Advances

Advances or lending in commercial banking is divided into two distinct segments;

consumer & commercial.

• Consumer lending is for individuals only for their domestic needs.

• Commercial lending is done for business needs of individual, partnership, sole
proprietorship, joint stock companies etc.

Following are some commercial lending products disbursed at MCB branches for
different customers as per their need.

1. Running Finance
a. Running Finance General
b. Running finance Instant
2. Demand Finance
3. Cash & Cash
4. Cash Finance
5. Letter of Credit
6. Bank Guarantee
7. Transfer Receipt.
8. Business Sarmaya.

Running finance instant:

This is the quickest lending an individual can avail in terms of paper work required. The
collateral accepted under Running finance instant is cash or liquid securities such as,
National saving certificates, deposit certificates of MCB & other banks, shares of blue
chip companies etc. However banks don’t accept these securities in the name of minor,
they should be at least 6 months mature. Accepted in the name of a third party if issued
from MCB otherwise such securities are not accepted for collaterals.

The process starts when the customers approaches the branch and as per discussion with
the customer relation officer who advices the client the type of product that would deem
fit for his/her needs. The customer formally writes a written request which is called;
Application for Finance or Loan Application Form (LAF) other document prepared is
under.
Basic borrower Fact Sheet – different for individual & corporate customer
Call Report – summary of discussion with the client and recommendation from credit
officer.
Customer Worthiness – if the financing is above PKR 0.5 million financials are also
attached.
Internal Credit Rating
Credit proposal Summary
CIB report From SBP – required above PKR 0.5 million financing.
All these documents are sent to HUB for analysis which is then approved by HUB head
& business head. It is then communicated to branch which then informs the customer
about the approval. A Facility advising letter is sent to branch which contains the terms &
conditions Security presented as collateral and rate of mark up to be charged.
An undertaking is signed by the customer along with encashment letter and lien marking
and confirmation letter. From this point forward four IB forms are prepared & Signed by
the customer.

1. IB-12 (Promissory Note):

2. IB- 6K (KIBOR Prices)
3. IB-28 (letter of lien)
4. IB-31 (security sale, buy back etc)

The documents are sent to CRCD department which upon approval send a letter called
Disbursement authorization certificate. After this last document limit is feed into the
customer account.

Running Finance General:

The requirements for this facility are mostly same as of running finance instant except
that the collateral for this mood of financing is fixed asset or property. The finance can be
used fro working capital requirements such as auto parts, distribution of pharmacy
products etc.