MCB FINAL 2010

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LAHORE BUSINESS SCHOOLPage 1

Internship Report on Bank (2010)

Submitted To:

SHUSMA KHAN

Submitted By:Farhat Ali Shah Gillani

MBA Marketing

Registration no:

MI01083-064

Department of management sciences

The University of Lahore

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Submitted To :

SHUSMA KHAN

Submitted By:

Syed Farhat Ali Shah

MBA (Marketing)

Registration No:

MI01083-064

Date:

30-12-2010

Lahore Business School

INTERNSHIP REPORT ON MCB BANK

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Preface 02

Dedication 03

Acknowledgment 04

Executive Summary 05

Introduction & Background of Organization 07

Overview of Organization 08

History of Organization:

History 10

Privatization 10

Vision & Mission 11

Developments 12

Head office 13

Circle office 13

Management of organization 14

Organizational structure 15

Branches 17

About branch 18

General banking 19

Department where internship was carried out 20

Operation department 20

TABLE OF C ONTENTS

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Nature of account 22

Account opening 24

Clearing department 26

Learning 27

Types of stamp 27

Remittance department 30

Types of remittance 31

Instruments 31

Other department 34

Cash department 34

Account department 36

Technology department 37

Advances department 38

Financial analysis 43

Advantage of ratio 44

Application of class room learning 49

What I have learnt in MCB 50

Suggestions & Recommendations 51

Growth scope for employees 52

If I were the manager in MCB 53

References 54

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Internship Report O N MCB

(MUSLIM COMMERCIAL BA NK); LAHORE

MA STER OF BUSINESS A D M INISTR A TION (MBA)

Submitted to: Madam Shusma K han

Submitted by: Syed Farhat Ali Shah(MI-01083-064 )

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PREFACE

Competition in practical field is growing due to no. of Govt. and private institutions making

students who have their worth. So, situation is getting challenging for students of Business

Administration.

To avoid this discrepancy the MBA students it seems compulsory to visit various business

organizations for one and half month practical training. This training makes them familiar with

the practical system of management, which prevails in various business organizations. So in this

connection I had the opportunity to perform internship at MCB BANK (Muslim commercial

bank), Lahore Pakistan.

The internship program is to broaden the vision of practical experiences with theoretical

knowledge as it increases ones capabilities to handle problems at various stages and ability of

decision.

I tried my best to collect the valuable information and its relevant fact.

F arhat Ali

MI-01083-064

LBS

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D E D ICATION

Our loving, caring and great teachers and parents, whose prayers have been a force

behind all our inspiration, whose guidance, motivation and support has made us able

to be successful in all the fields of life.

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ACKNOWLEDGEMENT

I bow my head before almighty Allah with gratitude. My indebt ness and salute too many

individuals who have helped shape this report cannot adequately be conveyed in a few sentences.

It is most appropriate to mention the ingenuity of respected teacher Sir, who provides me an

opportunity to enhance the marketing and management skills from a well-established

organization. It is my privilege and honors to my deep gratitude and in calculating thanks to the

all members of the Muslim commercial bank.

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EXECUTIVE SUMMARYThe 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. The network of bank branches now covers a very large segment of

national economy. The State Bank of Pakistan issues the shares of these periodically. Bank

employees and other common peoples can also purchase these shares and earn profit. In 1956,

MCB transferred its registered office to K arachi, where the Head Office is presently located. InApril 1991, MCB became Pakistans first privatized bank.

The corporate branch at Shahrah-e-Faisal K arachi (SF K) branch is the corporate branch of MCB

in K arachi. The bank is using SWIFT for transfer of information about imports and exports.

MCB SF K branch has Currently Following three Departments General Banking Department,

Advances Department & Foreign Exchange Department.

To open an account the customer has to meet the general banking manager with an introducer.

The procedure begins with the punching of account opening form to the customer file i.e.

customers master file. Before closing any account, bank send letter to the account holder for

informing him that his account is going to be closed. There is need an approval form higher

authority to close any account. Current deposits are those which are payable to bank whenever

demanded by the customer. Bank does not pay any profit on current deposits. The following are

the financial products/services of MCB Malay Mail Scheme, PLS Account, Saving 365 Account,

Capital growth certificate scheme, Fund Management Scheme, K hushali Bachat Account, Term/

Fixed Deposits and others like night banking, credit cards, traveler cheques.

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In remittance department like any other bank MCB also have instruments for transferring of

money, Telegraphic Transfer, Mail Transfer. In cash department both deposits and withdrawals

go side by side. This department works under the accounts department and deals with cash

deposits and payments. This department maintains the following sheets, books, and ledger of

account cash received voucher sheet, cash paid voucher sheet, Paying-in-slip, Cheque book,

Cash balance book. The clearing in K arachi at MCB or other banks is being done through NIFT

( National Institute of Facilitation Technology ).

Bank provides this facility to the people who need advance money to meet their requirement.

Party dealing with other banks financial condition of borrower business and as a first step credit

proposal is being made. MCB provides advances, which are two types. Secured Advances,Unsecured Advances. MCB usually classified advances in to following types Agricultural

Advances, Commercial Advances, Industrial Advances. Commercial Advances are of following

types

Demand Finance, Cash Finance, Foreign bills purchased, Finance against imported goods,

Finance against foreign bills, Export Refinance Part I (Pre Shipment ) & others. Banks

Agriculture division deals with the agriculture advances. Bank provides the Agriculture

Advances in order to enhance and support the agriculture sector of the country. Farm Credit &

Non Farm Credit.

In foreign exchange, MCB is dealing Foreign Currency Accounts, Foreign Remittances, and

Foreign Bills for Collection, Imports & Exports

Foreign currency accounts & the foreign currency department deals with the following types of

accounts, Dollar K hushali account, Current account, Saving bank account, Term deposit, PrimeCurrency Scheme. Foreign accounts are convertible on floating rate available to the bank. Letter

Of Credit facility is being provided by MCB in foreign exchange.

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INTRO D UCTION OF SECTOR

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. Banking in fact is primitive as human

society, for ever since man came to realize the importance of money as a medium of exchange,

the necessity of a controlling or regulating agency or institution was naturally felt. 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 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 receiptsfor encashment during a given period of time. They also found that most of the 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 a profitable business for the goldsmiths. They

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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.

At the time of independence, there were 631 offices of scheduled banks in Pakistan, of which

487 were located in West Pakistan alone. As a new country without resources it was very

difficult for Pakistan to run its own banking system immediately. Therefore, the expert

committee recommended that the Reserve Bank of India should continue to function in Pakistan

until 30 th September 1948, so that problems of time and demand liability, coinage currencies,

exchange etc. be settled between India and Pakistan.

The non-Muslims started transferring their funds and accounts to India. By the end of June 1948

the number of officers of scheduled banks in Pakistan declined from 631 to 225. There were 19

foreign banks with the status of small branch offices that were engaged solely in export of crop

from Pakistan, while there were only two Pakistani institutions, Habib Bank of Pakistan and the

Australian Bank. The customers of the bank are not satisfied with the uncertain condition of

banking. Similarly the Reserve Bank of India was not in the favor of Govt. of Pakistan. The

Govt. of Pakistan decided to establish a full-fledge central bank. Consequently the Governor-

general of Pakistan Quaid-I-Azam inaugurated the State Bank of Pakistan on July 1, 1948. Thus

a landmark was made in the history of banking when the state bank of Pakistan assumed full

control of banking and currency in Pakistan. The banking structure in Pakistan comprises of the

following types.

y State Bank of Pakistan

y Commercial Bank of Pakistan

y Saving banks.

y Cooperative banks

y Specialized credit institutions.

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Commercial banks have been the most effective mobilizes of savings and have been providing

short-term requirements of working capitals to trade, commerce and industry.

Up to December 31, 1973, there were 14 Pakistan commercial banks that functioned all over the

country and in some foreign countries through a network of branches. All these commercial

banks were nationalized in January 1, 1974, and were recognized and merged into the following

five banks:

y National Bank of Pakistan

y Muslim commercial bank limited

y Habib Bank Limited

y United Bank Limited

y Allied Bank of Pakistan

The state bank of Pakistan is the Central bank of the country and was established on July 1,

1948. The separation of East Pakistan and its repercussion in the form of economic depression

has caused a lot of difficulties to the banking system in Pakistan. The network of bank branches

now covers a very large segment of national economy. The numbers of branches have increased

appreciably and there is now on branch of bank for every 3000 heads of population

approximately. There is done reasonable growth in deposits from the establishment of Pakistan.

Besides this growth, specialized credit and financial institutions have also developed over the

years.

The Government of Pakistan in the late 90s introducing the need for the privatization of stateowned banks and companies. The private sector has accepted the challenge and most of the

banks are privatized today. The State Bank of Pakistan issues the shares of these periodically.

Bank employees and other common peoples can also purchase these shares and earn profit.

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Throughout the period of banking history the banks have been expanding rapidly and achieved

the desired goal of progress.

MCB BANK LIMITE D

HISTORY:

MCB was founded by ISF HA NI and ADAMJEE families in Calcutta on July 9, 1947. MCB is

not an overnight success story rather good track of services are responsible for the leaps and

bounds progress. After the partition of the Indo-Pak Subcontinent, the bank moved to Dhaka

from where it commenced business in August 1948. In 1956, the Bank transferred its registered

office to K arachi, where the Head Office is presently located. Thus, the bank inherits a 52-year

legacy of trust in its customers and the citizens of Pakistan

The performance of MCB was badly affected by bureaucrat government. In January 1974, MCB

was nationalized by Bhutto Government following the bank act 1974 subsequently in June 1974

Premier Bank Limited merged with MCB.

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.

MCB besides being money financial organization have rendered invaluable services in the

economics and social developments of our country. MCB today, represents a bank that has

grown with time, experience and Pakistan.

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VISION STATEMENT

To be the leading financial services provider, partnering with our customers for a more prosperous and secure future

MISSION STATEMENT

We are a team of committed professionals, providing innovative and efficient financialsolutions 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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D EVELOPMENTS:

After privatization, the growth in every department of the bank has been observed. Following are

some key developments:

y Increased participation on foreign trade.

y Betterment of branches and staff service level.

y Introduction of Rupee Traveler Cheques & Photo Credit Card for the first time in

Pakistan.

y Extended use of information technology which is evident from the fact that there are 768

fully automated branches, more than 250- online branches (integrated networking ), 151

ATMS in 27 cities nation wide and a M.C.B continuously innovate new product.

HEA D OFFICE

Chudrigor Road of K arachi has same importance in Pakistans economy as of the Wall Street in

world economy. The division working under MCB Head office is as follows:

y Administration

y Credit Management

y Investment Banking

y Human Resource

y Information Technology

y Corporate Planning & Budgeting

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Launching of different deposit schemes to increase saving level.

y Finance & Treasury

y International Division

y Inspection & Audit

y Law Division

y Marketing & Development

y Trustee Division

Under the President an Executive Committee and a Credit Committee works. All the matter of

the bank join to the board of director are presented to the executive committee which is

responsible for daily operation of the bank .The request for credit exceeding the General

Manager power is approved by the Credit Committee. Under the area Executive is the General

Manager who is the in charge of the Circle Office. Under the General Manager is the Zonal

Manager and then the Branch Manager. At present, there are 9 circles, 47 regions and 1400+

branches. Before privatization there were provincial chiefs for all the four provinces. But thismanagement now has abolished the provincial officers and improved the efficiency of the bank.

CIRCLE OFFICE

The working of circle office is to control and regulate the functions of branches which are under

in its control. The functions of circle office are to mobilize the deposits and receive reports from

branches. Circle office is like a mini head office. Agents and correspondents of MCB are in all

commercial cities of the world. Circle office is divided in the following division:

y Credit Management

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y Audit & Inspection

y Human Resource

y Marketing & Development

MANAGEMENT OF ORGANIZATION

MANAGEMENT OF BANK:

Mian Mohammad Mansha Chairman

S.M. Muneer Vice Chairman

Mohammad Aftab Manzoor President & Chief Executive

Tariq Rafi Director

Sheikh Mukhtar Ahmed Director

Mohammad Arshad Director

Shahzad Saleem Director

Raza Mansha Director

Sarmad Amin Director

Mian Umer Mansha Director

AU D IT COMMITTEE:

Mian Mohammad Mansha Chairman

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ORGANIZATIONAL STRUCTURE

As MCB is a banking company listed in stock exchange therefore it follows all the legalities

which are imposed by concerned statutes Mian Muhammad Mansha is Chairman of the

company with a team of 10 directors and 1 vice chairman to help in the business control and

strategy making for the company.

Operational Management of the bank is being handled by a team of 10 professionals. This team

is also headed by Mr. Muhammad Mansha. The different operational departments are Consumer Banking & IT div ; Financial & Inter branch div ; Banking operations div ; HR & Legal div ;

financial control & Audit div ; Credit management div ; Commercial Banking div ; Corporate

Banking div ; Treasury management & FX Group and lastly Special Assets Management (SAM )

Group.

For effective handling of branches, it has been categorized into three segments with different

people handling each category. These categories are:

CORPORATE BANKING:

These are branches which have an exposure of over Rs. 100 million. Usually includes

multinational & public sector companies

COMMERCIAL BANKING:

The branches which has a credit exposure of less than Rs. 100 million but having a credit

portfolio of more than Rs. 20 million (excluding staff loans )

Usually branches in large markets and commercial areas come under this category.

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CONSUMER BANKING:

These are the branches which have exposure up to Rs. 20 million and these include all the

branches which are neither corporate nor commercial branches.

Recently the organizational structure was re-designed as follows:

Punjab 650

Sindh 243

NWFP 103

Baluchistan 36

Azad J. K ashmir 14

Domestic 1046

Overseas 7

Total 1053

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INFORMATION ABOUT BRANCH

I did my internship in Muslim Commercial Bank Limited Mall road branch, Lahore. And some

important information about my branch which I observed is as follows:

MANAGEMENT OF THE BRANCH:

Branch manager Mr. Junaid Butt

Accountant Mr. Syed mehdi Tanvir

Operational manager Mr. Toufiq Butt

Cashier Mr. sajjad akbar

Peon Mr. Ajmal

Secrity guard Mr. Haidar

D EPOSITS:

The total deposits of this about to 207.10 million.

NUMBER OF ACCOUNTS:

Accounts in this branch of MCB are as follows:

CURRENT ACCOUNT:

Total numbers of current accounts are 4484

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D

EPARTMENTS WHERE INTERNSHIP WAS CARRIED

OUTy Operations Department

y Clearing Department

y Remittance Department

y Foreign trade

y Advances

OPERATIONS D EPARTMENT

In Operations department I was under supervision of Mr. Toufiq Butt Operational manager. And

I learnt to open accounts of different types and nature which are as follows,

TYPES OF ACCOUNTS:

y Single

y Joint

y Partnership

y Private Limited

y Public Limited

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SINGLE:

Only one person can operate this a/c. An individual who can fulfill the requirement of bank can

open this a/c. We can call it a personnel or individual a/c. The requirements for this type are

National Identity Card Photocopy, Minimum Deposited Balance, Account Opening Form, Letter

of K inship etc.

JOINT:

The requirements for this type are National Identity Card Photocopy, Minimum Deposited

Balance, Account Opening Form, Letter K inship, Additional Signature Form (For Joint

Account ), Declaration regarding the operator of account.

PARTNERSHIP:

The requirements for this type are National Identity Card Photocopy, Minimum Deposited

Balance, Account Opening Form, Registration certificate, agreement among partners and

Commencement of business and private registration, resolution of board of directors,

commencement of business, memorandum and articles of association and balance sheet etc.

PRIVATE LIMITE D :

Such type of account is opened in the name of the businesses having private limited concern and

mostly medium business enterprises open such kind of accounts. All the board of directors have

to submit the declaration regarding the account operator on the company pad and with the rubber

stamp with the signature of the all the members of the board of directors. In case of any change

in directors bank must be informed regarding that.

PUBLIC LIMITE D :

Public Limited A/C type of account is opened in the name of the businesses having Public

limited concern and mostly medium business enterprises open such kind of accounts. And terms

regarding board of directors are the same as of private limited.

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NATURE OF ACCOUNTS:

y Current Account

y PLS Saving bank A/C

y K hushali Bachat Account ( K BA)

y Saving 365 A/C

y

Basic banking A/C (BBA )

CURRENT ACCOUNT:

However, there is requirement of minimum balance maintenance of Rs. 1000/-. Usually this type

of account is opened by the businessmen. No profit is paid by the bank and no service charges

are deducted by the bank on current deposits account. These types of deposits are also exempt

from compulsory deduction of Zakat.

PLS SAVING BANK A/C:

This account was started in 1980s after the issuing of banking ordinance in 1980 by Zia

Government to develop Islamic banking in Pakistan. In this case customer would be responsible

for bearing profit as well as loss. For withdrawal of larger amount, 7 days notice in writing is

required to be given.

y Minimum balance is Rs.500/=

y Not more than eight withdrawals in a year allowed

y More than Rs.15000/= are not allowed to draw

y Seven day notice is required for big withdrawal

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y Zakat deducted on @ 2.5%

y Profit calculated on monthly basis

y Profit paid on annually basis

SAVING 365 ACCOUNT :

This account is newly developed of MCB and it provides flexibility of saving account to

business people. Profit on deposits will be payable on daily product basis on balance of RS.

500,000/- and above. There will be no restriction on withdrawal from the account. Zakat and

withholding Tax is also applicable on the account opened under this scheme.

y Minimum balance is Rs.500,000/=

y Below minimum balance, profit calculation ignored

y Profit calculated on daily basis

y Profit paid on annually basis

y 10% Withholding Tax on minimum balance

y Zakat deducted on @ 2.5%

KHUSHALI BACHAT ACCOUNT:

y Saving type account

y Rate of return is 8% per annum

y Profit calculated on daily basis

y Profit paid on half yearly basis

y Utility bills can be debited through this a/c

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BASIC BANKING A/C (BBA):

y Introduced specially for salaried persons.

y Minimum balance is Rs.1000/=

y No service charges.

y Only two transactions allowed, in one month.

y For more than two transactions Rs.35/- per transaction.

y Single natured A/C.

ACCOUNT OPENING PROCE D URE:

Following steps are involved in A/C opening,

ACCOUNT OPENING FORM:

Firstly the customer fills the account opening form and provides all the information as provided

above. I experienced to fill this form

INTRO D UCTION :

An account is needed to be introduced. The introduction of a current account holder is accepted

for the opening of an account.

The introducer should be a branch customer or may be account holder of any branch of MCB ;

however signatures should be verified by the banker. In certain cases, introduction from bank

other than bank MCB may be allowed.

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STAMPING:

Then it is stamped. Stamps like. BAL sign verified, Sign Admitted Stamp, Sign Verified stamps

etc are affixed.

ACCOUNT NUMBER:

After obtaining approval, an account number is allotted to the customer and all the information is

entered in to the computer and KYC is filled up. Then that account number is writing on the

Cheque Book, Specimen Signature cards and account opening form.

KNOWING YOUR CUSTOMER :

After entering information KYC is filled up. It should be ensured that at the time of filling

information in KYC, a customer should be physically present. After this all information is saved

in system. I filled KY C form also.

APPROVAL:

This account is further approved by Manager Operations.

SEN D FORM TO HEA D OFFICE:

After fulfilling all the requirements and verifying the forms from operation manager the account

opening form is sent to Head Office K arachi and make request to issue the printed cheque book.

LETTER OF THANKS:

Subsequent to the opening of an account, letter of thanks should be sent under registered post or

courier service to the customer and the introducer.

ISSUANCE OF A CHEQUE BOOK:

After opening an a/c with the bank, the a/c holder can not immediately start operating his/ her

account. The cheque book is issued, when a customer will submit a copy of letter of

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acknowledgement duly signed by him, in case of new account. Normally a cheque book having

at least 25 leaves is issued but it can also be of 50 leaves.

CLOSING OF AN ACCOUNT:

There is no. of reasons of closing an account. Some are listed below:

y If customer desires to close his account

y In case of death of one account holder.

y Bankruptcy of the account holder.

y If an account contain nil balance or not up to the requirement of rules.

y Before closing any account, bank send letter to the account hold for informing him that

his account is going to be closed. There is need an approval form higher authority to

close any account.

CLEARING D EPARTMENT

In clearing department I worked under supervision of MR FAR HA N ALI KHA N In clearing

department and learned about inward and outward clearing and I also learnt about,

MEANING OF CLEARING:

The word clearing has been derived from the word clear and is defined as,

A system by which banks exchange cheques and other negotiable instruments drawn on each

other within a specific area and thereby secure payment for their clients through the Clearing

House at specified time in an efficient way.

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CLEARING HOUSE

It is a place where cheques are presented, collected from bank branch. It is one of the services

provided by NIFT to other commercial banks. NIFT acts as a clearinghouse.

NIFT:

NIFT stands for National Institutional Facilitation Technologies . Clearing House of SBP has

shifted a tiresome part of its work to a private institution named NIFT. NIFT collects cheques,

demand drafts, Pay orders, Travelers Cheques, etc . from all the branches of different banks

within city through its carriers and send them to the branches on which these are drawn for

clearing. After the branches approve the instruments drawn on them, NIFT prepares a sheet for

each branch showing the number for instruments and amount in its favor and drawn on it and

sends it to each branch.

LEARNING IN CLEARING D EPARTMENT

My learning in clearing department was of following things:

y Procedure of clearing a cheque.

y Checking of cheques.

y Inward and outward clearing.

y Different reasons of returning a cheque.

TYPES OF CLEARING STAMPS:

CLEARING PROCE D URE:

Instruments collected are treated as Transfer, Transfer Delivery, Clearing, and Cheque

collection.

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CHECKING OF CHEQUES:

When the instruments are collected from the client. Following things are checked

y Cheque date, instrument should be neither stale/ nor post-dated.

y Title

y Amount in figures and words should be the same

y There should be no cutting and overwriting on the cheque

y

Instrument should not bear any unauthorized alternation.

y Cheque is crossed.

TRANSFER:

When the instruments are collected and paid by the same branch, it is called transfer.

TRANSFER D ELIVERY:

When instruments are collected and paid by two different branches of the same bank situated in

the same city, it is called transfer delivery. A cheque is processed under transfer delivery when it

has crossing stamp and is from local branch of MCB.

CLEARING:

Instruments 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, are processed for clearing.

In outward clearing when cheque is received two copies of voucher SF-37 are prepared, one

copy and instruments along with clearing stamp, realization stamp, add list and two vouchers of

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clearing summary are sent to NIFT in a sealed bag. And clearing records are recorded in clearing

register.

In Inward clearing instruments received from NIFT are posted in Computers after checking.

CHEQUE COLLECTION (C.C):

When cheque is from another city then it is grouped as C.C.Such instruments are processed as

cheque for collection. In this procedure SF-37 form is used in Cheque collection. Original

voucher with cheque, stamped as C.C along with C.C number is sent to main branch of the

responding city which is further sent to NIFT.

PAY-IN-SLIP:

It is used for two purposes

y 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.

y 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.

NOTE:

In inward clearing sometimes cheques are not passed due to some reasons then cheques are sent

back to NIFT along with cheque return memo. Some of these reasons are,

y Cheque incomplete

y Clearing stamp Required.

y Drawers sign incomplete

y Drawers sign different from specimen

y Post Dated

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y Payment stopped by drawer.

y Amount in words and figures differ.

y Insufficient funds etc.

REMITTANCE D EPARTMENT

REMITTANCE:

Remittance is transfer of funds from one place to another or from one person to another. It is an

important service provided by banks to customers as well as non-customers. Since it is not a free

service it is a source of income for the bank.

PARTIES INVOLVE D IN REMITTANCE

Four parties involved in remittance: -

Remitter, Remittee, Issuing Bank, Paying Bank

REMITTER:

One who initiates, or requests for a remittance. The bank charges him a commission for this

service. He may or may not be the branchs customer.

REMITTEE :

A Remittee is also called the beneficiary, or the payee. The person in whose name the remittance

is made. A Remittee is also the one who receive the payment.

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ISSUING BANK :

The bank that sends or effects the remittance, through demand drafts, telegraphic transfers, or

Mail Transfers.

PAYING BANK:

Paying Bank also knows as the drawee branch. The branch from where the instrument is drawn.

TYPES OF REMITTANCE:

y Remittance is classified into following four types

y Inward remittance, instruments received for payment

y Outward remittance, issuing instrument to the responding branch.

y Inland remittance, with in same country.

y Foreign remittance, from one country to another country.

INSTRUMENTS USE D IN REMITTANCE:

y Demand Draft (DD )

y Telegraphic Transfer (TT )

y Pay Order (PO )

y Call Deposit Receipt (CDR )

y Rupees Traveler Cheque (RTC )

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D EMAN D D RAFT:

DD is a written order given by the branch of the bank on behalf of the customer to other branch

of the same bank to pay the certain amount to the customer.DD are issued for the particular place

other than place of issuance. DD applicant or recipient, who might not be an A/C holder present

it to another bank at a different place requesting it to pay on demand a specified amount of

money which is already received to the person named on it.

D OCUMENTATION:

A printed application form is provided for filling in completely and signing by the applicant.

After depositing an amount of draft and commission of the bank, duly completed and signed by

two authorized officers, then it is handed over the applicant and credit order is dispatched to

drawee branch.

.

PAY OR D ER:

For this kind of remittance the payer must have the account in the issuing bank. Pay order are

more liquid as compared to cheques because cheques may be dishonored while PO cant be. It is

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D OCUMENTATION:

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.

NOTE:

At time of my stay in remittance department, there was no issue of CDR, TT, RTC, PO so I were

unable to understand its practical aspects, except clearing.

OTHER D EPARTMENTS

There have been some departments in which internship was not allowed, these departments were

y CAS H DEPARTME NT

y ACCOU NTS DEPARTME NT

y ADVA NCES DEPARTME NT

And in TECHNOLOGY D EPARTMENT I got information about ATM and Online Banking

and just filled their forms because computer work was not allowed to internees.

CASH D EPARTMENT

The cash department is the most important department of the bank . In cash department both

deposits and withdrawals go side by side. This department deals with cash deposits and

payments.

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The following books are maintained in the Cash Department:

y Cash Receipt Book

y Cash Payment Book

y Cash Balance Book

CASH RECEIPT BOOK:

The cashier is responsible to receive both the paying-in-slip and cash from the depositor. For

depositing the cash into customers accounts, there is need to fill in the paying-in-slip giving the

related details of the transaction. The cashier check the necessary details provided in the paying-

in-slip and accounts the cash and tallies with the amount declared in the slip then cashier fills in

the Cash voucher received Record Sheet and assigns a voucher no. to both the transaction

being made in the sheet and the slip. The 2 nd cashier posts the transaction entries in computer

ledger. After posting these entries, computer display before posting balance and after posting.

Cashier assigns the stamp POSTED on the voucher to show voucher transaction entries are

posted.

CASH PAYMENT BOOK:

The only instrument that can be used to withdraw an amount from an account is the Cheque

book. No payments are made by another instrument. When cheque is valid in all respects, the

cashier enters the necessary inputs in the computer and posts the entry so that account balance is

updated. When cashier posts these entries, computer automatically display the balance before

posting the transaction amount, balance after posting.

CASH BALANCE BOOK:

At the end of the working day cashier is responsible to maintain the cash balance book. The cash

book contains the date, opening balance, detail of cash payment and received in figures, the

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consolidated figure of receipt and payment of cash is entered in the cash book and the closing

balance of cash is drawn from that i.e.

Opening Balance of Cash + Receipts - Payments = Closing Balance

ACCOUNTS D EPARTMENT

The most important aspect in record keeping of a bank is its accounting system. The basic

purpose for maintaining an accounting system is to ensure consistency in record keeping and

accounts. The basic requirement for any accounting system is that it should be in accordance

with the GAAP i.e. Generally Accepted Accounting Principles. There are two choices available

to an organization for an accounting system.

Main Functions of Accounts D epartment:

The major function of this department is keeping the record maintenance of each and every

transaction and prepares reports about the amount of deposits and advances and sent to Head

office or State Bank of Pakistan on monthly, quarterly and yearly basis.

Following activities are carried out in Accounts D epartment.

y Budgets and budget review form

y Income & expenditures.

y Reports and Reconciliation.

y Activity checking.

y Depreciation & Maintenance of fixed assets provision.

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TECHNOLOGY D EPARTMENT

It include:

y Mobile Banking

y Phone Banking

y Online Banking

y ATM

MOBILE BANKING:

It has been launched recently during my

internship. It helps in getting accounts details

and making transactions using mobiles.

PHONE BANKING:

"MCB Phone Banking is available to all customers on a countrywide basis. Customers can

dial 111-000-622 (without any city code/prefix ) from their respective cities

Customers enjoy 24x7 Round the Clock Phone Banking

Services. MCB is the first bank in Pakistan to offer

Centralized connectivity.

ONLINE BANKING:

MCB now offers the facility of on-line banking to its

customers through its country wide network of branches.

Customers can use the ATMs or the banking counters of

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any branch for day-to-day banking needs, irrespective of branch where they maintain their

accounts.

There are now more than 250 branches linked through this system and they can transact with

each other directly using computer systems and the software named SYMBOLS at their own

branches.

ATM (Automatic Teller Machine):

ATM stands for Automatic Teller Machine. This machine is used to transact in one's account

without intervention of humans.MCB has the largest ATM

network in the country at the moment with almost one ATM at

each online branch and also ATM terminals at International

Airports covering 40 cities of Pakistan

ATMs are operated through a card issued to the valued customers

and by application of Personal Identification Number (PI N

number ).

.

A D VANCES D EPARTMENT

Different banks provide loan facility to general public, companies etc. but MCB provides two

types of loans that are as under:

y Fund Base Loans

y Non Fund Base Loans

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FUN D BASE LOANS:

In this type of loans cash is directly involved. Bank provides loans in shape of cash. Bank gives

credit or limit facility to customers that needed it. In fund based loans there are two further

classifications:

Long Term Loans:

y Lease facility for car

y For Machinery

y For Fixed Assets

Short Term Loans:

y Running Finance (R/F )

y Cash Finance (C/F )

RUNNING FINANCE:

The MCB provides overdraft facility to the customers for the working capital

requirement. These are the loans which are given to those customers whose business runs

through out the year or continuously. Its duration is one year and it is for running business. In

advances there are two securities one is known primary security and other is secondary or

collateral security. Hypothecation of stock is the primary security and mortgage is the secondary

or collateral security.

SECURITIES FOR FUN D BASE LOANS:

y Hypothecation of Stock

y Mortgage

y Pledge

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HYPOTHECATION OF STOCK:

In hypothecation of stock the possession of goods and the title remains in the favour of customer.

Without the permission of the bank the customer can't sell the stock. It is the restriction of the

bank that in god own there should be stock according to the instructions of bank every time. The

draw back of this is that there is no check and balance of stock from the bank. The customer can

easily sell his stock.

MORTGAGE:

The bank can mortgage the immovable property like land, building etc as a security. In mortgage

the possession remains to customer and title of goods remains to bank.

PLE D GE:

In this, bank requires the moveable property of the customer as a security like stock,

vehicle etc. possession of goods remains to customer and title in the favor of bank. The bank

hires a muqaddam [Guard] and the key of store where the stock is pledged is in the security of

bank. After receiving amount bank releases his stock for the same amount

NON FUN D BASE LOANS:

In non fund based loans cash is not directly involved but bank gives guarantee on the

behalf of customer. Bank works as a third party and known as Guarantor. Bank provides a

security to customer when he needs and someone requires from the customer.

D OCUMENTS REQUIRE D BY BANK FOR A D VANCES:

y Request of customer

y Credit application from bank

y Basic borrower sheet

y Net worth certificate

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y CIB report

y Financials

y Account statement

y Property evaluation report

y For sale value certificate

y Property documents

y

Title deed [fard]

y Property map

y C NIC

y Account opening form

y Undertaking

Following steps are there:

y Information required by the bank

y Preparation of credit proposals

y Sanction advice

INITIAL INFORMATION:

Following information is required to be submitted to bank. Nature & structure of borrower

business

y Names of proprietors, partners or directors

y Detail of all firms or companies associated with borrower.

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y Financial condition of borrower business

y An assessment of his business abilities

y Accurate and up to date financial statements of last two years for comparison purposes

y Market report on the borrower where borrower has maintained an account with another

bank, a report from his bank should also be obtained.

y A report from credit standing bureau of State Bank of Pakistan

PREPARATION OF CRE D IT PROPOSAL:

At first a formal application for credit approval is obtained from the party along with complete

group position. The partys credibility report is obtained from the bank with which the bank is

doing its business. The partys credibility report is also taken from the Head office of Trade

Information Division.

For obtaining credit, party has to submit the last two years Balance Sheet and Profit & Loss

statement duly attested by authorized 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.

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.

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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.

The form contains following information:

y Nature and amount of limit.

y Purpose

y Security/ Collateral

y Margin (% ).

y Mark up/ Charges

y Validity

FINANCIAL ANALYSIS OF MCB

RATIO ANALYSIS

Ratio analysis is an important and old technique of financial analysis. Ratios are important and

helpful in the reference that:

y These simplify the comprehension of financial statement and tell the whole story of

changes in the financial conditions of the business.

y These provide data for inter-firm comparison. The ratios highlight the factors associated

with successful and unsuccessful firms, also reveal strong and weak firms.

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y These help in planning and forecasting these can assist management in its basic functions

of forecasting, planning, coordination and control.

y These help in investment decision in case of investor and lending decision in case of

Bankers etc.

However, the ratios are only indicators, they cannot be taken as final regarding good or bad

financial position of the business other things have also to be seen.

Great care is needed while calculating meaningful ratios and in interpreting them. Although there

are several ratios, which an analyst can employ yet the type of ratios he would, use entirely

depends on the purpose for which the analysis is done i.e., a creditor would keep him abreast

about the ability of a concern to cover up its current obligations and so would care about current

and liquid ratios, Turnover of receivables, coverage of interest by the level of earnings etc.

AD VANTAGES OF RATIO ANALYSIS:

It helps to give comprehensive financial statements in evaluating aspects of any undertaking in

respect of financial health, operations efficiency and profitability. It gives a chance of inter-firm-comparison to measure efficiency and helps management to resort to some remedial measures. It

provides a good help in decision making for investors and the financial institutions.

CATEGORIES OF RATIO ANALYSIS:

y Liquidity ratios

y Activity ratios

y Debt ratios

y Profitability ratios

y Market ratios

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LIQUI D ITY RATIOS

The liquidity of a firm is measured by its ability to satisfy its short-term obligations as they comedue. Liquidity refers to the solvency of the firms overall financial position i.e. the ease with

which it pays its bills.

y Liquidity Measures are

y Current ratio

y Quick (acid-test ) ratio

CURRENT RATIO:

The current ratio, one of the most commonly cited financial ratios, measure the firms ability to

meet its short-term obligations. It is expressed as follows:

Current assets

Current ratio = Current liability

RESULT:

From the above ratios it is clear that the firms investment in current assets has increased. In

2008 it is in better position to pay its obligations as they come due. But in three years we can see

that the firm has the ability to pay its current liabilities efficiently. The standard for this ratio is

2:1 it is calculated by the current assets by total of the current liabilities.

Years 2008 2007 2006

Current ratio 1.42 1.02 1.31

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D EBT RATIO

The debt ratio measures the proportion of total assets financed by the firms creditors. The higher this ratio the greater the amount of other people money being used to generate profit. The ratio is

calculated by following formula

D ebt ratio = Total liabilities

Total assets

Years 2008 2007 2006

Debt ratios 0.864958 0.860627 0.877075

RESULT:

The ratio indicates the more than half of the assets financed by the debt. This ratio is almost

showing the same trend throughout the previous three years. Debt ratio indicates the greater the

risk and more financial leverage it has. It also shows that firm has paid some portion of the debt

during the year 2008.

MARKET RATIOS

y Return on total assets

y Return on equity

y Earnings per share

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EARNING PER SHARE:

RESULT:

This ratio indicates the amount of income earned by the common stockholders. Above figuresclearly show the progress of the company and it maintains this ratio more than Rs.20 which is

good for the investors.

VERTICAL ANALYSIS:

In vertical analysis each item of a financial statement is presented as a % age of the total of items

or some other suitable items.

HORIZONTAL ANALYSIS:

In vertical analysis each item in financial statement of the last year is considered as a base of the

same items.

RESULT ON THE BASIS OF VERTICAL & HORIZONTAL ANALYSIS:

From the above mentioned analysis following are my Result about the Operations of branches of

MCB for the year 2008,

y MCBs income by operations has been increased by 122.19% than 2007.

y Companys Total Assets in Pakistan has been increased by 130% than 2007.

y Deficit has been decreased by 104 % in comparison with year 2007

Year 2008 2007 2006

EPS 24.38929 26.16947 22.95

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y Due to financial crisis in the world investment activities are slowed down in year 2008

and they are decreased by 152% than year 2007.

y Due to its sound financial policies MCBs borrowing from financial institutions has been

decreased by 95 % than year 2007.

APPLICATION OF CLASS ROOM LEARNING

During my internship of six weeks in MCB Bank, Ltd. MALL ROAD BRA NCH LAHORE the

knowledge given by my respected and devoted teachers proved to be very helpful in

understanding the environment in the organization and working practically.

Following are some key points about application of my class room learning in the organization:

y The knowledge achieved from the subject Business Communication helped me in

understanding customer dealing i.e. how to deal with them? How to understand their

problems? Etc.

y It also helped me in understanding the inter Organizational Communication i.e. circulars,

notices etc.

y Also the K nowledge which I got from the subject Computer application in Business

also proved very useful.

y Financial Management and Principles of Accounting helped me in understanding the

accounting terminologies which are used in bank e.g. what is debit and credit vouchers?

What are these for? And also in understanding that how entries are made against certain

heads.

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SUGGESTIONS & RECOMMEND

ATIONSFollowing are some suggestions for MCB Bank, Ltd.

AD VERTISING:

Bank must let potential customers know that all attractions for banking exist. This is done by

advertising on television and obtaining press coverage, in conjunction with direct mail, window

displays, leaflet in branches and in appropriate other locations (such as hotels, shops, etc. ) and

including leaflets in statement of accounts sent to existing customers in the hope that they willtell potential customers about the services provided by our bank.

INCREASE D ATMS LOCATIONS:

Some personal sector customers prefer not to come to branch. They increasingly want to deal

with the bank in other ways, such as home banking or use of Automated Teller Machines

(ATMs ), which need to be at every branch or some important shopping plazas and airports etc.

INCREASE D SERVICES:

One way to retain the customers is to offer a wide range of services such as tax advice, free life

insurance equivalent to amount deposited, shares portfolio management, fund management

facility, etc., complimentary to the core services. Banks must have a slightly different mix of

services and mean of providing these such that customers can choose the mix that suits them

best.

MANAGEMENT OF TIME:

There should be a good management of time for the sake of employees i.e. offering them free

break hours instead of making them work in this time as well.

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GROWTH SCOPE FOR EMPLOYEES:

MCB should provide greater facilities to its employees, and give them bonuses for their hard

work and Promotions as well. There is a criticism on the banking management that the salariesof the employees are decreasing in every succeeding year. And I think this will shake the

confidence and working habit of the employees

BANKING PROFESSIONALS:

The bank should hire banking professionals having experience in their respective fields that

will boost the performance of the company as currently MBAs are produced for this field so they

should be hired for enhancing the performance of company.

ATTRACT CUSTOMERS:

The banking company should offer such policies which would attract customers which are

denied by other banking in the market.

JOB ROTATION AN D PROMOTIONS:

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

COMMUNICATION SYSTEM FOR EMPLOYEES:

As 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.

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IF I WERE MANAGER AT MCB BANK

If I would be a manager at MCB Bank Ill take following steps,

y I will apply such a communication system specially designed for employees trough they

can share the problems regarding work environment.

y

Complete working and break hours will be offered so that employees can work efficiently.

y I will make it sure that some of the employees should be sent for training to other

countries and employees from other branches should be brought here.

y I will make promotions, job rotation and bonuses, an important part of policies of MCB

Bank.

y At every months closing when employees stay at branch even after working hours, adinner from bank will be offered.

y To retain potential customers certain services will be provided and let them know with

advertising.

y I will make it sure that Working environment, equipment, furniture and staff dressing

should be according to the modern banking style.

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REFERENCES & RESOURCES

To make this internship report data is taken from the following resources:

ONLINE RESOURCES:

MCB Bank, Ltd http://www.mcb.com

MCB Bank Pakistan http://www.mcb.com/pakistan/

State Bank of Pakistan http://www.sbp.org.pk

MCB Bank management itself

Documents

MCB FINAL 2010