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INTERNSHIP REPORT ON MCB BANK LIMITED
DEDICATION
Respectable parents
And
Honorable teachers
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INTERNSHIP REPORT ON MCB BANK LIMITED
ACKNOWLEDGEMENT
By the Grace of Almighty, the most Merciful, the most Beneficial, I'm today
I'm glad to have it with MCB, where you come first, only if you're the customer.
Thirst of learning is inside you, and whatever the environment, if you're willing
to learn, you do. At MCB, I had a new, challenging, yet a perfect environment to
learn. My parents' prayers and their teachings were always with me and hereby I
will like to take this opportunity to show my gratitude to all those who made my
Ghulam Farid
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INTERNSHIP REPORT ON MCB BANK LIMITED
PREFACE
Banking sector owes a pivotal importance in the economy of any country
through its vibrant functions. This is the deep seated motivator that geared up me
to join any bank for internship. Moreover, the practice and familiarity learned
during this tenure would also attest very helpful and alleviating in the awaiting
proficient life.
I have strong belief that this report will guide and ease the readers to understand
the operations of banking system and more prominently have good knowledge
about MCB Bank Limited, one of the most trusty and leading banks in Pakistan.
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INTERNSHIP REPORT ON MCB BANK LIMITED
Chapter – 1
INTRODUCTION
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INTERNSHIP REPORT ON MCB BANK LIMITED
INTRODUCTION
The study is about the general operations and management of MCB bank
Limited Main Branch pattoki.
Every student of BBA (Hons.) has to under to an internship program of Eight
weeks in any organization to get exposure the real time business environment
and to know what sort of changes information technology brings in management
activities. The Real purpose of this internship program is to provide an
opportunity to the students to see the practical applications and approach of their
background professions studies
The report is a reflection on my experience when I was internee in MCB bank
Ltd.
Following are the main objectives of selecting MCB Bank Limited for studying.
The bank is certainly one of the leading banks in Pakistan, the reason
being I selected it for Internship and learning purpos
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INTERNSHIP REPORT ON MCB BANK LIMITED
Before separation of Indo Pak, the need for more Muslim banks was felt. And
Muslims having strong financial capacity were thinking to invest in this sector as
well. This was the idea which paved the way for setting up MCB Bank Ltd
known as MCB. This was the third Muslim bank in the subcontinent.
HISTORY
This bank was incorporated under companies’ act 1913 on 9th July, 1947 (just
before partition) at Calcutta. But due to changing scenario of the region, the
certificate of incorporation was issued on 17th August, 1948 with a delay of
almost 1 year; the certificate was issued at Chitagong. The first Head office of
the company was established at Dacca and Mr. G.M. Adamjee was appointed its
first chairman. It was incorporated with an authorized capital of Rs. 15 million.
After some time the registered office of the company was shifted to Karachi on
August 23rd, 1956 through a special resolution, now recently the Head office of
MCB has been transferred to Islamabad in July, 1999 and now Head office is
termed as Principle Office.
This institute was nationalized with other on January 1st, 1974. At that time it
had 506 branches and deposits amounting to Rs. 1,640 million. Although. MCB
has a reputation of a conservative bank but nationalization also left its effects on
this institute as well and by end of year 1991 in which it was privatized the total
number of branches were 1.287 and deposits amounting to as high as Rs. 35,029
million.
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INTERNSHIP REPORT ON MCB BANK LIMITED
Vision Statement
Mission Statement
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INTERNSHIP REPORT ON MCB BANK LIMITED
CUSTOMER FOCUS
We treat each of our customer equality & as the most important person while we
interact with him/her. We must ensure that we do everything to meet and exceed
the customers expectations with perfect to times, accuracy & quality services.
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INTERNSHIP REPORT ON MCB BANK LIMITED
MCB is in it’s over 50 years of operation. It has a network of over 1026 branches
all over the country with business establishments in Sri Lanka and Bahrain. The
branch break-up province wise is
Punjab (57%)
Sindh (21%)
NWFP (19%)
Over 750 of which are automated branches, Over 197 MCB ATMs in 35 cities
nationwide and a network of Over 12 banks on the MNET ATM switch.
In 2005 the total No. of Employees are 9,377 and No. of Accounts are 4,248,399.
In (2005, 2004, 2003, and 2001) MCB has received the Euro money award for
the 4th time in the last 5 years. MCB won the "Best Bank in Pakistan".
In 2000 and 2007 win the award of “Best Domestic Bank.” In 2004, 2005 also
has win Asia Money awards for being "The Best Domestic Commercial Bank in
Pakistan.
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INTERNSHIP REPORT ON MCB BANK LIMITED
Profits
Balance sheet
Net asset value at the year end(Rs) 36.24 43.16 55.64 74.76 87.73
Market value at the year end (Rs) 51.40 58.70 167.80 246.10 399.95
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INTERNSHIP REPORT ON MCB BANK LIMITED
NUMBER OF EMPLOYEES
MCB bank since its incorporation has the more potential bank not only for its
customers but also for its employees. MCB bank offering great working
opportunities for all the people who are interested to do job in MCB bank and
with passage of time employees is increasing as its business volume is increasing
because MCB bank provide enhanced career opportunities with dynamic work
employees are motivated with higher salaries according to their education and
experience level currently round about 9946 employees are working in MCB
bank including contractual and permanent staff
DESIGNATION NO OF EMPLOYEES
Cash Officer 01
System Administrator 01
Gun Man 02
Peons 02
MCB ATM Network is the largest and most advanced of its kind in the country,
and is part of MCB's continuing efforts to provide customers with convenience
that suits all requirements most. MCB ATM has operated globally.
Card Categories
The MCB ATM Regular Card allows withdrawal of up to Rs. 10,000 per day
and a maximum of 3 withdrawals per day per card.
The MCB ATM Gold Card allows withdrawal up to Rs. 25,000 per day and a
maximum of 6 withdrawals per day per card. The cardholder has to make at
least two transactions to withdraw the full amount of Rs. 25,000
BILL PAYMENTS:
MCB easy bill pay offers unmatched convenience to pay utility and mobile
phone bills or re-charge prepaid mobile phone accounts.
MCB is the only bank that offers coustomers, 3 convenient options of making
bill payments to PTCL, SSGC, KESC, Mobilink, and Ufone. MCB Smart Card
or MCB ATM Card Holder can easily pay their bills or re-charge their prepaid
mobile phone account.
ACCOUNTS
Saving Account
MCB’s Rupee Savings account is the most convenient way to manage savings.
Its basic features are:
Low average balance required
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INTERNSHIP REPORT ON MCB BANK LIMITED
Current Account
MCB’s Rupee Savings account is the most convenient way to manage savings.
Its features are given as below:
Term Deposit
In compliance with the directives of State Bank of Pakistan via BDP Circular
No. 30, issued on November 29, 2005, the Basic Banking Account has been
launched with effect from February 27, 2006. This product has been introduced
to facilitate the low income group as well as the existing account holders who
wish to convert their regular savings or current account into Basic Banking
Account.
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INTERNSHIP REPORT ON MCB BANK LIMITED
The Basic Banking Account is a current account and can be opened with a
minimum initial deposit of Rs. 1000/- only. Account holders will be allowed 2
clearing)
each month. All customer-initiated transactions over and above this limit
will be
charged a transaction fee.
Customer can open a foreign currency Savings account in any of the four
currencies i.e. US Dollar, UK Pound Sterling, and Euro. Its features are as
below:
By using of this product customer can manage expenses. MCB is the only bank
to introduce a debit card that gives the option to choose from domestic and
international cards for local and global usage respectively.
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INTERNSHIP REPORT ON MCB BANK LIMITED
MCB VISA:
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.
LOANS
Term Loans:
An individual can gain and benefit the most through MCB Consumer Banking.
MCB provide friendly, efficient and attentive personalized banking services - a
unique banking relationship experienced by each MCB client.
Based on the customer’s specific needs, the Corporate Bank offers a number of
Finance, Export Refinance, Pre-shipment and Post- shipment etc. Tailor- made
business.
FINANCING
Trade Finance
MCB corporate banking provides a finance services that include an entire range
of import and export activities including issuing Letters of Credit(L/Cs),
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INTERNSHIP REPORT ON MCB BANK LIMITED
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INTERNSHIP REPORT ON MCB BANK LIMITED
INVESTMENT BANKING
Private Placements
Debt/Equity Underwriting
Term Finance Certificates
Loan Syndication
Corporate Advisory
MCB Virtual Internet is to manage and control customer’s banking and finances
– when they want to, where they want to. MCB’s Virtual Internet Banking
facility is
Simple
Secure
Free of cost.
MCB Virtual Banking - is a safe and convenient way to manage and control
banking and finances. This service meets customer’s both (individual’s and
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INTERNSHIP REPORT ON MCB BANK LIMITED
Chapter – 2
INTRODUCTION TO
ORGANIZATIONAL
STRUCTURE
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INTERNSHIP REPORT ON MCB BANK LIMITED
ORGANIZATIONAL STRUCTURE
MCB relies on strong, lasting relationship with its customers and on its
reputation for stability and security for its continued process. MCB extends its
philosophy to its technology strategy but not perusing technology for
technology's sake. However, MCB learns from the mistakes of others especially
in "consumer banking". We let others get in first, take the hit, and find out the
flows. Said MCB officials - and has installed efficient and effective system for
processing and delivering information. Some directors are the personnel of the
MCB Bank and others are successful business person and executives of other
major organization. Nineteen members are included in board of directors.
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INTERNSHIP REPORT ON MCB BANK LIMITED
MANAGEMENT COMMITTEE
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INTERNSHIP REPORT ON MCB BANK LIMITED
Board of Directors
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INTERNSHIP REPORT ON MCB BANK LIMITED
Audit Committee
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INTERNSHIP REPORT ON MCB BANK LIMITED
Ali Amin
Company Secretary
Tameez-ul-haque
Auditor
A.F.Ferguson & co
Chartered accountants
Chartered accountants
Legal Advisor
Registered Office
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INTERNSHIP REPORT ON MCB BANK LIMITED
Shares department, ground floor sheikh sultan trust building no 2, Beaumont road
KarachI
PRESIDENT
SENIOR EXECUTIVE
VICE PRESIDENT
EXECUTIVE VICE
PRESIDENT
SENIOR VICE
PRESIDENT
VICE PRESIDENT
ASSISTANT VICE
PRESIDENT
OFFICERS GRADE
I II III
ASSISTANTS
CASHIER
PEONS
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INTERNSHIP REPORT ON MCB BANK LIMITED
Chapter – 3
INTRODUCTION TO
THE DEPARTEMENTS
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INTERNSHIP REPORT ON MCB BANK LIMITED
FIELDS OF ACTIVITIES
The purpose of banks is to provide some services to the general public. And for this
purpose different banks provide different services to the people in different forms.
The MCB Bank is a commercial bank, in modern time commercial banks play a
very important role and their functions are manifold. The main functions and
services which MCB Bank Limited provides to different peoples are as follows.
For proper functioning of branches and the over all bank has been divided in
different departments. These departments handle different jobs so that division of
work is there for improvement of functions and also it is easy to control the
situation. The general division in a branch is as follows:
1. Cash department
2. Deposit department
3. Advances & credit department
4. Remittance department
5. Foreign exchange department
6. Technology department (new addition in order to cop with the growing
needs of day to day technology requirements)
CASH DEPARTMENT
• Token Book
• Scroll Book
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.
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INTERNSHIP REPORT ON MCB BANK LIMITED
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 is made to payee. At
the close of day, the Token Book and Paying 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.
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.
DEPOSIT DEPARTMENT
Bank deals in money and they are merely mobilizing funds within the economy.
They borrow from one person and lend to another, the difference between the rate
of borrowing lending forms their spread or gross profit. Therefore we can rightly
state that deposits are the blood of the bank which causes the body of an institution
to get to work. These deposits are liability of the bank so from point of view of
bank we can refer to them as liabilities.
The total deposits of MCB are growing since its inauguration but after privatization
there is a sharp incline in over all deposits of the bank. The increase in deposits is
also a cause of increase on total number of accounts; bank has progressed in both
aspects.
TYPES OF DEPOSITS
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INTERNSHIP REPORT ON MCB BANK LIMITED
Deposits can be segregated on two bases, one is the duration in which there funds
are expected to be with the bank and second is the cost of getting these funds. So
divide deposits in two classes according to duration of deposits i.e.
And on the basis of the cost to acquire these funds, a deposit can be classified as
any one of following four, High Cost Medium Cost, Low Cost No Cost.
Banks has different kinds of deposit schemes in order to induce deposits. These
schemes are a mixture of the above mentioned two types of deposits with an
addition of different
In the similar fashion, MCB has a large variety of deposit schemes and some of
them are as follows:
CURRENT ACCOUNT
In this type of accounts the client is allowed to deposit or withdraw money as and
when he likes. He may, thus, deposits or withdraws money several times in a day if
he likes. There is also no restriction of amount to be deposited or withdrawn.
However, there is requirement of minimum balance maintenance of Rs. 1000/-.
Usually this type of account is opened by the businessmen. No profit is paid by the
bank and no service charges are deducted by the bank on current deposits account.
These types of deposits are also exempt from compulsory deduction of Zakat.
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INTERNSHIP REPORT ON MCB BANK LIMITED
PLS ACCOUNT
This type of account is for those persons who want to make small savings'. This
type of account is opened with a minimum deposit of Rs. 1000/-. Under this scheme
deposits can be made only up to a-costing amount and withdrawals are allowed
twice a week or 8 times a month. If a big amount is required a seven days notice is
required before the withdrawal. The profit is paid on these accounts on the
minimum balance during a month for the whole of
that month. Zakat & other withholding taxes are deducted as per rules of the
government.
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INTERNSHIP REPORT ON MCB BANK LIMITED
This is an advance form of PLS saving a/c, in this type of account. The minimum
balance requirement for this type is Rs. 2500/-. There is also restriction on the
number of withdrawals as well, i.e. up to 4 times in a calendar month. For
maintaining this extra balance the customer gets the benefits of profit calculation
on daily product basis and also free service of standing instructions of paying
utility bills and HBFC installments. All other rules of saving account are
applicable.
This is a type of term deposit, in this type of deposit an account is deposited and
monthly payments of Rs. 1000/- are made by the account holder in this account for
a minimum of 10 years. After
the expiry of term, he receives his funds along with profit for the tenor. The
distinctive feature of this product is that profit is calculated on monthly basis and
charged to account on end of each half /ear. Then profit is also calculated on that
amount of profit which is credited to the customer's account. So we can say that in
this type of account there is a concept of accumulated profits on profit. This ends in
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INTERNSHIP REPORT ON MCB BANK LIMITED
getting a heavy return for the depositor at the end of tenor for his small savings.
This product was actually introduced to promote saving habits in the people. Zakat
and withholding taxes are deducted as per rules only at the time of maturity while
making payment to the customer.
This is a type of term deposit in which a receipt is issued for varying tenors ranging
from 1 month to 5 years or more. These are in the form of receipts and profit on
these receipts is paid biannually. These receipts are encashable after expiry of the
period for which they were issued. Different profit rates are applied to different
type of TDRs.
Under this deposit scheme, a deposit is received from the depositor under the
condition that he will intimate the bank before a certain period in case of
withdrawals.
This was a brief review of different types of deposit schemes. The Deposit
Department handles the account opening, profit payment and accounting of all
types of deposit schemes.
Account Opening
Account opening is an agreement in which customer offers his funds and bank
accepts these funds, therefore the nature of relation between a banker and customer
is of a contractual one and all the conditions applicable to this contract act are also
applicable.
Profit payment & calculation is done in accordance with the rules of each type of
deposit scheme-by the deposit department. The products for each deposit scheme
are calculated separately and added till the end of 6 month period. Then the sum
total of these products is multiplied with the respective profit rates which are issued
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INTERNSHIP REPORT ON MCB BANK LIMITED
by the Head Office at the end of each half yearly closing. The profit provisions for
each type of deposits are also calculated on monthly basis by the same department
in order to calculate the net profit or loss position of the branch.
Accounting Entries
Accounting entries are also made in the respective books of account by this
department. However, in small and medium size branches, the accountant performs
the book keeping duties for all kinds of ledgers.
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INTERNSHIP REPORT ON MCB BANK LIMITED
CLEARING DEPARTMENT
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 to 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.
Types of Cheques
• Transfer cheques: are those cheques, which are collected and paid
by the same branch of bank.
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INTERNSHIP REPORT ON MCB BANK LIMITED
branches, are not in the same city or they are not the members of
clearing house.
• To arrange the payment of cheques drawn on the branch and given for
collection to any other branch on MCB or any other members or sub
member of the local clearing house.
• Receiving and scrutinizing the cheques and other deposit instruments, and
the pay-in-slip at the counter.
• Separating the cheque into transfer, transfer delivery, and clearing cheques.
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INTERNSHIP REPORT ON MCB BANK LIMITED
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INTERNSHIP REPORT ON MCB BANK LIMITED
ADVANCES DEPARTMENT
Advances are the most important source of earning for the banks. MCB is also
giving full attention towards this aspect and it is also obvious from the growing
portfolio of advances and from very low delinquency rate. The credit portfolio of
this institution is in a very much better shape than other financial institutions of
Pakistan and the credit goes to the management and the staff who are concerned
about the quantity and quality as well.
• Loans
• Cash Credits
• Overdraft
LOANS
The borrower withdraws whole the amount of loan. This type of loan is normally
granted against security of gold documents.
In case of demand loans against gold or documents, a demand promissory note for
the amount of loan is taken from the borrower loans are granted under;
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INTERNSHIP REPORT ON MCB BANK LIMITED
Under this type of loan, which is granted to the borrower the Head Cashier
estimates the value of Gold or Gold ornaments through an agent (Gold smith) and
keeps a margin of 40 to 50 percent. After the opening the gold loan account a token
is given to the borrower, which is a bank receipt.
On repayment of loan, the gold or ornaments held as security for it, together with
the demand promissory note duly discharged is returned to the borrower and his
receipt for the gold ornament taken in the demand loan ledger. This receipts states
that he ornaments returned are complete and in order. Part delivery of ornaments is
given against part payment of a loan but care is taken that the ornaments still in
banks possession fully covers the balance of the loan outstanding. The interest gold
loan is to be applied with quarterly.
In case of advancing such types of loans, the following precautions are kept in the
mind:
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INTERNSHIP REPORT ON MCB BANK LIMITED
REQUIREMENTS OF LOAN
For granting loan to any party or individual, the bank checks following particulars
of the client:
Credibility
Feasibility Report
By Credibility, bank Judges the credibility of the client by his past bank record,
CBI report etc. it is very important in making decision about giving him loan.
Feasibility report is on the running or proposed business of the client. The report
enables the bank to judge the likely return of the business.
CASH CREDIT
Such cash account is opened in the name of the customer who borrows from the
bank. Customer is granted a loan up to a certain limit, sanctioned by the head
office, from which he can draw when he requires and interest is charged on the
amount actually utilized by the customer. In order to avoid the danger of idle fund,
the bank charges a certain rate of interest, even if the customer does not withdraw
any amount. The rate charged by the bank on cash credit in 46 paisa per thousand
on daily basis.
When cash is granted against the pledge of stock or product, cash credit form is
taken, from the certain products or stock,
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INTERNSHIP REPORT ON MCB BANK LIMITED
but the actual pledge is created when the stock or finished products are placed
under the bank's lock or the document of title is duly endorsed to the bank by the
borrower.
HYPOTHECATION OF STOCKS
The difference between pledge and hypothecation is that under a pledge the
borrower's goods are placed in the bank's possession under own lock, whereas,
under a hypothecation, they remain in the possession of the borrower or guarantor
and are merely charged to the bank under documents signed by them. Even though
the documents empower the bank to take possession of the goods hypothecated, but
it is possible that the borrower may actually resist any attempt.
MORTGAGE OF PROPERTY
Title deeds of immovable property are accepted by the bank only as collateral
security or alternatively as unauthorized security.
REMITTANCE DEPARTMENT
When a customer requests the bank to transfer his money from one branch of bank
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INTERNSHIP REPORT ON MCB BANK LIMITED
to another branch of the same bank or from one city to another city to the same
bank or any other bank. Customer fills the form given by bank. If the customer has
an account with that amount as mentioned in the application form then concerned
officer will undertake the following procedure to make the mail transfer complete.
This type of transfer is simple. After filling the application form the concerning
officer shall fill the telegraphic transfer form. Then it is sent to the required bank
which on receiving it immediately makes the payment to the customer and
afterwards the voucher are sent to that bank by ordinary mail.
Demand draft is just like cheques and issued when the customer wants to take cash
with him personally. The idea behind is to avoid the risk and burden of currency
notes in huge quantity. Demand draft can easily be handled whatever amount it has
and the money can easily be taken from the bank when it is presented. In fact, the
bank persuades the customer to transfer money by drafts and avoid the risk of
frauds involves in MT and T.T. Draft is only issued when the bank knows customer
and bank has the confidence in him
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INTERNSHIP REPORT ON MCB BANK LIMITED
In case of transfer of money by drafts, the customer has to fill an application form.
Then the concerned officer fills the following forms:
1. Customer’s advice
2. Customer’s debit form
3. Register copy
4. Cover Advice
S. # Item Rate
1 Telegram on TT Actual-MinimumRs.75
2 Postage on MT Actual-MinimumRs.50
3 Cancellation of DD/Pay order Rs.50 far Account holder
TECHNOLOGY DEPARTMENT
Technological advancements are also affecting the banking industry. The foreign
banks have a competitive edge over all local banks in their technologies'
advancements and automated systems. Local banks have also realized the gravity
oil this situation and are striving to add computerized systems to their branches
MCB is ahead of all other local banks in this field and now it is in a position to
even compete with foreign banks. There are more than 1045 branches of MCB all
over Pakistan and out of these more than 300 branches are fully computerized
Almost all .the branches of big cities are computerized; therefore, the need for a
technology department at each branch is growing. Now a day, a computer division
is working in each city to provide service to ad the branches of that area.
MCB has also introduced the now concept of online banking. There are now more
than 250 branches linked through this system and they can transact with each
other directly using computer systems at their own branches. Now customers do not
have to wait long for their transactions and can operate their account through all the
online branches.
ATM NETWORK
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INTERNSHIP REPORT ON MCB BANK LIMITED
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.
MCB has the largest ATM network in the country at the moment with almost one
ATM at each online branch and also ATM terminals at International Airports. This
network covers more than the 27 cities of Pakistan including the provincial capitals
and large commercial cities of the country.
ATMs are operated through a card issued to the valued customers and by
application of Personal Identification Number (PIN number). A person can
withdraw from any machine across Pakistan with having an account in only one
branch of MCB. This was only possible with the help of online system. In this
system all the machines are linked to central banking host at IRM division Karachi
through either satellite or telephone controller. This system identifies the card
holder and his PIN Number.
Now MCB has also entered into a contract with Cirrus which is a subsidiary of
MasterCard. This contract will enable an ATM card holder to use his account
even when he is out of country at all the ATMs where Cirrus logo is displayed.
Gold Cards are special cars with maximum withdrawal limit of Rs.
25000/- in a day. These cards are issued to the persons having more than Rs.
500000/- as their average balance.
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INTERNSHIP REPORT ON MCB BANK LIMITED
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INTERNSHIP REPORT ON MCB BANK LIMITED
Deposits
The total deposits of this about to 322.734 million. In deposit there is increasing
trend.
Deposits
25
20
Amount in Million
15
10
0
2003 2004 2005
Years
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INTERNSHIP REPORT ON MCB BANK LIMITED
Profit
No. of vouchers
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INTERNSHIP REPORT ON MCB BANK LIMITED
The vouchers which are transacted in this branch in 2005 are as follows:
Financing & Advances
Mainly, the short term financing such as cash finance, running finance, Demand
finance,
ERF II, FAFB, FBP are being dealt here.
Number of accounts
PLS account
Total numbers of profit and loss accounts are 3950.
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INTERNSHIP REPORT ON MCB BANK LIMITED
F
Autonomous corporations, Limited Companies, Charitable Institutions,
Associations Educational Institutions or Local Bodies.
I
R
BASICS TO OPEN AN ACCOUNT
S
Tobserved a lot of about
During the span of mine internship in MCB, I learned and
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.
T
By opening an account at a bank a person becomes a ‘customer’ of a bank. Further
W
I am going to express the basic requirements and steps involved in the opening of
an account.
O
INTRODUCTION AND PRELIMINARY INVESTIGATION
W
Before opening an account MCB as like the other banks in Pakistan ascertain
whether or not the person who is going to open the account is a desirable customer
or not. Then MCB determine the prospective customer’sEintegrity, respectability,
occupation and the nature of business by the introductoryEreferences given at the
K
time of account opening. Negligence in this informal preliminary investigation may
result in serious consequences not only for the banker concerned directly but also
S indirectly.
for other bankers and the general public who may be affected
In order to further strengthen and streamline this process, the Federal Ombudsman
of Pakistan, vide his ruling on complaint No. II/31/5186, has directed the banks to
retain with the account opening form a Photostat copy each of the National Identity
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INTERNSHIP REPORT ON MCB BANK LIMITED
Cards of the person desiring to open an account as well as that of the introducer. As
per these directions, the concerned Branch Managers are required to obtain the
original National Identity Cards along with their Photostat copies and then return
the original after attesting the authenticity of the retained copy.
Avoid Frauds: In this regard I learned that if a banker does not make the necessary
inquiries mentioned above he may enable dishonest persons to possess cheque
books for fraudulent purposes. If any such person happens to be an undercharged
bankrupt, the banker might be placed in an awkward position for having allowed
such a person to open and open a bank account.
Inquiries about clients: Being a banker I think MCB has a business obligation to
respond to inquiries from other banks etc. about his customer’s financial position.
Though the banker gives only a general ideal about the financial standing of his
customer, it should nevertheless have the necessary information available with him.
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INTERNSHIP REPORT ON MCB BANK LIMITED
Specimen Signature
When an account is opened with MCB customer provides to the bank a specimen
of the form of signature which would appear on all his cheques to express his
authority for the payment of cheques drawn on his banker. This specimen is taken
generally on a card specially designed for this purpose, and rule for the customers,
full name, and account number are entered on it.
If the bank has reasons to doubt the genuineness of a signature, he should either get
it confirmed for his satisfaction or return the cheque with the remark ‘Signature
differs’. If the signature of the customer is forged the banker cannot escape his
liability because he has actually acted on his customer’s mandate.
Before opening an account in MCB I observed that the following points must be
considered in this regard.
• Another account holder of the bank should properly introduce the new
customer.
• The account holder should sign the account opening form in the presence of
bank officer and the signature is duly verified.
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INTERNSHIP REPORT ON MCB BANK LIMITED
Rs.
Saving 500
Current 500
The bank reserves the right to change the above mentioned minimum balance
requirement at any time without any notice.
• Title of Account
• Occupation
• Address
• Telephone No.
• Currency of account
• Nature of Business
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INTERNSHIP REPORT ON MCB BANK LIMITED
DOCUMENTS TO BE ATTACHED
Further I learned that if you wanted to open an account with MCB then you should
attach the following documents with your application form which are different for
different categories.
SOLE PROPRIETOR’S ACCOUNT
In order to open an account with MCB Sole Proprietors have to submit their
business registration certificate number.
Before an account of a Public Limited Company is opened MCB must ask the
person authorized to do so to submit the certified copies or the following
documents
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INTERNSHIP REPORT ON MCB BANK LIMITED
• Balance Sheet
• Full Names
• Address
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INTERNSHIP REPORT ON MCB BANK LIMITED
institution are registered under the Societies Registration Act, 1866, and are issued
a certificate of registration after they have been found fit for registration.
When a customer opens an account with the bank, he is provided with cheque book
for withdrawals from account. However, the first cheque book is given to the
customer only when all the required documents are checked. A cheque book
contains ten, twenty five, fifty or hundred leaves. The cheque book also carries a
requisition slip for the issuance of the new cheque book. This slip is duly filled and
singed by the customer. The signature of the customer is verified by the bank and
new cheque book is issued to the customer and serial numbers of the cheque are
duly entered in the book of the bank. Along with the signature, person should also
write his full name & address.
Usually only one cheque book is issued at a time, however big concerns who need
a number of cheque books at a time, may ask the bank to stock as number of
cheque books in their name and to point their name on these cheque books.
Bank debits the client’s account for excise duty of Rs.2.50/- per cheque and keeps
the cheque book ready for the customer, as on his advice.
The officer keeps and maintains the cheque book register Cheque book inventory
and cheque books issued are recorded in this register. The account number for
which the cheque book is issued and the number of leaves are also recorded in this
register when the cheque book issued an entry is passed in the cheque book issue
register.
In case of loss of cheque book or requisition slip on cheque book the customer has
to fill the Form No. 216-B to obtain a new cheque book.
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INTERNSHIP REPORT ON MCB BANK LIMITED
I worked in the utility bills collection department as the MCB collects utility bills
on behalf of WAPDA, Sui Gas Companies, and Pakistan Telecommunication
T
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
H
bills a list is made on the form which is called Bills scroll form. One copy of the
I copy with the receipt of
scroll is with the bank for evidence whereas the original
R
the bills is sent to the billing department of the respective corporation. The bank
charge commission on the bills.
D
W
E
E
K
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INTERNSHIP REPORT ON MCB BANK LIMITED
CASH MANAGEMENT
The most important department of MCB which deals in money (receiving deposits
F
at lower rates and lend them out at higher rates of interest). This department also
called as Chest Department and manager of it is called Cash Manager or Chest
Manager. In those branches where this department is not Oseparately existed, the
branch manager performs the duties of the Chest Manager.
R
T
H
The excess cash (More than its insured limit by the insurance company) of the
branches of the region is collected by the main branch. The main branch is also
bound to send its excess cash (more than its insured limit) to the State Bank of
W
Pakistan. No branch can have cash its safe more than its insurance at any time at
the time of closing cash, if it is so the manager will be responsible (not the
E office (exception to
insurance company) whether or not he informed to the regional
the limit which is insured for the day). E
K
New Notes and Prize Bonds are also part and parcel of the Cash Management.
Keys of the Safe lockers are with the three authorized persons each one of them is
responsible for cash as at the time of closing the cash the officers including Cash
officer presented and lock the safe after counting and scrutinize the cash. The cash
officer maintain its daily cash book with specification of notes (Bonds are also
recorded in the books in
relation with cash) and other vouchers, after being satisfied the manager
authenticates the books and vouchers regarding cash with stamp and signature. at
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INTERNSHIP REPORT ON MCB BANK LIMITED
the end I would like to conclude that the cash management is being done in the
MCB very effectively.
ADVANCES DEPARTMENT
On my first day of Internship, Manager gives me some advice and told me the ways
to success. He told me that if some one wants to get success in banking career then
L
he must have the knowledge of the one major department of the bank. I.e.
A in advances department
Advances. So from very first day I was interested to work
S
and at my request bank offer me opportunity to work in this department last two
weeks
T
of the proposal and the photocopies of the document to the title of property are sent
to the legal advisor of bank. The legal advisor gives his legal opinion upon the
Wreceived from the legal
documents. The branch manager, in the light of the opinion
O
advisor, discusses the proposal with the advancing manager whether to give or not
the loan to the applicant. If manager allows granting the loan all the documents
along with request letter are sent to regional office for approval. In the regional
W
office the proposal is analyzed and if the office is satisfied a consent letter prepared
E
which is signed by the regional controller credit. This letter is sent to the branch
manager. After receiving it the manager finance reviews the consent letter, and
E DAC can be made only
prepares a DAC (Disbursement Authorization Certificate).
for people who have a bank account.
K
S
The following documentation is made for loan.
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INTERNSHIP REPORT ON MCB BANK LIMITED
• Legal opinion of the legal advisor of the bank (for the title deeds)
• Affidavit
• Mortgage deed
• IB-6R Agreement of finance mark up (Contract with party for taking mark
up on quarterly basis)
• IB-26 (used for pledge of stock, margin is different for different goods)
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INTERNSHIP REPORT ON MCB BANK LIMITED
After that Loan is sanctioned to the party fulfilling all the terms and conditions for
the purpose. The procedure given above is for both short and long term loans. The
thing which is most important here is that the banks first keeps in mind and
analyzes according to the rules prudential regulations of the State Bank of Pakistan.
• Running Finance
• Tractor Finance
• Export Refinance I
• Export Refinance II
I have learnt about the documentation required for the financing. Major focus on
the financing is depending on the account turnover and collateral offered.
While financing to the fresh client the credit proposal of the client is elevated to the
higher office. The bank’s official get the applications form the customer and
prepare the case for getting approval for the higher office.
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INTERNSHIP REPORT ON MCB BANK LIMITED
Lien over export bills drawn under firm order and contracts
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INTERNSHIP REPORT ON MCB BANK LIMITED
Chapter – 4
FINANCIAL ANALYSIS
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INTERNSHIP REPORT ON MCB BANK LIMITED
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INTERNSHIP REPORT ON MCB BANK LIMITED
BALANCE SHEET
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INTERNSHIP REPORT ON MCB BANK LIMITED
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INTERNSHIP REPORT ON MCB BANK LIMITED
RATIOS ANALYSIS
Liquidity Ratios
1. Current Ratio:
The current ratio measures the number of items of the firm s current assets
cover its current liabilities.
Current Ratio
Years 2003 2004 2005 2006 2007
Percentage 102.81% 103.02% 106.80% 111.00% 110.00%
Current Ratio
112.00%
110.00%
108.00%
106.00%
Current Ratio
104.00%
102.00%
100.00%
98.00%
2003 2004 2005 2006 2007
Current ratio shows a firm’s ability to cover its current liabilities with its current
assets. It is obtained by dividing current assets of the firm by its current liabilities.
Current ratio does not show the true picture of the organization. Sometimes it
shows that organization has ability to pay its obligations but its profitability ratio
tells that it has not ability to pay its obligation.
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INTERNSHIP REPORT ON MCB BANK LIMITED
2. Quick ratios:
Quick ratio shows a firm’s ability to meets it current liabilities with its current assets
excluding inventories and prepaid expenses, which are least liquid portion of the
current assets. Since banks don’t have any sorts of inventories, therefore only prepaid
expenses are subtracted from the current assets of the bank.
100
90
80
70
60
50
40
30
20
10
0
2003 2004 2005 2006 2007
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INTERNSHIP REPORT ON MCB BANK LIMITED
Cash and equality are the most liquid assets. The cash ratio shows the
proportion of the assets held in the most liquid possible form.
Cash ratio
12.00%
10.00%
8.00%
4.00%
2.00%
0.00%
2003 2004 2005 2006 2007
describe the true picture of any organization. In MCB 2006 is the year in
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INTERNSHIP REPORT ON MCB BANK LIMITED
which the liquidity ratios are shown better than other years. So 2006 is mentioned a
good year of the Muslim Commercial Bank.
Leverage Ratios:
Leverage ratios of a firm show the extent to which a firm finances its operation
from the outside sources and money. The leverage can be determined from analysis
of owner equity in business, total liabilities, current and long-term liabilities, long-
term assets and total assets of the business. Following are the common leverage
ratios to show the degree of leverage the bank is using to finance its activities and
assets by liabilities.
5. Debt-To-Total-Assets Ratio
It shows that how much assets have been financed by liabilities and it also shows
the margin of protection available for the creditors.
Debt ratio
Debt ratio=Total debt/ Total assets
Debt ratio
Years 2003 2004 2005 2006 2007
Percentage 95.92% 94.38% 92.20% 88.06% 86.57%
Debt ratio
100.00%
95.00%
85.00%
80.00%
2003 2004 2005 2006 2007
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INTERNSHIP REPORT ON MCB BANK LIMITED
Financial leverage is the extent to which a firm is financed with debt. The
amount of the debt a firm uses has both positive and negative effects. The more
debt the more it is that the firm will have trouble meeting its obligations. Thus
the more debts higher profitability of the financial distress and even bankruptcy.
Further more the chance of the financial distress and debt obligation generally
bank, year 2003 was heavily financed because debt was the major source of
financing in 2003. Debt also had lower transaction cost. But better year was 2007
because Muslim Commercial Bank in this year was not heavily financed and had
6. Debt-To-Equity Ratio:
100
80
60
Debt to equity ratio
40
20
0
2003 2004 2005 2006 2007
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INTERNSHIP REPORT ON MCB BANK LIMITED
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INTERNSHIP REPORT ON MCB BANK LIMITED
Interest coverage ratio shows the ability of a firm to cover up its interest charges on the
income before interest and taxes. The ratio is obtained through dividing earning before
interest and taxes (EBIT) of the bank by its interest expenses.
500.00%
400.00%
300.00%
Interest coverage ratio
200.00%
100.00%
0.00%
2003 2004 2005 2006 2007
Coverage ratio shows the number of the times a firm can recover or meet particular
financial obligations. The interest coverage ratio, which is also called the time interest
earned ratio, measure the coverage of the firm s interest expense.2005 is the best
comparative better coverage of its interest and fixed charged obligations. After 2005,
2006 is better than other three but 2003 is worst than all.
Profitability Analysis:
Profitability ratios are of two types those showing profitability in relation to sales and
statement and balance sheet of the firm. Following are the some typical profitability
Cost to sales ratio determines the cost incurred in generating the sales of the bank. The net
sales of banks are its interest/mark up earned while costs of sales are its interest/mark up
expense incurred. The ratio is obtained by dividing cost of sales by net sales. The following
table shows the cost of sales of MCB over five years of operations.
30.00%
25.00%
20.00%
10.00%
5.00%
0.00%
2003 2004 2005 2006 2007
Cost to sales ratio shows the cost incurred in generating the sales of the bank. In 2003
the cost to generate the sales is higher with respect to other financial years. After 2003,
2007 had also higher cost. Year 2005 is best one for MCB but 2003 is worst than all.
10. Return On Investment:
Return on investment measure the ratio of profit generated in relation to the total assets
employed. Net profit after tax divided by total assets gives the return on investment.
Return on investment is an indicator of how profitable a company is. By using this ratio
annually, we compare business' performance to industry's norms.
Net profit after tax divided by Total assets
Return on investment= Net profit after tax/Total assets
Return on investment
Years 2003 2004 2005 2006 2007
Percentage 0.82% 0.94% 2.99% 3.55% 3.72%
4.00%
3.50%
3.00%
2.50%
Return on investment
2.00%
Series2
1.50%
1.00%
0.50%
0.00%
2003 2004 2005 2006 2007
Profitability ratios focus on the profit generating performance of the firm. These ratios
measure how effectively the firm is generating its profit. They reflect its performance, its
risk ness and the effect of leverage. Muslim commercial bank was heavily financed in
2007 that financing was used in investment that’s why return on investment is high in
2005 as compare to the other years.
Return on Equity
Years 2003 2004 2005 2006 2007
Percentage 72.76% 72.11% 209.18% 222.25% 242.98%
Return on equity
300.00%
250.00%
200.00%
150.00% Return on equity
100.00%
50.00%
0.00%
2003 2004 2005 2006 2007
1-P/E ratio
Price earning ratio=Market price per share/ earning per share
2000.00%
1500.00%
500.00%
0.00%
2003 2004 2005 2006 2007
Price earning ratio of MCB bank is high in 2007 as compared to the other years. Because the
market price per share is high in 2007. Because in this year MCB generate an excellent
profit. 2006 is also good but 2003 is worst all of them.
13 Earning yield:
Earning yield=Earning per share/Market price per share
Earning yield
Years 2003 2004 2005 2006 2007
Percentage 14.16% 12.28% 12.73% 9.51% 6.08%
Earning yield
16.00%
14.00%
12.00%
10.00%
8.00% Earning yield
6.00%
4.00%
2.00%
0.00%
2003 2004 2005 2006 2007
This ratio determines the amount of income that has been earned on each share
outstanding. Net profit after tax divided by total numbers of shares outstanding gives the
amount earned on each share.
30
25
20
Earning per share
15
Series2
10
0
2003 2004 2005 2006 2007
Chapter – 5
HORIZONTAL AND
VERTICAL ANALYSIS
Horizontal Analysis
A comparison of statements over several years reveals direction, speed and extent of a
trend(s). The horizontal financial statements analysis is done by restating amount of each
item or group of items as a percentage.
Vertical Analysis
Like horizontal analysis this can also done for balance sheet and income statement. Here
we assign 100% value to any key item of balance sheet or income statement and then see
portion of other items in this percentage.
250%
200%
150%
100%
50%
0%
Total Assets Total Liabilities Equity
The horizontal analysis of the balance sheet of the bank over all give the positive trend
.The result of the balance sheet depict that there is a constant increasing trend in cash, total
assets, total liability and equity. There is extraordinary high trend in 2005 in all factors of
balance sheet as compare to 2002.
The trend of cash is increasing to upward with 32%. The trend of Total asset is also
increasing to upward with 27%, and the trend of total liabilities is also increasing with 23%
to upward. Equity is increased by 99%.
180%
160%
140%
120%
100%
80%
60%
40%
20%
0%
Mark up Income Mark up Net mark up Net mark up after
Expense before provision provision
600%
500%
400%
300%
200%
100%
0%
Net Profit before tax Net Profit after tax
According to horizontal analysis of profit and loss account there is increasing trend. In
2005 there is increase in all factors such as interest income interest income interest income
after provision and profit before and after tax because the trust of people on banks is
increasing day by day. The increase in profit in 2005 is almost 5 times as compare to 2002.
Assets
Investments
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INTERNSHIP REPORT ON MCB BANK LIMITED
Deferred tax
Liabilities against liabilities
Unappropriated
assets subject to
Other liabilities profit
finance lease Reserves
INTERPRETATION
In balance sheet of bank the most important item is earning assets. There are four earning
assets. Bank has strong earning assets like advances investments and lending to financial
institutions has major percentage in of assets of bank. In liability and equity analysis the
Borrowings from financial institutions and deposits have major portion and reserve and
share capital has major portion in equity
INTERPRETATION
In vertical analysis of profit and loss account the interest expense has decreasing trend from
2002 to 2005 but in 2005 there little bit increase in net interest income but almost have
same trend. According to this analysis fee, commission and brokerage income has some
worth in our income statement its almost one fourth or one fifth of our interest income and
it has increasing trend.
The administrative expenses are also increasing from 2002 to 2005 but overall management
is able to reduce expenses, so due to which there is continuous increase in profit before and
after tax.
Chapter – 6
SWOT ANALYSIS
SWOT ANALYSIS
The overall evaluation of an organization’s strengths,
weakness, opportunities & threats is called SWOT
Analysis. It is a strategic planning tool used to evaluate
the strengths, weakness, opportunities & threats and
involves specifying the objective of the organization and
identifying the internal and external factors that are
favorable and unfavorable to achieving that objective. A
SWOT analysis is designed to help an organization &
provide you with information that helps in making decisions about your future. Before
conducting a SWOT analysis, 1st you defining and agreeing upon an objective.The key
steps in conducting a SWOT analysis include:
STRENGTH
All staff members are well mannered in communications, & the ethics.
WEAKNESS
Centralization Organization Structure
Information system needed for cards may not be compatible with legacy systems.
The big problem is liquidity risk which reflects the corporations’s inability to rise
funds.
OPPORTUNITEIS
Large market potential.
Favorable demographic changes in society
All the opportunities of the 21st century are to be availed in the information
technology. Information technology is the future of this dynamic world. Therefore
MCB should emphasize much on IT, especially on E-Banking. Bank can design a
universal account like other foreign banks, to enhance online facilities.
The bank is large & expanding day by day because customer accepts it. Its network
expanded to 240 branches.
The MCB Commercial Bank involves in creating public relations that will increase
the profitability of the bank. Often, public relations are conducted through the
media that is, newspapers, T.V, magazines, internet….etc that’s attract a large
number of customers.
The MCB Commercial Bank can increase the extensive advertisements of new
products, services, vacancies, in order to increase customers & heir competent
employees.
THREATS
MCB is facing a strong competition by its competitors, Business of all these Banks are
growing at very high pace.
Huge competition with local and foreign banks
Rapid technological advancements have become challenge for MCB Bank Ltd.
Chapter –7
CONCLUSIONS
RECOMENDATIONS
CONCLUSIONS
The time spent for the project at MCB Bank Limited were no doubt a source of great
Learning for me about many things particularly working of different departments in bank.
This practical project does help me attain loads of knowledge about the predominant
Functions performed by banking companies, but also impart a lot of training as regards the
set of behavioral traits which distinguish a particular person from the rest of the lot in a
Professional environment.
MCB Bank is newly born financial institution. Yet it is backed by the powerful
international investors. It is not hidden from anyone the banking sector of Pakistan
experienced tremendous growth over the couple of years. It is expected the same trend will
continue as the middle class is being empowered in the country and there are many areas
where investments can be employed depending on the country’s political and economic
situation. Despite there is a meltdown in the global economy and the foreign investment
which is shifting away from Pakistan, there is still hope that in the near future not much
people will loose the opportunity to reap the benefits from the banking sector with
flourishing prospects. In the micro sense the bank organization is able to go further ahead
and cross the further grounds of progress. Its merger with the PICIC, and its other asset
management and insurance arms with a larger branch network plus great assets worth can
be very profitable to it. The MCB Bank should try to finance its assets not with the
liabilities but by the issuance of right shares. It should also try to reduce costs. The
emphasis on consumer and SME financing should also be enhanced as these can be very
profitable areas for the bank. As the Stare Bank is pursuing tight policies the MCB should
keep itself always ready to deal with the squeezing policies.
RECOMMENDATIONS
During my employment at MCB Bank Ltd I observed some areas that need attention for the
management like:
Advertisements/marketing:
Bank needs to use more marketing channels to make public aware of its products and
services. In the presence of intense competition MCB Bank Ltd has to realize the
importance of marketing.
Distribution of work:
Management should distribute work equally among different employees. Some of the
employees are overburdened while some sections are overstaffed.
References
1. www.howstuffworks.com
2. www.sbp.org.pk
3. www.mcb.pk.com
6. www.kse.com.pk
9. www.wikipedia.com