Muslim Commercial Bank MCB Internship REport

An Internship Report
MCB Bank Ltd
Table for Contents
“With the name of Allah who is so merciful and
benevolent”........................................................4
Shahzad Ahmad Shad........................................5
THE BANK..........................................................7
Evolution of Banking.........................................8
Bank Origin........................................................8
There are different views about origin of the
world “Bank”. According to some people the
word “Bank” is derived from the world
“Bancus” which means a “Bench”. They argue
their point by this transacted their business of
money exchange on the benches. If the
business of any businessman failed, his bench
was destroyed by the people. Due to this
practice the word “Bankrupt” was also used. .8
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MCB Bank Ltd
On the other hand some people say that the
world “Bank” is derived from German time the
word “Bank” was replaced by the word “Bank”
which is called “Banco” in Italian language. ...8
Evolution of Banking ........................................8
First Stage of Evolution.....................................9
Second Stage.....................................................9
Third stage of Evolution....................................9
Fourth Stage of Evolution................................10
Growth of Banking in Pakistan.......................10
Time of Independence ....................................11
Establishment of State Bank..........................11
Development of Commercial Bank.................12
Specialized Financial Institutions..................12
Nationalization of Commercial Banks............12
Privatization of Commercial Banks................12
COMMERCIAL BANKS......................................13
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MCB Bank Ltd
COMMERCIAL BANKING SCENARIO IN
PAKISTAN .......................................................13
OTHER PRODUCT / SERVICES .....................................................30
NIGHT BANKING SERVICES............................30
FAX utility........................................................31
CONSULTANCY SERVICES..............................31
MCB RUPEE TRAVELERS CHEQUE.................31
SELF SUPPORTING SCHEME...........................32
UTILITY BILLS COLLECTION..........................32
ATM (Automated Teller Machine) ..................32

CLEARING DEPARTMENT...............................................................39
Agriculture Credit...............................................................................58
FARM CREDIT.................................................................................58
PRODUCTION FINANCE.................................................................59
DEVELOPMENT FINANCE...............................................................59
NON FARM CREDIT.........................................................................59
Letter of Credit...................................................................................60
Information in LC document..........................61
Types of LC.......................................................................................63
1-Irrevocable LC..............................................63
2-Revocable LC................................................63
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MCB Bank Ltd
LC Opening Charges........................................65
LC OPENING CHARGES...................................65
When an LC is opened, the bank collects
certain charges from importer these are:......65

Guarantee..........................................................................................66
Securities...........................................................................................66
Bankers Lien......................................................................................67
Mortgages..........................................................................................67
Pledge................................................................................................69
IN MCB..............................................................................................71
Term Deposit Accounts.....................................................................72
Dollar Khushali Account.....................................................................73
“With the name of Allah who is so merciful and
benevolent”
Internship is an integral part of MBA program. For the sake of internship

the most initial thing is to have a practical experience. This effort may
get a student to get a practical experience if right organization is
selected. During this internship, a student comes to practical
knowledge. As an MBA student I have also done my internship in MCB
Bank Limited Khanewal. I am also the employee of this organization
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MCB Bank Ltd
and working here since last 01 year. In my job in MCB Bank start from
4th September 2006 firstly they provide the theoretical knowledge in
MCB Staff College Lahore. But knowledge can not perfect without
practical. So, in Khanewal branch I get practical exposure and to get
familiarized with the ways to live in the organizational environment
which is dramatically different from the educational environment.
Now I am working as Credit Incharge here I come to know a different
and very interesting experience of learning and working with people.
First of all I will tell you about Bank then I will tell operations of different
department. In preparing this report Mr. Ejaz Ahmad Nadeem
Manager Khanewal branch and all staff members help me about
all topics, I have put all of my best efforts and tried my level best
to give maximum knowledge.
Shahzad Ahmad Shad
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MCB Bank Ltd
First and foremost all praise is to Almighty Allah to give me the courage
and patience to carry out this responsibility successful.
I also wish to tender grateful acknowledgements with profound respect
and gratitude to respected director of Institute of management Science
for affording us an excellent opportunity to explore ourselves in the
internship program.
I am highly indebted to Mr. Ejaz Ahmad Nadeem Manager MCB Bank
Khanewal, Mr. Ajmal Toroo Manager Operations, Mr. Iqbal Tasneem &
Mr. Sakeel Ahmad General Officer in MCB Bank Khanewal.
I also feel indebted to all the respected staff of MCB Bank
Khanewal who gave me very effective guidance to make this work
successful.
Author
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MCB Bank Ltd
THE BANK
1. “Bank is an institution which revives money from

one party and lends to another party”.
2. “Banks are guardian distributor of cash money”.
These are the following types of banks

1. Central Bank
2. Commercial Bank
3. Industrial Bank
4. Exchange Bank
5. Saving Bank
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MCB Bank Ltd
Evolution of Banking
Bank Origin
There are different views about origin of the world “Bank”.
According to some people the word “Bank” is derived from
the world “Bancus” which means a “Bench”. They argue their
point by this transacted their business of money exchange
on the benches. If the business of any businessman failed,
his bench was destroyed by the people. Due to this practice
the word “Bankrupt” was also used.
On the other hand some people say that the world “Bank” is
derived from German time the word “Bank” was replaced by
the word “Bank” which is called “Banco” in Italian language.
Evolution of Banking
The history of banking evolution is very interesting. In the early ages
human life and wealth was not secure. Due to fear of loot-mar and theft
people buried their wealth under land but this method was not satisfied.
People started to search the custodians of wealth. The evolution of
banking started and it has crossed the following stages.
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MCB Bank Ltd
First Stage of Evolution

After a great struggle people succeeded in finding the reliable persons
to deposit their money and valuable goods for safety. These people
were goldsmiths. These were considered the most trusted persons due
to their sounds financial position. On the other hand they had very
strong iron safes for keeping gold, money and other valuable items.
People started depositing their gold and cash in the safe of goldsmiths.
Goldsmiths charged something for this purpose and they returned the
depositors their money whenever they needed banking evolution and
goldsmith were the early bankers.
Second Stage
During this period those receipts which were issued by the goldsmiths
against the valuables goods were being used as a medium of exchange
by the merchants. People purchased the various things from the traders
against their receipts against the payments. So the receipts were used
like the bank Cheque of the modern age.
Third stage of Evolution

This period started at that time when goldsmiths came to know by the
experience that people are using their receipts as medium exchange
and very few people demand their deposits. So they reach to the
conclusion that they may lend some portion of their total deposits to
some other people and they can earn profit. Goldsmith started the
business of lending. They also started paying interest to attract the
depositors of net cash. Now this business became very profitable, so
the traders and money lenders also jumped in this field.
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MCB Bank Ltd
Fourth Stage of Evolution

It was started at that time when people were tempted to deposit more
and more cash to the traders, money lenders and goldsmiths to earn
maximum interest. On other hand number of borrowers also increased
borrowing the money. So for the borrowing and lending business
regular institutions came in to being.
In the present age bank is modernized shape of those institutions. But
to earn more profit every bank started issuing overdraft facility without
maintaining adequate cash reserves to meet the demands of the
depositors. This inability created the financial crises. Now to maintain
the good will of the banks perform their duties. All the commercial banks
perform their duties keeping in view the instructions of the Central Bank.
Keeping in view the above discussion about the evolution of bank we
can say that it is the result of the different activity of goldsmiths,
merchants and money lenders. They are the real founders of modern
banking business. All the basic functions of modern bank like accepting
are similar with the founders. Now with the changing business
requirements the secondary functions of banks have been changing
with the passage of time.
Growth of Banking in Pakistan

The entire banking business was controlled by the non-Muslims before
the partition of the sub-continent. When Hindus became sure about the
division of the sub continent, they secretly began to transfer their capital
to the safe places in India. The funds and other valuables were
transferred to India.
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MCB Bank Ltd
Time of Independence
Hindus migration from Pakistan to India also caused drain on the bank
deposits. In order to ruin the economy of Pakistan. Hindus closed down
most of the head offices and branches of the scheduled and non
scheduled banks in Pakistan.
At the time of independence there were only two Pakistani banks that is
Habib Bank and Australasia Bank. At the time, Pakistan had 631
branches of scheduled banks and 411 of no-scheduled banks. The total
deposits of Pakistan banks were Rs. 800 million and advances were
198 million, the non-scheduled banks number reduced from 411 to 106
over the same period.
The mass scale withdrawal of deposits closure of branches and
migration caused a deadlock in the banking business in Pakistan.
Keeping in view the above situation government, of Pakistan took
various steps to provide all kinds of facilities to they non-Muslim
bankers for restoring normal banking facilities but response was not
encouraging.
Establishment of State Bank

After independence it was not possible that Pakistan to take steps to set
up the Central Bank immediately. The Reserve Bank of India acted as a
Central Bank of Pakistan till 30th September. 1948 But it could not
protect the interests of Pakistan.
To remove the financial difficulties and to establish sound banking
system Govt. established the State Bank on 1st July 1948. In the
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MCB Bank Ltd
development, to banking system it played very important role as a

Central bank of the country.
Development of Commercial Bank

New branches were opened in the country with the development of
banking system. These banks also extended their branches to foreign
countries.
Specialized Financial Institutions

Government of Pakistan established the specialized financial
institutions like ADBP. IDBP, NDFC, PICIC, HBFC. These financial
institutions financed the particular sectors like agriculture, industry and
housing.
Nationalization of Commercial Banks

In 1974 Government of Pakistan nationalized all the banks. The
Weaker banks were merged with the strong banks.
It was argued that these were nationalized so, provide fair distribution
of Credit to all the classes of people and remove the monopoly of few
Capitalists over the banking industry.
Privatization of Commercial Banks

Now government has decided to privatize the Commercial Banks. The
banks are in the process of privatization like other units of the economy
since 1990. This step is taken to provide better banking facilities lo the
public. It was also argued that loans were used as a political bribe and it
destroyed our banking system. People are not willing to repay the loans
despite of all Govt. efforts. So after privatization private banks will not
accept the political pressure and loans will be issued on merit.
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MCB Bank Ltd
In January. 1991, a privatization Commission was set up and two

Commercial banks namely MCB and ABL were transferred to private
sector. Now HBL and UBL are also privatize by this Govt.
In August 1991 government has also allowed the establishment of new
private banks. Now new like Askari Bank, Platinum Bank, Indus Bank,
Mehran Bank, Soneri Bank, Bank Alfalah, Prime Bank, Union Bank and
Al-Habib Bank are established. These banks have established their
branches in all the important cities of the country.
COMMERCIAL BANKS
Commercial banks are companies which transact business of
banking in Pakistan Commercial banks have constituted the most
important source of institutional credit in the economy of Pakistan.
COMMERCIAL BANKING SCENARIO IN
PAKISTAN
At the time of independence in 1947, there were 38 scheduled
banks with 195 offices in "Pakistan. But by December 31, 1973
there were 14 scheduled Pakistani Commercial Banks with 3,233
offices all over Pakistan and 74 offices in the foreign countries.
Nationalization of Banks was not done 1st January 1974 under the
Nationalization Act 1974 due to certain objectives. But it had
negative effects on the efficiency of the banking sector.
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MCB Bank Ltd
THE MCB BANK LIMITED
History
MCB Bank formally Muslim Commercial Bank was founded by Isfhani
and Adamjee families in Calcutta on July 9, 1947. In January 1974,
MCB was nationalized by Bhutto Government following the bank act
1974 subsequently in June 1974 Premier Bank Limited merged with
MCB. But the performance of MCB was badly affected by bureaucrat
government. In the late 1990 after long period of time newly established
Democratic Government of Pakistan have decided to sell nationalized
assets of country for better utilization. In April 1991, MCB became
Pakistan’s first privatized bank.
Thus, the bank inherits a 59-year legacy of trust in its customers and
the citizens of Pakistan. Now in nationwide 1000 branches and 07
branches work internationally.
Vision Statement
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MCB Bank Ltd
Challenging and Changing the Way you Bank.
Mission Statement
MCB Bank’s team of committed professionals is dedicated to
maintaining long term customer relationships through outstanding
service and convenience.
VALUES
 Trust
We are the trustees of public funds and serve with integrity &
commitment. Ethical behavior is of critical importance to us. We adopt
full compliance with internal and external policies and procedures,
operating within the legal framework
 Customer Focus
We continuously seek to exceed our customer’s expectations, forging
and maintaining long term relationships
 Innovation
We strive to be the market leaders in innovative products and services
offering customized financial solutions with flawless execution
 Teamwork
The diversity of our people is our strength. We inspire and challenge
each other – working together to achieve synergy
 Achievement
Our people are our most valuable asset. We are committed to a result
oriented culture. Our goals are clear and merit is the only criterion for
reward
 Social Responsibility
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MCB Bank Ltd
As responsible citizens we contribute to the social welfare of the

community we live in
Euromoney Awards
Best Bank Award 2006
Best Domestic Bank Award 2000
Asia Money Award

Best Domestic Commercial Bank Award 2005
Best Domestic Commercial Bank Award 2004
Best Bank In Pakistan Award 2006

MCB has yet again received the esteemed Euromoney Award for the
“Best Bank in Pakistan”. It is the only bank to receive the Euromoney
Award for Excellence for the sixth time in the past seven years.
INVESTOR RELATIONS
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MCB Bank Ltd
 FINAL RESULTS FOR THE YEAR ENDED 31

DECEMBER’06
MCB Bank’s Board of Directors reviewed the bank’s performance during

2006 in during the year meeting held on 23rd February 2007 in Lahore,
Pakistan and approved the Bank’s financial results for the year ended
31st December 2006. The bank has declared bonus shares of 15% and
cash dividend of 15%. This is in addition to 60% interim cash dividends
announced
 HIGHLIGHTS FOR THE FULL YEAR (Consolidated

Accounts)
Net Income was Rs. 12,541M (US$ 206M) for the year ended 31
December’06, an increase of 36.1% over 2005.
Net Interest Income was Rs. 21276M(US$ 349M)for the year ended 31
December’06, a healthy increase of 42% over the same period last
year, with the pre provision operating profit at Rs.20, 113M( US$ 330M),
a 39% increase over last year.
The Net Interest Margin for the year came to 8.32% compared to 6.52%
for the year 2005.
Cost to Income Ratio dipped to 26.29% in 2006 compared to 33.56% for
the year 2005, decreasing further from 30.8% for 9 months ended 31
September’06.
Return on Average Shareholder’s Equity was 47.65% for the year
ended 31 December’06, compared to 64.34% for the year 2005.
Total Assets grew by 14% to Rs. 343Bn (US$ 5.6Bn) from Rs. 299Bn
(US$ 4.91Bn) last year, Loans growing by 10% to Rs.198Bn (US$
3.3Bn) and deposits by 12% to Rs. 257Bn (US$ 4.2Bn).
Equity grew from Rs. 18.7Bn (US$ 0.31Bn) by 95% to Rs. 36.4Bn (US$
0.60Bn) for the year ended 31 December’06.
Total capital adequacy ratio rose to 19.13% with Tier 1 at 16.58%
compared to 12.79% and 9.53% at 2005 year end.
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MCB Bank Ltd
Asset quality improved with the NPL ratio falling to 4.14% from 4.46% in
2005. The NPL coverage ratio improved from 93.10% in 2005 to
100.4% for the year ended 31 December, 2006
Basic earning per share was 24.17 Rs (US$ 0.40 per share) and
dividend payout for the year was 31.24% compared to 18% in 2005.
MCB continues to be an industry leader and is also the first bank in

Pakistan to tap international investor markets. We are now poised for
growth both on the domestic and international fronts.
Grain Market Branch Khanewal

Khanewal city has only one branch of MCB Bank Ltd. This branch
reported to circle office Multan. It is located in the center of the city in
the grain market Khanewal. Its deposit last month end Rs. 242M. It has
good working environment but its building is so small and old one.
That’s why customer feel guilty especially ladies customers are suffer
many problems when branch is crowded or outside environment in
cotton and wheat season transportation of these goods block the
entrance gates of the grain market.
Branch believes in Customer Service but no any Automation &
Modernization because token system used in this fully
computerized era. High demand of ATM machine here
due to competition with other banks.
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MCB Bank Ltd
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MCB Bank Ltd
GENERAL BANKING OPERATIONS

In General Baking these departments are working in MCB Bank
Khanewal. It is backbone of banking It is one of the major department of
MCB Bank Khanewal. It consists of following departments:
• Account Opening Department

• Accounts Department
• Remittance Department
• Clearing Department
• Cash Department
Account opening Department

New accounts are opened in this department. The fund deposited in the
MCB bank can be classified under the main heads:
 CURRENT ACCOUNT
 SAVING ACCOUNT
 TERM /CALL DEPOSITS
 SMART SAVING ACCOUNT
This department head by Manager Operation Mr. Ajmal Turoo.
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MCB Bank Ltd
ACCOUNT OPENING
To open an account the customer has to meet the manager operation
with an introducer (the person who is going go introduce that person in
the bank). He fill the application form (SF-1AA) (Green color for all
types of Accounts) Along with the specimen signature card (SF-6) is
also supplied to customer. He gets all information from the customer &
also get signature on application form & on the specimen signature
card.
Procedure
The Officer records the necessary details into the Account opening
register and allots an a/c number from this a/c opening register. This
register is maintained for each type of account and the a/c no’s are
allotted serially. After opening a saving and current account every
applicant’s data is entered into the computer to maintain a safe record
and application form is properly filled so that it can be available when
necessary. Checking officer (Computer operator) is responsible to
match the manual application form with the computerized a/c opening
file. The signature specimen card contains two signatures of an
applicant, applicant a/c no, a/c type, branch code, title of a/c, it will be
attached with an application form. Banker uses this card at the time
when he receives the Cheque; he compares customer’s signature with
the signature on the Cheque for avoiding fraud.
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MCB Bank Ltd
ACCOUNTS TYPES
These are most used types, each have different documentation
requirements:
1. Single
2. Joint
3. Partnership
4. Private Limited
5. Public Limited
SINGLE
Mostly open the single accounts. Only one person can operate this a/c.
An individual who can fulfill the requirement of bank can open this a/c.
The requirements for this type are National Identity Card Photocopy,
Minimum Deposited Balance, and Account Opening Form etc.
JOINT
In case of joint a/c applicant mentions that how much person will
operate the a/c. Instruction are given for joint a/c such that the account
shall be operated by anyone or more. The requirements for this type are
National Identity Card Photocopy, Minimum Deposited Balance,
Account Opening Form, Additional Signature Form (For Joint Account),
Declaration regarding the operator of account.
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MCB Bank Ltd
PARTNERSHIP
For partnership a/c, along with the application form other requirements
needs satisfied.
The requirements for this type are National Identity Card Photocopy,
Minimum Deposited Balance, Account Opening Form, Registration
certificate, agreement among partners and Commencement of business
and private registration, resolution of board of directors,
commencement of business, memorandum and articles of association
and balance sheet etc.
PRIVATE LIMITED
Such type of account is opened in the name of the businesses having
private limited concern and mostly medium business enterprises open
such kind of accounts. All the board of directors have to submit the
declaration regarding the account operator on the company pad and
with the rubber stamp with the signature of the all the members of the
board of directors. In case of any change in director’s bank must be
informed regarding that. In case funds are borrowed by the company all
the directors approval is necessary rather not only the authorized
partner who can be the operator of the account.
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MCB Bank Ltd
PUBLIC LIMITED
Public Limited A/C type of account is opened in the name of the
businesses having Public limited concern and mostly medium business
enterprises open such kind of accounts. All the board of directors have
to submit the declaration regarding the account operator on the
company pad and with the rubber stamp with the signature of the all the
members of the board of directors. In case of any change in director’s
bank must be informed regarding that. In case funds are borrowed by
the company all the directors approval is necessary rather not only the
authorized partner who can be the operator of the account.
ACCOUNT CLOSING & SOME OTHER

TYPES of ACCOUNT
There are number of reasons of closing an account can be one of the
following if customer desire to close his account, in case of death of one
account holder, bankruptcy of the account holder and If an account
contain nil balance or not up to the requirement of rules.
Before closing any account, bank send letter to the account hold for
informing him that his account is going to be closed. There is need an
approval form higher authority to close any account.
(i) DORMANT ACCOUNT

If no any operation in C/A a/c last 06 months & 01 year in PLS
Saving a/c. called the Dormant accounts.
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MCB Bank Ltd
(ii) INOPERATIVE ACCOUNTS

No operation in Current a/c in last 02 years & 03 years in PLS saving
a/c transfer to inoperative ledger in December.
(iii) DECEASED CUSTOMER ACCOUNTS

On the death of an customer his her a/c is marked as deceased. No
withdrawal. Get certificate from his family of his death.
(iv) UNCLAIMED ACCOUNTS

After ten years inoperative accounts are converting into unclaimed a/c
and now these are under SBP.
(A) CURRENT ACCOUNTS

For Business this type of a/c used. Current deposits are those which are
payable to bank whenever demanded by the customer. Bank does not
pay any profit on current deposits.
FEATURES
A sum of Rs. 10,000/= in cash as initial deposit is required for opening a
current account and the same may be maintained as minimum average
running credit balance. No profit will be paid on credit balances held in
current accounts. The bank reserves the right to allow opening of
current a/c at its description. All deposits and withdrawal from a current
a/c will take place only at the branch where the account is being
maintained
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MCB Bank Ltd
The account holder can draw sums from his account by means of
Cheque supplied to him by the bank for that particular account.
Account holder should take well care of the Cheque books issued to
them.
(B) SAVING ACCOUNT

Saving accounts are opened on proper introduction with sums of credit
balance within certain limit for individual (single, joint) institutions,
companies, educational institutions etc. MCB has introduced various
schemes under saving a/c are following:
ACCOUNTS CODE
PLS Account 02
Saving 365 Account 03
Saving 365 gold 07
Khushali Bachat Account 04
BBA 33
Smart Saving 08
(a) PROFIT & LOSS SHARING (PLS) ACCOUNT

• Minimum balance is Rs.10,000/- for account opening.
• Below minimum balance 10,000/= Rs. 50 charges will be debited
• Not more than eight withdrawals in a year allowed
• Seven day notice is required for withdrawal
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MCB Bank Ltd
• Profit calculated on monthly basis

• Profit paid on annually basis
• Profit paid on lowest balance at the end
• Zakat deducted on @ 2.5%
(b) SAVING 365 ACCOUNTS

This account is newly developed of MCB and it provides flexibility of
saving account to business people. Profit on deposits will be payable
on daily product basis on balance of RS. 300,000/- and above.
However, if balance in the account falls below RS. 300,000/- on any
day, the product will be ignored. There will be no restriction on
withdrawal from the account. Zakat and withholding Tax is also
applicable on the account opened under this scheme.
• Minimum balance is Rs.300,000/=

• Below minimum balance, profit calculation ignored
• Profit calculated on daily basis
• Profit paid on annually basis
• Zakat deducted on @ 2.5%
(c) SAVING 365 GOLD ACCOUNT

Introduced in 01 Dec 1998. High profit, balance not below 10M in this
case profit paid on saving rates.
(d) KHUSHALI BACHAT ACCOUNT
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MCB Bank Ltd
• Min balance is 2500 at any time.

• Saving type account
• Profit calculated on daily basis
• Profit paid on half yearly basis
• Utility bills can be debited through this a/c
• No charges will be debited for utility payments
(e) BASIC BANKING ACCOUNT

Opened with min Rs. 100, For 06 month’s period zero balance
maintaining a/c is not closed. Each month 02 deposit transactions
(either cash or clearing) & two withdrawals (either cash or clearing)
permitted. Every above transaction Rs. 25 charged.
(f) SMART SAVING ACCOUNT

This type of account introduces in 2007 and minimum required balance
is 10,000. Profit 3% on 100,000/- or more, 5% on 200,000 or more and
7% on 300,000 or more than 300,000 profit paid on 3 month basis.
TERM DEPOSITS
Term deposits are fixation of certain amount of money for a specific
span of time. These can be of mainly two types i.e. short term notice
deposits and long term notice deposits. Different rates are charged
for different period of times like as shown by following table. If
presented before maturity then previous period rate would be
charged.
The instrument term deposit is like a slip containing issuing bank name,
a/c # to operate on computer, deal #, customer name, reference #, date
of issue, amount, rate maturity date etc.
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MCB Bank Ltd
Duration Rate of Interest

01 month 08.1%
02 month 10.1%
03 month 11.0%
06 month 11.5%
01 year 12.5%
02 year 13.3%
03 year 14.5%
05 year 16.4%
CALL DEPOSITS
These call deposits are presented in the bidding process as guarantee
or security from the bank that this much money is deposited in the bank.
These are made in the favor the party offering contract or any other
person. The bank offer no interest rate on it because these can be
called at any time. For encashment the applicant must have to cancel
the call deposit instrument from its beneficiary.
For collection the beneficiary usually send the authority letter for paying
in the shape of Demand Draft or pay order. The call deposit instrument
containing the information regarding applicant and beneficiary name,
joint name a/c opened signature cards for encashment, reference #,
amount, date of issue, authorized signature etc.
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MCB Bank Ltd
OTHER PRODUCT / SERVICES

The privatization process for the expansion and diversification of
economic activities in the country also demanded the introduction
of new banking products. MCB took initiative in this direction and
for the first time MCB devised and marketed new products and
services with brand names to enter the varying requirements of its
diverse customers. MCB currently have following products or
services in banking sector that are making it more prominent in
the banking sector:
a) Night Banking
b) Fax Utility
c) Consultancy Services
d) Rupee Traveler Cheque
e) Self Supporting Scheme
f) Utility Bills Collection
g) ATM
NIGHT BANKING SERVICES

• To facilitate business community
• Only in commercial trades centers premises
• Clients can make deposits up to 8:00 pm
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MCB Bank Ltd
• Date moved to next for all such transaction
FAX utility
• Pioneer to introduced Fax for customer service.
• Facilitates speedy transfer of funds.
• Within an hour any where in Pakistan.
• Charges are debited to Customer account.
CONSULTANCY SERVICES
In the process of privatization of public sector units, prospective
buyers need professional assistance and MCB, with its expertise
offers to their specialized service for valuation of the market value
of the industrial unit, preparing bid documents and arranging
finance for the purchase of the unit.
MCB RUPEE TRAVELERS CHEQUE

• Can be a safest way to carry cash
• Cheque is accepted at trade centers & branches
• No need to be a/c holder for traveler Cheque
• Cheque is signed once when issued.
• Upon delivering second signed are made
• In case of theft no fair to encash
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MCB Bank Ltd
• But informing bank is necessary if thefted
SELF SUPPORTING SCHEME

• Loan for poor/needy people
• No mark-up charged
• Maximum amount of Rs. 25,000/=
• Minimum amount of loan Rs. 5,000/=
UTILITY BILLS COLLECTION

• Utility bill collection for maximum customers
• Objective is to create interaction with customers
• Currently 1000 branches are performing this job
ATM (Automated Teller Machine)

• Minimum balance of Rs. 500/=
• No charges are debited per transaction
• Only two hundred per annum debited
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MCB Bank Ltd
ACCOUNTS DEPARTMENT
Every transaction which takes place recorded in the computer so all
transactions in different departments are forwarded to account
department. Since all vouchers from different departments are
forwarded to Account department so this department tallies all such
transactions with current department after maintaining the ledger of
each department
This department maintains all formalities of the accounts and account
holders like it account name, account holder’s name, code number and
full address. Different cheques debit and credit voucher come form
different departments like Token, Clearing, Remittances, Cash, Foreign
Exchange, Advances and posted against different accounts.
A working Journal called Manual is prepared daily which shown the
balance accounts of all parties. Mark-up and profit are calculated daily.
That would be debited at credited from or to account holder’s account
after specific period of time.
Markup is debit from the account after every three month profit is
credited to accounts after every six months.
. Following are different functions performed by this department:

• Preparation of Financial Statements for different time span
• Maintain all accounts of different departments
• Calculation of profit on different schemes
• Calculation of markup on different advances
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MCB Bank Ltd
• Preparation Different types of reports for State Bank

• Daily position of cash & every accounts
• Matching daily summaries of all departments with ledger
TOTAL BALANCING
Transfer Sheet
All transfer entries like transfer of cheques, HO, General ledger
entries receiving CCs are enter in this sheet.
Other Sheet
In this sheet all DD payable, HO enteries, and DD, TT, MT, & PO
made by cheques.
Clearing Sheet
Clearing with other banks show in this sheet also show in daily
balancing.
Transfer Sheet total + Other Sheet total = Total Transfer Sheet
Total Transfer Sheet + Clearing sheet total + Cash Sheet total

= Closing Balance.
Match with the computer balancing.

This Closing Balance Is the next day opening Balance.
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MCB Bank Ltd
REMITTANCES
The need of remittance is commonly felt in commercial life particularly
and in every day life general. A major function of any banking system is
the transfer of funds from one client or one place to another. By
providing this service to the customer the bank earns a lot of income in
the form of service charges. This department deals with local currency
remittance i.e. remittance from one city to another without actually
carrying the currency. MCB Bank uses following instrument for
transferring of money:
• Demand Drafts (DD)
• Pay Order (PO)
• Telegraphic Transfer (TT)
• Mail Transfer (MT)
Demand Drafts (DD)

DD is a written order given by the branch of the bank on behalf of the
customer to other branch of the same bank to pay the certain amount to
the customer. DD are issued for the particular place other than place of
issuance. A draft is a Cheque drawn by a bank on its own branch or any
other branch of another bank at a different place requesting it to pay on
demand a specified amount of money which is already received to the
person named on it. DD is of following two types:
 DD payable
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MCB Bank Ltd
 DD Paid Suspense a/c

In the first type as advice reaches for payment the immediately pay to
the customer while in later as DD presented by the customer, it is paid
and the suspense account is debited.
Documentation
A printed application form is provided for filling in completely and
signing by the applicant. After depositing an amount of draft and
commission of the bank, duly completed and signed by two authorized
officers, then it is handed over the applicant and credit order is
dispatched to drawee branch. Following are the pre-requisites for the
processing of DD:
Show the Bank Serial No, No. of DD, Central No, Test Key and
Rs.75 Postage charges. Rs. 50 on Rs.50,000 or min amount then
every thousand increased Rs. 1 in commission till Rs. 100,000.
From Rs. 100,000 to Rs. 200,000 it is Rs. 100 but increased by
0.05% above Rs. 200,000.
Pay Order
For this kind of remittance the payer must have the account in the
issuing bank. Pay order are more liquid as compared to Cheque
because Cheque may be dishonored while PO can’t be. It is written
order issued by the bank drawn and payable on itself. It is used for local
transfer of money from one person to another person. It is also used by
the public for depositing money with Government or Semi Government
department.
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MCB Bank Ltd
DOCUMENTATION
The party who requires a pay order will get a printed application from
the bank. He will fill it and deposits the amount and commission. The
bank charges are same as on demand draft.
Bank Serial Number No. of PO & Central No.
In MCB Bank Khanewal used the computer for this instrument
printed shape.
TELEGRAPHIC TRANSFER (TT)

In this case the authority is given from one bank to other on the behalf
of the customer through telecommunication to debit their inter office
account through them and credit their parties account mentioned in TT.
It is an inter bank transaction. Telegraphic transfer is an instant transfer
of funds. Through this method applicant can transfer money from one
place to another place. There are two types of TT; both types of TT are
maintained in separate registers, test is applied by the manager of
every amount of TT.
• Incoming TT
• Outgoing TT
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MCB Bank Ltd
Applicant has to fill a form along with depositing amount to be

transferred and bank commission. MCB charges the commission at the
same rate as in the case of demand drafts but Rs. 100 charges for
telephone.
Documentation
Issuing Branch Name & Code
Beneficiary Branch Name & Code
No. of TT
Rs 75 Postage charges and Rs. 100 for telephone charges.
Amount in words & Figure
Test key
Mail Transfer (MT)

As the name shows, it is transfer of money in the shape of document
through mail. Procedure is like TT. The transfer of funds from one place
to another by mail is called Mail Transfer (MT). The MT can be foreign
or domestic. The applicant who is desiring to remit the funds by way of
Mail Transfer can either deposit cash or ask the bank to debit his/her
account with the cost of MT including the bank charges. These all
measures are for safe transfer of funds.
Documentation
Issuing Branch Name & Code
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MCB Bank Ltd
Beneficiary Branch Name & Code

Number of MT
Amount in words & Figure
Test key
CLEARING DEPARTMENT
All the external functions of clearing are carried by Mr. Sakeel through
National Bank of Pakistan main branch Khanewal.
Inward Bills of collection

1. Lahore -------- Khanewal.
MCB cheque of KWL come from (0176) N.G.LAH
We debit party A/C and Credit N.G. LAH. on the SF-181-
under transaction code 0300.
2. If the cheque is MCB BANK or UBL. This cheque sends by
cleaning. They Cr. us by National Bank and we send this
advice. They cr. party & Dr. MCB KWL.
Outward Bills of collection

1. Khanewal ------- Lahore.
we collect the N.G LAH.cheque and send it to the responding branch,
we made C.C & present through outgoing bills (C.C cheque for
collection) CC on SF -37- also write on C.C. register – then send If
they clear they send us SF-181 (Manual or computerized copy)
Open C.C. register telly it branch and amount. Then we collect
service charges of MCB banks cheque. Charge 15% and others are
like UBL, HBL 20% as per Cheque charges.
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MCB Bank Ltd
CASH DEPARTMENT
MCB Bank GM Br. Khanewal used old procedure of cash payment with
Tokens. This is a time consuming process but safe in using because
one cheque pass through many people hands. In cash department both
deposits and withdrawals go side by side. This department works under
the accounts department and deals with cash deposits and payments.
This department maintains the following sheets, books, ledger of
account:
• Cash received voucher sheet. (SF-14)
• Cash paid voucher sheet. (SF-13)
• Cash balance book. (SB-57)
• Cash position register.
• Prize bond register. (3B)
First Cheque presentd to Mr. Zamir he check the cheque, its date,
amount in words & amount in figure telly one face and two back
signature. Then token no. on cheque & token number in token register
cash paid stamp on cheque and give to Mr. Taswar. He posted into
computer. When he posts these entries, computer automatically display
the balance before posting the transaction amount, balance after
posting. He easily and quickly see whether the amount being withdrawn
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MCB Bank Ltd
so exceed the balance or within the balance. If the amount does exceed
the balance then it is upon the discretion of the manager to allow an
overdraft and not depending upon the customer’s reputation. If he does
not allow an over draft, the procedure is repeated again as described for
the mismatch of the signature Cheque is return.
The following staff members are performing their duties with patience
and hard work. Three peoples are working in cash department named
Mr. Nabi Bukhsh, for collection Mr. Raja Khalid for payments and Mr.
Akram on bills.
Cash Paid Sheet

The only instrument that can be used to withdraw an amount from an
account is the Cheque book. No payments are made by another
instrument. Cheques can be of two types, they may be presented at the
counter and encased and the others are clearing or transfer cheques.
Cashier manually inspects the Cheque for following:
Cash Received
For depositing the cash into customer’s accounts, there is need to fill in
the paying-in-slip giving the related details of the transaction. This
paying-in-slip contains the date, a/c/no, a/c title, particulars, amount
being deposited and details of the cash. There are two portion of the
paying-in-slip. The depositor signs the one part of the paying-in-slip one
is retained by the bank to show an acceptance of the entries made in
the slip.
The different colored paying-in-slip are used for all the types of
deposits. Only the slips related to a particular type of a/c is acceptable
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MCB Bank Ltd
by the bank. For example current paying-in-slip for current a/c and
saving paying-in-slips for saving a/c etc. The paying-in-slip serves as a
voucher to update to computerized transaction ledger. The transaction
ledger is only updated by paying-in-slip and Cheque.
The cashier responsible to receive both the paying-in-slip and cash from
the depositor the cashier check the necessary details provided in the
paying-in-slip and account the cash and tallies with the amount declared
in the slip. If the amount does not tally with the cash given, the deposit
is not entertained until the customer removes the discrepancy. Then
send to Mr. Iqbal who stamp on the voucher one part give to customer
and one for Mr. Taswar for posting in the computer.
CASH BOOK BALANCE
At the end of the working day cashier is responsible to maintain the
cash balance book. The cash book contain the date, opening balance,
detail of cash payment and received in figures, closing balance,
denomination of government notes (Currency). It’s checked by
manager. The consolidated figure of receipt and payment of cash is
entered in the cash book and the closing balance of cash is drawn from
that i.e.
Opening Balance of Cash + Receipts - Payments = Closing
Balance
The closing balance of today will be the opening balance of tomorrow.

This department is one of the most important department of the bank.
All the books maintained in this department are checked by officer.
Debit voucher (SF-9)
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MCB Bank Ltd
For debit entries used SF-9. Charges of services, postage etc.

Credit voucher (SF-10)
Commission on bills & other credit entries.
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MCB Bank Ltd
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MCB Bank Ltd
ADVANCES DEPARTMENT
It is major department of the branch. Mr. Mr. Shahzad Ahmad Shad

(myself) is the incharge of Credit department. Bank provides this facility
to the people who need advance money to meet their requirements. For
getting the advances, the first step is the preparation of credit proposal.
Some principles of lending are considered whenever financing being is
made. These principles are:
• Character
• Capacity
• Collateral
• Capital
• Condition
REQUIRED INFORMATION
 An assessment of his business abilities
 Accurate & up-to-date financial statements
 Market reports about the borrower
 Party dealing with other banks
 Nature and structure of borrower business
 Names of proprietors, partners or Directors
 Detail of companies associated with borrower business
 Financial condition of borrower business
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MCB Bank Ltd
PREPARATION OF CREDIT PROPOSAL

At first, a formal application for credit approval is obtained from the party
along with complete group position. The party’s credibility report is also
obtained from the banks from which the party has been doing the
business. The party creditability report is also taken from the head office
of Trade information Division.
For obtaining credit, party has to submit the last two years Balance
Sheet and Profit & Loss Statement duly attested but authorized
auditors. The Current and Debt equity ratio is also calculated by the
bank.
Then recommendations are made the type of data required to prepare
the credit proposal is to be gathered from different departments. Some
data is obtained from the foreign exchange department. Some data is
obtained from current account department and some data is available in
Advance Department. The purpose for which the financing is required
should be explained very clearly. The securities offered by the party to
the bank are also evaluated. In case of pledging of the property in
shape of land or building the complete evaluation of the property should
also be attached.
. These are two types of advances:
 Secured Advances
 Unsecured Advances
In secured advances, the bank takes any security against the loans
while in case of unsecured advance no security is taken by the bank.
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MCB Bank Ltd
ADVANCES TYPES
MCB Bank usually classified advances in to following types:
• Agricultural Advances
• Commercial Advances
• Industrial Advances
MCB divided the advances in to two major types:
 Fund Based
 Non Fund Based
In the fund base advances, the funds of MCB is involved and in

Non Fund based only guarantee is given by the bank.
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MCB Bank Ltd
Fund Base Advance

MCB Bank Khanewal have following Fund base facilities of
advance in its corporate branches. The details of these types
would be later. These are as follows:
I. Demand Finance (DF)

II. Cash Finance (CF)
III. Running Finance (RF)
IV. Finance against imported goods (FIM)
V. Export Refinance Part I (Pre Shipment)
VI. Export Refinance Part I (Post Shipment)
VII. Export Refinance Part II
VIII. . Finance against purchase collection (FACP)
IX. Finance against foreign bills (FAFB)
X. Foreign bills purchased (FBP)
XI. Local Manufacturing Machinery (LMM)
XII. Payment against document (PAD)
DEMAND FINANCE
This is a type of secured loan and demand loan never allowed without
security. It is a type of long term financing. GM Khanewal branch also
gives loan under the head of demand finance to individuals, industrial
units commercial business etc.
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MCB Bank Ltd
CASH FINANCE
In this, the borrower gives a specific reason for the need of cash. GM
Khanewal branch gives the facility of cash credit to business. The
amount is passed through voucher and credit to the party account.
RUNNING FINANCE
These finances as evident by the name are given to the business to
meet their daily needs. The mark up is charged on daily basis. This type
of advances is given to trade, commerce and manufacturing for general
purpose. It is drawn through Cheque.
FINANCE AGAINST IMPORTED
MERCHANDISE
These types of advances are granted against the pledge of imported
merchandise. The goods imported are pledged by bank. Bank pays all
the charges to exporter and customs and keeps the goods in its control.
On payment from the client to bank, the bank releases these goods.
EXPORT REFINANCE PART-I PRE-
SHIPMENT
This type of loan is provided by the bank to the customer at the rate of
12% for the period of 150 days. The bank provides this type of advance
facility to those exporters who have not enough money to make
shipment. To promote the export, the governments pursue the Banks to
provides loans to the exporters.
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MCB Bank Ltd
EXPORT REFINANCE PART-I POST
SHIPMENT
This type of facility is provided to the customers who have enough
amount of money to make first shipment but not more. So the bank
issues a loan to the exporter, this financing is for period of 150 days.
Finance is provided by the SBP to exporters for the purchase of raw
material and for its processing packing and shipment. The mark up rate
currently set by the SBP is 12%. In case, if the party is unable to make
the shipment within 150 days of financing. The party has to pay certain
amount of finance as asked by the SBP and after 150 days the markup
rate also charges up @ 60 paisa per thousand per day. So usually an
exporter tries to make the shipment within the fixed period set by the
SBP which is usually 150 days.
EXPORT REFINANCE PART-II

In this case the bank after receiving the performance of years in export
business of the party the limit is set for a period of one year. Here the
limit cannot be set by the terms pledged of the permission of the bank.
FINANCE AGAINST PURCHASE OF
COLLECTION DOCUMENT
The bank provides this type of advance facility to those exporters who
have not enough money to make shipment. A bill (Cheque, draft, etc.)
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MCB Bank Ltd
may be purchased by the bank. Bank pays the amount to the client after
deducting its commission.
FINANCE AGAINST FOREIGN BILLS

This facility is given to the exporter, If he needs an urgent money. Bank
also provides finance against the foreign bills. He gives bills of
exchange to the bank as a security and bank send these bills for
collection and bank gives money to he exporter.
FOREIGN BILL PURCHASE

The exporters which are under L/C are also provided with the facility of
loan. Amount is given to the exporter after the approval of L/C by the
issuing bank.
I. LOCAL MANUFACTURING
MACHINERY
The bank provides this facility to the business man who wants to buy
the local manufactured machinery. LMM funds are provided by the SBP.
Rate of markup for this type of loan facility is 12% on this type of loan.
II. PAYMENT AGAINST DOCUMENT

Bank make the payment to party against document and upon expire
date. Bank receives back money with mark up in this type of lending.
Upon receipt of the documents negotiated by the sellers bank. The
opening bank makes sure that documents are according to terms and
conditions of the credit.
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MCB Bank Ltd
1. Collect Information required for preparation of

an application for Finance (SF-86-A).
On SF-86-A Application of Finance require all information about
Outstanding Limit, Existing Limit & Proposal Limit With MCB
Bank & If any other Bank. Directors names & ID cards and also
Legal opinion on the documents.
2. Processing of credit proposals (SF-86).

Documents like Title Deed, NEC, and Approved site Map,
Ax Shajra (Map of Location of Property). If valid then valuation
through MCB Bank approved Company panel list. Harvests
mostly used. Then get application on singed SF 86A, signed
B/S, Signed I/S & A/S Statement.
3. Procedure for approval under Manger’s

Discretionary Limits.
Get singed Borrower Basic Fact Sheet, Risk Rating & CIB
Report through SBP Rs=300 Fee per client.
CPS Credit Proposal SF-86 System
It has 6 pages
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MCB Bank Ltd
1. This Page Same the SF-86A, fill all information about

customer show in SF-86A.
2. Securities existing and new offering Securities
3. Conformation
 DOC Compare
 stock Report
 Manger timely visit
 Insured
4. Financial & Business given to MCB Bank, Deposits &
Commission and No. of days
5. Group Information
If Customer have more than one business show their shares
All availing Finance self with other show in this page.
6. Comments
Background Development, Pricing, Margin on which we
finance, Justification of Proposal
Finance, Group A/C Strategy & Recoumdation on which bases
we finance.
Send these all to the office if they approved
4. Forwarding Credit Proposals to controlling
offices.
If approved then mortgage the property
Mortgage Register to the Registarion then Send to Tehsildar
then register charge to the Bank get the copy then we again
send to legal opinion.
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MCB Bank Ltd
If Yes valid All Property Documents & New Legal opinion to the
continuous office. Now if they approved give them limit.
5. Financial Statements Analysis and

Interpretation.
All F/S as like Balance sheet, Income statement, check by
credit officer.
6. Issuance of Sanctioned Facility Letters.

When Approval comes then we give the letter of sanctions
Facility letter which show all terms and conditions.
7. Obtaining the required Charge / IB forms duly

filled in signed and attested.
All IB Forms as like IB-6, IB-12 etc fill properly.
8. Documentation for collateral securities.
All documents collect from customer as like Title Deed, NEC,
and Approved site Map, Ax Shajra (Map of Location of
Property) and send to legal retainer for legal opinion.
9. Disbursement of credit Facilities.
If Yes valid All Property Documents & New Legal opinion to the
continuous office. Now if they approved give them limit.
10. Various returns for submission to controlling
offices.
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MCB Bank Ltd
. Weakly Reports statement of stock limit expiry send to

controlling offices.
11. Returns and Reporting to SBP including CIB.
CIF In this Relate to the CIB and also FCA Reports.
12. Obtaining Clearance report from CIB to SIB.

Get Information about customer for limit fee Rs. 300/- per
client.
13. Inter bank credit Reports.
Inter bank C.R. show all information get from other Banks of
city = confidence Report.
14. Monitoring of outstanding advances.
If expire Date then work stock checking
No usance of Limit after expiry Finance.
15. Calculation of Mark up.
Running Finance update the Rates automatically
Cash Finance calculate manually
Formula.
Markup Rate (1000)
365/100(Product)
KIBOR Rate+ SMR
11%+3%6747.178 if not timely paid 25 day outstanding SMR
change Full Normal Rate 3+5 SMR 11+3+5=19 then we write 20%
If more than 20% then original rate is correct.
Outstand 20800, Rate 11.84%
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MCB Bank Ltd
Markup
=11.84(1000)
365/100(20800)
Ignoring Last three (000) for find of product.
500,000 is 500
16. Inspection of hypothecated and pledged
stocks / inventories.
a) Pledge Stock
Used in Cash Finance. For inspection the stock of cotton bales
& oil cake. Mostly visit the Manger, Credit Incharge or Regional
Manger.
b) Hypothecated Stock
For RF mostly as like limits of cement, Ghee supplier & Sugar
supplier visit the Manger or Credit Incharge.
17. Follow up for recovery of Principal Markup.
Interlinked by customer about checking of his stock expiry &
markup payments.
18. Renewal and enhancement of Credit
Facilities.
For renewal check the Revenue Record like Copy of
mautation= Register Dakel & Kharga. New financials
statements like B/S & I/S. provide data to the controlling office
and get the approval.
19. Periodical review of outstanding finances to
detect the irregularities.
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MCB Bank Ltd
Check the Revenue Record like Copy of mautation, markup

payments and balances of limit periodically.
20. Follow up for recovery of stuck up finances.
Stuck up finance which one can not pay markup and timely
adjust the limit. Send reminder to the customer, if no response
then consults Legal Retainer.
21. Arranging the insurance cover for securities.
Limit + 10% insured at the time of financing.
Insured for (i) Theft, (ii) Fire & (iii) Building. This is the
obligation of the customer
22. Obtaining periodical stock statements.
Through Mocadam Company in Cash Finance daily basis report
and RF mostly monthly basis report collected. Mr. Saeed & Mr.
Farooq are two mocdams of the Khanewal branch.
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MCB Bank Ltd
Agriculture Credit
Banks Agriculture division deals with the agriculture advances. Bank
provides the Agriculture Advances in order to enhance and support the
agriculture sector of the country. Agriculture advances are of the two
types. The types are as follows:
 Farm Credit
 Non Farm Credit
FARM CREDIT
These are the credits provided by the MCB for the purchases of inputs
for development of agriculture sector. Following are two main sub
classes of Farm Credit.
Production Finance
Development Finance
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MCB Bank Ltd
PRODUCTION FINANCE
These are short term loans. These loans are provided to farmers for
purchases of different type of input, for example, Seeds, Fertilizers,
Pesticides. These loans are provided against personal guarantees or
mortgage of land as a security. Rate of profit for these loans is 10%.
DEVELOPMENT FINANCE
These are medium or long term loans. These loans are provided for the
development of agriculture sector. Main purpose of these loans are to
purchase instrument:
Tractors
 Implements (Trolley, Thresher etc.)
Installation of tube-well
Planting of garden
The loans are disbursed against security of land (mortgage) or any

other security acceptable to bank. The rate of profit for these loans is
11% to 17%.
NON FARM CREDIT

Second major form of agriculture advance is Non-Farm Credit. These
loans are provided against mortgage of land as a security or pledge of
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MCB Bank Ltd
equipment as a Collateral security. These are medium or long term

investment depending up the project. These loans are provided to boost
up agriculture sector to provide the sources of earning of foreign
exchange as well as to provide employment to people. Following are
the different types of small industries for which loans are provided to
improve the economy of the country:
Fish Farm
Cattle Farm
Poultry Farm
Dairy Farm
Non Fund Based
 L.C
 Guarantee
Letter of Credit
A letter of credit is defined as under
“Undertaking by the importer’s bank to exporter that the draw in
accordance with terms and conditions of the credit, will be honored if
presented with in the validity of the credit.”
It is a conditional undertaking by the Bank to make payment to

the exporter if he fulfills the terms of credit by presenting the required
documents to the bank in his country. In fact LC is a legal document on
behalf on which the payment made by the importer’s bank to the
exporter’s bank.
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MCB Bank Ltd
MCB Bank is providing this service to its customers who have an

account with the branch and other businessmen too. This facility has
been recognized as a modern banking activity of all commercial banks
that are included in the list of 6000 Banks internationally.
Information in LC document
 The name of the local company, which is importing the goods

 The name of foreign company, which is exporting the goods
 The details of the goods to be transacted including the amount,
quality, mode of packing etc.
 The total amount of the LC
 The number of days for which the LC is valid
 The name of the banks, who are regulating all these dealings
 The name of the carrier which will be used for the shipment of the
goods to the importer
Bank receives an L.C from the importer for exporter of goods. These
export LC used in Pakistan are following two types.
1) SIGHT L.CS
2) USANCE OR D/A LCS
SIGHT L.CS
The LC in which payment is made at sight basis after documents are

delivered
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MCB Bank Ltd
USANCE OR DA L.CS:
In this class of LC the exporter with that listed in the l.c makes the
payment after a specific period of time bank checks all the documents
provided. if no error then payment is being made else vice verse. The
payment in this type of export is made in full else specified, partly
payment may be made when both the parties agrees. After receiving
the LC and checking all the documents the officer is issuing an approval
sheet. The bank provides the bill of exchange.
Exporters provide the following documents to the bank.
 Bill of lading or air way bill
 Invoice
 Packing list
 Certificate of chamber of commerce
 Insurance
 E form
The bank informs SBP about current export uses the E form. It is issued
in quadruplicate. The custom authorities retain first spy of E-form
returned MCB Bank, .2nd copy is for SBP 3rd for exporter and 4th for the
banks record. When full payment is being made the SBP’s copy is
returned to MCB Bank
TERMS OF SALE
 CIF (cost, insurance and freight)
 FOB (freight on board)
 CFR (cost and freight)
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MCB Bank Ltd
There are normally six parties involved in a letter of
credit:
1) Buyer (known as the importer or consignee)
2) Buyer’s Bank (known as opening, or paying bank)
3) Seller (known as the exporter, or beneficiary)
4) Seller’s bank (known as advising, confirming,
negotiating bank)
5) Carrier (known as the shipping company)
6) Insurance Company
Types of LC
There are two types of LCs
1-Irrevocable LC
An irrevocable LC is one that is a definite undertaking by the

issuing Bank that it cannot be cancelled or amended without the
consent of all the parties to the credit. The exporter feels himself safe
and assured that his payment will be met in time without delay.
2-Revocable LC
This type of credit is one that can be cancelled at any time by the
issuing bank giving any reason to the negotiating bank, meaning that
the importer’s bank shall not honor any cheques/drafts presented for
payment. The importers do not so commonly use this type of LC, as
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MCB Bank Ltd
most of the time there are instructions by the exporters to open and
irrevocable LCs in their favor.
Opening of LC
For opening of LC the following documents are required by the bank.
 Application or bond
 Order or invoice or indent
 Insurance (mist according to Pakistan rules)
 Liability endorsement of customer
 Irrevocable documentary credit (LC)
 Serenity form
An L.C is issued after opening of the letter of credit it is sent to the negotiating bank.
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MCB Bank Ltd
LC Opening Charges
When an LC is opened, the bank collects certain charges

from importer these are:
 Commission
 Postage charges
 Telex charges
Bills Under LC
After receiving the L.C. the negotiation bank checks the documents, which are
provided by the exporter with that are described in the L.C. if there is not discrepancy
in that documents then the negotiating bank gives the payment to the exporter
otherwise vice verse.
The negotiating bank sends the document provided by the exporter to the LC
issuing bank with their covering letter known as bills under L.C. The negotiating bank
sends these documents by two mails so that if one mail is not received then the set
from second mail can be used for further transactions.
The negotiating bank sends following documents to the advising bank.
 Covering letter to advising bank 1 copy
 Bill of exchange 2 copies
 Invoices 8 copies
 Bill of lading or air way bill 3 copies
 Packing list 3 copies
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MCB Bank Ltd
 Shipping advice to insurance company 1 copy
 Shipping certificate from vessel 1 copy
The advising bank checks all the documents which they received
from the negotiating bank finds any information which is not given in the
L.C in this bill if the bank finds no thing then transaction is made and if
there is any discrepancy then the advising bank may claim the return of
amount from the negotiating bank.
Guarantee
A guarantee is a promise between one person to another person
or party to answerable for the debt of a third party. Bank issues
guarantee after 100%cash collaterals are provided by the person
i.e.50% in the form of the property.
Securities
Bankers lend money in the form clean advances against promissory
note as well as secured advances against tangible and marketable.
These reports are only valid MCB normally allow the advances to the
customers against the following types of securities:
• Bankers Lien
• Mortgage
• Pledges
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MCB Bank Ltd
Bankers Lien
This type of security is accepted in case of advances against share, life
policies, bonds, ornaments and fixed deposits etc. It is type of most
liquid security.
Mortgages
There are two types of Mortgage. These are following:
• Legal Mortgage
• Equitable Mortgage
Legal mortgage and equitable mortgage are accepted in case of

immovable properties like land, building and machinery etc.
Transfer of interest in movable property for securing the payment of

money lend on existing or future liability. The bank provides the
following two types of mortgage.
 Registered mortgage
 Equitable mortgage
Registered mortgage
Registered mortgage is provided on the residential property,

commercial industrial property, raw plot, etc. A party can get registered
mortgage if they provide the following documents to the bank.
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MCB Bank Ltd
 Title deed
 Non encumbrance (NEC)
 pit form (in case a constructed hose)
 Valuation certificate
 Affidavit
 Mortgage deed
 Personnel guarantee of mortgagor
 Power of attorney
 Legal opinion.
Banks examine all these reports, and if they are correct then
issue the mortgage to the party. The bank examines these reports to
see that the property they want to mortgage is registered and is not
already pledged. The bank also calculates the value of the property and
the legal opinion of the customer in case of non-payment.
Equitable mortgage
Equitable mortgage is provided on the residential property,

commercial industrial property, raw plot, etc.
 Title deed
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MCB Bank Ltd
 Non encumbrance certificate (nec)
 Pt-1 form (in case a constructed house)
 Valuation certificate
 Affidavit
 Memorandum of deposit of title deed
 Personal guarantee of mortgagor
 Power of attorney
 Legal opinion
In this mortgage a charge form bound the customer for any legal action
in case of non-payment. In this type of mortgage hypothecation of
stocks involves.
Pledge
This type of security is accepted in case of stocks or raw materials. In a
pledge, the borrower has not right to sell the stocks with the permission
of bank.
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MCB Bank Ltd
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MCB Bank Ltd
FOREIGN EXCHANGE
Encyclopedia Britannic defines Foreign Exchange as “a system by
which commercial nations discharges their debts to each other”.
• Nature has granted its wealth unevenly

• Need of Imports & Exports
• Because no international Money unit exists
IN MCB
This department works like general banking department with the
difference that it deals in foreign currencies like US ($) and Pound
Sterling, Dutch Mark (DM), Euro and Japanese Yen (Y). In MCB Bank
Khanewal deal in froiegn currency.
FOREIGN CURRENCY ACCOUNTS

These accounts can be operated foreign national and Pakistani
National. The foreign currency department deals with the following
types of accounts:
• Current account
• Saving bank account
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MCB Bank Ltd
• Dollar Khushali account

• Term deposit
Foreign accounts are convertible on floating rate available to the bank.

The account holder is free to operate the account. To the extent of
available balance, for remittance any where in the world in the world
and for whatever purpose. Remittances in any convertible foreign
currency can be accepted, these remittances will however be converted
into US $, pound sterling, DM and Japanese Yen at the ruling rate
before crediting to these foreign currency accounts.
Travelers cheques, drafts, telegraphic transfers and pay orders are
accepted for deposit. The interest earned on these deposits (saving
accounts and term deposits) is credited in foreign currency and is also
remittal freely. The interest earning is exempted from income tax and no
Zakat deductions are made from the account. The balances in these
accounts are freely transferable anywhere. No permission for the
remittances from State Bank of Pakistan is required. Traveler cheques
can be issued to the extent of deposit in the account.
Term Deposit Accounts

 Issued in US $ and sterling
 Duration of 3 months
 Interest in paid at maturity
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MCB Bank Ltd
Dollar Khushali Account

This scheme is introduced by MCB is 1994. It is service oriented
scheme is US dollar Currency. This account can be opened by all
Pakistani and Foreign national residing in Pakistan or abroad but in
1998 Govt freeze these A/Cs. Now this type called frozen A/Cs (DKA).
Features
 Profit is paid on daily basis.
 Conversion in Rs. From dollar through FEBC.
 No restriction on number of withdraw
 No Deduction of Zakat & Income tax
 Minimum balance to open US $ 100.
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MCB Bank Ltd
STRENGTHS WEAKNESSES OPPORTUNITIES
THREATS (SWOT) ANALYSIS
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MCB Bank Ltd
STRENGTHS
 MCB BANK one of the largest financial institutions of Pakistan with
high share of customer.
 MCB BANK has an extensive domestic branch network of 1000
(according to the latest data) branches located all over Pakistan. The
Bank also has a presence in 07 international branches.
 MCB BANK cash provision as percentage of non performing loans
equal to 60% .
 Highest share price Rs. 351 in month of July, 2007 in Pakistan
banking history.
WEAKNESSES
 MCB BANK staff especially at lower considers their work as burden.
They usually waste time in other task a part in performing their duty.
 The general out look and interior layout of branches are not as
required according to modern banking
 MCB BANK bearing up large burden in running those branches,
which are not producing any income but keep on adding
expenditure.
 MCB BANK is relying on its traditional sources of income it has not
taken benefit from innovation in banking like introducing retail
banking or consumer banking and using any type of scheme to
generate more deposits and producing more advances.
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MCB Bank Ltd
 MCB BANK is far behind in offering modern banking facility like

automated teller machines then other commercial bank in Pakistan
as only 102 branches in all over country have this facility.
 MCB BANK has only 389 on line branches and only 129 branches
working on Symol (Real online system). While from remaining
branches data gathering is time consuming, and not fool proof.
Quantum of settlement within different branches is pending because
of this updating daily record is becoming very difficult.
 In MCB BANK, most of the time merit not has importance in hiring of
employees. Such practices are black spot on the face of bank and
resulted big losses and fraudulent acts by MCB BANK own
employees.
OPPORTUNITIES
Reorganizing efforts going on in the MCB BANK has open many
opportunities for MCB BANK to grow. MCB BANK current management
has boarder vision. They have taken steps to improve customer
services, streamline internal procedure and creating a delectating
climate for technology initiative.
To achieve above mention objective they have created operation group
 Starting of the retail banking initial working.
 Setting of target for of making at least 300 Symbol branches country
wide on line last of 2008.
 Closing of all those branches, which are burden on MCB BANK.
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MCB Bank Ltd
 Management to offer specialized services to major corporate

including advisory and debt syndication introduces the concept of
relationship manager.
 Comprehensive training programs has been develop to up grade the
core banking skills of the existing staff as well as integrate high
quality hiring.
 To improve the motivation of staff a merit-based culture is being
promoted. Through overhauling the manpower recruitment
preservation and performance appraisal system.
These actions taken by current management provide a great

opportunity for MCB BANK for making it future prosper and can make
MCB BANK not less than any modern commercialize bank in Pakistan.
THREATS
Following are the major threats which MCB Bank is facing:
 Major threats MCB BANK facing is from its competitor especially
from nationalized commercial bank. In which NBP is on the top of the
list, The Bank gets the all big accounts of Govt.
 Retail banking and consumer banking resulting in the products such
as credit cards, housing finance and automobile finance lending to
small individual consumers, and purchases of automobiles, housing,
and consumer goods are generally made on a cash basis. These are
causing another threat, if not counter will result in significance loss of
customers.
 Recently banks and other financial institutions have introduced
innovative schemes to attract deposits, like gift checque scheme by
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MCB Bank Ltd
Bank Alfalh Ltd. These schemes offer prizes on short and long term
fixed deposits, through lucky draws.
 Now banks are using technology which covers the distance no
matter how far away any one, through a satellite based, on-line real-
time banking system and by offering telephone banking, electronic
funds transfer, E-Banking and other modern facilities.
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MCB Bank Ltd
SUGGESTIONS FOR MCB BANK LTD.

 MCB BANK major fault is that wasn’t keeping its pace with
on going changing in banking industry unlike other bank.
Now this bank combining all it power and trying to
approach other banks.
 Latest reorganizing efforts are necessary to make it cost
effective also making its facility accordingly to modern
banking. These must continue.
 Bank management has to put its all effort to change the
prevailing culture of the bank and to put the foundation
stone of business oriented culture. In which employees
give important to the bank and its customer.
 To attract the customer in the future MCB BANK have to
make extensive effort to give facilities of retail and
consumer banking. Plus the technology in the banking
which will be necessary for future banking is another week
area need to be stressed.
 The outlook and interior lay out of the branches is another
thing which needs to be improved.
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MCB Bank Ltd
 The procedure of taking services from the bank must be

made easier and straight forward not involving long difficult
procedure for simple task.
 To remain in the market bank need to be vigilant in the
eyes of customer. One way is through promotion efforts,
so that people aware about he services of the banking and
any addition which the bank as made in the portfolio of its
services.
SUGGESTIONS FOR MCB BANK KHANEWAL
High demand of ATM machine here due to competition with other

banks.
 Better located building having more space for customer
 Change token system for payment of cheques with computer
system.
 Better environment through better relations between staff
members.
 Basically Khanewal is an agriculture city no any industry in
Khanewal city so, need a strong Agri Lone Department for this
more staff required for this department.
 No Human Resources Department should be here in order to
motivate and trained the employees. I have noted some mistakes
of the new staff are due to not any training program for them in
the beginning.
 The bank has problem of staff shortage. The new officers need in
Account department, Agri department and Credit department.
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MCB Bank Ltd
CONTACT PERSONS IN MCB BANK KHANEWAL
Mr. Ejaz Ahmad Nadeem Manager
Cell No. 0300-6887024
Mr. Ajmal Toroo Manager Operation
Cell No. 0345-7410033
Office # 1) 065-2554762
2) 065-2558762
81

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An Internship Report

MCB Bank Ltd

Table for Contents

“With the name of Allah who is so merciful and

Shahzad Ahmad Shad........................................5

There are different views about origin of the

world “Bank”. According to some people the

word “Bank” is derived from the world

“Bancus” which means a “Bench”. They argue

their point by this transacted their business of

money exchange on the benches. If the

business of any businessman failed, his bench

was destroyed by the people. Due to this

practice the word “Bankrupt” was also used. .8

On the other hand some people say that the

world “Bank” is derived from German time the

word “Bank” was replaced by the word “Bank”

which is called “Banco” in Italian language. ...8

Evolution of Banking ........................................8

First Stage of Evolution.....................................9

Third stage of Evolution....................................9

Fourth Stage of Evolution................................10

Growth of Banking in Pakistan.......................10

Time of Independence ....................................11

Establishment of State Bank..........................11

Development of Commercial Bank.................12

Specialized Financial Institutions..................12

Nationalization of Commercial Banks............12

Privatization of Commercial Banks................12

COMMERCIAL BANKING SCENARIO IN

NIGHT BANKING SERVICES............................30

MCB RUPEE TRAVELERS CHEQUE.................31

SELF SUPPORTING SCHEME...........................32

UTILITY BILLS COLLECTION..........................32

ATM (Automated Teller Machine) ..................32

When an LC is opened, the bank collects

certain charges from importer these are:......65

Internship is an integral part of MBA program. For the sake of internship

Shahzad Ahmad Shad

1. “Bank is an institution which revives money from

These are the following types of banks

First Stage of Evolution

Third stage of Evolution

Fourth Stage of Evolution

Growth of Banking in Pakistan

Establishment of State Bank

development, to banking system it played very important role as a

Development of Commercial Bank

Specialized Financial Institutions

Nationalization of Commercial Banks

Privatization of Commercial Banks

In January. 1991, a privatization Commission was set up and two

COMMERCIAL BANKING SCENARIO IN

THE MCB BANK LIMITED

MCB Bank formally Muslim Commercial Bank was founded by Isfhani

and Adamjee families in Calcutta on July 9, 1947. In January 1974,

MCB was nationalized by Bhutto Government following the bank act

1974 subsequently in June 1974 Premier Bank Limited merged with

MCB. But the performance of MCB was badly affected by bureaucrat

Democratic Government of Pakistan have decided to sell nationalized