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AN INTERNSHIP REPORT ON MCB

EXECUTIVE SUMMARY
According to our internship program, I completed my

six weeks internship at MCB (Chowk Shahabbas Branch

Multan). Head office of MCB is situated at Karachi. At

present 1214 branches of MCB are serving in various cities

of Pakistan. MCB have three important departments.

1. Retail /General banking operations department.

2. Credit operations department.

3. Foreign exchange department.

MCB offers different types of deposit schemes for

demand deposits and term deposits. MCB gives mark up on

these schemes which are fixed by management. This profit

rate is revised in care of profit. Local remittances are

transfer of funds with in the country in the shape of

Telegraphic Transfer (T/T) & Demand Draft (D/D). Cheque

clearance, where all the Cheques are checked and the

authorized officer verify the balance of each account holder.

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AN INTERNSHIP REPORT ON MCB

After that process, encashment is completed on the cash

counter.

Advances department deals various finance facilities to

industrial and commercial business. There are two types of

finance facilities to industrialists and commercial business,

fund based facilities and Non fund based facilities.

The world-renowned financial magazine “Euro Money”

has announced, “Euro money Awards for Excellence

2000” to MCB. Now MCB has been declared the “Best

Domestic Bank in Pakistan”.

With the completion of my internship, I perceived that

MCB overall performance is better as compared to other

private commercial Banks.

Management is trying hard to establish and maintain

the trust of its customers.

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AN INTERNSHIP REPORT ON MCB

WHAT IS ABOUT BANKING

Bank is derived from Bancus or Banque or Back. History

of banking is traced to 2000 B.C. in Greece. Priests and

goldsmiths acted as financial agents by keeping money and

valuables of people in temples in strong safes. Thus the first

stage in the development of modern banking was accepting

of deposits cash from those who had surplus money with

them.

The goldsmiths issued receipts for the money deposited

with them which began to pass from hand to hand in

settlement of transactions as people had confidence in the

integrity and solvency of goldsmiths. The receipts were

drawn in a way that it entitled the holder to claim the

specified amount of money from goldsmiths. These receipts

were the earlier bank notes. Thus the second stage in the

development of banking was the issue of bank notes. The

goldsmiths discovered all the people who had deposited

money did not come to withdraw their funds in cash. Only a

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AN INTERNSHIP REPORT ON MCB

few people presented the receipts for encashment during a

given period of time and they also found that most of the

money deposited with them was lying idle. They also found

they were being constantly requested for loans on good

security. They thus thought it profitable to lend at least

some of the money to the needy persons. This proved

profitable for them. Instead of charging interest from

depositors, they began to give interest on money deposited

with them.

Through experience, banks came to know that they

could keep a small proportion of total deposits for meeting

demands of customers for cash and could easily lend the

rest.

They allowed depositors to draw over and above than

the money standing to their credit. They thus allowed the

overdraft facilities to their depositors and this was the fourth

stage in the development of banking.

Every bank issued receipts and most allowed overdraft

facilities and this caused too much confusion in the system.

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AN INTERNSHIP REPORT ON MCB

In order to earn profits, banks not keep adequate reserves to

meet demands of customers’ demands for cash. This failure

on the part of bankers to return money caused widespread

distress among people.

In order to create confidence among people, steps were

taken to regulate the banking organization. A conference

was held in Nuremberg in 1548 where it was decided that a

bank should be set up by the state, which would streamline

the banking organization. The first central bank was thus

formed in Geneva in 1694. The responsibility of issuing notes

is now entrusted to a central bank in each country.

With the passage of time, activities of commercial

banks increased. They dealt with large number of issues

such as obtaining funds, advancing loans to businesses,

farmers, households, making investments in stocks,

discounting bills of exchange etc. commercial banks are now

multi-service organizations and play a very important role in

financial markets.

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AN INTERNSHIP REPORT ON MCB

What is a commercial Bank?


“A bank or banker is a dealer in credit or more properly

a dealer in money. It is an intermediate party between the

borrower and the lender. It borrows from one party and

lends to another and the difference between the terms on

which it borrows and those on which it lends forms the

source of its profit”.

Or

“A bank is a dealer in debts—his own and of other


people”

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AN INTERNSHIP REPORT ON MCB

HISTORY OF MCB
Muslim Commercial Bank Ltd. was established on July 9,

1947 at Calcutta on the express wishes of the founder of

Pakistan Qauid-e-Azam Muhammad Ali Jinnah who was

deeply concerned with the plight of banking among the

Muslim community in India. Muslims in general were at that

time not favorably inclined towards joining the banking

profession. This was therefore a right step taken by the

founder of Pakistan to induct.

Muslim Commercial Bank first shifted its head office to

Chittagong on August 17, 1947, immediately after

independence and finally to Karachi on July 15, 1954, which

was the federal capital at that time. With the independence

of the country, whatever scarce human resources available

were utilized in the banking sector. However, as the branch

network was expanding, so was the de for trained manpower

to man the newly setup branches as well as the controlling

offices. In the period 1947 till 1965, young university

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AN INTERNSHIP REPORT ON MCB

graduates were recruited and trained for a year by the

training department of SBP and then assigned to the

commercial banks.

In January 1974, the government of Pakistan decided to

nationalize all banks in Pakistan under Pakistan Banks Act

1974. By January 1991, MCB was privatized. The bank has

done well since then.

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AN INTERNSHIP REPORT ON MCB

MCB’s MISSION AND


VISION

Mission

“To become the preferred provider of quality financial

services in the country with profitability and responsibility

and to be the Best Place to Work”

Our Vision

By the year 2002, MCB will have a highly motivated

professional team who will provide quality customer service,

expand and penetrate the customer base, in order to

improve profitability so that we can pay regular dividend

and increase our share value.

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AN INTERNSHIP REPORT ON MCB

OBJECTIVE OF MCB
1- Saving Mobilization.

MCB has opened up branches in urban and rural areas

to mobilize savings of the people and channels them into

productive investment. Their financial position, good

management has motivated the people to open their

accounts with MCB.

2- Export / Import Promotion.

MCB has created a separate department in their main

branches all over Pakistan to cater for the needs of

exporters and importers, MCB facilitate the foreign trade by

issuing letters of credit and it offers loans in foreign

currencies for importers. Further more with the passage of

time MCB has started foreign exchange or in other branches

international banking departments, which are in charge of

all business concerning of all business concerning other

countries.

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AN INTERNSHIP REPORT ON MCB

3- Provide Loans to Agricultural Sector.

Agriculture is a backbone of Pakistan; MCB has

provided credit to this sector for the improvement of their

products, buying machines, fertilizers insecticides, etc.

4- Provide Loans to Industrial Sector.

MCB provides loans to trade and industry. The various

credit instruments (like Cheques, promissory notes and Bill

of Exchange) have made it possible to make all the

transactions in money.

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AN INTERNSHIP REPORT ON MCB

PERFORMANCE AFTER
PRIVATIZATION
The following successes were achieved by MCB since 1991:

The shareholders Equity of MCB, which was Rs.

1,613million in 1991, stands at Rs 4,483.670 as at

December 2000. This effectively demonstrates the Board of

Directors desire to have a sizable capital base so as to

enable the bank to fulfill the “Capital Adequacy”

requirement and also to enable the bank to have a larger

lending ability to its clients. The most satisfying aspect that

can be seen during the last six years since the banks

privatization is been the banks ability to mobilize deposits

which stand at Rs 135,990 million on December 2000

compared to Rs 35029 million as on December 1991

showing an increase of Rs 100,979 million.

The advance made by the bank have increased by

around 311% since 1991 where it stood at a figure of Rs

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AN INTERNSHIP REPORT ON MCB

21000million and stands at Rs 86,313 million as at

December 2000. Investment made by the bank which stood

at Rs 13,047 million in 1991 stands at Rs 36,481 million, at

almost 179.6% increase.

The imports and export business which passed through

the bank as at December 2000 are Rs 66,910 million and

Rs 33,575 million respectively compared to Rs 18,119

million and Rs 13,390 million on December 1991, at the

time of privatization of the bank.

Since privatization, the MCB Ltd. has been able to open

its overseas operations in Sri Lanka, Bangladesh, and

Bahrain. In addition MCB also has successfully acquired and

is managing exchange companies in Dubai and Doha.

160000
140000
120000
100000 1991
80000
60000 2000
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AN INTERNSHIP REPORT ON MCB

Performance after privatization

BRANCHES OF MCB

At the onset of MCB Ltd. in 1947, only three branches

were under it. As time and years passed by, the bank has

continued to grow and as of December 2000, the had 1214

branches to its name. The distribution of the branches is as

follows:-

PROVINCES CIRCLE REGION BRANCHES

BALUCHISTAN 1 2

40

NWFP & AJK 5 9

244

PUNJAB 6 7

748

SINDH 10 12

282

___________________________________________________________________

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AN INTERNSHIP REPORT ON MCB

DOMESTIC 22

1214

EXPORT PROCESSING ZONE

FOREIGN BRANCHES

______________________________________________________

TOTAL 22 30

1221

ORGANIZATIONAL
STRUCTURE

Chief
Manager

Operations Manager Credit


Manager International Manager
Banking

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AN INTERNSHIP REPORT ON MCB

General/Domestic International Credits/Advances/


Banking Banking Loans

Cash Clearing Fixed


Remittances
Department Department Deposited
Department
Department

Departments and Their


Works
Basically the branch of farid gate is performing three

types of operations. On the bases of those operations the

bank is divided into three departments.

1. Retail /General banking operations department.

2. Foreign exchange operations department.

3. Credit operations department.

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AN INTERNSHIP REPORT ON MCB

Retail/General Banking Operations


Department

The general banking operations department is

concerned with maintenance of the accounts of the branch,

the expenditure and revenue of the branch is controlled and

monitored in this department. This department is

responsible for preparing the financial statements of the

branch. Preparation of these statements is done daily and

all transactions which have taken place in the other

departments are posted in this department to counter check

that the whole banks working for the day is balanced. It is

also the job of this department to prepare Pay orders as

these are computerized in this particular branch and most of

the other branches of MCB.

This department divide into four other sections in which the

bank is performing different functions performs.

 Cash section.

 Remittances section.

 Fixed deposit section.

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AN INTERNSHIP REPORT ON MCB

 Clearing section.

1) Cash Section

The cash department is in charge of all cash

transactions that are under taken in the bank. These

transactions mainly deal with the bank clients. The

transactions are of two types:

a) Receipts or Deposits

Receipts or Deposits are the amounts of money which

clients of the bank pay to the cashiers to either be credited

into their accounts or for other transactions such as for any

kind of transfer to other banks (mail transfer, telegraphic

transfers, etc.) or even other payments in favor of the bank

such as payments for Cheque books by the clients.

b) Payments or Withdrawals

Payments or withdrawals are amounts of money that

clients of the bank come to take or withdraw from their own

particular accounts or from accounts of other persons if a

check has been issued to the with drawers by the owners of

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AN INTERNSHIP REPORT ON MCB

the accounts. The cash department handles this transaction.

All withdrawals are through Cheques, which have been

issued by the bank’s branch.

2) Remittance section

Remittances are sums of money sent in payment for or

against something. The remittance department is mainly

concerned with these payments. Remittances are divided

into two types:

a. Inward remittances

Inward remittances refer to payments in favor of the

banks account holders. Inward remittance includes all

cheques received for collection.

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AN INTERNSHIP REPORT ON MCB

b. Outward remittances

Outward remittances are all payments made to other

people on behalf of the account holders in the bank.

Outward remittances can also be done for none account

holders who deposit cash in the bank and remittance tools

are prepared for them.

Among the work done by the clearing department is

receiving credit advises in favor of the banks account

holders and also debit advises against the account holder’s

accounts. There are various tools of remittances to the

customers who want to use the facility of remittance. These

are:

 Telegraphic Transfer (TT).

 Mail Transfer (MT).

 Demand Draft (DD).

 Pay Order (PO).

(i) Telegraphic/Fax Transfer

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AN INTERNSHIP REPORT ON MCB

This mode of remittance is the fastest in terms of time

taken for the message to arrive as the telephone or the fax

machine is used to convey the message. This remittance is

used for all banks whether in the same city or in different

cities.

(ii) Mail Transfer

As the name suggests, this mode of remittance is

through the mail channels through either registered mail or

through special couriers. Mail transfers are mostly for out of

city remittances. A minimum charge for the mailing is

charged depending on the mail service to be used.

(iii) Demand Draft

This mode of remittance is normally used for payment

to out of city beneficiaries. They are normally also drawn on

banks near the beneficiary’s residence.

(iv) Pay order

Pay orders are mostly used when a customer wants to

pay someone who is in the same city as he is and who

prefers non cash payments for any service or goods that

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AN INTERNSHIP REPORT ON MCB

he/she has sold. This remittance facility is provided to the

general public as a whole. But during my internship period

no pay order was made.

3) Fixed deposit section

All deposits in the account should be accompanied by

pay in slip showing the title, number of account to be

credited. The entry will be verified by signature of an official

of the bank under bank stamp on the counterfoil of the pay

in slip. Customer has to fill the credit or voucher slip in which

he write the amount in words and in digits in the form of

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AN INTERNSHIP REPORT ON MCB

cash, the name of the depositor and the date of the amount

deposited. These deposits are:

a. Demand Deposits
These are deposits, which can be withdrawn at any one

time at the discretion of the account holders. Demand

deposits are further categorized into:

1) Current Accounts

A current account is a running account that is

continuously in operation. A customer to transfer money or

to withdraw deposits on demand uses it. The current

accounts of the customers are maintained in a current

account ledger by the bank. The bank has to honor the

cheques provided they are within the limits of the account.

For the customers who need a liquid balance, they maintain

a current deposits account.

Banks do not usually pay interest on such type of

deposits, as they can be withdrawn without prior notice. In

this case, the bank acts only as the custodian of money. The

bank cannot employ these funds for other purposes due to

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AN INTERNSHIP REPORT ON MCB

the fear of withdraw without notice. The bank has to keep a

high reserve ratio to meet these demand liabilities.

2) Saving account

These are important sources of funds for the bank and

are of various categories.

i) Profit and Loss Sharing (PLS) Account

A saving account is an important source of fund for the

commercial banks. It is opened and offered to encourage

savings among persons of meager means. In Pakistan, PLS

account was introduced in January 1982. the main value of

PLS accounts are as under:

1) The PLS account can be opened with a sum of not less

than Rs.500.

2) A credit balance of Rs. 100 is eligible of sharing profit and

loss of the bank.

3) The bank has full right to make investment of credit /

deposits in the PLS

Account.

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4) Withdrawals from PLS account are allowed often more

than 8 times in a calendar month and for a total amount not

exceeding Rs. 15000. for withdrawal of larger amounts, 7

days notice in writing is required to be given.

5) Withdrawal can only be made by means of a cheque

issued by the bank.

6) Statement of account is to be supplied to the account

holder at periodical intervals.

7) The profit /loss earned on PLS account will be credited

/debited as determined by the bank on the basis of its

networking result at the end of each half/full year.

ii) Profit and Loss saving 365 Account

In this particular account being offered by MCB, account

holders of PLS 365 are required to maintain a minimum

balance of rupees 250,000 in their respective accounts.

MCB offers a profit rate calculated on daily basis for this type

of account on the balance if equal to or in excess of the

minimum requirement. The balance can at certain time go

below the minimum requirement and in such cases does not

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AN INTERNSHIP REPORT ON MCB

pay the profit for that particular month in which the deposits

are below minimum.

iii) Khushali Bachat Account

This account has been introduced for the first time in

Pakistan. This account helps the account holders to pay

utility bills through their accounts. The account offers an

8.4% rate of return per annum and the return is calculated

on the daily average balance and paid twice in a year. A

minimum of rupees 2,500.00 is required as a balance for this

account to avail the profit facility.

b. Term/Time Deposits

As the name suggests, these types of deposits are for

a particular time period. Each deposit is offered a profit rate

depending on its time period. The following are the terms

deposits schemes that are offered by MCB with their

underlying profit rates declare:

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AN INTERNSHIP REPORT ON MCB

Category of Deposit Profit

Per Annum.

7 to 29 days

5.8%

Over 30 days

6.7%

For 1 month

9.2%

For 2 months

10%

For 3 months

10.25%

For 6 months

10.8%

For 1 year &above

11.3%

For 2 year &above

12.3%

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AN INTERNSHIP REPORT ON MCB

For 3 year &above

13.3%

For 4 year &above

14.2%

For 5 year &above

14.6%

The five year and above deposits are of two types namely:

• Capital Growth Scheme

In this scheme, deposits are to stay with the bank

for five years and every six months the profit is calculated

and added into the initial deposit so it is a form of

compounding. The initial deposit is to double after the five

years period.

• Mahana Khushali Scheme

In this scheme, a profit is calculated and paid to the

depositors every month for the whole period of five years.

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AN INTERNSHIP REPORT ON MCB

OPENING OF AN

ACCOUNT
Requirements for Opening of New Account;

♦ Account opening Form

♦ Initial Cash opening Form

♦ National Identity Card Copy

Partnership

Requirements for Opening of New Account:

♦ Account opening Form

♦ Initial Cash Deposit

♦ National Identity Card Copies of all persons

♦ Application on Letter Head

♦ Partnership Deed

Sole proprietorship

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AN INTERNSHIP REPORT ON MCB

Requirements for Opening of New Account:

♦ Account opening Form

♦ Initial Cash Deposit

♦ National Identity Card Copy

♦ Application on Letter Head

Companies

Requirements for Opening of New Account:

♦ Account opening Form

♦ Initial Cash Deposit

♦ National Identity Card Copies of Directors

♦ Application on Letter Head

♦ Memorandum of Association/ Article of Association

♦ Certificate of Incorporation

♦ List of Directors duly signed.

In account opening first of all a form (AOF) is given to a

person who wants to open the account. For each account a

specific form is used. The from is filled with necessary

information from the person who wants to open the account,

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in which the photocopy of his national identity card,

signature on the specimen of signature card and a guarantee

is taken from the existing account holder. The minimum

amount for account opening is Rs. 2500. A checkbook is

issued to the person after completing the procedure. The

amount is deposit by a voucher and receipt is given to the

person or who wants to open the account.

MAINTENANCE OF EXISTING ACCOUNT

Main responsibility have the account department is to

maintain the account of the account holder. Account holder.

When the account holder deposit the amount. The account

department credits the account the account holder. Or when

he draws the amount the department credits make the

transaction in his account. It may be due to out side

payments to account

holder. Or he makes payment to out side’s parties to make

his personal business transactions. If sometime the

chequebook is lost from the customers the bank charges

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Rs.100 for new chequebook issuance. But at the time of

account opening there are no charges for new chequebook.

CLOSING OF ACCOUNT

It is also the responsibility of account opening department.

For this purpose the account holder for closing of account

gives an application. Then the department closed the

accounts and gives the entire deposit amount to the holder.

The bank collects the chequebook from the concerned

person extracts him from the books.

SPECIALIZED PRODUCTS

MCB has a good number of specialized products, which

contains the largest network of automated teller machines in

Pakistan.

1- AUTOMATED TELLER MACHINES (ATMs)

The MCB Automated Teller Machine launched in 1995 is

a means of providing customer with 24 cash convenience.

Over the years its success has encouraged the bank to

expand its network to major cities. In the past six-year, we

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AN INTERNSHIP REPORT ON MCB

have installed this convenience in Karachi, Lahore,

Hyderabad, Rawalpindi, Islamabad, Faisalabad, Multan,

Gujranwala, Multan, Quetta, Sialkot, and Peshawar. 24-hour

cash convenience is also available at Karachi, Lahore and

Islamabad airports. MCB has the largest ATM network with

80 ATM locations in major cities and over 100 online

branches where ATM card are issued.

With the MCB ATM 24 hour cash card a Muslim

Commercial Bank customer can:

♦ Access 80 ATM machines in eleven major cities of

Pakistan.

♦ Select between two languages, Urdu and English, for

the non-screen transactions.

♦ Withdraw cash immediately instead of waiting in long

queues and delays at the branch.

(a) MCB ATM REGULAR CARD

The MCB ATM regular card allows withdrawal up to

Rs.10,000 per day and a maximum of 3 withdrawals per day

per card.

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(b) MCB ATM GOLD CARD

The MCB ATM Gold Card allows withdrawals up to

Rs25000 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.

2- MCB MASTER CARD

People have tried to find more convenient ways to pay,

from gold to paper money and now checks. Today, money is

moving away from distinct hard currencies and towards

universal payment products that transcend national borders,

time zones, and, with the Internet, even physical space.

MasterCard International has expanded globally in more

locations in the world than any other card. The card was

introduced by Muslim Commercial Bank Limited in 1995 and

now offers card members over 15 million outlets in 232

countries.

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♦ Photo security- the first bank in Pakistan to introduce

the enhanced feature of photograph on the card

limiting fraud in case of card loss.

♦ Welcomed at over 3,000 outlets in Pakistan.

♦ Provides up to 45 days Free Credits.

♦ Joining and Annual Fees to suit you.

♦ Free travel Insurance of Rs. 3.5 million.

♦ 24 Hour Customer Services Call 111-700-700 and you

can get information from customer services

representatives on new card application or have your

queries resolved anytime of the day.

♦ Cash advance Facilities available in Pakistan and

Worldwide.

3- MCB RUPEE TRAVELER CHEQUES

Muslim Commercial Bank has been at the forefront of

providing its customers with new and innovative products

and financial instruments that are safe, secure and

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profitable. MCB Rupee Traveler Cheques were first

introduced in 1993 as a safe way to pay for high valued

purchases. The product has been extremely popular and is

used by consumers in all walks of life for business dealing;

high value transactions for purchases, MCB Rupee Travelers

Cheques are Ideal for Every Deal. MCB Rupee Travelers

Cheques- The safest way to Carry Cash.

♦ As good as cash: the most convenient substitute for

cash for all kinds of purchases, business, and property

and trade transactions.

♦ Easily available: Buy them from any of the designated

branches in Pakistan.

♦ Easily enchased: At any designated MCB branch.

♦ Easily refunded: in case of loss or theft, you can get the

full amount back.

♦ Exclusive security features: Due to special printing and

safety precautions, Cheques cannot be faked or

duplicated.

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♦ Denominations: Available in denominations of Rs. 1000,

Rs. 10,000 and Rs. 50,000 and Rs.100,000.

♦ Valid until Used: Validity of Cheques indefinite.

♦ 24 hour Service available at Airport MCB booths

Karachi, Lahore & Islamabad.

4) Clearing section

The clearing department is in charge of processing all

cheques, pay orders, or demand drafts deposited or sent to

the bank by the banks customers for clearing. The cheques

are categorized into the following:

• Cheques of the same branch (MCB Fried gate

Branch) in favor of another client of the same

bank.

• Cheques of MCB originating from other parts of the

country such as from branches of MCB in Lahore,

Karachi, etc.

• A cheque of other banks such as Habib Bank

Limited, Citibank. Allied Bank, etc, situated in

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other parts of the country such as in Karachi,

Lahore, etc.

Processing of these cheques is done with different

procedures and these procedures can be broadly

categorized into the following:

a. Clearing.

This procedure is done for cheques of other banks

(Habib, Allied, etc.) lying in the jurisdiction of fried gate and

which have been deposited or sent to MCB Farid gate Branch

by the banks accountholders.

b. Transfer delivery

Transfer delivery procedure is done for all cheques of

MCB branches in the jurisdictions of Farid gate respectively

which account holders in the bank have deposited with the

bank.

c. Cheques for Collection.

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The collection procedure is done for all cheques

originating from other parts of the country otherwise known

as outstation cheques both belonging to MCB branches and

to other banks as well. The only variation is to where the

cheques are sent for collection.

• Cheques coming from MCB branches around the

country are sent directly to the respective branches for

collection.

• Cheques of other banks coming from around the

country are sent to MCB main branches otherwise

known as responding branches, in the area where the

bank from which the cheque is originating is situated.

The MCB main branch then presents the cheque for

clearing and once the proceeds are collected, advises

the originating branch, which credits the account holder

who deposited the cheque.

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Foreign Exchange
Department
The foreign exchange department deals with daily

exchange rates. It is an important department because it

deals with foreign exchange like US dollar, German mark,

Saudi reyal, Japanese yan and etc. according to this

department the rates change daily to daily.

MCB FOREIGN CURRENCY ACCOUNT

1- FOREIGN CURRENT SAVINGS ACCOUNT

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MCB’s Foreign Currency Savings Account offers the

attractive returns on your Foreign Currency investment. One

can invest in any of the four currencies i.e. US Dollar, UK

Pound Sterling, Japanese Yen or Deutsche Mark.

The foreign currency account is exempted from Zakat and

withholding tax.

2- FOREIGN CURRENCY ACCOUNT

MCB Foreign Currency account offers the convenience

of unlimited withdrawals i.e. access to the funds whenever

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

of transactions you make in a day.

 You can invest in any of the four currencies i.e. US

Dollar, UK Pound Sterling, Japanese Yen or Deutsche

Mark

 Your foreign currency account is zakat and withholding

tax exempted.

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 You can avail a credit facility up to 75% of the total

deposit value

3- FOREIGN CURRENCY TERM DEPOSITS

Place your investment in a MCB Foreign Currency Term

Deposit and receive a higher rate of return. Avail your choice

of 1 month, 3 months, 6 months, 1 year, 2 years, 3 years, 4

years and 5 years term deposits. For more information or to

open an account at MCB, contact one of our designated

foreign currency branches.

Credit/Advance/Loan
Department

MCB in conducting its business and helping its

customers and the public in their business is involved in

advancing and giving loans. The credit department has the

duties of issuance of short and long-term loans to customers.

All advance proposals of all shapes and sizes from

customers with different backgrounds and line of business

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are presented to the bank through the advances department

for consideration. Lending or advances offered are of two

main types.

a) Fund Based Financing

This type of advances or financing involves the physical

movement of cash from the bank reserves to the customer

who applies and is successful for a loan.

b) Non Fund Based Financing

This type of financing does not involve the physical

movement of cash or funds from the banks reserves although

sometimes this finance can become a fund based finance if

the applicant fails to pay his commitments. This type of

financing is of the type of letters of credit. These finances can

be of short-term, medium or long-term in nature. The bank

gives various facilities in this regard such as: the running

finance. MCB before lending to any customer has their own

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procedures and principle’s of lending which are meant to

reduce the banks risks in the face of loan defaulters.

• Fund based Financing


1- Running Finance

Among the various modes of Bank financing, credit

lines afforded to customers under the above head (Running

Finance) are most commonly used. Withdrawals on the

Current balance, which the customer has maintained,

thereby creating running finance.

Under this type of financial accommodation, the

borrower is required to adjust the finance provided by the

Bank with the stipulated expiry period.

The account may, however, be freely operated, by way

of multi transactions, provided that the sanctioned limit is

not, at any time, exceeded, and also provided that the

account is operated strictly in accordance with the approved

Limit terms and conditions.

2- Demand Finance

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This type of finance is for personal needs and is payable

on demand for one year. The client is bound to repay it in the

monthly installments and whole amount is supposed to be

adjusted within one year along with mark up. In case of

Demand Finance whole amount is credited in his account

and he will pay interest on whole amount.

3- Cash Finance

The bank provides cash finance for short period less

than one year for seasonal businesses. The loan is provided

against the goods. The goods are pledged with the bank.

4- Staff Finance

It is the type of loan that is provided to the members of

the staff up to a certain limit. The loan is provided for house,

car, motorcycle, purchasing piece of land etc. The house

loan is provided to its staff members up to a certain limit

where there is no interest. The loan for a motorcycle is

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provided to clerical staff. The officers can also apply for this

loan.

• Non-Fund based financing

1- Letters of Credit

A letter of credit is the most widely used modes of

settling trade debts on an international level. It is also the

convenient important method of obtaining short-term

financial accommodation for banks by customers.

2- Guarantees

It includes performance guarantees, bid bonds,

shipping guarantees, mobilization guarantees and security

deposit guarantees.

1- Performance Guarantees

These are generally requested by customers,

guaranteeing completion of work or supplies, as per terms of

contract and or mutual agreement. In such instances, the

Branch Manager or chief manager should exercise special

care is given below.

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i) The guarantees are not for projects,

which are in any way uncertain or speculative.

ii) The contractor is well experienced in his

line of work, having executed similar contracts

satisfactorily in the past earthquake. All insurance

premium costs shall be borne by the customer. It shall

be the responsibility of the Branch Manager or the Chief

Manager to ensure that premises always remain

adequately insured. The Branch should directly pay the

premium to the debit of customer’s account if the

customer does not insure the premises promptly,

despite branch reminders.

2- Bid Bonds

The bank is often requested by its customers to issue

Bank Bonds in lieu of deposit of earnest money against bids

for tenders.

In case of breach of the Bid Bonds terms, on the

customer’s part, the bank could be applied upon to make

payment.

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3- Shipping Guarantees

There are instance where the importers need to

obtain delivery of goods without production of the relevant

bill of lading. In such cases the Bank is requested by the

customers (importers) to issue a Shipping Guarantee in

favor of the concerned Shipping Company.

4- Mobilization Guarantees

Under these, the Bank guarantees the performance of

a contract or other work, as specified in the guarantee. The

bank guarantees the amount of advance payment made to

the customers in this connection, for satisfactory

performance of the contract.

5- Security Deposit Guarantees

These guarantees are issued in lieu of security deposit,

generally to Utility Service organizations for connection

supply of electricity, telephone, gas, etc to the customers

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Banking Terminologies

1- Transaction Period

The period runs from the date of financing (i.e.,

first disbursement in part or full amount of financing) to the

date of payment of last installment (inclusive of grace

period) to amortize the Marked-up price of the house/flat. It

may be/expressed in “number of years”.

2- Grace Period

This is the period during which the party shall not

pay any installment. Installments will fall due for payment

after the expiry of grace period. Grace period may be

allowed when financing is made against a house or flat,

which is to be constructed, or for completion of a partly

constructed house or flat. In case of outright purchase of a

completed house or flat, normally no grade period is

allowed.

3- Cushion Period

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In Mark-up financing, Mark-up on Mark-up is not

permissible. In case of default, the Bank shall stop earning.

While calculating the Marked-up price (for agreement

purpose) additional Mark-up for a period of 210 days (7

months) will be applied, in anticipation that the amount of

financing shall be recovered within the additional period of 7

months through persuasion or through legal process

MCB INTERNATIONAL
The International Division provides one of the fastest

means of remittance from the Middle East and other

countries and also has Pak Rupee and Dollar drawing

arrangements.

• Speed Cash

A Drawing Arrangement specifically arranged with

Citibank Karachi and the Saudi American Bank in

Riyadh ensures doorstep delivery of drafts within 48

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hours anywhere in Pakistan where courier service is

available.

• Home Remittance

Demand draft and telex transfer facilities offered to

cover 35 Companies and Banks in the Middle East.

• Drawing Arrangements

Have been arranged for both Pak Rupees and Dollar

through designated branches and arrangements through

Local and foreign Banks.

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SWOT Analysis

When I go for the internal analysis of the MCB it


indicates many areas where it posses strength and a
competitive edge over others as well as there are
some weakness in its structure and in operational
activities.

STRENGTHS

 Management is taking initiative in every field


and making innovations to serve their
customers better.

 MCB has a qualified management in their


knowledge and experience and bank takes
benefits from their expertise.

 MCB is injecting new qualified staff on regular


bases.

 Having a large scale of deposits, MCB is


providing an efficient service to their
customers in the form of giving loan to
different sectors of the economy.

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 Over 1200 branches network enables of the


MCB to serve the maximum areas of the
economy.

 Being a private Bank, MCB does not observe


any sort of political influence.

 MCB is charging less rate of markup from their


customers on advances as compared to other
banks with minimum hurdles of operations.

 MCB’s Master Card and ATM card are becoming


more popular among people huge numbers of
people are using this facility.

 Most of MCB’s branches are computerized;


high investments are being made in
technology, using SWIFT and other fastest
sources for delivering the messages.

 The Account and Products are competitive in market


against the nationalize commercial banks as well as
privatize Commercial bank

 MCB is the pioneer in introducing the Rupee


Traveler Cheques in the country and are
widely used in the business transactions.

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 MCB credit cards are used all over the world as well

as in Pakistan.

 The most industries & organizations have their


accounts with MCB.

 First bank to be privatized, which has now become


the leader in market with largest on-line ATM
network in the country.

 Extension and improvement in services to domestic


as well as foreign customers.

WEAKNESSES

 Some potential zones have no ATM facility.

 MCB being a private bank cannot pursue its


customers, as they prefer the government
banks to deposit their money.

 MCB is facing an internal politics problem.

 MCB has few foreign branches that is why it


has to pay large commissions in business with
others countries banks.

 MCB has large scale of advances so has a high


level of Bad Debts; this indicates its internal
weakness for recoveries of the loans.

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 There is a need of new branches in many


developing areas.

 Some potential zones have no ATM facility.

 In some cities the number of ATM are greater than

the requirement and some potential zones are

missing them.

 MCB RTC. Market leading but it is useable in Pakistan

only.

 Some branches have no computer facility.

 Customers having accounts with small amounts are

not given same services and dealing given to those

with high accounts.

OPPORTUNITIES

 MCB has an opportunity to install the


Automated Teller Machines in all over the
country.

 MCB can develop a nationwide systematic


network of On-Line branches.

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 There is potential to grow in banking sector.


The use of advance banking techniques and
technology has become an opportunity for the
banks to be a leader in business sector.

 Customers' feed back on different products and

accounts can really improved the bank performance

and encouraged the atmosphere for other future

policies.

 Due to efficient and experienced management


group, MCB can also improve well and expand its
foreign operation successfully.

 Increasing need and potential of leasing in Pakistan

provide MCB an opportunity to utilize its skills and

efficiencies in leasing business as well.

THREATS

 Inconsistency in government's policies regarding to


business and economic sector.

 Loss of confidence of overseas prospects/customers


due to freezing of accounts.

 Government Banks when privatized, then they


produce stiff competition to MCB.

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A rapid capture of market by Askari


Commercial Bank Limited.

 Increasing number of foreign banks in the country.

 MCB has attained a status in the country, the


growth of other bank are potential threat for
the Bank. Different schemes launched by other
banks because difficulties and competition is
increasing.

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Suggestions and
Recommendation
Upon the completion of my internship program with

MCB Limited, I offer the following recommendations:

 International Branches should be


opened instead of relying on foreign `
banks. Bank should increase the
foreign contact through its own
branches.

 An effective recovery system should be


formulated in order to block the
increasing bad debts.

 By an employee, Job Rotation is not


accepted willingly and it decreases both
performance and satisfaction. It should
be changed.

 Downsizing has created frustration


among employees and work burden on

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the employees has increased which is


de-motivating employees.

 To be pioneer, Bank should install


Automated Teller Machines in the City
Multan and in other cities.

 Internal politics and lobbying should be


removed which has bad impact on the
performance of the bank.

 Bank should hire the fresh MBA persons


instead of selecting the commerce
graduates.

 An inquiry or a reception desk should be


established in order to direct and give
information to customers as I noticed that
many people came in to ask for various types
of information and there was not any one in
particular to deal with them.

 The line of services to the customers could


also be increased.

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 There should be market research and more


branches in the potential areas should be
opened.

Conclusion
MCB should continue with the same spirit to serve the

Pakistani citizens in the country and all over the world. The

financial position of the bank is very strong, as compared to

some of the nationalized banks and even some of the private

banks. MCB has tried to provide the best services and safety

to the public by introducing the Rupees Travelers Cheques

and by having the largest network of Automated Teller

Machines. The environment in MCB is a very friendly

environment, which is really impressive. The employees try

to help each other in times when there is a lot of work on

somebody else’s hand and this is to be complemented.

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In general and in short MCB is destined to go places

given time and more thorough planning. My congratulations

and thanks to all in MCB farid gate Branch for their

cooperation and their friendly help.

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