INTERNSHIP REPORT ON

MCB Bank Limited

Adalat Garh Branch, Sialkot

BY

Haseeb Razzaq

MBA (Finance)

08031020-076

Session: 2008-2010

DEPATMENT OF MANAGEMENT SCIENCES

UNIVERSITY OF GUJRAT

April, 2010

INTERNSHIP REPORT ON

M

MCB Bank Limited

Adalat Garh Branch, Sialkot

Internship Report submitted to the Department of Administrative Sciences

In Partial Fulfillment of the Requirements for the Degree of

Master of Business Administration

April 2010

DEPATMENT OF MANAGEMENT

SCIENCES

UNIVERSITY OF GUJRAT

Faculty of Management and Administrative Sciences

University of Gujrat, HH-Campus

INTERNSHIP REPORT ON

MCB Bank Limited

Adalat Garh Branch, Sialkot

SUPERVISED BY:

Signature:

Name:

Designation:

Chairman:

Signature:

Name: _

First of all I would like to thanks to Allah on this occasion.

I also want to show my gratitude to my loving parents and humble teachers who make me able to be at this position.

I also thankful to all the staff members at MCB Adalat Garh Branch, Sialkot especially Mr.

Acknowledgement

Executive Summary

MCB Bank Limited (Formerly Muslim Commercial Bank Limited) has a solid foundation of over 50 years in Pakistan, with a network of over 1000 branches, over 850 of which are Automated Branches, over 350 MCB ATMs in 41 cities nationwide and a network of over 12 banks on the MNET ATM Switch.

MCB's operations continued to be streamlined with focus on rationalization of expenses, re-alignment of back-end processing to increase productivity, enhancement of customer service standards, process efficiency and controls. The Bank has taken the lead in introducing the innovative concept of centralizing Trade Services in the country by providing centralized foreign trade services to branches with a view to improve efficiency, expertise and reduce delivery cost.

During my internship in MCB I worked in Remittances, Advances, Foreign Exchange and Customer Service Office department and I successfully completed all the task/duties that were assigned to me.

During the course of internship I learned about different functions performed by Remittances, Advances, Foreign Exchange and Customer Service Office department and bank as a whole. I also learned bank’s correspondence with their customers and within branches. I learned about documentation requirements and record keeping for different activities and processes, especially the documentation requirement for different kinds of financing facilities.

Table of Content:TABLE OF CONTENT:...............................................................................................................1

CHAPTER # 1 INTRODUCTION...............................................................................9

INTRODUCTION:.......................................................................................................................9BACKGROUND OF THE STUDY:................................................................................................9PURPOSE..................................................................................................................................9SCOPE....................................................................................................................................10LIMITATION OF THE STUDY:.................................................................................................10OBJECTIVES...........................................................................................................................10METHODOLOGY.....................................................................................................................10

Primary Data:..............................................................................................................10Secondary Data:..........................................................................................................11

ORGANIZATION:....................................................................................................................11SUMMARY.............................................................................................................................11

CHAPTER # 2 ROLE OF SECTOR AND ORGANIZATION...............................13

INTRODUCTION:...............................................................................................................13OVERALL RESPECTIVE SECTORS IN PAKISTAN:.....................................................................13HISTORY OF BANKING IN PAKISTAN:........................................................................13ROLE OF THE ORGANIZATION IN PAKISTAN:.........................................................................15OVERALL ORGANIZATION AND FUNCTIONS OF ORG IN PAKISTAN:.......................................16

Vision Statement:.............................................................................................................17Mission Statement:...........................................................................................................18VALUES:..........................................................................................................................19

FUNCTIONS:...........................................................................................................................20Principal function:...........................................................................................................20

Deposits:......................................................................................................................20FINANCING...............................................................................................................21

Auxiliary function............................................................................................................22ORGANIZATION OFFICE IN WHICH YOU ARE WORKING:........................................................24SUMMARY:............................................................................................................................25

CHAPTER # 3 HISTORY OF ORGANIZATION...................................................26

INTRODUCTION:.....................................................................................................................26BRIEF HISTORY OF THE ORGANIZATION:..............................................................................26

NATIOINALIZATION:.....................................................................................................26PRIVATIZATION:............................................................................................................27Awards of MCB:..............................................................................................................27Present Status:.................................................................................................................28

RELATIONSHIP OF HEAD OFFICE TO THE BRANCH OFFICES:..................................................30MAIN DEPARTMENTS AND THEIR JOBS.....................................................................30

GENERAL BANKING......................................................................................................30REMITTANCE...........................................................................................................30

PAY ORDER.........................................................................................................31DEMAND DRAFT................................................................................................31MAIL TRANSFER................................................................................................31TELEGRAPHIC TRANSFER...............................................................................31PAYMENT OF PAY-ORDER AND DEMAND DRAFT....................................32CANCELLATION OF PAY-ORDER AND DEMAND FRAFT.........................32VOUCHERS..........................................................................................................32INWARD CLEARING..........................................................................................32OUTWARD CLEANING......................................................................................33ISSUANCE OF CHEQUE BOOKS......................................................................33ISSUANCE OF ATM CARDS..............................................................................33CANCELLATION OF ATM CARDS...................................................................34SHORT NOTICE TERM DEPOSIT......................................................................34CALL DEPOSIT....................................................................................................34

FOREIGN EXCHANGE............................................................................................34LC’S ESTABLISHMENT.....................................................................................34PAYMENT OR RETIREMENT............................................................................35FOREIGN CURRENCY DEPOSITS....................................................................35FOREIGN REMITTANCES..................................................................................35

ADVANCES / CREDIT....................................................................................................35BASIC BANKING ACCOUNT.................................................................................36

PAK RUPEE OR FOREIGN CURRENCY ACCOUNTS.................................................36SAVING ACCOUNT.................................................................................................36MCB RUPEE MAXIMIZER ACCOUNT..................................................................37CURRENT ACCOUNT..............................................................................................37KHUSHALI BACHAT ACCOUNT..........................................................................37MCB ENHANCED SAVING ACCOUNT................................................................37

MCB’s PARTNERS IN BILL PAYMENT.........................................................................38INVESTMENT BANKING................................................................................................38

ABOUT REMIT EXPRESS.......................................................................................39FEATURES............................................................................................................39

PERSONAL LOAN....................................................................................................39OFFICES OR FIELD OFFICES....................................................................................................40

MCB BRANCH NETWORKS:.........................................................................................40CURRENT STAFF....................................................................................................................40

Current staff of branch according to qualification and experience:...............................41Training received by number of employees:...............................................................41

Workload..........................................................................................................................41Responsibilities................................................................................................................41

PHYSICAL FACILITIES............................................................................................................42CRITICAL ANALYSIS OF THE BRANCH...................................................................................42

Performances...................................................................................................................43In term of customer’s satisfaction:..............................................................................43In term of accounts and budgets:................................................................................43

SUMMARY:............................................................................................................................43CHAPTER # 4 POLICIES............................................................................................44

INTRODUCTION......................................................................................................................44POLICIES:...............................................................................................................................44

Internship Policy:............................................................................................................44MCB has no gender bias..................................................................................................44Opening account policy...................................................................................................44Training of employees......................................................................................................44Revenue Recognition........................................................................................................44Investments Policy...........................................................................................................45RISK MANAGEMENT.....................................................................................................45

Currency Risk Management........................................................................................45Credit Risk Management............................................................................................45

MCB’s Competitive Strategies.........................................................................................45SUMMARY:............................................................................................................................48

CHAPTER # 5 DIFFERENT MODELS.....................................................................49

INTRODUCTION:.....................................................................................................................49SWOT ANALYSIS:.............................................................................................................49

STRENGTH:....................................................................................................................49WEAKNESS:....................................................................................................................49OPPORTUNITIES:..........................................................................................................50THREATS:.......................................................................................................................50

PEST ANALYSIS AND ENVIRONMENTAL SCAN.......................................................50POLITICAL AND LEGAL ENVIRONMENT:..................................................................51ECONOMIC TRENDS.....................................................................................................51SOCIO-CULTURAL ENVIRONMENT............................................................................51TECHNOLOGICAL FACTORS.......................................................................................52

RATIO ANALYSIS OF THE MCB:...........................................................................................52Interpretation:.........................................................................................................53

Interpretation:.........................................................................................................55CHAPTER # 6 RECOMMENDATION.....................................................................56

SHORTAGE OF STAFF:...........................................................................................................56STAFF IS NOT ADEQUATELY TRAINED:................................................................................56ONLINE BANKING.................................................................................................................56OTHERS.................................................................................................................................57OVERALL SUGGESTIONS FOR IMPROVEMENT.......................................................................57

Introduce Various Profitable Investment Schemes..........................................................57Training Staff:..................................................................................................................57Change The Nature Of Work:..........................................................................................58Refresher Courses:..........................................................................................................58Special Training In Abroad.............................................................................................58Incentive to Employees:...................................................................................................58Others...............................................................................................................................58Reward and Punishment..................................................................................................59Survival Of The Fittest.....................................................................................................59

REFERENCES.....................................................................................................................60

Chapter # 1 Introduction

Introduction:Chapter one is about introduction of report. As a part of requirement of

MBA degree six week internship is necessary for student. This chapter

includes background, purpose, scope, objectives and methodology of the

study. It also include introduction of organization.

Background of the study: Internship training program during Master in Business administration

Program is necessary for the partial fulfillment of the completion of Degree of

Master in Business Administration. It is necessary for me to complete an

internship session of about 6 weeks in some manufacturing or service industry

relevant to my area of interest and specialization. So, I choose the Banking

field because I have the interest in this sector because my study background is

related with this sector.

PurposeInternship is the capstone experience that provides me with hands-on,

real-world experience in a work setting. Ideally, internship will enable interns

to:

(a) integrate and use my knowledge and skills from the classroom,

(b) discover where further competence is needed,

(c) take steps to gain that competence under educational supervision, and

(d) become better acquainted with the types of work settings in which such

competence can be applied.

Scope This study will facilitate the students regarding the working of Banking sector

of Pakistan because most of the teachers during their lectures use the examples

of Banks like MCB, National Bank, UBL, Bank Alfalah and many others,

students should study this report so that they must grasp the functioning of

such Banks.

Limitation of the Study:The study is done with the sole purpose of doing the best work but

there were certain limitation faced during the internship period. The most

important limitation from which the study suffers is the non-availability of

information in a manner required for analysis and the secrecy of the bank.

Another important limitation of the study is time and space constraint.

ObjectivesI worked as an internee in MCB Adalat Garh branch, Sialkot. The main

objectives to study in MCB were:

To get some experience in working with well reputed organization.

To gain knowledge about the professional environment of the bank.

To know about the technology utilized in the banks.

To deal and manage with the situation of stress.

MethodologyThere are mainly two methods that are used for the collection of data.

Primary Data: Observation of functions of Branch operations on the spot.

Observation of different processes of Branch on the spot.

Secondary Data: Internet is very helpful for me to study more about banking sector

of Pakistan.

Different type of booklets of the Bank.

Annual reports

Journals

Newspapers

Organization:

MCB is one of the leading banks of Pakistan with a deposit base of

about Rs. 280 billion and total assets of around Rs.300 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.

SummaryThis is the first chapter of the report containing the detail introduction

of the report. Internship training program during Master in Business

administration Program is necessary for the partial fulfillment of the

completion of Degree of Master in Business Administration. Internship will

enable interns to integrate and use my knowledge and skills from the

classroom. This study will facilitate the students regarding the working of

banking sector of Pakistan.

For achieving my purposes, objectives and for the preparation of the

internship report I required some kind of data, I used both methods of data

collection that are primary sources and secondary sources for that purpose.

Chapter # 2 Role of Sector and Organization

INTRODUCTION:This chapter will summarize that what’s the current situation of the

banking sector in Pakistan. What elaborate the importance of MCB in the

banking sector of Pakistan? This chapter will explore the role of MCB in the

economic & social development of Pakistan. Moreover this will also tells you

about the functions that’s the organization is performing and about the

internship office.

Overall respective sectors in Pakistan:Banking is one of the most sensitive businesses all over the world.

Banks play very important role in the economy of a country and Pakistan is no

exemption. Banks are custodian to the assets of the general masses. The

banking sector plays a significant role in a contemporary world of money and

economy. It influences and facilitates many different but integrated economic

activities like resources mobilization, poverty elimination, production and

distribution of public finance.

HISTORY OF BANKING IN PAKISTAN:At the time of independence, commercial banking facilities were

provided fairly well here. There were 487 offices of schedule banks in the

territories now constituting Pakistan. An Expert committee was appointed.

The committee recommended that the reserves bank of India should continue

their function in Pakistan until 30 September. 1948, and Pakistan would take

over the management of public debt and exchange control from reserve bank

of India on April 1948 and that Indian notes would continue to be legal tender

in Pakistan until 30 September 1948. Moreover the banks including those

having their registered office in Pakistan transferred them to India in order to

bring a collapse of a new state. By 30 June 1948 the number of the offices of

scheduled banks in Pakistan declined from 487 to only 195.In order to make

necessary arrangement for the assumption of control and expert committee

was appointed to recommend necessary steps, including the required

legislation to establish a central bank for Pakistan. The governor-general of

Pakistan Quaid-i-Azam Muhammad Ali Jinnah inaugurated the State Bank of

Pakistan order was promulgated on May 12, 1948. The first Pakistani notes

were issued in October 1948 in the State Bank of Pakistan withdrew the

reserves Bank of India notes of the value of Rs. 125.02 crores with the help

the Pakistan notes.

On 1st January, 1947 all Pakistani banks were nationalized through

Nationalization Act 1974. Under this law all Pakistani Banks become a pubic

property. All small banks were merged in bigger banks to create five major

Pakistani banks. These banks were to control by Pakistani Banking Council.

There are still controversies about this act of Govt. as whether it contributed in

success of failure of banks. However the major changes after Nationalization

were as follows:

Working of banks was extended to under-developed areas.

Market expansion for credit and deposits.

Decrease in service level of bank officers.

Decrease in profitability as well.

In 1990 the govt. decided to denationalize all the nationalized institutions.

Same was also suggested in banking sector. For this purpose, amendments

were made to Nationalization Act 1974 and two nationalized banks were

privatized. Along with this a permission to open banks in private sector was

also granted. The rules regarding establishment of new banks and for

incoming foreign banks were also relaxed. The two privatized banks are: MCB

taken up by a private group in April, 1991 & ABL taken up by its own

employees in September, 1991. After these changes a large number of private

and foreign banks started their operation in Pakistan

Now, 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.

Pakistan's banking sector has remained remarkably strong and resilient

during the world financial crisis in 2008–09, a feature which has served to

attract a substantial amount of FDI in the sector. Stress tests conducted on

June 2008 data indicate that the large banks are relatively robust, with the

medium and small-sized banks positioning themselves in niche markets.

Banking sector turned profitable in 2002. Their profits continued to rise for the

next five years and peaked to Rs 84.1 ($1.1 billion) billion in 2006.

During the fiscal year of 2008-2009, total assets of all the scheduled banks

increased by Rs 574.7 billion. Total assets grew by 6.4 percent from Rs 8861

billion in June 2008 to Rs 9436 billion in June 2009. During the fiscal year of

2008-09, there was also an increase of Rs 248 billion in the net advances of

the scheduled banks. Net advances grew by 8.67 percent from Rs 2873 billion

in June 2008 to Rs 3128 billion in June 2009.

Role of the organization in Pakistan:MCB Bank Limited formerly known as Muslim Commercial Bank

Limited was incorporated by the Adamjee Group on July 9, 1947 in Kolkata

in Bengal, under the Indian Companies Act, VII of 1913 as a limited

company`. But due to changing scenario of the region, the certificate of

incorporation was issued on 17 August, 1948 with a delay of almost 1 year;

the certificate was issued at Chittagong. The first Head office of the company

was established at Dacca and Mr. G.M. Adamjee was appointed its first

chairman. It was incorporated with an authorized capital of Rs. 15

million. The Bank transferred its registered/Head office from Dhaka to

Karachi on August 23, 1956 through a special Resolution.

The bank was established with a view to provide banking facilities to

the business community of the South Asia. The bank was nationalized in 1974

during the government of Zulfiqar Ali Bhutto. This was the first bank to be

privatized in 1991 and the bank was purchased by a consortium of Pakistani

corporate groups led by Nishat Group.

MCB is Pakistan’s fourth largest bank by assets having an asset base of

US$6.7 billion, and the largest by market capitalization having a market

capitalization of US$4.1 billion. The Bank has a customer base of

approximately 4 million and a nationwide distribution network of 1,026

branches, including 8 Islamic banking branches, and over 300 ATMs, in a

market with a population of 160 million.

In 2008 the head office of MCB was shifted from Karachi to Lahore in

a newly constructed building, namely MCB House located at Sharea Ghous-

ul-Azam, commonly known as Jail Road.

Overall organization and functions of org in Pakistan:

MCB is one of the leading banks of Pakistan with a deposit base of

about Rs. 280 billion and total assets of around Rs.300 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.

Vision Statement:

To be the leading financial services provider, partnering with our

customers for a more prosperous and secure future.

 

Mission Statement:

We are a team of committed professionals, providing innovative

and efficient financial solutions to create and nurture long-term

relationships with our customers. In doing so, we ensure that our

shareholders can invest with confidence in us.

VALUES:

INTEGRITY

We are the trustees of public funds and serve our community with

integrity. We believe in being the best at always doing the right thing.

We deliver on our responsibilities and commitments to our customers

as well as our colleagues.

RESPECT

We respect our customer’s values, beliefs, culture and history. We

value the equality of gender and diversity of experience and education

that our employees bring with them. We create an environment where

each individual is enabled to succeed.

EXCELLENCE

We take personal responsibility for our role as leaders in the 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.

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.

Functions:

Basically there are two basic categories on the basis of functioning of MCB

Bank, which are

Principal function

Auxiliary function

Principal function:

The principal functions are basically the core functions of the bank that is their

lifeblood of bank, which are

Acceptance of deposits

Financing

Deposits:

There are basically two types of deposits and their nature vary due to time

factor, which are

Demand deposits

The demand deposits have no legal restriction on drawing of the

deposited amount and the cash is readily available on demand without

any conditions

Demand deposits are further classified into two categories

o Current deposits:

The current deposits are non-interest bearing deposits and

earn the most for banks as there is no cost for the banks but the

depositor can claim no interest whatsoever.

o Saving deposits:

The saving deposits are the interest bearing deposits and although

there are no such restrictions but it is mostly preferred for saving and

salaried class and similar class clients deposit in this category to earn

interest so no regular withdrawal takes place in this type of deposits.

Time deposits:

On the contrary the time deposits are deposits for a particular

period of time and cannot be easily withdrawn on demand and if the

amount is withdrawn certain penalty is levied on withdrawal before

time.

Time deposits are further categorized into two categories that are

o Notice time deposits:

The opposite is a Demand deposit or a sight deposit which can

be withdrawn at any time, without any notice or penalty; e.g.

money deposited in a checking account or savings account in a

bank.

o Fixed term deposits:

A deposit held at a financial institution that has a fixed term.

These are generally short-term with maturities ranging anywhere

from a month to a few years.

FINANCING

The second important function of the MCB is to provide finances

to the individuals and businesses against securities at a certain fixed rate of

interest. As the different types of accounts in accepting deposits MCB

also have the different types of account in which it provide the loan to its

customers. Following are the different types of the accounts in which loan

is made.

Demand Finances:

Demand Finances are those finances, which are given on demand.

It is a single transaction. It can be long, medium and short term. Markup is

also charged. Here the amount can be withdrawn once at the time of

disbursement.

Running Finances:

It is always a short-term loan i.e., one-year. It can be withdrawn at any

time and deposited at any time. It is basically for running day today business

operations. This type of loan is provided to the person who has the strong

relation with the bank.

Cash Finances:

Cash finances are for a limited period of time i.e., one year. It is

advanced to people to complete the working process.

Fixed Asset Financing:

This type of account is provided to the business for the purchase of fixed

assets and the assets is considered as the security.

Overdraft

This type of loan is provided to the individual that has very healthy position

and they are allowed to draw up to the limit if there is no balance in the

account. The rate of interest is charged on the daily basis.

Auxiliary function

These are the functions that have the secondary position in the bank point of

view. These functions are cause to attract the customer. Banks performs this

kind of functions as per demand on the extra charges.

Collection of Cheques

MCB acts as an agent to its customers in the collection and payment of

cheques, bills and promissory notes. This is done on the behalf of the customer

and MCB charges the commission.

Locker:

MCB also provides locker facility to its valuable clients. where of

people can be kept their precious ornaments.

Collection of Dividends:

The bank provides a very useful service in the collection of dividends

or interest earned on stocks and shares held by his customers. The customer is

simply to inform the issuer of the securities that the interest on the securities is

to be credited to his account in the bank.

Purchase and Sale of Securities:

MCB is authorized by the customer, purchase or sale securities on his

behalf and thus adds other benefits to his portfolio.

Transfer of Funds:

MCB also transfer funds of the customers from one bank to another

bank. If the transfer is at one station, they don’t charge any commission and

even if they charge, they charge on reduce rate

Issue of Traveler’s Cheques:

The bank has introduced the schemes of Rupee Travelers Cheques and

issues them for the convenience of travelers and charges a nominal

commission. In addition to these bank also performs a number of functions

and activities for and on behalf of its clients with the sole purpose of serving

them to the best of its capabilities and potentialities.

DISCOUNTING BILLS OF EXCHANGE:

The bank utilizes their surplus funds in another important way. They

discount the bills of exchange at their market worth, i.e., the pay to the holders

of the bill an amount equal to their face value after deducting interest at the

current market rate for the period the bill has to mature. The bills of exchange

are a very liquid asset for a bank to hold. These bills are usually drawn for

three months and are used for financing internal as well as external trade.

Acts as a Referee:

MCB provides a useful service to his customers by acting as a referee

for his credit worthiness. The information is supplied in almost secrecy and is

based impartially on the respectability and financial standing of the client.

Foreign Exchange Business:

MCB transacts foreign exchange business by discounting foreign bills

of exchange and thus provides facilities for financing the foreign trade.

Organization office in which you are working:

I have completed internship in MCB Adalat Garh branch (1077), Sialkot.

Although it’s a small branch in this area, but they are facilitating their

customers by providing quality services. They provided different services to

their customer. To fully satisfy their customer, and for efficient working, they

assign different services to different departments. Few of these given below:

Cash Department

Deposit Department

Advance & Credit Department

Remittance Department

Foreign Exchange Department

Summary:

Banking started in Pakistan after the bold and emergent decision of

formulation of SBP on July 1, 1948. Thereafter this sector has witnessed

enormous growth. In 1974 banks were nationalized, in the hope that new era

of growth could be achieved through it. However the process is reverse since

1991, up till now MCB, ABL, and UBL have been privatized and HBL is in

the process of its privatization. Pakistan's banking sector has remained

remarkably strong and resilient during the world financial crisis in 2008–09.

During the fiscal year of 2008-2009, total assets of all the scheduled banks

increased by Rs 574.7 billion. During the fiscal year of 2008-09, there was

also an increase of Rs 248 billion in the net advances of the scheduled banks.

The principal functions of MCB are acceptance of deposits & financing and

auxiliary functions of MCB are Collection of Cheques, Locker, Collection of

Dividends, Purchase and Sale of Securities & etc.

Chapter # 3 History of Organization

Introduction:Chapter three is about the introduction to the MCB Bank Limited. In

this chapter the overall working of MCB is described. This chapter contains

information about the brief history of the organization. When the bank was

established and who starts it.

Banks have a proper communication system through which the head

office communicate to the branch offices. The details of communication

system followed by head office are included in chapter three.

Brief History of the organization:MCB Bank Limited formerly known as Muslim Commercial Bank

Limited was incorporated by the Adamjee Group on July 9, 1947 in Kolkata

in Bengal, under the Indian Companies Act, VII of 1913 as a limited company.

But due to changing scenario of the region, the certificate of incorporation was

issued on 17 August, 1948 with a delay of almost 1 year; the certificate was

issued at Chittagong. The first Head office of the company was established at

Dacca and Mr. G.M. Adamjee was appointed its first chairman. It was

incorporated with an authorized capital of Rs. 15 million. The Bank

transferred its registered/Head office from Dhaka to Karachi on August 23,

1956 through a special Resolution.

NATIOINALIZATION:In January 1974, the government of Pakistan nationalized MCB

following the banks (Nationalization) Act 1974, subsequently, in June 1974,

Premier Bank limited merged with MCB.

PRIVATIZATION:A wave of economic reforms swept Pakistan in the late 1990’s

introducing the need for privatization of state owned banks and companies in

April 1991, MCB because Pakistan’s first privatized Bank, the government of

Pakistan transferred the management of the Bank to Nishat Group– group of

leading industrialists of the country by selling 26% shares of the Bank. With a

view to broaden equity holding the government sold 25% of the paid up

capital to the general public. In terms of agreement between the government of

Pakistan and the Nishat Group additional 24% shares have been purchased by

the group making their holding 50%. As of June 2008, the Nishat Group owns

a majority stake in the bank. 25% was retained by the government.

Now it is fully privatized.

Mian Mohammad Mansha is the Chairman of the group (and also

MCB) and has played instrumental role in its success. In recognition of Mr.

Mansha’s contribution, the Government of Pakistan has conferred him with

"Sitara-e-Imtiaz", one of the most prestigious civil awards of the country.

MCB is Pakistan’s fourth largest bank by assets having an asset base of

US$6.7 billion, and the largest by market capitalization having a market

capitalization of US$4.1 billion. The Bank has a customer base of

approximately 4 million and a nationwide distribution network of 1,026

branches, including 8 Islamic banking branches, and over 300 ATMs, in a

market with a population of 160 million.

Awards of MCB:

MCB has become the only bank to receive the Euromoney award for

the seventh time and Asiamoney award for fifth time in the last ten years.

MCB won “Best Bank in Asia” award in 2008. MCB also won the

"Best Bank in Pakistan" award in 2008, 2006, 2005, 2004, 2003, 2001, 2000.

In addition, MCB also has the distinction of winning the Asia Money award in

2009, 2008, 2006, 2005 & 2004 for being "The Best Domestic Commercial

Bank in Pakistan".

Present Status:

In 2007, MCB reported a profit after tax of PKR16.4 billion (US$270

million) and generated a return on average equity of 38% and a net interest

margin of 8.08%. The Bank’s asset quality is strong with a gross NPL ratio of

4.7% and provision coverage of 100%.

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 and managing its non-performing loans via improved risk management

processes.

In 2005, the management of the bank abbreviated its name from

Muslim Commercial Bank Limited to MCB Bank Limited to explore

international markets; they were facing resistance due to the word Muslim

specially from Western Countries to avail license. In 2008 the head office of

MCB was shifted from Karachi to Lahore in a newly constructed building,

namely MCB House located at Sharea Ghous-ul-Azam, commonly known as

Jail Road.

The MCB Tower in Karachi serves as the MCB's headquarters, and is

also the tallest building in Pakistan. MCB, advised by Merrill Lynch, became

the fourth Pakistani company (the other three being Hubco, PTCL and

Chakwal Cement - they all have been delisted) to list on the London Stock

Exchange when it raised US$150 million global depositary receipts.

In May 2008 Malaysian bank, Maybank and MCB signed an

agreement, whereby Maybank will acquire up to 20% of the ordinary shares in

MCB from Nishat Group. The acquisition is in-line with Maybank’s strategy,

as Malaysia’s financial services leader in the region, to build its presence in

key growth markets across the region. It also paves the way for MCB, one of

Pakistan’s premier financial services groups, to engage Maybank as its

exclusive foreign commercial bank strategic partner.

Maybank initially acquired from Nishat Group 94,241,527 ordinary

shares in MCB, representing a 15% stake in the Bank, for a cash price of

PKR470 per share. The total consideration paid was approximately US$686

million. The purchase price represented a 11.4% premium to MCB’s closing

share price of PKR 422 on May 2, 2008, and a premium of 12.9% to the

average closing share price for MCB over the 30 trading days immediately

preceding the date of this announcement.

Based on MCB’s December 31, 2007 audited book value, the purchase

price represents an implied price to book value multiple of 5.13x, a price to

2007 earnings multiple of 18.0x and a price to 2008 earnings multiple of

15.2x. In July 2008 Maybank exercised its right to increase its stake to 20%.

The stake in MCB allows Maybank the right to appoint two Directors

to represent its interest on the Board of MCB. One of these Directors was to be

appointed immediately and the second Director will be appointed upon

completion of the term of the existing Board, scheduled to be on March 27,

2009.

As part of the transaction, Maybank and MCB are also expected to

enter into a business cooperation arrangement which will include, among

others, Islamic banking, retail banking, credit cards, asset management and

SME banking. Leveraging Maybank’s leadership and experience in these

segments coupled with MCB’s brand and broad distribution network,

Maybank and MCB believe that significant revenue synergies can be attained.

Both Maybank and MCB are also expected to benefit from increased business

ties and trade flows between Pakistan and Malaysia.

Relationship of head office to the branch offices:

In MCB decision, strategies, policies are made by the top level

management and these are implemented in each branch. Top level

management don’t involve the lower management in decision making process.

MCB is the pioneer of computerization, as far as it has a very

developed and fastest network. So the head office and all of its branches are

linked through a electronic network, that make possible easy and in time

transformation of the important information.

MAIN DEPARTMENTS AND THEIR JOBSThere are three main departments in any branch of MCB

GENERAL BANKING

FOREIGN EXCHANGE

ADVANCES/CREDIT

GENERAL BANKINGGeneral banking deals with following services:

REMITTANCEIt is transfer of funds. Funds can be transferred in shape of pay orders,

demand draft, mail telegram and telegraph transfer. Payments of fees of

different organizations, fulfillment of tenders, and collection of funds are the

main functions of remittance. Maximum part of general banking depends on

this department.

Issuance of different kinds of remittance:

PAY ORDERPay order is the property of person/company that has to take the

benefit of the amount being pay ordered by the concerned person. Pay

orders are made for the payment of fees, tender or issued for the

payments of dealings. These are required for the proof of payments

made between the bank and the customer in the favor of beneficiary.

These are noted in printed block letters and yearly serial numbers are

issued from computerized system.

DEMAND DRAFTDemand drafts are made for the beneficiary for payments,

funds etc, these are made for outstation branches of the concerned

banks. An advice is also made for the confirmation of the draft send.

These are also approved and safe way of sending amount to the

beneficiary.

These are also noted by computerized system and a serial number is

issued from the computer system.

MAIL TRANSFERMail Transfer is made with in the city for transfer of amount.

An advice is also made for the confirmation of the draft send. These

are also approved and safe way of sending amount to the beneficiary.

These are also noted by computerized system and a serial number is

issued from the computer system.

TELEGRAPHIC TRANSFERTelegraph Transfer is telegram message for transferring the

amount from one branch to other branch. A message advice and a

confirmation advice both are made with TT numbers that are issued for

TEST. TEST depends on two steps:

1. First TEST is on Day, Date and Code Number of branch.

2. Second TEST is on Currency, whether Pak rupees or foreign

currency, amount and TT number issued from manual registers and

confirmed from computerized system.

PAYMENT OF PAY-ORDER AND DEMAND DRAFTPay-Order and Demand Draft both could be paid in shape of

physical payment of cash and in case transfer of amounts; the amount

could be transferred in the beneficiary account. In case of physical

payment authorized signature of beneficiary are taken for the proof of

amount being paid to him and in case of transferring of amount

authorized signature of the beneficiary are checked and verified for

reducing risks.

CANCELLATION OF PAY-ORDER AND DEMAND FRAFTAny type of Pay-Order / Demand Draft is cancelled by the

permission and instructions made by the beneficiary. The customer

could only cancel the pay order/ demand draft as the verified

signatures of beneficiary are present on the advice.

VOUCHERSVouchers are made for records and they should be completed in

all respects, the amount, date, its head, particulars, amount in words,

authorized signatures and contra advice or voucher should be present.

Vouchers are advice either debit or credit slips. They are contra of each

other. If any voucher of debit is passed its contra credit voucher should

also be passed for the balancing of accounts, their respective sheets.

INWARD CLEARINGIt depends on those checks that are cleared inter branch and

with in the city. As the concerned branch receive any type of clearing

check first of all physical checking is taken place. For clearing

procedure there should be two days margin. These cheques have their

vouchers and the amount of the cheque and voucher should be

identical. Than these cheques are stamped and noted on receiving sheet

as well as feed in to the computerized system.

OUTWARD CLEANINGIt depends on those cheques that are cleared out side the city.

For outward clearing cheques are send because the home branch has

there accounts but checks are of other banks. Contras of these cheques

are vouchers that are recordrd in the home branch.

ISSUANCE OF CHEQUE BOOKSAny account holder that has opened the account he/she could

credit his/her account and for this purpose there should be a cheque

book, so he/she could be able to credit the needed amount whatever

he/she wishes. For the issuance of the cheque book a person is advised

to fill a requisite slip with his/her full names and the account number

with two verified signatures. These signatures are checked and then

another requisite slip prepared by the bank staff send to the NIFT, and

it issues the printed cheque books after completion of the procedure in

two or three days.

Account holder can take it by singing on the issuance register or if the

absence of the account holder another person could also take the

cheque book only if he/she has authorized signature of the account

holder. When the cheque books are issued they are feed in the

computer system from the requisite slip so when the cheques are given

for the credit/transfer of amount they could checked. In this way

neither the cheques could be repeated nor could the invalid cheques be

claimed.

ISSUANCE OF ATM CARDSHead office issues ATM (Auto Teller Machine) cards with their

PIN (Personal Identification Number) codes and when the customer

claims for their ATM card they are checked from the list that is also

issued from the head office, and the claim is checked from the list and

if the name is found than the cards are issued by taking a signature and

their PIN codes are given to them by taking signatures on their ATM

card forms. The ATM card has been activated by the number provided

at or with the specific card.

CANCELLATION OF ATM CARDSThe Cancellation of ATM Cards becomes necessary in the

following conditions:

If folded or damaged

Stolen

PIN code missed or forgotten

Card captured by the machine and expired

If requested by the customer

The cancellation or inactivity of the card is being processed by the

request or instructions provided from the customer.

SHORT NOTICE TERM DEPOSITThere are short times either for seven days or for thirty days

and the profit is calculated by the given percentage from the head

office at the payment time. If the customer fails to complete the

duration of seven days or thirty days then no profit is given. If any

amount is outstanding, only in case of automatic continuity, then the

profit is calculated for the whole period by the rate given from the head

office multiplying from the numbers of days divided by the 365 for the

one-day profit.

AMOUNT, RATE, NUMBER OF DAYS / 365 DAYS

Profit is calculated for the six months only for outstanding

SND. Zakat is also deducted but if Zakat deduction form is submitted

to the bank, no Zakat will be deducted then, 10% with holding tax is

also deducted from the profit to calculate net profit.

CALL DEPOSITIt is highly liquid instrument, it can be cashed at any time when

needed. This instrument bears no profit on it. It is mostly used for the

purpose of tenders.

FOREIGN EXCHANGE

LC’S ESTABLISHMENTAny company can provide its documents containing e-form,

bill of lading, short shipment notice in case of short shipment,

packaging list etc. the information provided from the documents is

recorded in the LC establishment portion or section in the computer.

PAYMENT OR RETIREMENTWhen the transactions have been completed then approved

documents from the concerned bank are sent to the home bank for the

payment or retirement of the LC.

These transactions have recorded in the payment or retirement section

of the computer.

FOREIGN CURRENCY DEPOSITSThe Foreign Currency Deposit relates with the foreign currency

accounts, cash deposit or credit and foreign remittances.

FOREIGN REMITTANCESIn this we received the messages through SWIFT for foreign

remittances, which we record in their respective accounts, if these are

relates with Pak rupees than it was transferred in Pak rupees with the

latest rate and if this relates to the foreign currency than it is dealt with

accordingly. The amount has been credited to the respective account

and the head office has been debited against it. After crediting the

amount to the respective account. All the subsequent entries have been

made in the registers and also in the computer record as the system

now have been upgraded on computers. As we are reporting daily to

the head office, so an annexure has been maintained and faxed to the

head office.

ADVANCES / CREDITThis department deals with the approval of different kinds of loans to

different business entities. The loans, which are being approved by the

department, are kept with some securities such as bonds, properties and any

other type of asset, which is equally valuable or more than this as a guarantee.

Every branch has its own limit, if the amount of loans is with in the limit of

the branch then it is being approved by the branch but if the amount of loan is

exceeding the limit then it has to make it approved by the head office. In this

case the branch stored all the required papers and sent them to the head office

for necessary action. If the head office approved the loan then mostly the

period contains a year. And if the party requires more loan than after a year the

loan has been re-approved required that they should have the limit. In case if

the head office do not approve the loans then the return letter came back with

the reasons of not approval of loan and if the reasons have been made

approved by the concerned party then it could be sent again for approval. This

whole process is recorded in the back remain with the bank until the party has

not refunded all the amount of loan and bank has the authority to liquidate

those assets for preventing it from loss.

BASIC BANKING ACCOUNTIn compliance with the directives of State Bank of Pakistan via

BDP Circular No. 30, issued on 29th November 2005, the Basic

Banking Account has been launched with effect from 27th February

2006. This product has been introduced to facilitate the low income

group as well as the existing account holders who wish to convert their

regular savings or current account into Basic Banking Account.

The Basic Banking Account is a current account and can be opened

with a minimum initial deposit of Rs. 1000/- only. Account holders

will be allowed 2 deposit transactions (each cash or through clearing)

and 2 withdrawals (cash or clearing) each month. All customer-

initiated transactions over and above this limit will be charged a

transaction fee. However unlimited free charge cash withdrawals are

allowed through MCB’s own ATM’s.

PAK RUPEE OR FOREIGN CURRENCY ACCOUNTS

SAVING ACCOUNTMCB’s Foreign Currency Savings Account offers you

attractive returns on your foreign currency investment. Unlimited

transaction facility, profit credited to your account on a half yearly

basis. You can avail a credit facility up to 75% of the total deposits

value. A foreign currency account can be opened at any of our foreign

exchange dealing branches.

MCB RUPEE MAXIMIZER ACCOUNTMCB Rupee Maximizer Account provides you an opportunity

to convert you’re the recent changes in the economic scenario MCB

launched the Rupee Maximizer Account exclusively for its Foreign

Currency Account Holders. MCB Foreign Currency Account holders

now have an opportunity to convert their Foreign Currency Account

balances into Pak Rupees and earn a profit at the rate of 12.6% per

annum.

Other features include profits calculated on a daily product basis, no

restrictions on the number of the withdrawals, no minimum deposit

required. Special benefits include one free ATM card and locker

facility free of cost. MCB Rupee Maximizer Account is being

advertised in leading daily newspaper as well as local papers. Foreign

Currency Account into Pak Rupee and earn profit at the rate of 12.6%

per annum.

CURRENT ACCOUNTMCB’s Foreign Currency Current Account offers you the

convenience of unlimited withdrawals i.e. access to your funds

whenever you want without any notice. There is no limit on the

number of transactions you make in a day.

KHUSHALI BACHAT ACCOUNTOpen a Khushali Bachat or Dollar Khushali Account, both

require low minimum income deposits plus you receive profit on daily

product basis. Get a saving with current account facilities through

saving 365 or double your investment through capital growth and

receive monthly profits through monthly Khushali.

MCB ENHANCED SAVING ACCOUNTKeeping in view the small savers, looking for higher returns on

their savings, MCB introduces the Enhanced Saving Account (ESA).

This account can be operated via all the channels available at the MCB

such as Cheques, Virtual Banking, Mobile Banking, MCB Smart Card

and ATMs/Point of sales all across Pakistan. MCB ESA, governed

under PLS rules, can be opened with a minimum initial deposit of Rs.

5000 and the profit shall be calculated on an average basis maintained

by the customer during that month.

Following shall be the slabs used for profit calculation:

If average balance is greater than Rs. 20,000 standard PLS rates

will apply.

If average balance less than Rs. 20,000 (or equal to 20,000) with up

to 4 withdrawal transactions per month (excluding ATMs, PSO,

and VB) 4.0% p.a.

If average balance is less than Rs.20,000 (or equal to 20,000) with

over 4 withdrawal transactions per month (excluding ATMs, PSO,

and VB) then standard PLS rates will apply.

The rates mentioned above are expected and shall be revised at

least every six months. Average account balances can exceed Rs.

20,000 during a month. However, in that case, they shall be paid profit

as per the standard PLS rates, as mentioned in slabs above. Profit shall

be calculated on average basis and shall be credited to the account after

each calendar quarter.

MCB’s PARTNERS IN BILL PAYMENTPay your bills 24 hours a day, a day, 7 days, and a week. Make total

payments of up to Rs. 20,000 per day. Carry out up to 10 transactions per day

per card. Make either full or partial payments. Full payment is required for

PTCL only. Recharge your prepaid account for Mobilink, Ufone and Telenor

as per their fixed slabs. Pay as a registered or non-registered user. Registration

will help you avoid the time delay in entering details each time you carry out a

transaction.

o Pay with MCB ATM

o Pay through MCB Virtual

o Pay through MCB Call Centre

INVESTMENT BANKINGOur investment banking team has emerged as a leading player in

Pakistan’s investment banking arena. The team handles advisory, corporate

finance and capital markets related transactions, within these areas the team

has developed expertise in:

Private Placements

Debt/Equity Underwriting

Team Finance Certificates

Loan Syndication

Arrangement of Non-Fund Facilities

Mergers and Acquisitions

Privatization

Corporate Advisory

ABOUT REMIT EXPRESSFastest to Pakistan, anywhere in Pakistan, the fastest way of getting

your money across to Pakistan. Remit express offers low cost remittance from

U.A.E and Saudi Arabia. Your relatives’ friends or business associates receive

drafts within 72 hours.

MCB remit express has been specifically designed to meet the needs of

the expatriate Pakistani community residing in the gulf countries.

FEATURESEasiest and safest way to remit funds, remittance within 24 to

74 hours, personal delivery to the beneficiary, delivery confirmation to

the remitter, message facilities for both parties. Your beneficiary will

receive the amount even if he/she does not have an MCB account.

PERSONAL LOAN“The more you praise and celebrate your life, the more there is in life

to celebrate”. MCB personal loan shortens the distance between your dreams

and your celebrations. It is fast, flexible and affordable, speedy loan approval.

No guarantor / security / collateral required. Borrow up to Rs. 1,000,000. 1 to

5 year tenures, partial and full adjustments allowed anytime during the tenure,

optional insurance, equal monthly installments, lower interest rates, higher

loan limits, loan amount renewed anytime after nine months. You as an

individual can gain and benefit the through MCB consumer banking. In MCB

you get friendly, efficient and attentive personalized banking services, a

unique banking relationship experienced by each MCB client.

Offices or field offices

Offices means the Head office which is situated in MCB House located

at Sharea Ghous-ul-Azam, commonly known as Jail Road. Field offices mean

the Branches. MCB has the forth largest domestic branch network in Pakistan.

The bank has a network of over 1000 branches in Pakistan and 6 branches

worldwide in 6 countries.

MCB BRANCH NETWORKS:PROVINCE –WISE

Province Branches Sub – Brs. Total

Punjab 665 7 672

Sindh 248 1 249

N.W.F.P. 106 – 106

Balochistan 37 – 37

Azad J. Kashmir 18 – 18

Domestic Total 1,074 8 1,082

Overseas 6 – 6

EPZ 1 – 1

Grand Total 1,081 8 1,089

Current staffMCB Adalat Garh branch has the 8 staff member in which 2 security

guards are also included, which are as fellows:

Mohammad Asif Manager

Farhan Sharif Operatinal Manager

Mohammad Asif

Mohammad Qasim Credit Officer

Khalid Masood Malik Cashier

Mohammad Arshad Cashier

Current staff of branch according to qualification and experience:

Mostly the staff of the Bank has not the lot of experience but their

qualification is high because mostly employees are young. Let’s see the brief

introduction of the Banks staff experience and their qualification:

Mohammad Asif M.Com 7 years

Farhan Sharif M.BA 4 years

Mohammad Asif M.B.A 3 years

Mohammad Qasim M.B.A 2.5 years

Khalid Masood Malik Matric 27 years

Mohammad Arshad Matric 23 years

Training received by number of employees:For the efficient working training is an important part and it clears the

direction of the employees towards attaining the organizational goals. In

banks every employee received the basic course of training of the banking

system in which overall view of all the bank work is provided and than every

person get the training in his particular job that is assigned to him. So in

banks no one can be appointed with out the basic training.

WorkloadThe work load of the bank staff is based upon on the daily system. The

office timing starts from 9.00 am to 5.00 pm (Monday to Friday) and 9.00 am

to 1.00 pm on Saturday for the customers. After the bank timing the staff

fulfill the daily vouchers transaction and made the entries on the net system

and then counted the cash, put it in the safe. The banking staff should finished

their word on daily basis whether there work is short or long.

ResponsibilitiesResponsibilities of staff depend upon the scale of the staff members.

Higher the rank of the staff higher will be the responsibility on it. For example

the Branch Manager responsibility is higher than the Operational Manager.

Branch Manager has the responsibility to deal with the Branch

customer and with the outsider parties also while all the remaining staff is

responsible to deal with the Branch customers only. Branch Manager is

responsible for the internal and external environment and the remaining staff

is responsible for internal environment only.

Operational Manager has the responsibility to check the activities of

his subordinates. Cashier is responsible for all the cash transactions which

occur in the Bank. Customer Relation officer is responsible to deal the

customers well and provide them the necessary information if required.

Physical facilities The branch where I have done my internship is MCB Adalat Garh

branch, here the physical facilities available to the customers are sufficient,

proper sitting arrangement is available, and gas heater in winter and air

conditioners for summer is also available. But the facilities for the employees

is not sufficient, employees have the combined table there is no separate

rooms for the employees.

Critical analysis of the branchAlthough the bank is performing their function very well but mostly

the staff of the bank is young. They have very less experience and low

banking knowledge.

The banking staff always worries about for increasing the deposit of

the bank rather than improving the customer’s services.

The Branch is not located in the business or industry area that why the

customer’s output is very low in the Branch.

Every morning the Branch Manager gives the Branch report to the

Regional Manager on the telephone meeting which has no logic because

Branch Manager always worries for the deposit.

Performances

In term of customer’s satisfaction:The customers are very satisfied with the performance of the bank. The

bank is provided latest banking services to the customers so that they can

easily access to their accounts. The bank is also providing the internet facility

to theirs customers through this they can access to their accounts on the net

and they can check their balance with out going to Bank. The Bank also

provides the door to door services to those customers who transactions are

daily occurs that why those customers are very satisfied with the Bank and this

thing also helps to the Banks for increasing their accounts holders.

In term of accounts and budgets:The performance of the Banks is increasing day by day. The accounts

holders are very satisfied with the faclities which they provides.

Summary:In this chapter basically organizational attitude towards its employees

and employee’s satisfaction and attachment is discussed. MCB performs

several functions and have many departments in order to retain and maintain

their customers some of these departments are the collections department,

Advance department, Bill department, Clearing department etc. To motivate

the employees MCB provide many allowances and facilities to its employees

such as medical facility, huge amount of bonuses and also motivate the

employees through promotions. The branch in which I have done my

internship is providing the very satisfactory services to its customers and large

numbers of customers are satisfied with the attitude and the sevices provided

the branch.

Chapter # 4 Policies

IntroductionChapter four is about policies of MCB. It include brief introduction of

policies of MCB.

Policies:

Internship Policy:MCB is the bank that serves all type of customers and makes its

policies according to their needs and demands here the MCB has the

policy to serve the students that is six weeks internship.

MCB has no gender biasFor the selection of the employee MCB focus on merit rather

than gender. There is no any kind of discrimination on the basis of

male or female, a person having the skills and knowledge and is

perfect of that particular job can be selected as the employee.

Opening account policyPrior to establishing a relationship with new customer MCB

obtains basic information i.e. business, source of income, expected

level of activity in the account and reasons for opening the account.

Training of employeesMCB has the program through which all the employees of the

bank get proper training and then work for the achieving the goals.

Revenue RecognitionMCB recognized its revenue on accrual basis. For example if

MCB invest in some different securities and entitled for the profit yet

not received, the profit is recorded as when it earned not when it

received.

Investments PolicyMCB also invest its money other than the advances, while investing in

the securities MCB has the following policy to invest in

a) Held for trading

b) Held to maturity

In the light SBP regulations quoted securities are shown at market

values and any changes arising are taken to profit and loss account

only upon actual realization.

RISK MANAGEMENTThe bank is primarily subject to interest rate, credit and currency risks.

The bank has designated and implemented a frame work of controls to

identify, monitor and manage these risks are as follow

Currency Risk ManagementTo handle with currency risk, MCB enters into futures and

swaps transactions in the inter-bank market and with the State Bank of

Pakistan in order to hedge its assets and liabilities and cover its foreign

exchange position.

Credit Risk ManagementIn order to manage the credit risk MCB has a good policy the bank first

scan the information about the person who wants to obtain the loan and

then assign the limit of sanctioned amount that is decided on the critical

analysis of the person’s income and resources. MCB is government

backed bank that’s why it provide the loan only against the security.

Interest rate Risk Management

To hedge with the interest rate MCB also focus on to make the

interest rate swap and other documents.

MCB’s Competitive StrategiesTo be competitive the Bank has further reinforced its position in the

Consumer banking area by streamlining and re-launching the consumer

financing products and introducing more convenience based solutions. With

the re-launch of auto finance and house finance products, the Bank pushed the

products with full thrust. The Bank has also launched a running finance

facility against mortgage of property.

Technology continued to play an important role in improving and

expanding product offerings. The Bank introduced more IT based products to

cater to the changing lifestyles and needs of the customers.

MCB Virtual-Internet Banking was launched with wide ranging

banking solutions for the customers ranging from individual to corporate

customers and it has become the most preferred Internet banking solution in

the country.

MCB also had the privilege of being the first Bank in Pakistan to

launch the comprehensive bill payment facility through its alternate delivery

channels which include Internet Banking, ATMs and MCB Call Centre,

currently with six payment partners. Similarly, the Bank also took initiatives

to increase the usage of debit facility. To provide timely and updated

information, MCB has also provided a new look to its website which is user

friendly and considerably easy to browse.

The Islamic Banking initiative has been very successful in attracting

new customer, both individuals and companies. Similarly, those relationships,

which were confined only to current account facility, have grown into stronger

business relationships. The branch network was expanded to Lahore and

Multan during the last year and recently been extended to Hyderabad and

Faisalabad. The Bank plans to further expand its Islamic Banking branch

network to other metropolitan areas and also to introduce new sharia

compliant banking solutions to a wider range of customers for satisfying their

individual and business needs.

Some wide-ranging new strategic initiatives were also taken up which

will be important for the Bank in years to come. A private company has been

formed in Hong Kong (fully owned subsidiary of MCB) in partnership with

Standard Chartered Bank, handling trade transactions of select countries in the

Asia-Pacific region. It is projected to earn US$ 1 million in its first year of

operations. To increase its international presence, the Bank will be opening its

representative office in Dubai and entering into major strategic alliances with

banks in the UAE/ especially for marketing our consumer banking products to

non-resident Pakistanis.

Furthermore, feasibility is also being carried out for entering other

international markets. MCB's operations continued to be streamlined with

focus on rationalization of expenses, re-alignment of back-end processing to

increase productivity, enhancement of customer service standards, process

efficiency and controls. The Bank has taken the lead in introducing the

innovative concept of centralizing Trade Services in the country by providing

centralized foreign trade services to branches with a view to improve

efficiency, expertise and reduce delivery cost.

Management of Human Resources has been one of our core focus

areas. MCB is committed towards attracting, retaining and motivating

outstanding people. Challenge for MCB is to provide an environment in which

employees can better realize their potential. The Bank introduced 'reward for

performance' where high potential officers were identified and rewarded

accordingly. In view of the competitive environment, the Bank is focusing on

performance and introducing a more robust performance management system.

MCB is also strongly committed to training its staff at all levels. The

Bank will also be implementing the full suite of the latest version of

SYMBOLS Version 8. MCB Bank will run SYMBOLS E-Finance modules to

deliver personalized services to its customers over multiple delivery channels,

while SYMBOLS Enterprise Operations Center will serve as its core banking

transaction-processing engine. By implementing SYMBOLS, MCB Bank aims

to raise the level of its customer service and its time to market in new product

offerings for its three core banking businesses in Corporate, Commercial and

Consumer Banking – retaining its market leadership as Pakistan's progressive

Bank.

Summary:This chapter discuss about policies of MCB. MCB has the policy to

serve the students that is six weeks internship. MCB focus on merit rather than

gender. To be competitive the Bank has further reinforced its position in the

Consumer banking area by streamlining and re-launching the consumer

financing products and introducing more convenience based solutions.

Chapter # 5 Different Models

Introduction:In this chapter have some models that analysis and explain the real

situation about the MCB. For gathering the real information about the

opportunities and the threats that are facing the MCB this chapter include four

models that are following

SWOT Analysis

PEST Analysis

Ratios Analysis

SWOT ANALYSIS:The overall evaluation of a company’s strength, weakness,

opportunities, and threats is called SWOT analysis.

STRENGTH:The main strength of the bank lies in its services. The other fact that

contributes is approaching to each segment of society. Another positive issue

that because the strength its innovation. Some others are as follows:

Bank reputation

Technical management skills

Customer satisfaction

Promotion effectiveness

Team based approach.

Continuous improvement.

Quest for quality.

Employees respect and dignity.

Good corporate citizenship

WEAKNESS: Competition pressure: bank has tough competition pressure. We are

having very well established and well reputed competitor in the market having

addressing the same community as we are dealing and is having good services.

Financial pressure: no doubt MCB has a lot of finance but due to competition

pressure they have a need of finance.

OPPORTUNITIES: For more amelioration there is a need of new market. Extra advertising

support will enable us to improve our services. Almost every organization has

the tendency to grow in size. We also have this opportunity.

THREATS: Weak economic conditions of Pakistan

Unregistered business concerns

PEST ANALYSIS AND ENVIRONMENTAL SCAN A broad view of market is important when management is interested

in introducing better services for customers. Rapid technological change,

global competition and the diversity of buyers preferences in many markets

require the constant attention of the market vouchers to identify promises

business opportunities, see the shifting requirements of the buyers, evaluate

changes in competitors positioning and guide the choice of which buyers to

target and classify them according to respective segments. Identification of

external and macro factors that influence buyers and thus change the size and

composition of market overtime involves initially building customer profiles.

These influences include:

Political and legal environment

Economic trends

Socio cultural environment

Technological factors

POLITICAL AND LEGAL ENVIRONMENT:Banks are strongly affected by the political and legal considerations.

This environment is composed of regulatory agencies and government law that

influence and limit various organizations and individuals. Mostly these laws

create new opportunities for business.

Business legislation has following main purposes

o To protect banking companies from unfair competition.

o To protect consumers from unfair business practices adopted by

banking companies

o To protect the interest of the society from unbridled business behavior.

ECONOMIC TRENDS A banking market requires better consumer market in volume along with

higher borrowing power. The available borrowing power depends on:

o Consumer income

o Saving rates

o Consumption patrons

o Rates of interest

o Budget deficit

o Exchange rates

o Cost of living

o Inflation

SOCIO-CULTURAL ENVIRONMENT A society is shaped by beliefs, norms and values. People in a society

consciously and unconsciously interact with:

Themselves

Others

Organization

Society

TECHNOLOGICAL FACTORS Forces of technological advancement have played the most dramatic

role in shaping the lives of people. The rate of change of technology has

greatly affected the rate of growth of economy. New technology is creating

deep rooted affects which could be observed in long run. The improvement

techniques involved in on line banking. In brief PEST analysis affects the

overall banking companies and provides us the information about the external

macro condition.

Ratio Analysis of the MCB:“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 fro 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.

Following are the main types of ratios that I am going to calculate in

this report to compare and highlight the financial performance of MCB in

2009 with 2008

Variance compared to

2008

2009 Amount %

Mark-up / return / interest

earnedRs. M 51,616 11,572 29%

Mark-up / return / interest

expensed" 15,841 4,281 37%

Net mark-up / interest

income" 35,775 7,291 26%

Provisions & write off " 7,465 3,423 85%

Non-mark-up / interest

income" 5,643 (149) -3%

Non-mark-up / interest

expenses" 10,797 2,433 29%

Profit before taxation " 23,155 1,287 6%

Taxation " 7,660 1,167 18%

Profit after taxation " 15,495 121 1%

EPS Rupees 22.42 0.17 1%

Interpretation:The past two years data shows an increase in all return (i.e. interest

earned, interest income, Profit after taxation) which is a positive sign. But

mostly expenses (i.e. interest expensed, Provisions, Taxation) are also increase

which show negative sign of business. The Bank should have to review its

policies to decrease expenses.

FINANCIAL RATIOS 2009 2008

Profit before tax ratio

(PBT/ total income)

55.91% 63.80%

Gross Spread (NIM/Int

Income)

69.31% 71.13%

Income/ expense ratio Times 3.84 4.10

Return on average equity

(ROE)

27.35% 31.49%

Return on average assets

(ROA)

3.25% 3.60%

Return on Capital

Employed (ROCE)

27.35% 31.49%

Earnings per share (EPS

before tax)

Rs. 33.50 31.64

Earnings per share (EPS

after tax)

Rs. 22.42 22.25

Advances/ deposits ratio

(Gross)

73.37% 82.64%

Advances/ deposits ratio

(Net)

68.89% 79.39%

Breakup value per share Rs. 88.37 75.60

Breakup value per share

(including surplus)

Rs. 100.91 84.55

Earning assets to total

assets ratio

87.23% 85.70%

Earning assets to Deposits

& borrowings

107.74% 107.75%

Deposits to shareholder

equity ratio

Times 6.02 6.32

Capital Adequacy Ratio 19.07% 16.28%

Interpretation:

The past two years data shows that mostly financial ratios decrease

which show negative sign of company. The Bank should have to review its

policies to decrease expenses.

DIVIDEND RATIOS 2009 2008

Cash Dividend Per

ShareRs. 11.00 11.50

Dividend Yield Ratio

(based on cash dividend)5% 9.14%

Dividend Payout Ratio 53.52% 56.19%

Bonus Shares Issued 10.00% 10.00%

Interpretation:

The past two years data shows that dividend ratios decrease which show

negative sign of company. The Bank should have to review its policies to

decrease expenses.

Chapter # 6 Recommendation

Shortage of Staff:Almost in all branches of Muslim Commercial the problem of Shortage

of Staff is very common. There are only few employees who are the be all and

end all of the whole branch resulting in burden of work. Basically the main

idea behind it is that whenever there is shortage of staff in any organization it

always result in lot of work and also boots up the destructiveness as well

because people working over there feel like that they can do whatever they

feel like so are least bothered about the rules and regulations as implemented

by the head office and mostly it results in corruption.

Staff Is Not Adequately Trained:Staff in almost all branches of MCB is not adequately trained with the

contemporary era. Basically MCB is from the very beginning, is pioneer of

new products including ATMs, Mobile Banking and Online banking as well

but as they developed the new systems and products in order to satisfy the

customers want they didn’t get their staff trained in relation with those

innovations. MCB having two staff colleges one in Lahore and One in Karachi

but both make you aware of the systems and procedures but are not training or

can say emphasizing on these innovated products.

Online BankingThis problem is related to the previous problem as well because when

the staff is not adequately trained then how can they satisfy their customer’s

needs, which is the basic theme or mission of MCB.

When MCB started their online banking, there were only one or two

banks (foreign Banks) doing this practice because of having a larger network

as compared to all other domestic banks MCB started doing this practice but

not successful in it because of the above two problems.

OthersA lot of productive time is wasted by the staff in unproductive pursuits

and tea and launch breaks are got voluntarily extended and the time spent in

corridors, depends on the staff will. This tendency of late must be eliminated

which reflect adversely on the image of the institution and has posed a serious

problem.

No proper allocation of duties, suitable person for suitable job.

Distribution of work is not on equity basis, work has not been allocated

properly some workers have to work hard in late hours without any extra

reward. So I suggest that steps should be taken to allocate the work properly.

No periodic increase on salaries of employees.

Overall Suggestions For ImprovementFrom the quantum of the profit and its financial data it can easily

judged that after privatization MCB is performing well. Its deposits are

growing day-by-day and so is profitability. The controlling body is responsible

for the productive performance of the bank.

Following are my observation and suggestion to improve the efficiency for the

development of the economy.

Introduce Various Profitable Investment SchemesA big portion of the home remittance is sent by Pakistan working

capital through MCB Limited. As we know a big portion of this amount is

wasted purchasing of luxuries. The people motivated to save money by

offering the deposit through various investment schemes. The rate of profit

should increase 1% or 2% than the other banks and it would be profitable step

for bank.

Training Staff:Staff turnover particularly of trained staff result in financial and other

losses. The amount spent by the bank on employment, induction and training

of an outgoing officer constitutes to beat till another officer should ready

prove his work. The exodus of bank officer in the past has worsened the

situation.

Change The Nature Of Work:Most of the bank employees are sticking to one seat only with the

result that they become master of one particular job and loose their grip on

other banking operation. In my opinion all the employees should have regular

job experience all out-look towards banking. The promotion policy should be

adjusted.

Refresher Courses:Refresher courses for the staff are most important in any international

organization. All the employees should have these courses according to their

requirement. Foreign experts can also be called for this purpose.

Special Training In AbroadEvery 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 employees should be

provided the opportunities to attend and participate in seminars and lectures on

banking.

Incentive to Employees:Bank should give some more incentive to its employees in order to

remove the conflict between lower and higher officers and should try to

improve the working condition of the bank.

Such system should be designed that every employee who has some

problems with his officers can communicate it to the higher management and

some steps must be taken to improve that.

OthersThe period of internship should be divided into the number of

department of the MCB. The internee should be given timetable mentioning

the number of days he has to work at different places in the bank. On the 1st 4

day in each department internee should be given a lecture by the officer of the

department concerned about working of the department.

A lot of productive time is wasted by the staff in unproductive pursuits

and tea and lunch breaks are got voluntarily extended and the time spent in

corridors, courtyards, depends on the staff will. This tendency of late must be

eliminated which reflect adversely on the image of the institution and has

posed a serious problem.

Distribution of work is not on equity basis, work has not been allocated

properly some workers have to work hard and have to work in late hours

without any extra reward. So I suggest that steps should be taken to allocate

the work properly.

Reward and PunishmentIt is human nature one goes behind reward and incentives while and try

to avoid from punishment. Likewise in commercial institution like bank this

system be introduced with full force means active smart, educated skilled, self

spoken and well versed staff personal, should be reward and appreciates, while

on the other hand lazy, lethargic, heared, rough dealers and ill mannered must

be warned penalized and punished. But this all should be on merit and

considering the policy of honesty is the best policy and mot due to some

personal liking, disliking prejudice and patrimonial. It is therefore suggest

certain schemes and checks may be introduced in banks to increase efficiency

through reward and punishment system.

Survival Of The FittestIt is not nearly a sentence or idiom right man for the right job

according to his qualification to his qualification, profession skills and

experience with the job specification must be considered while posting and

placing the employees.

It should not be like that a person who may be a very good worker but

possessing lack of managerial capabilities should be posted as manager. But as

second place in command or some heavy working department wished persons

together with managerial qualities and manners in the same fashion should be

posted and placed as manager.

REFERENCES

http://www.oppapers.com/essays/Pakistans-Banking-Sector-Industry Analysis/181995

http://en.wikipedia.org/wiki/Economy_of_Pakistan

http://www.sbp.org.pk/reports/annual/arfy09/annex_index.htm

http://en.wikipedia.org/wiki/Muslim_Commercial_Bank

http://www.blurtit.com/q501915.html

MCB Brochures Manuals

Annual Report