Internship Report

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
 Internship Report

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

 Internship Report

University of Gujrat, HH-Campus

INTERNSHIP REPORT ON

MCB Bank Limited

Adalat Garh Branch, Sialkot

SUPERVISED BY:

Signature:

Name:

Designation:

Chairman:

Signature:

Name: _
 Internship Report

Acknowledgemen
t

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. Muhammad Asif (Manager) & Mr. Farhan
Sharif (Operation Manager) for their guidance
and encouragement.
 Internship Report

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.
 Internship Report

Table of Content:
TABLE OF CONTENT:...............................................................................................................1
CHAPTER # 1 INTRODUCTION...............................................................................9
INTRODUCTION:.......................................................................................................................9
BACKGROUND OF THE STUDY:................................................................................................9
PURPOSE..................................................................................................................................9
SCOPE....................................................................................................................................10
LIMITATION OF THE STUDY:.................................................................................................10
OBJECTIVES...........................................................................................................................10
METHODOLOGY.....................................................................................................................10
Primary Data:..............................................................................................................10
Secondary Data:..........................................................................................................11
ORGANIZATION:....................................................................................................................11
SUMMARY.............................................................................................................................11
CHAPTER # 2 ROLE OF SECTOR AND ORGANIZATION...............................13
INTRODUCTION:...............................................................................................................13
OVERALL RESPECTIVE SECTORS IN PAKISTAN:.....................................................................13
HISTORY OF BANKING IN PAKISTAN:........................................................................13
ROLE OF THE ORGANIZATION IN PAKISTAN:.........................................................................15
OVERALL ORGANIZATION AND FUNCTIONS OF ORG IN PAKISTAN:.......................................16
Vision Statement:.............................................................................................................17
Mission Statement:..........................................................................................................18
VALUES:.........................................................................................................................19
FUNCTIONS:...........................................................................................................................20
Principal function:...........................................................................................................20
Deposits:......................................................................................................................20
FINANCING...............................................................................................................21
Auxiliary function............................................................................................................22
ORGANIZATION OFFICE IN WHICH YOU ARE WORKING:........................................................24
SUMMARY:............................................................................................................................25
CHAPTER # 3 HISTORY OF ORGANIZATION...................................................26
INTRODUCTION:.....................................................................................................................26
BRIEF HISTORY OF THE ORGANIZATION:..............................................................................26
NATIOINALIZATION:....................................................................................................26
PRIVATIZATION:...........................................................................................................27
Awards of MCB:..............................................................................................................27
Present Status:.................................................................................................................28
RELATIONSHIP OF HEAD OFFICE TO THE BRANCH OFFICES:..................................................30
MAIN DEPARTMENTS AND THEIR JOBS.....................................................................30
GENERAL BANKING.....................................................................................................30
REMITTANCE...........................................................................................................30
PAY ORDER.........................................................................................................31
DEMAND DRAFT................................................................................................31
MAIL TRANSFER................................................................................................31
TELEGRAPHIC TRANSFER...............................................................................31
PAYMENT OF PAY-ORDER AND DEMAND DRAFT....................................32
CANCELLATION OF PAY-ORDER AND DEMAND FRAFT.........................32
VOUCHERS..........................................................................................................32
INWARD CLEARING..........................................................................................32
OUTWARD CLEANING......................................................................................33
ISSUANCE OF CHEQUE BOOKS......................................................................33
ISSUANCE OF ATM CARDS..............................................................................33
CANCELLATION OF ATM CARDS...................................................................34
SHORT NOTICE TERM DEPOSIT......................................................................34
CALL DEPOSIT....................................................................................................34
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FOREIGN EXCHANGE............................................................................................34
LC’S ESTABLISHMENT.....................................................................................34
PAYMENT OR RETIREMENT............................................................................35
FOREIGN CURRENCY DEPOSITS....................................................................35
FOREIGN REMITTANCES..................................................................................35
ADVANCES / CREDIT....................................................................................................35
BASIC BANKING ACCOUNT.................................................................................36
PAK RUPEE OR FOREIGN CURRENCY ACCOUNTS.................................................36
SAVING ACCOUNT.................................................................................................36
MCB RUPEE MAXIMIZER ACCOUNT..................................................................37
CURRENT ACCOUNT..............................................................................................37
KHUSHALI BACHAT ACCOUNT..........................................................................37
MCB ENHANCED SAVING ACCOUNT................................................................37
MCB’s PARTNERS IN BILL PAYMENT.........................................................................38
INVESTMENT BANKING...............................................................................................38
ABOUT REMIT EXPRESS.......................................................................................39
FEATURES............................................................................................................39
PERSONAL LOAN....................................................................................................39
OFFICES OR FIELD OFFICES....................................................................................................40
MCB BRANCH NETWORKS:.........................................................................................40
CURRENT STAFF....................................................................................................................40
Current staff of branch according to qualification and experience:...............................41
Training received by number of employees:...............................................................41
Workload.........................................................................................................................41
Responsibilities................................................................................................................41
PHYSICAL FACILITIES............................................................................................................42
CRITICAL ANALYSIS OF THE BRANCH...................................................................................42
Performances...................................................................................................................43
In term of customer’s satisfaction:..............................................................................43
In term of accounts and budgets:................................................................................43
SUMMARY:............................................................................................................................43
CHAPTER # 4 POLICIES............................................................................................44
INTRODUCTION......................................................................................................................44
POLICIES:...............................................................................................................................44
Internship Policy:............................................................................................................44
MCB has no gender bias.................................................................................................44
Opening account policy...................................................................................................44
Training of employees.....................................................................................................44
Revenue Recognition.......................................................................................................44
Investments Policy...........................................................................................................45
RISK MANAGEMENT.....................................................................................................45
Currency Risk Management........................................................................................45
Credit Risk Management............................................................................................45
MCB’s Competitive Strategies........................................................................................45
SUMMARY:............................................................................................................................48
CHAPTER # 5 DIFFERENT MODELS.....................................................................49
INTRODUCTION:.....................................................................................................................49
SWOT ANALYSIS:.............................................................................................................49
STRENGTH:....................................................................................................................49
WEAKNESS:....................................................................................................................49
OPPORTUNITIES:..........................................................................................................50
THREATS:.......................................................................................................................50
PEST ANALYSIS AND ENVIRONMENTAL SCAN.......................................................50
POLITICAL AND LEGAL ENVIRONMENT:.................................................................51
ECONOMIC TRENDS.....................................................................................................51
SOCIO-CULTURAL ENVIRONMENT...........................................................................51
TECHNOLOGICAL FACTORS.......................................................................................52
RATIO ANALYSIS OF THE MCB:...........................................................................................52
Interpretation:.........................................................................................................53
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Interpretation:.........................................................................................................55
CHAPTER # 6 RECOMMENDATION.....................................................................56
SHORTAGE OF STAFF:...........................................................................................................56
STAFF IS NOT ADEQUATELY TRAINED:................................................................................56
ONLINE BANKING.................................................................................................................56
OTHERS.................................................................................................................................57
OVERALL SUGGESTIONS FOR IMPROVEMENT.......................................................................57
Introduce Various Profitable Investment Schemes..........................................................57
Training Staff:.................................................................................................................57
Change The Nature Of Work:..........................................................................................58
Refresher Courses:..........................................................................................................58
Special Training In Abroad.............................................................................................58
Incentive to Employees:...................................................................................................58
Others..............................................................................................................................58
Reward and Punishment..................................................................................................59
Survival Of The Fittest.....................................................................................................59
REFERENCES.....................................................................................................................60
 Internship Report

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.

Purpose
Internship 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.
 Internship Report

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.

Objectives
I 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.

Methodology
There 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.
 Internship Report

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.

Summary
This 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.
 Internship Report

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.
 Internship Report

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
 Internship Report

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
 Internship Report

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.
 Internship Report

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.
 Internship Report

Vision Statement:

To be the leading financial services provider, partnering with our

customers for a more prosperous and secure future.

 
 Internship Report

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.
 Internship Report

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.
 Internship Report

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.
 Internship Report

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
 Internship Report

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.
 Internship Report

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:

 Internship Report

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
 Internship Report

 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.
 Internship Report

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.
 Internship Report

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:
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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
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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
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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 JOBS

There are three main departments in any branch of MCB
 GENERAL BANKING
 FOREIGN EXCHANGE
 ADVANCES/CREDIT

GENERAL BANKING
General banking deals with following services:
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REMITTANCE
It 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 ORDER
Pay 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 DRAFT
Demand 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 TRANSFER
Mail 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 TRANSFER
Telegraph Transfer is telegram message for transferring the
amount from one branch to other branch. A message advice and a
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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 DRAFT

Pay-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 FRAFT

Any 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.

VOUCHERS
Vouchers 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 CLEARING
It 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
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identical. Than these cheques are stamped and noted on receiving sheet
as well as feed in to the computerized system.

OUTWARD CLEANING
It 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 BOOKS

Any 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 CARDS

Head 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
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card forms. The ATM card has been activated by the number provided
at or with the specific card.

CANCELLATION OF ATM CARDS

The 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 DEPOSIT

There 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 DEPOSIT
It 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.
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FOREIGN EXCHANGE
LC’S ESTABLISHMENT
Any 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 RETIREMENT
When 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 DEPOSITS

The Foreign Currency Deposit relates with the foreign currency
accounts, cash deposit or credit and foreign remittances.

FOREIGN REMITTANCES
In 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 / CREDIT
This 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.
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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 ACCOUNT

In 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 ACCOUNT
MCB’s Foreign Currency Savings Account offers you
attractive returns on your foreign currency investment. Unlimited
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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 ACCOUNT

MCB 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 ACCOUNT
MCB’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 ACCOUNT

Open 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.
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MCB ENHANCED SAVING ACCOUNT

Keeping 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 PAYMENT

Pay 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
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o Pay through MCB Virtual

o Pay through MCB Call Centre

INVESTMENT BANKING
Our 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 EXPRESS

Fastest 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.

FEATURES
Easiest 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
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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 staff
MCB 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
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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.

Workload
The 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.
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Responsibilities
Responsibilities 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 branch

Although 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.
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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.
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Chapter # 4 Policies
Introduction
Chapter 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 bias

For 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 policy

Prior 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 employees
MCB has the program through which all the employees of the
bank get proper training and then work for the achieving the goals.

Revenue Recognition
MCB 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.
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Investments Policy
MCB 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 MANAGEMENT
The 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 Management

To 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 Management

In 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 Strategies

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. With
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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
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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.
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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.
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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
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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
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 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
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 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
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Variance compared to
2008
2009 Amount %
Mark-up / return / interest
Rs. M 51,616 11,572 29%
earned
Mark-up / return / interest
" 15,841 4,281 37%
expensed
Net mark-up / interest
" 35,775 7,291 26%
income
Provisions & write off " 7,465 3,423 85%
Non-mark-up / interest
" 5,643 (149) -3%
income
Non-mark-up / interest
" 10,797 2,433 29%
expenses
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.
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FINANCIAL RATIOS 2009 2008

Profit before tax ratio 55.91% 63.80%
(PBT/ total income)
Gross Spread (NIM/Int 69.31% 71.13%
Income)
Income/ expense ratio Times 3.84 4.10
Return on average equity 27.35% 31.49%
(ROE)
Return on average assets 3.25% 3.60%
(ROA)
Return on Capital 27.35% 31.49%
Employed (ROCE)
Earnings per share (EPS Rs. 33.50 31.64
before tax)
Earnings per share (EPS Rs. 22.42 22.25
after tax)
Advances/ deposits ratio 73.37% 82.64%
(Gross)
Advances/ deposits ratio 68.89% 79.39%
(Net)
Breakup value per share Rs. 88.37 75.60
Breakup value per share Rs. 100.91 84.55
(including surplus)
Earning assets to total 87.23% 85.70%
assets ratio
Earning assets to Deposits 107.74% 107.75%
& borrowings
Deposits to shareholder Times 6.02 6.32
equity ratio
Capital Adequacy Ratio 19.07% 16.28%
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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
Rs. 11.00 11.50
Share
Dividend Yield Ratio
5% 9.14%
(based on cash dividend)
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.
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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 Banking
This 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.
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Others
A 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 Improvement

From 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 Schemes

A 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.
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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 Abroad

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 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.

Others
The 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
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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 Punishment

It 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 Fittest

It 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.
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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