Faculty of Business Administration

Department of Management Sciences

Internship Report

Muslim Commercial Bank

Deadline for submission
30 November, 2010

Semester MBA

Student Name AHSAN ALI

Student Number SP09-MBA-014

Total Marks Obtained (Report + viva) --------------------------

 MCB Bank Ltd.

1. INTRODUCTION
1.1. History of Banks

The word “Bank” is of a European origin and is derived from the Italian word “BANCO”, which
means a table or a counter. In the opinion of the eminent scholars of banking, the reason why
this word was given to the banking business was the then prevailing traditions of Lombardian
money changers. It was at the end of the middle ages when the trade and the business of
exchange of money was flourishing in the Northern cities of Italy and the money changers used
the wooden benches to carry out their business in the markets of buying and selling of various
currencies.

1.2. Financial Sector of Pakistan

Pakistan‟s financial sector consists of Scheduled Commercial Banks which include nationalized, foreign,
and private banks; and Non-banking Financial Institutions (NBFIs) which include Development Finance
Institutions (DFIs), Investment Banks, leasing companies, modarabas, and housing finance companies.

Scheduled Banks and NBFIs (excluding modaraba and leasing companies) are both regulated by the State
Bank of Pakistan‟s Prudential Regulations, albeit through different wings, and are subject to different
SBP regulatory requirements such as capital and liquidity reserve requirements.

Modaraba and leasing companies are being regulated by the Securities and Exchange Commission of
Pakistan (formerly Corporate Law Authority), which is a body corporate.

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 MCB Bank Ltd.

Structureof Financ ial Sector in Pakistan

Scheduled B anks NB FI s
(47) - Modarabas
- Commercial banks - Leas ing companies
- Specialised banks - Mutual funds
- Specialised financial (DFIs)
- Inves tment banks
- Hous ing Finance Companies

Specialised Banks Commercial Banks

Foreign Banks Domestic Banks

(22) (25)

1.3. Banking in Pakistan

Prior to partition in 1947, banking in Pakistan was dominated by branches of British banks. The
State Bank of Pakistan, the central bank, was formed after partition in 1948. It assumed the
supervisory and monetary policy powers of the State Bank of India. In the period of 60s to 70s
the emergence of a number of specialized development finance institutions (DFIs) such as
Industrial Development Bank of Pakistan (IDBP) and the Agricultural Development Bank
(ADB). These DFIs were either controlled directly by the state or through the SBP, and were
intended to concentrate on specific priority sector lending. In 1974 all domestic commercial
banks were nationalized by the Government. The Pakistan Banking Council was established,
which assumed the role of a banking holding company but with limited supervisory powers.
However, PBC was dissolved in 1997, leaving the SBP as the sole regulatory authority for banks

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 MCB Bank Ltd.

and financial institutions in Pakistan. Nationalization of the banking sector led to pet projects.
The branch network of NCBs also proliferated in an effort to provide banking services to all
regions/territories of the country, often with disregard to the viability or feasibility of such
expansion.

Banks play very important role in the economy of a country and Pakistan is no exemption. Banks
in Pakistan account for 95% of the financial sector. Pakistan has a well-developed banking
system, which consists of a wide variety of institutions ranging from a central bank to
commercial banks and to specialized agencies to cater for special requirements of specific
sectors. The country started without any worthwhile banking network in 1947 but witnessed
phenomenal growth in the first two decades. By 1970, it had acquired a flourishing banking
sector.
The era of 90s was the climax of privatization, deregulation and restructuring in the domestic
banking industry and financial institutions. The Government only owns the National Bank but
80% of bank assets are in private sector. Banking assets rose three-a fold over the last five years
and the industry size is reaching Rs 4 trillion. The contribution of banking sectorto GDP ratio is
55.6%. Pakistan has been ranked 2nd in performance and efficiency indicators among the South Asian
countries by the World Bank. Pakistan is currently under a wave of Mergers and Acquisitions (M & As).
There are on average 3 M & A s per year.

1.4. MCB Bank Ltd. History

MCB is one of the leading banks of Pakistan with a deposit base of Rs. 368 Billion and total assets over
Rs.500 Billion. Incorporated in 1947, MCB soon earned the reputation of a solid and conservative
financial institution managed by expatriate executives. In 1974, MCB was nationalized along with all
other private sector banks.

The Bank has a customer base of approximately 4 million, a nationwide distribution network of over
1,000 branches and over 450 ATMs in the market.

During the last fifteen years, the Bank has concentrated on growth through improving service quality,
investment in technology and people, utilizing its extensive branch network, developing a large and stable
deposit base.

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 MCB Bank Ltd.

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 areresponsible for the leaps and bounds progress.
After the partition of the Indo-PakSubcontinent, the bank moved to Dhaka from where it commenced
business inAugust 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 inits customers and the
citizens of Pakistan.MCB Bank Limited is one of the leading banks of Pakistan and continuouslyawarded
“Best Domestic Bank in Pakistan” from 2002-2006 and also ranked in AA+ Rating. The Management of
the Bank maintained its strategy of concentrating ongrowth through improvement in quality services,
investment in technology &people, utilizing its extensive branches network, large & stable deposit base
andmanaging its non-performing loans.

MCB Bank Limited is the only Bank in Pakistan who listed on London StockExchange and issued Global
Depository Receipts (GDRs) worth 150 MillionDollars. MCB Bank is first ever in the history of the
country to be listed on theLondon Stock Exchange for trading on the Professional Securities Market
which isnow being followed by NBP & Others. The Bank‟s Registered Office is at MCBBuilding, F-6/G-
6 Jinnah Avenue, Islamabad and Principal Office at MCB Tower, I.I. Chundrigar Road Karachi.

In the late 1990 after long period of time newly established Democratic Governmentof Pakistan have
decided to sell nationalized assets of country for better utilization.In April 1991, MCB became Pakistan‟s
first privatized bank. The government ofPakistan transferred the management of the Bank to National
Group, a group ofleading industrialists of the country by selling 26% shares of the bank.

In terms of agreement between the Government of Pakistan and the National Group,the group, making
their holding 50% has purchased additional 24% shares. Now,25% is purchased by the Government,
which shall be sold in the near future.

The name of bank has been changed from MUSLIM COMMERCIAL BANK LTDto MCB BANK LTD.
The name to change was felt due to the reasons that bank wasmainly known and popular as a MCB
BANK.

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 MCB Bank Ltd.

1.5. Vision
To be the leading financial services provider, partnering with our customers for a more
prosperous and secure future.

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

1.7. Values

Integrity
We are the trustees of public funds and serve our community with integrity. We believe in being
the best at always doing theright thing. We deliver on our responsibilities and commitments to
our customers as well as our colleagues.

Innovation
We encourage and reward people who challenge the status quo and think beyond the boundaries
of the conventional.Our teams work together for the smooth and efficient implementation of
ideas and initiatives.

Excellence
We take personal responsibility for our role as leaders in pursuit of excellence.We are a
performance driven, result oriented organization where merit is the only criterion for reward.

Customer Centricity
Our customers are at the heart of everything we do. We thrive on the challenge of understanding
their needs and aspirations,both realized and unrealized. We make every effort to exceed
customer expectations through superior services and solutions.

Respect
We respect our customers‟ values, beliefs, culture and history. We value the equality of gender
and diversity of experienceand education that our employees bring with them. We create an
environment where each individual is enabled to succeed.

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 MCB Bank Ltd.

1.7.8. Awards

2009 ASIA MONEY: Best Domestic Bank in Pakistan

2009 The Asset: Best Domestic Bank in Pakistan
2008 EURO MONEY: Best Bank in Asia
2008 EURO MONEY: Best Bank in Pakistan
2008 ASIA MONEY: Best Domestic Bank in Pakistan
2006 ASIA MONEY: Best Domestic Bank in Pakistan
2006 EURO MONEY: Best Bank in Pakistan
2005 ASIA MONEY: Best Domestic Bank in Pakistan
2005 EURO MONEY: Best Bank in Pakistan
2004 EURO MONEY: Best Bank in Pakistan
2004 ASIA MONEY: Best Domestic Bank in Pakistan
2003 EURO MONEY: Best Bank in Pakistan
2001 EURO MONEY: Best Bank in Pakistan
2000 EURO MONEY: Best Bank in Pakistan

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 MCB Bank Ltd.

1.7.9. Organizational Structure

1.7.9.1 ORGANIZATIONAL SETUP OF MCB

HEAD QUARTER KARACHI

PROVINCIAL HEAD
QUARTERS

PUNJAB LAHORE

SINDH KARACHI

BALOCHISTAN PESHAWAR

NWFP & AZAD QUETTA

KASHMIR

CIRCLE OFFICES

BRANCH OFFICES

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 MCB Bank Ltd.

1.9.2.OrganizationalStructure OF MCB

Board of
Director
(BoD)

Chairman Audit & RAR

President

Wholesale Islamic Commercial Consumer Treasury &

Banking Banking Banking Banking Forex

Risk Strategic Compliance

Special Asets Public Financial
Planning& & Control
Management Relations Management Control
Investment Banking

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 MCB Bank Ltd.

1.10. Corporate Information

1.10.1 Board of Directors

1. Mian Mohammad ManshaChairman (Non-Executive Director)
Mr. Mansha has served as the Chairman of MCB since its privatization in 1991. In 2004, he was
presented with Pakistan'shighest civil award the Sitara-e-Imtiaz, for his contributions to
industrial development. He is a member of the InternationalAdvisory Board at Babson College in
the USA. He is also on the Board of Engineering Management Foundation (FASAT),Board of
Investment (Govt. of Pakistan), Civil Aviation Authority (Govt. Nominee), Shalamar Medical &
Dental College and alsoserves as the Honorary Director of Punjab Board of Investment & Trade
(PBIT). In addition, he is the Chairman on the Boardof Punjab Coal Mining Company.

2. S.M. Muneer Vice Chairman (Non-Executive Director)

With experience in sectors ranging from tanneries, textiles and leather garments, Mr. Muneer is a
consummate industrialist.He has been awarded with The Best Export Performance trophy by the
Federation of Pakistan Chamber of Commerce & Industry (FPCCI), the Gold Medallion Award
from the International Export Association, UK and Best Businessman of the Year Award from
FPCCI. In addition, he has received the Sitara-e-Isaar and the Sitara-e-Imtiaz in 2006 and 2007
respectively. His contributions and achievements go beyond the economic sphere into the
education sector as well. He was awarded an Honorary PhD degree by the Governor of Sindh
and is also a member of the Board of Directors of CBM and Greenwich College, Karachi.

3. Tariq Rafi (Non-Executive Director)

Mr. Rafi is a recipient of the coveted civil award Sitara-e-Imtiaz and the Best Businessman of the
Decade. At MCB, he is theChairman of the Audit Committee, Member of the Risk Management
& Portfolio Review Committee, Member of the Committeeon Physical Planning, IT System &
Contingency Arrangements.

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 MCB Bank Ltd.

4. Shahzad Saleem (Non-Executive Director)

Mr. Shahzad Saleem is an active member of the Risk Management & Portfolio Review
Committee at MCB. Along with that he is serving as the Chief Executive of Nishat Chunian Ltd
and Chairman of Nishat Chunian Power Ltd.

5. Sarmad Amin (Non-Executive Director)

Mr. Amin has 30 years of business experience in the fields of Construction, Electrical
Manufacturing and Textiles. He servesas a Director for various companies. At MCB, he is the
Chairman of the Committee on Physical Planning, IT Systems & Contingency Arrangements and
a member of the Risk Management & Portfolio Review Committee.

6. Dr. Muhammad Yaqub (Non-Executive Director)

Former Governor of SBP (1993-1999), Dr. Yaqub has held various offices for the Government
of Pakistan and the IMF. Appointed to the MCB Board in April 2006 he is a member of the
Audit Committee, the Business Strategy & Development Committee and the Human Resource
Committee.

7. Mian Raza Mansha (Non-Executive Director)

Mr. Raza Mansha, is a member of the Committee for Business Strategy & Development, Human
Resource, Risk Management& Portfolio Review, Physical Planning, IT Systems & Contingency
Arrangements at MCB. In addition, he is a board memberfor various other businesses.

8. Mian Umer Mansha (Non-Executive Director)

Mr. Umer Mansha was elected as a Director to the MCB Board in November 1997 and served till
September 2007. He wasre-elected as a Director at MCB in the 61st AGM held on March 27,
2009. Presently he is the Chairman of the Risk Management& Portfolio Review Committee and
is a member of the Business Strategy & Development Committee at MCB. In addition,he is a
Director on the Board of Adamjee Insurance Company and Pakistan Business Council.

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9. Dato’ Mohammed Hussein (Non-Executive Director)

Dato' Mohammed Hussein, joined the MCB Board as an Independent Non-Executive Director in
August 2008. He is currentlya member of the Audit Committee and the Business Strategy &
Development Committee. His years of experience in thefinancial sector include 31 years with the
Maybank Group where he held various senior management positions includingDeputy President
and Chief Financial Officer until he retired in 2008. Presently he also sits on the board of a
number ofcompanies listed on the Stock Exchange in Malaysia and Singapore,
severalgovernment-linked institutions in Malaysia andthe Exim Bank of Malaysia.

10. Abdul Farid Bin Alias (Non-Executive Director)

Mr. Farid is the Head of International at Maybank, Malaysia. He has held senior positions at a
number of Malaysian and globalfinancial institutions primarily in the area of Investment
Banking. From April 2009 to May 2009 he served as a member of theCommittee on Physical
Planning, IT System & Contingency Arrangements at MCB.

11. Aftab Ahmad Khan (Non-Executive Director)

Mr. Aftab Ahmad Khan is the Group Director, Finance and Accounts at Nishat Group of
Companies, which involves financialplanning, strategic decision making and investment
appraisals for the group. He is also a fellow Chartered Accountant of theInstitute of Chartered
Accountants of Pakistan. Mr. Aftab Ahmad Khan has over 47 years of diversified professional
experiencein various sectors. Presently he serves on the board of Commercial Banking, Textile,
Paper, Energy, Hotel and Tourism sectors.He has also served on the Punjab Industrial
Development Board and in Public sector organizations such as Ghee, Sugar andRice mills. At
MCB he is a member of the Audit Committee.

12. Muhammad Ali Zeb (Non-Executive Director)

Mr. Muhammad Ali Zeb is currently the CEO of Adamjee Insurance and has more than 15 years
of professional experiencein Finance, Insurance & Manufacturing sectors. He was elected as a
Director at MCB in the 61st AGM held in March 2009.At MCB, he is a member of the Audit
Committee.

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13. Atif BajwaPresident & Chief Executive Officer (Executive Director)

Mr. Bajwa has 28 years of diverse national and international experience in corporate and
consumer banking. He began his career at Citibank Pakistan as a corporate banker in 1982 and
went on to become a senior member of the Corporate Banking & Finance Unit for the Gulf
Markets. From 1993 - 2001, he was part of ABN AMRO Bank where, among other significant
roles, he served as Country Head, Pakistan and later Consumer Banking Head, Asia Pacific. Mr.
Bajwa re-joined Citibank in 2001 as Regional Head for Central and Eastern Europe covering
corporate and consumer banking and then in 2005, moved to Dubai with Mashreqbank to lead
their Retail and Small Business Group. In June 2007, he joined MCB Bank and has brought
along with him the vision and leadership to lead the bank to new horizons.

1.10.2 Board Committees

Audit Committee
Members
Mr. Tariq Rafi Chairman Mr. Aftab Ahmad Khan
Dr. Muhammad Yaqub Mr. Muhammad Ali Zeb
Dato' Mohammed Hussein Malik Abdul Waheed
Terms of Reference
The main terms of Audit Committee are determination of suitable measures to safeguard bank's
assets, reviewing financialstatements and statement on internal control prior to approval of the
Board, making recommendations to the Board forappointment of external auditors, reviewing
management letter issued by external auditors, receiving and reviewing relatedparty transactions,
determining effectiveness and efficiency of internal controls, reviewing scope of internal audit
functionsand adequacy of resources at internal audit, considering of significant findings of
internal investigations, ensuring coordinationbetween internal and external auditors and
communication between employees and the committee, monitoring of relevantstatutory
violations and any considering any other issue as assigned by the Board.
Human Resource Committee
Members
Mian Mohammad Mansha Chairman Mian Raza Mansha
Dr. Muhammad Yaqub Mr. Atif Bajwa

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Terms of Reference
The main tasks of the Human Resource Committee are ensuring review of existing policies and
revision in these policies as deemed necessary, proper classification and reclassification of
employees' pay scales, job description and methods of periodical reviews, development of in-
house expertise, approval and revision of organizational setup, setup of latest criterions for
recruitment, training and performance appraisals and effective management of information
systems to monitor implementation of policies as approved by the Board.
Risk Management and Portfolio Review Committee
Members
Mian Umer Mansha Chairman Mr. Sarmad Amin
Mr. Tariq Rafi Mian Raza Mansha
Mr. Shahzad Saleem
Terms of Reference
Main terms of the RM & PR Committee are review of risk management strategies, development
of risk managementpolicies and portfolio management parameters, approval and monitoring of
limits in respect of credit, market and liquidityrisks, monitoring of progress towards Basel II,
carrying surveillance functions on behalf of the Board, monitoring of Bank'sportfolio and
approval of policy framework to be followed by the management for lending operations, write-
offs, restructuringand rescheduling.
Business Strategy and Development Committee
Members
Mian Mohammad Mansha Chairman Mian Raza Mansha
S. M. Muneer Mian Umer Mansha
Dr. Muhammad Yaqub Mr. Atif Bajwa
Dato' Mohammed Hussein
Terms of Reference
Major tasks include review and development of 'Vision & Mission' statements and 'Core Values'
for the Bank, developmentof Bank's initiatives relating to business philosophy and acquisition,
investment and divestment, capital raising exercise,strategic alliances and brand management,
devising short, medium and long term business plans and policies based onstrategy, future
direction and milestones set by the Board and monitoring the progress of the key strategy
initiatives undertakenby the Bank.

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Committee on Physical Planning, IT Systems and Contingency Arrangements

Members
Mr. Sarmad Amin Chairman Mian Raza Mansha
S. M. Muneer Mr. Atif Bajwa
Mr. Tariq Rafi
Terms of Reference
Development of an overall plan for physical infrastructure, IT system and contingency
arrangements for the Bank, review andmonitoring of all work in progress based on physical
planning, monitoring and recommending to the Board the building plans,master development
agreements, information technology & contingency arrangements and review of
theadministrativestructures& plans in place to ensure the ongoing health and safety of utilities
and physical assets, including land & buildings,IT infrastructure and recommend, as appropriate,
changes in plans arising from this review.

1.10.3 Other Information

Chief Financial Officer

Salman Zafar Siddiqi

Company Secretary
Abdus S. Sami

Auditors
KPMG Taseer Hadi & Co.
Chartered Accountants

Legal Advisors
Khalid Anwer& Co.
Advocates & Legal Consultants

Registered Office
MCB Building, F-6/G-6, Jinnah Avenue, Islamabad.

Principal Office
MCB 15 Main Gulberg, Lahore.
UAN: (042) 111-000-111
PABX: (042) 36041998-9
Website: www.mcb.com.pk
Email: info@mcb.com.pk

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Shares Registrar
M/s. THK Associates (Pvt.) Ltd., State Life Building No.3,
Dr. Ziauddin Ahmed Road, Karachi.

1.10.4. Staff Stength

Particulars 2009 2008

Permanent 9397 10160
Temporary/on contractual basis 48 47
Bank‟s own staff strength at the end of the year 9445 10207
Outsourced 3747 3727
Total staff strength 13192 13934

1.10.5. Non-Financial Information

Particulars 2009 2008 2007 2006 2005 2004

Number of branches* 1081 1060 1026 994 952 946
Number of permanent employees* 9397 10160 9721 9011 9377 9889
Number of ATMs* 495 370 349 263 234 217

Note:
* Absolute numbers

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2. BANK’S FINANCIAL PERFORMANCE

2.1Income Statement

Currency in As of: Dec 31 Dec 31 Dec 31 Dec 31

Millions of Pakistan Rupees 2006 2007 2008 2009
Restated Reclassified Restated PKR
PKR PKR PKR
TOTAL REVENUES 25,469.7 28,605.7 30,367.3 34,214.7
Cost of Goods Sold 336.0 377.0 510.4 539.6
GROSS PROFIT 25,133.7 28,228.7 29,856.9 33,675.2
Selling General & Admin Expenses, Total 5,725.9 5,063.3 7,160.0 9,691.7
EBT, EXCLUDING UNUSUAL ITEMS 19,393.9 22,538.4 21,886.7 23,366.6
Merger & Restructuring Charges -443.7 -- -- --
Other Unusual Items, Total -19.4 -12.1 -- -17.5
Other Unusual Items 41.1 -- -- --
EBT, INCLUDING UNUSUAL ITEMS 18,930.8 22,526.3 21,886.7 23,349.1
Income Tax Expense 6,389.9 6,084.6 6,563.5 7,683.7
Minority Interest in Earnings 0.0 0.0 0.0 0.0
Earnings from Continuing Operations 12,540.9 16,441.7 15,323.2 15,665.4
NET INCOME 12,540.9 16,441.7 15,323.2 15,665.4
NET INCOME TO COMMON INCLUDING 12,540.9 16,441.7 15,323.2 15,665.4
EXTRA ITEMS
NET INCOME TO COMMON EXCLUDING 12,540.9 16,441.7 15,323.2 15,665.4
EXTRA ITEMS

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2.2.BALANCE SHEET
Currency in As of: Dec 31 Dec 31 Dec 31 Dec 31
Millions of Pakistan Rupees 2006 2007 2008 2009
Restated Reclassified Restated PKR
PKR PKR PKR
Assets
Cash and Equivalents 36,398.1 16,397.7 21,883.3 23,943.4
Trading Asset Securities -- 515.8 423.7 332.0
TOTAL CASH AND SHORT TERM 48,429.9 16,913.5 24,707.1 24,275.4
INVESTMENTS
Other Receivables -- 44.8 44.8 44.8
TOTAL RECEIVABLES -- 44.8 44.8 44.8
Prepaid Expenses 0.1 -- -- --
Restricted Cash 2,717.5 27,153.8 21,854.4 20,908.8
Other Current Assets 5,734.1 12,108.0 4,172.2 3,085.9
TOTAL CURRENT ASSETS 61,616.0 61,691.8 60,020.8 57,353.2
Gross Property Plant and Equipment 11,433.5 18,819.0 20,516.6 21,904.8
Accumulated Depreciation -2,732.2 -2,923.0 -3,391.4 -4,056.5
NET PROPERTY PLANT AND EQUIPMENT 8,701.3 15,895.9 17,125.3 17,848.3
Deferred Tax Assets, Long Term 174.9 -- -- --
Other Intangibles 372.0 186.8 195.2 250.7
Other Long-Term Assets 11,859.7 27,233.2 12,655.0 42,511.9
TOTAL ASSETS 343,177.9 412,900.8 445,285.8 511,741.9
LIABILITIES & EQUITY
Accrued Expenses 4,350.7 4,139.3 7,627.3 8,207.7
Short-Term Borrowings 14,902.8 31,340.3 11,346.1 33,281.6
Current Portion of Long-Term Debt/Capital 1,117.4 479.2 -- --
Lease
Current Income Taxes Payable 2,368.5 1,348.8 -- 1,089.4
Other Current Liabilities, Total 7,600.0 11,792.4 10,848.9 8,521.8
TOTAL CURRENT LIABILITIES 287,524.5 341,188.5 359,974.9 418,681.7
Long-Term Debt 9,520.7 8,066.5 11,335.3 11,380.5
Minority Interest 0.1 0.1 0.1 0.1
Pension & Other Post-Retirement Benefits 1,445.3 1,458.6 1,406.9 1,371.6
Deferred Tax Liability Non-Current -- 1,183.6 440.3 3,201.8
Other Non-Current Liabilities 2,502.4 3,456.4 11,996.3 4,793.1
TOTAL LIABILITIES 300,992.9 355,353.6 385,153.7 439,428.7
Common Stock 5,463.3 6,282.8 6,282.8 6,911.0
Additional Paid in Capital 9,702.5 9,702.5 9,702.5 9,702.5
Retained Earnings 21,292.1 31,394.6 37,943.3 46,248.8
Comprehensive Income and Other 5,727.1 10,167.4 6,203.5 9,450.9
TOTAL COMMON EQUITY 42,185.1 57,547.3 60,132.1 72,313.2
TOTAL EQUITY 42,185.1 57,547.3 60,132.1 72,313.2
TOTAL LIABILITIES AND EQUITY 343,177.9 412,900.8 445,285.8 511,741.9

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2.3 Financial Ratios

“An index that relates two accounting numbers and is obtained by dividing one number by other”

Ratio Analysis is an important and age-old technique of financial analysis. It simplifies the
comprehension of financial statements. Ratios tell the whole story of changes in the financial
condition of business. It provides data for inter firm comparison. They also reveal strong firms
and weak firms, over- valued and undervalued firms.

Ratio analysis also makes possible comparison of the performance of different divisions of the
firm. The ratios are helpful in decision about their efficiency of otherwise in the past and likely
performance in future. Ratios also help in Investment decisions in the investors and lending
decisions in the case of bankers etc.

2.3.1 Basic Ratios

Particulars 2009 2008 2007 2006 2005 2004
Profit before tax ratio (PBT/ 55.91% 63.80% 70.16% 70.49% 62.80% 34.47%
total income)
Income/ expense ratio Times 3.84 4.10 5.06 4.01 3.12 1.62
Return on average equity 27.35% 31.49% 37.66% 45.00% 64.87% 28.73%
(ROE)
Return on average assets 3.25% 3.60% 4.06% 3.79% 3.20% 0.91%
(ROA)
Return on Capital Employed 27.35% 31.49% 37.22% 42.48% 58.12% 24.17%
(ROCE)
Earnings per share (EPS before 33.50 31.64 30.83 26.77 18.84 5.87
tax) Rs. ***
Earnings per share (EPS after 22.42 22.25 22.09 17.57 12.91 3.52
tax) Rs. ***
Advances/ deposits ratio 73.37% 82.64% 78.65% 80.34% 82.03% 65.14%
(Gross)
Advances/ deposits ratio (Net) 68.89% 79.39% 74.96% 77.00% 78.63% 62.12%
Earning assets to total assets 87.23% 85.70% 83.60% 85.54% 87.34% 86.88%
ratio
Earning assets to Deposits & 107.74% 107.75% 103.52% 103.99% 101.65% 98.47%
borrowings
NPLs to Gross advances ratio 8.62% 6.70% 4.67% 4.14% 4.46% 6.14%
Deposits to shareholder equity 6.02 6.32 6.43 7.22 12.53 24.03
ratio Times
Capital Adequacy Ratio ** 19.07% 16.28% 16.75% 18.65% 12.54% 9.64%

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2.3.2. Cash Dividend Ratios

Particulars 2009 2008 2007 2006 2005 2004

Per Share Rs. 11.00 11.50 12.50 7.25 4.00 2.50
Dividend Yield Ratio (based on cash 5% 9.14% 3.13% 2.95% 2.38% 4.26%
dividend)
Dividend Payout Ratio 53.52% 56.19% 56.59% 49.79% 46.64% 99.48%
Bonus Shares Issued 10.00% 10.00% 0.00% 15.00% 20.00% 10.00%

2.4. Share Information

Particulars 2009 2008 2007 2006 2005 2004

Market value per share
Dec 31 Rs. 219.68 125.81 399.95 246.10 167.80 58.70
High - during the year Rs. 244.00 494.80 434.60 284.50 175.50 65.00
Low - during the year Rs. 75.00 125.81 244.05 150.30 50.50 45.35
Market Capitalization Rs. M 151822 79044 251279 134451 71572 19792
Price to book value ratio Times 2.49 1.66 6.09 4.77 6.33 4.41
Price to earning ratio Times 9.80 5.66 18.11 14.01 13.00 16.68

2.5. Industry Shares

Particulars 2009 2008 2007 2006 2005 2004

Deposits 8.50% 8.55% 9.74% 8.58% 8.62% 11.96%
Advances 8.24% 8.63% 9.53% 8.58% 9.20% 13.04%
Total Assets 8.52% 8.51% 10.12% 8.43% 8.64% 9.66%
Market Capitalization 22.35% 18.59% 17.50% 16.22% 14.81% 12.85%

Note:
* Absolute numbers
** 2009, 2008 and 2007 based on BASEL II framework
*** Adjusted for prior years to affect bonus shares issued during 2009

2.6. Credit Ratings

The Pakistan Credit Rating Agency (PACRA) has maintained the long-term and short-term
entity ratings of MCB Bank Limited at “AA+” (Double A Plus) and “A1+” (A One Plus),
respectively. The ratings denote a very low expectation of credit risk emanating from a very
strong capacity for timely payment of financial commitments. The ratings reflect MCB‟s strong

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risk absorption capacity emanating from sound capital structure supplemented by consistently
robust performance. The bank is well positioned to sustain its competitive edge in the sector
owing to its quality management team, established franchise and extensive outreach equipped
with requisite technology infrastructure. The ratings recognize the bank‟s prudence in aligning
its business strategy with challenging operating environment.

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3. Products and Services

3.1. MCB Online Banking
MCB has a fast growing network of over 1,100 onlinebranches in the country providing
customers real time onlinetransaction facilities.

3.2. MCB MNET

MNET is an electronic inter-bank connectivity platform foronline transactions on ATM and
other remote banking channels.It offers other Value Added Services that include a portfolioof e-
banking and payment system products as well asmanagement and day-to-day operations of the
same. Membersinclude 10 local and foreign financial institutions enjoying ATMsharing and
Value Added Services.

3.3. MCB Cash Management

Cash Management provides a wide range of value addedservices to large corporations through its
vast network ofonline branches. Our structured and customized productsenable our customers to
realize their sales proceeds swiftlyfrom all over the country, supported by real-time MIS.

3.4. MCB Channel Financing

MCB Channel Financing provides working capital facilities todealers and vendors of selected
companies under a structuredproduct program. This product enables our customer's dealersto
leverage themselves and increase their business capacitywith their respective business partners.

3.5. MCB Local Rupee Drawing Arrangement

Transaction Banking Department at MCB, provides LocalRupee Drawing Arrangement, a
product for small banks andfinancial institutions to use our vast branch network platformto make
payments in areas where their own branch networkdoes not exist, thus extending their reach
countrywide.

3.6. MCB Home Remittance

MCB Home Remittance provides a seamless inflow offoreign remittances credited in the
beneficiary‟s accountwithin minutes. Cash payments can also be made at ourdesignated branches
on behalf of Xpressmoney, Samba(SpeedcashNow) and Moneygram, along with cash
paymentsfrom other correspondents all over the world.

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3.7. MCB Corporate Financing

MCB Corporate Financing provides access to diversifiedfinancing options, including working
capital loans, term loans,trade finance services and investment banking.

3.8. MCB Project & Structured Finance

Involves financing complex projects, usually in an SPV structure, where the loan is tightly
structured around the cash flows,risks are allocated amongst various stakeholders, and thereis
limited or no recourse to the sponsors.

3.9. MCB Syndicated Loans and Debt Capital Markets

It involves arrangement, underwriting and placement servicesfor significant financing
requirements by large corporate andinstitutional clients to other financial institutions or
throughthe debt capital markets.

3.10. MCB Quasi Equity/Hybrid Instruments

It structures and places a category of debt that has somecharacteristics of equity such as being
unsecured, subordinatedor with a potential equity upside.

3.11. MCB Equity Capital Raising

Equity Services relate to raising capital for our clients byoffering common or preferred equity to
public or privateinvestors, through initial public offers, offers for sale, rightsissues and private
equity placements.

3.12. MCB Advisory Services

Financial and Capital Raising Advisory provides our clientswith financial advisory services,
commercial structuringsupport and access to capital resources to help companiessuccessfully
finance their business/project.

3.13. MCB Islamic Banking

With the help of Shariah specialists, lawyers andprofessional commercial bankers, MCB Islamic
Bankingprovides Riba Free and Shariah Compliant solutions to variouscustomer segments in a
growing number of cities. For customers who are looking for a deposit opportunity where they
can purse their funds and reap halal returns on it, MCB offer the following products:

 Al-Makhraj Saving Account

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 Al-MakhrajIanat Account
 Al-Makhraj Term Deposit
 Fund Based Facilities
 Ijarah Products
MCB‟s Islamic Ijarah, analogous to the English term 'leasing‟, is based on the „IjarahwaIqtina‟
concept which means the sale of the asset to the lessee after the Ijarah has matured. Under this
scheme, MCB will be the owner of the asset, and the customer (lessee) will be given the asset to
use for a certain period of time in return for monthly rental payments. MCB will give a separate
unilateral undertaking that it will offer to sell the asset to the customer (lessee) at the maturity of
the Ijarah agreement at a price that may be equal to the security deposit amount, hence the term
„WaIqtina‟.

Types of Ijarah:

1. Car Ijarah
2. Equipment Ijarah

3.14. MCB Agri Products

MCB has been providing finance to the agriculture sectorsince 1973. With the help of our vast
branch network,specialized staff posted in the branches, multiple and diversifiedproduct range,
we cater to the financing requirements of thefarming community spread throughout the country
and facilitatein achieving increased productivity.

3.15. MCB Privilege

A first from a local bank, MCB Privilege through its dedicated,world class Privilege Centers
offers a higher level of personalizedservices, more rewarding in-branch experiences and a
widearray of deposit and investment products that are tailored tomeet the financial expectations
of our affluent clientele. Asmembers of MCB Privilege, customers experience
unparalleledadvantages that put them ahead of others. MCB‟s dedicatedPrivilege Centers awaits
to welcome you in Karachi, Lahore, Islamabad and Multan, with plans to expand to more
locations.

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3.16. Current Account

MCB Bank offers a variety of current accounts to cater tothe everyday transactional needs of
various customers.These accounts ensure ease and freedom to bank from anyof the 1,100
branches across the country. The differentaccounts include: the basic account that has no
minimumbalance; Business Account offering free online transactions,Demand Drafts, Pay
Orders and lots more to meet the dayto day business requirements; Current Life Account
whichoffers the security of life insurance free of cost; and for allthe others the conventional
Current Account.

3.17. Savings Account

It offers a wide array of savings products that suit short termgrowth& transactional needs. Our
savings accounts offerattractive profit rates as well as flexibility to transact. SavingsXtra is
targeted for customers having Rs. 5 million + deposit,365 Gold offers profit rate on daily balance
while PLS savingshas a lower minimum balance requirement. In addition, aunique product:
Smart Savings is an account run solely viaa debit cart, offering a very competitive rate to small
savers.
Saving accounts are opened on proper introduction with sums of credit balance within certain
limit for individual (single, joint) institutions, companies, educational institutions etc. MCB has
introduced various schemes under saving a/c are following:

 Mala Maal Scheme

 PLS Account
 Saving 365 Account
 Capital growth certificate scheme
 Fund Management Scheme
 Khanm Bachat Scheme
 Khushali Bachat Account
 Term/ Fixed Deposits

3.18. Terms Deposit

MCB Term Deposits offer attractive short to mid-terminvestment options with flexibility,
convenience and security.With various tenor options available customers can chooseone that

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suits their needs. This is combined with differentprofit payout options and the added facility of
being able toavail credit facility against their deposits.

3.19. MCB Salary Club

A payroll solution designed to make life easy; it simplifies allthe monthly payroll related banking
needs of employers andopens the door to a world of special offers for employees.Salary Club
provides the convenience of having an extensiverange of financial services available to
employees at theirplace of work.

3.20. MCB Investment Services

Make the most of your wealth with investment opportunitiesthat match your unique financial
aspirations. MCB InvestmentServices offer distribution of mutual funds managed by theleading
fund managers of Pakistan. We can suggest theproducts most suited for your needs, or work with
you tocreate a personalized solution completely focused on yourexpectations of the capital
markets.

3.21. MCB Visa Credit Card

MCB offers a complete suite of Classic, Gold and PlatinumVisa Credit Cards focusing on
providing, superior service,travel privileges & shopping pleasure. It also offerscomprehensive
insurance & installment plans, reward pointsand SMS alerts that give a different feel to the world
of CreditCards. These unique features include i-revolve, which makesvariable mark-up rate
available to customers allowing themto repay at affordable rates.

3.22. MCB Car4U

MCB Car4U not only gets you a car of your own choice butis also affordable with competitive
mark-up, flexible conditions,easy processing and above all, no hidden costs.

3.23. MCB Instant Finance

With MCB instant Finance get a loan instantly at any MCBbranch against liquid collateral at
competitive pricing.

3.24. MCB Smart Card

MCB Smart Card is the key that enables access to convenientbanking services.

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Smart Card allows you to manage your account, withdrawcash, transfer funds, pay utility and
mobile bills, rechargeprepaid connections, register for mobile and internet bankingservices and
much more.

3.25. MCB Rupee Travelers Cheque

It is a safe and secure way to make payments nationwide.MCB Rupee Travelers Cheque, being
the market leader, isthe most widely accepted way to pay cash for travel-relatedpurposes.

3.26. MCB ATMs

MCB has one of the nation's largest ATM networks with over450 ATMs and still growing. MCB
ATMs give you 24-hoursconvenience of cash withdrawal, mini-statement, utility billpayment,
funds transfer services and much more.

3.27. MCB Mobile ATM

With MCB Mobile ATM not only do we provide you withworld class banking service but we
also provide convenience.Our innovative mobile ATMs ensure that you are given serviceclose to
you.

3.28. MCB Lockers

MCB Lockers are the best protection for your valuables.Lockers of different capacities are
available nationwide.

3.29. MCB SMS Banking

Banking at your finger tips: SMS anytime to get informationregarding balance, mini statements
and credit card relatedinformation once your card is linked.

3.30. MCB Full Day Banking

Enjoy the convenience of extended banking hours from 9am to 5pm, including Saturdays at
MCB FULL Day Bankingbranches across the country.

3.31. MCB Bancassurance

Combining the best of banking and insurance solutions,MCB Bancassurance has created a one-
stop shop for allyour financial and insurance needs. Whether you want tosave for your child‟s
education or marriage, for the securityof dignity after retirement or gaining maximum return
onsavings, MCB Bancassurance has a plan just for you.

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3.32. MCB Call Center

There‟s no easier way to bank than the new enhanced24/7 MCB Call Center, which blends
innovation andconvenience to provide Banking Services that go beyondexpectations. With MCB
Call Centre you can maintain yourVISA credit & ATM/Debit cards, check your account
balances,confirm last 5 transactions, pay utility & mobile phone bills,top-up your mobile, pay
MCB Visa Credit Card bill from yourMCB account, transfer money within your own accounts
inMCB and register complaints.

3.33. MCB Mobile

MCB Mobile is a quick easy and secure way to rechargemobile phones, transfer money, pay bills
and do much more.No need to visit a branch or an ATM anymore, login towww.mcbmobile.com
using your mobile phone andstart transacting.

3.34. MCB Virtual Banking

MCB provides the convenience of banking via internet, whetherat home, office or on travel, log
on to www.mcb.com.pk andenjoy 24 hour access to all your accounts at MCB for a greatnumber
of services such as Funds Transfer, Utility Bill Payments,Mobile Top-ups and much more.
MCB Virtual Internet Banking offers a wide range of online services which makes your banking
accessible anytime and from anywhere.

 Detailed Account Summary of all listed accounts.

 Mini-statements of each of the listed accounts showing recent transaction history for that
account(s).
 Statement-by-Period of each of the listed accounts, based on the period specified.
 Immediate or Scheduled Transfer of Funds between your own accounts, as well as to
third-party accounts setup as beneficiaries, maintaining accounts with MCB.
 Scheduling of „One-Time‟ as well as „Recurring‟ Funds Transfers.
 Payment of utility bills for registered Utility Companies.
 Immediate or Scheduled Bills Payment. Scheduling of „One-Time‟ as well as „Recurring‟
bill payments. Option for „Full‟ or „Partial‟ payment based on the payment conditions
specified by a particular Utility Company.

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 Bulk Salary Transfer for Corporate Customers, to facilitate them in paying salary to the
corporate employees, who maintain accounts with MCB.
 Bulk Funds Transfer for Corporate Customers.
 Check Book Request for any of your listed accounts.
 Payment/Transfer Alerts for reminding, in advance, prior to the processing of specified
payments and transfers.
 Personal Alerts for reminding of pre-specified events and occasions.

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4. Learning & Experience

4.1. Internship Duration & Rationale for Selection

The duration of the internship was from July 1, 2010 to August 27, 2010. The main reason for
choosing a bank for internship was.
 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?
 To know banks activities i.e. its services and products.
MCB bank is certainly one of the leading banks in Pakistan; therefore I selected it for
Internship and learning purpose.

4.2. Activities Performed at Branch

The purpose of banks is to provide some services to the general public. The main functions and
services which the Branch 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:
a. Collecting cheques and bill of exchange for the customers.
b. Collecting interest due, dividend, pensions and other sum due to customers.
c. Transfer of money from place to place.
d. Acting an executor, trustee or attorney for the customers. „Providing safe custody
and facilities to keep jewelry, documents or securities.
e. Issuing of travelers Cheque and letters of credit to give credit facilities to travel.
f. Accepting bills of exchange on behalf of customers.

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g. Purchasing shares for the customers.

h. Undertaking foreign exchange business.

4.3. Details of Training department wise/ Tasks performed

During the period of internship I performed task relating to Remittance Department, Clearing
Department and Customer Service Department.
CLEARING DEPARTMENT:
It is an association of banks; usually setup in a given locality for the purpose of inter-changing
credit claims. Nearly, everywhere this function is performed the Central Bank of country. In
Pakistan, the areas where there is no Central Bank branch the function of clearing house is
performed by NBP.
In undertaking the process of interchanging credit the following procedure is adopt in banking
business, when a creditor ask for same payment, it is always the Cheque through which the
payment is asked for, but there arise two situation when the payee asks for payment through
Cheque. The payee may be account holder in the same bank. When the payee is an account
holder in the same bank, then the Cheque is directly transferred from one A/c to other, and the
total assets and liabilities of the bank remain the same. But in practice, it is often that the payee
has A/c in some other bank. Then in such cases the payee deposits Cheque in his bank drawn on
some other bank. The bank with which the Cheque is deposited becomes the creditor of the
drawer‟s bank. The debtor bank will pay this amount of the Cheque by transferring it from cash
reserves if there is no offsetting transaction. The clearance house is the branch of Central Bank
of Pakistan or NBP in case of area where no Central Bank Branch is available. The messengers
of the various commercial banks gathered at the clearance house and transferring Cheque
payable by other banks while collecting drawn on their banks. A summary sheet is prepared
describing the number of Cheques received and delivered by a bank at the clearance house. Total
of these in and out Cheques are collected. Then the difference with a given bank is paid or
received from the account maintained at the Central Bank. Normally, the banks maintain two
books for clearing house.
 Inward clearing book
 Outward clearing book

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Remittances Department:
Remittance department performs the function of remitting funds i.e. to transfer funds for
customers from one location to another. The transfer of funds may be from one branch to another
or from one bank to another. Remittances mean “the transfer of money or fund from one place to
another place through bank”. It may be “inland remittance” or “Remittance”
 Within locality
 Outside locality
Within Locality:-
When a branch situated in Islamabad is required to send the draft to any other branch situated in
the same locality, the process will say to be within locality. I.e. MCB corporate branch
Faisalabad, send any draft to MCB Ghulam Mohammad Ababd branch, this is known as within
locality.
Pay Order
Pay order is used for payment within the cities; the main purpose of pay order is to make
payment in record this payment in the bank as evidence. Bank charge the commission for its
services. The purchaser fill an application form, which includes the amount of payment or order,
the name of the payee and complete address of purchaser and payee application form is also
signed by the purchaser.
Outside locality:-
Outside locality is an important type of inland remittances. Outside locality means the transfer of
money payable outside the city i.e. MCB corporate branch Islamabad sent any draft to a branch
situated in Peshawar city. It is commonly done through the following three means.
 Telegraphic transfer
 Demand draft
 Mail transfer
 Bank Draft
Telegraphic Transfer:
Telegraphic transfer is an important mode of remittance. It is the quickest mean of transferring
the funds from one place to another place by the use of telephone or telegraphic. Now a day, new

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technology is used for this purpose i.e. fax, e-mail. The big traders and businessman use this
method of remittance in this method of remittance the purchaser is not responsible for the
dispatch.
Demand Draft & Pay Order:
For safe, speedy, and reliable way to transfer money, Muslim commercial bank Demand Drafts
and pay orders are available for customers at very reasonable rates. Any person whether an
account holder of the bank or not, can purchase a Demand Draft from a bank branch. A demand
draft is an order drawn by a bank on its branch or on another bank in a different place requiring
the later to pay on demand the sum of money specified in the draft. Pay order is just like demand
draft except the pay order is made for local transfer of money whereas demand draft is meant for
remittances of funds from one city y to another.
Mail Transfer:
Mail transfer draft is one of the bank modes of remittance. Mail transfer is issued by one branch
of bank to another branch of the same bank by instructing to branch to pay the other branch by
issuing mail transfer receipts. In M.T the purchaser is not responsible for dispatch, but the bank
will be responsible for dispatch.
Bank Draft
Bank draft is the most important type of remittance. Draft is an instrument issued by a bank.
Draft is issued by one branch to another branch out of the city. The difference branches of same
bank can issue the bank draft to each other and it is also called the banker cheques i.e. the main
branch of MCB in Islamabad issued the draft to the MCB Faisalabad.

4.3.1. Account Opening

Account opening and closing is the function of accounts departments. Bank‟s customers may be
individuals (Single or Joint), firms (partnership/proprietorship), Autonomous corporations,
Limited Companies, Charitable Institutions, Associations Educational Institutions or Local
Bodies.
BASICS TO OPEN AN ACCOUNT
During the span of mine internship in MCB, I learned and observed a lot of about the opening of
an account. Basically I think that the opening of an account is the establishment of a contractual

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relationship between the banker and the customer. By opening an account at a bank a person
becomes a „customer‟ of a bank. Further I am going to express the basic requirements and steps
involved in the opening of an account.
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.
 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.

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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
• 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.

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 Certified true copy of the resolution of the board of directors / managing committee /
governing body regarding conduct of the account.
 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 institution are registered under the Societies
Registration Act, 1866, and are issued a certificate of registration after they have been found fit
for registration.

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4.3.2. Utility Bills Collection

I have also collected utilities bills of WAPDA, WASA, PTCL, Sui Gas. I put the stamp on the
utility bills “Paid”, Date of payment, Signature of the officer receiving the utility bills. After
receiving utility bills a list is made on the form which is called Bills scroll form. One copy of the
scroll is with the bank for evidence whereas the original copy with the receipt of the bills is sent
to the billing department of the respective corporation. The bank charge commission on the bills.
4.3.3. Granting Loan
Although I didn‟t do in practice but I learnt about how loan is granted to the customers. Bank
adopts the following procedure in order to grant a loan. A customer applies for a loan to the
manager, who says him to give details of his property. The details 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 documents. The branch manager, in the light of
the opinion received from the legal 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
office the proposal is analyzed and if the office is satisfied a consent letter prepared 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 prepares a DAC (Disbursement
Authorization Certificate). DAC can be made only for people who have a bank account.
The following documentation is made for loan.
 An application or request letter for loan by the customer
 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

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 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)
 IB-28 (used for lien) etc.
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.
4.3.4. Issue Check Book to a New Account Holder

After opening an account, a letter of thanks is sent to the customers from the Circle Office after
2 or 3 days. After receiving that letter a customer can obtain his/her check book from the bank.
But while customer is coming to the bank for receiving his/her check book this letter of thanks
should be with him.

These are the following steps that are used for gaining check book:

5. The customer brings the letter of thanks and gives to the authorized person. The person
fills the check book requisition slip for the customer and takes his signatures. Then the
authorized person saves that slip in his record and fills another slip and fwd to Karachi
via NIFT and customer is asked to come after 5 days.

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6. After 5 days cheaque book is given to customer after taking his signature in a separate
register But in case if ;

(a) Customer is new than after taking letter of thanks check books would be hand over to
him/her.
(b) But in other case if customer is not new he is a regular customer than at the end of
each check book a requisition slip is attached. So whenever a new check book would
be needed the customer will put his/her signature on it and submit it to the authorized
officer.
4.3.5. Issue ATM/Debit Card

The following steps are taken while issuing an ATM/DEBIT card. When an ATM or Debit Cards issue,
the following steps are needed:

 A copy of CNIC
 A minimum Rs.550 should be in respective account.
After filling up all the required documents for ATM card these documents are given to the authorized
person who pasted a verification stamp on these documents and signing on it. And at the end, after 5 days
the person is called again to hand over ATM card after taking his Signatures.

Process of getting an ATM/DEBIT card Pin

When the customer is given ATM card he goes to another Person to get his/her secrete Pin code. The
person takes the signatures and gives it to customer. Then Customer goes to CSO (Customer Service
Officer) and activates his CARD.

4.3.6. Learned About Clearing

Procedure for outgoing clearing

I also made out going clearing, for outgoing clearing a list I made an excel sheet of all bills
having depositing account number, amount and cheaque number then separated bills from slips
then posted various stemps on bills and slips as follows

 Clearing stamp of next date on front of bill

 Accounts credited stamp on back of bill

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 Clearing stamp on front of deposit slip

Procedure for intercity Clearing

I also made intercity clearing. For Intercity Clearing a stamp of intercity posted on face of bill,
then amount, acct number and city name is entered in a separate register and deposit slip is
attached in a specific file. And a stamp is posted on back of bill. A separate slip is filled for every
city given by NIFT. In the specified envelope is used for every city given by NIFT with printed
name of city.

4.3.7. Learned About Making Demand Draft (DD) & Pay Order(PO)

Out of the city DD is used, DD is made through Check and Cash. Rs.50 is charged on cash slip
and in case of check slip Rs.220 is charged. PO is made within a city. It is also in the form of
Cash and Check. Rs.50 is charged on cash and Rs.220 is charged on check slip.

 If a regular customer wants to make DD or PO then in this case he/she has to fill up a
form. This form is known as “FUNDS TRANSFER FROM”; on making this DD/PO
Rs.50 is charged for making this in case of account holder but for non account holder
Rs.220 is charged.
 In the form all the mandatory places are compulsory to fulfill. Like, currency of
instrument, type of remittance, beneficiary details, particular of applicant, applicant
signature etc. these are such requirements that must be fill up.
 And at the last the authorized officer puts his/her signature on DD/PO form and three
stamps are pasted on it;
a. Transfer stamp
b. Signature verified stamp
c. Crossing check stamp ( in case if half payment is made through cash form, then a
check is fill up for this and attached with the DD/PO form)
 And at the last the operational manager puts supervision on this and all the records are
transferred into computer for bank records.

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4.3.8. Learned making of Cash Deposit Receipt (CDR)

CDR is used locally. It is also in from of Cash AND Check. CDR has no charges. A request
form is filled by the hands of the customer for making CDR. This form is known as “CREDIT
DEPOSIT FORM”. In this form some requirements are compulsory which has to be full up
these are check no, the person name to whom it is going to be transferred, signature specimen,
date etc. After all these the verification stamp, check transfer stamp, and signature verified stamp
is pasted on it. And at the final stage, all the transactions are recorded in a register for keeping
banks records.

4.3.9. Other Tasks Performed

 Attended phone calls

 Attended customer inquiries
 Received ATM forms
 Received and entered daily DAK
 Filled cheaque book requisition slips

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4.4. SWOT Analysis

The overall evaluation of company‟s strength, weakness, opportunities and threats is called
SWOT analysis. Strengths include internal capabilities, resources and situational factors that may
help the company to serve its customers and achieve its objective. Weakness includes 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. Threats are unfavorable external factors or trends that may
present challenges to performance.

Strengths

 MCB is reputed financial organization and well known all over Pakistan.
 MCB look for the comfort and convenience of clients.
 Large number of diverse products.
 MCB has branch strength of more than 1100 branches nationwide.
 Phone Banking
 Mobile Banking
 Highly automated Bank with almost 1000 online branches
 Internationally designed products
 Continuous improvement.
 Quest for quality

Weakness

 Poor Advertising
 Mismanagement of Time
 Costly and too much paper work for loan sanctioning
 Low job satisfaction among employees
 Manual Book Keeping
 High Charges
 Lack of Training Facility

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Opportunities
 Diversification
 Prepaid Debit Cards
 Student Finance Facility
 Establishing Foreign Branches
 Credit Cards
 Asset Management Sector
 Agriculture Sector
Threats
 Competition
 Low Investment
 Expectation of the People
 Weak Economic Conditions of Pakistan

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4.5. Recommendations
By analyzing the MCB bank following tings should be adopted to improve the bank‟s
performance.

 Bank must let the potential customers know about their products. This can only be done
by effective advertising on television and obtaining press coverage together with direct
marketing.
 The ATM has become more popular during the last two years or so. Therefore by
increasing the number of ATM location bank can cater those consumers who prefer not to
come to branch. The ATM should be placed in places other than bank branches like
hotels, airports etc.
 Job rotation and promotions can increase the productivity of the employees.
 Communication system for the employees that would help them better to communicate
with each other.
 Extensive Employee training programs should be devised to increase the productivity of
the productivity of the employees.
 Every year some of the employees should be sent for training to other countries and
employees from other branches should be brought here. Some more reading material
should be provided. The purpose should be to educate the employees with the advance
studies in their field. The employee should be provided the opportunities to attend and
participate in seminars and lectures on banking.
 Recruitments should be strictly on merit basis and induction should be after proper and
extensive training.
 Foreign branches should be opened in order to capture the international market and to
earn international repute for the bank.
 A short term promotional technique is to offer price incentives, for example, low interest rates on
advances or limited issue high profit bearing term deposits. Longer term, a Loss Leader may be
offered. For example, profit bearing current accounts are not very lucrative but any bank can not
afford not to offer these. The reduced profits can be augmented by profits made on other
products.

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Conclusion
The emerging banks of the private sector of Pakistan like MCB have proven to be helpful in
improving the overall economy of Pakistan. MCB has been declared 07 times “Euromony
award” and “Asia Money Award” for the last five years, which is a very big achievement for
Pakistan. Muslim Commercial Bank is heading towards the right direction and it possesses the
necessary potential to improve in all of its sectors. Thus Muslim Commercial Bank Limited is
one of the best banks of Pakistan. Doing internship in MCB give me great opportunity for
learning about the banking sector of the country and this experience will help me in my future
career.

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REFERENCES:
1) MUSLIM COMMERCIAL BANK
http://www.mcb.com.pk/
2) BUSINESS WEEK
http://investing.businessweek.com/research/stocks/people/people.asp?ticker=MCB:PA
3) CORPORATE INFORMATION
http://www.mcb.com.pk/mcb/corporate_information.asp
4) FINANCIAL INFORMATION ( FINANCIAL REPORT 2009)
http://www.mcb.com.pk/ir/fin_data_rep.asp
5) Oppapers
http://www.oppapers.com/essays/Pakistans-Banking-Sectors-Industry-Analysis/124675
6) Wikipedia
http://en.wikipedia.org/wiki/Muslim_Commercial_Bank

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Appendix
Sample Demand Draft

MCB ATM and Credit Card

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ACKNOWLEDGEMENT

Praise is to Allah, the most Gracious and Merciful, who blessed me with the knowledge and
wisdom and enabled me to overcome this task. Heartiest gratitude to my parents without their
continuous encouragement and love I could not have accomplished this task.

I dedicate this internship report to four most wonderful and amazing woman in the whole wide
universe. Because of their prayers and encouragement I have been able to complete this report.

In last but not the least all the employees at MCB bank for their support.

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PERSONAL RESUME

AHSAN ALI
PERSONAL INFORMATION

Sex: Male Home Address:

Marital status: Single House No. 500

NIC: 33100-7470976-5 A Block

D.O.B: 19/08/85 Ghulam Mohammad Abad

Nationality: Pakistani Faisalabad, Pakistan

E-mail: ali_ahsan77@hotmail.com Mobile: 03235348685, 03136677110

Tel: 041-681501

PROFILE

A well organised individual used to working under pressure. Communicates well, both
written and orally and enjoys working with a wide range of people. Self-motivated with
an outgoing personality and the determination to succeed.

ABILITIES AND AREAS OF SPECIALIZATION

Capability to plan, organize and implement several projects simultaneously, and meeting the targets with
quality by giving close attention to each assignment. Leadership qualities: Group leader of all the projects
mention ahead.

Computer literate and well versed in:

 MS office
MS Word, MS Power Point, MS Front Page(basic), MS Excel, MS Project(basic),

 Other Software
SPSS (Basic), Quick Books, Peach Tree

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CURRENT DEGREE:

MASTER OF BUSINESS ADMINISTRATION (MBA), COMSATS INSTITUTE OF

INFORMATION TECHNOLOGY (CIIT), ISLAMABAD (2009-2011)

PROJECTS
 Analysis for expected rate of return on equity investment with the help of
three models; Market Adjusted Model, Market Model, CAPM.(Corporate
Finance)
 Fundamental & Technical Analysis of three selected listed public
companies.(IAPM)
 Tools of TQM used by Kohinoor Mills, Rawalpindi(Operations
Management)
 Research on Constraints on performance of SMEs(Research Methodology)
 International Business strategy for IntroducingAKEA Store in
Pakistan(International Business)
 Financial Statement Analysis(Financial Management)
 Recruitment Strategy of PIA and ways to Improvement (HR Theory
&Practices)
 Applied Marketing Strategies used by Lipton & Supreme, competing brands of
Unilever (Applied Marketing Strategy)

SUMMARY OF QUALIFICATIONS
B Com (2007) ICS (2003)
Punjab University BISE, Faisalabad
Quaid College of Commerce, GC University
Peoples Coloney, Faisalabad
Faisalabad
Secondary School Certificate (2001)
BISE, Faisalabad
Govt. M.C. High School
AllamaIqbal Road,
Faisalabad
REFERENCES
Available on Request

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