MCB Final Report

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.

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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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Structure of Financial Sector in Pakistan

Scheduled B anks

(47)

- Commercial banks

- Specialised banks

NB FIs

- Modarabas

- Leas ing companies

- Mutual funds

- Specialised financial (DFIs)

- Inves tment banks

- Housing Finance Companies

Specialised Banks Commercial Banks

Foreign Banks

(22)

Domestic Banks

(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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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 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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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.

MCB Bank Ltd.

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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











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1.7.9. Organizational Structure

1.7.9.1 ORGANIZATIONAL SETUP OF MCB

PUNJAB

NWFP & AZAD

KASHMIR

SINDH

BALOCHISTAN

KARACHI

LAHORE

PESHAWAR

PROVINCIAL HEAD

QUARTERS

QUETTA

HEAD QUARTER

CIRCLE OFFICES

BRANCH OFFICES

KARACHI

MCB Bank Ltd.

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1.9.2.OrganizationalStructure OF MCB

Board of Director (BoD)

Chairman

President

Wholesale

Banking

Islamic Banking

Commercial Banking

Special Asets Management

Public Relations

Risk

Management

Financial Control

Strategic Planning& Investment

Compliance & Control Banking

Consumer Banking

Treasury & Forex

Audit & RAR

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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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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: [email protected]

MCB Bank Ltd.

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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

MCB Bank Ltd.

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2. BANK’S FINANCIAL PERFORMANCE

2.1Income Statement

Currency in

Millions of Pakistan Rupees

As of: Dec 31

2006

Restated

PKR

Dec 31

2007

Reclassified

PKR

Dec 31

2008

Restated

PKR

Dec 31

2009

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

EXTRA ITEMS

12,540.9 16,441.7 15,323.2 15,665.4

NET INCOME TO COMMON EXCLUDING

EXTRA ITEMS

12,540.9 16,441.7 15,323.2 15,665.4

MCB Bank Ltd.

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2.2.BALANCE SHEET

Currency in

Millions of Pakistan Rupees

As of: Dec 31

2006 Restated

PKR

Dec 31

2007 Reclassified

PKR

Dec 31

2008 Restated

PKR

Dec 31

2009 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

INVESTMENTS

48,429.9 16,913.5 24,707.1 24,275.4

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

Lease

1,117.4 479.2 -- --

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/

total income)

55.91% 63.80% 70.16% 70.49% 62.80% 34.47%

Income/ expense ratio Times 3.84 4.10 5.06 4.01 3.12 1.62

Return on average equity

(ROE)

27.35% 31.49% 37.66% 45.00% 64.87% 28.73%

Return on average assets

(ROA)

3.25% 3.60% 4.06% 3.79% 3.20% 0.91%

Return on Capital Employed

(ROCE)

27.35% 31.49% 37.22% 42.48% 58.12% 24.17%

Earnings per share (EPS before

tax) Rs. ***

33.50 31.64 30.83 26.77 18.84 5.87

Earnings per share (EPS after

tax) Rs. ***

22.42 22.25 22.09 17.57 12.91 3.52

Advances/ deposits ratio

(Gross)

73.37% 82.64% 78.65% 80.34% 82.03% 65.14%

Advances/ deposits ratio (Net) 68.89% 79.39% 74.96% 77.00% 78.63% 62.12%

Earning assets to total assets

ratio

87.23% 85.70% 83.60% 85.54% 87.34% 86.88%

Earning assets to Deposits &

borrowings

107.74% 107.75% 103.52% 103.99% 101.65% 98.47%

NPLs to Gross advances ratio 8.62% 6.70% 4.67% 4.14% 4.46% 6.14%

Deposits to shareholder equity

ratio Times

6.02 6.32 6.43 7.22 12.53 24.03

Capital Adequacy Ratio ** 19.07% 16.28% 16.75% 18.65% 12.54% 9.64%

MCB Bank Ltd.

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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

dividend)

5% 9.14% 3.13% 2.95% 2.38% 4.26%

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: [email protected] 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

Documents

MCB Final Report