INTERNSHIP REPORT

MCB

Report requirement for the degree of MBA6th finance

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ACKNOWLEDGEMENT

Most grateful to Almighty Allah who enable me to utilize my knowledge and skills for the preparation and completion of this internship report am thankful to God who helps me to complete my internship report. I am also thankful to teachers, friends and bank staff who guided me. The bank staff was cooperative, friendly and sincere. Mam Iram who was the general manager of the MCB helped me a lot in the learning process.

EXECUTIVE SUMMARY

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The banking structure in Pakistan comprises of the following types, State Bank of Pakistan, Commercial Bank of Pakistan; Exchange Banks, Saving banks, Cooperative banks, specialized credit institutions. The state bank of Pakistan is the Central bank of the country and was established on July 01, 1948. 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. MCB was incorporated under companies’ act 1913 on 9th July; 1947.The bank transferred its registered office to Karachi, where the Head Office is presently located. In April 1991, MCB became Pakistan’s first privatized bank. The bank has corporate branch at Shahrah-e-Faisal Karachi (SFK). The bank is using SWIFT for transfer of information about imports and exports. MCB SFK 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. customer’s 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 of 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, Khushali Bachat Account, Term/ Fixed Deposits and others like night banking, credit cards, traveler cheques. In remittance department like any other bank MCB also have instruments for transferring of money, Telegraphic Transfer, Mail Transfer.

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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 Karachi 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 and 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 are two basic types of agriculture 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 Khushali account, Current account, Saving bank account, Term deposit, Prime Currency Scheme. Foreign accounts are convertible on floating rate available to the bank. Letter Of Credit facility is being provided by MCB in foreign exchange.

HISTORY OF THE MCB BANK LIMITED

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Before separation of Indo Pak, the need for more Muslim banks was felt. And Muslims having strong financial capacity were thinking to invest in this sector as well. This was the idea which paved the way for setting up MCB Bank Ltd known as MCB. This was the third Muslim bank in the subcontinent. History

This bank was incorporated under companies’ act 1913 on 9th July, 1947 (just before partition) at Calcutta. But due to changing scenario of the region, the certificate of incorporation was issued on 17th August, 1948 with a delay of almost 1 year; the certificate was issued at Chitagong. The first Head office of the company was established at Dacca and Mr. G.M. Adamjee was appointed its first chairman. It was incorporated with an authorized capital of Rs. 15 million.

After some time the registered office of the company was shifted to Karachi on August 23rd, 1956 through a special resolution, now recently the Head office of MCB has been transferred to Islamabad in July, 1999 and now Head office is termed as Principle Office.

This institute was nationalized with other on January 1st, 1974. At that time it had 506 branches and deposits amounting to Rs. 1,640 million. Although. MCB has a reputation of a conservative bank but nationalization also left its effects on this institute as well and by end of year 1991 in which it was privatized the total number of branches were 1.287 and deposits amounting to as high as Rs. 35,029 million. Privatization

When privatization policy was announced in 1990, MCB was the first to be privatized upon recommendations of World Bank and IMF. The reason for this choice was the better profitability condition of the organization and less risky credit portfolio which made'' it a good choice for investors. On April 8th, 1991, the management control was handed over to National Group (the highest bidders). Initially only 26% of shares were sold to private sector at Rs. 56 per share. After privatization

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Ten years after privatization, MCB is now in a consolidation stage designed to lock in the gains made in recent years and prepare the groundwork for future growth. The bank has restructured its asset portfolio and rationalized the cost structure in order to remain a low cost producer.

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

 Launching of different deposit schemes to increase saving level.

 Increased participation on foreign trade.

 Betterment of branches and staff service level.

 Introduction of Rupee Traveler Cheques & Photo Credit Card for the first time in Pakistan. In short MCB is one of the leading banks of Pakistan with a deposit base of about Rs. 280 billion and total assets of around Rs.300 billion. Incorporated in 1947, MCB soon earned the reputation of a solid and conservative financial institution managed by expatriate executives. In 1974, MCB was nationalized along with all other private sector banks. This led to deterioration in the quality of the Bank’s loan portfolio and service quality. Eventually, MCB was privatized in 1991. 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.

MCB BANK TODAY MCB today, represents a bank that has grown with time, experience and Pakistan. A major financial institution, in scope and size, it symbolizes a fully growing tree evergreen, strong, and firmly rooted. Foreign trade The bank conducted import business during the year amounting to RS. 54.0 billion as compare to RS. 56.4 Billion In 2005. The export business slightly

University of Gujrat INTERNSHIP REPORT improves to RS. 36.9 Billion From RS. 35.1 Billion. In 2006. Home remittances decline to RS. 16.7 Billion From 30.7 Billion the decline in home remittances business was due to freezing of Foreign Currency Accounts, which has affected the confidence of Pakistanis working overseas. Year 2006 compliance MCB’s strength lies in providing a technological base at the gross root level of the society with a challenge to educate and assimilate such systems across vast cultural and economic backgrounds. With over 768 automated branches, 263 online branches, over 151 MCB ATMs in 27 cities nationwide and a network of over 16 banks on the MNET ATM switch, MCB continuously innovates new products and services that harness technology for the customer’s benefits. Social sector The bank is participating in the Prime Minister self-employment Scheme. The application received from various applicants is being processed on merit and disposed off as quickly as possible. The business MCB is in it’s over 50 years of operation. It has a network of over 1,000 branches all over the country with business establishments in Sri Lanka and Bahrain. The branch break-up province wise is Punjab (57%), Sindh (21%), NWFP (19%) and Blochistan (3%) respectively. MCB has an edge over other local banks, as it was the first privatized bank. The State Bank of Pakistan has restricted the number of branches that can be opened by foreign banks, an advantage that MCB capitalizes because of its extensive branch network. Fifteen years after privatization, MCB is now in a consolidation stage designed to lock in the gains made in recent years and prepare the groundwork for future growth. The bank has restructured its asset portfolio and rationalized the cost structure in order to remain a low cost producer. MCB now focuses on three core businesses namely Corporate, Commercial and Consumer Banking. Corporate clientele includes public sector companies as well as large local and multi national concerns. MCB is also catering to the growing

University of Gujrat INTERNSHIP REPORT middle class by Providing new asset and liability products. The Bank provides 24 hour banking convenience with the largest ATM network in Pakistan covering 27 cities with over 151 ATM locations. The Bank’s Rupee Traveler Cheques have been market leaders for the past six years and have recently launched their Gift Cheque Scheme. A major achievement of MCB is that the state bank of Pakistan has issued a license to MCB to start Islamic banking. Now MCB is setting up a 1st Islamic banking branch at 1st floor shaheen complex, Karachi. This complex starts working from September 1, 2003.

Challenging and changing the way you bank.

MCB Bank’s team of committed professionals is dedicated to maintaining long term customer relationships through outstanding service and convenience.

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MANAGEMENT COMMITTEE

BOARD OF DIRECTORS

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Mian Mohammad Mansha Chairman

S.M. Muneer Vice Chairman

Dr. Muhammad Yaqub Director

Mian Umer Mansha Director

Shahzad Saleem Director

Sheikh Mukhtar Ahmed Director

Tariq Rafi Director

Sarmad Amin Director

Atif Yaseen Director

Mohammad Aftab Manzoor President & Chief Executive Advisor Raza Mansha Audit committee Dr. Muhammad Yaqub Chairman Tariq Rafi Member Mian Umer Mansha Member Aftab Ahmad Khan Member Chief financial officer Ali Munir Secretary

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Tahir Hassan Qureshi Auditors KPMG Taseer Hadi & Co. Chartered Accountants Riaz Ahmad & Co. Chartered Accountants Legal Advisor Mandviwalla & Zafar Advocates & legal consultants Shariah Advisor Dr. Muhammad Zubair Usmani Registered Office MCB building, F-6/G-6 Jinnah Avenue, Islamabad Principle Office MCB tower I.I chudrigar road Karachi

Registrar and Share Registration Office THK associates (pvt) Ltd. Shares department, ground floor sheikh sultan trust building no 2, Beaumont road Karachi

ORGANIZATIONAL HIERARCHY OF MCB

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PRESIDENT

SENIOR EXECUTIVE VICE PRESIDENT

EXECUTIVE VICE PRESIDENT

SENIOR VICE PRESIDENT

VICE PRESIDENT

ASSISTANT VICE PRESIDENT

OFFICERS GRADE I II III

ASSISTANTS

CASHIER

PEONS

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ORGANIZATIONAL SETUP OF MCB

HEAD QUARTER KARACHI

PROVINCIAL HEAD QUARTERS

PUNJAB LAHORE

SINDH KARACHI

BALOCHISTAN PESHAWAR

NWFP & AZAD QUETTA KASHMIR

CIRCLE OFFICES

BRANCH OFFICES

ORGANIZATIONAL STRUCTURE OF MCB

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As MCB is a banking company listed in stock exchange therefore it follows all the legalities which are imposed by concerned statutes Mr. Muhammad Mansha is chairman & chief executive 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. For effective handling of branches, it has been categorized into three segments with different people handling each category. These categories are: a) Consumer Banking b) Corporate Banking c) Commercial banking

Consumer Corporate Commercial 637 branches 20 branches 383 branches a) 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. b) Corporate Banking These are branches which have an exposure of over Rs. 100 million. Usually includes multinational & public sector companies. c) 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.

PRODUCTS AND SERVICES Consumer (personal) banking

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The products and services offered by MCB as a consumer bank are as follows: 1. Online services i. ATMs ii. Mobile Banking iii. Call Centre iv. Bill Payments v. Virtual Banking 2. Accounts i. Khushali Bachat accounts ii. Pak Rupee Accounts iii. Saving Accounts iv. Basic Banking accounts v. Foreign Accounts 3. Cards i. Smart Card / Debit Card ii. MCB Visa 4. Traveler's cheque i. Rupee Traveler's cheques ii. Gift Cheques 5. Remittance i. Overseas Remittance 6. Branches & ATMs i. ATMs Locator ii. Online Branches iii. Branch Network 7. MNET switch i. M NET Switch

The details of above mentioned products & services are as follows.

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1. Online services The particulars of the online services are as follows: i. MCB ATM Card Welcome to a world of convenience with the MCB ATM 24- Hour Smart Card. "It Works. Anytime in Pakistan and abroad." With an ever growing number of ATMs operating across the nation, the MCB ATM Network is the largest and most advanced of its kind in the country, and it is part of MCB's continuing efforts to provide you with convenience that suits your requirements most. And now the MCB ATM has gone global. MCB's affiliation with Master Card International brings about added facilities for the MCB traveler abroad with the Cirrus and Maestro networks. Categories of MCB ATM card  MCB ATM Regular Card The MCB ATM Regular Card allows withdrawal of up to Rs. 10,000 per day and a maximum of 3 withdrawals per day per card.  MCB ATM Gold Card The MCB ATM Gold Card allows withdrawal up to Rs. 25,000 per day and a maximum of 6 withdrawals per day per card. The cardholder has to make at least two transactions to withdraw the full amount of Rs. 25,000. ii. Mobile banking At the forefront of technological excellence, MCB proudly introduces MCB MOBILE BANKING. The convenience of accessing your account balance information and mini statements whenever you want or wherever you may need them, with comfort and peace of mind. MCB Mobile Banking is a free service for MCB account holders who have an ATM card. All you pay for is the cost of an SMS message if charged by the service provider. iii. Call centre

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The state of the art MCB call center is the right choice to keep you in step with your ever hectic schedule by providing you services relating to your account and Smart card at any point in time.

Our well-abreast and friendly call center team is available 24 x 7, 365 days a year to ensure that your daily financial obligations are taken care of guaranteeing you a good night’s sleep. Welcome to the MCB PHONE BANKING Experience : 111-000-MCB(622)! Services Offered by MCB call centers  ATM locations  Account opening procedures  MCB bank charges  Product information  MCB merchant locations  Account Balance inquire  Pay orders request  Funds transfer request  Debit card Transactions details  Last five transactions details  Balance Certificate request  Bank Statements request  Address Change request  Zakat Deduction certificate request

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 Tax deduction certificate request  Mobile Banking activation  Debit card blocking

iv. Bill payments MCB easy bill pay offers unmatched convenience to pay your utility and mobile phone bills or re-charge your prepaid mobile phone accounts anywhere, anytime with security and peace of mind. MCB is the only bank that offers you 3 convenient options of making bill payments to PTCL, SSGC, KESC, Instaphone, Mobilink,and Ufone. So, save your precious time by avoiding long queues and pay your bills through MCB Easy Bill Pay. MCB Smart Card or MCB ATM Card Holder can easily pay their bills or re-charge their prepaid mobile phone account. MCB's partners in

v. Virtual banking

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MCB Virtual Internet Banking offers you the convenience to manage and control your banking and finances – when you want to, where you want to. MCB’s Virtual Internet Banking facility is  Simple  Secure  Free of cost. With MCB Virtual Internet Banking you can access any of the banking services, 24 hours a day, 7 days a week and throughout the year. Services of MCB virtual MCB Virtual Internet Banking offers a wide range of online services which makes your banking accessible anytime and from anywhere.  Detailed Account Summary of all listed accounts.  Mini-statements of each of the listed accounts showing recent transaction history for that account(s).  Statement-by-Period of each of the listed accounts, based on the period specified. . 2. Accounts MCB offers following accounts to customers. i. Khushali bachat account It is a savings account which gives profit on daily balances. Features  Low average balance requirement.  Profit is paid on your account on a half yearly basis.  Cash deposit and withdrawal facility at hundreds of MCB branches across Pakistan (conditions apply).  Make cash free transactions, from your account at thousands of merchant outlets through your MCB Smart Card (local & international).  Stay in touch with your account through MCB’s Virtual Banking Service.  Use your account to pay your bills 24 hours a day, 7 days a week through Virtual Banking.

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ii. Pak rupee accounts Pak rupee account is of four types.  Saving Account  Current Account  Term Deposit  Special Term Deposit Saving account MCB’s Rupee Savings account is the most convenient way to manage your savings. Its features are  Low average balance requirement  Enjoy unlimited free of cost transaction facility at your branch  Profit is paid on your account on a half yearly basis  Cash deposit and withdrawal facility at hundreds of MCB branches across Pakistan (conditions apply)  Make cash free transactions, from your account at thousands of merchant outlets through your MCB Smart Card (local & international)  Stay in touch with your account through MCB’s Virtual Banking Service. Current account The features of current account are.  Low average balance requirement.  Enjoy unlimited free of cost transaction facility at your branch.  Profit is paid on your account on a half yearly basis.  Cash deposit and withdrawal facility at hundreds of MCB branches across Pakistan (conditions apply).  Make cash free transactions, from your account at thousands of merchant outlets through your MCB Smart Card (local & international). Term deposit MCB offers a wide range of attractive term deposit schemes to suit your requirements.

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 Avail your choice of 1 month, 3 months, 6 months, 1 year, 2 years, 3 years, 4 years and 5 year term deposits.  Low investment threshold.  Half yearly profit payment.  Avail a credit facility up to 75% of the total deposit value. Special term deposit MCB’s Special Rupee Term deposits offer a very attractive long term investment option with ease and convenience.  Highly attractive profit rates.  Tenors available are 3 months, 6 months, 1, 3 and 5 years.  Profit on 3 and 6 months deposit is payable at maturity of deposit.  Profit on 1, 3 and 5 years deposit is payable quarterly.  Withdraw your amount through our wide network of ATMs.  Avail a credit facility up to 75% of the total deposit value. iii. Saving accounts There are two types of saving accounts offer by MCB which are  Saving 365  Saving 365 Gold iv. Basic banking accounts In compliance with the directives of State Bank of Pakistan via BDP Circular No. 30, issued on November 29, 2005, the Basic Banking Account has been launched with effect from February 27, 2006. This product has been introduced to facilitate the low income group as well as the existing account holders who wish to convert their regular savings or current account into Basic Banking Account. v. Foreign accounts For foreign accounts there are two options  Saving Accounts  Current Accounts

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Saving accounts MCB’s Foreign Currency Savings Account offers you attractive returns on your Foreign Currency investment.  Open a foreign currency Savings account in any of the four currencies i.e. US Dollar, UK Pound Sterling, and Euro.  Unlimited transaction facility.  Low balance requirement.  Profit credited to your account on a half yearly basis.  You can avail a credit facility up to 75% of the total deposit value.  A foreign currency account can be opened at any of MCB’s foreign exchange dealing branches. Current accounts MCB’s 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 number of transactions you make in a day.  Open a foreign currency Current account in any of the four currencies i.e. US Dollar, UK Pound Sterling, and Euro.  Unlimited transaction facility.  Low balance requirement.  You can avail a credit facility up to 75% of the total deposit value.  A foreign currency account can be opened at any of MCB’s foreign exchange dealing branches. 3. Cards MCB provides smart card as a debit card and visa card as a credit card. MCB visa card has several options which a customer can avail according to his requirements.

i. Smart card / Debit card

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MCB now brings you MCB SmartCard a secure and convenient instrument of payment with unmatched functionalities. It provides 24-hours direct access to your bank account. The convenience and flexibility of MCB SmartCard will help you live a smarter life. It not only helps you manage your expenses, but also eliminates undue interest on your day to day credit card transactions. Your balance is always within your reach and you spend accordingly. MCB is the only bank to introduce a debit card that gives the option to choose from domestic and international cards for local and global usage respectively. Features of smart card The features of smart card are as follows.

 Purchasing  International usage  Bill payment  Funds transfer  24 Hours cash withdrawals  Balance inquiry  Mini statement  MCB mobile banking ii. MCB visa Credit card is called as MCB visa in MCB. It not only provides the conventional credit card services in a manner that is superior in comparison, but goes an extra mile.

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MCB visa has the following types  i-resolve  i-secure  i-party  i-plan  i-switch  i-dial  i-insure  i-cash 4. Traveler's cheque MCB provides following two types of traveler cheques. i. Rupee traveler's cheques MCB Bank has been at the forefront of providing it’s customers with new and innovative products and financial instruments that are safe, secure and profitable. MCB Rupee Traveler's Cheques were first introduced in 1993 as safe cash for traveling and travel related purposes. The product has been extremely popular and is preferred over cash by customers while travelling and in all walks of life. ii. Gift cheques MCB Gift Cheques, eliminates guesswork in trying to find out the perfect Gift for any occasion birthdays, wedding, graduation and religious festivals. Gift Cheque is beautifully packed in a Gold / Silver envelope with a personalized Gift Card designed to suit all occasions. They are safer than cash, because they can be replaced if lost or stolen. They are also available at all TCS Express Centres round the clock. 5. Remittance Overseas remittance

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MCB's Remittance Services are an efficient way to transfer money overseas. You can remit funds from any country to Pakistan through Swift System. Corporate banking The products and services provided by MCB as corporate bank are as follows. 1. Accounts i. Pak Rupee Accounts ii. Basic Banking Accounts iii. Foreign Accounts 2. Loans i. Term Loan ii. Working Capital Loan 3. Financing i. Trade Finance 4. Cash management i. Cash Management 5. Investment i. Investment Banking Details of products and services for corporations are as follows. 1. Accounts i. PAK rupee accounts Pak rupee account is of four types.  Saving Account  Current Account  Term Deposit  Special Term Deposit Saving account MCB’s Rupee Savings account is the most convenient way to manage your savings. Its features are  Low average balance requirement

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 Enjoy unlimited free of cost transaction facility at your branch  Profit is paid on your account on a half yearly basis  Cash deposit and withdrawal facility at hundreds of MCB branches across Pakistan (conditions apply) Current account The features of current account are.  Low average balance requirement.  Enjoy unlimited free of cost transaction facility at your branch.  Profit is paid on your account on a half yearly basis.  Cash deposit and withdrawal facility at hundreds of MCB branches across Pakistan (conditions apply).  Withdraw cash through Pakistan’s largest ATM network.  Make cash free transactions, from your account at thousands of merchant outlets through your MCB Smart Card (local & international). Term deposit MCB offers a wide range of attractive term deposit schemes to suit your requirements.  Avail your choice of 1 month, 3 months, 6 months, 1 year, 2 years, 3 years, 4 years and 5 year term deposits.  Low investment threshold.  Half yearly profit payment.  Avail a credit facility up to 75% of the total deposit value. Special term deposit MCB’s Special Rupee Term deposits offer a very attractive long term investment option with ease and convenience.  Highly attractive profit rates.  Tenors available are 3 months, 6 months, 1, 3 and 5 years.  Profit on 3 and 6 months deposit is payable at maturity of deposit.  Profit on 1, 3 and 5 years deposit is payable quarterly.

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 Withdraw your amount through our wide network of ATMs.  Avail a credit facility up to 75% of the total deposit value.

ii. Basic banking accounts In compliance with the directives of State Bank of Pakistan via BDP Circular No. 30, issued on November 29, 2005, the Basic Banking Account has been launched with effect from February 27, 2006. This product has been introduced to facilitate the low income group as well as the existing account holders who wish to convert their regular savings or current account into Basic Banking Account. 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 (either 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 of charge cash withdrawals are allowed through MCB's own ATMs. iii. Foreign accounts For foreign accounts there are two optins  Saving Accounts  Current Accounts Saving accounts MCB’s Foreign Currency Savings Account offers you attractive returns on your Foreign Currency investment.  Open a foreign currency Savings account in any of the four currencies i.e. US Dollar, UK Pound Sterling, and Euro.  Unlimited transaction facility.  Low balance requirement .  Profit credited to your account on a half yearly basis.  You can avail a credit facility up to 75% of the total deposit value.  A foreign currency account can be opened at any of MCB’s foreign exchange dealing branches.

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Current accounts MCB’s 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 number of transactions you make in a day.  Open a foreign currency Current account in any of the four currencies i.e. US Dollar, UK Pound Sterling, and Euro.  Unlimited transaction facility.  Low balance requirement.  You can avail a credit facility up to 75% of the total deposit value.  A foreign currency account can be opened at any of MCB’s foreign exchange dealing branches. 2. Loans The loans provided to corporations are  Term Loan  Working Capital Loan i. Term loan In MCB you get friendly, efficient and attentive personalized banking services - a unique banking relationship experienced by each MCB client. MCB offer term loans to its valued customers. ii. Working capital loan Corporate Bank offers a number of different working capital financing facilities including Running Finance, Cash Finance, Export Refinance, Pre-shipment and Post- shipment etc. Tailor- made solutions are developed keeping in view the unique requirements of your business.

3. Financing Trade finance Under Corporate Banking MCB offers trade finance services that include an entire range of import and export activities including issuing Letters of Credit

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(L/Cs), purchasing export documents, providing guarantees and other support services. 4. Cash management Cash management MCB’s network of over 900 branches in Pakistan enables its customers to collect and disburse payments efficiently with MCB’s cash management services. MCB also offers its customers a choice of paper based or electronic fund transfer solutions including collection amounts, cross branch on- line transactions etc. 5. Investment Investment banking MCB’s Investment Banking Team has emerged as a leading player in Pakistan's Investment Banking arena. The Team handles advisory, corporate finance and capital markets related transactions. Within these areas, the team has developed expertise in:  Private Placements  Debt/Equity Underwriting  Term Finance Certificates  Loan Syndication  Arrangement of Non- Fund Facilities  Mergers and Acquisitions  Privatization  Corporate Advisory

PLACING STRATEGIES OF MCB BANK

The location of the bank plays a vital role in making its operations profitable. If the bank is located in some business center then it will be very easy for it to attract business people

University of Gujrat INTERNSHIP REPORT as its customers. Therefore MCB has most of its branches at places where it can reach its targets customer Place No. of branches easily.

The Punjab 632 branch network of MCB is Sindh 232 given as follows: NWFP 123

Blochistan 34

Azad Kashmir 19

Domestic 1040

Overseas 4

Total 1045

PROMOTION STRATEGIES OF MCB BANK MCB Bank is actively participating in promotion of its products and services through advertisement and other promotional schemes. Initially, the bank focused on the upper class customer’s only and offered products for a limited class of people. But now the strategy has been changed and the bank is now targeting the middle market also. The products offered are of diverse nature to cater the needs of maximum number of people. Customer oriented attitude

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MCB Bank values its customers. Customers’ complaints are encouraged because it gives an opportunity to know the needs of the customer and build more confidence in them. Most of the promotional efforts are done through . Direct marketing . Public relations MCB bank sometimes gets suggestions and recommendations from its good customers. FIELDS OF ACTIVITIES

The purpose of banks is to provide some services to the general public. And for this purpose different banks provide different services to the people in different forms. The MCB Bank is a commercial bank, in modern time commercial banks play a very important role and their functions are manifold. The main functions and services which MCB Bank Limited provides to different peoples are as follows. 1) Open Different accounts for different peoples 2) Accepting various types of deposits 3) Granting loans & advances 4) Undertaking of agency services and also general utility functions. For proper functioning of branches and the over all bank has been divided in different departments. These departments handle different jobs so that division of work is there for improvement of functions and also it is easy to control the situation. The general division in a branch is as follows: DEPARTMENTS OF MCB The departments of MCB are: 1. Cash department 2. Deposit department 3. Clearing department 4. Advances department 5. Remittance department

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6. Foreign exchange department 7. Technology department (new addition in order to cop with the growing needs of day to day technology requirements)

CASH DEPARTMENT 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, ledger of account:  Cash paid voucher sheet.  Cash received voucher sheet.  Cash balance book  Paying-in-slip Cash department is performing its job completely through computers. DEPOSIT DEPARTMENT

Bank deals in money and this is merely mobilizing fund within the economy. They borrow from one person and lend to another, the difference between the rate of borrowing lending forms their spread or gross profit. Therefore we can rightly state that deposits are the blood of the bank which causes the body of an institution to get to work. These deposits are liability of the bank so from point of view of bank we can refer to them as liabilities. Types of deposits

1) Time deposits / liabilities

2) Demand deposits / liabilities Functions of deposit department

This was a brief review of different types of deposit schemes. The Deposit Department handles the account opening, profit payment and accounting of all types of deposit schemes.

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 Account opening

Account opening is an agreement in which customer offers his funds and bank accepts these funds, therefore the nature of relation between a banker and customer is of a contractual one and all the conditions applicable to this contract act are also applicable.

 Profit payment & calculation

Profit payment & calculation is done in accordance with the rules of each type of deposit scheme-by the deposit department. The products for each deposit scheme are calculated separately and added till the end of 6 month period. Then the sum total of these products is multiplied with the respective profit rates which are issued by the Head Office at the end of each half yearly closing. The profit provisions for each type of deposits are also calculated on monthly basis by the same department in order to calculate the net profit or loss position of the branch.

 Accounting entries

Accounting entries are also made in the respective books of account by this department. However, in small and medium size branches, the accountant performs the book keeping duties for all kinds of ledgers.

CLEARING DEPARTMENT

Every banker acts both as a paying as well as a collecting banker, It is however an important function of crossed cheques. A large part of this work is carried out through the bankers clearing house.

A clearing house is a place where representative of all banks of the city get together and settle the receipts and payment of cheques drawn on each other. As the collecting banker runs certain risks in receipt of their ownership the law has provided certain protections to the banks.

The Negotiable Instrument Act, 1881, lays down that drawer or holder of a cheque or draft may cross the instrument generally or specially. It further lies

University of Gujrat INTERNSHIP REPORT down that a crossed cheque can only be paid to a banker, who collects it for a customer in good faith and without negligence. Types of cheques

 Transfer cheques: are those cheques, which are collected and paid by the same branch of bank.

 Transfer delivery cheques: are those cheques, which are collected and paid by two different branches of the same bank situated in the same city.

 Clearing cheques: are those cheques, which are drawn on the branches of some other bank of the same city or of the same area, which is covered by a particular clearing house.

 Collection cheques: are those cheques, which are drawn on the branches of either the same bank or of another bank, but those branches, are not in the same city or they are not the members of clearing house. Functions of clearing department

 To accept Transfer, Transfer delivery, clearing and collection cheques from the customers of the branch and to arrange for their collection.

 To arrange the payment of cheques drawn on the branch and given for collection to any other branch on MCB or any other members or sub member of the local clearing house.

 To collect amount of cheques drawn on members, sub-member of local clearing house, sent for collection by MCB Branches, not represented at the local clearing house

 Receiving and scrutinizing the cheques and other deposit instruments, and the pay-in-slip at the counter.

 Fixing the stamps.

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 Scrutiny and receipt by the authorized officer.

 Returning the counter file to the depositor.

 Certificate and confirmation by the officer in charge of the department..

 Separating the cheque into transfer, transfer delivery, and clearing cheques.

Clearing process (Flow Chart)

Cheque with slip given Slip is asked & filled

Cheque along with slip checked, signed & received by officer

Entries in daybooks are made

Entries checked & verified by another officer after banking hours by officer

Cheques collected at the day end by Main Branch’s Officials

Cheques are sent to respective banks next day after posting in computer by Main Branch

The same day not honored cheques are returned to Main Branch

The day after tomorrow the banks are informed about dishonored cheques

Provisional entries for returned cheques are debited again in both computer & daybooks

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Party is informed about returned cheques through Phone or personal contact

Cheques are mailed through TCS in case of no personal contact the same day (If there is any availability)

ADVANCES DEPARTMENT

It is another major department of the branch. Bank provides this facility to the people who need advance money to meet their requirements. For getting the advances, the first step is the preparation of credit proposal. Some principles of lending are considered whenever financing being is made. These principles are:

 Character

 Capacity

 Collateral

 Capital

 Condition

Required information

 An assessment of his business abilities

 Accurate & up-to-date financial statements

 Market reports about the borrower

 Party dealing with other banks

 Nature and structure of borrower business

 Names of proprietors, partners or Directors

 Detail of companies associated with borrower business

 Financial condition of borrower business

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Preparation of credit proposal

At first, a formal application for credit approval is obtained from the party along with complete group position. The parties credibility report is also obtained from the banks from which the party has been doing the business. The party creditability 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 but authorized auditors. If the party also involve in export or import business then the bank also consider the data of three years about imports and exports.

Then recommendations are made the type of data required to prepare the credit proposal is to be gathered from different departments. Some data is obtained from the foreign exchange department. Some data is obtained from current account department and some data is available in advances department. The purpose for which the financing is required should be explained very clearly. The security offered by the party to the bank is also evaluated. In case of pledging of the property in shape of land or building the complete evaluation of the property should also be attached.

After all the requirements and necessary documents for applying for advances is fulfilled by the party then, the case is sent to the Chief Manager for approval. If the manager will find any discrepancies, he may write on these documents. If the credit limit is in his range, he may approve the party for credit. If the amount is exceeding the Chief Manager forward the case to the Circle Office for approval and here the same procedure is repeated and if the credit amount is in the range of GM, he can approve and if the credit amount is very large from Circle Office, the case is then sent to Head Office and if it is a real big then is to be decided by Board of Director. MCB provides advances which are two types. These are two types of advances:

 Secured Advances

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 Unsecured Advances

In secured advances, the bank takes any security against the loans while in case of unsecured advance no security is taken by the bank.

Advances types

MCB usually classified advances in to following types:

 Commercial Advances

 Agricultural Advances

 Industrial Advances

Commercial advances

MCB divided the advances in to two major types:

 Fund Based

 Non Fund Based

In the fund base advances, the funds of MCB is involved and in Non Fund based only guarantee is given by the bank.

Fund base advance

MCB have following Fund base facilities of advance in its corporate branches. The details of these types would be later. These are as follows:

 Demand Finance (DF)

 Cash Finance (CF)

 Running Finance (RF)

 Finance against imported goods (FIM)

 Export Refinance Part I (Pre Shipment)

 Export Refinance Part I (Post Shipment)

 Export Refinance Part II

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 Finance against purchase collection (FACP)

 Finance against foreign bills (FAFB)

 Foreign bills purchased (FBP)

 Local Manufacturing Machinery (LMM)

 Payment against document (PAD)

Demand finance

This is a type of secured loan and demand loan never allowed without security. It is a type of long term financing. MCB also gives loan under the head of demand finance to individuals, industrial units & commercial business etc.

Cash finance

In this, the borrower gives a specific reason for the need of cash. MCB gives the facility of cash credit to business. The amount is passed through voucher and credit to the party account. Normally 0.60 paisa per thousand is charged on daily basis to customer.

Running finance

These finances as evident by the name are given to the business to meet their daily needs. The mark up is charged on daily balances. This type of advances are given to trade, commerce and manufacturing for general purpose. Normally 0.60 paisa per thousand is charged on daily basis. It is drawn through Cheque.

Finance against imported merchandise

This type of advances is granted against the pledge of imported merchandise. The goods imported are pledged by bank. Bank pays all the charges to exporter and customs and keeps the goods in its control. On payment from the client to bank, the bank releases these goods.

Exports refinance PART-I pre-shipment

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This type of loan is provided by the bank to the customer at the rate of 12% for the period of 150 days. The bank provides this type of advance facility to those exporters who have not enough money to make shipment. To promote the export, the government pursues the Banks to provide loans to the exporters.

Exports refinance PART-I post shipment

This type of facility is provided to the customers who have enough amount of money to make first shipment but not more. So the bank issues a loan to the exporter, this financing is for period of 150 days. Finance is provided by the SBP to exporters for the purchase of raw material and for its processing packing and shipment. The mark up rate currently set by the SBP is 12%. In case, if the party is unable to make the shipment within 150 days of financing. The party has to pay certain amount of finance as asked by the SBP and after 150 days the markup rate also charges up @ 60 paisa per thousand per day. So usually exporters try to make the shipment within the fixed period set by the SBP which is usually 150 days.

Exports refinance PART-II

In this case the bank after receiving the performance of years in export business of the party the limit is set for a period of one year. Here the limit cannot be set by the terms pledged of the permission of the bank.

Finance against purchase of collection document

The bank provides this type of advance facility to those exporters who have not enough money to make shipment. A bill (Cheque, draft, etc.) may be purchased by the bank. Bank pays the amount to the client after deducting its commission.

Finance against foreign bills

This facility is given to the exporter, If he needs an urgent money. Bank also provides finance against the foreign bills. He gives bills of exchange to the bank as a security and bank send these bills for collection and bank gives money to the exporter.

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Foreign bill purchase

The exporters which are under L/C are also provided with the facility of loan. Amount is given to the exporter after the approval of L/C by the issuing bank.

Payment against document

Bank make the payment to party against document and upon expire date. Bank receives back money with mark up in this type of lending.

The opening bank makes sure that documents are according to terms and conditions of the credit.

Agriculture credit

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. Agriculture advances are of the two types. The types are as follows:

 Farm Credit

 Non Farm Credit

Farm credit

These are the credits provided by the MCB for the purchases of inputs for development of agriculture sector. Following are two main sub classes of Farm Credit.

 Production Finance

 Development Finance

Production finance

These are short term loans. These loans are provided to farmers for purchases of different type of input, for example, Seeds, Fertilizers, and Pesticides. These loans are provided against personal guarantees or mortgage of land as a security. Rate of profit for these loans is 10%.

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Development finance

These are medium or long term loans. These loans are provided for the development of agriculture sector. Main purpose of these loans is to purchase instrument:

 Tractors

 Implements (Trolley, Thresher etc.)

 Installation of tube-well

 Planting of garden

The loans are disbursed against security of land (mortgage) or any other security acceptable to bank. The rate of profit for these loans is 11% to 17%.

Non farm credit

Second major form of agriculture advance is Non-Farm Credit. These loans are provided against mortgage of land as a security or pledge of equipment as a Collateral security. These are medium or long term investment depending up the project. These loans are provided to boost up agriculture sector to provide the sources of earning of foreign exchange as well as to provide employment to people. Following are the different types of small industries for which loans are provided to improve the economy of the country:

 Fish Farm

 Cattle Farm

 Poultry Farm

 Dairy Farm

Securities

Bankers lend money in the form clean advances against promissory note as well as secured advances against tangible and marketable. These reports are only

University of Gujrat INTERNSHIP REPORT valid MCB normally allow the advances to the customers against the following types of securities:

 Bankers Lien

 Mortgage

 Pledges

 Hypothecation

Banker’s lien

This type of security is accepted in case of advances against share, life policies, bonds, ornaments and fixed deposits etc. It is type of most liquid security.

Mortgages

There are two types of Mortgage. These are following:

 Legal Mortgage

 Equitable Mortgage

Legal mortgage and equitable mortgage are accepted in case of immovable properties like land, building and machinery etc.

Pledge

This type of security is accepted in case of stocks or raw materials. In a pledge, the borrower has no right to sell the stocks without the permission of bank. REMITTANCE DEPARTMENT The need of remittance is commonly felt in commercial life particularly and in every day life general. A major function of any banking system is the transfer of funds from one client or one place to another. By providing this service to the customer the bank earns a lot of income in the form of service charges. This department deals with local currency remittance i.e. remittance from one city to another without actually carrying the currency. MCB uses following instrument for transferring of money:

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i. Demand Drafts (DD) ii. Pay Order (PO) iii. Telegraphic Transfer (TT) iv. Mail Transfer (MT) i. Demand drafts (DD) 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. A draft is a Cheque drawn by a bank on its own branch or any other branch of 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. Documentation 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. Following are the pre- requisites for the processing of DD:  Bank Serial No  No. of DD  Central No  Test Key

ii. Pay order 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 can’t be. It is written order issued by the bank drawn and payable on itself. It is used for local transfer of money from one person to another person. It is also used by the public for depositing money with Government or Semi Government department. Documentation

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The party who requires a pay order will get a printed application from the bank. He will fill it and deposits the amount and commission. The bank charges are same as on demand draft.  Bank Serial No.  No. of PO  Central No. iii. Telegraphic transfer (TT) In this case the authority is given from one bank to other on the behalf of the customer through telecommunication to debit their inter office account through them and credit their parties account mentioned in TT. It is an inter bank transaction. Telegraphic transfer is an instant transfer of funds. Through this method applicant can transfer money from one place to another place. There are two types of TT; both types of TT are maintained in separate registers, test is applied by the manager of every amount of TT.  Incoming TT  Outgoing TT Applicant has to fill a form along with depositing amount to be transferred and bank commission. MCB charges the commission at the same rate as in the case of demand drafts. Documentation  Issuing Branch Name & Code  Beneficiary Branch Name & Code  No. of TT  Amount in words & Figure  Test key iv. Mail transfer (MT) As the name shows, it is transfer of money in the shape of document through mail. Procedure is like TT. The transfer of funds from one place to another by mail is called Mail Transfer (MT). The MT can be foreign or domestic. The

University of Gujrat INTERNSHIP REPORT applicant who is desiring to remit the funds by way of Mail Transfer can either deposit cash or ask the bank to debit his/her account with the cost of MT including the bank charges. These all measures are for safe transfer of funds. Documentation  Issuing Branch Name & Code  Beneficiary Branch Name & Code  Number of MT  Amount in words & Figure  Test key

FOREIGN EXCHANGE DEPARTMENT

H. E. Evit states that “the means and methods by which right to wealth express in terms of currency of one country are converted into rights to wealth in term of the currency of another country are known as foreign exchange”.

Encyclopedia Britannic defines Foreign Exchange as “a system by which commercial nations discharges their debts to each other”.

In MCB

This department works like general banking department with the difference that it deals in foreign currencies like US ($) and Pound Sterling, Dutch Mark (DM), Euro and Japanese Yen (Y). This department deals with the following products/services:

 Foreign Currency Accounts

 Foreign Remittances

 Foreign Bills for Collection

 Selling of Government Certificates

 Imports & Exports

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TECHNOLOGY DEPARTMENT

Technological advancements are also affecting the banking industry. The foreign banks have a competitive edge over all local banks in their technologies' advancements and automated systems. Local banks have also realized the gravity oil this situation and are striving to add computerized systems to their branches

MCB is ahead of all other local banks in this field and now it is in a position to even compete with foreign banks. There are more than 1045 branches of MCB all over Pakistan and out of these more than 300 branches are fully computerized Almost all .the branches of big cities are computerized; therefore, the need for a technology department at each branch is growing. Now a day, a computer division is working in each city to provide service to add the branches of that area.

MCB has also introduced the now concept of online banking. There are now more than 250 branches linked through this system and they can transact with each other directly using computer systems at their own branches. ATM network

ATM stands for Automatic Teller Machine. This machine is used to transact in one's account without intervention of humans. These machines are basically used for taking cash, confirming balances and requesting statements.

MCB has the largest ATM network in the country at the moment with almost one ATM at each online branch and also ATM terminals at International Airports. This network covers more than the 27 cities of Pakistan including the provincial capitals and large commercial cities of the country.

ATMs are operated through a card issued to the valued customers and by application of Personal Identification Number (PIN number).

Now MCB has also entered into a contract with Cirrus which is a subsidiary of MasterCard. This contract will enable an ATM card holder to use his account even when he is out of country at all the ATMs where Cirrus logo is displayed.

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 Green Cards are ordinary cards with a maximum withdrawal facility of Rs. 10,000/- in a day. The annual fee for this card is Rs. 300/- only.

 Gold Cards are special cars with maximum withdrawal limit of Rs. 25000/- in a day. These cards are issued to the persons having more than Rs. 500000/- as their average balance.

 International Cards are issued in collaboration with Cirrus and are useable all over the world with maximum withdrawal facility according to the standards of Cirrus.

INFORMATION ABOUT MY BRANCH I did my internship in MCB, Settla town, GRW. The information about the bank is as follow:

Management of the branch

Branch Manager Ashiq Ali

Operational Manager Miss Madiha Abbass

General manager Miss Iram

Clearing Manager Mubasshar Hassan

Chief Cashier Afzal Ch

Cashier Khuram Zaffar

Billing Cashier Sadia Nawaz

CSO Miss Sundas

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Other general information of the branch

Deposits

The total deposits of this about to 800 million. In deposit there is increasing trend.

Deposits

80 75 70 65

60 2009, 2010 2011

WORK DONE BY ME During my internship in the MCB bank Limited, I really enjoyed to work with the staff of Branch, Settla town GRW and have a wish to be employee of MCB. My internship was six weeks which was ended at 22 august. It was almost impossible to work in all the departments within that limited time. But on my request, the staff of the branch provided me the opportunity to work in the different departments for the sake of practical knowledge. I am very thankful to branch manager Sir Ashiq Ali who provides me a learning environment in the branch. During my internship in MCB I have worked in different departments & seats and learnt the followings.

FIRST TWO WEEKS

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ACCOUNT OPENING DEPARTMENT Account opening and closing is the function of accounts departments. Bank’s customers may be individuals (Single or Joint), firms (partnership/proprietorship), Autonomous corporations, Limited Companies, Charitable Institutions, Associations Educational Institutions or Local Bodies. Basics to open an account During the span of my internship in MCB, I learned and observed a lot about the opening of an account. Basically I think that the opening of an account is the establishment of a contractual relationship between the banker and the customer. By opening an account at a bank a person becomes a ‘customer’ of a bank. Further I am going to express the basic requirements and steps involved in the opening of an account. Introduction and preliminary investigation Before opening an account MCB as like the other banks in Pakistan ascertain whether or not the person who is going to open the account is a desirable customer or not. Then MCB determine the prospective customer’s integrity, respectability, occupation and the nature of business by the introductory references given at the time of account opening In order to further strengthen and streamline this process, the Federal Ombudsman of Pakistan, vide his ruling on complaint No. II/31/5186, has directed the banks to retain with the account opening form a Photostat copy each of the Computerized National Identity Cards of the person desiring to open an account as well as that of the introducer. As per these directions, the concerned Branch Managers are required to obtain the original National Identity Cards along with their Photostat copies and then return the original after attesting the authenticity of the retained copy. Preliminary investigation is necessary because of the following reasons:

 Avoid frauds: In this regard I learned that if a banker does not make the necessary inquiries mentioned above he may enable dishonest

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persons to possess cheque books for fraudulent purposes. If any such person happens to be an undercharged bankrupt, the banker might be placed in an awkward position for having allowed such a person to open a bank account.  Safeguard against unintended overdrafts: Sometimes due to a mistake an account may be given an overdraft, For instance, the ledger keeper, misreading the balance of an account honors a cheque for an amount larger than the balance. Similarly a credit entry belonging to a customer may be made by mistake in another customer’s account. In such situations the excess amount withdrawn by the customer can only be realized if the customer is a identifiable person.  Inquiries about clients: Being a banker I think MCB has a business obligation to respond to inquiries from other banks etc. about his customer’s financial position. Though the banker gives only a general idea about the financial standing of his customer, it should nevertheless have the necessary information available with him. How to open an account (General) Before opening an account in MCB I observed that the following points must be considered in this regard.  Another account holder of the bank should properly introduce the new customer.  The account holder should sign the account opening form in the presence of bank officer and the signature is duly verified.  A copy of computerized national identity Card is required by Bank.  Against submission of the Bank’s prescribed application form, duly introduced in the manner provided and on supplying such document, as may be required and account may be opened. The Bank reserves to itself the right to refuse to open and account without assigning any reason.  Each account shall be allotted a distinct number that is to be quoted in all correspondence with the bank relation to the account.

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 Minimum amount for opening and continued maintenance of various types of accounts is as follows: Rs. Saving 500 Current 500 Term Deposit1000 The bank reserves the right to change the above mentioned minimum balance requirement at any time without any notice. Procedure to open an account According to my practice in MCB, when a customer wants to open an account, the bank officer gives him an application form. All information, which is necessary to be known by the bank, are requirements of the application form. Form also requires the essential documents to be attached by the customer. Basically following information is required to open an account with MCB.  Title of Account  Full Name of Applicant  Occupation  Address  Telephone No.  Currency of account  Nature of Business  Introducer’s Name, Address & Signatures  Special instruction regarding the account  Initial Amount of the Deposit  Signature of the applicant Documents to be attached Further I learned that if you wanted to open an account with MCB then you should attach the following documents with your application form which are different for different categories.

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 Sole proprietor’s account In order to open an account with MCB Sole Proprietors have to submit their business registration certificate number.  Private / joint account For individual or private or joint accounts Computerized National Identity Card is required.  Joint stock company Before an account of a Public Limited Company is opened MCB must ask the person authorized to do so to submit the certified copies or the following documents  Certified true copy of the Memorandum and Articles of Association of the company.  Certified true copy of the resolution of the board of directors / managing committee / governing body regarding conduct of the account.  Certified list containing names and signatures of the directors / office bearers.  Certified true copy of the certificate of incorporation or registration.  Certified true copy of the certificate of commencement of business (in case of public limited companies).  Balance Sheet  I.D. Card copy of each director  Original is also enclosed for inspection and return  List of persons authorized to operate the account.  Power of Attorney in favor of the person opening account.  Partnership firm account Information which is required to be submitted to MCB by a partnership firm in this case is as follows:  Full Names  Address

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 Specimen of signatures of the partners  Certified true copy of partnership deed  Registration No. if the Partnership is registered  Societies / clubs and associations account MCB is authorized to open the accounts of the societies/clubs and associations, These are non-trading organizations, formed for the promotion of culture, science, education, recreational activities and charitable purposes etc. some of these institution are registered under the Societies Registration Act, 1866, and are issued a certificate of registration after they have been found fit for registration. Specimen signature When an account is opened with MCB customer provides to the bank a specimen of the form of signature which would appear on all his cheques to express his authority for the payment of cheques drawn on his banker. This specimen is taken generally on a card specially designed for this purpose, and rule for the customers, full name, and account number are entered on it. If the bank has reasons to doubt the genuineness of a signature, he should either get it confirmed for his satisfaction or return the cheque with the remark ‘Signature differs’. If the signature of the customer is forged the banker cannot escape his liability because he has actually acted on his customer’s mandate. Issuance of cheque book When a customer opens an account with the bank, he is provided with cheque book for withdrawals from account. However, the first cheque book is given to the customer only when all the required documents are checked. A cheque book Contains of ten, twenty five, fifty or hundred leaves . The cheque book also carries a requisition slip for the issuance of the new cheque book. This slip is duly filled and singed by the customer. The signature of the customer is verified by the bank and new cheque book is issued to the customer and serial numbers of the cheque are duly entered in the book of the bank. Along with the signature, person should also write his full name & address.

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Usually only one cheque book is issued at a time, however big concerns who need a number of cheque books at a time, may ask the bank to stock as number of cheque books in their name and to point their name on these cheque books. Bank debits the client’s account for excise duty of Rs.5.0/- per cheque and keeps the cheque book ready for the customer, as on his advice. The officer keeps and maintains the cheque book register Cheque book inventory and cheque books issued are recorded in this register. The account number for which the cheque book is issued and the number of leaves are also recorded in this register when the cheque book issued an entry is passed in the cheque book issue register. In case of loss of cheque book or requisition slip on cheque book the customer has to fill the Form No. 216-B to obtain a new cheque book.

THIRD WEEEK

FOREIGN EXCHANGE DEPARTMENT

In my third week of internship I work in foreign exchange department. The most important thing that I learned in this department was the transaction with letter of credit.

The steps involved in any international trade transaction are:

 The Pakistan Importer places an order with the US exporter and asked the American if he would be willing to ship under L/C.

 The US exporter agrees to ship under a L/C and specifies relevant information such as prices and delivery terms.

 Power Plants The Pak. Importer applies to MCB for a L/C to be issued in favor of the US exporter for the merchandise the importer wishes to buy.

 MCB issues a L/C in the Pak. Importer’s favor and sends it to the US exporter’s bank, the Bank of New York.

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 The bank of New York advises the US exporter of the opening of a L/C in his favor.

 The US exporter ships the goods to the Pak. Importers on a common carrier. An official of the carrier gives the exporter a bill of lading.

 The US exporter presents a 90-days draft drawn on MCB in accordance with its L/C and the bill of lading to the bank of New York. The US exporter endorses bill of lading so title to the goods is transferred to the Bank of New York.

 The Bank of New York sent the draft and bill of lading to MCB. MCB accept the draft taking possession of the documents and promising to pay the now accepted draft in 90-days.

 MCB returns the accepted draft to the Bank of New York.

 The Bank of New York tells the US exporter that it has received the accepted bank draft, which is payable in 90 days.

 The exporter sells the draft to the Bank of New York at a discount from its face value and receives the discounted cash value of the draft in return.

 MCB notifies the Pak. Importer of the arrival of the documents. He/She agrees to pay MCB in 90 days. MCB releases the documents so the importer can take possession of the shipment.

 In 90 days MCB receives the importer’s payment, so it has funds to pay the maturing draft. FOURTH WEEK

CASH MANAGEMENT In fourth week I was sent to cash department and I observed that the most important department of MCB which deals in money. The excess cash (More than its insured limit by the insurance company) of the branches of the region is collected by the main branch. The main branch is also

University of Gujrat INTERNSHIP REPORT bound to send its excess cash to the State Bank of Pakistan. No branch can have cash its safe more than its insurance at any time at the time of closing cash, if it is so the manager will be responsible whether or not he informed to the regional office (exception to the limit which is insured for the day). New Notes and Prize Bonds are also part and parcel of the Cash Management. Keys of the Safe lockers are with the three authorized persons each one of them is responsible for cash as at the time of closing the cash the officers including Cash officer presented and lock the safe after counting and scrutinize the cash. The cash officer maintain its daily cash book with specification of notes (Bonds are also recorded in the books in relation with cash) and other vouchers, after being satisfied the manager authenticates the books and vouchers regarding cash with stamp and signature at the end I would like to conclude that the cash management is being done in the MCB very effectively. UTILITY BILLS COLLECTION Then I was transferred in utility bills collection section. I worked in the utility bills collection department as the MCB collects utility bills on behalf of WAPDA, Sui Gas Companies, and Pakistan Telecommunication Corporation Limited by putting the stamp on the utility bills “Paid”, Date of payment, Signature of the officer receiving the utility bills. After receiving utility bills a list is made on the form which is called Bills scroll form. One copy of the scroll is with the bank for evidence whereas the original copy with the receipt of the bills is sent to the billing department of the respective corporation. The bank charge commission on the bills.

Fifth week

HOW TO HONOUR A CHEQUE During my internship span in the Muslim Commercial Bank Limited, I observed that Cheques are received for the following purposes. i) For Cash payments

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ii) For transfer(from one account to another account) iii) For Clearing i) For cash Payments Cheques which are presented on Bank counter must be checked in the following way: 1) Date. 2) Signature of Drawer. 3) Signature of Payee. 4) Whether Bearer has cancelled. 5) Whether Payee account duly is there. If condition 4&5 exist then check the signatures of Drawer. 6) Match the figure and wordily amount of cheque. When all above matters are satisfied then come to the Token register and check: 1) Token number. 2) Cheque number. 3) Amount of cheque. 4) Particulars. Two stamps are put on cheque. a) Cash Payment (on the face of cheque). b) Stamp for Token (on the back of cheque). On stamp which is put for token their details are as follows:  Token number.  Time of giving token to client.  Signature of token giver.

Cheque Encashment Process (Flow Chart)

Token is assigned to cheque

Cheque verified for signatures University of Gujrat INTERNSHIP REPORT

Entries posting in computer

Cheque approval

Balance is checked

2nd signatures of senior officer

Cash counted and given

ii) Cheque for Transfer When cheques are presented to be sent for collection and drawn on bank situated within the city then there are three stamps to be put on face as well as on back of cheque. a) Crossing Stamp (face) b) Transfer Stamp (face) c) Bank Manager Stamp (back)

iii) Cheques for clearing There are two stamps put on each cheque, sent for clearing: a) Crossing Stamp. b) clearing Stamp.

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iv) Cheques in Collection When cheques received in clearing are intra city then these are controlled under CC.First of all, these cheques are recorded in day book then allotted number and then serial number. Then a performa is prepared in which Bank on whom was drawn, cheque number, amount, beneficiary name are recorded. After completing that performa cheque is posted along with performa.

Sixth week

CLEARING I spent my sixth week of internship in clearing department. The procedure of clearing the cheques: Following information is entered in clearing register. a) Name of favoring party. b) Name of bank on whom drawn. c) Branch. d) Cheque number. e) Amount. Clearing is sent after entering in register. In clearing register future date and day is putted. Cheques and vouchers are then separated and Cheques are sent for clearing. Clearing credit vouchers are entered on clearing sheet. Such credits are balanced by giving debits to cheques received in clearing from other branches. At the beginning of the day clearing return sheet is received. Vouchers are made if 1. Clearing received is more than clearing delivered then Credit voucher. 2. Clearing delivered is more than clearing received then Credit voucher. On the same day, credit vouchers sent for clearing are entered on the sheet's credit side. Cheques are sent to NIFT after taking them on calculator, their total

University of Gujrat INTERNSHIP REPORT amount along with total number of instruments. A summary is prepared and sealed after noting the number of seal in summary.  Telephonic Transfer  DD- Demand Draft  PO- Payment Order For TT, the account of beneficiary must be there in branch. DD is also prepared and beneficiary can get payment. First of all, Performa is filled by purchasing party along with cheque or cash payment. When cheque is received it is first posted in computer section in order to check the balance of account. After posting the bank officer calculate tax if National Tax number is not there. i.e. Rs.100000 @0, 1% More than Rs.40000 @0.4% Commission and postage charges are also calculated. These are paid in cash or otherwise by cheque. SWOT ANALYSIS The SWOT analysis of MCB is as follows: STRENGTHS The strengths of MCB are:  Good reputation MCB is the first Pakistani privatized bank because of its quality management, marketing, innovation in products and services. Due to all such factors they have established a good reputation in the banking market.  Strong branch network There are large number of branches of MCB and still more branches are under expansion plan. All the branches of MCB are in commercial areas.  Trained, Skilled & cooperative employees The name of MCB makes you recall the highly cooperative and professional individuals ready to serve you with maximum co-operation. Personnel of MCB are well trained and highly skilled. Majority of employees has many years of

University of Gujrat INTERNSHIP REPORT experience in banking sector and are an asset for the bank. The joining of experienced people, advanced management, advance setup and facilities gave MCB an edge over its competitors  Faster banking services MCB has faster banking services that are making it more prominent in the banking industry especially in operations and Foreign exchange. Moreover bank provides high status services in every field, whether consumer banking, commercial banking & corporate banking  Reasonable service charges The customer prefers this bank not only because of its faster speedy service but also due to reasonable service charges.  Strict advances policy One of the major strengths of MCB Bank is that very less amounts of debts turn doubtful or bad due to their conservative policy.  Highly automated bank MCB in Pakistan is also in the list of highly automated banks because of its modern style of banking through fully computerized control and twenty four hour banking.

WEAKNESSES The weaknesses in MCB would be categorized as following:  Insufficient advertisement The majority of people are not well aware about the products of MCB. Therefore it should advertise extensively especially RTC and Master Cards.  Behavior towards customer A behavior has been noted that bank tries to feel at ease with good looking, rich and educated people and the poor looking customers feel some bit strange in the environment of the bank. The bank employees should try to accommodate behaviorally all types of customers.  Inefficient HR policies

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In MCB there is lack of specialized skill because of job rotation policy of human resource department. The bank should concentrate upon increasing its abilities on individual service basis.  Mismanagement of time Mismanagement of time is another big mistake in MCB branches, the bank official time of closing is 5:30pm but due mismanagement of time allocation staff is normally on their seats till 7:00 or 8:00’o clock.  Overloading of work on employees Most of the employees of MCB are overloaded with work. There is uneven distribution of work. Promotions are not very timely.  Outdated software The version of the software (MIBS) used by MCB is outdated. The newer version is available but it is not applied in all the branches. So the branches with old software have less efficiency as compared to the branches with new software.

OPPORTUNITIES Opportunities for MCB are:  Emphasis on information technology All the opportunities of the 21st century are to be availed in the information technology. Information technology is the future. Therefore MCB should emphasize much on IT, especially the E Banking. Bank can design a universal account like other foreign banks, to enhance online facilities.  Effect of Privatization The need of privatization has made people to switch to banks to satisfy their needs of lending and borrowing. This not only increases the deposits but also the credit business.  Branch network Due to lenient licensing policy by SBP MCB Bank has more opportunities to open new branches.  To be in the list of top banks

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MCB bank has grown up its business with a very high pace and it has got tremendous popularity. There are many opportunities for the bank and by availing that it can stand amongst the top banks.  Marketing More market share and customers can be gained by effective marketing strategies. New customer friendly products can be introduced.

THREATS The threats from which MCB should be aware of are:  Government policies Change in government policies has affected the banking business. Still banks have to wait to get permission of state bank. The freezing of foreign currency accounts is a vital example of letting people not to trust on banks.  Increased competition in banking market The Competition has become severe by the entrants of so many banks, So to exist one will have to prove himself in its services through excellent management and will have to satisfy its shareholders. Otherwise he will be out of the market.  Unstable economic situation The decrease purchasing power of consumer in the current economic situation of the country affecting the business activity speed too much and the result is the low investment from the investors in new projects. The recession experienced by the economy has overall affected the banking industry.

RECOMMENDATIONS From the Quantum of the profit and its financial data it can be easily judged that after privatization, MCB is performing well. Its deposits are growing day by day. 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 bank.

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 There is a criticism on the banking management that the salaries of the employees are decreasing in every succeeding year. And I think this will shake the confidence and working habit of the employees.  There is another recommendation about the bank that there is no proper timing of the bank and unnecessary delay is made in the banking transactions, which might not be a good sign for the bank from future prosperity point of view.  Staff turnover particularly trained staff results in financial and other losses. The amount spent by the bank on employment, induction and training of outgoing officers constitutes to beat till another officer should ready prove this work. The exodus of bank officer in the past has worsened the situation.  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 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.  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 employee should be provided the opportunities to attend and participate in seminars and lectures on banking.  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.

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 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.  Recruitments should be strictly on merit basis and induction should be after proper and extensive training.  Old and lazy staff should be replaced by young, qualified and energetic staff.  Foreign branches should be opened in order to capture the international market and to earn international repute for the bank.  Working environment, equipment, furniture and staff dressing should be according to the modern banking style.  Proper attention should be paid to upgrade customer services.  Bank should adopt the global organizational banking structure to meet the international standards of banking sector. Conclusion It is evident from this report and the financial statements of MCB that it is making progress by leaps and bounds. The profits of MCB have grown considerably during the last few years and this trend is expected to continue into the future. Therefore, we conclude that MCB has a very prosperous present and future, which assures the shareholders of wealth maximization. Side by side of it I think that if bank would be able to cover and control on the above mentioned recommendations then it would be in such a situation that will really lead it towards the road of prosperity, development and integrity. And with the above mentioned sentences I think there is also a fault of the customers and in order to make the proper working of the bank the customers should also cooperate with the bank which will be really a good, ambitious and diligent condition for the bank. And then bank will be really in such a situation and position to compete its competitors in the country as well as on international level.

REFERENCES

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Gitman, Lawrence, “Principles of managerial finance”, Singapore: Pearson education, Tenth edition, 2003. Myers, Stewart and Brealey Richarad, “Principles of corporate finance”, New York: MacGraw-Hill, Seventh edition, 2003 www.mcb.com.pk MCB newsletter www.bluechipmag.com by Shukat Aziz www.sbp.gov.pk www.bluechipmag.com by Atif Aziz www.google.com

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