Ali Sial Internship Reports on Mcb Bank Ltd

8/8/2019 Ali Sial Internship Reports on Mcb Bank Ltd

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INTERNSHIP REPORTS ON MCB BANK Ltd.

ALI NAWAZ KHAN

(9830)

Submitted in partial fulfillment of the requirements for the degree of Master in Business

Administration

At

National University of Modern Languages

Islamabad, Pakistan

September 2010

Copyright by ALI NAWAZ KHAN 2010


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NATIONAL UNIVERSITY OF MODERN LANGUAGES

Faculty of Management Sciences

It is hereby certified that the report has been thoroughly and carefully read and

Recommended to the Faculty of Management Sciences for acceptance of Final

Internship Report. By Ali Nawaz Khan Roll No. 9830, Session (Aug

2008 to Jun 2010) /Eve, in partial fulfillment of the requirements for the degree of

Master of Business Administration of National University of Modern

Languages Islamabad.

Dated: Sep. 2010

Supervisor Name ____________________________

Supervisor Signature ____________________________

Panel Member Name ____________________________

Panel Member Signature____________________________

Head of Department: _________________________

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Acknowledgement

First of all I would like to thanks to Allah on this occasion also want to show my gratitude

To my loving parents and humble teachers who make me able to be At this position.

I also thankful to all the staff of MCB I-9 Branch Islamabad especially Mr. Abid Rafiq

Dogar (Branch Manager) and Muhammad Yasin for their cooperation in my work.

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DEDICATION

This Report is dedicated to my parents and especially my brothers Qasir and Tabassum

whose supports and prayers give the result to me in the shape of MBA.I am also thank full to my teachers especially Sir Javad Jawad Sb. Whose support and guide me for preparation of this Report.

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Executive Summary

MCBBank Limited Has a solid foundation of over 50 years in Pakistan, with

network of over 1000 branches, over 850 of which are Automated Branches, over 350

MCB ATMs in 41 cities nationwide and of over 12 banks on the MNET ATM Switch.

MCB's operations continued to be streamlined with focus Rationalization of expenses,

realignment of backend processing to increase productivity, enhancement of customer

service standards, process efficiency and controls. The Bank has taken the lead in

introducing the innovative concept centralizing Trade Services in country by providing

centralized foreign trade services to branches a view to improve efficiency, expertise and

reduce delivery cost.

During my internship in MCB I worked in Remittances, Advances, Foreign Exchange and

Customer Service department and I successfully completed all the task that were assigned

to me.

During the course of internship I learned about different functions performed

Remittances, Advances, Foreign Exchange Customer Service Office department and bank

as a whole. I also learned banks correspondence with their customers and within

branches. I learned about documentation requirements record keeping for different

activities and processes, especially the documentation requirement for different kinds

financing facilities.

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Table of Content:

Title Page i

REGISTRATION FORM ii

Acknowledgement iii

Dedication iv

Executive Summary v

Table of Content vi

CHAPTER # 1 01

INTRODUCTION 01

BACKGROUND OF THE STUDY 01

LIMITATION OF THE STUDY 02

OBJECTIVES 02

METHODOLOGY 02

ORGANIZATION 03

SUMMARY 04

CHAPTER # 2 ROLE OF SECTOR ANDORGANIZATION 05

INTRODUCTION: 05

HISTORY OF BANKING IN PAKISTAN 05

ROLE OF THE ORGANIZATION IN PAKISTAN 08

OVERALL ORGANIZATION AND FUNCTION OF OR IN PAK.09

Vision Statement 10

Mission Statement 11

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VALUES 12

FUNCTIONS 13

FINANCING 14

Auxiliary function 16

ORGANIZATION OFFICE IN, WHICH YOU ARE WORKING 18

SUMMERY 19

CHAPTER # 3 HISTORY OF ORGANIZATION 20

BRIEF HISTORY OF ORGANIZATION 20

NATIONALIZATION

PRIVATIZATION 21

Awards of MCB 22

Present Status 22

RELATIONSHIP OF HEAD OF TO BRANCHES 24

MAIN DEPARTMENTS AND THEIR JOBS 24

INWARD CLEARINGS 27

OUTWARD CLEARINGS 27

ISSUANCE OF CHECQUE BOOKS 28

CANCILATION OF ATM CARDS 29

PAYMENT OF RETIREMENTS 30

FOREIGN REMITTANCES 30

ADVANCES/CREDITS 31

BASIC BANKING ACCOUNTS 32

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PAK RUPEE OR FOREIGN CURRENCY DEPOSITS 32

SAVINGS ACCOUNTS 32

MCB RUPEE MAXIMIZER ACCOUNT 33

CURRENT ACCOUNT 33

KHUSHALI BACHAT ACCOUNTS 33

MCB ENHANCED SAVING ACCOUNT 34

MCBS PARTNERS IN BILL PAMENT 35

INVESTMENT BANKING 35

ABOUT REMIT EXPRESS 36

OFFICES OR FIELD OFFICES 37

MCB BRANCH NETWORKS 37

CURRENT STAFF 37

WORKLOAD 39

RESPONSIBILITIES 39

CRITICAL ANALUSIS OF THE BRANCH 40

PERFORMANCE 40

SUMMERY 41

CHAPTER # 4 POLICIES 42

INTRODUCTION 42

POLICIES 42

RISK MANAGEMENT 43

SUMMERY 47

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CHAPTER # 5 DIFFERENT MODELS 48

INTRODUCTION 48

SWOT ANALYSIS 48

POLITICAL AND LEGAL ENVIRONMENT 50

ECONOMIC TRENDS 50

TECHNOLOGICAL FACTORS 51

RATIO ANALYSIS 52

Interpretation 54

CHAPTER # 6 RECOMMEND

ATION 55

SHORTAGE OF STAFF 55

STAFF IS NOT ADEQUATLY TRAINED 55

OTHERS 56

OVER ALL SUGGESTION FOR IMPROVEMENT 56

Introduce variance profitable Investments Schemes 56

Training Staff 57

Change The Nature Of Work 57

Special Training In Abroad 57

Incentive to Employees 58

Others 58

Reward and Punishment 59

Survival Of The Fittest 59

REFERENCES 60

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Chapter # 1 Introduction

Introduction:

Chapter one is about introduction of report. As a part of requirement of MBA degree

eight weeks internship is necessary for student. This chapter includes background,

purpose, scope, objectives and methodology of the study. It also include introduction

of organization

Background of the study:

Internship training program during Master in Business administration Program is

necessary for the partial fulfillment of the completion of Degree of Master in Business

Administration. It is necessary for me to complete an internship session of about 8

weeks in some manufacturing or service industry relevant to my area of interest and

specialization. So, I choose the Banking field because I have the interest in this

sector because my study background is related with this sector.

Purpose

Internship is the capstone experience that provides me with hands-on, real-world

experience in a work setting. Ideally, internship will enable interns to:

(a) integrate and use my knowledge and skills from the classroom

discover where further competence is needed

take steps to gain that competence under educational supervision, and


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(d) Become better acquainted with the types of work settings in which such competence

can be applied.

Scope

This study will facilitate the students regarding the working of Banking sector of Pakistan

because most of the teachers during their lectures use the examples of Banks like MCB,

National Bank, UBL, Bank Alfalah and many others students should study this

report so that they must grasp the functioning of such Banks

Limitation of the Study:

The study is done with the sole purpose of doing the best work but There was certain

limitation faced during the internship period. The most Important limitation from which

the study suffers is the non-availability of Information in a manner required for analysis

and the secrecy of the bank. Another important limitation of the study is time and space

constraint.

Objectives

I worked as an internee in MCB Industrial Area branch, I-9 Islamabad. The main

Objectives to study in MCB were:

To get some experience in working with well reputed organization.

To gain knowledge about the professional environment of the bank

To know about the technology utilized in the banks.

To deal and manage with the situation of stress Methodology

There are mainly two methods that are used for the collection of data.

Primary Data:

Observation of functions of Branch operations on the spot


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Observation of different processes of Branch on the spot

Secondary Data:

Internet is very helpful for me to study more about banking sector Of Pakistan.

Different type of booklets of the Bank

Annual reports

Journals

Newspapers

Organization:

MCB is one of the leading banks of Pakistan with a deposit base of About Rs. 368 billion

and total assets of around Rs.500 billion. Incorporated in1947, MCB soon earned the

reputation of a solid and conservative financial Institution managed by expatriate

executives. In 1974, MCB was nationalized Along with all other private sector banks.

The Bank has a customer base of approximately 4 million, a Nationwide distribution

network of over 1,000 branches and over 450 ATMs in The market.

During the last fifteen years, the Bank has concentrated on growth Through improving

service quality, investment in technology and people, Utilizing its extensive branch

network, developing a large and stable deposit Base.


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Summary

This is the first chapter of the report containing the detail introduction

Of the report. Internship training program during Master in Business

Administration Program is necessary for the partial fulfillment of the

Completion of Degree of Master in Business Administration. Internship will Enable

interns to integrate and use my knowledge and skills from the

Classroom. This study will facilitate the students regarding the working of

Banking sector of Pakistan. Collection that is primary sources and secondary sources for

that purpose. Internship report I required some kind of data, I used both methods of data

For achieving my purposes, objectives and for the preparation of the report.


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Chapter # 2 Role of Sector and Organization

INTRODUCTION:

This chapter will summarize that whats the current situation of the Banking sector in

Pakistan. What elaborate the importance of MCB in the Banking sector of Pakistan? This

chapter will explore the role of MCB in the Economic & social development of Pakistan.

Moreover this will also tells you About the functions thats the organization is performing

and about the Internship office.

Overall respective sectors in Pakistan:

Banking is one of the most sensitive businesses all over the world Banks play very

important role in the economy of a country and Pakistan is no Exemption. Banks are

custodian to the assets of the general masses. The Banking sector plays a significant role in

a contemporary world of money and Economy. It influences and facilitates many different

but integrated economic Activities like resources mobilization, poverty elimination,

production and Distribution of public finance.

HISTORY OF BANKING IN PAKISTAN:

At the time of independence, commercial banking facilities were Provided fairly

well here. There were 487 offices of schedule banks in the Territories now constituting


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Pakistan. An Expert committee was appointed The committee recommended that the

reserves bank of India should continue Their function in Pakistan until 30 September.

1948, and Pakistan would take Over the management of public debt and exchange control

from reserve bank Of India on April 1948 and that Indian notes would continue to be legal

tender Having their registered office in Pakistan transferred them to India in order to Bring

a collapse of a new state. By 30 June 1948 the number of the offices of Scheduled banks

in Pakistan declined from 487 to only 195.In order to make Necessary arrangement for the

assumption of control and expert committee Was appointed to recommend necessary

steps, including the required Legislation to establish a central bank for Pakistan. The

governor-general of Pakistan Quaid-e-Azam Muhammad Ali Jinnah inaugurated the State

Bank of Pakistan order was promulgated on May 12, 1948. The first Pakistani notes Were

issued in October 1948 in the State Bank of Pakistan withdrew the Reserves Bank of India

notes of the value of Rs.125.02 crores with the help The Pakistan notes.

On 1st January 1947 all Pakistani banks were nationalized through Nationalization Act

1974. Under this law all Pakistani Banks become a public Property. All small banks were

merged in bigger banks to create five major Pakistani banks. These banks were to control

by Pakistani Banking Council There are still controversies about this act of Govt. as

whether it contributed in Success of failure of banks. However the major changes after

Nationalization Were as follows:

_ Working of banks was extended to under-developed areas

_ Market expansion for credit and deposits

_ Decrease in service level of bank officers


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_ Decrease in profitability as well.

In 1990 the govt. decided to denationalize all the nationalized institutions It was also

suggested in banking sector. For this purpose, amendments Were made to Nationalization

Act 1974 and two nationalized banks were Privatized. Along with this a permission to

open banks in private sector was Also granted. The rules regarding establishment of new

banks and for Incoming foreign banks were also relaxed. The two privatized banks are:

MCB Taken up by a private group in April, 1991 & ABL taken up by its own Employees

in September 1991. After these changes a large number of private And foreign banks

started their operation in Pakistan.

Now, Pakistan has a well-developed banking system, which consists of a Wide

variety of institutions ranging from a central bank to commercial banks And to

specialized agencies to cater for special requirements of specific Sectors. The country

started without any worthwhile banking network in 1947 But witnessed phenomenal

growth in the first two decades. By 1970, it had Acquired a flourishing banking sector.

Pakistan s banking sector has remained remarkably strong and resilient During the

world financial crisis in 200809, a feature which has served to Attract a substantial

amount of FDI in the sector. Stress tests conducted on June 2008 data indicate that the

large banks are relatively robust, with the Medium and small-sized banks positioning

themselves in niche markets Banking sector turned profitable in 2002. Their profits

continued to rise for the Next five years and peaked to Rs 84.1 ($1.1 billion) billion in

2006.

During the fiscal year of 2008-2009, total assets of all the scheduled banks Increased

by Rs 574. 7 billion. Total assets grew by 6.4 per cent from Rs 8861 Billion in June 2008


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to Rs 9436 billion in June 2009. During the fiscal year of2008-09, there was also an

increase of Rs 248 billion in the net advances of The scheduled banks. Net advances grew

by 8.67 percent from Rs 2873 billion In June 2008 to Rs 3128 billion in June 2009.

Role of the organization in Pakistan

MCB Bank Limited Formerly known as the Adamjee Group incorporated Muslim

Commercial Bank Limited On July 9, 1947 in Kolkata In Bengal, under the Indian

Companies Act, VII of 1913 as a limited Company`. But due to changing scenario of the

region, the certificate of Incorporation was issued on 17 August 1948 with a delay of

almost 1 year, The certificate was issued at Chittagong. 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. The

Bank transferred its registered/Head office from Dhaka to Karachi on August 23, 1956

through a special Resolution The bank was established with a view to provide banking

facilities to The business community of the South Asia. The bank was nationalized in

1974 During the government of Zulfiqar Ali Bhutto. This was the first bank to be

Privatized in 1991 and a consortium of Pakistani purchased the bank Corporate groups led

by Nishat Group.

MCB is Pakistans fourth largest bank by assets having an asset base of US$6.7 billion,

and the largest by market capitalization having a market Capitalization of US$4.1 billion.

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 160 million.


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In 2008 the head office of MCB was shifted from Karachi to Lahore in A newly

constructed building, namely MCB House located at Sharea Ghous Ul-Azam, commonly

known as Jail Road

Overall organization and functions of org. in Pakistan:

MCB is one of the leading banks of Pakistan with a deposit base of About Rs 368

billion and total assets of around Rs.500 billion. Incorporated in1947, MCB soon earned

the reputation of a solid and conservative financial Institution managed by expatriate

executives. In 1974, MCB was nationalized Along with all other private sector banks.

The Bank has a customer base of approximately 4 million, a Nationwide distribution

network of over 1,000 branches and over 450 ATMs in The market.

During the last fifteen years, the Bank has concentrated on growth Through improving

service quality, investment in technology and people Utilizing its extensive branch

network, developing a large and stable deposit Base.


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Vision Statement

To be the leading financial services provider, partnering with our Customers for a

more prosperous and secure future.


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Mission Statement:

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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VALUES:

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 customers 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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Functions:

Basically there are two basic categories on the basis of functioning of MCB Bank, which

are.

Principal Function

Auxiliary Function

Principal function

The principal functions are basically the core functions of the bank that is there Lifeblood

of bank, which are

Acceptance of deposits

Financing

Deposits

There are basically two types of deposits and their nature vary due to time Factor, which

are

Demand deposits

The demand deposits have no legal restriction on drawing of the Deposited amount and

the cash is readily available on demand without Any conditions.

Demand deposits are further classified into two categories

Current deposits

The current deposits are non-interest bearing deposits and Earn the most for banks as there

is no cost for the banks but the Depositor can claim no interest whatsoever.


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Saving deposits

The saving deposits are the interest bearing deposits and although There are no such

restrictions but it is mostly preferred for saving and Salaried class and similar class clients

deposit in this category to earn Interest so no regular withdrawal takes place in this type of

deposits.

Time deposits

On the contrary the time deposits are deposits for a particular Period of time and cannot be

easily withdrawn on demand and if the Amount is withdrawn certain penalty is levied on

withdrawal before Time. Time deposits are further categorized into two categories that are

Notice time deposits:

The opposite is a Demand deposit or a sight deposit, which can Be withdrawn at any time,

without any notice or penalty; e.g. Money deposited in a checking account or savings

account in a bank.

Fixed term deposits:

A deposit held at a financial institution that has a fixed term These are generally

short-term with maturities ranging anywhere from a month to a few years.

FINANCING:

The second important function of the MCB is to provide finances to the individuals

and businesses against securities at a certain fixed rate of interest. As the different

types of accounts in accepting deposits MCB also have the different types of

account in which it provide the loan to its customers. Following are the different types

of the accounts in which loan is made.


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Demand Finances

Demand Finances are those finances, which are given on demand. It is a single

transaction. It can be long, medium and short term. Markup is also charged. Here the

amount can be withdrawn once at the time of disbursement.

Running Finances

It is always a short-term loan i. e., one-year. It can be withdrawn at any time and

deposited at any time. It is basically for running day today business operations.

This type of loan is provided to the person who has the strong relation with the

bank.

Cash Finances

Cash finances are for a limited period of time i.e., one year. It is advanced to

people to complete the working process.

Fixed Asset Financing

This type of account is provided to the business for the purchase of fixed assets

and the assets is considered as the security.

Overdraft

This type of loan is provided to the individual that has very healthy position and

they are allowed to draw up to the limit if there is no balance in the account. The

rate of interest is charged on the daily basis.


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Auxiliary function

These are the functions that have the secondary position in the bank point of view.

These functions are cause to attract the customer. Banks performs this kind of

functions as per demand on the extra charges.

Collection of Cheques

MCB acts as an agent to its customers in the collection and payment of Cheques, bills and

promissory notes. This is done on the behalf of the customer and MCB charges the

commission.

Locker:

MCB also provides locker facility to its valuable clients. where of people can be

kept their precious ornaments.

Collection of Dividends

The bank provides a very useful service in the collection of dividends or interest

earned on stocks and shares held by his customers. The customer is simply to inform

the issuer of the securities that the interest on the securities is to be credited to his account

in the bank.

Purchase and Sale of Securities

MCB is authorized by the customer, purchase or sale securities on his behalf

and thus adds other benefits to his portfolio.


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Transfer of Funds

MCB also transfer funds of the customer s from one bank to another bank. If the

transfer is at one station, they dont charge any commission and even if they charge,

they charge on reduce rate.

Issue of Travelers Cheques

The bank has introduced the schemes of Rupee Travelers Cheques and issues them for

the convenience of travelers and charges a nominal commission. In addition to this

bank also performs a number of functions and activities for and on behalf of its

clients with the sole purpose of serving them to the best of its capabilities and

potentialities.

DISCOUNTING BILLS OF EXCHANGE

The bank utilizes their surplus funds in another important way. They discount the

bills of exchange at their market worth, i.e., the pay to the holders of the bill an amount

equal to their face value after deducting interest at the current market rate for the

period the bill has to mature. The bills of exchange are a very liquid asset for a

bank to hold. These bills are usually drawn for three months and are used for

financing internal as well as external trade.

Acts as a Referee

MCB provides a useful service to his customers by acting as a referee for his

credit worthiness. The information is supplied in almost secrecy and is based

impartially on the respectability and financial standing of the client.


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Foreign Exchange Business

MCB transacts foreign exchange business by discounting foreign bills of exchange

and thus provides facilities for financing the foreign trade.

Organization office in which you are working

I have completed internship in MCB Industrial Area branch(1301),I-9 Islamabad. This

is main and very important branch of this area facilitating their customers by providing

quality ser vices. They provided different services to their customer. To fully satisfy

their customer, and for efficient working, they assign different services to

different departments. Few of these given below:

_ Cash Department

_ Deposit Department

_ Advance & Credit Department

_ Remittance Department

_ Foreign Exchange Department


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Summary:

Banking started in Pakistan after the bold and emergent decision of formulation of

SBP on July 1, 1948. Thereafter this sector has witnessed enormous growth. In

1974 banks were nationalized, in the hope that new era of growth could be achieved

through it. However the process is reverse since1991, up till now MCB, ABL, and

UBL have been privatized and HBL is in the process of its privatization. Pakistan's

banking sector has remained the process of its privatization. Pakistan's banking

sector has remained remarkably strong and resilient during the world financial crisis

in 200809 During the fiscal year of 2008-2009, total assets of all the scheduled

banks increased by Rs 574.7 billion. During the fiscal year of 2008-09, there was

also an increase of Rs 248 billion in the net advances of the scheduled banks The

principal functions of MCB are acceptance of deposits & financing and auxiliary

functions of MCB are Collection of Cheques, Locker, Collection of Dividends,

Purchase and Sale of Securities & etc.


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Chapter # 3 History of Organization

Introduction:

Chapter three is about the introduction to the MCB Bank Limited. In Chapter three is

about the introduction to the MCB Bank Limited. In information about the brief

history of the organization. When the bank was established and who starts it.

Banks have a proper communication system through which the head office

communicate to the branch offices. The details of communication system followed

by head office are included in chapter three.

Brief History of the organization:

MCB Bank Limited formerly known as Muslim Commercial Bank Limited was

incorporated by the Adamjee Group on July 9, 1947 in Kolkata in Bengal, under the

Indian Companies Act, VII of 1913 as a limited company But due to changing scenario

of the region, the certificate of incorporation was issued on 17 August, 1948 with a

delay of almost 1 year; the certificate was issued at Chittagong. 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. The Bank transferred its registered/Head office from

Dhaka to Karachi on August 23, 1956 through a special Resolution.

NATIOINALIZATION:

In January 1974, the government of Pakistan nationalized MCB following the

banks (Nationalization) Act 1974, subsequently, in June 1974 Premier Bank limited

merged with MCB.


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PRIVATIZATION:

A wave of economic reforms swept Pakistan in the late 1990s introducing the

need for privatization of state owned banks and companies in April 1991, MCB

because Pakistans first privatized Bank, the government of Pakistan transferred the

management of the Bank to Nishat Group of leading industrialists of the country by

selling 26% shares of the Bank. With a view to broaden equity holding the

government sold 25% of the paid up capital to the general public. In terms of

agreement between the government of Pakistan and the Nishat Group additional 24%

shares have been purchased by the group making their holding 50%. As of June 2008,

the Nishat Group owns a majority stake in the bank. 25% was retained by the

government Now it is fully privatized.

Mian Mohammad Mansha is the Chairman of the group (and also MCB) and has

played instrumental role in its success. In recognition of Mr. Manshas

contribution, the Government of Pakistan has conferred him with"Sitara-e-Imtiaz",

one of the most prestigious civil awards of the country.

MCB is Pakistans fourth largest bank by assets having an asset base ofUS$6.7 billion,

and the largest by market capitalization having a market capitalization of US$4.1

billion. 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 160 million.


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Awards of MCB:

MCB has become the only bank to receive the Euro money award for the seventh time

and Asia money award for fifth time in the last ten years MCB won Best Bank in Asia

award in 2008. MCB also won the Best Bank in Pakistan award in 2008, 2006, 2005,

2004, 2003, 2001, 2000 In addition, MCB also has the distinction of winning the Asia

Money award in2009, 2008, 2006, 2005 & 2004 for being " The Best Domestic

Commercial Bank in Pakistan.

Present Status:

In 2007, MCB reported a profit after tax of PKR16.4 billion (US$270 million) and

generated a return on average equity of 38% and a net interest margin of 8.08%.

The Banks asset quality is strong with a gross NPL ratio of4.7% and provision

coverage of 100%.

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 and managing

its non-performing loans via improved risk management processes.

In 2005, the management of the bank abbreviated its name from Muslim

Commercial Bank Limited to MCB Bank Limited to explore international markets;

they were facing resistance due to the word Muslim specially from Western

Countries to avail license. In 2008 the head office of MCB was shifted from

Karachi to Lahore in a newly constructed building, namely MCB House located at

Sharea Ghous-Ul-Azam, commonly known as Jail Road.


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The MCB Tower in Karachi serves as the MCB's headquarters, and is also the tallest

building in Pakistan MCB advised by Merrill Lynch, became the fourth Pakistani

company (the other three being Hubco, PTCL and Chakwal Cement - they all

have been delisted) to list on the London Stock Exchange when it raised US$150

million global depositary receipts.

In May 2008 Malaysian bank, Maybank and MCB signed an agreement, whereby

Maybank will acquire up to 20% of the ordinary shares in MCB from Nishat Group.

The acquisition is in-line with Maybanks strategy as Malaysias financial services

leader in the region, to build its presence in key growth markets across the region.

It also paves the way for MCB, one of Pakistans premier financial services groups,

to engage Maybank as its exclusive foreign commercial bank strategic partner.

Maybank initially acquired from Nishat Group 94,241,527 ordinary shares in MCB,

representing a 15% stake in the Bank, for a cash price of PKR470 per share. The

total consideration paid was approximately US$686 million. The purchase price

represented a 11.4% premium to MCBs closing share price of PKR 422 on May

2, 2008, and a premium of 12.9% to the average closing share pr ice for MCB

over the 30 trading days immediately preceding the date of this announcement.

Based on MCBs December 31, 2007 audited book value, the purchase price represents

an implied price to book value multiple of 5.13x, a price to2007 earnings

multiple of 18.0x and a price to 2008 earnings multiple of15.2x. In July 2008

Maybank exercised its right to increase its stake to 20%.


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The stake in MCB allows Maybank the right to appoint two Directors to represent its

interest on the Board of MCB. One of these Director s was to be appointed immediately

and the second Director will be appointed upon completion of the term of the

existing Board, scheduled to be on March 27, 2009.

As part of the transaction, Maybank and MCB are also expected to enter into a

business cooperation arrangement which will include, among others, Islamic

banking, retail banking, credit cards, asset management and SME banking.

Leveraging Maybanks leadership and experience in these segments coupled with

MCBs brand and broad distribution network Maybank and MCB believe that

significant revenue synergies can be attained Both Maybank and MCB are also

expected to benefit from increased business ties and trade flows between Pakistan and

Malaysia.

Relationship of head office to the branch offices:

In MCB decision, strategies, policies are made by the top level management and

these are implemented in each branch. Top level management dont involve the

lower management in decision making process.

MCB is the pioneer of computerization, as far as it has a very developed and

fastest network. So the head office and all of its branches are linked through a

electronic network, that make possible easy and in time transformation of the

important information.

MAIN DEPARTMENTS AND THEIR JOBS

There are three main departments in any branch of MCB

_ GENERAL BANKING


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These are also noted by computerized system and a serial number is issued from

the computer system.

MAIL TRANSFER

Mail Transfer is made with in the city for transfer of amount An advice is also

made for the confirmation of the draft send. These are also approved and safe

way of sending amount to the beneficiary These are also noted by computerized

system and a serial number is issued from the computer system.

TELEGRAPHIC TRANSFER

Telegraph Transfer is telegram message for transferring the amount from one

branch to other branch. A message advice and a confirmation advice both are

made with TT numbers that are issued for TEST. TEST depends on two steps.

First TEST is on Day, Date and Code Number of branch

Second TEST is on Currency, whether Pak rupees or foreign. currency, amount

and TT number issued from manual registers and confirmed from computerized

system.

PAYMENT OF PAY-ORDER ANDDEMANDDRAFT

Pay-Order and Demand Draft both could be paid in shape of physical payment of

cash and in case transfer of amounts; the amount could be transferred in the

beneficiary account. In case of physical payment authorized signature of beneficiary

are taken for the proof of amount being paid to him and in case of transferring of

amount authorized signature of the beneficiary are checked and verified for

reducing risks.


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CANCELLATION OF PAY-ORDER AND DEMAND FRAFT

Any type of Pay-Order / Demand Draft is cancelled by the permission and

instructions made by the beneficiary. The customer could only cancel the pay

order/ demand draft as the verified signatures of beneficiary are present on the advice.

VOUCHERS

Vouchers are made for records and they should be completed in all respects, the

amount, date, its head, particulars, amount in words authorized signatures and

contra advice or voucher should be present Vouchers are advice either debit or credit

slips. They are contra of each other. If any voucher of debit is passed its contra credit

voucher should also be passed for the balancing of accounts, their respective sheets.

INWARD CLEARING

It depends on those checks that are cleared inter branch and with in the city. As

the concerned branch receive any type of clearing check first of all physical

checking is taken place. For clearing procedure there should be two days margin.

These Cheques have their vouchers and the amount of the Cheques and voucher

should be identical. Than these Cheques are stamped and noted on receiving sheet as

well as feed in to the computerized system.

OUTWARD CLEANING

It depends on those Cheques that are cleared out side the city For outward

clearing Cheques are send because the home branch has there accounts but checks

are of other banks. Contras of these Cheques are vouchers that are recorded in the

home branch.


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ISSUANCE OF CHEQUE BOOKS

Any account holder that has opened the account he/she could credit his/her

account and for this purposethere should be a Cheques book, so he/she could be

able to credit the needed amount whatever he/she wishes. For the issuance of the

Cheques book a person is advised to fill a requisite slip with his/her full names and

the account number with two verified signatures. These signatures are checked and

then another requisite slip prepared by the bank staff send to the NIFT, and it issues the

printed cheque books after completion of the procedure in two or three days.

Account holder can take it by singing on the issuance register or if the absence of

the account holder another person could also take the cheque book only if he/she

has authorized signature of the account holder. When the cheque books are issued

they are feed in the computer system from the requisite slip so when the Cheques are

given transfer for the credit of amount they could checked. In this way neither the

Cheques could be repeated nor could the invalid Cheques be claimed.

ISSUANCE OF ATM CARDS

Head office issues ATM (Auto Teller Machine) cards with their PIN (Personal

Identification Number) codes and when the customer claims for their ATM card

they are checked from the list that is also issued from the head office, and the claim

is checked from the list and if the name is found than the cards are issued by taking a

signature and their PIN codes are given to them by taking signatures on their

ATM card for ms. The AT M card has been activated by the number provided at or

with the specific card.


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CANCELLATION OF ATM CARDS

The Cancellation of ATM Cards becomes necessary in the following conditions;

_ If folded or damaged

_ Stolen

_ PIN code missed or forgotten

_ Card captured by the machine and expired

_ If requested by the customer

_ The cancellation or inactivity of the card is being processed by the request or

instructions provided from the customer.

SHORT NOTICE TERM DEPOSIT

There are short times either for seven days or for thirty days and the profit is

calculated by the given percentage from the head office at the payment time. If

the customer fails to complete the duration of seven days or thirty days then no

profit is given. If any amount is outstanding, only in case of automatic continuity,

then the profit is calculated for the whole period by the rate given from the head office

multiplying from the numbers of days divided by the 365 for the one-day profit

AMOUNT, RATE, NUMBER OF DAYS / 365 DAYS

Profit is calculated for the six months only for outstanding SND. Zakat is also

deducted but if Zakat deduction form is submitted to the bank, no Zakat will be

deducted then, 10% with holding tax is also deducted from the profit to calculate net

profit.


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CALL DEPOSIT

It is highly liquid instrument, it can be cashed at any time when needed. This

instrument bears no profit on it. It is mostly used for the purpose of tenders.

FOREIGN EXCHANGE

LCS ESTABLISHMENT

Any company can provide its documents containing e-form bill of lading, short

shipment notice in case of short shipment, packaging list etc. The information

provided from the documents is recorded in the LC

establishment portion or section in the computer.

PAYMENT OR RETIREMENT

When the transactions have been completed then approved documents from the

concerned bank are sent to the home bank for the payment or retirement of the LC.

These transactions have recorded in the payment or retirement section of the

computer.

FOREIGN CURRENCY DEPOSITS

The Foreign Currency Deposit relates with the foreign currency accounts, cash deposit or

credit and foreign remittances.

FOREIGN REMITTANCES

In this we received the messages through SWIFT for foreign remittances, which

we record in their respective accounts, if these are relates with Pak rupees than it

was transferred in Pak rupees with the latest rate and if this relates to the foreign

currency than it is dealt with accordingly. The amount has been credited to the


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respective account office and the head has been debited against it. After crediting

the amount to the respective account. All the subsequent entries have been made in

the registers and also in the computer record as the system now have been

upgraded on computers. As we are reporting daily to the head office, so an

annexure has been maintained and faxed to the head office.

ADVANCES / CREDIT

This department deals with the approval of different kinds of loans different

business entities. The loans, which are being approved by the department, are kept

with some securities such as bonds, properties and any other type of asset, which is

equally valuable or more than this as a guarantee Every branch has its own limit, if

the amount of loans is with in the limit of the branch then it is being approved by

the branch but if the amount of loan is exceeding the limit then it has to make it

approved by the head office. In this case the branch stored all the required papers

and sent them to the head office for necessary action. If the head office approved

the loan then mostly the period contains a year. And if the party requires more loan

than after a year the loan has been re-approved required that they should have the

limit. In case if the head office do not approve the loans then the return letter came

back with the reasons of not approval of loan and if the reasons have been made

approved by the concerned party then it could be sent again for approval. This whole

process is recorded in the back remain with the bank until the party has not refunded

all the amount of loan and bank has the authority to liquidate those assets for

preventing it from loss.


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BASIC BANKING ACCOUNT

In compliance with the directives of State Bank of Pakistan via BDP Circular No. 30,

issued on 29th November 2005, the Basic Banking Account has been launched

with effect from 27th February2006. This product has been introduced to facilitate

the low income group as well as the existing account holders who wish to convert their

regular savings or current account into Basic Banking Account The Basic Banking

Account is a current account and can be opened with a minimum initial deposit

of Rs. 1000/- only. Account holders will be allowed 2 deposit transactions (each

cash or through clearing) and 2 withdrawals (cash or clearing) each month. All

customer initiated transactions over and above this limit will be charged a

transaction fee. However unlimited free charge cash withdrawals are allowed

through MCBs own ATMs.

PAK RUPEE OR FOREIGN CURRENCY ACCOUNTS

SAVING ACCOUNT

MCBs Foreign Currency Savings Account offers you attractive returns on your

foreign currency investment. Unlimited transaction facility, profit credited to your

account on a half yearly basis. You can avail a credit facility up to 75% of the

total deposits value. A foreign currency account can be opened at any of our foreign

exchange dealing branches.


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MCB RUPEE MAXIMIZER ACCOUNT

MCB Rupee Maximizer Account provides you an opportunity to convert youre

the recent changes in the economic scenario MCB launched the Rupee Maximizer

Account exclusively for its Foreign Currency Account Holders. MCB Foreign

Currency Account holders now have an opportunity to convert their Foreign

Currency Account balances into Pak Rupees and earn a profit at the rate of 12.6%

per annum.

Other features include profits calculated on a daily product basis, no restrictions on

the number of the withdrawals, no minimum deposit required. Special benefits

include one free ATM card and locker facility free of cost. MCB Rupee

Maximizer Account is being advertised in leading daily newspaper as well as local

papers Foreign Currency Account into Pak Rupee and earn profit at the rate of 12.6%

per annum.

CURRENT ACCOUNT

MCBs Foreign Currency Current Account offers you the convenience of unlimited

withdrawals i. e. access to your funds whenever you want without any notice.

There is no limit on the whenever you want without any notice. There is no limit

on the number of transactions you make in a day.

KHUSHALI BACHAT ACCOUNT

Open a Khushali Bachat or Dollar Khushali Account, both require low minimum

income deposits plus you receive profit on daily product basis. Get a saving with


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current account facilities through saving 365 or double your investment through

capital growth and receive monthly profits through monthly Khushali.

MCB ENHANCED SAVING ACCOUNT

Keeping in view the small savers, looking for higher returns on their savings, MCB

introduces the Enhanced Saving Account (ESA). This account can be operated via all

the channels available at the MCB such as Cheques, Virtual Banking, Mobile

Banking, MCB Smart Card and ATMs/Point of sales all across Pakistan. MCB

ESA, governed under PLS rules, can be opened with a minimum initial deposit of

Rs5000 and the profit shall be calculated on an average basis maintained by the

customer during that month.

Following shall be the slabs used for profit calculation.

_ If average balance is greater than Rs. 20,000 standard PLS rates will apply.

_ If average balance less than Rs. 20,000 (or equal to 20,000) with up to 4 withdrawal

transactions per month (excluding ATMs, PSO and VB) 4.0% p.a.

_ If average balance is less than Rs.20,000 (or equal to 20,000) with over 4

withdrawal transactions per month (excluding AT Ms, PSO and VB) then standard

PLS rates will apply.

The rates mentioned above are expected and shall be revised at least every six

months. Average account balances can exceed Rs20,000 during a month. However,

in that case, they shall be paid profit as per the standard PLS rates, as mentioned in

slabs above. Profit shall be calculated on average basis and shall be credited to the

account after each calendar quarter.


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Offices or field offices

Offices means the Head office which is situated in MCB House located at Sharea

Ghous-ul-Azam, commonly known as Jail Road. Field offices mean the Branches.

MCB has the forth largest domestic branch network in Pakistan The bank has a

network of over 1000 branches in Pakistan and 6 branches worldwide in 6

countries.

MCB BRANCH NETWORKS

PROVINCE WISE

Province Branches Sub Brs. Total

Punjab 665 7 672

Sindh 248 1 249

N. W.F.P. 106 106

Balochistan 37 37

Azad J. Kashmir18 18

Domestic Total 1,074 8 1,082

Overseas 6 6

EPZ 1 1

Grand Total 1,081 8 1,089

Current staff

MCB Industrial Area branch I-9 has the 28 staff member in which 6 security

guards are also included, which are as fellows;


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Abid Rafiq Dogar Manager

Ch. Mubark Ali Operatinal Manager

Nasir ALI

Mohammad Mumtaz Credit Officer

Ch. Zamir Cashier

Kala Khan Cash

Current staff of branch according to qualification and experience:

Mostly the staff of the Bank has not the lot of experience but their qualification

is high because mostly employees are young. Lets see the brief introduction of the

Banks staff experience and their qualification.

Abid Rafiq Dogar MBA 7 years

Amjid Farooq MBA 4 years

Ms Hifsa MBA 4 years

Tauqeer Abbas MBA 4 years

Muhammad Amir MBA 1 year

Mohammad Yasin B.com 3 years

Training received by number of employees

For the efficient working training is an important part and it clears the direction of

the employees towards attaining the organizational goals. In banks every employee

received the basic course of training of the banking system in which overall view of


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all the bank work is provided and than every person get the training in his

particular job that is assigned to him. So in banks no one can be appointed with out

the basic training.

Workload

The work load of the bank staff is based upon on the daily system. The office timing

starts from 9.00 am to 5. 00 pm (Monday to Friday) and 9.00 am to 1.00 pm on

Saturday for the customers. After the bank timing the staff fulfill the daily

vouchers transaction and made the entries on the net system and then counted the

cash, put it in the safe. The banking staff should finished their word on daily basis

whether there work is short or long.

Responsibilities

Responsibilities of staff depend upon the scale of the staff members Higher the

rank of the staff higher will be the responsibility on it. For example the Branch Manager

responsibility is higher than the Operational Manager.

Branch Manager has the responsibility to deal with the Branch customer and with

the outsider parties also while all the remaining staff is responsible to deal with

the Branch customers only. Branch Manager is responsible for the internal and

external environment and the remaining staff is responsible for internal environment

only.

Operational Manager has the responsibility to check the activities of his

subordinates. Cashier is responsible for all the cash transactions which occur in the

Bank. Customer Relation officer is responsible to deal the customers well and

provide them the necessary information if required.


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Physical facilities

The branch where I have done my internship is MCB Industrial Area branch, here

the physical facilities available to the customers are sufficient proper sitting

arrangement is available, and gas heater in winter and air conditioners for summer

is also available. The facilities for the employees is also sufficient, employees have

the separate tables for their work and two rooms for the employees.

Critical analysis of the branch

Although the bank is performing their function very well but mostly the staff of

the bank is young. They have very less experience and low banking knowledge.

The banking staff always worries about for increasing the deposit of the bank

rather than improving the customers services.

The attitude of Branch operational manager is not good with customers as well as With

employees working in the branch.

Every morning the Branch Manager gives the Branch report to the Regional

Manager on the telephone meeting which has no logic because Branch Manager

always worries for the deposit.

Performances

In term of customer s satisfaction

The customers are very satisfied with the performance of the bank. The bank is provided

latest banking ser vices to the customers so that they can easily access to their

accounts. T he bank is also providing the internet facility to theirs customers through

this they can access to their accounts on the net and they can check their balance

with out going to Bank. The Bank also provides the door to door services to those


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customers who transactions are daily occurs that why those customers are very

satisfied with the Bank and this thing also helps to the Banks for increasing their

accounts holders.

Interm of accounts and budgets

The performance of the Banks is increasing day by day. The accounts holders are

very satisfied with the facilities which they provides.

Summary:

In this chapter basically organizational attitude towards its employees and

employees satisfaction and attachment is discussed. MCB performs several

functions and have many departments in order to retain and maintain their

customers some of these departments are the collections department Advance

department, Bill department, Clearing department etc.To motivate the employees

MCB provide many allowances and facilities to its employees such as medical

facility, huge amount of bonuses and also motivate the employees through

promotions. The branch in which I have done my internship is providing the very

satisfactory services to its customers and large numbers of customers are satisfied with

the attitude and the services provided the branch.


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Chapter # 4 Policies

Introduction

Chapter four is about policies of MCB. It include brief introduction of policies of

MCB.

Policies:

Internship Policy:

MCB is the bank that serves all type of customer s and makes its policies according to

their needs and demands here the MCB has the policy to serve the students that is

eight weeks internship.

MCB has no gender bias

For the selection of the employee MCB focus on merit rather than gender. There

is no any kind of discrimination on the basis of male or female, a person having

the skills and knowledge and is perfect of that particular job can be selected as the

employee.

Opening account policy

Prior to establishing a relationship with new customer MCB obtains basic

information i.e. business, source of income, expected level of activity in the account

and reasons for opening the account.

Training of employees

MCB has the program through which all the employees of the bank get proper

training and then work for the achieving the goals.


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Revenue Recognition

MCB recognized its revenue on accrual basis. For example if MCB invest in

some different securities and entitled for the profit yet not received, the profit is

recorded as when it earned not when it received.

Investments Policy

MCB also invest its money other than the advances, while investing in the securities

MCB has the following policy to invest in;

Held for trading

Held to maturity

In the light SBP regulations quoted securities are shown at market values and any

changes arising are taken to profit and loss account only upon actual realization.

RISK MANAGEMENT

The bank is primarily subject to interest rate, credit and currency risks The bank has

designated and implemented a frame work of controls to identify, monitor and

manage these risks are as follow;

Currency Risk Management

To handle with currency risk, MCB enters into futures and swaps transactions in

the inter-bank market and with the State Bank of Pakistan in order to hedge its assets

and liabilities and cover its foreign exchange position.


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Credit Risk Management

In order to manage the credit risk MCB has a good policy the bank first scan the

information about the person who wants to obtain the loan and then assign the

limit of sanctioned amount that is decided on the critical analysis of the persons

income and resources. MCB is government backed bank thats why it provide the loan

only against the security.

Interest rate Risk Management

To hedge with the interest rate MCB also focus on to make the interest rate swap

and other documents.

MCB s Competitive Strategies

To be competitive the Bank has further reinforced its position in the Consumer banking

area by streamlining and re-launching the consumer financing products and

introducing more convenience based solutions. With the re-launch of auto finance and

house finance products, the Bank pushed the products with full thrust. The Bank has

also launched a running finance facility against mortgage of property.

Technology continued to play an important role in improving and expanding

product offerings. The Bank introduced more IT based products to cater to the

changing lifestyles and needs of the customers.

MCB Virtual-Internet Banking was launched with wide ranging banking solutions

for the customers ranging from individual to corporate customers and it has

become the most preferred Internet banking solution in the country.


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MCB also had the privilege of being the first Bank in Pakistan to launch the

comprehensive bill payment facility through its alternate delivery channels which

include Internet Banking, AT Ms and MCB Call Centre currently with six payment

partners. Similarly, the Bank also took initiatives to increase the usage of debit

facility. T o provide timely and updated information, MCB has also provided a

new look to its website which is user friendly and considerably easy to browse.

The Islamic Banking initiative has been very successful in attracting new customer,

both individuals and companies. Similarly, those relationships which were confined only

to current account facility, have grown into stronger business relationships. The branch

network was expanded to Lahore and Multan during the last year and recently

been extended to Hyderabad and Faisalabad. The Bank plans to further expand its

Islamic Banking branch network to other metropolitan areas and also to introduce

new sharia compliant banking solutions to a wider range of customers for satisfying

their individual and business needs.

Some wide-ranging new strategic initiatives were also taken up which will be

important for the Bank in years to come. A private company has been formed in

Hong Kong (fully owned subsidiary of MCB) in partnership with Standard

Chartered Bank, handling trade transactions of select countries in the Asia-Pacific

region. It is projected to ear n US$ 1 million in its first year of operations. To

increase its international presence, the Bank will be opening its representative office

in Dubai and entering into major strategic alliances with banks in the UAE/ especially

for marketing our consumer banking products to non-resident Pakistanis.


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Furthermore, feasibility is also being carried out for entering other international

markets. MCB's operations continued to be streamlined with focus on

rationalization of expenses, re-alignment of back-end processing to increase

productivity, enhancement of customer service standards, process efficiency and

controls. The Bank has taken the lead in introducing the innovative concept of

centralizing Trade Services in the country by providing centralized foreign trade

services to branches with a view to improve efficiency, expertise and reduce

delivery cost.

Management of Human Resources has been one of our core focus areas. MCB is

committed towards attracting, retaining and motivating outstanding people. Challenge

for MCB is to provide an environment in which employees can better realize their

potential

MCB is also strongly committed to training its staff at all levels. The Bank will

also be implementing the full suite of the latest version of SYMBOLS Version 8.

MCB Bank will run SYMBOLS E-Finance modules to deliver personalized services to

its customers over multiple delivery channels while SYMBOLS Enterprise

Operations Center will serve as its core banking transaction-processing engine. By

implementing SYMBOLS, MCB Bank aims to raise the level of its customer service and

its time to market in new product offerings for its three core banking businesses in

Corporate, Commercial and Consumer Banking retaining its market leadership as

Pakistan's progressive Bank.


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Summary

This chapter discuss about policies of MCB. MCB has the policy to serve the

students that is six weeks internship. MCB focus on merit rather than gender. To be

competitive the Bank has further reinforced its position in the Consumer banking area by

streamlining and re-launching the consumer Consumer banking area by streamlining

and re-launching the consumer.


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Chapter # 5 Different Models

Introduction

In this chapter have some models that analysis and explain the real situation about

the MCB. For gathering the real information about the opportunities and the

threats that are facing the MCB this chapter include four models that are following;

SWOT Analysis

PEST Analysis

Ratios Analysis

SWOT ANALYSIS

The overall evaluation of a companys strength, weakness opportunities, and threats

is called SWOT analysis

STRENGTH:

The main strength of the bank lies in its services. The other fact that contributes

is approaching to each segment of society. Another positive issue that because the

strength its innovation. Some others are as follows;

Bank reputation

Technical management skills

Customer satisfaction

Promotion effectiveness

Team based approach

Continuous improvement

Quest for quality


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Employees respect and dignity

Good corporate citizenship

WEAKNESS

Competition pressure: bank has tough competition pressure. We are having very

well established and well reputed competitor in the market having addressing the same

community as we are dealing and is having good services Financial pressure: no doubt

MCB has a lot of finance but due to competition pressure they have a need of finance.

OPPORTUNITIES:

For more amelioration there is a need of new market. Extra advertising support will

enable us to improve our services.

Almost every organization has the tendency to grow in size. We also have this

opportunity.

THREATS:

Weak economic conditions of Pakistan Unregistered business concerns.

PEST ANALYSIS AND ENVIRONMENTAL

SCAN

A broad view of market is important when management is interested in introducing

better services for customers. Rapid technological change global competition and

the diversity of buyers preferences in many markets require the constant attention

of the market vouchers to identify promises business opportunities, see the shifting

requirements of the buyer s, evaluate changes in competitors positioning and guide

the choice of which buyers to target and classify them according to respective


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segments. Identification of external and macro factors that influence buyers and thus

change the size and composition of market overtime involves initially building

customer profiles.

These influences include:

Political and legal environment

Economic trends

Socio cultural environment

Technological factors

POLITICAL AND LEGAL ENVIRONMENT

Banks are strongly affected by the political and legal considerations. This

environment is composed of regulatory agencies and government law that influence and

limit various organizations and individuals. Mostly these laws create new

opportunities for business.

Business legislation has following main purposes

To protect banking companies from unfair competition

To protect consumers from unfair business practices adopted by banking companies.

To protect the interest of the society from unbridled business behavior.

ECONOMIC TRENDS

A banking market requires better consumer market in volume along with higher

borrowing power. The available borrowing power depends on

Consumer income

Saving rates

Consumption patrons


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Rates of interest

Budget deficit

Exchange rates

Cost of living

Inflation

SOCIO-CULTURAL ENVIRONMENT

A society is shaped by beliefs, norms and values. People in a society consciously

and unconsciously interact with.

Themselves

Others

Organization

Society.

TECHNOLOGICAL FACTORS

Forces of technological advancement have played the most dramatic role in

shaping the lives of people. The rate of change of technology has greatly affected

the rate of growth of economy. New technology is creating deep rooted affects

which could be observed in long run. The improvement techniques involved in on

line banking. In brief PEST analysis affects the overall banking companies and

provides us the information about the external macro condition.


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Ratio Analysis of the MCB

An index that relates two accounting numbers and is obtained by dividing one

number by other.

Ratio Analysis is an important and age-old technique of financial analysis. It

simplifies the comprehension of financial statements. Ratios tell the whole story of

changes in the financial condition of business. It provides data fro inter firm

comparison. They also reveal strong fir ms and weak firms over- valued and

undervalued firms.

Ratio analysis also makes possible comparison of the performance of different

divisions of the firm. The ratios are helpful in decision about their efficiency of

other wise in the past and likely performance in future. Ratios also help in

Investment decisions in the investors and lending decisions in the case of bankers etc.

Following are the main types of rat ios that I am going to calculate in this report

to compare and highlight the financial performance of MCB in2009 with 2008.

Variance compared to

2009 2008 Amount %

Mark-up / return / interest Rs.M 51,616 11,572 29%

Mark-up / interest expensed 15,841 4,281 37%

Net mark-up / interest income 35,775 7,291 26%

Provisions & write off 7,465 3,423 85%

Non-mark-up / interest income 5,643 (149) -3%


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Non-mark-up / interest expenses 10,797 2,433 29%

Profit before taxation " 23,155 1,287 6%

Taxation " 7,660 1,167 18%

Profit after taxation " 15,495 121 1%

EPS Rupees 22.42 0.17 1%

Interpretation

The past two years data shows an increase in all return (i.e. interest earned,

interest income, Profit after taxation) which is a positive sign. But mostly expenses

(i.e. interest expensed, Provisions, Taxation) are also increase which show negative

sign of business. The Bank should have to review its policies to decrease expenses.

FINANCIAL RATIOS 2009 2008

Profit before tax ratio(PBT/ total income) 55.91% 63.80%

Gross Spread (NIM/Int Income) 69.31% 71.13%

Income/ expense ratio Times 3.84 4.10

Return on average equity 27.35% 31.49%

Return on average assets 3.25% 3.60%

Return on Capital 27.35% 31.49%


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When MCB started their online banking, there were only one or two banks (foreign

Banks) doing this practice because of having a larger network as compared to all

other domestic banks MCB started doing this practice but not successful in it because

of the above two problems.

Others

A lot of productive time is wasted by the staff in unproductive pursuits and tea and

launch breaks are got voluntarily extended and the time spent in corridors, depends

on the staff will. This tendency of late must be eliminated which reflect adversely on

the image of the institution and has posed a serious problem.

No proper allocation of duties, suitable person for suitable job Distribution of work

is not on equity basis, work has not been allocated properly some workers have to

work hard in late hours without any extra reward. So I suggest that steps should be

taken to allocate the work properly No periodic increase on salaries of employees.

Overall Suggestions For Improvement

From the quantum of the profit and its financial data it can easily judged that after

privatization MCB is performing well. Its deposits are growing day-by-day and so is

profitability. The controlling body is responsible for the productive performance of the

bank Following are my observation and suggestion to improve the efficiency for the

development of the economy.

Introduce Various Profitable Investment Schemes

A big portion of the home remittance is sent by Pakistan working capital through

MCB Limited. As we know a big portion of this amount is wasted purchasing of

luxuries. The people motivated to save money by offering the deposit through


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various investment schemes. The rate of profit should increase 1% or 2% than the

other banks and it would be profitable step for bank.

Training Staff

Staff turnover particularly of trained staff result in financial and other losses. The

amount spent by the bank on employment, induction and training of an outgoing

officer constitutes to beat till another officer should ready prove his work. The

exodus of bank officer in the past has worsened the situation.

Change The Nature Of Work

Most of the bank employees are sticking to one seat only with the result that they

become master of one particular job and loose their grip on other banking operation.

In my opinion all the employees should have regular job experience all out-look

towards banking. The promotion policy should be adjusted.

Refresher Courses

Refresher courses for the staff are most important in any international organization.

All the employees should have these courses according to their requirement. Foreign

experts can also be called for this purpose.

Special Training In Abroad

Every year some of the employees should be sent for training to other countries and

employees from other branches should be brought here. Some more reading material

should be provided the purpose should be to educate the employees with the advance

studies in their field. The employees should be provided the opportunities to attend

and participate in seminars and lectures on banking.


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Incentive to Employees

Bank should give some more incentive to its employees in order to remove the

conflict between lower and higher officers and should try to improve the working

condition of the bank.

Such system should be designed that every employee who has some problems with

his officers can communicate it to the higher management and some steps must be

taken to improve that.

Others

The period of internship should be divided into the number of department of the

MCB. The internee should be given timetable mentioning the number of days he has

to work at different places in the bank. On the 1st 4 day in each department internee

should be given a lecture by the officer of the department concerned about working of

the department.

A lot of productive time is wasted by the staff in unproductive pursuits and tea and

lunch breaks are got voluntarily extended and the time spent in corridors,

courtyards, depends on the staff will. This tendency of late must be eliminated

which reflect adversely on the image of the institution and has posed a serious

problem.

Distribution of work is not on equity basis, work has not been allocated properly

some workers have to work hard and have to work in late hours without any extra

reward. So I suggest that steps should be taken to allocate the work properly.


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Reward and Punishment

It is human nature one goes behind reward and incentives while and try to avoid from

punishment. Likewise in commercial institution like bank this system be introduced

with full force means active smart, educated skilled, self spoken and well versed staff

personal, should be reward and appreciates on the other hand lazy, lethargic, heared,

rough dealers and ill manner ed must be warned penalized and punished. But this all

should be on merit and considering the policy of honesty is the best policy and

mot due to some personal liking, disliking prejudice and patrimonial. It is therefore

suggest certain schemes and checks may be introduced in banks to increase efficiency

through reward and punishment system.

Survival Of The Fittest

It is not nearly a sentence or idiom right man for the right job according to his

qualification to his qualification, profession skills and experience with the job

specification must be considered while posting and placing the employees.

It should not be like that a person who may be a very good worker but possessing lack of

managerial capabilities should be posted as manager. But as second place in command or

some heavy working department wished persons together with managerial qualities

and manners in the same fashion should be posted and placed as manager.


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REFERENCES

Janjua, M. A. (2003). History of the Slate Bank of Pakistan (vol. 111, pp. 790-800).

Karachi, State Bank of Pakistan.

Ansari, A. J., Naeem, M., & Zubari, J. (2008). Financial Management in Pakistan (1st

Ed.). Lahore publisher Lahore.

Retrieved Sep. 13, 2010, from http://en.wikipedia.org/wiki/Banking_in_Pakistan

Retrieved Sep. 13, 2010, from http://www.oppapers.com/ essays/Pakistans-Banking-

Sector-Industry A nalysis/181995

Retrieved Sep. 05, 2010, from http://www.sbp.org.pk/ reports/annual/a

rfy09/annex_index.htm

Retrieved Sep. 01, 2010, from http://en.wikipedia.org/ wiki/Muslim_Commercial_Ba nk

Retrieved Sep. 01, 2010, from http://

www.mcb.com.pk/.../Annual%20Standalone%20Accounts%20-%202009.pdf

Mcb virtul banking. (2010). Banking through Internet (1stEd. ) [Brochures]. MCB

Bank:Author.

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Ali Sial Internship Reports on Mcb Bank Ltd