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Transcript of FINI619 Marked Internship Report on MCB Virtual University
Virtual University of Pakistan
Evaluation Sheet for Internship Report Fall 2010
FINI619: Internship Report (Finance) Credit Hours: 3
Name of Student: MUHAMMAD BASIT SALEEM
Student’s ID: MC070401877
Start preparing for presentation & viva voce and improve your work. Also read lesson # 7 of this course.
Evaluation Criteria Result
Report writing Pass
Presentation & Viva voceFinal Result
Internship Report
Your concepts regarding your internship work and ratio analysis must be very strong for delivering an effective presentation
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Internship Report
Virtual University of Pakistan
Evaluation Sheet for Internship Report Fall 2009
FINI619: Internship Report (Finance) Credit Hours: 3
Name of Student: MUHAMMAD BASIT SALEEM
Student’s ID: MC070401877
Supervisor:
Evaluation Criteria Result
Report writing Pass
Presentation & Viva voceFinal Result
iii
Submitted To:
Virtual University of Pakistan
Submitted By:MUHAMMAD
BASIT SALEEM
ID: MC070401877
Fall-2008
Submitted Date
22-03-2010
Internship Report
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LETTER OF UNDERTAKING
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Internship Report
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SCAND COPY OF INTERNSHIP CERTIFICATE
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DEDICATION
I dedicate this internship report to my parents, especially elder
brother WAJID FARAZ and MALIK NOOR HASSAN. Because
of their prayers and encouragement I have been able to complete
this report.
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ACKNOWLEDGEMENT
Praise is to Allah, the most Gracious and Merciful, who blessed me with the knowledge
and wisdom and enabled me to overcome this task. Heartiest gratitude to my parents
without their continuous encouragement and love I could not have accomplished this
task.
I am very grateful to all the staff members at MCB Khayaban Sarwar Branch, Dera Ghazi
Khan. Mrs. Aasma, Mrs Azara, & Mr. Maqsood Ahmed for their guidance and
encouragement.
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EXECUTIVE SUMMERY
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 1,053 domestic branches, 7 international branches and over 450 ATMs in the
market. The number of employees increasing and the increase in the number of
employees joining MCB Bank shows that people feel confident in MCB Bank as a
prospect employer.
MCB operates in 3 directions Consumer, Corporate and Commercial banking with a large
number of products and services. The financial ratios analysis shows that the financial
position of the bank is strong and MCB is working well in the Banking sector. Also its
horizontal and vertical analysis of Balance Sheet and Profit and Loss account shows that
MCB is one strongest banking organization in Pakistan.
The stock prices and earning per share of the bank have also increased over the years.
MCB Bank promotes its products and services through print and electronic media. MCB
Bank also promotes itself by sponsoring different events.
During the course of internship I learned about documentation requirements and record
keeping for different activities and processes, especially the documentation requirement
for different kinds of financing facilities, and documents for the product and services.
MCB has strengths and opportunities. But there is also weakness and threats. That could
be control by improving the total management. All the report is consist on original data.
The mostly data get from MCB official website.
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TABLE OF CONTENT
TITLE PAGE.........................................................................................................................i
LETTER OF UNDERTAKING............................................................................................ii
SCAND COPY OF INTERNSHIP CERTIFICATE.............................................................iii
DEDICATION....................................................................................................................iv
ACKNOWLEDGEMENT.....................................................................................................v
EXECUTIVE SUMMERY...................................................................................................vi
TABLE OF CONTENT......................................................................................................vii
ORGANIZATION BUSINESS SECTOR OVERVIEW..........................................................1
(A) BANKING SECTOR OVERVIEW....................................................................2
(B) ORGANIZATION BUSINESS SECTOR...........................................................3
OVERVIEW OF ORGANIZATION......................................................................................7
(A) BRIEF HISTORY................................................................................................8
(B) NATURE OF THE ORGANIZATION.............................................................13
(C) BUSINESS VOLUME......................................................................................18
(D) PRODUCT LINE...............................................................................................19
(E) COMPETITORS...............................................................................................39
ORGANIZATION STRUCTURE........................................................................................44
(A) HIERARCHY OF MANAGEMENT................................................................45
(B) NO. OF EMPLOYEE........................................................................................48
(C) MAIN OFFICES................................................................................................48
(D) INTRODUCTION OF ALL DEPARTMENTS................................................49
PLAN OF INTERNSHIP PROGRAM................................................................................55
(A) INTRODUCTION OF THE BRANCH.............................................................56
(B) DURATION OF MY INTERNSHIP.................................................................61
(C) DEPARTMENTS IN WHICH I GOT TRAINING...........................................61
TRAINING PROGRAM.....................................................................................................62
(A) ACTIVITIES PERFORMED BY THE DEPARTMENTS OF BRANCH.......63
(B) DESCRIPTION OF TASKS THAT I COMPLETED.......................................76
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STRUCTURE OF THE FINANCE DEPARTMENT..........................................................79
(A) DEPARTMENTAL HIERARCHY...................................................................80
(B) NO. OF EMPLOYEE WORKING IN FINANCE DEPARTMENT................81
(C) FINANCE AND ACCOUNTING OPERATION.............................................82
FUNCTION OF FINANCE DEPARTMENT.....................................................................84
(A) FINANCE SYSTEM OF THE ORGANIZATION...........................................85
(B) FINANCE AND ACCOUNTING SYSTEM OF THE ORGANIZATION......87
(C) SOURCE OF FUNDS.......................................................................................93
(D) ALLOCATION OF FUNDS.............................................................................95
CRITICAL ANALYSIS........................................................................................................97
(A) RATIO ANALYSIS........................................................................................100
(B) HORIZONTAL & VERTICAL ANALYSIS..................................................115
(C) INDUSTRY ANALYSIS................................................................................119
(D) FUTURE PROSPECTS OF THE ORGANIZATION....................................121
SWOT ANALYSIS OF ORGANIZATION.........................................................................122
CONCLUSION................................................................................................................126
RECOMMENDATIONS...................................................................................................127
REFERENCES AND SOURCES......................................................................................129
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ORGANIZATION BUSINESS SECTOR
OVERVIEW
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(A) BANKING SECTOR OVERVIEW
Pakistan’s banking and finance sector grew by over 21 percent from July 2004 March
2005 amid the eight percent expansion in the services sector in Pakistan. Financial sector
in Pakistan is going through a fast paced transition as new groups were buying out
foreign banks’ operations in Pakistan. The number of listed banks is also increasing.
While the income from core banking activity has increasing due to higher business
volume, earnings are also expected to improve due to ventures into consumer finance,
housing finance and enhanced lending to the agriculture sector.
In just four years the banking industry has expanded tremendously and now there are
more than two dozen commercial and investment banks operating in the country.
Commercial banks in the private sector had performed well since their inception,
registering overall growth in the deposit base and profits. The banks also managed to
maintain a healthy credit portfolio.
Foreign banks have a strong presence in all major cities and are targeting high net worth
individuals and blue chip companies. Their strategy is quite successful as they account
for about 34 percent of total sector profits, despite having only 15 percent of deposits and
16 percent of advances.
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(B) ORGANIZATION BUSINESS SECTOR
For effective handling of branches, it has categorized into segments with different people
handling each category, these categories are:
a) COMMERCIAL BANKING
b) CORPORATE BANKING
c) CONSUMER BANKING
a) COMMERCIAL BANKING
The branches which has a credit exposure of less than Rs. 100 million but having a credit
portfolio of more than Rs. 20 million (excluding staff loans). Usually branches in large
markets and commercial areas come under this category.
b) CONSUMERS BANKING
These are the branches which have exposure up to Rs. 20 million and these include all the
branches, which are neither corporate nor commercial branches.
Specialized Products / Facilities and Accounts:
MCB provides different saving accounts with attractive returns and Investment products
that give the monthly profits as well as the convenient payment instruments to save the
purpose of safety in high valuable transactions, having high acceptance around the world.
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a. Specialized Products.
MCB products are designed to cater to all your financial needs. They include:
Convenient 24 hours banking services through the largest ATM network
in Pakistan.
The MCB PAK RUPEE TRAVELLERS CHEQUES are the safest way
to carry cash for high value cash transactions.
The MCB MASTER CARD is the future of money with over 12 million
merchants welcoming the card globally for you to buy without paying
cash on the spot. You have never seen convenience like this before.
MCB REMIT EXPRESS is the fastest way of getting your money across
to Pakistan, through the bank service, which saves your previous time.
b. Specialized Accounts:
MCB provide its customers to open an account that fits their requirements and life style
in best way.
MCB RUPEE MAXIMIZER ACCOUNT provides an opportunity to convert your
foreign currency account in to Pak.
In Pak. Rupee or foreign currency accounts the bank provide with a selection of
accounts suiting your needs.
The KHUSHALI BACHAT or DOLLAR KHUSHALI ACCOUNT, both
require a low minimum income deposits plus you receive profit on daily product
basis.
Under SAVING 365 ACCOUNT, MCB offers you’re a saving account with
current account facilities.
The CAPITAL GROWTHINVESTMENT provides you an opportunity to
double your amount and also receive monthly profits through monthly
KHUSHALI.
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MBC MALAMAL DEPOSIT also provide the customer with incentive of
different prizes along with saving of their amount for a particular period at a
predetermined rate of profit.
More over the MCB’s policies relating too customer with innovative saving schemes,
products and services. Its ATM network is largest in Pakistan and Pak Rupee Travelers
cheques are market leaders. MCB also claims to be the first to introduce the photo card
with the introduction of MCB Master Card for adding additional security to its customers.
c) MCB CORPORATE BANKING
These are branches which have an exposure of over Rs. 100 million. Usually includes
multinational & public sector companies.
MCB corporate banking is providing its customers with professional financial advisor
that give personal attention to your banking needs. They are specialists in connection
with the services like under writing corporate advisory, project finance, equity
placements and a lot more. The Bank’s experienced corporate banking team assures you
to be assisted with all your financial needs and requirements by offering different
exclusive schemes and credit policies with the objectives to:
Help the process of industrialization in the country.
Provide employment opportunities to skilled and unskilled labor.
Encourage local and overseas Pakistanis for investment.
Increase production and boost exports.
MCB INVESTMENT BANKINGGROUP
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The Investment Bank Group (IBG) has emerged as a leading player in Pakistan’s
investment banking area. The group handles advisory, corporate finance, project finance
and capital market related transactions.
CAPITAL MARKETS
The Capital Markets (CM) teams participate in some of the largest capital markets
transactions emanating from Pakistan. IBG has been involved in all major corporate bond
transactions as Lead Manager or Lead Underwriter.
CORPORATE FINANCE
The Corporate Finance (CF) team is involved in some of the major Merger and
Acquisition transactions taking place in Pakistan. The team identifies potential targets or
acquires and arranges funds for the merger or acquisitions.
PROJECT FINANCE
The team at Muslim Commercial Bank is trained in conducting comprehensive risk
analysis of the projects under consideration, devise the financing in structure according to
the needs and cash flows of the project and arranges the required funds through
syndication.
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OVERVIEW OF ORGANIZATION
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(A) BRIEF HISTORY
At the time of independence in 1947 the banks services were very badly affected and by
June 30, 1948, the number of offices of scheduled banks came down to only 81 in 2 the
territories comprising Pakistan; but by December 31, 1973 there were following 14
scheduled Pakistani commercial banks with 3323 offices all over the Pakistan and 74
offices in foreign countries.
1. National Bank of Pakistan
2. Habib Bank Limited.
3. Habib bank (Overseas) Limited.
4. United Bank Limited.
5. Muslim Commercial Bank Limited.
6. Commerce bank limited.
7. Standard bank Limited.
8. Australasia bank limited.
9. Bank of Bahawalpur Limited.
10. Premier bank limited
11. Pak bank limited.
12. Sarhad Bank limited
13. Lahore commercial banks limited.
14. Punjab Provincial Cooperative bank limited.
MCB was founded by ISFHANI and ADAMJEE families in Calcutta on July 9, 1947.
MCB is not an overnight success story rather good track of services are responsible for
the leaps and bounds progress. After the partition of the Indo-Pak Subcontinent, the bank
moved to Dhaka from where it commenced business in August 1948.In 1956,the Bank
transferred its registered office to Karachi, where the Head Office is presently located.
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Thus, the bank inherits a 52 year legacy of trust in its customers and the citizens of
Pakistan.
MCB Bank Limited is one of the leading banks of Pakistan and continuously awarded
“Best Domestic Bank in Pakistan” from 2002-2007 and also ranked in AA + Rating. The
Management of the Bank maintained its strategy of concentrating on growth through
improvement in quality services, investment in technology & 3 people, utilizing its
extensive branches network, large & stable deposit base and managing its non-
performing loans.
MCB Bank Limited is the only Bank in Pakistan who listed on London Stock Exchange
and issued Global Depository Receipts (GDRs) worth 150 Million Dollars. MCB Bank is
first ever in the history of the country to be listed on the London Stock Exchange for
trading on the Professional Securities Market which is now being followed by NBP &
Others. The Bank’s Registered Office is at MCB Building, F-6/G-6 Jinnah Avenue,
Islamabad.
Province wise Branches detail
Province Branches Sub-Branches
Punjab 656 5
Sindh 243 1
N.W.F.P 103 -
Balochistan 36 -
Azad J. Kashmir 15 -
Domestic Total 1053 6
Overseas 7 -
Grand Total 1060 6
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Overseas Operations
Colombo 1
Kandy 1
Maradana 1
Pettah 1
Wellawatte 1
Bahrain 1
EPZ 1
Dubai (Rep. Office) 1
Summery
Group Circle Region Branches Sub-Branches
CBBG South 4 7 199 1
CBBG East 3 8 229 -
CBBG Central 4 12 327 4
CBBG North 3 11 332 1
Consumer Banking
Group
- 3 44 -
Whole sales and Islamic
Banking Group
- - 21 -
WBG Cash Management - - 1 -
Total 14 41 1053 6
Overseas - - 7 -
Grand Total 14 41 1060 6
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SUBSIDIARIES
The bank has two subsidiaries:
1. Adamjee Insurance Company Ltd.
2. First Women Bank Ltd
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. The government of
Pakistan transferred the management of the Bank to National Group, a group of leading
industrialists of the country by selling 26% shares of the bank. In terms of agreement
between the Government of Pakistan and the National Group, the group, making their
holding 50% has purchased additional 24% shares. Now, 25% is purchased by the
Government, which shall be sold in the near future.
The name of bank has been changed from MUSLIM COMMERCIAL BANK LTD to
MCB BANK LTD. The name to change was felt due to the reasons that bank was mainly
known and popular as a MCB BANK.
MCB PHILOSOPHY
MCB Bank knows the best to deal with its customers and thus has a customer oriented
philosophy. The MAB philosophy in their words is described below.
“For us, you are not just a set of numbers; you are a valued customer whom we know by
name. This helps us serve you exactly the way you want us to that’s the difference! We
offer effective solutions derived from our personal knowledge of all your banking
requirements which are met when we meet you…by name.”
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MCB’S PERFORMANCE OVERVIEW
Based on continuing growth and consistently outstanding performance, MCB has once
again received the Euromoney Award 2005 for the “Best Bank in Pakistan”. MCB has
become the only bank to receive the Euromoney Award for Excellence for the fifth time
in last six years.
In addition, Asia Money has also declared MCB as “The Best Domestic Commercial
Bank in Pakistan” for the year 2005.
AWARDS
MCB Bank has won many awards, which is a clear proof of its good performance. It has
won Euromoney awards and Asia Money awards.
Euromoney Awards
Best Bank In Pakistan Award 2007
Best Bank In Pakistan Award 2005
Best Bank In Pakistan Award 2004
Best Bank In Pakistan Award 2003
Euromoney Award 2003 for the "Best Bank in Pakistan".
Best Bank In Pakistan Award 2001
Best Domestic Bank Award 2000
Asia Money Awards
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(B) NATURE OF THE 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
eputation 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 1,053 domestic branches, 7 international 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.
OBJECTIVES OF ORANIZATION
The following are the objectives of Muslim Commercial Bank Limited.
CREATING AND MANAGING VALUES
The first objective of Muslim Commercial Bank Limited is to create and mange the
values, which is one of the back bone of the objectives of any well organized and
managed organization.
HUMAN VALUES
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The second objective of Muslim Commercial Bank is to take care of the Human capital
which is a necessary thing for the development and prosperity of any well established
organization.
BEST PLACE TO WORK
The third objective of Muslim Commercial Bank Limited is to make it a place which is
much feasible and comfortable for employees of the bank. The MCB is always conscious
in developing such place where employees of the bank feel easiness.
TECHNOLOGY
The forth objective of Muslim Commercial Bank Limited is to bring new and latest
technology in the operations of the bank. At MCB, technology has a direct relation with
your needs; it is a means for creating value and convenience for the customer. Over the
last few years MCB has invested heavily into strengthening its technology backbone.
Today it is leading the way in banking technology and setting new standards for the
banking industry; penetrating into the local market, listening to the needs of the people
and educating them of simple financial products and services that create both value and
convenience. MCB’s strength lies in providing a technological base at the grass roots
level of the society with a challenge to educate and assimilate such systems across vast
cultural and economic backgrounds. MCB continuously innovate new products and
services that harness technology for the customer’s benefit.
UNDERSTANDING RELATIONSHIPS
The fifth and very important objective of Muslim Commercial Bank Limited is to create
such an environment which is suitable for creating understanding and relationship
between the employees, thus going towards the way of development and prosperity. Over
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the years, MCB has fostered strong bonds with its customers. Understands them; their
needs. They feel comfortable with MCB; it’s their bank; it responds to them; listens to
them; partners with them; grows with them. At MCB, banking is all about being there for
people, making a home in their hearts-continuously building relationships on mutual trust
and confidence. We understand that relationships are about expectations-our products and
services are based on your customers, expectations. Be it financing for personal or
business related needs, funds transfer and trade related facilities or need for different
types of deposit accounts, MCB offers you a variety of products and services customized
to satisfy your individual needs.
UNDERSTANDING CONVENIENCE
The next objective of Muslim Commercial Bank Limited is to make understanding a
convenient thing for the whole environment of the bank, for the purpose of boosting up
its values and prosperity in such a competitive environment. Convenience is what the
customer is looking for; and this is what we at MCB are continuously striving to provide.
Whether it is the 24 hours cash convenience of our ATM network or the easy availability
of financing requirements or simple opening of account, MCB has tailored its products
and services to make your life easier. MCB knows the particular needs of its diverse
customer base d continuously develop products and services that fulfill these needs.
UNDERSTANDING RELIABILITY
The last but not least objective of Muslim Commercial Bank Limited is to make an
environment which have an understanding of reliability in the whole structure of the
bank. With a strong financial base, a promising team and the right resources, MCB has
proved to be a reliable partner indeed. MCB understands the special needs of the
business, trading and agricultural sectors. Strategically located branches in small towns
and cities provide warm services and advice to the small businessmen and local traders.
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MCB speaks their language; it understands their needs and provides tangible results. By
responding in a timely manner with a flexible approach, MCB provides its clients with
the reliable financial service and support they require to successfully achieve their
business objectives. With a solid foundation of over 50 years in Pakistan and having
recently completed 10 successful years of privatization, MCB is strongly positioned to
lead the banking sector in the new millennium. You can feel safe in our hands.
VISION STATEMENT
“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”.
OUR 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
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‘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
“As responsible citizens we contribute to the social welfare of the community we live in.”
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(C) BUSINESS VOLUME
Business volume of MCB
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(D) PRODUCT LINE
PERSONAL BANKING
Deposit Accounts
Khushali Bachat Account
Khushali Bachat Account, a Rupee savings account is one of MCB Bank’s most popular
products. Due to the low initial deposit, the account can be opened by people from all
walks of life and still avail the facility of daily product profit calculation.
Mahana Khushali Bachat
MCB Monthly Khushali Scheme provides you with a steady income every month. Just
purchase a Monthly Khushali Certificate and you will enjoy a steady income of your total
deposit every month.
Pak Rupee Savings Account
MCB’s Pak Rupee Savings Account offers you attractive returns on your Pak Rupee
investment. In addition, you have access to a countrywide ATM network convenient cash
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accessibility 24 hours a day. The facility also provides you with unlimited daily
transactions with a limit on maximum withdrawal amount through the ATM machines.
Pak Rupee Current Account
MCB’s Pak Rupee 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 plus you can avail finance facility up to 75% of
the total deposit. In addition, you have access to a countrywide ATM network convenient
cash accessibility 24 hours a day. The facility also provides you with unlimited daily
transactions with a limit on maximum withdrawal amount through the ATM machines.
Pak Rupee Term Deposit
MCB Pak Rupee Term Deposit gives a higher rate of return. It gives you choice of 1
month, 3 months, 6 months, 1 year, 2 years, 3 years, 4 years and 5 year term deposits.
Saving 365
The MCB Saving 365 calculates profits on a daily product basis and gives you the facility
of unlimited withdrawals.
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FOREIGN CURRENCY SAVINGS ACCOUNT
Foreign Currency Savings Account
MCB’s Foreign Currency Savings Account offers you attractive returns on your Foreign
Currency investment. You can invest in any of the four currencies i.e. US Dollar, UK
Pound Sterling, Japanese Yen or Euro. Your foreign currency account is exempted from
Zakat and withholding tax
Foreign Currency 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.
MCB Foreign Currency Term Deposit
MCB Foreign Currency Term Deposit gives a higher rate of return. It gives the choice of
1 month, 3 months, 6 months, 1 year, 2 years, 3 years, 4 years and 5 year term deposits.
Dollar Khushali Account
The Dollar Khushali Account, a Dollar based account was introduced in 1993 at selected
MCB Bank branches. Today, you can open a Dollar Khushali Account at over 200
ranches in Pakistan.
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LOAN PRODUCTS
MCB Business Sarmaya
“MCB Business Sarmaya” is the best Running Finance facility against your residential
property which empowers you to manage your business dealings better. So act today and
get MCB Business Sarmaya and thus improve your business, avail lucrative opportunities
and expand your business, with absolute satisfaction of cash flows.
MCB Car4u
Life is like a chess board. You plan your career options. You analyze your business
moves. But when you really want to improve your life, you make a power move. MCB
CAR4U Auto Finance is the power move that assists you in more ways than you ever
imagined. It is affordable, with lowest mark up, flexible conditions, easy processing and
above all, no hidden costs.
MCB Pyara Ghar
Some destinations require a long wait. Like waiting for a home of your own. But with
MCB Pyara Ghar it is now easy to step into your home and start living a real life. MCB
Pyara Ghar is an ideal Home Finance from your own bank that lets you Purchase,
Renovate or Construct your home the way you have always wanted. Having your own
home was never so easy.
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Easy Personal Loan
MCB Easy Personal Loan provides you with the financial advantage to do things you've
always wanted to but never had the sufficient funds for. Take that much‐needed holiday.
Buy a car. Refurnish your house. Purchase a new TV. Finance a better education for your
children.
MCB Master Card
Since the beginning of time, people have tried to find more convenient ways to pay, from
gold to paper money and cheques. Today, money is moving away from distinct hard
currencies and towards universal payment products that transcend national borders, time
zones, and, with the Internet, even physical space. Plastic or "virtual" money, credit,
debit, and electronic cash products, inevitably will replace cash and cheques as the
money of the future.
MCB Rupee Traveler's Cheques
MCB Rupee Traveler's Cheques were first introduced in 1993 as safe cash for traveling
and travel related purposes. The product has been extremely popular and is preferred over
cash by customers while traveling and in all walks of life. MCB Rupee Traveler's
Cheques” The safest way to Carry Cash”
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CORPORATE BANKING
Cash Management Services
MCB’s network of over 900 branches in Pakistan enables it to collect and disburse
payments efficiently with its cash management services. This also enables it to offer you
choice of paper based or electronic fund transfer solutions including collection amounts,
cross branch on‐ line transactions etc.
Working Capital Loans
Based on the customer’s specific needs, the Corporate Bank offers a number of different
working capital financing facilities including Running Finance, Cash Finance, Export
Refinance, Pre‐shipment and Post‐ shipment etc. Tailor‐ made solutions are developed
keeping in view the unique requirements of your business.
Term Loans
MCB offers Short to Medium Term Finance to meet capital expenditure and short term
working capital requirements of our customers. The loans are structured on the basis of
underlying project characteristics and cash flows of the business.
Trade Finance Services
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Under Corporate Banking MCB offers trade finance services that include an entire range
of import and export activities including issuing Letters of Credit (L/Cs), purchasing
export documents, providing guarantees and other support services.
VIRTUAL BANKING
MCB Virtual Internet Banking offers you the convenience to manage and control your
banking and finances – when you want to, where you want to. MCB’s Virtual Internet
Banking facility is simple and secure. And its free of cost. With MCB Virtual Internet
Banking you can access any of the banking services, 24 hours a day, 7 days a week and
throughout the year.
MCB Virtual Internet Banking offers a wide range of online services which makes your
banking accessible anytime and from anywhere.
Detailed Account Summary of all listed accounts.
Mini statements of each of the listed accounts showing recent transaction history
for that account(s).
Statement by Period of each of the listed accounts, based on the period specified.
Immediate or Scheduled Transfer of Funds between your own accounts, as well as
to third party accounts setup as beneficiaries, maintaining accounts with MCB.
Scheduling of ‘One‐Time’ as well as ‘Recurring’ Funds Transfers.
Payment of utility bills for registered Utility Companies.
Immediate or Scheduled Bills Payment. Scheduling of ‘One Time’ as well as
‘Recurring’ bill payments. Option for ‘Full’ or ‘Partial’ payment based on the
payment conditions specified by a particular Utility Company.
Bulk Salary Transfer for Corporate Customers, to facilitate them in paying salary
to the corporate employees, who maintain accounts with MCB.
Bulk Funds Transfer for Corporate Customers.
Cheque Book Request for any of your listed accounts.
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Payment/Transfer Alerts for reminding, in advance, prior to the processing of
specified payments and transfers.
Personal Alerts for reminding of pre specified events and occasions.
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ISLAMIC BANKING
Deposit Schemes
For customers who are looking for a deposit opportunity where they can purse their funds
and reap halal returns on it, we offer the following products:
Al Makhraj Saving Account
Al Makhraj Ianat Account
Al Makhraj Term Deposit
Fund Based Facilities
Ijarah Products
MCB’s Islamic Ijarah, analogous to the English term 'leasing’, is based on the ‘Ijarah wa
Iqtina’ concept which means the sale of the asset to the lessee after the Ijarah has
matured. Under this scheme, MCB will be the owner of the asset, and the customer
(lessee) will be given the asset to use for a certain period of time in return for monthly
rental payments. MCB will give a separate unilateral undertaking that it will offer to sell
the asset to the customer (lessee) at the maturity of the Ijarah agreement at a price that
may be equal to the security deposit amount, hence the term ‘Wa Iqtina’.
Types of Ijarah
Car Ijarah
Equipment Ijarah
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OTHERS PRODUCTS
Flexi Life
a. Optional benefits available through unit deductions
i. Family Income Benefit
ii. Critical Illness Benefit
iii. Permanent Total Disability
b. Optional benefits available through additional premium
i. Accidental Death
ii. Accidental Death or Dismemberment
iii. Waiver of Premium
iv. Hospitalization Cash Reimbursement
LifePartner
Protection Benefit
a. Accidental Death
b. Accidental Death or Dismemberment
c. Waiver of Premium
d. Hospitalization Cash Reimbursement
Additional Benefits
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Flexibility of Choice
Inflation Protection
Additional Top-Ups (Ad-hoc Feature)
Additional benefits are subject to terms and conditions.
Access to Your Savings
a. Partial Withdrawal
b. Complete Surrender
Free-Look Period
The plan offers you a free-look period of 14 days, in which you can cancel your policy by
contacting NJI Life, and have your premium refunded. However, as per law, NJI Life
reserves the right to deduct the expenses incurred on medical examination(s) of the Life
Assured in connection with the issuance of this Policy.
EDUCARE
BENEFITS:
Education Continuation” Benefit
Education Support” Benefit
Accidental Death and Disability Benefit
Fund Acceleration Premium
Inflation Protection
Access to Your Savings
Additional Benefits:
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a. Partial Withdrawal
b. Complete Surrender
Plan Maturity Benefit
a. Income Benefit
b. Waiver of Premium
c. Additional Term Assurance
Free-Look Period
The plan offers you a free-look period of 14 days, in which you can cancel your policy by
contacting EFU life, and have your premium refunded. However, as per law, certain
charges will be deducted related to any medical examination that you may have
undergone during the application stage.
DREAM WEDDING
BENEFITS:
Marriage Continuation” Benefit
Engagement Support” Benefit
Accidental Death and Disability Benefit
Fund Acceleration Premium (Ad-hoc Feature)
Inflation Protection
Access to Your Savings
Plan Maturity Benefit
a. Partial Withdrawal
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b. Complete Surrender
Additional Benefits:
a. Income Benefit
b. Waiver of Premium
c. Additional Term Assurance
Free-Look Period
The plan offers you a free-look period of 14 days in which you can cancel your policy by
contacting EFU Life and have your premium refunded. However, as per law, certain
charges will be deducted related to any medical examination that you may have
undergone during the application stage.
CAPITALSURE
BENEFITS:
Partial Withdrawal
Guaranteed Maturity
Protection Benefit
Complete Surrender
Loan
Premium Escalation
Additional benefits
a. Level Term Insurance Rider (LTR)
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b. Income Benefit Rider (IBR)
c. Accident Care Benefit (ACB)
d. Family Protection Rider (FPR)
Free-Look Period
CapitalSure offers a free look period of 14 days during which you can review your policy
terms and conditions and cancel the policy. Your premium will be refunded on receipt of
written request within 14 days from the date of receipt of policy document. ALICO
reserves the right to deduct the expenses incurred on medical examination.
RETIREEASY
BENEFITS:
FLEXIBILITY OF CHOICE
Conservative Strategy
Balanced Strategy
Aggressive Strategy
Guaranteed Loyalty Bonus
Policy year Loyalty Bonus Unit Allocation as % of Basic Premium
5 15%
10 25%
15 and every 5 years thereafter 25%
Account Value Acceleration Premiums
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Guaranteed Death Benefit
Partial Withdrawal
Complete Surrender
Maturity Benefit
Premium Escalation
Additional Benefits:
a. Level Term Insurance Rider (LTR)
b. Family Protection Rider (FPR)
c. Income Benefit Rider (IBR)
d. Accident Care Benefit (ACB)
Free-Look Period
IncomeMax offers free look period of 14 days during which you can review your policy
terms and conditions and cancel the policy. Your premium will be refunded on receipt of
written request within 14 days from the date of receipt of policy document. Alico
reserves the right to deduct the expenses incurred on medical examination.
STEPUP
BENEFITS:
Protection Benefit
Accidental Death Benefit
Waiver of Premium (Accidental disability only)
Policy Loan
Complete Surrender
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Policy Payouts:
If you survive and continue to pay premiums, you will receive a fixed amount to meet
mid-term/short-term needs.
Year % of sum assured
7 25%
14 25%
21 50%
Guaranteed Bonus:
In addition to the policy payouts, you are also provided guaranteed bonuses. If the
policyholder dies after the bonus has been announced, the bonus will be added to the
death benefit.
Year % of sum assured
6 12.5%
13 75%
Bonus payable only at maturity
Free-Look Period:
The plan offers a free-look period of 14 days, in which you can cancel your policy by
contacting Adamjee Life, and have your premium refunded. However, as per law,
Adamjee Life reserves the right to deduct the expenses incurred on medical
examination(s) of the Life Assured in connection with the issuance of this Policy.
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SERVICES
MCB Mobile Banking
At the forefront of technological excellence, MCB proudly introduces MCB MOBILE
BANKING. The convenience of accessing your account balance information and mini
statements whenever you want or wherever you may need them, with comfort and peace
of mind.
MCB SMS BANKING
Now, MCB SMS Banking gives you quick and easy access to your account(s) round the
clock, at our convenience.
At the forefront of technological excellence, MCB proudly introduces MCB SMS
Banking service.
This service is available to all MCB Account Holders anytime, anywhere.
For more information call our Help Line 111-000-622 (MCB).
Banking at your Fingertips
MCB SMS Banking allows you to avail the following services:
Account Balance Inquiry.
Account Mini Statement (last 5 transactions).
View Credit Card(s) minimum payment.
View Credit Card(s) outstanding balance.
View Credit Card(s) bill.
A Free Service
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MCB SMS Banking is a free service for all MCB account holders. However, standard
SMS charges levied by your service provider are applicable.
MCB Call Center
Keeping up with banking services can be tedious but not with MCB Bank, where phone
service is at your fingertips. Just dial our Call Centre from the comfort of your home or
office or wherever you happen to be. It offers basic banking services for your
convenience, eliminating the need for you to make unwanted trips to your branch.
MCB Smart Card
MCB now brings you MCB Smart Card a secure and convenient instrument of payment
with unmatched functionalities. It provides 24hour direct access to your bank account.
The convenience and flexibility of MCB Smart Card will help you live a smarter life. It
not only helps you manage your expenses, but also eliminates undue interest on your day
to day credit card transactions. Your balance is always within your reach and you spend
accordingly.
MCB Debit Card
Now MCB brings a secure, convenient and quick payment facility that enables you to do
purchasing by using your existing MCB ATM / MCB Smart Card as a DEBIT CARD.
ATM Network
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ATM stands for Automatic Teller Machine. This machine is used to transact in one’s
account without intervention of humans. These machines are basically used for taking
cash, confirming balances and requesting statements/Cheque books.
The nation’s largest network of over 400 ATMs and growing. Get 24 hour convenience
of cash withdrawal; mini‐statement, bill payment and funds transfer services.
ONLINE BANKING:
Providing customers with 24 * 7 real time online transaction facilities.
Full Day Banking:
Enjoy the convenience of extended banking hours from 9 to 5, even on Saturdays, for
satisfying your banking needs at all MCB Full Day Banking branches across the country
where you are now served with a wide range of services throughout the day.
MNET
MCB has provided the nation's largest operating switch with the highest transaction
volume in the form of MNET. MNet is basically MCB’s Network for Electronic
Transactions; it is an electronic hub for ATM sharing plus other touch points. MNET
enables all the member banks (members of Muslim Commercial bank) to share their
electronic networks. This means customers of all member banks can use each other's
ATMs. ATM machines of MNET member banks accept cards issued by:
• MCB Bank
• Citibank
• Standard Chartered
• HSBC
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• Bolan Bank
• Bank of Punjab
• Prime Commercial Bank
• Saudi Pak Bank Limited
• Habib Bank AG Zurich
• Metropolitan Bank
• Bank of Khyber
• American Express
• KASB
• My Bank Ltd
• NDLCIFIC Bank Ltd
MNET customers can use over 600,000 ATMs worldwide that carry the Cirrus logo and
shop at over 5 million outlets (POS) that carry the Maestro logo
MCB Lockers
The best protection for your valuables. Lockers of different capacities are available
nationwide.
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(E) COMPETITORS
List of MCB competitors is given below
CENTRAL BANK
State Bank of Pakistan
NATIONALIZED SCHEDULED BANKS
First Women Bank Limited
National Bank of Pakistan
SPECIALIZED BANKS
Industrial Development Bank
Zarai Taraqiati Bank Limited[1]
Punjab Provincial Cooperative Bank
SME Bank
PRIVATE SCHEDULED BANKS
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Habib Bank, Karachi
Allied Bank of Pakistan, Karachi
Arif Habib Limited, Karachi -
Askari Bank, Rawalpindi
Atlas Bank, Karachi (Corporate Website)
Bank AL Habib, Karachi
Bank Alfalah, Karachi
Barclays Bank,Karachi
Faysal Bank, Karachi [1]
Habib Metropolitan Bank, Karachi
JS Bank
KASB Bank, Karachi
MCB Bank Limited (formerly Muslim Commercial Bank), Islamabad
Mybank Limited, Karachi
NIB Bank, Karachi
SAMBA Bank Limited, Karachi
Silkbank Limited
Soneri Bank
United Bank Limited, Karachi
Bank Of Punjab, Lahore
Citibank,Islamabad
Standard chartered Bank Ltd,Karachi
Royal Bank of Scotland Ltd,Karachi
HSBC Ltd,Lahore
khushali bank of Pakistan
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DEVELOPMENT FINANCIAL INSTITUTIONS
Pak China Investment Company Limited, Islamabad
Pak Kuwait Investment Company Limited, Karachi
Pak Libya Holding Company Limited, Karachi
Pak Iran Joint Investment Company Limited, Karachi
Pak-Oman Investment Company Limited, Karachi
Saudi Pak Industrial and Agricultural Investment Company (Pvt) Limited,
Islamabad
House Building Finance Corporation, Karachi
Investment Corporation of Pakistan, Karachi
Pak Brunaei Investment Company Limited, Islamabad
INVESTMENT BANKS
Al-Towfeek Investment Bank Limited
Invest Capital Investment Bank Limited
Atlas Investment Bank Limited
Crescent Investment Bank Limited
Escorts Investment Bank Limited
First Credit and Investment Bank Limited
IGI Investment Bank Limited
Fidelity Investment Bank Limited
Islamic Investment Bank Limited
AMZ Securities
Orix Investment Bank (Pakistan) Limited
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Prudential Investment Bank Limited
Trust Investment Bank Limited
DISCOUNT AND GUARANTEE HOUSES
First Credit & Discount Corp Limited
Prudential Discount & Guarantee House Limited
National Discounting Services Limited
Speedway Fordmetall (Pakistan) Limited
HOUSING FINANCE COMPANIES
Asian Housing Finance Limited
Citibank Housing Finance Company Limited
House Building Finance Corporation
International Housing Finance Limited
VENTURE CAPITAL COMPANIES
Pakistan Venture Capital Limited
Pakistan Emerging Ventures Limited
AMZ Ventures
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MICRO FINANCE BANKS
NRSP Micro Finance Bank Limited
The First Micro Finance Bank Limited
Khushali Bank Limited
Karakuram Bank
Network Micro Finance Bank
Pak Oman Micro Finance Bank
Rozgar Micro Finance Bank, Karachi
Tameer Microfinance Bank Limited
Kashf Foundation Limited
ISLAMIC BANKS
Dawood Islamic Bank Limited
Dubai Islamic Bank Pakistan limited
Meezan Bank Premier Islamic Bank In Pakistan
AlBaraka Islamic Bank
BankIslami Pakistan Limited
Emirates Global Islamic Bank
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ORGANIZATION STRUCTURE
46
SEVP
ESEVP
VP
AVP
Assistant
OG-1
OG-3
OG-2
SVP
Clerical Staff
Cashier
Technical Staff
Non clerical staff
Messenger
Dispatch Rider
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(A) HIERARCHY OF MANAGEMENT
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MANAGEMENT COMMITTEEBoard of Directors
Mian Mohammad Mansha Chairman
S.M.Muneer Vice Chairman
Tariq Rafi Member
Shahzad Saleem Member
Sarmad Amin Member
Dr. Muhammad Yaqub Member
Mian Raza Mansha Member
Dato' Mohammad Hussein Member
Aftab Ahmad Khan Member
Atif Bajwa President / CEO
Audit Committee
Tariq Rafi Chairman
Dr. Muhammad Yaqub Member
Mian Raza Mansha Member
Dato' Mohammad Hussein Member
Aftab Ahmad Khan Member
Human Resources Committee
Mian Mohammad Mansha Chairman
Dr. Muhammad Yaqub Member
Mian Raza Mansha Member
Shahzad Saleemn Member
President Member
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Risk Management & Portfolio Review Committee
Shahzad Saleem Chairman
Tariq Rafi Member
Sarmad Amin Member
Mian Raza Mansha Member
Aftab Ahmad Khan Member
Committee on Physical Planning, IT System & Contingency Arrangements
Sarmad Amin Chairman
S. M. Muneer Member
Mian Raza Mansha Member
President Member
Business Strategy & Development Committee
Mian Mohammad Mansha Chairman
S. M. Muneer Member
Shahzad Saleem Member
Mian Raza Mansha Member
Dr. Muhammad Yaqub Member
Dato' Mohammad Hussein Member
President Member
Chief Financial Officer
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Ali Munir
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(B) NO. OF EMPLOYEE
Employees: 12,256 (appro.)
Shareholders: 43290Shareholding: 628276843
(C) MAIN OFFICES
Registrar Office
MCB Building F-6/G-6
Jinnah Avenue, Islamabad
Principal Office
MCB 15 Main Gulberg, Lahore
Registrar's and Share Registration Office
MCB 15 Main Gulberg, Lahore
M/s. THK Associates (Pvt.) Limited
State Life Building No.3,
Dr. Ziauddin Ahmed Road,
Karachi
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(D) INTRODUCTION OF ALL DEPARTMENTS
DEPARTMENTION IN MCB
In MCB there is departmentation by function. There are twenty divisions working under
Head Office, each of which is having his own field of work, these divisions are:
1. AGRICULTURE DIVISION.
This division work for the development of agriculture in the country. It advances loans
for agricultural purpose and recovers all loans already given for the said purpose. This
division also assists World Bank and other donors in their agriculture development
project.
2. AUDIT DIVISION.
Previously IT was called inspection and Audit Division. It conducts audit in Bank’s
branches and it delegated enough authority from the Board of Directors so OTB that it
can work without any fear. It appoints audit teams and all the irregularities are reported to
this division.
3. BUSINESS DEVELOPMENT & MARKETING DIVISION.
This is the most important division working under H.O, the main function of this division
is business development. This division on the basis of market survey introduces new
schemes and all the marketing activities for the promotion of the new products are carried
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out by this division. Changes in the existing connection with bank & customer scheme is
also the responsibility of this division.
4. CENTRAL ACCOUNTS DIVISION.
The main responsibility of this division is to keep accounts of branches and record of all
inter branch transitions and of branches with HO. Calculation of profit on the accounts of
branches maintained with HO is also the responsibility of this division.
5. CORPORATE AFFAIR DIVISION.
It deals with the affairs of public and private limited companies. It includes financing of
large and specialized corporations, projects. In short it manages the corporate financing.
It also directly controls those branches which are designated as corporate branches.
6. CREDIT MANAGEMENT DIVISION.
Main function of this division is to form credit rules and regulation in accordance with
the prudential rules and regulation framed by SBP. It deals with all credit proposals
submitted by advances departments of different branches and defines their limits of loans.
Marketing activities about the loan is also carried out by this division. This division keeps
contacts with all valuable clients and considers their view about he loans/advances
procedure and tries to make the procedures as simple as possible. Action necessary for
the recovery of loan is also taken by this division.
7. FINANCE AND TREASURY DIVISION.
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This division manages all the assets of MCB Management of income tax and central
excise duty is the function of this division. The most important function it performs is the
announcement of profit rate On different schemes from time to time.
8. FOREIGN TRADE AND EXCHANGE OPERATION DIVISION.
The main function of this division is to arrange foreign currency reserves, for day to day
requirements of bank. It frames all rules and regulations regarding foreign exchange and
L/C opening in the light of prudential rules and regulations of SBP, and instructions of
Export Promotion Bureau (EPB) and Ministry of Commerce and Industry.
9. GENERAL SERVICE SECTION.
This division deals with construction and maintenance of branches, purchase and
maintenance of vehicles and lasing of bank’s property. The supply of stationery and
equipment’s is also the responsibility of this division.
10. HUMAN RESOURCES DEVELOPMENT DIVISION.
It is the most important division of HO. Dealing with the most important asset of the
bank i.e Human Resource. It deals with all the personnel functions of recruitment,
transfer, promotion, resignation, and separation. It settles all salary matters and matters
relating to increments, bonuses and fringe benefits. It maintains records of employees and
conducts performance appraisal and disciplinary actions.
11. INFORMATION MANAGEMENT DIVISION.
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It is fully computerized division, which provides all sorts of information to top
management. This division monitors the information system of all branches and is
playing s a very important role in computerization of MCB.
12. INDUSTRIAL CREDIT DIVISION.
Previously it was part of Credit Management division, but now it works under the said
division. It deals only with the advances to industrial units.
13. INTERNATIONAL DIVISION.
It looks after all the matters relating to foreign banks including the branches of MCB
abroad. It looks after all deals which Muslim Commercial Bank carries out with banks
and financial institution of foreign countries. Management of Umra and Hajj operations is
also the responsibility of this division. The management and conditions of seminars and
training programs outside the country and to send its officials for the training abroad is
the responsibility of this division.
14. INVESTMENT BANKING GROUP.
It is the unit which under takes investment with respect to the product of the banks. It
deals with capital market at national and international level and also manager’s
syndicates in case of issuing of shares etc.
15. ISLAMIZATION DIVISION.
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This division was established in Zia regime, after the introduction of Islamic Banking in
Pakistan. This division administers Zakat deductions, Iqra surcharge and Qarze Hasna
mode of financing. This division also gives suggestions on the adoption of interest free
banking in Pakistan.
16. LEGAL AFFAIR DIVISION.
This division deals with the legal affairs if the back, it handles all the cases filed against
someone and to defend all the cases filed against MCB. It alsi five suggestions in framing
of new rules and regulations to other divisions.
17. ORGANIZATION AND METHOD DIVISION
This division firms methods and procedures to be adopted by different branches. This
division is also responsible for construction and review of organizational structure of
MCB as a whole and the braches. The division collects data and suggestions or MCB as a
whole and the branches. This division collects data and suggestions for the improvement
of his organizational structure and procedures.
18. RUPEES TRAVELER CHEQUE AND CREDIT CARD DIVISION
This division is responsible fir maintaining all records to Rupees travelers’ cheque and
master card.
19. SPECIAL ASSETS MANAEMENT DIVISION
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This division is created to give suggestions and fins new ways and means to recover the
stuck up loans of bank.
20. TRAINING DIVISION.
The division is responsible for arranging training fir all level of employees. It administers
the staff colleges of MCB. This division keeps aware itself from the introduction of new
banking techniques, and provides a full opportunity to its employees to learn what ever
new.
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PLAN OF INTERNSHIP PROGRAM
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(A) INTRODUCTION OF THE BRANCH
I did my internship in MCB Bank limited KABAYAN-E- SARWAR, branch Dera
Ghazi Khan.
In the MCB Bank limited, I really enjoyed working with the staff of Khayaban-e-Sarwar,
Branch, Dera Ghazi Khan and having a wish to be employee of MCB. It was almost
impossible to work in all the departments within that limited time. But on my request, the
staff of the branch provided me the opportunity to work in the different departments for
the sake of practical knowledge. I feel highly indebted to work in the Khayaban-e-Sarwar
Bach on the request of the manager of that branch Maqsood Ahmed, because I learnt a lot
in that branch.
Some important information about my branch which I observed is as follows.
Address: (Khabayan-e-Sarwar, Multan Road, Dera Ghazi Khan)
Branch Code 1493
It is deposit branch, did not give the loan. (But deal Short term finance)
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GENERAL INFORMATION ABOUT MY BRANCH
DEPOSITS
The total deposits of this about to 15, 00, 00,000 Rs.
NUMBER OF ACCOUNTS
Accounts in this branch of MCB are as follows
CURRENT ACCOUNT:
Total numbers of current accounts are 1200 Nos.
PLS ACCOUNT
Total numbers of profit and loss accounts 2100 Nos.
REMITTANCE
Total remittance of this branch is 3,00,00,000 Rs. Per month.
NO. OF VOUCHERS
The vouchers which are transacted in this branch are 220 to 230 daily
Types
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Transfer
Clearing
Cash
Rate of interest
Maximum
That gives to this year.
RATE OF INTEREST
The rate of interest provided by such bank is 5 % on saving
FINANCING
Mainly, the short term financing schemes are being deal here.
CAPITAL
Capital of branch is treated in its head office
REVENUES
The total revenues of this branch are near to 5 Millions (last year)
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MANAGEMENT OF THE BRANCH
Branch Manager Maqsood Ahmed
(Working as Sales / Deposited, collect deposit, contact parties for
depositing and Supervision of the working of Staff)
Operation Manager Miss Aasma
(Over all working and Supervisor, and Supervision of operations)
Custom Service Mrs. Aara
(Opening Account, and others issued relating to opening the
account matter)
Remittances Officers Mis Irram
(T.T., DP, Check deposit, mean Check department)
Cashier Mr. Muhammad Rahil
(Cash payment, Cash Receive and others relating to cash matters)
Collective Department Miss Aasma/Mrs. Aara/Miss Irma
These employee randomly work in this Department.
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(On daily basis , they check the cheque from the other banks and
after checking they submit them in the head office every day)
Office Boy Muhammad Kaleem
(Working as a peon, do the services to the customers.)
Security guards
Muhammad Imtiaz (Morning Duty)
Manzar Hayat (Morning Duty)
Talib Hussain (Evening Duty)
(They provide the security to the branch)
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(B) DURATION OF MY INTERNSHIP
Start Date: 05 October 2009
End Date: 05 December 2009
(C) DEPARTMENTS IN WHICH I GOT TRAINING
Name of Department Duration
Remittance department 05-10-2009 to 20-10-2009
General banking department/clearing department 20-10-2009 to 10-11-2009
Accounts and Deposit Department 11-11-2009 to 25-11-2009
Cash department 26-11-2009 to 05-12-2009
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TRAINING PROGRAM
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(A) ACTIVITIES PERFORMED BY THE DEPARTMENTS OF BRANCH
DEPARTMENTS OF BRANCH
The departments functioning at, MCB KHAYABAN-E-SARWAR 1493 branch Dera
Ghazi Khan are discussed below.
Cash department
Accounts and Deposit Department
Remittance department
General banking department/clearing department
CASH DEPARTMENT
The following books are maintained in the Cash Department:
Receiving Cash Book
Paying Cash Book
Token Book
Scroll Book
Cash Balance Book
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When cash is received in counter, it is entered in the Scroll Book and Receiving Cashier
Book. At the close of the day, these are balanced with each other. When the cheque or
any negotiable instrument is presented at counter for payment, it is entered in the token
book and token is issued to the customer. The token clerk and the Cashier make entries in
the paying book and payment Cashier Book are balanced. The consolidated figure of
receipt and payment of cash is entered in the cash balance book and drawn closing
balance of cash.
Opening Balance + Receipts – Payments = closing Balance.
This is very important department because cash is the most liquid asset and mostly frauds
are made in this department, therefore, extra care is taken in this department and nobody
is allowed to enter or leave the area freely. Mostly, cash area is grilled and its door is
under supervision of the head of that department. All the books maintained in this
department are checked by an officer.
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ACCOUNTS DEPARTMENT
The function of Accounts department is to post daily activities of each and every section.
Every department is sending the detailed report of daily progress to the Account
Department for posting the same in the cash book, also allowed the clean cash register.
The transaction then will be shifted to their appropriate heads. Accounts department deals
in two types of registers.
In the income ledger the transactions relating to the income of the bank are to be posted,
like commission from parties, maintenance etc. all the development expenses of the bank
including salaries expenses of the staff, rent expenses etc are to be posted in the expense
ledger. Accounts department also maintains the deposits, and also prepares the weekly
and daily statements of the affairs of the branch. It is just like a balance sheet.
THE DEPOSITS SECTION
The deposits are one of the most fundamental sections of any bank. This section had been
set up with a view to accept deposits from general public and which was also a central
idea to create a bank. It will not wrong to say that the banking starts from this section.
FUNCTIONS OF THE SECTION
The deposits section carries out many significant functions, besides providing other
required facilities and information to its customers. Some of key functions are given
under:
OPENING NEW ACCOUNT
Opening of new account is like a contract between the banker and customer. It is the
preliminary function of the deposits section to open various types of account, by allotting
those numbers.
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Types of Accounts
Keeping in view the purpose and duration for which deposits are to be kept with the
deposits section in the bank, the deposits can be classified into two categories, Demand
deposits and Time or Fixed Deposits. The demand deposits are ones which are payable
by the bank whenever demanded y the depositors. This category includes current and
savings deposits accounts.
While on the other hand the deposits which are accepted by the bank under the condition
that they will not be payable on demand but will be payable on a fixed or predetermined
future time or date are called Time or Fixed Deposits.
Following are the types of accounts the deposits department opens.
1. Current Accounts
These are running accounts and are opened by the individuals/businessmen, public
institutions and groups, that make deposits and withdrawals frequently. The deposits and
withdrawals can be made through cheques, demands drafts, pay orders, etc, drawn on the
branch. As these accounts are payable whenever the depositors demand and the Bank by
accepting these deposits incurs the obligation of paying all types of orders to the extent of
the credit balance in the depositor’s accounts. These deposits represent current liabilities
of the bank. So, the bank has to keep sufficient funds in its hand to meet the requirements
of the depositors of these deposits.
Furthermore the businessmen, who require money frequently, open current accounts. The
bank can not apply the proceeds of such expenses, fees, commission, and markup etc
arising out of any dealing or services with the branch. The account holder is expected to
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maintain a minimum balance of Rs.500/- in his account or whatever the minimum
amount is prescribed for the purpose. These accounts are completely exempted from
withholding tax and zakat deduction.
2. PLS Saving Accounts
These are also one kind of demand deposits and are kept to develop the saving sense in
the citizens of the country. These accounts are opened mainly by those customers whose
banking transactions are not frequent and numerous. Lower and middle income groups,
small traders, professionals, farmers and other salaried classes usually make such
deposits, so as to save small amounts for the small or big needs, like purchase of
television, refrigerator, car or house. Funds can be deposited frequently through cash,
cheques, demand drafts, pay orders, telegraphic transfers, and other such instruments. But
the withdrawals are restricted to twice a week.
From the bank’s point of view a considerably percentage of such deposits can safely be
invested and the Bank need not keep larger reserves to satisfy the daily demand upon
such deposits. At the same time the bank pays the profit at competitive rates on such
deposits in long period investments. The bank can, on the request of its depositors, pay
their utility and other bills out of their accounts. The profit is not paid on these deposits.
As a result the bank earns maximum profit from these kinds of accounts. Providing
banking investment with the proceeds of these deposits and providing, under an
agreement, overdraft facilities to the depositors are the main proposes of the bank by
keeping such deposits.
SALIENT FEATURE
To maintain requirement for opening account is rs.500/-
There is no limit for maximum deposit.
No limit of deposits and withdrawals is defined.
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The deposits can be lodged in both local as well as foreign currencies.
The bank collects cheques, demand drafts, etc and pays all the bills, cheques, pay
orders, etc, on the behalf of its depositors.
The current accounts can be made by:
Individuals (single or jointly) Proprietorship, Proprietorship, and companies in
their names. Such other groups and organization.
All cheques and other instruments should be crossed, before they are deposited
for credit into account.
The bank would not require any prior permission from the account holder for
debiting his/her account for charging deposits, which varies from time to time
usually after every six months. The objectives of the bank to keep deposits are to
earn maximum profit by investing the proceeds of the deposits, to help small
savers, to fulfill their banking needs and to provide assistance in uplifting the
economy.
3 (PLS) TERMS DEPOSITS
The deposit which is acceptable by the bank under the condition that it will not be
payable on demand, but will be payable on a fixed or predetermined future time or date,
is called fixed deposit. But after the illumination of banking system in 1985, its name has
been changed from fixed to PLS Terms Deposit.
These deposits represent such surplus funds of the depositors, which are not required by
them for sufficiently long periods. The bank needs not to keep greater reserves in respect
of such deposits. The bank can make long-term investments from the credit balances of
such deposits. The deposits are accepted for the range from 3 months to above. Of course,
the longer the period, the higher is the rate of profit offered. People generally deposit
larger amounts of money in these accounts. The bank can advance loan to businessmen
out of these deposits because they are fixed for a particular period. But for the premature
withdrawal of amount a prior notice to the bank is necessary. For the amount placed on
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the term deposit, the bank issues a deposit certificate (receipt), which states the amount
received, the name of the depositor and the period for which the deposit is placed. Being
a deposit receipt it cannot be negotiated or transferred. The bank accepts these deposits
with the purposes, to make minimum profit by using the proceeds of such deposits, to
appeal customers by offering them a high rate of return, to meet their entire banking
needs, and to help economy to grow.
SALIENT FEATURE
The minimum deposits is accepted by the bank with the sum of Rs.1000/-
The maximum deposit has got no limit.
The deposits are accepted for the period form three months maximum to above.
The PLS term depositors would be eligible for sharing profit/loses with the bank
at true rate determined by the bank.
Where profits and losses would be distributed on half yearly basis.
On the maturity, the depositors shall have an option either to draw the deposit and
the amount of his profit share if any or renew the deposit.
Incase of premature withdrawal a prior notice must be given by the depositor to
the bank on which bank is eligible to maximize the profit ratio of depositor or to
deduct some charges of its services.
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REMITTANCE DEPARTMENT
According to concerned officer of this department, the bank promoted the facility of
remitting the funds within certain limits. Remittance department here consists of two
major sections.
Inland remittance
Foreign remittance
INLAND REMITTANCE
The term inland remittance means transfer of funds from one branch too another within
the country through following banking instruments.
i. Demand draft.
ii. Telegraph transfer.
iii. Mail transfer.
iv. Pay order.
i. Demand draft (DD)
It is written drawn by one branch of a bank upon another branch of the same bank or
upon branch of any other bank working with in the country under special arrangement to
pay certain sum of money to or to the order of specified person. MCB deals with two
types of dd.
Open DD1
Open DD is one which is payable directly at the counter and there is no need of crediting
to the account.
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Cross DD2
Cross DD is one whose payment is done through account, the amount of the DD is
credited to the favoring accounts and then he can transact in ordinary way through
cheque.
ii. Telegraph Transfer (TT)
Transfer of funds form one branch to another of the same bank or upon other banks under
special arrangements for the payment to beneficiary, through telegram, telex, and fax is
allied telegraph transfer.
iii. Mail Transfer
Transfer of funds from one branch of the same bank inside or outside the country through
mail/courier service is called. Mail transfer are same as for telegraph transfer, but if a
person’s account is not existed in the said branch, in this case the sending branch will
shift the amount to the concerned branch and advice will be sent to the other bank in
which his account exists. In suspense account the party will have to prove identity.
iv. Pay Order
A pay order is a written authorization for payment made in a receipt from issued and
payable by the bank to the person named and addressed there, on this giving a proper
discharge there on. Pay order can be made for the branch of same bank with in the same
city. There is option to change bank (name) but that bank’s branch should be in the same
city. The Bank’s commission is fixed as 5% for any amount.
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FOREIGN REMITTANCE
The bank provides the facilities of foreign remittance to the domestic residential and
foreigners to send money from one country to another. The bank also provides foreign
exchange in the shape of traveler’s cheques to intending visitors. Traveler’s cheque is an
order drawn by the bank in favor of travelers upon specific bank to pay him specific
amount on demand after proper identification abroad. The travelers first pay the amount
of money to the issuing bank, which is responsible to pay the amount to the foreign bank
upon which it is drawn.
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GENERAL BANKING DEPARTMENT
Clearing Department
Every banker acts both as paying as well as a collecting banker, It is however an
important function of crossed cheques. A large part of this work is carried out through the
bankers clearing house. A clearing house is a place where representative of all banks of
the city get together and settle the receipts and payment of cheques drawn on each other.
As the collecting banker runs certain risks in receipt of their ownership the law has
provided certain protections t the banks.
The Negotiable Instrument Act, 1881, lays down hat drawer or holder of a cheque or
draft may cross the instrument generally or specially. It further lies down that a crossed
cheque can only be paid to a banker, who collects it for a customer in good faith and
without negligence.
The functions of clearing department is under
Receiving the instruments deposited by customers
Posting the amount of instruments in credit of customer’s account
If cheque returns from the concerned bank, the customer account is debited.
Crossing stamp is put on the instrument and slip given to customer on receipt of
the instrument. Clearing stamp and “payee account credited” are put on the
instrument and the voucher.
As we know that, one of the basic economic functions of commercial banks is to receive
deposits and to honor cheques drawn upon them. So, cheque is a most commonly used
instrument for making payments by account holder. Along with the cheques, there are
some other negotiable instruments like PO, DD, TC, PS, CDR etc. (discussed in the next
part) that are used for making payments and are drawn upon a bank. The question arises
that how these cheques & other negotiable instruments drawn on one bank are deposited
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in other banks and money is transferred from one bank to another. Clearing House has
provided this facility. Clearing house facilitates different banks, on one city, to get their
cheques drawn upon other banks to be cleared. Cheques lodged in clearing constitute two
types of clearing:
Outward Clearing
Inward Clearing
Lodgment of Cheques in Outward Clearing
When cheques, TC’s and other negotiable instruments drawn upon their banks like MCB,
ABN‐AMRO of the same city (as Lahore) is presented in MCBBANK LIMITED Ltd. To
deposit them in the respective payee’s accounts, these instruments are lodged in outward
clearing.
Clearing Stamp:
After the cheques have been crossed specially, clearing stamp is put on the cheques and
other instruments, with the following day’s date, as these cheques should have to be
presented in their concerned drawee banks on the subsequent day.
Endorsement Stamp:
The word endorsement is derived from Latin word ‘indorsum’ which means ‘on the
back’. Ordinarily, it means anything written or printed upon the back of an instrument.
So, at the end, the cheques are endorsed in full (endorsed specially) by putting the stamp
with words describing “Payee’s account Credit5ed in BAL Circular road, Lahore” After
putting these three stamps on cheques & other negotiable. Instruments, they are sent to
NIFT (National Institutional Facilitation Authority) with Add List. NIFT after
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segregating the cheques of different banks delivers them to their concerned banks, which
constitute the inward clearing for those drawee banks.
Accounting Procedure:
After lodgment of all cheques in outward clearing, Payee’s accounts are credited by the
amount of their vouchers. Drawee banks will debit the drawer’s accounts in their inward
clearing (discussed later). As main branch Of BAL deals with other banks through inter‐
bank accounts and we deal with our main branch. So, we (BAL Circular road) debit our
main Br. Account, maintained with us, by the total amount of outward clearing and an
IBDA (inter branch debit advise) with a debit voucher is sent to main branch. Local
Clearing Main branch Debit Payee’s Account Credit
Return In Outward Clearing:
Some of the cheques lodged in o/q clearing are dishonored by the concerned branches
due to some deficiencies and returned back through NIFT. This process is carried out
under main branch’s governance. Either, these cheques are again lodged in outward
clearing or returned to customers by canceling bank’s all stamps, based on the reasons.
Now, the accounting entries opposite to first are passed i.e. Payee’s accounts are debited
& main branch’s account is credited.
Inward Clearing
Cheque and other negotiable instruments (PO, DD, PS, CDR Etc.) drawn on MCBBANK
LIMITED Circular Road, sent by other banks, constitute the inward clearing of BAL.
After having all the stamps and dates of cheques confirmed, the concerned drawer’s
accounts are debited (in BAL Circular Road) and main branch’s account is credited by
the total amount. DEBIT Drawer’s Accounts CREDIT Local Clearing Main branch.
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(B) DESCRIPTION OF TASKS THAT I COMPLETED
LEARNING AS A STUDENT
The duties that I performed and the thing I learned in 2 months are given as follows:
UTILITY BILLS COLLECTION
MCB Bank Limited collects utility bills on behalf of WAPDA, Sui Gas Companies, and
Pakistan Telecommunication Corporation Limited by putting the stamp on the utility bills
“Paid”, Date of payment, Signature of the officer receiving the utility bills. After
receiving utility bills a list is made on the form, which is called Bills scroll form. One
copy of the scroll is with the bank for evidence whereas the original copy with the receipt
of bills is sent to the billing department of the respective corporation. The bank charge
commission on the bills.
OPENING NEW ACCOUNT BASICS
During the span of my internship in MCB I learned and observed a lot of about the
opening of an account. Basically I think that the opening of an account is the
establishment of a contractual relationship between the banker and the customer. By
opening an account at a bank, a person becomes a ‘customer’ of a bank.
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DEMAND DRAFT AND PAY ORDER SLIP
Demand Draft (DD) is a written order drawn by the branch of the same bank to another
branch of the same bank to pay an amount. DD is used in the same city or in other city
branches. Bank charges commission on it.
Pay order can be issued to the customers but in practice. Commonly pay orders used for
banks own payment purpose only.
During my Internship I filled these documents for customers.
Documents that required for Demand Draft or pay order are:
Name and Address of the customer
ID card number of the customer
Amount
Place where demand draft drawn
DEPOSIT SLIPS
Customers used deposit slips to deposit the money into their account. I also worked for
many days in this section. I fill the deposit slips for customers and then they deposit the
money into their account.
ISSUING CHEQUE BOOK
When Customers open new accounts then they need a Cheque Book to withdraw their
money. Or an exiting customer needs a Cheque Book when his first Cheque Book is end.
I issued Cheque Book to the Customers during My Internship.
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TRAINING IN DIFFERENT DEPARTMENTS
During my Internship I worked in different departments. The Bank Manager attached me
in different departments with in charge of the Department.
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STRUCTURE OF THE FINANCE DEPARTMENT
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(A) DEPARTMENTAL HIERARCHY
Branch Manager Maqsood Ahmed
(Working as Sales / Deposited, collect deposit, contact parties for
depositing and Supervision of the working of Staff)
Operation Manager Miss Aasma
(Over all working and Supervisor, and Supervision of operations)
Custom Service Mrs. Aara
(Opening Account, and others issued relating to opening the
account matter)
Remittances Officers Mis Irram
(T.T., DP, Check deposit, mean Check department)
Cashier Mr. Muhammad Rahil
(Cash payment, Cash Receive and others relating to cash matters)
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(B) NO. OF EMPLOYEE WORKING IN FINANCE DEPARTMENT
These person works randomly in Finance Department.
MAQSOOD AHMED
MISS AASMA
MRS. AARA
MIS IRRAM
MR. MUHAMMAD RAHIL
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(C) FINANCE AND ACCOUNTING OPERATION
The function of Accounts department is to post daily activities of each and every section.
Every department is sending the detailed report of daily progress to the Account
department for posting the same in the cash book, also allowed the clean cash register.
The transaction then will be shifted to their appropriate heads. Accounts department deals
in two types of registers.
In the income ledger the transactions relating to the income of the bank are to be posted,
like commission from parties, maintenance etc. all the development expenses of the bank
including salaries expenses of the staff, rent expenses etc are to be posted in the expense
ledger. Accounts department also maintains the deposits, and also prepares the weekly
and daily statements of the affairs of the branch. It is just like a balance sheet.
Accounting Procedure:
After lodgment of all cheques in outward clearing, Payee’s accounts are credited by the
amount of their vouchers. Drawee banks will debit the drawer’s accounts in their inward
clearing (discussed later). As main branch Of BAL deals with other banks through inter‐
bank accounts and we deal with our main branch. So, we (BAL Circular road) debit our
main Br. Account, maintained with us, by the total amount of outward clearing and an
IBDA (inter branch debit advise) with a debit voucher is sent to main branch. Local
Clearing Main branch Debit Payee’s Account Credit
Return In Outward Clearing:
Some of the cheques lodged in o/q clearing are dishonored by the concerned branches
due to some deficiencies and returned back through NIFT. This process is carried out
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under main branch’s governance. Either, these cheques are again lodged in outward
clearing or returned to customers by canceling bank’s all stamps, based on the reasons.
Now, the accounting entries opposite to first are passed i.e. Payee’s accounts are debited
& main branch’s account is credited.
Inward Clearing
Cheque and other negotiable instruments (PO, DD, PS, CDR Etc.) drawn on MCBBANK
LIMITED Circular Road, sent by other banks, constitute the inward clearing of BAL.
After having all the stamps and dates of cheques confirmed, the concerned drawer’s
accounts are debited (in BAL Circular Road) and main branch’s account is credited by
the total amount. DEBIT Drawer’s Accounts CREDIT Local Clearing Main branch.
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FUNCTION OF FINANCE DEPARTMENT
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(A) FINANCE SYSTEM OF THE ORGANIZATION
The finance department (FIN) is responsible for policies, planning, mobilization and
administration of the Bank’s financial resources. The department manages the Bank’s
financial relation with the objectives of providing loans to borrowing member countries
on a cost-effective basis, while maintaining the bank’s AAA/AA ratings and safeguarding
its resources.
MAIN RESPONSIBILITIES
Achieving cost-effective Treasury operations.
Raising funds in the international capital markets to support the bank’s lending
operations.
Managing the bank’s liability portfolio.
Providing proactive financial policy, timely strategic financial planning and risk
management.
Ensuring that all financial obligations are met and collections made.
Producing prompt and accurate financial reporting and producing audited
financial statements for the Bank’s Annual Report.
Overseeing internal controls in the processing of financial transactions.
Managing the MCB Capital, including resource replenishments, new member
countries subscriptions and monitoring of member countries. Voting rights.
Performing Loan Management functions to administer monitor and control the
Bank’s loan and technical cooperation portfolios, including management of the
Operation Framework for lending in Local Currency.
Audited financial statements of the MCB are published each year in the Bank’s Annual
Report.
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FUNCTIONS OF DEPARTMENT
Maintenance of books of accounts and preparation of financial statements of the
Bank in accordance with the IAS, as adopted by the Bank.
Coordination and facilitations for Business planning and budgeting function in the
bank and periodic reporting to the management and to the Board.
Maintenance of foreign currency accounts/ investments and execution of
International payments and receipts.
Maintenance of accounts relating to International Organizations and Donor
Agencies Like IMF, IBRD, ADB, Asian Clearing Union (ACU) et.
Currency issuance and it’s over all management.
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(B) FINANCE AND ACCOUNTING SYSTEM OF THE ORGANIZATION
The Finance Department is responsible to perform and mange the functions detailed on
pre-page. It controls the working of the Officers under the provisions of issue and
Banking Department Manuals. Issue Department deals with management of currency
operations, which includes designing, printing of currency notes and its circulation.
Banking Department relates to the operation of offices of the Bank, maintenance of
Federal and Provincial Government Accounts, booking of financial transactions in the
books of accounts of Central Directorate and issue of weekly Statement of Affairs and
required under the provisions of SBP Act, 1956, preparation of Profit and loss Account
and Balance Sheet on yearly basis, formulation of budget estimates of revenue and capital
expenditure. Management of General Provident Fund and Provident Fund balances of all
employed of the bank. Operational control of working of offices by framing policies and
procedures under the provisions of Banking/ Issue Department Manuals, Sale/ purchase
of foreign currencies, maintenance of foreign reserves of the country. To achieve the
above objectives, the Department has been divided into seven divisions as detailed
below:-
FINANCIAL ACCOUNTS DIVISION (FAD)
Financial Accounts Division performs the following functions:-
Preparation of Annual Financial Statements Accounting Policies for the bank.
Preparation of Weekly Statement of Affairs for issuance in the Government
Gazette as provided in the State bank of Pakistan Act, 1956.
Quarterly profit updates to the Central Board of Directors.
Maintenance of GL to provide information for informed decision-making.
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Monitoring of contraction and expansion of Currency operations.
Consolidation of Departmental Budgets.
Preparation of daily balance position and communication thereof to the Federal
Finance Division and Provincial Finance Departments.
FOREX, SECURITIES & INVESTMENT DIVISIONS (FSID)
Maintenance and recording of Cash Reserve Requirement, SCR Requirements,
MCR, foreign debt payments, FE-2 Deposits etc.
FCY payments of Government of Pakistan (Defense, Privatization Commission,
TCP etc) and SBP.
Short/ medium term investment and Swap deposits and maintenance of Foreign
Currency Accounts and revaluation of foreign currency Assets & Liabilities.
Special US Dollar Government Bonds. Payment of Profit and principal payment
on redemption
Purchase, repurchase, acquisition of SDR, and revaluation of IMF loans/ facilities.
Payments to executing agencies/ parties under various Loans/ Grants of
International Donor agencies Viz IBRD/IDA/ ADB etc.
Transactions of Sale/ Purchase of Currencies & Settlement of ACU Account
under ACU Arrangement.
Transactions of the Foreign Funded Projects including TABS et.
Monthly Abstract, Daily Reserves and weekly review reporting.
SYSTEM AND PROCEDURE DIVISIONS (SPD)
Systems & Procedures Divisions (SPD) acts as a liaison between functional user & ISD
to ensure effective systems development, implementation, and usage. Major
responsibilities are;
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Representation of Finance Department, SBP, in various automation projects under
development/ implementation (RTGS & ate ware House)
Recommend continuous business process refinement in coordination with
business units of fiancé Department SBP and SBP BSC.
Participate in automated solutions development/ configuration for SBP is
financial areas.
PAYMENT CONTROLLER DIVISION (PCD)
This division responsible for :-
Making of payments to external suppliers and employees of the bank after
independent verification of transaction documents on the basis of bills/ invoices/
claims approved by the processing units.
Checking and verifying the selected financial transactions/ cases referred by the
Director Finance to ensure accuracy and compliance to respective rules and
regulations.
ASSET MANAGEMENT DIVISION (ADM)
Assets Management division is responsible for
Assets capitalization, assets transfers and overall responsibility to manage and
maintain, assets physical inventory, keeping track of physical location of assets.
Maintaining the financial information of the assets, cost evaluation and
retirements, Disposal
To ensue the smooth and unhampered running of the Fixed Assets Management
functions.
To record all the expenses regarding repair/ maintenance and rent taxes for SBP
buildings and equipments.
CURRENCY MANAGEMENT DIVISION (CMD)
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Currency Management division is responsible for :
Policy making and management of currency related matters.
Issuance of Statements of Affairs of Issue Department on Weekly, Monthly and
Quarterly Basis.
Preparation of Balance Sheet of Issue Department at very financial year-end.
SUPPORT SERVICES DIVISION (SSD)
Support Services Division performs the function as follow:-
To deal with various administrative matters arising in the Finance Department.
To provide a healthy and sound environment to officers of Finance Department.
To respond to various queries raised from various internal and external sources.
Dissemination of any revising in laws, policy and regulation matters to relevant
quarters.
ROLE OF CFO IN THE BANK
The Chief Accountants used to perform several tasks which were preparing accounts.,
preparing budgets, operational reporting and interpreting, evaluating operating results,
preparing income tax returns, establishing internal control procedures to safe-guard the
companies assets.
TRANSITION FROM CHIEF ACCOUNTANT TO CHIEF FINANCIAL
OFFICER
Due to increased governance requirement there arises a need to empower the Chief
accountant and to make him responsible by requiring him to sign the accounts. There
comes the code of corporate governance, which makes the Chief accountant powerful and
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more responsible. With the new role, Chief Accountant becomes Chief Financial Officer
(CFO)
APPOINTMENT AND APPROVAL REQUIREMENT
The appointment, removal and remuneration terms and conditions of employment of the
Chief financial officer of a listed company shell be determined by the Chief Executive
Officer with the approval of the Board of Directors.
QUALIFICATION REQUIREMENT
The qualification requirement is defined under the code of corporate governance that is
the person appointed as the Chief Financial Officer must be Member of recognized body
of professional accountants or a graduate from a recognized university or equivalent,
hang at least 5 years experience in handing financial and corporate affairs of a listed
company.
INTERNAL AND EXTERNAL REPORTING
Chief Financial Officer now has extensive responsibilities for internal and external
reporting. All the information required for decision-making by the Board of Directors and
Chief Executive is processed and furnished by the Chief Financial Officer. Apart from
this, external reporting requirement is fulfilled by Chief financial Officer, the accounts
and financial statements are signed by the Chief Financial Officer before they are sent to
concerned authorities.
CGG requires that the listed companies submit their quarterly accounts to the
shareholders within one month of the close of the first and their quarter of year of
account.
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The CCG does not prescribe the time for submitting half yearly accounts to the
shareholders. Here we can refer to section 245 of companies ordinance 1984 for this
purpose, which requires half yearly account to be submitted within two months of the
close of first half. The CCG required a limited review of half yearly accounts by external
auditor.
Annual audited accounts are now required to be submitted within four months of the
close of financial year.
The Securities and Exchange Commission of Pakistan is exercising strict vigilance to
ensure compliance of 4th and 5th schedule of the Companies Ordinance, 1984 and timely
submission of accounts by companies. It has recently imposed penalties on Directors of
nine listed companies who failed to prepare and circulate the quarterly accounts.
Furthermore, fines have been imposed on Chief Executives.
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(C) SOURCE OF FUNDS
The Bank industry witnessed a volatile year in 2008 in terms of profitability, with every
quarter depicting a different picture. The total profitability improved from the first
quarter to the second quarter but after the amendment in SBP’s regulation regarding NPL
and FSV, banks became more prudent in lending and total profitability declined.
Non interest income grew significantly by 43 % during the period under review. The net
interest income earned by the banking sector in FY08, also posted a growth of 17.4 %
and reached at Rs. 280 billion as compared to Rs. 203 billion in FY07. The major reason
behind this growth was the high level of spreads throughout the year. Which remained at
7.29 % on average, despite the SBP,s further tightening of the monetary policy in July 07,
SBP raised the discount rate by another 0.5 % in January 2008, raising its benchmark
policy rate to 10.5 %. The lending rates increased while deposit rates were maintained by
the banks.
The increasing lending rates not only deteriorated the debit servicing capacity of
borrowers (both corporate and consumers) but also subdued the credit demand by the
private sector resulting in slower advances growth, also the country’s large scale
manufacturing activity slowed down. Due to this the banks are shifting from advances to
investments as the key source of funds/ income for the banks.
Growth in investment by banks during the first nine month of 2008 was about 9 times of
the increase in the advances in this period. It recorded an increase of PK Rs. 476 , nearly
80 % of assets increase during January, to September 2008. As a result, the assets mix of
the banks showed a slight shift from the previous trend.
Banks are now introducing new products for general public in the market to attract fresh
deposits and increase in the weighted average deposit rates of the banking system, (4.14
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% at the end of October, 2008 up by 16 basis points from June, 2008.) Moreover, the
asset quality of the banks has been improving through strict policies and effective credit
management.
Financial performance (FY’03-FY’ 08) MCB bank Limited (MCB) posted profit after tax
of Rs. 15.26 b with earnings per share of Rs. 24.30 in FY’ 08 as compared to profit after
tax of Rs. 12.1b with earnings per share of Rs. 19.33 in FY’06 depicting a significant
growth of 26.0 % during the year.
However, considering the size and operations of the bank, this is not a significant growth.
An upsurge of 92 % in the interest earned on the investments in available for sale
securities and a 15 % increase on the interest earned on the customers’ loan were the
major drivers behind the said growth.
Non-interest income also supported the bottom line growing by 20.4 % to Rs. 6.b in FY’
08 from Rs. 4.9b in FY’07 on the back of capital gain received on the sale of securities.
Major contribution also came from a 14 % surge in fee commission and brokerage
income.
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(D) ALLOCATION OF FUNDS
The recent Discount Rate hike to 13 % and 100bp increase each in CRR and SLR to 9 %
and 19 % respectively would translate into an increase in market interest rates and firmly
restrain credit expansion. On the flip side, it is likely to have a positive impact on deposit
mobilization as the banks struggle for liquidity, which has already started to become
scarce.
Despite the concretionary monetary policy stance of SBP, the banking spread has
increased by 20bps to 7.34 % in May 2008 compared to 7.14 % December, 2007.
However, the imposition of 5 % minimum deposit rates on interest bearing checking
accounts from July’08 onwards would squeeze NIM and result potentially higher credit
costs (due to asset quality deterioration), thereby potentially rimming net interest income
and reducing MCB’s future profitability.
Higher than average ROE posted by MCB seems sustainable over next few years.
Overall, the risk profile and asset quality of MCB has vastly improved over the years.
However, the possibility of rising NPLs/advances ratio in FY’08 could be rules out. To
cater to this, the bank has pursued stringent policies and made adequate provisioning,
thus, the future profitability of the bank will not be impacted so greatly.
Another positive sign for the bank in Malaysian May bank’s plans to acquire another 5%
stake in MCB Bank by August 2008. The 5% option is part of the initial deal for
acquisition of 20 % stake in MCB Bank. May bank has already acquired 15 % stake in
MCB from Nishat group in May 2008 and was required to acquire the remaining within a
period of 12 months.
At an agreed price of Rs. 490/share, an upside of 82 % from MCB’s current market
value, the incremental 5 % stake in MCB, Maybank would generate foreign inflow of US
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$218mn. Moreover, partnership with Maybank is expected to add more value to MCB
going forward. The deal could have al long run positive impact with technology transfer
and infrastructure investment bossing depositor density and improving loan penetration in
trade financing, Islamic Banking and SME Business.
With SBP raising the upper limit of retail exposure to PKR 75 mn (not be more than 2 %
of gross retail portfolio of the bank) in case of consumer loans and small business loans.
MCB has increased its penetration this high margin segment. Despite the challenges of
declining demand & rising NPLs due to higher interest rate vulnerability and late entry
along with established brand equity of existing players like UBL. Consumer financing
continues to be a profitable niche for MCB.
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CRITICAL ANALYSIS
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CRITICAL ANALYSIS
I have critically analyzed according to the theoretical knowledge and would like to
comments in below.
a). KNOWLEDGE OF RISK MANAGEMENT IS MISSING.
The main purpose of financial and banking organization is to create valuable system by
interacting with its environment, customers, constituents, suppliers, technology,
competition, economy, government, etc. A valuable system is created by the conversion
of available resources i.e. human, financial, physical, and intangible assets into goods and
services that fulfill the needs of the customers and save the best interests of the banking
and financial organization. Risk management performs all these diversified but integrated
work to achieve maximum out-put,. Managing risk is actually managing the
organizations: planning, organizing, directing, and controlling organization systems and
resources to achieve objectives. Managing risk must come from within and act to change
the organization and its response to changes in the environment.
Now many domestic banks are hiring experts of risk management to secure their precious
assets. National bank of Pakistan has also created risk management group at head office
and as well as regional level to save the best interests of the bank and enhance the
chances of investments.
b). TOTAL QUALITY MANAGEMENT
Ours is the age of cutthroat competition, scarcity of resources, technological
advancement, and integration of financial services, Expansion of economic markets and
cultural diversity. In these complicated and conflicting financial and economic scenarios
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the need of TQM in the ranks of domestic banking industry is indispensable. The middle
management should need to have basic understandings about complicated management
processes, crises management tools, marketing/ product strategies, financial and treasury
management techniques, financial discipline, soundness and transparency of banking
system, human resource administration and above all genuine leadership qualities to
adequately operate within a highly sensitive and complicated industry.
There is urgent need of having TQM in the realms of banking industry of the country. At
the dawn of WTO and increasing chances of investment banking among the SARRC
countries the TQM in the need of the hour. Our commercial banks must pay attention to
this shift and start thinking strategically for providing high quality products and services
to customers. According to a study from Business Communications Company Inc, The
changing Global Commercial Banking Industry Structure, total commercial banking
assets are expected to climb.
The banking industry should determine where improvement is needed, how service can e
improved and where operating system breakdowns occur, why they occur and how they
can be avoided
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(A) RATIO ANALYSIS
Financial analysis, while varying according to the particular interest of the analyst,
always involves the use of various financial statements - primarily the balance sheet and
income statement and the cash flow statement. Financial analysis involves the use of
various financial statements.
The balance sheet summarizes the assets, liabilities, and owners' equity of a business at a
point in time, while the income statement summarizes revenues and expenses of a firm
over a particular period of time and about cash flow it tells the cash generated by the
bank. A conceptual framework for financial analysis provides the analyst with an inter-
locking means for structuring the analysis. For example, in the analysis of external
financing, one is concerned with the firm's funds needs, its financial condition and
performance, and its business risk. Upon analysis of these factors, one is able to
determine the firm's financing needs and to negotiate with outside suppliers of capital.
Ratio analysis involves methods of calculating and interpreting financial ratios to analyze
and monitor the bank’s performance.
INTERESTED PARTIES
Ratio analysis of a firm, s financial statements is of interest to shareholders, creditors and
the firm’s own management. Both present and prospective shareholders are interested in
the firm’s current and future level of risk and return, which directly affect share price.
The firm’s creditors are interested primarily in the short term liquidity of company and its
ability to make interest and principal payments. A secondary concern of creditors is the
firm’s profitability; they want assurance that the business is healthy. Management is
concerned with all aspects of the firm’s financial situation and its attempts to produce
financial ratios that will be considered favorable by both owners and creditors.
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LIQUIDITY RATIOS
Liquidity ratios measure a firm’s ability to meet its current obligations.
These include:
Current Ratio
Acid Test Ratio
Sales to Working Capital
Working capital
Current Ratio
Formula to calculate current ratio:
Current ratio = current assets / current liabilities.
Current ratio definition and explanation:
The current ratio is used to evaluate the liquidity, or ability to meet short term debts.
High current ratios are needed for companies that have difficulty borrowing on short term
notice.
The generally acceptable current ratio is 2:1
The minimum acceptable current ratio is 1:1
Current ratio = = 477,743,510,000 / 340,825,623,000
Year 2008 = 0.14%
Year 2007 = 412,900,841,000/355,353,519,000
= 0.33%
Year 2006 = 343,177,949,000/300,992,830,000
= 0.34%
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ACID TEST RATIO
Acid Test Ratio = (cash + marketable securities) / current liabilities
Acid test ratio definition and explanation:
The acid test ratio measures the immediate amount of cash immediately available to satisfy short term debt.
Acid Test Ratio = 43,674,272,000+15,058,126,000/385,179,850,000
Year 2008 = 0.039
Year 2007 = 43,491,402,000+ (-52,951,926,000)/355,865,842,000
= 0.107
Year 2006 = 39,115,635,000+(-13,324,929,000)/300,992,830,000
= 0.085
SALES TO WORKING CAPITAL RATIO Sales to Working Capital = sales / working capital
A high ratio may indicate inadequate working capital, which reflects negatively on liquidity.
Sales to Working Capital = 15,374,600,000/52,244,865,000
Year 2008 = 29.42%
Year 2007 = 15,265,562,000/45,414,156,000
= 33.6%
Year 2006 = 12,540,879,000/36,404,315,000
= 34.4%
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Working Capital Ratio
Working Capital Ratio = current assets / current liabilities
The working capital ratio is also referred to as the current ratio. See current ratio
definition and explanation.
Working capital definition and explanation:
Working capital is the liquid reserve available to satisfy contingencies and uncertainties.
A high working capital balance is needed if the business is unable to borrow on short
notice.
Banks look at working capital over time to determine a company's ability to weather
financial crises.
Loans often specify minimum working capital requirements.
Working Capital Ratio = 443,615,904,000/385,179,850,000
Year 2008 = 1.151
Year 2007 = 412,900,841,000/355,353,519,000
= 1.161
Year 2006 = 343,177,949,000/300,992,830,000
= 1.140
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LEVERAGE RATIOS
Leverage ratios measure the degree of protection of suppliers of long
term funds. These include:
• Time Interest Earned
• Fixed Charge Coverage
• Debt Ratio
• Debt / Equity Ratio
• Debt to Tangible Net worth Ratio
• Current Worth / Net worth Ratio
• Total Capitalization Ratio
• Fixed Asset Ratio / Equity Ratio
• Long term Assets versus Long term Debt
Times Interest Earned Ratio
Formula to calculate times interest earned: Times Interest Earned Ratio = (net income + interest) / interest.
Times interest earned definition and explanation
The times interest earned ratio indicates the extent of which earnings are available to
meet interest payments.
A lower times interest earned ratio means less earnings are available to meet interest
payments and that the business is more vulnerable to increases in interest rates.
Times Interest Earned Ratio = 15,374,600,000+ 28,484,083,000/28,484,083,000
Year 2008 = 1.53
Year 2007 = 16,441,670,000 + 23,932,935,000/ 23,932,935,000
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= 1.68
Year 2006 = 12,540,879,000 + 21,275,707,000/21,275,707,000
= 1.58
Fixed Charge Coverage Ratio
Formula to calculate fixed charge coverage ratio:
Fixed Charge Coverage Ratio = (Net Income before Interest and Taxes + interest + fixed
costs) / fixed costs.
Fixed charge coverage ratio definition and explanation
The fixed charge coverage ratio indicates the risk involved in ability to pay fixed costs
when business activity falls.
The fixed charge coverage ratio is included in the financial statement ratio analysis
spreadsheets highlighted in the left column, which provide formulas, definitions,
calculation, charts and explanations of each ratio.
Fixed Charge Coverage Ratio = 45, 35,264,000+ 28,484,083,000
Year 2008 = 33019347000
Year 2007 = 39,092,587,000 + 23,932,935,000
= 63025522000
Year 2006 = 31,206,391,000 + 21,275,707,000
= 21306913391
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Debt Ratio Debt Ratio = liabilities / assets
The debt ratio is also known as the debt to capital ratio, debt to equity ratio or financial
leverage ratio.
The debt ratio shows the reliance on debt financing.
A high debt ratio is unfavorable because it indicates that the company is already
overburdened with debt.
Debt Ratio = 385,179,850,000/443,615,904,000
Year 2008 = 86.82%
Year 2007 = 355,353,519,000 /412,900,841,000
= 86.06%
Year 2006 = 300,992,830,000 /343,177,949,000
= 87.70%
Debt to Equity Ratio (Financial Leverage Ratio)
Formula to calculate debt to equity ratio (financial leverage ratio):
Debt to Equity Ratio = Short Term Debt + Long Term Debt /Total Shareholders Equity
Debt to equity ratio definition and explanation:
Debt to Equity Ratio is also referred to as Debt Ratio, Financial Leverage Ratio or
Leverage Ratio. The debt to equity (debt or financial leverage) ratio indicates the extent
to which the business relies on debt financing.
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Upper acceptable limit of the debt to equity (debt or financial leverage) ratio is usually
2:1, with no more than one-third of debt in long term.
A high financial leverage or debt to equity ratio indicates possible difficulty in paying
interest and principal while obtaining more funding.
Total Debt to Tangible Net Worth
If your business is growing, track this ratio for insight into the distributive source of
funds used to finance expansion.
Debt Ratio Current + Long-Term Debt = Debt Ratio
Total Assets
What percentage of total funds is provided by creditors? Although creditors tend to prefer
a lower ratio, management may prefer to lever operations, producing a higher ratio.
The capitalization ratio
Measures the debt component of a company's capital structure, or capitalization (i.e., the
sum of long-term debt liabilities and shareholders' equity) to support a company's
operations and growth
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PROFITABILITY RATIOS
Profitability ratios measure the earning ability of a firm.
These include:
Net Profit Margin
Return on Assets
DuPont Return on Assets
Operating Income Margin
Operating Assets Turnover
Return on Operating Assets
Sales to Fixed Assets
Return on Investment (ROI)
Return on Total Equity
Gross Profit Margin
Profit Margin Ratios
Formulas to calculate profit margin ratios:
Net Profit Margin Ratio (After Tax Margin Ratio) = net profit after tax / sales.
Profit Margin Ratios definitions and explanations:
These three profit margin ratios state how much profit the company makes for every
dollar of sales.
The net profit margin ratio is the most commonly used profit margin ratio.
A low profit margin ratio indicates that low amount of earnings, required to pay fixed
costs and profits, and is generated from revenues.
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A low profit margin ratio indicates that the business is unable to control its production
costs.
The profit margin ratio provides clues to the company's pricing, cost structure and
production efficiency.
The profit margin ratio is a good ratio to benchmark against competitors.
Net Profit Margin Ratio = 15,374,600,000/6,853,911,000
Year 2008 = 2.24
Year 2007 = 16,441,670,000 / 10,248,222,000
= 1.60
Year 2006 = 12,540,879,000 /7,149,009,000
= 1.75
Return on Assets Ratio
Formula to calculate return on assets:
Return on Assets = net profit before taxes / total assets.
Return on assets ratio definition and explanation:
The return on assets ratio provides a standard for evaluating how efficiently financial
management employs the average dollar invested in the firm's assets, whether the dollar
came from investors or creditors.
A low return on assets ratio indicates that the earnings are low for the amount of assets.
The return on assets ratio measures how efficiently profits are being generated from the
assets employed.
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A low return on assets ratio compared to industry averages indicates inefficient use of
business assets.
Return on assets ratio =
2008 3.47%
2007 3.98%
2006 3.65%
Return on Assets Du Pont is a financial ratio
That shows how the return on assets depends on both asset turnover and profit margin.
The Du Pont method breaks out these two components from the return on assets ratio in
order to determine the impact of each on the profitability of the company.
Return on assets Du Pont can be expressed as
ROA Du Pont = (Net income / Sales) x (Sales / Total Assets)
This ratio helps to highlight the impact of changes in asset turnover and profit margin.
ROA Du Pont = 15,374,600,000/443,615,904,000
Year 2008 = 3.46%
Year 2007 = 16,441,670,000/412,900,841,000
= 3.98%
Year 2006 = 12,540,879,000 /343,177,949,000
= 3.65%
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Market Ratio
Market ratios are commonly used by the investors to assess the
performance of a business as an investment and also the cost of
issuing stock.
These include:
Dividend per share
Earning per Share
Price/Earning Ratio
Percentage of Earnings Retained
Dividend Payout
Dividend Yield
Book Value per Share
Earning per Share
Before tax
2006 2007 2008
33.85 33.92 34.81
After tax
2006 2007 2008
23.40 24.30 24.47
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Dividend Payout
2006 2007 2008
37.39% 51.45% 51.06%
Dividend Yield
2006 2007 2008
0.03 0.03 0.09
Price/Earning Ratio
2006 2007 2008
05.41 16.46 10.52
Dividend per share
2006 2007 2008
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07.25 12.50 11.50
Capital Adequacy Ratio
2006 2007 2008
18.75% 16.65% 16.41%
Advance/Deposit Ratio
2006 2007 2008
77.00% 73.96% 79.48%
Miscellaneous
Income Expenses Ratio
2006 2007 2008
2.78 : 1 2.58 : 1 2.78 : 1
PBT/Total Income Ratio
2006 2007 2008
70.49% 70.16% 63.80%
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Net Markup income / Gross income (Gross
spread)
2006 2007 2008
82.44% 75.26% 71.13%
Return on Everage (ROE)
2006 2007 2008
45.00% 37.66% 31.49%
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(B) HORIZONTAL & VERTICAL ANALYSIS
HORIZONTAL ANALYSIS BALANCE SHEET
ParticularsIncrease or (decrease)
2006 vs. 2007Increase or (decrease)
2007 vs. 2008
Amount %age Amount %age
AssetsCash and balance with treasury bankBalances with other banksLending to the financial institutionInvestments-netAdvances-netOperating fixed assetsDeferred taxed assets-netOther assets-netTotal Assets
7,217,907
(2,769,498)(20,030,428)49,602,94720,721,4436,969,967
(11,031,450)68,377,274
22.23%
-42.10%-95.01%78.13%10.45%76.98%
19.98%
(52,711)
235,5813,048,707
(20,832,389)43,549,8721,239,610
-1,941,7153,313,0387
-0.13%
6.18%289.9%-18.42%19.88%7.73%
10.86%8.07%
LiabilitiesBill payableBorrowingDeposits and other accountsSub-ordinate loanLiabilities against asset, finance leaseDeferred tax liabilities-netOther liabilitiesTotal Liabilities
Net Assets
3,389,37915,463,35534,636,228(1,118,208)
-1,180,162550,996
54,101,913
14,275,061
47.80%64.58%13.45%-70%
4.93%17.95%
34.94%
72,430(16,742,991)38,176,089
479,232
-(743,025)9,530,75729,814,008
3,316,379
0.69%(42.48%)13.06%
-62.95%81.30%8.38%
6.01%Represented By:Share capital ReservesUnappropriated profit
819,4929,338,214(400,223)9,757,481
150.8%37.86%-7.23%27.36%
03,768,1278,682,5826,830,709
11.08%169.2%15.04%
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VERTICAL ANALYSIS OF BALANCE SHEET
2006 2007 2008AssetsCash and balance with treasury bankBalances with other banksLending to the financial institutionInvestments-netAdvances-netOperating fixed assetsDeferred taxed assets-netOther assets-netTotal Assets
9.489%2.250%7.212%2.171%57.946%3.724%0.050%3.773%100%
9.667%.927%4.315%27.550%53.341%6.577%4.352%
-100%
8.933%.911%0.924%20.796%59.175%3.891%
-4.465%100%
LiabilitiesBill payableBorrowingDeposits and other accountsSub-ordinate loanLiabilities against asset, finance leaseDeferred tax liabilities-netOther liabilitiesTotal Liabilities
Net Assets
2.07%6.99%75.25%0.46%
--
3.26%88.06%
-11.93%
2.55%9.60%71.15%0.134%
-0.11%2.85%
86.57%-
13.42%
2.37%5.10%74.45%
--
0.09%4.79%
86.82%-
13.17%Represented byShare capital ReservesUnappropriated profit
Surplus on revaluation of assets-net of tax
1.59%7.20%1.61%10.42%1.51%11.93%
1.53%8.28%1.24%11.06%2.36%13.42%
1.53%8.51%2.07%11.7%1.39%13.17%
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PROFIT AND LOSS ACCOUNT
HORIZONTAL ANALYSIS
ParticularsVariance in %age
2006 Vs 2007Variance in %age
2007 Vs 2008Mark up/ returned/ interest earnedMarkup/ Returned/ Interest expensesNet Mark up/ interest income
Provision for diminutionProvision against loansBad debts written off
Net mark up/ interest income after provision
23.30%73.81%12.55%
-13.14%191.7%-99.57%159.1%
3.91%
25.97%47.23%19.07%
154.9%-54.88%
100%31.12%
17.29%Non mark up/ Interest incomeFee, commission & brokerage incomeDividend IncomeIncome dealing in foreign currencyGain on sale of securities-netUnrealized loss on revolutionClassified aid held for tradingOther income-netTotal non markup/ Interest income
13.99%-34.42%0.20%147.7%
-100%
75.30%29.18%8.94%
8.81%16.01%4.92%
-50.66%--
-5.77%-10.18%10.69%
Non mark up/ Interest expensesAdministrative expensesTotal non markup/ Interest expensesExtra ordinary / unusual item
Profit before taxation
Taxation-Current year -Prior year -Deferred year
Profit after taxation
-16.29%-8.57%
-
15.17%
-4.96%
25.72%
39.08%39.83%
-
2.71%
7.45%
0.71%
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Vertical Analysis of profit and loss accountParticulars 2006 2007 2008
Mark up/ returned/ interest earnedMarkup/ Returned/ Interest expensesNet Mark up/ interest income
Provision for diminutionProvision against loansBad debts written off
Net mark up/ interest income after provision
100%17.55%82.44%
0.47%3.93%0.18%4.58%
77.85%
100%24.74%75.25%
0.33%9.31%0.06%9.64%
65.61%
100%28.92%71.07%
6.70%3.33%
-10.03%
61.09%Non mark up/ Interest incomeFee, commission & brokerage incomeDividend IncomeIncome dealing in foreign currencyGain on sale of securities-netUnrealized loss on revolutionClassified aid held for tradingOther income-netTotal non markup/ Interest income
8.96%3.14%2.68%2.35%
--
2.21%19.36%
97.21%
8.28%1.67%2.18%4.72%
--
3.14%20.28%
85.89%
7.15%1.54%1.81%1.84%
--
2.35%14.46%
75.55%Non mark up/ Interest expensesAdministrative expensesOther provision/ (reversal)-netOther chargesTotal non markup/ Interest expensesExtra ordinary / unusual item
Profit before taxation
Taxation-Current year -Prior year -Deferred year
Profit after taxation
25.14%0.04%0.25%25.45%
71.76%
24.66%
47.10%
17.07%-
1.80%18.87%
-
67.03%
19%
48.02%
18.84%0.02%2.07%20.94%
54.65%
16.21%
38.39%
Unappropriated profit brought forwardTransfer from surplus on revolution fixed asset
Profit available for appropriation
Basic & diluted earning per share-after tax
19.35%0.12%19.47%66.58%
17.40%0.03%17.43%65.46%
12.81%0.05%12.86%51.26%
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(C) INDUSTRY ANALYSIS
Listed, which are Habib Bank, United Bank, Allied Bank of Pakistan, Dawood Bank,
Standard Chartered Bank. Citibank, Deutsche Bank and ABN AMRO Bank are main
foreign banks in the country. These four banks continue to enjoy a significant share in the
market, both in terms of deposits and advances. All the foreign banks of the country are
busy to invest heavily in the field technology and e-commerce in order to overcome
branch limitation. All the foreign banks have been busy to introduce new products and
idea to grab larger proportion of the local markets.
Foreign banks are carrying major proportion of local business in credit cards, consumer
fiancés and housing finance. Many domestic banks have increased their general
standards. Ours is the age of plastic money. Internet-based service is constantly
increasing the number of ATM machines, either by installing their own machines or
making arrangements with other networks. The number of Debit Cards has also been
increasing at an unprecedented rate. All the domestic and foreign banks vigorously
institutionalized consumer financing in the country and earned handsome profits. The
borrowing to private sector has also increased which ultimately boosted the profitability
of all the domestic banks of the country. In the last 3 to 4 years many domestic banks
have been suffering from surplus liquidity crisis mainly due to low demand for credit and
slowdown of manufacturing sector in the country. Almost all the banks are now by to
invest in capital markets to increase their exposure in equities. To stop that risky trend the
State Bank of Pakistan.
Issued the instructions to follow the Prudential Regulations in letter and spirit and not
invest in the capital markets beyond the limits. The domestic bank’s lending under
consumer finance and housing finance has also been growing. The analysis of Annual
Reports of banks shows that their income from core banking activities has been growing.
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The other positive point is that there are growing expectations for increase in interest
rates.
The growth in advances has started matching growth in deposits. The quality of asset as
well liability products have been improving. The rations of non-performing loans have
decreased. The SBP29 Scheme has benefited the banks as well as the borrowers to pay-
off their long standing dues. Bank Alfalah is the first to opt for the listing policy of the
government and also offered its share to general public. Two of the state-owned banks,
Habib Bank and United Bank have been privatized but the Government still holds a
substantial stake in these banks.
Allied Bank of Pakistan was privatized in early nineties. But due to many internal and
external reasons it continues to suffer. Some meaningful senior managerial changes
would be better at the earliest. Dawood bank has come into existence as a result of
acquisition of Pakistan operations of a Sri Lankan bank by a local business group. It is
also not listed at the local stock exchanges. Meezan bank is the first bank of the country,
which is carrying complete Islamic banking.
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(D) FUTURE PROSPECTS OF THE ORGANIZATION
The bank has now completed more than 19 years, since its privatization and it is, indeed,
gratifying to note that during this period, MCB has performed well and has sustained its
growth in all the major sectors. The well deserved credit, for this good performance and
progress, must surely go to the Bank’s management, its Directors and, in no small
measure, to the entire MCB team for its dedication, concerted efforts and excellent team
spirit.
MCB has been a pioneer among the Banks in Pakistan, particularly in introducing a
number of innovative banking products and services. For the first time in the history of
Pakistan, these multifarious products mostly in the shape of saving schemes have been
introduced by MCB with brand names. This has set the trend and many other banks, both
local and foreign, have since followed in MCB’s footsteps, by launching new products
and services, on similar lines.
It should be kept in mind that an investor can conduct as many precautionary tests as
possible in order to diversify the risks of investing; however, he or she cannot completely
get rid of the risks. Some risks are diversifiable but others are not. Therefore, although
are current analysis of MCB showed that its stock may yield capital gains for those who
invest in it, this notion is not 100% accurate. Also, keeping in mind that due to the
political and economic instability in Pakistan, the stock market’s performance and MCBs
share price can be significantly be affected.
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SWOT ANALYSIS OF ORGANIZATION
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SWOT ANALYSIS
SWOT (Strength, Weakness, Opportunities, and Threats) means internal strengths and
weaknesses, and external opportunities and threats. It is important for any company,
organization, business, product, services and even for non profit organizations. It show
that where we are strong and where we are weak and also shows us that what the benefits
industry has that are useful for company and what is harmful for overall industry that
harms the company. SWOT Analysis for Muslim Commercial bank is described as
under.
STRENGTH
MCB is the first privatized bank in Pakistan. Customers can easily trust on it
because of its good reputation. Public confidence is its most powerful tool.
MCB has a sound and healthy financial position in industry. Its profitability is
increasing every year. And also profit earning per share is increasing.
Markup rates are less from others banks. And because of the peoples willing to
take loan from MCB.
MCB bank is multinational bank. It is also its strength.
Mobile banking, a new system for consumers. Consumer can easily pay bills
through their mobile phones. This feature is not available in most other banks.
And people like this system very much and opened new accounts only because
of this new system.
Employee turn over is low in MCB. Low turn over shows that employee are
loyal with MCB.
MCB website for online customers is user-friendly and its interface looks cool.
A new user doesn’t face problems to use its website.
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Pakistan is an Islamic country. Many peoples hesitate to deposit in bank
because of interest. Because it is forbidden in Islam. MCB get the solution of
this by introducing Islamic Banking system.
WEAKNESSES
The recruitment process is not fair in MCB. And because of this low
knowledgeable persons are working in MCB.
Low salaries of workers dishearten them. So they do not show their
effectiveness.
No proper training for workers is also its weakness.
Another weakness of the bank is absence of proper advertisement. There is no
proper advertisement of the products. And because of this many people don’t
know about bank product.
Absence of branches in small cities and towns. Where there is a need of bank
there is no bank like in towns. MCB branches are in large cities. They need to
established branches in town to get competitive advantages.
There are no seating arrangements for customer in many branches.
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OPPORTUNITIES
IT is growing in Pakistan. MCB has also this opportunity.
Taking loan of customer from banks in Pakistan is common. When companies
start their new project or people start new business then they need money. Then
they don’t hesitate to take loan from banks. So working in this environment is
an opportunity for banks.
The trend of Islamic banking is also growing because Pakistan is an Islamic
country.
THREATS
Economic condition in Pakistan is going down with every passing day.
Many foreign investors do not invest in Pakistan due to the hanging
condition of Pakistan economic condition.
Pakistan political condition is also threat for industry. Because army rolled
more then common public as a government. This situation is harmful for
Pakistan’s economic. World political condition also influences the whole
industry.
As the industry is growing, competition is also growing. Many others
banks are establishing so competition is high. Every bank tries to make
more profit by introducing new product and services. So other competitor
must do according to that.
Increasing the interest rate is losing the value of money market. People try
to invest in stock market instead of investing in money market.
Lack of skilled people in Pakistan is also a threat. Local skilled people want
to do work in foreign countries because of high salaries.
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CONCLUSION
Working as an internee in MCB and according to the Financial Statement of the bank I
think that MCB is making progress by leaps and bounds. The profit of the bank is
increasing every year. Also the MIS (Management Information System) enhanced the
efficiency of the Bank. The bank pays a low Interest rate on deposits which less attractive
for its customers. Also problem with bank is too lengthy formalities and procedures
involved in mortgage of properties offered as collateral to the bank.
Bank needs to control mentioned below recommendation for increasing their profit. MCB
has no branches in towns. If the Bank established branches in town then its progress will
be more then now. Installation of ATM in most of branches is also a competitive edge for
the bank. Customers easily withdraw cash from ATM 24/7. Changes in top management
also have a positive effect on Bank. It is also recorded that after privatization MCB made
more progress. Its profit increased every year.
I am not satisfied with MCB customer care. MCB must care and respect their customer as
the customers are assets for the bank. But there is less control over Customer care.
According to my point if view MCB has a bright future if MCB control over its SWOT.
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RECOMMENDATIONS
After observation, learning in MCB, reading Bank financial statement more deeply and
knowing more about banking sector I suggest some recommendations that if MCB cover
them then MCB can stay at its position and make more progress.
The salaries are not enough according to bank workers job. Some time they
work more until late night to maintain their record but they do not paid by the
bank for their extra time. Management should increase their salaries and also
paid them for working extra hours.
As we know that there is a dramatic change in technologies. Competition
among industries increasing day by day. So bank management must arrange
training for their employee especially in MIS. Every worker must be a
computer literate.
MCB management should expend their ATM network to more branches and
also this facility should be available in town. Because this is a competitive edge
for MCB
Their should be a job rotating system. Every worker must know the work of all
departments of branch. So that every worker will be capable to do work in case
of emergency or in case of job rotating.
New workers selection should be made at merit system and lazy staff should be
removed to meet the globalization. So management should first remove the lazy
staff and then select a new staff only on merit basis. Selected staff will work
more effectively to make their job permanent.
Their should be an incentive plan on yearly basis so that worker be encouraged
to do work hard. When management gives incentives to their worker then the
workers that do not work hard, they try to work hard to get incentives. This
thing creates competition among workers and encourages work to do work
hard.
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Foreigner trainer should be hired to train the top management. And should also
be a training program for workers after some period.
Customer care service should be improved. In this environment, where a large
number of competitors are present. Customers need satisfaction. They will go
there where they get respect.
MCB should establish branches in towns to get competitive advantages.
Because mostly bank don’t give attention to the small city. If MCB give
attention to small cities and town then it will be a positive step to increasing the
over all profit.
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REFERENCES AND SOURCES
Websites
www.mcb.com.pk
www.wikipedia.com
Reports
http://mcb.com.pk/quick_links/economic_reports.asp
http://mcb.com.pk/ir/annual_final_result_08.asp
http://mcb.com.pk/ir/MCB%20A-Report2007.pdf
http://mcb.com.pk/mcb/financial_contant/MCB%20A-Report%20FINAL%2006-
04-07.pdf
Books
Financial Statement Analysis, Handouts of Virtual University
Allen Louis A, “Management and Organization” IST Ed, Tokyo McGraw Hill,
Kogakusha Ltd.
Others
Staff of MCB branch Khayaban Sarwar Branch Dera Ghazi Khan
Personal Observations
Reading different Banks report
Reading Previous MCB Internship Reports
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