.

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cWhen all the procedures are completed than the final approval is taken from the branch
manager. After obtaining approval, an account number is allotted to the customer and all the
information is entered in to the computer and KYC is filled up. Then that account number is
writing on the Cheque Book, Specimen Signature cards and account opening form.

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After entering information KYC is filled up. It should be ensured that at the time of
filling information in KYC, a customer should be physically present. After this all information is
saved in system. I filled KYC form also.

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This account is further approved by Manager Operations.

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After fulfilling all the requirements and verifying the forms from operation manager the
account opening form is sent to Head Office Karachi and make request to issue the printed
cheque book.c

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Subsequent to the opening of an account, letter of thanks should be sent under registered
post or courier service to the customer and the introducer.c

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cAfter opening an a/c with the bank, the a/c holder can not immediately start operating
his/ her account. The cheque book is issued, when a customer will submit a copy of letter of
acknowledgement duly signed by him, in case of new account. And for subsequent issuance of
cheque book He/she has to make a request once again in the name of bank for the issuance of
cheque book and he should mention title of A/C, A/C number, sign it properly and mention the
number of leaves requires. Normally a cheque book having at least 25 leaves is issued but it can
also be of 50 leaves.

&$/#(c$c#c$#)1c

There is no. of reasons of closing an account. Some are listed below:

ëc If customer desires to close his account

ëc In case of death of one account holder.

ëc Bankruptcy of the account holder.

ëc If an account contain nil balance or not up to the requirement of rules.

^6 c
c
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c

Before closing any account, bank send letter to the account hold for informing him that
his account is going to be closed. There is need an approval form higher authority to close any
account.

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In clearing department I worked under supervision of Miss Shumaila Malik. In clearing


department and learned about inward and outward clearing and I also learnt about,

#/#(c$c&/#(1c

The word clearing has been derived from the word ³clear´ and is defined as,

³A system by which banks exchange cheques and other negotiable instruments drawn on
each other within a specific area and thereby secure payment for their clients through the
Clearing House at specified time in an efficient way.´

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It is a place where cheques are presented, collected from bank branch. It is one of the
services provided by NIFT to other commercial banks. NIFT acts as a clearinghouse.

#/)1c

NIFT stands for # 2 c /  


 2 c
+   2 c )+ 226 O Clearing House of SBP has
shifted a tiresome part of its work to a private institution
named NIFT. NIFT collects + >
c  c 3c c
2 c)c >
c+. from all the branches of
different banks within city through its carriers and send
them to the branches on which these are drawn for
clearing. After the branches approve the instruments drawn
on them, NIFT prepares a sheet for each branch showing the number for instruments and amount

^Õ c
c
c c c c
c

in its favor and drawn on it and sends it to each branch. A similar sheet for each bank is also sent
to clearing house of SBP where accounts of banks are settled in the same manner.

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My learning in clearing department was of following things:

ëc Procedure of clearing a cheque.

ëc Checking of cheques.

ëc Inward and outward clearing.

ëc Different reasons of returning a cheque.

ëc Types of clearing stamps.

&/#(c $'1c

Instruments collected are treated as ) 3c ) 3c ' c  6c  c
 >
c+2+ 2 ,c

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When the instruments are collected from the client. Following things are checked

ëc Cheque date, instrument should be neither stale/ nor post-dated.

ëc Title

ëc Amount in figures and words should be the same

ëc There should be no cutting and overwriting on the cheque

ëc Instrument should not bear any unauthorized alternation.

ëc Cheque is crossed.

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When the instruments are collected and paid by the same branch, it is called transfer.

)#c'&/0-1c

When instruments are collected and paid by two different branches of the same bank
situated in the same city, it is called transfer delivery

A cheque is processed under transfer delivery when it has crossing stamp and is from
local branch of MCB

&/#(1c

Instruments 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, are processed for clearing.

In 2
? c+ 6 when cheque is received two copies of voucher SF-37 are prepared,
one copy and instruments along with clearing stamp, realization stamp, add list and two vouchers
of clearing summary are sent to NIFT in a sealed bag. And clearing records are recorded in
clearing register.

In / ? c + 6c instruments received from NIFT are posted in Computers after
checking.

*7c$&&)/$#c<,=1c

When cheque is from another city then it is grouped as C.C.Such instruments are
processed as cheque for collection. In this procedure SF-37 form is used in Cheque collection.
Original voucher with cheque, stamped as C.C along with C.C number is sent to main branch of
the responding city which is further sent to NIFT. Whereas Carbon copy with Pay-In-Slip is
taken by bank for record purposes.

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It is used for two purposes

ëc Whenever we want to deposit cash in our account then pay-in-slip is used by


writing amount on it and depositing it to cashier along with money.

ëc Whenever we have cheque from any party to be collected in our account we fill
pay-in-slip. One part is attached with cheque and another is given to cheque
holder as a receipt.

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In inward clearing sometimes cheques are not passed due to some reasons then cheques
are sent back to NIFT along with cheque return memo. Some of these reasons are,

ëc Cheque incomplete

ëc Clearing stamp Required.

ëc Drawer¶s sign incomplete

ëc Drawer¶s sign different from specimen

ëc Post Dated

ëc Payment stopped by drawer.

ëc Amount in words and figures differ.

ëc Insufficient funds etc.

c
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u/))#c' )#)c

/))#1c

Remittance is transfer of funds from one place to another or from one person to another.
It is an important service provided by banks to customers as well as non-customers. Since it is
not a free service it is a source of income for the bank.

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Four parties involved in remittance: -

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6c c  6c c

/))1

One who initiates, or requests for a remittance. The bank charges him a commission for
this service. He may or may not be the branch¶s customer.

/))1c

A Remittee is also called the beneficiary, or the payee. The person in whose name the
remittance is made. A Remittee is also the one who receive the payment.c

//#(c#"1c

The bank that sends or effects the remittance, through demand drafts, telegraphic
transfers, or Mail Transfers.

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Paying Bank also knows as the drawee branch. The branch from where the instrument is
drawn.

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Remittance is classified into following four types

ëc Inward remittance, instruments received for payment

ëc Outward remittance, issuing instrument to the responding branch.

ëc Inland remittance, with in same country.

ëc Foreign remittance, from one country to another country.

/#)#)c'c/#c/))#1c

ëc Demand Draft (DD)

ëc Telegraphic Transfer (TT)

ëc Pay Order (PO)

ëc Call Deposit Receipt (CDR)

ëc Rupees Traveler Cheque (RTC)

'#'c')1c

DD is a written order given by the branch of the bank on behalf of the customer to other
branch of the same bank to pay the certain amount to the customer.DD are issued for the
particular place other than place of issuance. DD applicant or recipient, who might not be an A/C
holder present it to another bank at a different place requesting it to pay on demand a specified
amount of money which is already received to the person named on it.

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A printed application form is provided for filling in completely and signing by the
applicant. After depositing an amount of draft and commission of the bank, duly completed and
signed by two authorized officers, then it is handed over the applicant and credit order is
dispatched to drawee branch.

)&( */c)#c<))=1c c

TT is fund that is transferred electronically which is remitted on the order of a certain


person. In this case the authority is given from one bank to
other on the behalf of the customer through
telecommunication to debit their inter office account through
them and credit their parties account mentioned in TT. But it
is not practiced these days frequently.

-c$'1c

For this kind of remittance the payer must have the account in the issuing bank. Pay order
are more liquid as compared to cheques because cheques may be dishonored while PO can¶t be.
It is written order issued by the bank drawn and payable on itself. It is used for local transfer of
money from one person to another person.

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The party who requires a pay order will get a printed application from the bank. He will
fill it and deposits the amount and commission.c

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It is an instrument like Cheque issued by the bank on account of a customer & in favor of
a person, to pay the specified amount. CDR¶s are issued to make payments, especially when a
company goes for some tenders or for purchase of government securities or any contracts with
others.

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The party who requires a CDR will get a printed application from the bank. He will fill it
and deposits the amount and commission. The bank enjoys the benefit of keeping funds
deposited until the payment is not madeOc

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RTC is the traveler cheque are acceptable at all branches


of MCB, and they carry dozens o f benefits. Security is always
being an important issue of concern. TCs provide maximum
security while carrying big amounts.

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First of all RTC-10 is given to customer. It is filled and then cash is deposited to cash
department. One copy is for office and one copy is given to the customer and RTC are issued at
that time.

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At time of my stay in remittance department, there was no issue of CDR, TT, RTC, PO
so I were unable to understand its practical aspects, except clearing.

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cu$)*c' )#)c

There have been some departments in which internship was not allowed, these
departments were

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And in )*#$&$(-c ' )#) I got information about ATM and Online
Banking and just filled their forms because computer work was not allowed to internees.

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The cash department is the most important department of the bankO In cash department
both deposits and withdrawals go side by side. This department deals with cash deposits and
payments.

The following books are maintained in the


Cash Department:

ëc Cash Receipt Book

ëc Cash Payment Book

ëc Cash Balance Book

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c

The officers in this department are called teller and there were 2 tellers Mr. Nazir and Mr.
Abrash at the counter. This department is involved in two activities:  c '52 c  c
 ,

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The cashier is responsible to receive both the paying-in-slip and cash from the depositor.
For depositing the cash into customer¶s accounts, there is need to fill in the paying-in-slip giving
the related details of the transaction. The cashier check the necessary details provided in the
paying-in-slip and accounts the cash and tallies with the amount declared in the slip then cashier
fills in the ³Cash voucher received Record Sheet´ and assigns a voucher no. to both the
transaction being made in the sheet and the slip. The 2nd cashier posts the transaction entries in
computer ledger. After posting these entries, computer display before posting balance and after
posting. Cashier assigns the stamp uPOSTED´ on the voucher to show voucher transaction
entries are posted.

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The only instrument that can be used to withdraw an amount from an account is the
Cheque book. No payments are made by another instrument. When cheque is valid in all
respects, the cashier enters the necessary inputs in the computer and posts the entry so that
account balance is updated. When cashier posts these entries, computer automatically display
the balance before posting the transaction amount, balance after posting.

The cashier at the same time maintains the ³Cash Voucher Received Record Sheet´.
Then inspects the signature of the customer, cancellation mark of checking officer and stamp of
³POSTED´ is placed on cheque before he hands over the cash to customer.

*c&#c$$"1c

At the end of the working day cashier is responsible to maintain the cash balance book.
The cash book contains the date, opening balance, detail of cash payment and received in figures,

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The consolidated figure of receipt and payment of cash is entered in the cash book and
the closing balance of cash is drawn from that i.e.

$5 6c +c23c cAc+ 5cc  cBc2 6c +c

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The most important aspect in record keeping of a bank is its accounting system. The basic
purpose for maintaining an accounting system
is to ensure consistency in record keeping and
accounts. The basic requirement for any
accounting system is that it should be in
accordance with the GAAP i.e. Generally
Accepted Accounting Principles. There are two
choices available to an organization for an
accounting system.

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+ 2 c23c++2
c'5 1c

The major function of this department is keeping the record maintenance of each and
every transaction and prepares reports about the amount of deposits and advances and sent to
Head office or State Bank of Pakistan on monthly, quarterly and yearly basis.c

Following activities are carried out in Accounts Department.

ëc Budgets and budget review form

ëc Income & expenditures.

ëc Reports and Reconciliation.

ëc Activity checking.

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c

ëc Depreciation & Maintenance of fixed assets provision.

ëc Maintenance & depreciation of fixed assets.

cu)*#$&$(-c' )#)c

It includes;

ëc c 
c

ëc c 
c

ëc c 
c

ëc  c

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It has been launched recently during my internship. It helps in getting accounts details
and making transactions using mobiles.

*$#c#"/#(1c c c

Cc 2 c   6´ is available to all


customers on a countrywide basis. Customers can dial
:@@(without any city code/prefix) from their
respective cities

Customers enjoy @DEF Round the Clock Phone


Banking Services. MCB is the first bank in Pakistan to
offer Centralized connectivity.

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MCB now offers the facility of on-line banking to its customers through its country wide
network of branches. Customers can use the ATMs or the banking counters of any branch for
day-to-day banking needs, irrespective of branch where they maintain their accounts.

There are now 2c  c@;c4 +  linked through this system and they can
transact with each other directly using computer systems and the software named
³-$& at their own branches.

)c<
2 +c)c+ =1c c

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 covering 27 cities of Pakistan

ATMs are operated through a card issued to the valued customers and by application of
Personal Identification Number (PIN number). Now MCB has also entered into a contract with
 
cwhich is a subsidiary of  . 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.

( c  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.

(2 c   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.

/   2 c  are issued in collaboration with Cirrus and are useable all over the world
with maximum withdrawal facility according to the standards of Cirrus.

c c
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Different banks provide loan facility to general public, companies etc. but MCB provides
two types of loans that are as under:

ëc Fund Base Loans

ëc Non Fund Base Loans

#'cc&$#1c

In this type of loans cash is directly involved. Bank provides loans in shape of cash. Bank
gives credit or limit facility to customers that needed it. In fund based loans there are two further
classifications:

&2 6c)c&2 1c

ëc Lease facility for car

ëc For Machinery

ëc For Fixed Assets

 2c)c&2 1c

Running Finance (R/F)

Cash Finance (C/F)

##/#(c/##1c

The MCB provides overdraft facility to the customers for the working capital
requirement. These are the loans which are given to those customers whose business runs
through out the year or continuously. Its duration is one year and it is for running business.

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c

In advances there are two securities one is known primary security and other is secondary
or collateral security.

Hypothecation of stock is the primary security and mortgage is the secondary or


collateral security.

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Hypothecation of Stock

Mortgage

Pledge

*- $)*)/$#c$c)$"1c

In hypothecation of stock the possession of goods and the title remains in the favour of
customer. Without the permission of the bank the customer can't sell the stock. It is the
restriction of the bank that in god own there should be stock according to the instructions of bank
every time. The draw back of this is that there is no check and balance of stock from the bank.
The customer can easily sell his stock.

$)((1cc

The bank can mortgage the immovable property like land, building etc as a security. In
mortgage the possession remains to customer and title of goods remains to bank.

&'(1c

In this, bank requires the moveable property of the customer as a security like stock,
vehicle etc. possession of goods remains to customer and title in the favor of bank. The bank
hires a muqaddam [Guard] and the key of store where the stock is pledged is in the security of
bank. When customer wants to sell the stock then he pays the amount equivalent to stock which
he wants to sell. After receiving amount bank releases his stock for the same amount

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In non fund based loans cash is not directly involved but bank gives guarantee on
the behalf of customer. Bank works as a third party and known as Guarantor. Bank provides a
security to customer when he needs and someone requires from the customer.

'$#)c7/'c-c#"c$c'0#1c

ëc Request of customer

ëc Credit application from bank

ëc Basic borrower sheet

ëc Net worth certificate

ëc CIB report

ëc Financials

ëc Account statement

ëc Property evaluation report

ëc For sale value certificate

ëc Property documents

ëc Title deed [fard]

ëc Property map

ëc CNIC

ëc Account opening form

ëc Undertaking

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Following steps are there:

ëc Information required by the bank

ëc Preparation of credit proposals

ëc Sanction advice

/#/)/&c/#$)/$#1c

Following information is required to be submitted to bank.

ëc Nature & structure of borrower business

ëc Names of proprietors, partners or directors

ëc Detail of all firms or companies associated with borrower.

ëc Financial condition of borrower business

ëc An assessment of his business abilities

ëc Accurate and up to date financial statements of last two years for comparison
purposes

ëc Market report on the borrower where borrower has maintained an account with
another bank, a report from his bank should also be obtained.

ëc A report from credit standing bureau of State Bank of Pakistan

 )/$#c$c'/)c $ $&1c

At first a formal application for credit approval is obtained from the party along with
complete group position. The party¶s credibility report is obtained from the bank with which the
bank is doing its business. The party¶s credibility report is also taken from the Head office of
Trade Information Division.

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For obtaining credit, party has to submit the last two years Balance Sheet and Profit &
Loss statement duly attested by authorised auditors. If the party is also involved in export or
import business then the bank also considers the data of three years about import & export.
Current debt and equity ratio is also calculated by the bank. The type of data required to prepare
the credit proposal is to be gathered from the different departments. Some data is obtained from
the foreign Exchange department. Some data is available in Advance Department. The purpose
of obtaining Credit should be explained clearly. The securities offered by the party to the bank
are also evaluated. In case of pledging of property in shape of land or building the complete
evaluation of the property should also be attached.

After all the necessary documents for applying for advance is fulfilled by the party then
the case is sent to Manager for approval. If the credit limit is in his range then he can decide over
it otherwise the case is forwarded to seniors. If there is any discrepancy then the party is
informed of it.

 + 2 c  +1c

When the documents required are complete and there is no ambiguity then the party is
advised that their credit or loan is approved and will be available to you soon.

The form contains following information:

ëc Nature and amount of limit.

ëc Purpose

ëc Security/ Collateral

ëc Margin (%).

ëc Mark up/ Charges

ëc Validity

mw c
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c
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u/##/&c#&-/c$cc

u)/$c#&-/c

Ratio analysis is an important and old technique of financial analysis. Ratios are
important and helpful in the reference that:

ëc These simplify the comprehension of financial statement and tell the whole story
of changes in the financial conditions of the business.

ëc These provide data for inter-firm comparison. The ratios highlight the factors
associated with successful and unsuccessful firms, also reveal strong and weak
firms.

ëc These help in planning and forecasting these can assist management in its basic
functions of forecasting, planning, coordination and control.

ëc These help in investment decision in case of investor and lending decision in case
of Bankers etc.

However, the ratios are only indicators, they cannot be taken as final regarding good or
bad financial position of the business other things have also to be seen.

Great care is needed while calculating meaningful ratios and in interpreting them.
Although there are several ratios, which an analyst can employ yet the type of ratios he would,
use entirely depends on the purpose for which the analysis is done i.e., a creditor would keep him
abreast about the ability of a concern to cover up its current obligations and so would care about
current and liquid ratios, Turnover of receivables, coverage of interest by the level of earnings
etc.

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c
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'0#)(c$c)/$c#&-/1c

It helps to give comprehensive financial statements in evaluating aspects of any


undertaking in respect of financial health, operations efficiency and profitability. It gives a
chance of inter-firm-comparison to measure efficiency and helps management to resort to some
remedial measures. It provides a good help in decision making for investors and the financial
institutions.

)($/c$c)/$c#&-/1c

ëc Liquidity ratios

ëc Activity ratios

ëc Debt ratios

ëc Profitability ratios

ëc Market ratios

&/7/'/)-c)/$c

The liquidity of a firm is measured by its ability to satisfy its short-term obligations as
they come due. Liquidity refers to the solvency of the firm¶s overall financial position i.e. the
ease with which it pays its bills. Due to low or declining liquidity firm moves towards financial
distress and bankruptcy.

Liquidity Measures are

ëc Current ratio

ëc Quick (acid-test) ratio

c
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c
c

#)c)/$1c

The current ratio, one of the most commonly cited financial ratios, measure the firm¶s
ability to meet its short-term obligations. It is expressed as follows:

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c c
    Ú 

   M  M M


M
c c

&)1c

From the above ratios it is clear that the firm¶s investment in current assets has increased.
In 2008 it is in better position to pay its obligations as they come due. But in three years we can
see that the firm has the ability to pay its current liabilities efficiently. The standard for this ratio
is @1 it is calculated by the current assets by total of the current liabilities.

This ratio is below the standard. The management should take steps to improve the short-
term financial position of the firm.

')c)/$c

The debt position of a firm indicates the amount of other people¶s money being used to
generate profits. In general, the financial analyst is most concerned with long term debts, because
these commit the firm to a stream of payment s over the long run.

The debt ratio measures the proportion of total assets financed by the firm¶s creditors.
The higher this ratio the greater the amount of other people money being used to generate profit.
The ratio is calculated by following formula

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c c c c )2cc

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c
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    Ú 

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ccc

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The ratio indicates the more than half of the assets financed by the debt. This ratio is
almost showing the same trend throughout the previous three years. Debt ratio indicates the
greater the risk and more financial leverage it has. It also shows that firm has paid some portion
of the debt during the year 2008.

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ccc
ëc Return on total assets

ëc Return on equity

ëc Earnings per share

)#c$#c)$)&c)1c

It measures the overall effectiveness of management in generating profits with its


available assets. The higher the Return on total assets better will be the performance.

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c
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&)1c

The return on investment of the firm is 5.03 % in 2008. It is less than the previous year. It
shows that firm generates Rs.5.03 for each Rs.100 of the investment which is very poor for the
company progress.

)#c$#c7/)-1c

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c
c
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M




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&)1c

The return on equity of the firm is 28.313% in 2008. It is less than the previous year. It
shows that firm generates Rs.28.313 for each Rs.100 of the investment made by the partners or
shareholders of the company (which are privately owned by four brothers).

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&)1c

This ratio indicates the amount of income earned by the common stockholders. Above
figures clearly show the progress of the company and it maintains this ratio more than Rs.20
which is good for the investors.

0)/&c#&-/1c

In vertical analysis each item of a financial statement is presented as a % age of the total
of items or some other suitable items.

*$/$#)&c#&-/1c

In vertical analysis each item in financial statement of the last year is considered as a base
of the same items.

§^ c
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c)c! c'+4c@@F@:c

cc ^  ^  ^ 

cc å  å  å 

a   

Cash and balances with treasury banks d d  d dd d 

Balances with other banks  d    

Lending to financial institutions   d 

Investments  d  d  

Advances d     d

operating fixed assets d  d

deferred tax assets   

Other Assets    d   

   dd  

à a à     

Bills payable   

Borrowings from financial institutions     

Deposits and other accounts d d d d d

Sub-ordinate loans dd  d 

Liabilities against assets subject to


finance lease   d  

Other liabilities   d 

§d c
c
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Êa dd ddd  d d

ddd d  

YYÊ    

Share capital   

Reserves   d

Unappropriated profits dd d  

d   d

Minority interest  dd dd

  d 

Surplus/ (deficit ) on revaluation of


securities  ddd dd

    

ddd d  

/ +2c c

2c c-c@@F@:c

cc   

  


cc   

Mark-up /return/ intertest earned   d  d

Mark-up/ return/ interest expensed       

§m c
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c
Net Mark-up /return/ intertest income d d d d 

Provision for diminution in the value of


investment - nrt d     

Provision against non-performing loans and


advances - net dd   d 

Bad debts written off directly    

  d d

#c
5c9 c +2c3c52  2 c d    

#2 
5c9c c +2c   

Fee, commission and brokerage income d  d

Income earned as trustee to various funds    d

Dividend income d dd 

Income from dealing in foreign currencies   d  

Gain on sale of securities - net d   

Unrealized loss on revaluation of investments å d ådd  

classified as held for trading   

Other income - net d  d

Total non-mark-up / interest income    d  

ddd d 

Non-mark-up / interest expenses   

Administrative expenses d d 

Other provision / (reversal) - net  ådd 

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Total non-mark-up / interest expenses d  d d 

Share of profit of associated undertaking dd ddd d

Extra ordinary / unusual item   

Profit before taxation  d  dd

Taxation   

Current year dd d  

Prior years d    d 

Deferred d    d

Share of tax of associated undertaking    

dd  d d

Profit after taxation dd   

  

Basic and diluted earnings per share - after tax d     

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Balances with other banks      

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operating fixed assets d  d  

deferred tax assets   

Other Assets  dd d

total assets   

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Borrowings from financial institutions     

Deposits and other accounts    

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total liabilities   

  

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total common stockholder equity   

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total liabilities & equity   

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Total Provisions    

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Fee, commission and brokerage income    

Income earned as trustee to various funds   

Dividend income d    

Income from dealing in foreign currencies   

Gain on sale of securities - net   d

Unrealized loss on revaluation of investments   

classified as held for trading   

Other income - net d d 

Total non-mark-up / interest income      

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Other provision / (reversal) - net d  

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Total non-mark-up / interest expenses    d

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Liabilities against assets subjectto finance lease   

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Net Mark-up /return/ intertest income dd   

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Total non-mark-up / interest expenses   d 

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From the above mentioned analysis following are my Result about the Operations of
branches of MCB for the year 2008,

ëc MCB¶s income by operations has been increased by 122.19% than 2007.

ëc Company¶s Total Assets in Pakistan has been increased by 130% than 2007.

ëc Deficit has been decreased by 104 % in comparison with year 2007

ëc Due to financial crisis in the world investment activities are slowed down in year 2008
and they are decreased by 152% than year 2007.

ëc Due to its sound financial policies MCB¶s borrowing from financial institutions has been
decreased by 95 % than year 2007.

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Strengths (S) include internal capabilities, resources and positive situational factors that
may help the company to serve its customers and achieve its objectives

Weaknesses include internal limitations and negative situational factors that may interfere
with the company¶s performance.

Opportunities are favorable factors or trends in the external environment that the
company may be able to exploit to its advantage.

And Threats are unfavorable external factors or trends that may present challenges to
performance.

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A scan of the internal and external environment is an important part of the strategic
planning process. The SWOT Analysis provides information that is helpful in matching the
firm¶s resources and capabilities to the competitive environment in which it operates.

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MCB is the first Pakistani privatized bank and because of its quality management,
marketing, innovation in products and services. Owing to all such factors they have established a
good reputation in the banking market. The name of MCB makes you recall the highly
cooperative and professional individuals ready to serve you with maximum zeal and zest.

The joining of experienced people, advanced management, advance setup and facilities
gave MCB an edge over its competitors.

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MCB is a reputable financial organization and is well known all over the Pakistan.
Perception is of producing a high quality services.

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The Bank not only provides high quality services but it also look for the comfort and
convenience of the clients, MCB always preferred their customers.

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MCB has covered much of the potential market and the net profit is increasing years after
years. Deposits and advances have sufficiently increased.

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This is also its main strength as it has diversified in many products such as:

ëc Debit Card

ëc Visa Card

ëc Car Financing

ëc Agriculture Financingc

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It is the greatest strength of the Bank. In 2004, five more branches were added to the
network and by the end of the year 2005 the total number of branches was raised from just 53 to
143. MCB has also planned to open more branches in next coming years.

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Skillful marketing of the products is being achieving countrywide goals of Muslim


Commercial Bank Limited.

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Every account holder can conform its balance on Phone and may ask for any query.
There are also 24 hours help lines for customers,c

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It has been launched recently. It helps in getting accounts details and making transactions using
mobiles.

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MCB in Pakistan is the also in the list of highly automated banks, about 750, like
Emirates because of its modern style of banking through fully computerized control and twenty
four hour banking.

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MCB have faster banking services that are making it more prominent in the banking
industry especially in operations and Foreign exchange. The customer prefers this bank not only
because of its faster speedy service rather due to reasonable service charges.

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MCB¶s products are internationally designed products. These are valuable and
operational in all over the world.

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Now MCB has also entered into a contract with  


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 . 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.

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The majority of people are not well aware about the products of MCB. Therefore it
should advertise extensively especially RTC and Master Cards.

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A behavior has been noted that bank tries to feel at ease with good looking, rich and
educated people and the poor looking customers feel some bit strange in the environment of the
bank. The bank employees should try to accommodate behaviorally all type of customers.

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Mismanagement of time is another big mistake in MCB branches, the bank official time
of closing is 5:30pm but due mismanagement of time allocation and work the staff is normally
on their seats till 7:00 or 8:00 clock.

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ëc Costly documents are required for loan sanctioning.

ëc Some times bank also never meets stated rate of profit

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As on December 31, 1998, sixty-eight scheduled banks with 9,106 branches are operating
in Pakistan. As on this date, total population of Pakistan is 140.03 million. Total number of
personal accounts with all scheduled banks as on December 31,1997, are 28.98 million. If we
consider the population statistics of working age group as on December 31,1997, it stands to the
figure of 96.64 million. Thus we can say those 28% of working age people of Pakistan are
having accounts with banks while 72% are unbanked.

The need of privatization has made people to switch to banks to satisfy their needs of
lending and borrowing. This not only increases the deposits but also the credit business.

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They may enter in New business or any other consumer-durable product in order to
promote their name, by introducing Loan for the students, small businesses, and handicraft
industry.

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ëc Information Technology.

ëc Credit cards can give more earning.

ëc Establishing more foreign Branches.

ëc They should introduce Student Finance Facility.

ëc They should also introduce mobile ATM

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Change in government policies has affected the banking business. Still banks have to wait
to get permission of state bank. The freezing of foreign currency accounts is a vital example of
letting people not to trust on banks.

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The Competition has become severe by the entrants of so many banks, So to exist one
will have to prove himself in its services through excellent management and will have to satisfy
its shareholders. Otherwise he will be out the market.

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The decrease purchasing power of consumer in the current economic situation of the
country affecting the business activity speed too much and the result is the low investment from
the investors in new projects can create problem for the bank because it is working a lot in trade.

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As the Bank introduces unique products so they face problem if State Bank Of Pakistan
employ taxes on them which force them to increase the rate of Interest.

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Due to huge competition among those banks and MCB,, people are the basic
beneficiaries from it and thus their expectations tend to increase about the products and the
relative rate of interest thus creating a threat for MCB.

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PEST analyses tell How Political, Economical, Social and technological factors affect
MCB. These are the external factors which affects the whole organization.

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ëc Stable government

ëc Stable policies in favor of business

ëc Improved relation with outside world

ëc Law and order.

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Due to this reason foreigners hesitate to invest their savings in banks, as a result of
economy of our country is going downward and banks suffer.

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The situation of law and order is adverse. The policies are not very handy and beneficial
for the country. The Govt. passes such rules which are not in the favour of bank e.g. The Govt. of
Pakistan has passed a rule that if anyone withdraws more than Rs.25000 then he will be charged
0.30% on withdrawal.

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Pakistan's economy is going weaker and weaker. 9/11 has a great influence on the
economic crisis of all over the world. With economic factors the bank influenced very much that
are as under:

ëc Impact of %)$cforce to cost reduction methodology.

ëc Low interest rate

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ëc Inflation

ëc Low GDP growth

ëc Budget deficit

ëc Increase in Govt. duties

ëc Fluctuation in exchange rates

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Social environment includes family, friends, a person's role and status. An individual¶s
life directly by society and the person acts according to his or her society. Cultural environment
includes norms, values, religion, conception and perception.

ëc If we see the religion point of view then interest is not allowed that's why most of
the people hesitate to invest their savings in banks and yet they are not aware of
ISLAMIC BANKING.

ëc Traditional business men do not like the business with bank. They pay their
creditors through cash not through cheque. They do not want to get the bank
facilities.

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Today is the era of technology. In the every aspect of life technology plays an important
role.

ëc Due to rapid change in technology every bank has to change its technology to
compete other ones.
ëc Increasing issue of securities due to technology resulted increase in cyber
crime. Cyber crime means manipulation. One person can easily transfer
amount from any other's account to his account.

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During my internship of eight weeks in Muslim Commercial Bank, Ltd. Kot Farid
Branch, Sahiwal the knowledge given by my respected and devoted teachers proved to be very
helpful in understanding the environment in the organization and working practically.

Following are some key points about application of my class room learning in the
organization:

The knowledge achieved from the subject ³Business Communication´ helped me in


understanding customer dealing i.e. how to deal with them? How to understand their problems?
etc.

It also helped me in understanding the inter Organizational Communication i.e. circulars,


notices etc.

Also the Knowledge which I got from the subject ³Computer application in Business´
also proved very useful.

Financial Management and Principles of Accounting helped me in understanding the


accounting terminologies which are used in bank e.g. what is debit and credit vouchers? What
are these for? And also in understanding that how entries are made against certain heads.

I could do this only with the help of the knowledge provided to me in my two semesters
of MBA at  
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In Muslim Commercial Bank Ltd. I really enjoyed working with the staff of Kot Farid
Branch, Sahiwal having a wish to be employee of MCB. It was almost impossible to work in all
the departments within that limited time. But the staff of the branch provided me the opportunity
to work in the different departments for the sake of practical knowledge. I feel highly indebted to
work in the Kot Farid Branch with the manager of that branch Mr. Yasin Tahir, because I learnt a
lot in that branch.

During my internship training in the MCB as I early mentioned that I have worked in
different departments & seats and learnt the following things,

ëc How to deal with different types of customers.

ëc Account opening.

ëc Cheque book issuance.

ëc Outward clearing.

ëc Cheque for Collection.

ëc Different forms and vouchers filling.

ëc Experience of working in a well reputed organization.

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Following are some suggestions for Muslim Commercial Bank, Ltd.

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Bank must let potential customers know that all attractions for banking exist. This is done
by advertising on television and obtaining press coverage, in conjunction with direct mail,
window displays, leaflet in branches and in appropriate other locations (such as hotels, shops,
etc.) and including leaflets in statement of accounts sent to existing customers in the hope that
they will tell potential customers about the services provided by our bank.

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Some personal sector customers prefer not to come to branch. They increasingly want to
deal with the bank in other ways, such as home banking or use of Automated Teller Machines
(ATMs), which need to be at every branch or some important shopping plazas and airports etc.

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One way to retain the customers is to offer a wide range of services such as tax advice,
free life insurance equivalent to amount deposited, shares portfolio management, fund
management facility, etc., complimentary to the core services. Banks must have a slightly
different mix of services and mean of providing these such that customers can choose the mix
that suits them best.

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There should be a good management of time for the sake of employees i.e. offering them
free break hours instead of making them work in this time as well.

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MCB should provide greater facilities to its employees, and give them bonuses for their
hard work and Promotions as well.c There is a criticism on the banking management that the
salaries of the employees are decreasing in every succeeding year. And I think this will shake the
confidence and working habit of the employees

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The bank should hire banking professionals having experience in their respective fields
that will boost the performance of the company as currently MBAs are produced for this field so
they should be hired for enhancing the performance of company.

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The banking company should offer such policies which would attract customers which
are denied by other banking in the market.

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Most of the bank employees, are sticking to one seat only with the result that they
become master of one particular job and loose their grip on other banking operation. In my
opinion all the employees should have regular job experience all out-look towards banking. The
promotion policy should be adjusted

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As such system should be designed that every employee who has some problems with his
officers can communicate it to the higher management and some steps must be taken to improve
that.

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If I would be a manager at MCB I¶ll take following steps,

ëc I will apply such a communication system specially designed for employees trough they
can share the problems regarding work environment.

ëc Complete working and break hours will be offered so that employees can work
efficiently.

ëc I will make it sure that some of the employees should be sent for training to other
countries and employees from other branches should be brought here.

ëc I will make promotions, job rotation and bonuses, an important part of policies of MCB.

ëc At every month¶s closing when employees stay at branch even after working hours, a
dinner from bank will be offered.

ëc To retain potential customers certain services will be provided and let them know with
advertising.

ëc I will make it sure that Working environment, equipment, furniture and staff dressing
should be according to the modern banking style.

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To make this internship report data is taken from the following resources:

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Muslim Commercial Bank, Ltd http://www.mcb.com

Muslim Commercial Bank Pakistan http://www.mcb.com/pakistan/

State Bank of Pakistan http://www.sbp.org.pk

Statistical Bureau of Pakistan http://www.fbs.gov.pk

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