Beruflich Dokumente
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MCB BANK LTD
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PROJECT
ON
MCB BANK LTD
Presented By:
Mudassar Hassan Ei08MBA040
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TABLE OF CONTENTS
TABLE OF CONTENTS....................................................................................................................6
EARLIEST BANKS......................................................................................................................................11
INTRODUCTION TO THE BRANCH...........................................................................................52
ACCOUNT OPENING...................................................................................................................................60
PROCEDURE FOR ACCOUNT OPENING:........................................................................................................67
INWARD REMITTANCE..................................................................................................................86
IMPORTANT FEATURES..............................................................................................................................91
PROCEDURE .............................................................................................................................................92
INITIAL INFORMATION REQUIRED BY THE BANK:...........................................................................................94
PREPARATION OF CREDIT PROPOSAL:.........................................................................................................95
SANCTION ADVICE:...................................................................................................................................96
OTHER TERMS AND CONDITIONS:..............................................................................................................97
TYPES OF ADVANCES................................................................................................................................99
LETTER OF CREDITS..........104
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EXECUTIVE SUMMARY
The banking structure in Pakistan comprises of the following types, State Bank of Pakistan,
Commercial Bank of Pakistan; Exchange Banks, Saving banks, Cooperative banks,
Specialized credit institutions. The state bank of Pakistan is the Central bank of the country
and was established on July 01, 1948. MCB transferred its registered office to Karachi in
1956, where the Head Office is presently located. In April 1991, MCB became Pakistan’s
first privatized bank.
After this, Report provides detailed information about the Bank including origin of “MCB
BANK” its history & Introduction, vision, mission, Hierarchy of Head Office &
SHEIKHUPURA Main Branch and all about its products & Services Etc.
This Report also provides the Awards Achieved by the MCB in its history,
The departments in which we have done our work, these are Account opening department,
Remittance department, Clearing department, Advances department and Foreign Exchange
department.
Here after comes Financial Statement Analysis comprises of general and special analysis, In
the last, the final Recommendations & Suggestion are given to overcome flaws & Problems
that is being to be faced by MCB Bank Limited.
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Here some Financial Highlights of MCB half year ended June 30, 2009 which shows Profit
before taxation 11,688,703, Taxation 3,932,214 Profit after taxation 7,756,489,
The financial analysis of MCB BANK is divided into two major parts
1. General Analysis
2. Specialized Analysis
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EVOLUTION OF BANKING
The word 'Bank' is said to have been derived from the words Bancus or Banque or Bank.
This history of banking is traced to as early as 2000 B.C. The priests in Greece used to keep
money and valuables of the people in temples. These priests thus acted as financial agents.
The origin of banking is also traced to early goldsmiths. They used to keep strong safes for
storing the money and valuables of the people. The persons who had surplus money found it
safe and convenient of deposit their valuables with them. The first stage in the development
of modern banking, thus, was the accepting of deposits of cash from those persons who had
surplus money with them.
The goldsmiths used to issue receipts for the money deposited with them. These receipts
began to pass from hand to hand in settlement of transactions because people had confidence
in the integrity and solvency of goldsmiths. When it was found that these receipts were fully
accepted in payment of debts; then the receipts were drawn in such a way that it entitled any
holder to claim the specified amount of money from goldsmiths. A depositor who is to make
the payments may now get the money in cash from goldsmiths or pay over the receipt to the
creditor. These receipts were the earlier bank notes. The second stage in the development of
banking thus was the issue of bank notes.
The goldsmiths soon discovered that all the people who had deposited money with them do
not come to withdraw their funds in cash. They found that only a few persons presented the
receipts for encashment during a given period of time. They also found that most of the
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money deposited with them was lying idle. At the same time; they found that they were being
constantly requested for loan on good security. They thought it profitable to lend at least
some of the money deposited with them to the needy persons. This proved quite a profitable
business for the_ goldsmiths. They instead of charging safe keeping charges from the
depositors began to give them interest on the money deposited with them. This was the third
stage in the development of banking.
DEFINITIONS OF A BANK
The term 'bank' is being used for a long time, yet it has no precise definition. The basic
reason is that the commercial banks perform not just one but many types of functions. The
term bank has been defined differently by different authors. Some are as follows:
According to Crowther:
"Bank is a dealer in debts—his own and of other people."
Banking Companies Ordinance 1962 "Banker means person transacting the business of
accepting for the purpose of lending or investment, of deposits of money from the public,
repayable on demand or otherwise and withdraw able by cheque, draft, order or otherwise
and includes any Post Office Savings Bank."
According to Holder:
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Thus the comprehensive definition of the bank is:
A bank is a financial institution, which deals with money and credit. It accepts deposits from
individuals, firms and companies at a lower rate of interest and gives at a higher rate of
interest to those who need them. The difference between the terms at which it borrows and
lends differs forms the source of it profit. A bank, thus, is a profit earning institution.
Earliest Banks
The very first banks were probably the religious temples of the ancient world. In them were
stored gold in the form of easy to carry compressed plates. Their owners justly felt that
temples were the safest places to store their gold as they were constantly attended, well built
and were sacred, thus deterring would-be thieves. There are extant records of loans from the
18th Century BC in Babylon that were made by temple priests to merchants.
Ancient Greece holds further evidence of banking. Greek temples as well as private and civic
entities conducted financial transactions such as loans, deposits, currency exchange, and
validation of coinage. Interestingly, there is evidence too of credit, whereby in return for a
payment from a client, a money Lender in one Greek port would write a credit note for the
client who could "cash" the note in another city, saving the client the danger of carting
coinage with him on his journey.
Ancient Rome perfected the administrative aspect of banking and saw greater regulation of
financial institutions and financial practices. Charging interest on loans and paying interest
on deposits became more highly developed and competitive.
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Importance of Banking
Banks play very important role in the economic life of a nation. The growth of the economy
is dependent upon the soundness of its banking system. Although banks do not create new
wealth but borrow, exchange and consume. These make generation of wealth. In this way
they become most effective partners in the development of that country.
To encourage the habit of saving and to mobilize these savings is its basic purpose. Banks
deposit surplus from the public and then advances these surpluses in the form of loans to the
industrialists, agriculturists, businessmen and unemployed people under different schemes so
that they set up their own business. Thus banks help in capital formation.
If there are no banks, then there would be concentration of wealth in few hands and great
portion of wealth of a country would be idle. In the fewer developing countries rate of saving
is very low and due to this, rate of investment and rate of growth is also very low. We can
take bank just like a heart in the economic structure and capital provided by it is like blood in
it. As long as the blood is in circulation, the organs will remain sound and healthy. If the
blood is not provided is not provided to any organ then the organ would become useless. So
if the finance is not provided to agriculture sector or to industrial sector, it will be destroyed.
Loan facility provided by bank works as an incentive to the producer to increase production.
Banks provide transfer of payment facility, which is cheaper, quicker and safe. Many
difficulties in the international payment have been overcome and volume of transactions has
been increased. These facilities are very much helpful for the development of trade and
commerce.
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The partition plan was announced on June 3, 1947 and August 15, 1949 was fixed as the date
on which independence was to take effect. It was decided that the Reserve bank of India
should continue to function in the dominion of Pakistan until September 30, 1948 due to
administrative and technical difficulties involved in immediately establishing and operating a
Central Bank.
At the time of partition, total number of banks in Pakistan were 38 out of these the
commercial banks in Pakistan were 2, which were Habib Bank Limited and Australia Bank
of India. The total deposits in Pakistani banks stood at Rs.880 million whereas the advances
were Rs.198 million. The Governor General of Pakistan, Muhammad Ali Jinnah issued the
order for the establishment of State Bank of Pakistan on 1st of July 1948.
In 1949, National Bank of Pakistan was established. It started with six offices in former East
Pakistan. There were 14 Pakistani scheduled commercial banks operating in the country on
December 1973, the name of these were:
So, through the Nationalization of Bank Act 1974, the State Bank of Pakistan, all the
commercial banks incorporated in Pakistan and carrying on business in or outside the country
were brought under the government ownership with effect from Jan. 1, 1974. The ownership,
management, and control of all banks in Pakistan stood transferred to and vested in the
Federal Government.
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Commercial Banking Scenario in Pakistan
Broadly speaking we can divide the development of commercial banking into four phases:
This was the first phase of development of Pakistan’s commercial banking system, which
consist of the circumstances under which the development of banking was started in the
country.
There were 19 non-Indian foreign banks in Pakistan at the time of independence with the
status of small branch network, whose policies and operations were controlled by their head
offices abroad. These banks were engaged solely in export of corps from Pakistan. There
were only two Pakistani banks, the Habib bank, which had transferred its head office from
Bombay to Karachi after the announcement of the partition plan, and Australian bank which
has been working in Pakistani territories prior to June 1947.
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The Indian government withheld Pakistan’s share of Rs. 75 crore in cash balances held by
her at the time of independence. The foregoing developments clearly brought home the
urgency of assuming control and currency in Pakistan and brought to the fore the need to
setup a central banking institution to take the place of reserve bank of India. Therefore it was
agreed between the government of India and Pakistan to authority of Pakistan from 30th
September 1947 to 30th June 1948.
In order to make necessary arrangements of the establishment of the central bank of Pakistan
a committee was appointed to recommend the necessary steps. Consequently the Governor
General of Pakistan and father of the nation Quaid-e-Azam Muhammad Ali Jinnah
Inaugurated the State Bank of Pakistan on 1st July 1948. After the State Bank order was
promulgated on 12th May 1948.
NATIONALIZATION OF BANKS
The banking reforms turned out to be a transitional and temporary step and hardly after 18
month the government nationalized the banking system. Thus through the Nationalization
Bank Act 1974, SBP and all commercial banks incorporated in Pakistan and carrying on
business in or outside the country were brought under the government ownership with effect
from January 1974. The ownership and management of all Pakistan banks stood transferred
and rested in the federal government. The shareholders were provided compensation in the
form of federal government bonds redeemable at par any time within a period of fifteen
years. The amount of compensation was equal to the break up value of the shares in case of
commercial banks. For the State Bank shares the amount of compensation was estimated on
the basis of average of the clearing quotations during the six working days preceding
nationalization. The chairman, director and chief executives of various banks were remove
from their offices other than those appointed by the federal government and the state bank.
The central board of banks, managing committees and similar other bodies were dissolved. A
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Pakistani banking counsel was established for nationalized commercial banks to co-ordinate
their activities.
As a result of merger of banks the following five major banking companies were formed:
In 1977 the Bhutto government was toppled. The martial law government planned to reform
the banking sector in a novel way. The overall policy was to Islamise the economy and the
banking system, being based on interest was an important target of the new policy. The most
preferred form of Islamic bank financing profit and loss sharing would require banks to
receive deposit without guaranteeing any return.
The Islamic bank has to acquire a high degree of confidence of the saver to make him deposit
his money with them. Not even the return of the principle amount if guaranteed. The Islamic
bank cannot finance the project of an investor merely on the furnishing of collateral. The
bank will have to be a partner in the project. This will require to careful security of the
project and the assessment of risk involved because profits are the function of the amount of
risk in the project. Honesty and trust form both sides of the market are more important to the
system of Islamic Banking.
Application for privatization of other banks namely UBL and HBL were also invited but the
bidding response was quite poor. The privatization of these banks is under consideration.
Legislation was enacted to permit the establishment of new banks and the government
approved 10 application from the private sector for the grant of commercial bank licenses by
SBP, out of these 9 new banks have since been incorporated. Till March 1994 there were 20
domestic scheduled banks with 9825 branches and 21 foreign banks with 66 branches in
operation in the country.
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MCB BANK INTRODUCTION&HISTORICAL BACKGROUND
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 and a nationwide distribution
network of 1,026 branches, including 8 Islamic banking branches, and over 300 ATMs, in a
market with a population of 60 million.
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.
Now let us discuss the historical background of Muslim Commercial 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 Muslim Commercial Bank Ltd known as MCB.
HISTORY:
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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.
Nationalization
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.
Privatization
When privatization policy was announced in 1990, MCB was the first to be privatized upon
recommendations of World Bank and IMF. The reason for this choice was the better
profitability condition of the organization and less risky credit portfolio which made'' it a
good choice for investors. On April 8th, 1991, the management control was handed over to
National Group (the highest bidders). Initially only 26% of shares were sold to private sector
at Rs. 56 per share.
After Privatization
Ten years after privatization, MCB is now in a consolidation stage designed to lock in the
gains made in recent years and prepare the groundwork for future growth. The bank has
restructured its asset portfolio and rationalized the cost structure in order to remain a low cost
producer.
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After privatization, the growth in every department of the bank has been observed.
Following are some key developments:
• Extended use of information technology which is evident from the fact that
there are 768 fully automated branches, 243 online branches (integrated networking),
300 ATMS in 27 cities nation wide and a MCB continuously innovate new product.
MCB today, represents a bank that has grown with time, experience and Pakistan. A major
financial institution, in scope and size, it symbolizes a fully growing tree evergreen, strong,
and firmly routed.
FOREIGN TRADE:
MCB Bank’s remittances during the year 2008-2009 were about 5.493Arab Dollars. The
bank conducted import business during the year amounting to RS. 54.0 billion as compare to
RS. 56.4 Billion In 2008. The export business slightly improves to RS. 36.9 Billion From RS.
35.1 Billion In 2008.
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SOCIAL SECTOR:
The bank actively participating in the Prime Minister’s self-employment Scheme. The
application received from various applicants is being processed on merit and disposed off as
quickly as possible.
THE BUSINESS
MCB is in it’s over 50 years of operation. It has a network of over 1,023 branches all over
the country with business establishments in Sri Lanka and Bahrain. The branch break-up
province wise is Punjab (620), Sindh (225), NWFP (106), Baluchistan (35),Azad
J.Kashmir(14) and overseas(7) respectively.
MCB has an edge over other local banks, as it was the first privatized bank. The State Bank
of Pakistan has restricted the number of branches that can be opened by foreign banks, an
advantage that MCB capitalizes because of its extensive branch network.
Fourteen years after privatization, MCB is now in a consolidation stage designed to lock in
the gains made in recent years and prepare the groundwork for future growth. The bank has
restructured its asset portfolio and rationalized the cost structure in order to remain a low cost
producer.
MCB now focuses on three core businesses namely Corporate, Commercial and Consumer
Banking. Corporate clientele includes public sector companies as well as large local and
multi national concerns. MCB is also catering to the growing middle class by Providing new
asset and liability products. The Bank provides 24 hour banking convenience with the largest
ATM network in Pakistan covering 27 cities with over 300 ATM locations. The Bank’s
Rupee Traveller Cheques have been market leaders for the past six years and have recently
launched their Gift Cheque Scheme.
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Profile of MCB Bank Ltd.
4 Islamic Branches 8
7 Overseas Branches 7
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To be the leading financial services provider, partnering with our customers for
a more prosperous and secure future.
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We are a team of committed professionals, providing innovative and efficient
financial solutions to create and nurture long-term relationships with our
customers. In doing so, we ensure that our shareholders can invest with
confidence in us.
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INTEGRITY
We are the trustees of public funds and serve our community with integrity. We believe in
being the best at always doing the right thing. We deliver on our responsibilities and
commitments to our customers as well as our colleagues.
RESPECT
We respect our customer’s values, beliefs, culture and history. We value the equality of
gender and diversity of experience and education that our employees bring with them. We
create an environment where each individual is enabled to succeed
EXCELLENCE
We take personal responsibility for our role as leaders in the pursuit of excellence. We are a
performance driven, result oriented organization where merit is the only criterion for reward.
CUSTOMER CENTRICITY
Our customers are at the heart of everything we do. We thrive on the challenge of
understanding their needs and aspirations, both realized and unrealized. We make every
effort to exceed customer expectations through superior services and solutions.
INNOVATION
We encourage and reward people who challenge the status quo and think beyond the
boundaries of the conventional. Our teams work together for the smooth and efficient
implementation of ideas and initiatives.
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Euro money Awards
Euromoney Awards
MCB has been awarded as a Euromoney Award 2008 for the " Best Bank in Asia".
MCB has yet again received the esteemed Euromoney Award for the “Best Bank in
Pakistan”. It is the only bank to receive the Euromoney Award for Excellence for the sixth
time in the past seven years.
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MCB has again received the esteemed Euromoney Award for the “Best bank in Pakistan”. It
is the only bank to receive the Euromoney Award for Excellence for the fifth time in the last
six years.
In a continuous winning streak, MCB once again takes pride in being conferred with
Euromoney's prestigious award of excellence, for being the "Best Bank in Pakistan" for the
fourth time in the last five years.
MCB believes in you. Together we work with quality, integrity and dedication, striving to
achieve collective success by understanding changing trends and assimilating into diverse
cultures. Your trust in our ability and our commitment to deliver has again won us the
Euromoney Award 2003 for the "Best Bank in Pakistan".
Your trust and our commitment is always an award wining combination MCB was awarded
as a Euromoney Award 2001 for the “Best Bank in Pakistan".
MCB was awarded as a Euromoney Award 2000 for the “Best Domestic Bank in Pakistan".
MCB Continues to shine as once again Asia Money declares MCB as "The Best Domestic
Commercial Bank in Pakistan" for the year 2005.
MCB has a distinction of winning the Asia Money 2004 award for being "The Best Domestic
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Commercial Bank
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Board of Directors:
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Mian Mohammad Mansha Chairman
Audit Committee:
Mr. Tariq Rafi Chairman
Principal Office:
MCB 15 Main Gulberg, Lahore
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.
Chairman
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Mian Muhammad7Mansha
Vice Chairman
Mr. S. M. Muneer
President
MANAGEMENT HERIARCHY
President
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Vice president
Vice president
Assistants
Cashier
Peon
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A Vision of the Future
The modern, urbane architecture and intelligent design of MCB Tower reflect MCB’s
pioneering role in the banking arena, providing cutting edge, innovative banking solution-
leading with an edge of technology.
Towering at 116 meters, with 29 levels and 3 basements, MCB tower is the tallest building in
Pakistan. It is a sound representation of MCB’s leadership position in the banking sector,
testified by four “best bank in Pakistan” Euro money Awards in five years.
Strong Foundation
MCB tower is a manifestation of MCB’s strong foundation with over 50 years of banking
excellence and represents our commitment to always stay a step ahead
From individual customers to corporate and commercial clients, MCB’s flexible solutions
reach out to a diversified audience -reflected in all levels of MCB tower
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• One of the most integrated safety and security features with 24 x 7 surveillance
system including smart card access to prevent unauthorized entry at any level.
• From furniture design to signages, MCB tower has been designed with exquisite
attention to detail.
• The bank produces its own power by 1.2 MW gas turbine backed-up by two separate
diesel generating sets. The heat recovery system insured that the heat produced thus
is used to operate the chillers for the central air conditioning system thereby
achieving an unprecedented level of power / energy consumption.
• State of the art Fire / Smoke detection Alarm and sprinklised suppression system
backed-up by a central fire fighting system. Rooftop garden and gymnasium with
unparalleled views of the city skyline
• 6 high speed Elevators with a unique call system which identifies, allocates and
assigns each passenger to a particular elevator to optimize their wait and travel time.
• Double insulated glazing to reduce heat loss by upto 30 % and reduce noise level
significantly. The glass used is specially tempered to increase strength 5 times,
eliminating the risk of damage.
• Construction of the heli pad for helicopter access and egress in case of fire.
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The Largest network of over 315 on-line branches in the country and growing. Providing
customers with 24x7 real time on-line transaction facilities.
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The best protection for your valuables. Lockers of different capacities are available
nationwide.
MCB Islamic banking provides Riba free and Shariah Compliant solutions to various
customer segments in a growing number of cities. With the help of Sharia specialists,
lawyers, & professional commercial bankers, we have the best compliant products like
Musharika, Murabaha, Ijara and Istasana.
A local Point of Sale acquiring network facilitating acceptance of all major card brands.
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Cash withdrawal facility at over 900,000 ATMs worldwide.
Convenience of shopping at over 5 million POS locations globally.
MCB, provides the convenience of banking on internet. You can access your account
anytime, anywhere & enjoy 24-hour access to all your accounts at MCB.
Call now for answer to your queries about banking, ATM, mobile banking, RTC, tele-
banking services and MCB product information.
The nation's largest network of over 210 ATMs and growing. Get 24 hour convenience of
cash withdrawal, mini statement, bill payment and funds transfer services.
Banking at your fingertips. Dial in anytime to get information regarding balance and mini
statements.
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MCB Network for Electronic Transactions is an electronic hub for ATM sharing plus other
touch points. The nation's largest operating switch with the highest transaction volume.
A secure instrument of payment, offering CASH FREE convenience. It is the most powerful
Debit and ATM Card providing 24 hour direct access to your bank account.
Providing access to diversified financing options including working capital loans, term loans,
trade finance services and investment banking.
Get a loan in an instant at any MCB branch. Offering same day financing facility against
liquid collateral at competitive pricing.
MCB Pyara Ghar is an ideal home financing facility with options of home purchase,
construction and renovation. Financing available upto 20 years for amount up to Rs. 20
million.
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A deposit account for customers with substantial balance offering profit on a daily product
basis with the facility of unlimited withdrawals.
The most widely accepted way to pay cash for travel related purposes. A safe and secure way
to make payments nationwide.
Car financing and leasing at competitive rates with flexible options. Car4u finances both
semi-commercial and non-commercial vehicles for personal and business use.
Personal loans for salaried individuals of reputed local and foreign companies at rates
tailored to customer's repayment capacity.
Cash management services for corporate customers. Helps customers substantially reduce
their receivable collection time frame; improve cash flow and business management.
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MCB Full Day Banking
Enjoy the convenience of extended banking hours from 9am to 5am, including Saturdays at
MCB FULL Day Banking branches across the country.
Bill Payments
MCB easy bill pay offers unmatched convenience to pay your utility and mobile phone bills
or re-charge your prepaid mobile phone accounts anywhere, anytime with security and peace
of mind. MCB is the only bank that offers you 3 convenient options of making bill payments
to PTCL, SSGC, Instaphone, Mobilink, Paktel and Ufone. So, save your precious time by
avoiding long queues and pay your bills through MCB Easy Bill Pay. MCB Smart Card or
MCB ATM Card Holder can easily pay their bills or re-charge their prepaid mobile phone
account through the following convenient options of MCB easy bill pay.
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INTRODUCTION TO THE
BRANCH
MCB Main Branch Sheikhupura is located at a Lahore Sargodha Road, Sheikhupura. Many
people from these areas have accounts in MCB Main Branch Sheikhupura . There are almost
7 more banks at the same location. Competition is fierce and every bank is trying to compete
with best of its services, and MCB doing the same to have an edge on other banks to remain
customer focused.
Branch Code of MCB Main Branch Sheikhupura is 0204.MCB Main Branch Sheikhupura
has Rs.340 million deposits, Rs.70 million advances, 10000 numbers of accounts and up
to Rs.2 million remittances. MCB Bank is focusing and targeting the middle class, which is
the largest of the population of Pakistan. For that purpose MCB Bank has developed a strong
chain of branches.
This branch has a total of 20 employees from manager to the security guard. It has 1 ATM to
provide 24-hour cash withdrawal facility.
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Organization Structure
Cashier
1. Mujahid Nazir
2. Farkhanda Munir
ICO (internal Control Officer) is basically an independent authority to report directly to regional head on the
progress or overall situation of the branch.
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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. Account Opening Department
3. Clearing Department
4. Remittance department
5. Advances & Credit Department
6. Foreign Exchange Department
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CASH DEPARTMENT
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This department of the bank deals in operation relating to cash accounts as name implies this
is a preliminary deal with the cash, which involves payment of cheques presented by the
customer and receipt of the cash deposited by the customer in their accounts. This
department is responsible for the cash balance at the end of the day.
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.
Cash payments
Payment of cash to customer involves the following procedure
1. The cheque is presented to the cashier first, who takes care of following precautions
a) It should not be out dated.
b) There should not be any crossing on it, if so the signature should be with cutting.
c) Two signature of the customer receiving the cheque should be in the back of the
cheque.
d) There should not be any difference between the amount and figures
e) It should not be crossed.
1. The cheque is entered in the computer by the cashier and customer account is debited.
2. If the amount of the cheque exceed the customer balance in that account a note
regarding this will automatically appeared on the computer screen. Such entries are
immediately scratched.
3. Finally the cheque goes to the officer, who first, checks the signatures, whatever it is
according to the specimen signature card, he will also check the conditions mentioned
in no.1. If he has any doubt he will reject the transaction. Otherwise he authenticated
the transaction and sign on the cheque.
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4. The cheque is finally returned to the cashier for payment.
5. If the cheque is dishonored due to any reason Rs.200 is deducted from the account of
the customer as a penalty for that return.
6. At the start of next day all the cheques, which are honored by the bank on previous
day, are sent to account department for permanent record.
Receipt of Cash
1. All the cash is deposited on a specific deposit slip. The depositor has to mention
specific deposit account number, name of the account holder and the amount which
he wishes to deposit in his account on this slip.
2. This slip is presented to the cashier along with the currency note, he count the notes
and stamp the slip with “cash received” if he is satisfied, then he enters the slip in the
computer by crediting the account.
3. Finally the transaction regarding deposit of cash is authenticated by the responsible
officer and put his signature on the slip. Now the transaction is permanently stored in
the computer.
4. At the start of next day all deposit slip of the previous day is sent to accounts
department for permanent record.
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In this book the cashier records all the amount of money which he receives from the
customers during the day. The customers name, account no. , cheques no and amount are
written in the register. All the cash which is received it is manually entered in a cash receipt
register at the end of day.
All the receipts are sent to officer for the posting in the computer the officer post the amount
and verified it by another officer. At the end of the day it must also be tallied by the
computer’s received payment.
This sum is added in the opening balance of the cash and hence closing balance is calculated.
Cash Paid Register
This is a book in which all the payments during the day are recorded. After receiving the
cheques from the customer the officer verifies the signature and posts it in the computer then
the cashier makes the payment and enters the amount in the register. At the end of the day the
total payment must be tallied with the computers amount.
When all the cheques are paid then all entries regarding payment of cash is entered if the cash
paid register by the cashier & total payment during the day is computed. This sum is then
subtracted from the opening balance of the cash. The responsible officer then verifies all
these entries.
Is physical checking by cashier after closing hours. There should not be any difference
between the two balances, if any he is not allowed to leave counter unless the reason for
difference is traced out.
A certain amount of cash is kept in bank lockers for meeting daily requirement but if any
further cash is required in emergency due to some heavy payment, such cash is called from
other branches or from MCB. Such cash reached within one or two hours.
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ACCOUNT OPENING DEPARTMENT
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Account Opening
The general banking performs various functions among them the first and most important
function is A/C opening. The process of opening an account is very simple and any body
who would like to open his account could do it easily without any difficulty.
Nature of Accounts
MCB Bank has launched the Basic Banking Account from February 27, 2006. Target market
for this account is students and people with low income group. Customer who are operating
current and saving accounts have the facility to convert their accounts to BBA Account.
Key points:
Current Account
Current account is the convenient way to manage money. Customers can transact through
MCB Current Account any time. MCB Current Account is most suitable for the businessmen
and organizations that do monetary transaction on daily basis. Bank does not pay any interest
on current accounts.
Key Points:
Saving 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.
Key Points:
• Customer has to maintain a deposit of Rs. 10000 in his account otherwise low balance
charges of Rs. 50 will be deducted from the customers’ account on monthly basis.
• Profit paid into your account every six months.
• Unlimited cash deposit and withdrawal facility at hundreds of branches nationwide.
• Use your MCB Smartcards to shop at thousands of merchants across Pakistan.
• Locker facility at economical rates.
Key Points:
• Discover a sensible solution that helps make more of your dollar savings.
• MCB Smart Dollar Account is a sensible way to maintain or grow your US Dollar
deposit across USD Current, Savings or Term Deposits.
Key points:
Key Points:
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Special Rupee Term
Key Points:
Business Account
Key Points:
FREE SERVICES
• Grow with MCB Xtra by saving more and earning greater profit.
• MCB Savings Xtra Account offers you a wide range of attractive profit rates.
Key Points:
Key Points:
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BASICS TO OPEN AN ACCOUNT
During the span of mine internship in MCB, I learned and observed a lot of about the
opening of an account. 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. Further I am going to express the basic
requirements and steps involved in the opening of an account.
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’s integrity, respectability, occupation and the nature of
business by the introductory references given at the time of account opening. Negligence in
this informal preliminary investigation may result in serious consequences not only for the
banker concerned directly but also for other bankers and the general public who may be
affected indirectly.
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.
Sometimes due to a mistake an account may be given an overdraft, For instance, the ledger
keeper, misreading the balance of an account honours a cheque for an amount larger than the
balance. Similarly a credit entry belonging to a customer may be made by mistake in another
customer’s account. In such situations the excess amount withdrawn by the customer can
only be realized if the customer is a respectable person.
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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.
Account Opening Form is SF1AA1R(See annexure).The name, occupation, father name, date
of birth, marital status, CNIC NO, telephone/mobile number, initial deposit, nature of
account, type of account is also mention and complete address of the person opening the
account are written in the columns that are provided in the form. Signatures are obtained
from the customer where it is required. These signatures should be usual signatures and he
would operate the account with them.
In account opening form following accounts are mentioned in this form. What is a procedure
for opening that type of accounts and what type of documents are attached in application
form.
Types of Account
1. Individual Account:
A. Single Account:
When a single man or woman opens an account in his or her own name and has the right to
operate, it is called individual A/C.
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Title of Account:-
Title of Account should mention the name of the person who operates the account.
Special Instructions:-
At the time of opening the account, clear and specific instructions should be obtained
regarding the nominee of the account holder means after the death of the account holder who
will operate the account.
Documents:
B. Joint Account
These are the account of two or more persons who are neither partners nor trustees
Title of Account
Title of account holder should mention the names of all the joint account holders.
Special Instruction
At the time of opening the account clear and specific instructions should be obtained
regarding operation of the account and payment of the balance at the death of one or more
joint account holders in the following manner:-
Documents
Mode of Signature
• A
ll joint account holders are required to sign as applicant and in the
column of special instructions.
• Specimen Signature of only those joint account holders are required
who are authorized to operate the account.
2. Business Account
When the owner of the firm operating singly, open an account in his firm name.
Title of Account
Special Instructions
In case of proprietorship concern, the special instruction should cover the style of the account
and the name of the person who will operate the account as sole proprietor. For example, if
the account to open is in the name of “Islamabad Cloth Store”, the person who is the sole
proprietor should declare as such.
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Documents
B.Partnership Account:
Title of Account:
Title of account must be in the name of the firm as declared by the partners.
Operational Instructions:
Documents:
“An association of individuals for the purpose of profit, possessing a common capital
contributed by the members constituting it, such capital being commonly divided into shares
of which each possess one or more and which are transferable by the owners.”
Title of Account
Title of account should be exactly in the same name and style as mentioned on the
memorandum and article of association.
Special Instructions
All the special instructions should be given to the bank in the form of Resolution of Board of
Director.
Documents
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• Certificate of Commencement of Business (for Public limited
company’s only).
D.Trust Account
“A trust is an obligation annexed to the ownership of property and arising out of a confidence
proposed in and accepted by him for the benefit of another, or of another or owner.”
Branches are allowed to open the Trust Account subject to the prior approval of Area
Manager, after scrutiny of the legal documents by the legal advisor.
Title of Account
The account should be opened in the name of the trust. However, if the account is opened in
the name of the trustees, the account should not be treated as a joint account, rather it should
be treated as a trust account.
Special Instructions
The Banker should examine the trust deed very carefully. Particular attention should be paid
to the borrowing powers, status of account in case of death of any trustee or signatory, and
provisions for the appointment of new trustees.
Documents
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Mode of Signature
All the trustee are required to sign the account opening form, Specimen Signature Card, and
Cheque book requisition slip in their official capacity.
These are non- trading / non- profit organization and are formed for the promotion of culture,
education, recreational activities and charitable purpose etc.
Title of Account
Operational Instructions:-
Documents
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F.Minor Account:
The natural guardian who signs both Account Opening Form and Specimen Signature Card
can open account in the name of minor.
Title of Account
The title of account should clearly indicate both the names of minor as well as guardian in
the following manner:-
Special Instructions
The guardian will continue to operate the account even if minor attains the age of majority.
Documents
Before opening such account the illiterate person should be informed that he / she cannot
issue Cheques in favor of any other person.
Title of Account
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Name of account holder should be written in block form.
Special Instructions
Personal Withdrawal
Documents
Specimen Signature Card is SF-6A2 (See annexure).This card contains two signatures of an
applicant, applicant account number, account type, branch name, branch code, title of
account, it will be attached with an account opening form. Banker uses this card at the time
when he receives the cheque, he compares customer’s signature with the signature on the
cheque for avoiding fraud. Manager has every right not to accept this contract if he is not
satisfied by the details provided by the customer.
3. ChequeBook Requisition
Cheque Book Requisition slip is MF-80R (See annexure). Chequebook requisition slip
contains applicant account number, account type, branch name, branch code, title of account,
Signature of account holder where it is necessary. It will be attached with an account opening
form.
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In view of recent heightened global efforts to prevent the possible use of the banking sector
for money laundering, terrorist financing, transfer of illegal/ill-gotten monies, and as conduit
for white collar crime etc., the importance of Know Your Customer (KYC)/customer due
diligence has increased. In line with the international best practices, as also to ensure
transparency/prudence in banking transactions while starting relationship with existing
customers, the following minimum guidelines are required to be followed by banks.
However, banks are free to obtain any further information/documents from customers / other
banks / as they deem fit, provided the same are reasonable and applied across the board. Risk
factors(HIGH RISK,NORMAL RISK) are also mention in KYC Form It will be attached
with an account opening form.
5. VeriSys
Conformation from NADRA through VeriSys system by the bank. The date mentions in
VeriSys are same as Account opening form. It will be attached with an account opening
form.
6. Letter of Thanks
Bank prepares letter of thanks for the appreciation of the account holder because bank gives a
chance for providing better services to the customer. This act promotes good will among the
customer. It will be attached with an account opening
Account Number
When all the formalities are completed then the final approval of account has to be taken
from the Branch Manager. After obtaining approval of the branch manager an account
number is allotted to the customer all the information is entered into the computer. Then that
account number is written on the Cheque Book, Specimen Signature cards and account
opening form.
After fulfill all the requirement and verify the form from operation manager the account
opening form send to Head Office Karachi and make request to issue the printed cheque
book.
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Issuance of a Cheque book
After opening an A/C with the bank, the A/C holder receive a letter of thanks from Head
Office Karachi then after receiving this letter client come to bank and makes a request in the
name of bank for the issuance of a Cheque book. The A/C holder mentions title of A/C, A/C
number, signs it properly. Normally MCB issues a Cheque book having 25 leaves for Saving
Account and 50 leaves Cheque Book to Current Account Holder. Every Cheque book also
contains one leaf that is used for another issue of a Cheque book.
Before issuance of a Cheque book, the employee performs certain functions. They include:
After entry in the manual register, the employee issues the Cheque book to the A/C holder
with his/her signature on the register.
The banker may close the account of the customer due to following reasons:
I. Notice by Customer
The banker closed the account of the customer in the application the customer for closing his
account.
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III. Customer’s Insanity
If the customer becomes mentally ill, this terminates the banker’s customer relationship
comes to its end, in such as situation, it is usually considered that the banker’s authority to
pay his customer’s cheques is revoked by notice of insanity. However, the bankers treat their
customers as it unless a fairly conclusive evidence of the customer’s insanity is available to
them.
A court of law may serve a banker with an order in garnishee proceeding in execution
of a decree prohibiting him from honoring a customer’s cheques
V. Customer Insolvency
Insolvency is civil death, therefore, the insolvent adjusting loss his rights receiver of
liquidates. As soon as the receives the notice of insolvency of his adjusting, or petition filed
for adjusting a filed customer insolvency, his authority to pay cheques or to accept of honor
bills to take any other action on behalf of his insolvent customer comes to end.
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CLEARING DEPARTMENT
In the clearing department the Incharge of this department Mr.Fiaz Shah helped me a lot in
understanding the procedure of clearing. Clearing department in MCB Sheikhupura is still
working manually whereas in some branches of MCB in different cities uses ORACLE
software by the name of SYMBOLS. Every banker acts both as a 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.
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.
• Transfer cheques
Are those cheques, which are collected and paid by the same branch of bank.
Are those cheques, which are collected and paid by two different branches of the
same bank, situated in the same city.
• Clearing cheques
Are those cheques, which are drawn on the branches of some other bank of the same
city or of the same area, which is covered by a particular clearing house.
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• Collection cheques
Are those cheques, which are drawn on the branches of either the same bank or of
another bank, but those branches, are not in the same city.
CASE-1
If the customer come with a Transfer cheque then a token is given on Transfer
cheques when presented to bank for payment. In this case payment is made at the spot
to the cheque holder. (Detail will be on Cash Department)
CASE-2
If the customer come with a Transfer delivery cheque then First of all cheques are
noted in Transfer Delivery Ledger with the date in advance because it takes one day
to reach cheque issuing branch in the same city. In transfer delivery Ledger Name of
account holder, Number & amount of Cheque are written and two copies, one original
and one carbon copy of voucher SF-73 B are prepared. Original copy of voucher
along with cheque is send to issuing branch while carbon copy and Pay-In-Slip is
with the bank. The cheque with voucher goes to Main branch then to issuing branch
and then reverse from issuing branch to main branch and then to our branch.
CASE-3
If the customers come with a Clearing cheque then such cheques are collected as
clearing cheques and are noted in Clearing Ledger. Two copies of voucher SF-37 are
prepared. Original voucher with the cheques are send to Main branch which then send
to NIFT (National Institutional Facilitation Technologies) in advance date. The
payment is not given at hand but it is transferred to account of account holder. In case
if cheque is returned due to number of reasons then the objection is finished and again
send to main branch but this time a credit voucher along with original cheque is send
to main branch instead of any Pay-In-Slip.
CASE-4
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When customer comes with a cheque which is from another city then it is grouped as C.C.
then SF-37 form is used in Cheque collection, Original voucher with cheque is send to main
branch in that city. Carbon copy with Pay-In-Slip is taken by bank for record purposes.
Types of Clearing
1. Inward clearing
2. Outward clearing
• Inward Clearing
Cheques signed by MCB main branch Sheikhupura’s customers are given by them to other
parties and they deposit those cheques in their account.
When bank receive those cheques in clearing, it debit customer’s account and credit the
clearing control account. If the bank returns them there is no entry in system but in cheque
returned system.
• Outward Clearing
Customers of MCB main branch Sheikhupura’s receives cheque from other parties which
belongs to a different bank within the city, and they want to deposit those cheques in their
account.
MCB’s customer deposit their cheques with deposit slip signed and proper scrutiny, the bank
provide them a receipt after affixing stamp. At the end they make a summary and bundle
cover the today’s clearing sent and handover those cheques to the NIFT rep and detach
deposit slips. Then the bank post the credit entries for customer with 3 float days and clearing
control account is automatically debited.
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Clearing control account is the account that enables funds transfer from SBP to Head office
to our branch.
Special Collection
NIFT has given the facility of clearing to banks, and cheques are cleared within 3 working
days. There is another option to get cheques cleared within one working day (24-Hrs/Same
day Clearing) and even NIFT provide the 3-Hours clearing. This Option is available only to
branches in Mall Road Area i.e. Egerton road Branch or Head Office Neela Gumbad Lahore
branch, etc.
Pay-In-Slip
Purpose
• Whenever we want to deposit cash in our account then pay-in-slip is used by writing
amount on it and depositing it to cashier along with money.
• Whenever we have cheque from any party to be collected in our account we fill pay-
in-slip. One part is attached with cheque and another is given to cheque holder as a
receipt.
Cheque Returns
Customers sending their cheques through clearing are subject to availability of funds, and
their perfection in every regard. Every bank has the right to reject cheque for payment in
clearing for some common points enlisted in cheque return memo SF-16 .Other banks reject
cheques on similar grounds.
Only an Account holder can apply in written to stop payment for a lost cheque. The
concerned officer verifies his identity, fill application on
SF- 16 and gets customers’ signature. Then on verification by branch manager, he marks
caution as stop payment of the cheque in the system.
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REMITTANCE DEPARTMENT
Transfer of money or equivalent to money from one branch to another branch of the same
bank is called remittance. Now it is become easier and safer method both for the client and
banker to transfer their money from one branch to another within the city and outside the
city.
Originating branch
It is the branch from which money is send to another branch or the point of origin of
remittance.
Responding branch
The branch which receives the instrument or money for remittance is known as Responding
Branch.
TYPES OF REMITTANCE
• INWARD REMITTANCE
• OUTWARD REMITTANCE
• INLAND REMITTANCE
• FOREGIN REMITTANCE
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INWARD REMITTANCE
The branch receives the instrument directly from the customer or from the originating
branch, and is responsible to pay to part is called inward remittance.
OUTWARD REMITTANCE
The branch, which issues or sold the instrument to the responding branch is, called outward
remittance.
INLAND REMITTANCE
Transfer of money from one branch to another branch of the same bank within the same
country is called inland remittance. In this case both originating branch and responding
branch will be situated in the same country.
FOREIGN REMITTANCE
Transfer of money from one country to another country is called foreign remittance. In such
case may be originating or responding branch will be out of the country, and mostly
conversion of foreign currency is involved.
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SF-100 Funds Transfer Application is the general form for any type of funds transfer.
Demand draft is a meant of payment. The bank issues a cheque on one of its branches or on a
correspondent in settlement of a payment. A customer can get himself issued a Demand Draft
either through cash payment or the amount can be debited from account.
Charges involved commission, postage, and federal exercise duty as per schedule of charges
are then paid either through credit cash voucher or can be debited from account as well but
Federal exercise duty in cash as per SBP regulation.
After this the Remittance officer enters all the information and detail of Demand draft in the
computer using SYMBOLS software and print the Demand Draft on pre-printed DD
provided by head office.DD number also entered in the DD issued register as well.
Remittance officer applies TEST part-II and then hands over to the operations manager to
apply part-I. Then after signature of IBS (inter Branch Signature) holders DD instrument is
handed over to the customer, and the advice in the form of a batch is sent to payee’s branch
as well.
In case of DD payment if DD arrives before advice, then the batch received, TEST, IBS
and telephonic confirmations are enough to confirm its genuineness and the payee can be
paid the amount. When SYMBOLS will take over all prevailing banking systems, there will
be no need of any advice. If both are present then entry in DD payable register is marked,
head office is debited and payee’s account is credited, or clearing control account debited if
received in clearing.
Demand draft is not issued to minors and discouraged for walk-in customers.
Customer can present original DD, fill & sign a DD cancelation request in order to cancel the
Demand draft. Then with the authorization of branch manager, the amount will be credited to
his account.
Revalidation
If a customer lost his DD before delivering to payee’s branch, it can be reported as lost DD
and be canceled. The procedure requires confirmation of non-payment from payee’s branch,
and an FIR with police station, and then stop payment is marked in both branches.
A pay order is written authorization for payment made in a receipt form issued and payable
by the bank to the person named and address.
Pay Order is used as instrument for transfer of money within station or city.
Pay order is written order, which is issued and received by the same bank or drawn and
payable on same branch. For pay order it is not necessary that applicant should be account
holder. It is used for local transference of money from one person to another. The bank
charges excise duty and flat rate from the applicant.
Pay order numbers are also issued to officers by operation manager, and on issuance are
recorded in pay order register. When pay order is debited and PO account is credited. Pay
orders are issued to customers as well as for bank’s own payments to couriers, etc.
On payment, beneficiary account is credited and PO is debited. Pay orders can be paid in
clearing/cash/transfer, and issuance of duplicate Pos is also the same as above. Pay order
payable account is balanced weekly and it should also show a credit balance.
• Transfer of funds from one branch to another branch of the same bank with in or out
side the city is called mail transfer.
• In this method extra charges is received if the customer wants to fax the M/T to the
destination Branch.
v) Advice to customer
In case where the customer is not account holder of the bank then the customer will have to
deposit the amount which he wants to transfer under Mail. Then the above said procedure
will be done.
• Transfer of funds from one branch to another branch of the same bank or upon
other bank under special arrangements. This type of transfer is simple
Parties
• Applicant
• Drawing branch
• Drawee branch
• Beneficiary
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TT issuance
TT payment
• TT can be received through the mail or by receiving the telephonic message in both
cases the test is checked by the officer.
• TT Receipt Register.
• TT Payable Register.
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• All the TT inward must be controlled through number.
• The officer enters it into the TT receipt and the payable register.
• Credited the amount to the party’s account on the same day and cash is paid.
This department deals in RTC. It stands for Rupees Travellers Cheques. MCB RTC has the
largest share of the total RTC Market. Over 1.5 Million satisfied customers have made MCB
RTCs. These are printed in the UK and carry a thread watermark- a feature that prevent
counterfeiting.
Important Features
As good as cash
The most convenient substitute for cash for all kinds of transactions (property, trade, personal
etc).
Denominations
Cheques are available in the denomination of Rs 1,000/- & 10000/- only
Easily Encashed
They can be encashed at any MCB branch.
Easily refundable
In case of Loss or Theft we can get the full amount back.
Televerification System
It enables us to check the validity of cheque 24 hours a day. Televerification UAN (021) 111-
000-456.
Procedure
First of all RTC-10 is given to customer. It is filled and then cash is deposited to cash
department . One copy is for office and one copy is given to the customer and RTC are
issued at that time. When RTCs are sold then H.O A/C is credited by using form no RTC-20.
A, B, C, D, E.
When RTCs are returned or purchased by the MCB then H.O is debited by that amount by
using form RTC-30. Summary of al RTC purchased by branch is made on form RTC-40.
Cross-Branch Transaction(CBT)
SYMBOLS allow CBTs in a very manner, allowing customers to debit or credit others
account. This is possible with CQWI entry and hence a transfer facility that only used to
be valid within branch only. This is the reason, SYMBOLS is truly commended as the
radical change that converted a branch’s customer to the Bank’s customer. In MIBS
however, CBT is possible when customer duly fills out the CBT slip, deposits cash and
hands it over to Remittance officer. He then verifies beneficiary’s account and then
transfers the amount if branch is online. But in my observation, most of MIBS branches
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were offline. Otherwise CBT is sent on SF-180 mentioning beneficiary’s account and the
amount and then couriered to the drawee branch.
Online Transfer
Internal Transfer is transfer of funds from one branch to another branch of MCB within or
outside the city, from one account to another through Internet.
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Advances & Credit 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
man For getting the advance the following steps are there:
3. Sanction advice
Accurate and upto date financial statements of last two years for comparison
purposes.
Market report on the borrower where borrower has maintained an account with
another bank, a report from his bank should also be obtained.
For obtaining credit, party has to submit the last two years Balance Sheet and Profit & Loss
statement duly attested by authorised auditors. If the party is also involved in export or
import business then the bank also considers the data of three years about import & export.
Current debt and equity ratio is also calculated by the bank. The type of data required to
prepare the credit proposal is to be gathered from the different departments. Some data is
obtained from the foreign Exchange department. Some data is available in Advance
Department. The purpose of obtaining Credit should be explained clearly. The securities
offered by the party to the bank are also evaluated. In case of pledging of property in shape
of land or building the complete evaluation of the property should also be attached
After all the necessary documents for applying for advance is fulfilled by the party then the
case is sent to Manager for approval. If the credit limit is in his range then he can decide over
it otherwise the case is forwarded to seniors. If there is any discrepancy then the party is
informed of it.
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.
Sanction Advice:
When the documents required are complete and there is no ambiguity then the party is
advised that their credit or loan is approved and will be available to you soon. There is a
separate form for every annual approval or in case of a new facility.
Purpose
Security/ Collateral
Margin (%).
Validity
• The bank reserves the rights to revise / amend / modify the rates of mark-up
commission or any other conditions of the liabilities within the period so decided by
the Bank.
• The bank shall have full authority to cancel the facilities allowed without assigning
any reason and to call for adjustment of the liabilities within the period decided by
the bank.
• The hypothecationed goods, building and machinery must be insured at all times
against the risk of fire, strike, burglary, malicious damage risks withthe bank as the
mortgage and yourself as a mortgager, and the relevent policy held by us.
• Assets hypothecated to the bank will have to be insured at all times for full market
value. The insurance policy will be made in the joint name of the company and the
bank. The relevent insurance policy will be held by the bank along with the premium
payment receipt.
• Stock statements together with a list of book debts are to be submitted at the end of
each month to reach us by the first week of the following month.
• The bank would undertake the inspection of stocks from time to time and in any case
atleast once in the calendar year.
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• Audited accounts should be submitted to the bank within six months of date from the
date of your financial year end.
• All levies and taxes now or at any time here after levied and payable in respect of the
financial accommodation and banking facilities set out in this letter will be
exclusively borne by you.
• For any change in any ownership, prior permission of bank shall be obtained
otherwise existing owners shall also continue to be liable.
LOANS
Loans are monetary assistance by a financial institution to a business, individual etc. The
loans are granted by the bank in lump sum, so these types called fixed or demand loans.
Interest is charged on the whole amount of a fixed loan. 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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i) Stock pledged must be readily saleable
ii) Products should be readily saleable
iii) Advance should be within the borrows means
CASH CREDIT
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 credit is usually given against the securities of goods or merchandize as follows:
3. MORTGAGES OF PROPERTY:
Title deeds of immovable property are accepted by the bank only as collateral security or
alternatively as unauthorized security.
Types of Advances
MCB provides advances, which are of two types. These are as following:
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Non Fund Based Advances
There are following types of advances, which are given to customer on fund basis.
a. Industrial loan
b. Commercial loan
c. Agricultural loan
a.Industrial Loan
Loans are given to industrial units including cottage industries up to or less than RS. 20
million. Loans and advances shall not exceed amount specified by marginal restriction on
the type of securities offered. Industrial loans are granted to the manufacturing section of the
economy including finance for fixed investments and working capital requirements of small
industries.
Loan Period
Loans are allowed for a maximum period of 5 years including a maximum grace period of 1
year. In special case up to 10 years also, depending upon the merit of the case.
b.Commercial Loan
Total principal amount of loans to a single enterprise/borrower shall not exceed RS. 0.5
million. Maximum maturity is 3 years, depending upon the nature and type of advances,
decided upon case to case basis.
Mark-up
Both for commercial and industrial loan mark-up will be charges as per existing rate, subject
to changes from time to time.
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Mode of Repayment:
Equal monthly, quarterly or half-yearly, repayment of principal and interest or as per term of
approval.
c.Agricultural Loan:
Bank provides the agriculture advances in order to enhance and support the agriculture sector
of the country. Bank’s Agriculture division deals with the agriculture advances. These
advances are of following types:
1. Farm Credit
1. Farm Credit
These are the credits provided by the MCB or purchases of inputs for development of
agriculture sector. Following are two main Sub classes of Farm credit.
Production Finance:
These are short term loans. These laons are provided to farmers for purchases of different
types of input, for example seeds, fertilizer, and pesticides.
Development Finance:
These are medium or long term loans. These loans are provided for the development of
agricultural sector. Main Purposes of these loans are as under:
To purchase tractors
Fish Farm
Cattle Farm
Poultry Farm
Dairy Farm
• Demand finance
• Running finance
• Cash finance
There are two type of advances which come under Non Fund Advances.
Guarantees.
Letter Of Credit.
Guarantees
Introduction
Bank examines customer’s relation with the bank 7 the nature of the business. Bank also sees
his past business with the bank. Sometimes bank issues Guarantee on the behalf of the
customer by getting some margin from him. This margin may vary from customer to
customer.
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Procedure
Bank charges a commission on the amount for which guarantee is issued. Normally the
validity period of guarantee does not exceed one year. After the guarantee has been issued, a
copy of same is issued to the counter guarantee issued to the customer.
LETTER OF CREDITS
Bank opens Letter of credit on the request of its customer who wants to import
something from abroad. Bank only provides this facility to its current foreign currency
account holders. There are four parties involved in L/C,
Buyer or importer
Seller or Exporter
The guarantee taken by the bank with its customer is known as charge form. The detail of
contract, which is supplied by the exporter to importer, is known as Performa invoice.
To open an L/C, bank must receive a request from the foreign currency account holder to
open an L/C. bank sees which kind of collateral customer provides. Customer has to fill
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Import forms (I.B Forms), which has all the details of Promissory note, Details of L/C, and
short-term loan Performa if required. Branch forwards his request along with the detail of
collateral and Performa invoice to the circle office for the approval of L/C. They examine all
the terms and conditions after doing so, circular office approves or rejects the concerned
Personnel to open an L/C or not. If approved, bank opens L/C. Importer bank pays the
required amount to the exporter bank after the importer has received the shipment. Bank
insures all the goods being imported on the request of importer. Client has to bear all the
insurance charges.
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FOREIGN EXCHANGE DEPARTMENT
Foreign exchange department is very important department of bank. This department deals
with foreign countries. The function of this department is just like general banking with the
difference that it deals in foreign currencies. This department is further divided into
following main heads.
• IMPORT
• EXPORT
• FOREIGN REMITTANCE
IMPORT:
In this department, bank provides the facility to importers and manufactures to import
machinery, raw material and products from other countries.
1. Pledge of stock
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2. 100% Margin as a security
DOCUMENTATION:
After taking the security Bank gave him I-Form (Import form) and request for following
documents.
After taking documents and filing the I-Form the bank sends these documents to the Trade
Service Center, Nila Gumbad, Lahore.
After the verification of these documents, the importer bank opens the L/C in favor of
exporter bank send this L/C to the Exporter bank. Now the agreement between importer
banks and exporter bank. On the behalf of this L/C exporter sends the goods to importer and
send the L/c’s original shipping documents to the importer’s bank and request fort payment.
When documents come to the importer’s bank then bank inform the importer about his
documents and request him for his due payment.
If the importer has some time to make payment to the bank, but the bank made payment to
the buyer’s bank, it is called payment against documents.
In the other case, If the importer did not retire their documents from the bank, then the
importer bank gave the payment to the exporter bank on the behalf of the importer but in this
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condition the importer bank pledge his imported merchandise in his custody and gave the
finance against these imported merchandise.
The imported makes the payment for his imported goods (as much he wants to release from
bank) to the bank. When importer made all financed payment to the bank, then bank will
release all the imported goods and close the L/C from its books.
EXPORT:
In this department, the bank also provides the facility to export the goods to other countries.
REQUIREMENTS:
If the exporter wants to export the goods to the other countries then he has following
requirements
PROCESS:
If the exporter fulfill the above requirement then the bank provide E- Form (Export Form).
After the completion of E- Form the forex manager verify it. Then exporter export the goods
and after the shipment he gets B/L (Bills of Lading). Exporter gives all these documents to
the bank and make a request for payment from the importer.
SOURCE OF PAYMENT:
Exporter’s bank gets the payment from the importer from the following three sources.
1. Advance payment
2. Letter of credit
3. D/A
In case of advance payment importer send full amount of invoice to the exporter so that he
can make all the productions easily. In the case of L/C, importer open L/C in the favor of
exporter and exporter feel secure to send his goods to overseas, as there is a guarantee of
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advising bank to sure its payment. In both these cases export’s risk for loosing its payment is
also zero percent.
But in the case of D/A, exporter and importer make full confidence on each other, because in
this case importer make payment after the 180 or 90 days after the shipment of goods. This
type of export only made to that importer, on which, exporter have full confidence on
importer to make payment on the prescribed time, committed on the performa invoice.
FOREIGN REMITTANCE
TYPES OF REMITTENCE:
1. INWARD REMITTANCE
2. OUTWARD REMITTANCE
INWARD REMITTANCE:
In this department a lot of amount come from the foreign country. The amount, which comes
from, the foreign country called INWARD REMITTENCE.
MODE OF PAYMENT:
The foreign exchange department mostly TT (Telegraphic Transfer) used for inward
remittances.
The minimum amount is 10000 dollars which the account holder receive from foreign
country without any inquiry. If the amount is above 10000 dollars then the State Bank asks
the purpose of this amount through the Remittance Purpose Form.
OUTWARD REMITTANCE:
The foreign exchange department also provides the facility to customer to remit. Their funds
to overseas education purpose, and for some business purpose.
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Although, the State Bank of Pakistan fixes many kinds of restrictions to outward remittance,
so it is the duty of in charge of forex department to keep these remittances in order to
compliance with SBP regulations.
Only foreign currency account holders are allowed to make a outward remittance freely
without any hesitation. The person who are not maintaining the foreign currency accounts
face many problems and sometime it is impossible for them to send their funds abroad to
fulfill their desire or needs.
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FINANCIAL ANALYSIS OF MCB BANK
The financial analysis of MCB BANK are divided into two parts
1. General Analysis
2. Specialized Analysis
1. General Analysis:
General Analysis of bank are further divided into three main categories
Solvency Analysis
Profitability Analysis
Investor Analysis
2. Specialized Analysis
Solvency Analysis
The ability of a business to pay its long term debts. Solvency analysis of a firm indicates the
amount of the other people’s money being used to generate profit. In general, these analyses
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are more concerned with long term debts, because these commit the firm to a stream of
payments over the long run.
i. Debt ratio
ii. Proprietary ratio
iii. Debt to equity ratio
i. Debt ratio:
Total Debts
= Total Assets
Debt ratio
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ii. Propritory ratio
Total Equity
=
Total Assets
Proprietary ratio
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iii. Debt to equity ratio:
Total Debt
=
Total Equity
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Solvency Analysis:
Critical Analysis:
The overall solvency ratios are showing poor trend as compare to previous year.
The contribution of debt in the business is increasing, while the equity
contribution is decreasing which is not better for business. Debt ratio is
increased which shows the poor solvency condition of the bank. Solvency Ratio
is in bad condition. So we can say that overall Solvency condition of the MCB
Bank is unfavorable with the comparison to the year2007.
b.Profitability Analysis:
The ability of a business to generate return for the owner. Profitability analysis of a firm
indicates the overall efficiently of the management. Without profit a company can not attract
the outside capital. Profitability analysis includes:
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RETURN ANALYSIS
i. Return on investment
ii. Return on asset
iii. Return on equity
i. Return on investment:
Net profit
= × 100
Amount invested with in the
business
Return on investment
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ii. Return on asset:
Net Profit
= × 100
Total asset
Return Analysis:
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Name of 2008 2007 Result Reason for change
Ratios
Critical Analysis:
The return analysis shows the effectiveness of management towards utilization of resources
to generate return. The major calculations of MCB BANK indicate that return ratios are also
unfavorable. As all return ratios basically depends upon the net profit which is decreasing.
ROE>ROI>I
In 2007 28.6%>5.5%>I
In 2008 25.48%>4.4%>I
Although in 2008 ROE>ROI>I relation is favorable, but as compared to base year the ROE
or ROI is less in current year which is unfavorable.
C.Investor/Market Analysis:
Market Analysis:
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The strength of a particular business in the market.
OR
Investor Analysis:
Marketability
i. Price earning ratio
ii. Book value per share
iii. Market to book ratio
13 to
Net income available
stock holder 7
Number of shares
=
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Year 2008 2007
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100 – 28.77 = 71.23%
Dividend per
share 1.08%
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Dividend yield 12.44% 1.88% favorable
ratio
Dividend per
share 1.08%
Dividend 64.16% 28.77% favorable
payout ratio
Critical Analysis:
One of the concerned of the prospective investor is the prompt return on his investment. The
comparative analysis of the MCB BANK indicates that the investor short term goals have been
achieved with the performance of the MCB BANK. As all indicators except EPS (which is decrease
little bit due to decrease in net income) is favorable for the investor.
One more strength of the MCB BANK is the ability to payoff the dividends which is very much high
in the current year as compared to base year.
• Marketability:
i. Price earning ratio:
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Price earning ratio
Total equity
= Number of × 100
shares
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iii. Market to book ratio:
Market price per
share
Marketability:
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Name of 2008 2007 Result Reason for
Ratios change
68.54%
68.54%
Critical Analysis:
Marketability is also important for investor analysis because it works for achievement of long term
goals.
The marketability of a MCB BANK is unfavorable because majority of the ratios shows negative
results.
As people are ready to pay more but this favorable market potential is associated with the performance
of the MCB BANK instead of market factor of the bank.
Conclusion:
It is concluded from the analysis that the MCB BANK is unfavorable for long-term objective but it is
favorable for short-term objective of the investor.
Specialized Analysis:
Bank ratio analysis is little bit different from other organizations and if we want to see the
real picture of a bank we have to focus on given special ratios.
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i. Earning assets to total assets
ii. Return on earning assets
iii. Net margin to earning assets
iv. Loan loss coverage ratio
v. Deposit time capital
vi. Loan to deposit ratio
Earning Assets
= × 100
Total Assets
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Earning asset to total assets
Critical Analysis:
This is the activity ratio of the bank. It shows how effectively the management puts its asset
into work.
It describes the relationship between earning assets and the total assets of the bank. This ratio is
describes in percentage. In year, 2008 there is increasing trend in this ratio. This is healthy
indication because the increasing trend of this ratio is favorable. It shows that the bank utilize
its resources in effective way
= × 100
Earning Assets
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Year 2008(000) 2007(000)
Critical Analysis:
This is the profitability ratio of the bank. It shows the quality of the earning assets of the bank.
That how effectively the assets of the bank are put into work.
It describes the relationship between the net profit after tax and the earning assets of the bank.
This ratio is describes in percentage. In 2008, the return on earning assets has been decrease
from 4.8% to 4.2%. This is not a healthy sign because the increasing trend of this ratio is
favorable.
Net margin
= × 100
Earning Assets
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Year 2008(000) 2007(000)
Critical Analysis:
This is also the profitability measure of the bank. It shows how effective the management of
the bank controls the spread of markup expense. The higher answer shows the real quality of
earning assets.
It describes the relationship between the net margin and earning assets. This ratio is describes
in percentage. There is an increasing trend in this ratio in current year as compared to base
year. This is a healthy sign because the increasing trend of this ratio is favorable.
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Higher ratio indicates that the bank has received more interest income against cost of income
(interest expense).
This ratio provides a protection to the persons who are depositing their money. Higher ratio
provides higher level of protection to the existing loan and ultimately customers of the pretax
income when divided by net charges off it gives us loan loss coverage ratio.
There has been increasing trend from 8.61 to 17.4 respectively. This is healthy sign that shows
the favorability for the bank.
It shows the confidence over the bank management and customers feels their money in secure
hands.
13
Equity
7
=
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Critical Analysis:
This ratio is known s debt to equity ratio of the bank. It is the two folded ratio both higher &
low have their own prospects.
This ratio is between the deposits and the equity of the bank. In 2008 the deposits time
capital has been increase by 5.8 to 5.1, which shows the increasing.
The increasing trend shows the higher deposits of the bank. This indicates the growth of the
bank.
Deposit 13
7
=
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Critical Analysis:
It is debt coverage ratio, which provides protection to the depositors with reference to their
original amount.
Loans or advances are the major liabilities of a bank. Higher ratio shows the better solvency of
bank. This ratio is increased in current year as compared to base year because advances of the
bank are increased as previous years although Deposits are also increased this year but its ratio
is less.
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MCB SWOT ANALYSIS
Strengths
MCB bank has a strong financial back.
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Has the largest deposits reserve.
Has the advantage of operating more than 1023branches all over Pakistan. This strong
network of branches is one of the biggest strengths of MCB.
Has the largest network of ATMs.
MCB has won the award of best domestic bank from past 5 years.
MCB has the maximum account holders in Pakistan.
MCB is the most profitable Bank of Pakistan.
Enjoying the strong competitive position.
MCB has trained and highly skilled workforce.
MCB possess best technology and its new software named Symbols has reduced their
transaction time and fastened the operations.
Has the advantage of being the first privatized bank in this era of privatization.
MCB has the highest share price of Rs. 172.94 in market.
Weaknesses
MCB staff is less cooperative because they have given a lot of workload.
MCB does not advertise aggressively and there promotional campaigns are very few.
MCB is currently downsizing the staff so other employees are loosing confidence and
looks unhappy.
Employee turnover rate is high.
Employees are not well aware of the modern technologies and software. They need
proper training and development.
Employees are less motivated because referrals are given importance and preference
over them.
Opportunities
Industry is growing and there is demand of banking in market. In fact no business is
complete without banks now a day.
Banking Sector has high growth rate worldwide.
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Foreign market is the big opportunity for MCB.
MCB can cater the new untapped markets like lower income class.
MCB can focus on the main and possibly growth oriented industries like the
agricultural, textile, fashion designing etc for investments.
Banking industry is highly profitable and has high growth opportunities.
MCB could also contact with the overseas banking companies and invite them to
Pakistan so that direct trade relations could be built.
Threats
Because of large number of new entrants and large number of existing competitors,
MCB faces intense competition. There are huge numbers of foreign and domestic banks and
new banks are still coming into market that makes competition more intense.
The political instability and inconsistency is another threat to the bank.
Foreign industries do not prefer to work with Muslim nations.
Muslims hesitate to work with banks because they think that banking is against their
religious values.
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PROBLEMS
Following are the identified problems;
SYSTEM BREAKDOWNS
The internal computer system is quite slow and often gets hanged up. The Bank
software Symbols has been newly introduced and is incurring some problems. Most
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of the time system gets offline from the head office and customers have to wait in
queues.
Another technological problem is related to ATM machines. Most of the time
customers come into the branch and complaint about ATM machines.
Another problem that I found out while doing mine internship in MCB, is that
the new changed upper management of MCB now a days adopted the Phil
posy of firing or not giving adequate opportunities to the older staff. This is a
very big and major issue among the senior employees of MCB, as they have
spend almost decades serving this bank and now they are facing this problem,
this all leads to low confidence, less attention while performing their tasks,
and automatically this all leads to less effective work.
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RECOMMENDATIONS
Following are the main recommendations according to the problems MCB facing;
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REDUCE TECHNOLOGICAL BREAKDOWNS
MCB possess the best technology but they should focus on proper maintenance so that
technological breakdowns and other related problems would be reduced.
TEAM WORK
MCB should form teams of employees and should operationalize management by objective
technique. In team, employees will be able to achieve complex tasks efficiently in less time.
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REDUCE CUSTOMER COMPLAINTS
MCB should try to reduce complaints and should provide high quality customer services that
customers wish to receive. For this purpose MCB should increase the motivation of
employees and should reduce the technological breakdowns.
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It is evident from this report and the financial statements of MCB that it is making progress
by leaps and bounds. The profits of MCB have grown considerably during the last few years
and this trend is expected to continue into the future. Therefore, we conclude that MCB has a
very prosperous present and future, which assures the shareholders of wealth maximization.
Side by side of it we think that if bank would be able to cover and control on the above
mentioned recommendations then it would be in such a situation that will really lead it
towards the road of prosperity, development and integrity. And with the above mentioned
sentences we think there is too fault of the customers and in order to make the proper
working of the bank the customers should also cooperate with the bank which will be really a
good, ambitious and diligent condition for the bank. And then bank will be really in such a
situation and position to compete its competitors in the country as well as on international
level.
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C
CREDIT CARD:
A plastic card issued by a bank authorizing payment for purchases. Interest is charged on the
outstanding balance
CREDIBILITY:
CREDIT:
Credit is defined as direct or indirect lending enabling a person to take possession of goods for future
payment.
CHEQUES:
It is a written order of the depositor upon a bank to pay to or to the order of designated party or to a
bearer, a specified sum of money on demand.
D
DEMAND DRAFT:
It is a written order, drawn by one office (branch) of a bank upon another office (branch) of the same
bank, to pay a certain sum of money to or to the order of a specified person
M
MUSHARAKH:
It is an agreement under which the Islamic bank provides funds which are mingled with the funds of
the business enterprise and others. The profit is distributed among the partners in pre-determined
ratios, while the loss is distributed by each partner in proportion to his contribution.
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MUDARABA:
Sale on profit; Cost plus profit, sale at stated cost price and mark-up, sale at a specified profit margin.
MARK UP:
Yield Spread Premium is the markup your loan originator adds to your mortgage interest rate,
frequently without telling customer
MORTGAGE:
The mortgage generally means the transfer interest in specific property by the borrower to the lender
for the purpose of securing loan.
N
NEXT TO kin:
The person who is legally entitled to receive the balance in case of death of account holder.
O
ONLINE:
Means transfer of money within a minutes through computer system from one branch to another
branch.
P
PAY ORDER:
It is a written order, drawn by one office (branch) of a bank upon itself, to pay a certain sum of money
to or to the order of a specified person.
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S
SCRUTNY OF CHEQUES:
Check the cheques/documents whether they all are correct and complete.
T
TELEGRAPHIC TRANSFER:
Transfer of funds from one branch to another branch of the same bank or upon other bank under
special arrangements.
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A
Awards 29
Account opening 61
BOARD OF DIRECTORS 34
BILLS PAYMENT 42
BUSINESS ACCOUNT 58
CASH DEPARTMENT 49
CURRENT ACCOUNT 63
CHEQUE BOOK 73
DEFINATION OF BANK 4
EXECUTIVE SUMMARY 1
EVOLUTION OF BANKING 3
EXCELLENCE 28
FIRST PHASE 11
FOURTH PHASE 14
FOREIGN TRADE 20
H
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HISTORY OF MCB 17
Innovation 26
Joint account 64
Minor account 72
Nationalization 18
Remittance department 92
Saving account 63
Specimen sign 81
VeriSys 81
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Books:
Gibson. “Financial Statement Analysis” Edition 8th
Web Sites
< www.mcb.com.pk>
<www.sbp.com.pk>
<Www, brecorder.com>
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