Mcb Internship Report

INTERNSHIP REPORT ON MUSLIM COMMERCIAL BANK

Instructed by: Mr. Naveed Ahmed Lecturer Comsats Institute of Information Technology

Presented by: Muhammad Hussain MBA-A Roll No.65 Semester 3

2 Muslim Commercial Bank DEDICATION

I dedicate whole of my education along with my life to my beloved parents and respected teachers, who were always kind to me. May God Bless Them (Aamin). Muhammad Hussain

3 Muslim Commercial Bank TABLE OF CONTENTS 1. Preface 2. Introduction Of Bank 3. Types of Bank 4. Executive Summary of MCB 5. History of MCB 6. Vision & Mission Statement of MCB 7.

Commercial Bank

8. Branches & ATMs 19 9. Product & Services21 10. Department in MCB25 11. Management Hierarchy28 12. Investment Banking 13. Know Your Customer 14. Remittance Department 15. Financial Statements 16. SWOT analysis 17. Work Performed By Me 18. Findings 19. Recommandations

4 Muslim Commercial Bank

PREFACE Banking sector owes a pivotal importance in the economy of any country through its variant functions. This basic motivator that stressed me to join any bank for Internship Training. Moreover, the experience and practice learned during this tenure also prove very helpful and facilitating in the forthcoming professional life. This report is the result of two months Internship will, Muslim Commercial bank, Kot Fareed, Sahiwal. The motive behind selecting this bank is that it is one of the Top 10 Asia, Bank‘s. The fact remains that Muslim Commercial bank, posses an excel/cut and historical importance being the most senior and leading in terms fluids and services to Pakistan at all ages of life. I had with the strong belief that this report will guide and facilitate the readers to understand the functioning of banking system and more importantly have good knowledge about Muslim Commercial bank. My utmost efforts to elaborate this report wit, material read, listened and observed. Yet, I feel that this period was not long enough to learn and understand the complex and widespread functioning of banking sector. I am really thankful to the entire staff members of the aforesaid branch for the friendly and cooperative behavior during my internship. Muhammad Hussain MBA-A Roll No.65

5 Muslim Commercial Bank

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ell-developed banking setup plays very significant role in the economic development of a country. Banking sector is precondition for the development of any country. The banking sector helps in proper utilization of resources of the country by financing the less developed sector. It also helps to keep cumulative demand in proper balance with the supply of those resources, which are responsive to monetary demand. DEFINITION OF BANK. “A bank is an institution, which deals in money.” I BROADLY SPEAKING “Banks draw surplus money from the people who are not using it at that time, and lend to those who are in a position to use it for productive purposes.” 2 IN OTHER WORDS “Bank also accepts the deposits from public repayable on demand or otherwise and withdrawal by cheques. Drafts order and include any post office saving bank.” BANK. The word bank is said to have been derived from the Italian words “Bancus” or “Banque”. The History of banking is transacted to be as early as 200 B.C.

6 Muslim Commercial Bank PEGETS DEFINITION: no one anybody. Corporate or otherwise can be a banker who does not: I Open current account 2 Pay cheques drawn on him 3 Collect cheques for his customers. HARTS DEFINITION. “A hanker is one who is in the ordinary course of his business, honors cheques drawn upon his by persons from and for whom he receives money on current account.”

ACCORDING TO THE BANKING COMPANIES ORDINANC, 1962: SECTION 5(B): “Banker means a person transacting the business of accepting, for the purpose of lending or investment, of deposits from the public, and withdrawal by cheques, drafts, order of otherwise, and inclined any post office saving banks.” IMPORTANCE OF BANKING. Banks play very important role in the economic life of a nation. The growth of the economy is dependent upon the soundness of its banking system. Although banks so not create new wealth but borrow, exchange and consume. These make generation of wealth. In this way. They become most effective partners in the development of that country. To encourage the habit of saving and to mobilize these savings is its basic purpose. Banks deposit surplus from the public and then advances the surpluses in the form of loans to the industrialists, agriculturists, businessmen and unemployed people under different schemes so that they setup their own business. Thus banks help in capital formation if there are no banks, and then there would be concentration of wealth in few hands great portion of wealth of a country would be idle. In the fewer developing countries rate of saving is very low and due to this rate of investment and rate of growth is very low. We can take hank just like a heart in the economic structure and capital provided by it is like blood in it. As long as the blood is in circulation, the organs will remain sound and healthy. If the blood is not provided to any organ then the organ would become useless. So if the finance is not provided to

7 Muslim Commercial Bank agriculture sector or to industrial sector, it wills he destroyed. Loan facility provided by bank works as an incentive to the producer to increase production. Banks provide transfer of payment facility, which is cheaper, quicker and safe. Many difficulties in the international payment have been overcome and volume of transactions has been increased. These facilities are very much helpful for the development of trade and commerce. EVOLUTION OF BANKING IN INDO PAK SUB-CONTINENT: The Indian society was quite familiar with the banking, right for the beginning. There is also sufficient evidence to show that during 51h century people were accustomed to use 1-lounds as a credit investment. Loans were given to the people against personal and other Securities such as ornaments, goods and other immovable properties.

TYPES OF BANK: Following is the list of various types of banks: Central Bank Commercial Bank Exchange Bank Industrial Bank Agriculture Bank I. COMMERCIAL BANK: The banks in any country speeded over with an objective to get the excessive money Form the public in the form of deposits and providing finance to the investors. These Banks are in the ground for profit earning motive and in competition with each other. These banks are providing the basic services to the customers in the form of deposits, Advances, remittances and others. Commercial Banking Scenario In Pakistan: At the time of Independence in 1947.ther were 38 scheduled banks with 195 offices in Pakistan. But by December 3l”, 1973 there were 14 scheduled Pakistani Commercial Banks with 3233 Branches in Pakistan and 74 Branches in the Foreign Countries Nationalization of banks was done on 1st January 1974

8 Muslim Commercial Bank under the Nationalization Ac 1 947 due to certain objectives. But it had negative effects on the efficiency of the banking sector. Afterwards, a Privatization Commission was set upon January 22nd, 1991. The Commission transferred many banks to the private sector, i.e., Muslim commercial Bank and Allied Bank Limited. The Govt. approved and permitted the establishment of 1 0 new private banks in August 1991 Functions of commercial Banks: I borrowing of money from customers in shape of term deposits (PLS Saving Current Deposits and Notice Deposits). 2 Lending of money to borrowers in shape of finances, short-term finances, and long-term finances under various names such as Demand Finance, Small Finance, Cash Finance. 3 Agency services. 4 Remittance of money. 5 Foreign exchange business, foreign currency deposits. LCS, Imports and exports etc. ROLE OF COMMERCIAL BANKS IN THE ECONOMIC DEVELOPMENT OF A COUNTRY: Banks play an important role in the economic development of a country. If the banking system is unorganized and inefficient, it creates market adjustments and impediments in the process of development. In Pakistan, the banking system is organized in well manner. The State Bank of Pakistan since July 1st. 1984 stands at the apex and is responsible of the operation of the banking system. The other bands, which form the banking structure in Pakistan, are playing role in h\the economic development of the country. The role of the commercial bank in the growth and development of the economy on sound and steady footings is discussed briefly as follows: Mobilization of Resources: The commercial banks are the most efficient organization of the economy in the mobilization the resources and making a profitable pool of these resources. Taking the Money from the savers and lending it to the investors is the most prominent job of the hank Financing Development Projects:

9 Muslim Commercial Bank The banks and other financial institutions advance loans for the development projects that enhance the pace of overall development of the country. These advances are made in both public and private sectors for the purpose of achieving a good and strong economic field to catty on the other activities of trade and business. Creating Climate For Capital Formation: Capital formation is done by the act of accepting people’s money and putting into Profitable ventures. This money so accumulated, make possible the availability of the needed capital by the investors. The investors on the other hand are able to get the needed funds that shortfall their requirements.

Planned Development: With the help of well-organized banking sector the government is able to make good Implementation of its economic planning and can execute developmental activities for the welfare of the society.

Promotion of Saving Habit: There are persons who have money but cannot put them in profitable use. The banks attract these persons by offering a variety of accounts. They provide them not only the safety of the funds but also higher returns on them. The banks, in this way, promote the habit of saving among the people. Effective Implementation of Monetary Policy: With the help of a good banking system in the country the government and the central Banks regulate the monetary supply and demand of the money. A good system helps in the implementation of the policies that are formulated by the government. l through these banks using different techniques of credit control makes credit expansion and contraction.

10 Muslim Commercial Bank Narrowing Regional Disparity: The banks help in bridging the country. The surplus fund of on Region is sent to the centers of deficit. The less developed areas acquire funds, put them into productive channel and increase production. The banks help in a balanced growth the economy.

Executive Summary CORPORATE PROFILE Mian Mohammad Mansha

Chairman

S.M.Muneer

Vice Chairman

Tariq Rafi Shahzad Saleem Sarmad Amin Aftab Ahmad Khan Atif Yaseen Dr. Muhammad Yaqub Mian Raza Mansha Atif Bajwa

President / CEO Board Committees : Audit Committee

Dr. Muhammad Yaqub

Chairman

11 Muslim Commercial Bank Tariq Rafi

Member

Mian Raza Mansha

Member

Atif Yaseen

Member HR Committee

Mian Muhammad Mansha

Chairman

Dr. Muhammad Yaqub

Member

Mian Raza Mansha

Member

Atif Bajwa

Member

Mr. Tariq Rafi

Risk Management Committee Chairman

S.M. Muneer

Member

Mian Raza Mansha

Member

Aftab Ahmed Khan

Member

Committee on Physical Planning, IT System and Contingency Arrangements Sarmad Amin Chairman Atif Yaseen

Member

Aftab Ahmad Khan

Member

Atif Bajwa

Member

Business Strategy & Development Committee Mian Mohammad Mansha Chairman S.M. Muneer

Member

12 Muslim Commercial Bank Tariq Rafi

Member

Mian Raza Mansha

Member

Atif Bajwa

Member Credit Committee

Shahzad Saleem

Chairman

Sarmad Amin

Member

Tariq Rafi

Member

Mian Raza Mansha

Member

Chief Financial Officer Tahir Hassan Qureshi Company Secretary Abdus S.Sami Auditors KPMG Taseer Hadi & Co Chartered Accountants Riaz Ahmed & Co. Chartered Accountants Legal Advisors Mandviwalla & Zafar Advocates & Legal Consultants

13 Muslim Commercial Bank

History of Muslim Commercial Bank The Muslim Commercial Bank Limited was incorporated on 9th July 1947 in Calcutta in Bengal. After partition, the Registered Office of the bank was shifted to Dhaka where it commenced business from August 1948. The Bank transferred its registered/Head office from Dhaka to Karachi in 1956. In 1999, its registered / Head office was transferred to Islamabad and Karachi office was named as principal office. The government transferred a 26% management stake to a group of leading industrialists, collectively named National Group of which Mian Mohammad Mansha is the Major stakeholder. In 1992 a further 24% was sold to the National Group. The current shareholding structure is 50% National Group, 25% government and 25% floated on bourses. NATIONALIZATION OF MCB Muslim Commercial Bank Limited was nationalized by the Government of Pakistan in January 1974 under the Banks Nationalization Act, 1974. Subsequent

14 Muslim Commercial Bank to nationalization the operations of premium Bank Limited were merged with the Muslim Commercial Bank Limited in June 1974. PRIVATIZATION OF MCB The previous Government declared the privatization policy as one of its main objectives and in accordance with its policy, the Government offered Muslim Commercial Bank Limited for privatization. The Bank was the first Public sector bank, which was privatized on 2nd April 1991. The Government of Pakistan transferred management of the bank to Private Industrialists and Entrepreneurs, "National Group" by selling 26% shares of the Bank at Rs.56 per share. Present Status Over the years Muslim Commercial bank fostered strong bonds with its customers. MCB understands them; their needs. They feel comfortable with MCB; its their bank; it responds to them; listens to them; partners with them; grows with them. That is why it is one of the leading commercial banks of the country, providing a wide range of modem banking services. At present, the banking network consists of over 1000 branches along with – controlling offices known as Area Head offices and Regional Head offices. These controlling offices are responsible for the smooth operation of the bank on National & international levels. The entire financial and operational objectives are achieved with the Human Resources strength over 12000 employees. The bank is known as the major credit provider, best place of working and paymaster in the financial (money market) of the country. Over the past few years, MCB's profits have been hit by the need to increase provisions coverage and restructuring costs associated with the downsizing of the workforce and branch network, whilst there is some need to boost provisions, these charges (necessary to bring the bank back into shape) are largely over. It has also slowly received permission from the SBP to shut down a number of unprofitable branches. In 1999 EURO MONEY recognized MCB as the best domestic bank in Pakistan.

15 Muslim Commercial Bank The banking sector has been worst hit by the external account crisis that Engulfed the country following the nuclear tests. Due to the nature of banks as a Medium for debt transactions the country's technical default and subsequent rating downgrade impacted them the most. Those core concerns are still not fully alleviated in the view of the investors. The closest that investors have come to positive expectations regarding external account sustainability and a possible rerating was back in the fourth quarter of the year 1999, and this led to MCB climbing to Pakistani rupees 56 per share. Resumption of the IMF funding and a

possible rescheduling of bilateral debt will positively impact the banking sector and especially MCB. State Bank of Pakistan continued the process of Banking Reforms, which included strengthen of Prudential Regulations and focus on recovery of defaulted loans. In 1999 return on Government Savings Scheme and Treasury Bills was reduced, which led to a lowering of lending rates, resulting in erosion of margins for banks but it is likely to give a boost to economic activity. MCB Rupee travelers Cheques continued to maintain their leadership position in the industry and sales registered a 45% growth over last year. MCB successfully introduced the Rs.100, 000 denomination cheque countrywide and introduced RTC dialup tele-verification facility from Lahore city as well. Mainly there are three types of Banking in MCB. These are: CORPORATE AND INVESTMENT BANKING

16 Muslim Commercial Bank Corporate Banking Group of MCB is focusing on top tier local corporate groups and multinationals in a structured and focused manner building relationships leading to increased market share. Branches having Advances of Rs.100, 000,000 per party relationship and monitoring such advances are called as Corporate Branches. These branches include corporate clients and their requirements are looked after. There are about 20 corporate branches of MCB in Pakistan.

OUR VISION & MISSION Vision Statement To be the leading financial services provider, partnering with our customers for a more prosperous and secure future. future.

Mission Statement We are a team of committed professionals, providing innovative and efficient financial solutions to create and nurture long-term relationships with our customers. In doing so, we ensure that our shareholders can invest in us with confidence.

17 Muslim Commercial Bank

COMMERCIAL BANKING The Commercial Banking Group of MCB continues to service the trading Community and middle market, with sustained focus on developing new customer relationships and increasing the asset portfolio. CONSUMER BANKING The Consumer Banking Group focuses on the lower end of the market and micro credit. Individual customer needs are being serviced through the introduction of diverse lifestyle consumer loans and introduction of new products and partnerships with service providers. Customers will continue to use the extensive branch network, which in turn will generate deposits to feed the asset development and liquidity requirements of the Bank through its diversified and stable deposit base. ATM TECHNOLOGY At MCB, technology has a direct relationship with the needs of the customers, it is a mean of creating value and convenience for the customer. Over the last few

18 Muslim Commercial Bank years MCB has invested heavily into strengthening its technology backbone. Today it is leading the way in banking technology and setting new standards for the banking industry, penetrating into the local market, listening to the needs of the people. MCB’s strength lies in providing technological base at a grass root levels of the society with a challenge to educate and assimilate such systems across vast cultural and economic backgrounds. With over 768 automated branches, 243 online branches, over 151 MCB’s 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. Additionally in order to enhance the utility of the ATM services they successfully linked their ATM network to the MasterCard, Cirrus and Maestro, effectively becoming part of the largest ATM network in the world. MasterCard and Cirrus/Maestro users can now access their ATM's network. Together with the above MCB made a strategic decision to establish an ATM switch and open their ATM network to other banks. The ATM switch has been named MNET. It has following banks in MNET switch: Standard Chartered Citi Bank MCB ATM SERVICES 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 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

19 Muslim Commercial Bank with Master Card International brings about added facilities for the MCB traveler abroad with the Cirrus and Maestro networks. So go ahead! Use your MCB ATM 24- Hour Cash Card day or night, at home or abroad. 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.

BRANCHES & ATMs Mnet MNET enables all the member banks to share their electronic networks. Which means customers of member banks can use MNET as well as 1-Link ATMs Nationwide. MNET member banks ATM machines accept cards issued by MCB Bank Ltd, Citibank, Standard Chartered, HSBC, Saudi Pak Bank Limited, Habib Metropolitan Bank, JS Bank, Deutsche Bank, SME Bank, Arif Habib Rupali Bank and First Women Bank. MNET customers can use over 600,000 ATMs worldwide that carry the logo and shop at over 5 million outlets that carry the logo. M-Net switch has currently 612 ATMs in 50 cities. We plan to have the network grow in faster pace in future as MCB itself will be adding more ATMs by the end of the year. The ATM deployment has been planned in such a manner that a customer will be only a few minutes away from an ATM in major cities. This coupled with geographic coverage provides the largest convenient spread in the country, because of which we are very strongly concentrating on Diverse Coverage & Convenience. M-Net Switch ATMs are present in all the major cities of the country. They are available in the hilliest and northern areas of the country such as Murree, Abbottabad and Swat etc thus providing convenience of accessing 24 hours cash to the customers across the country. M-Net switch also has its Service Centers in the main cities of the country providing support to member banks customers. M-Net Switch ATMs are also

20 Muslim Commercial Bank present in all 3 main Airports of Pakistan i.e., Jinnah Terminal (Karachi), Allama Iqbal International Airport (Lahore) & Islamabad International Airport.

MEMBER BANKS & their ATM Locations In Pakistan, the ATM facilities can be availed at any of the following locations: MCB Bank Ltd.

Standard Chartered

CITIBANK

Saudi Pak Bank limited

HSBC

Habib Metropolitin Bank

Arif Habib Rupali Bank

Deutsche Bank

First Women Bank

SME Bank

CORPORATE IMAGE BUILDING In view of Goals established through mission and vision statement, the first step taken was to change the corporate image of the Bank, which inclined following aspects: In 1991 Bank changed its logo from to current logo which is:

Which signifies the growth and prosperity? The change of logo was part of effort to change image of the Bank as a progressive bank in the minds of people of country. A comprehensive electronic media campaign was launched with a logo "Good Banking getting even better" stressing on the improvement.

21 Muslim Commercial Bank An on going process of Face Lifting and renovation of MCB branches was started which is still going on. The purpose of it was to ensure the overall outlook of the bank changes and employees get a better environment to work and customers of the bank feel more comfortable.

NEW PRODUCTS AND SERVICES SINCE PRIVITIZATION In order to achieve long-term goals of expansion and penetration in the market. Bank introduced various new products for its customers, which cater to the needs of various segments of the society. In order to do so, a constant process of market research, evaluation and development of New products was started which resulted in introduction of various new products which were earlier not introduced by any other Bank in the country. Introduction of these products was indeed a major source of penetration for the bank and turned out to be a differential factor as compared to other banks: Prime Currency Accounts - For foreign currency deposits, (since 1991) Mahana Khushali Scheme - A monthly income plan through deposit of a fixed sum in the account, (since 1991) Hajj Mubarik Scheme - For intending Pilgrims, (since 1991) Capital Growth Certificates - It doubles the deposit of depositor in 5 years. It offers high rate of return and was introduced for fetching long-term deposit, (since 1991)

22 Muslim Commercial Bank PLS 365 Savings Accounts. - Introduced high earning product with feature of calculation of profit on daily product basis. No restriction on deposit withdrawals and Minimum deposit of Rs.300,000/- (since 1992) Fund Management Scheme - To generate funds to develop secondary market for Government Securities (from 1991 to 1992) MCB Khushali Bachat Accounts - Savings accounts with added value to customers due to profit application of daily product basis. MCB Dollar Khushali Accounts - For foreign currency deposits, (launched in 1993) FAXPRESS - A fast inter-city Remittance Service, (since 1991) MCB Rupee Travelers Cheques - The most popular product of MCB, introduced Rupee Traveler cheque for the very first time in the country and it immediately fetched high share of the market and MCB share is still growing - (launched in 1993) Consultancy Services For intending buyers of State-owned enterprises being privatized, (since 1991) Self-Financing Scheme - Mark-up free finance from 5000 to 25000. (since 1991) Night Banking Services (since 1991) Utility Bills Collection Centers - Separate utility Bills collection centers were established for collection of utility bills (since 1994) MCB MasterCard - (since 1994) EXPORTMOR - Financing facility for exporter (since 1994) REMITEXPRESS - A fast remittance service between Pakistan and Middle East. (Since 1994) Personal Banking Services- In order to promote Consumer Banking system in the country a proper personal Banking service was started for High Net worth clients of Bank in selected branches (since 1995) MCB Custodian Services - Launched for local and international capital market clients.

23 Muslim Commercial Bank Online- The largest network of branches in the country and growing. Providing customers with 24x7 real time online facilities. MCB Call Center- Call now for answers to your queries-banking services, ATM services, mobile banking services, RTC services, telebanking services and MCB product information. 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. Cash Plus-Cash management services for corporate customers help customers substantially reduce their receivable collection time frame, improve cash flow and business management. Islamic banking services through exclusive units/ branches offering a range of liability and asset based sharia compliant products like musharika, murabaha, ijara and istasana. MCB Mobile bankingBanking at your figure tips. Dial in anytime to get information regarding balance and mini statements. 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 service is available to all MCB ATM cardholders, 24 hours 365 days. Just call our Help Line on 111-000-MCB(622) or any MCB online branch for assistance. Mobile Banking at a Glance

24 Muslim Commercial Bank MCB Mobile Banking gives you easy and quick access to your account(s) at a time you find convenient, including all holidays. Banking at your Fingertips With MCB Mobile Banking you can: Check your balance View the last 4 transactions of your MCB account(s).

A Free Service 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. MCB lockers- The best protection for your valuables. Lockers of different capacities are available nationwide. Pyara ghar-

Flexible and competitive home financing facility with options of

home purchase, construction and renovation. MCB car cash- Car financing and leasing at competitive rates with flexible options. Largest ATM Network- of 100 ATMs connected to worldwide ATM network of about 350,000 ATMs along with Cirrus and Maestro facility enabling MCB ATM card to be used All over the world & anywhere in the country. CUSTOMER SATISFACTION For any organization to succeed, it is extremely vital to ensure Customer Satisfaction. Banks being in service sector, it is highly important that high service standards be maintained and real value to their money is provided to its customers. In order to do so MCB took three revolutionary steps:

25 Muslim Commercial Bank Provision of comparatively batter service to its customers as compared to other banks through value added features of low cost, quick disposal of work and friendly environment. Modernization, Computerization of most of the branches enabled Bank stay abreast with the technology and provision of better service at the root level to its customers. Bank also started an ongoing process of Branch face lifting creating a better congenial environment for its customers. In order to be more customers' conscious, MCB started a very effective and timely action system on Customer Complaints

Departments in MCB Brief functions and responsibilities of departments at MCB are as follows. Human Resources and legal group:  Recruitment.  Training.

26 Muslim Commercial Bank  Transfer & posting.  Promotions.  Disputes.  Staff loans. Banks operations group:  Policy.  Premises.  Capital & operating expenses processing.  Return & consolidation.  Reconciliation.  Product sales.  Relationship co-ordination.  Service standards.  Customer complaints. Financial Institution & overseas group:  Inter-bank exposure.  Forex licensing.

27 Muslim Commercial Bank Financial control & Audit group:  Audit & internal control.  Budgeting & planning.  Monitoring of expenses.  Financial reports. Credit & risk management group:  Credit proposal evaluation & analysis.  Project financing.  Monitoring of credit portfolio of bank. . Corporate banking group:  Placement of all multi-national & public sector companies. Consumer banking group:  Penetration in high net-worth customers.  Earning increase.  Customer retention. Commercial banking group:  Conduction of normal retail operations.

28 Muslim Commercial Bank Treasury & FX group:  Funds management.  Investment management. Assets management group/ Fraud control group:  Classified portfolio looks after.  Special assets management.  Restructuring / Rescheduling.  Out of court settlements Information technology group:  ATM / CIRRUS facilities.  I.T. related franchise management.  SWIFT system.  On-line branches network look after.  Hardware / software support.

29 Muslim Commercial Bank MCB’s Management Hierarchy

President (M. Aftab Manzoor)

Human Resource Group

Legal Group

Corporate Banking Group Corporate South

Corporate Central

Bank Operation Group

Financial Institution Group

Hamid Yasin (AVP-Credit)

Corporate North Raheel Ijaz (GM)

Bashir Khan (AVP-Admn.)

Financial Control & Audit Group Credit & Risk Management Group

Mall Branch RWP (CM)

Blue Area Branch ISB Nadeem Elahi (CM)

Operations Raja Khaliq (AVP)

Foreign Exchange Abdul Majeed (OG-2)

G-8/4 Branch ISB (CM)

Consumer Banking Group

Treasury & FX Group Assets Management/Fraud Control Group Information Technology Group

Commercial Banking-North

Commercial Banking-South

Credit Hameed Durrani (AVP)

30 Muslim Commercial Bank Business of MCB MCB is in it’s over 50 years of operation. It has network of over 1,100 branches all over the country with business establishments in Bangladesh, Sri Lanka and Bahrain. The branch break-up province wise is Punjab (57%), Sindh (21%), NWFP (19%) and Baluchistan (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 The Consumer Banking of MCB provides customers with innovative saving schemes, products and services. The ATM network of MCB is the largest in Pakistan and the Pak Rupee Travelers Cheques are market leaders. MCB was the first to introduce the Photo Card with the launch of the MCB MasterCard. The Corporate Banking of MCB ensures assistance from a dedicated team of professional financial advisors for underwriting, project finance or corporate advisory services. When it comes to banking practices, the consumer can depend on MCB, because it'd been around for over fifty years. 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. Eight 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.

31 Muslim Commercial Bank MCB now focuses on three core businesses namely Corporate, Commercial and Consumer Banking. Corporate clientele includes public sector companies as well as large local and multi national concerns. MCB is also catering to the growing middle class by providing new asset and liability products. The Bank provides 24 hour banking convenience with the largest ATM network in Pakistan covering 9 cities with around 100 ATM locations. The Bank's Rupee Traveler Cheques have been market leaders for the past six years. MCB looks with confidence at year 2002 and beyond, making strides towards fulfillment of its 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". Corporate Banking MCB's Corporate Banking Team consists of dedicated professionals with the requisite expertise to take care of the banking needs. The Corporate Bank with 20 branches has its presence in all major cities of Pakistan. The Area Offices are located in Karachi, Lahore and Islamabad. Corporate Platforms have been established in the three principal cities where teams of dedicated Relationship Managers have been posted. These Relationship Managers have been entrusted with the complete responsibility for managing the risk of their allocated portfolios, acting as allusion between the customer and the bank, and providing you with the entire range of products/services offered by the bank. The products/services of the Corporate Bank are broadly divided into the following categories: Working Capital Loans:

32 Muslim Commercial Bank The working capital loan includes Running Finance, Cash Finance, Export Refinance, Pre-shipment and Post-shipment etc. Term Loans: Offer Short to Medium Term Finance to meet capital expenditure of the customer business needs. Trade Finance Services: Trade finances services that include an entire range of import and export activities including issuing Letters of Credit (L/Cs), purchasing export documents, providing guarantees and other support services. Cash Management: The network of about 1100 branches in Pakistan enables the bankers to collect and disburse payments efficiently with the MCB cash management services. This also enables. the bankers to offer the customer’s choice of paper based or electronic fund transfer solutions including collection amounts, rose branch online transactions etc.

33 Muslim Commercial Bank Investment Banking The Investment Banking Team of MCB 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 investment banking team of the MCB has developed expertise in the following areas of the investment: Private Placements Debt/Equity Underwriting Term Finance Certificates Loan Syndication Arrangement of Non- Fund Facilities Mergers and Acquisitions Financial Highlights The results for the year 2001 are reflective of sustaining all-around efforts over the few years, to maintain profitable growth along with prudent and proactive risk management and expansion of product range of customers. Pre-profit for the year 2001 was Rs.2.10 billion as against Rs.1.32 billion in 2000a healthy increase of 59%. Growth in profitability is primarily due to fund-based activities through efficient assets and liability management. Fee based income was lower despite increase in volumes due to competitive pricing and discontinuation of charges on PLS accounts. Administrative expenses grew by 3% generally attributed to absorb effect of inflation and enhancement in Govt. levies. Pragmatic efforts are, however, under

34 Muslim Commercial Bank way to manage costs in relation to revenues to further improve the revenue/expense ratio. Higher level of provisions was in the line with the Bank’s policy to upfront recognize problem lending. In 2001, the Bank managed to recover Rs.2.19 billion as against Rs.1.97 billion in 2000. The balance sheet footings have increased to Rs.187 billion from Rs.175 billion primarily based on deposit growth. Deposits have registered a substantial increase of 14% and stand at Rs.154.5 billion in 2001 as against Rs.136 billion in 2000. Despite of low PLS deposit rates, branch network has shown a commendable performance by increasing and managing the deposit mix. This has been possible by improvement in customer services and targeted sales of products like ATM cards. Net advances as at December 31, 2001 stood at Rs.76.6 billion, a reduction of Rs.9.8 billion. Demand for credit from manufacturing and export clients fell considerably, post September 11,2001, which led to a reduction in advances as on the balance sheet date from a higher level during the year. Leadership in Rupee Travelers Cheques: Sales have grown by 26% in the year 2001 and continue to reflect meteoric growth. With the extension of the generic brand, increase in the range of denomination backed by a powerful verification system and over 900 branches involved in this business. Leadership in ATM’s: With around 100 ATMs and 170 online branches, MCB is again an undoubted Indus leader with connectivity extended to 16 cities of Pakistan. In the year 2002 further ATM will be deployed and connectivity increased to other cities. MCB ATMs not only serve 24-hour cash convenience but also improve on the counter services and turn around time at cash counters. The MCB ATM Master Card with Maestro and Cirrus networks has become a global service furthering the convenience to our customers. Traveling customers

35 Muslim Commercial Bank can access their account from a large number of internationally deployed ATMs and point of Sale (POS) units. The MCB ATM Switch - MNET is now operational. IT GROUP of MCB has been able to create the largest network for secure electronic financial transactions in Pakistan. Local branches of six international banks are connecting to this network. This will enable participating banks to use each others' ATMs resulting in an increased convenience to MCB customers and customers of other banks. The IT Group is currently expanding the network capability to provide the customers access to banking through multiple electronic channels. American Express Bank enters into an ATM sharing alliance with Muslim Commercial Bank: Muslim Commercial Bank Limited and American Express Bank Ltd. signed a Memorandum Of Understanding creating a mutually beneficial alliance, which will enable customers of American Express Bank to use ATM facilities offered by Muslim Commercial Bank. Mr. Taufiq A. Hussain, Country Manager, American Express Bank Ltd., Pakistan in a simple ceremony in Karachi, signed the MOU. MCB has setup an ATM Switch called MNET and American Express Bank is the fourth foreign bank to sign the sharing MOU. Speaking at the ceremony - AEB Country Manager said, "Customer service quality is the cornerstone of AEB's philosophy and this initiative will significantly enhance our customer service capability for our consumer banking clients". He added "After having considered various routes to acquire this capability AEB selected MCB as an ideal partner keeping in view the large network capability and long standing relationship with MCB". MCB with a network of over 1000 branches in the largest private sector bank of the country. The Bank is a market leader in 24 hour banking convenience with

36 Muslim Commercial Bank the largest nationwide ATM network covering 11 major cities in all provinces of the country. CITI bank and Muslim Commercial Bank sign ATM sharing agreement: Muslim Commercial Bank and CITI Bank signed an ATM sharing agreement today. By the middle of this year, both Banks’ customers will be able to use the services of either Bank's ATMs. Seen at the signing ceremony are Mr. Haroon Basheer Sheikh, Head of Consumer Banking and Information Technology - MCB and Mr. Nadeem Hussain, General Manager Global Manager Global Consumer Banking – CITI Bank Pakistan with their respective team members. Standard Chartered Grindlays and Muslim Commercial Bank to launch cobranded credit card: Rated as Pakistan's best banks ('domestic' and foreign' respectively) by Euro money magazine Muslim Commercial Bank (MCB) and Standard Chartered Grindlays signed a Memorandum of Understanding to launch the first-ever joint servicing co-branded credit card in Pakistan. Under the arrangement the partnering banks will have shared as well as distributed responsibilities to service the customers in line with their respective strength's. The Partnership will derive its strength by combining the large diversified customer base of MCB and the track record of Standard Chartered Grindlays in managing a successful credit card business in Pakistan. MCB, the largest Private Bank in Pakistan, has over four million accounts domiciled in 1100 branches across the country. Standard Chartered Grindlays, the largest foreign bank in Pakistan, has over ninety thousand satisfied card members and is a leading international player in the cards business. With this new initiative the customers product of the two leading banks in Pakistan. This agreement further strengthens the relationship between these two banks; earlier this year Standard Chartered Grindlays signed an agreement to join MCB's switch/ATM network, the largest in the country.

37 Muslim Commercial Bank FAYSAL BANK LIMITED to sell Muslim Commercial Bank’s Rupee traveler’s cheques: Muslim Commercial Bank Limited and Faysal Bank Limited signed an agreement for the Sale and purchase of MCB Rupee Travelers Cheques at all 11 Faysal Bank branches in Pakistan.

38 Muslim Commercial Bank Main categories of Account opening form: Type of Account There is a category of “Type of Account “, the customer can check any option to open a certain account. Following are certain kinds of accounts: Current PLS-Saving MCB Saving-365 Khushali Bachat PLS Term Deposit New Foreign Currency Account (Current/Saving) Currency There is a category of “Currency” in the form: In this section there are four kinds of currencies are given in which MCB opens account. They are: Pakistani Rupee US dollar Nature of Account There is a category of “nature of account” i.e. Individual Partnership Sole proprietor Joint stock company Introduction Before opening an account a banker should ascertain weather or not the person desirous of opening the account is a desirable customer. There is Reference section in the form in which the person who wants to open an account must provide a reference of a person who has already an account with MCB. For current account only reference of current account holder is accepted whereas for saving account reference of any whether current or saving is allowed. Preliminary investigation is necessary because of the following reasons:

39 Muslim Commercial Bank 

To avoid frauds



Safe guard against unintended overdrafts



To avoid negligence



To replay inquiries against clients

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To comply with Prudential Regulations/Laws

There is a specimen signature card with the bank on which the signature of account holder is to be taken while opening of his account. And then he is issued with a cheque book. It is advised that one must keep his cheque book under proper care but there are cases that people sometimes lost their cheque books. In that case there is an application form in the name of manager is available and the customer who wants to get a new cheque book fills that form and gives it to the manager then he is provided with a new cheque book. In other case a requisition slip is present in the cheque book and whenever the customer wants a new cheque book he simply fills that requisition slip and presents it to manager and gets a new cheque book. Know your Customer In view of recent heightened global efforts to prevent the possible use of the banking sector for money laundering, terrorist financing, transfer of illegal/illgotten monies and as a conduit for white collar crime etc, the importance of “Know your Customer” has increased. The objective of knowing a customer is to have a fair idea about the identity, financial resources and general information about the customer at the time when the relationship is established. A banker must have following information about the customer: \

40 Muslim Commercial Bank Customer’s Name: Enter complete name as mentioned in original Identity Card/other business documents. Nature of Business/Profession: If the customer is of salaried class then banker will enter his employer’s name. If the customer is a businessman, trader, sole proprietor, then the banker will enter the business name. Also enter the customer’s title/position and address of the employer/business. Addresses with P.O. Box are not acceptable. Similarly remarks like “Private Service”, “Business” are not acceptable, rather specify what type of company/business the customer is associated with. In case of individual his attested Photocopy of national identity card or passport is required, in case of salaried person, attested photocopy of his sarvice card. In case of partnership attested photocopy of identity cards of all partners is required and attested photo copy of “Partner ship Deed” along with a copy of Registration certificate with registrar of firms. In case of Company, Memorandom and Article of association, certificate of incorporation, certificate of commencement of business and attested photocopy of identity cards of all the directors is required. Address: Enter the complete residential/business address. Within the brackets you may also provide prominent address identification marks for ease of physically locating the address. Contact Number: Enter home, official, mobile, fax numbers and e-mail address (if available).

41 Muslim Commercial Bank Special Instructions: Clear-cut operational instructions must be obtained from the customers. If the customer has not given any special instructions in specified column, the column must be cancelled by drawing a line, as this column must not be left blank under any circumstances. The bankers considered the following points while opening the accounts: Remittances Department The next department I worked in is Remittances department. The incharge of this department, Mr. Khalid told me that there are four kinds of remittances they deal in:  Telegraphic Transfer  Mail transfer  Demand Draft  Pay order Another task of this department was to issue the traveler cheque and to give the ATM card numbers. Here is a little detail of all of these works: Telegraphic Transfer: It is a facility provided by the bank through which a customer can send or transfer any amount immediately. The procedure for the customer is simple. And more importantly the person who wants to transfer the funds may not have the account in the bank even then he can avail this facility. The procedure is like this, a customer walks in and fills an application form named as “APPLICATION FOR REMITTANCE” in which he mentions the bank to which he wants to transfer the funds also the name of the payee, his account number, also he has to mention

42 Muslim Commercial Bank his own address etc. then there are charges for this special facility provided by the bank and the bank receives these from the person who is sending the funds. Further there are two kinds of telegraphic transfers: Ordinary TT TT The ordinary TT reaches to its destination after two days of its dispatchment whereas simple TT reaches to its payee immediately because the payee branch is informed immediately through telephone and fax. For ordinary TT only two vouchers are prepared: Commission Voucher Postage Voucher Whereas for TT three vouchers are prepared: Commission Postage Telephone charges In the application form of TT there are two options available for the person who is sending the funds i.e whether the payees account is credited for the same amount or payee is simply to receive the payment in hand. Documents Prepared: The documents that are prepared for the TT are: TT register Remittances Confirmation of cable sent And afterwards whole of these information are recorded in a big register named as: Branch outward remittance register And after this procedure the respective branch is informed through telephone.

43 Muslim Commercial Bank Recommendations This whole procedure is quite lengthy and hectic. So the only recommendation that could be given is, it must be computerized Another task of the accounts department is to give the customers the ATM card number. The procedure is like this that when a customer applies for the ATM card, he is given a certain time to collect the card. On due date the customers gets his card from manager and for safety purpose the ATM number remains with the account department and the customer gets his number from there. Traveler cheque In account deptt there are two people working. One’s job is to issue the traveler cheque and the other is suppose to make the payment of TC. This work is separated for the purpose of safety and to prevent the frauds. When RTC is issued it is written in Traveler cheque register and when it is paid it is posted in MBIS. Traveler cheque register is used to maintain the stock of RTC’s. When RTC is issued HO RTC deptt. Is credited and when RTC is purchased it is debited. One of the person has the complete register of staff’s salary he maintains a staff salary register.

The remittance facilities of the MCB are according to the need of the customer. Your beneficiary will receive the amount even if he/she does not have an MCB account. The Remit Express facilities the MCB can be avail in the following Bank/Companies:

44 Muslim Commercial Bank Demand draft Demand Draft can be explained as the instrument which is payable on demand as its name implies the same, the value of which has already been received. This instrument is issued by one branch and payable at other branch of same bank or other bank’s branch e.g. DD issued by MCB payable by ACBL. Procedure of issuance: The customer wants to make the DD fills in the same form or application i.e of remittances in which he mentions the DD, the beneficiary’s name, the place, the mode of payment i.e, whther he wants the payee to receive the cash, cheque or debit his account, signature and his name and address Check the application form. Commission is charged as per bank policy. Also excise duty & withholding tax are recovered as per applicable rates. Entry is then made in DD issued register. In the DD issued register, separate folio is allotted for each drawee branch and a serial control number is applied. The entries made is DD payable account is credited and cash is debited and when the payee receives the cash against DD, DD payable account is debited and cash is credited. Procedure of Cancellation of D.D. On receiving the application for cancellation in writing along with original DD the signature of the applicant is verified This signature should tally with the signature on DD application form. Then cancellation is marked in DD issued register and the drawee branch is Informed about cancellation. Issuance of Duplicate DD In case of Lost/Stop Payment:

45 Muslim Commercial Bank Application is received and signature is verified, then the drawee branch is informed about the loss of DD and further they are advised to tell the branch the status of DD i.e whether it has been paid or not. Then a duplicate of DD is issued with "Duplicate in lieu of original DD No____ dated____ reported lost" written on its face. The duplicate DD will have the same control number. PAY ORDERS: Pay order is a kind of instrument issued and paid in the same branch. It is normally issued for payment in the same city. Procedure of Issuance of Pay order: The customer fills the remittances application form and mark check on pay order. On receiving application he is issued with a pay order after receiving charges. All pay orders are crossed i.e “Payees a/c only” Procedure of Cancellation of Pay order: On receiving application for cancellation of pay order along with the pay order, it is cancelled and cancellation charges are recovered. Duplicate Pay Order: If the payment of pay order has not yet been made a duplicate copy of it can be made on receiving application from the customer. The duplicate charges are recovered from customer.

46 Muslim Commercial Bank Clearing Department CLEARING: Clearing implies a system by which banks exchange cheques and other negotiable instruments drawn on each other within a specified area and thereby secure payment for their clients through the clearing house at specified time in an efficient way. Clearing House: In past State bank was indulged in clearing function i.e for the settlement of mutual obligations of different commercial banks. As all banks have their accounts and keep a certain percentage of the cash deposits as a reserve with Central Bank, it become easy to set up their mutual obligations by off-setting their accounts. The claim of banks against each other is settled by simple transfers from and to their accounts. These methods of settling accounts though the central bank, apart from being convenient is economical as regards the use of cash since account are adjusted through accounts, there is usually no need for cash. At present this function of state bank is performed by NIFT. And now clearing house is a place where NIFT’s representatives of all scheduled banks sit together and interchange their claims against each other with the help of controlling staff of State Bank of Pakistan and where there is no branch of State Bank of Pakistan the designated branch of National Bank of Pakistan acts as controlling member instead of State Bank of Pakistan.

47 Muslim Commercial Bank Reasons of Cancellation of Membership: When a bank is no longer a scheduled bank. When any bank fails to meet its liabilities. When It is prohibited to receive fresh deposits by State Bank of Pakistan or Central Government. Advantages of Clearing: ♪

As clearing does not involve any cash etc and all the transaction takes place through book entries, the number of transactions can be unlimited.

♪

No cash is needed, as such the risks of robbery, embezzlements and pilferage are totally eliminated.

♪

As major payments are made through clearing, the banks came manage cash payments at the counters with a minimum amount of cash in vaults.

♪

A lot of time, cost and labor are saved. Since it provides an extra service to the customers of banks without any service charges or costs, more and more people are inclined and attracted towards banking.

48 Muslim Commercial Bank Rules & Regulations of Clearing House: Timing: -

Monday through Saturday

1st Clearing

10.00 A.M.

2nd Clearing

2.30 P.M.

 Cheques and other negotiable instruments are sent through NIFT’s representative for exchange.  All the cheques and negotiable instruments must be properly stamped and suitably discharged  Each and every Cheque must be accompanied by an objection memo when returned unpaid duly initialed.  Each bank is required to maintain sufficient funds in the principal account with SBP to meet the payment obligations.  The State Bank of Pakistan debits the account of each member of the clearinghouse with the proportionate working expenses incurred on the operation of clearing house. These expenses are very nominal. Functioning of Clearing House: All the scheduled banks which are the member of clearing house, must maintain accounts with SBP, by debit and credit to which the clearing settlements are made. If on a particular day, a bank delivers Cheque and other negotiable instruments worth more than the total amount of Cheque received by it that banks account with State Bank of Pakistan will be credited with the differential amount. If on the other hand the total amount of Cheque and other negotiable instruments drawn on a certain bank by other banks is more than the total

49 Muslim Commercial Bank amount receivable by it from other banks, then this bank's account will be debited on that day. The Cheque delivered to the other banks through NIFT’s representatives for clearing are called outward clearing; whereas Cheque received from the representatives of other banks for payment are called inward clearing. How settlement is done in NIFT? Presume that MCB got the Cheque, which are drawn on UNION BANK, UBL and ACBL for amounts Rs.50,000/-, Rs.30,000/-, Rs.15,000/- respectively, its total being Rs.95,000/-. It means that this amount is to be credited to MCB A/c with S.B.P. On the other hand the Cheques drawn on MCB are from UNION BANK, UBL & ACBL of Rs.15,000/- Rs.75,000/- and Rs.30,000/- respectively, its total being Rs.1,20,000/-. It means that this amount is to be debited from MCB A/c. The difference between Rs. 95.000/- credit and Rs.120.000/- debit is Rs. 25,000/- debit, which means the house, is against MCB for Rs. 25,000/-. If we separately show it then, MCB has to receive Rs.50,000/- from UNION BANK and to pay Rs.15,000/- to UNION BANK so difference is Rs.35,000/- credit. MCB has to receive Rs.30,000/- from UBL and to pay Rs.75,000/- to UBL so difference is Rs.45,000/- debit. MCB has to receive from ACBL Rs.15,000/- and to pay Rs.30,000/- to MCB so difference is Rs.15,000/- debit. GRAND TOTAL: + 35,000, - 45,000, -15,000 = -25,000 i.e. Rs.25,000/- debit.

50 Muslim Commercial Bank Hence MCB A/c with State Bank of Pakistan will be debited with Rs.25,000/- and the contra will be other banks accounts respectively. This is called as "Debit and Credit Rule". The amounts and number of instruments received are entered in the House Book from the main schedules of the respective banks. The State Bank of Pakistan maintains two major books for clearing house purpose :HOUSE REGISTER. This book contains the information about the amounts and number of cheques received and delivered by each bank is noted down. Its columns are just like our clearing house-page. HOUSE BALANCE BOOK: This book contains the amount and number of cheques received and delivered by each bank as well as the amounts which are to be received and paid to respective banks through their accounts by State Bank of Pakistan is written down. This book has the following columns:-

Initial s

To Pay Amoun t

No. of Cheques Received/Delivere d

N ame of Bank

Receive d Amount

To Receive d Amount

Initials

Both sides of this book are balanced. Vouchers are prepared from the slips received from the respective banks and the amounts are compared with this balance book. Summary of Clearing House Working:

51 Muslim Commercial Bank The working of clearing house may be summarized as under:-



The instruments are delivered to the respective banks.



The instruments drawn on our Bank are received from other banks.



The amount and number of instruments received are entered in the House Book from the main schedules of respective banks.



The amount of instruments delivered, received and the difference is written on a Figure slip provided in the clearinghouse and the slip is returned to the supervisor.



The instruments are arranged branch-wise.



Schedules are detached and kept safely.

OUTWARD CLEARING AT THE BRANCH: The following points are to be taken into consideration white an instrument is accepted at the counter to be presented in Outward Clearing:



The name of the branch appears on its face where it is drawn on.



It should not be stale or post dated or without date.

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Amount in words and figures does not differ.

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Signature of the drawer appears on the face of instrument.

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Instrument is not mutilated.

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There should be no material alteration if so, it should be properly authenticated.



If order instrument, suitably endorsed and the last endorsee's account being credited.



Endorsement is in accordance with the crossings if any.



The amount of the instrument is same as mentioned on the paying-in-slip and counterfoil.



The title of account on the paying-in-slip is that of payee or endorsee (with the exception of bearer cheque).

52 Muslim Commercial Bank If an instrument is in order then our bank's special crossing stamp is affixed across the face of the instrument. Clearing stamp is affixed on the face of the instruments, paying-in-slip and counterfoil (The stamp is affixed in such a manner that half appears on paying-in-slip and half on counterfoil). The instrument is suitably discharged, where a bearer cheque does not require any discharge and also an instrument in favor of a bank need not be discharged. The instrument along with paying-in-slip is retained while the counterfoil is given to the customer duly signed. Then the following steps are to be taken:-



The particulars of the instruments and the pay-in-slips or credit vouchers are entered in the Outward Clearing Register.



Serial number is given to each voucher.



The register is balanced, the credit vouchers are separated from the instruments and are released to respective departments against acknowledgement in the register.



The instruments are arranged bank-wise.



The schedules are prepared in triplicate, two copies of which are attached with the relevant instruments and the third is kept as office copy.



The house page is prepared from schedules in triplicate.



The Officer Incharge with branch stamp signs the schedules and house pages.



The grand total of the house page is taken and agreed with that of the outward clearing register.

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The instruments along with duplicate schedules and house-page are sent to the Main Office.



However the amount is kept in float till final status of various instruments is known from respective paying banks in second dealing.

53 Muslim Commercial Bank The entry of the instruments returned unpaid is made in Cheques Returned Register. If the instrument is not to be presented again in clearing then a covering memo is prepared. The covering memo along with returned instrument and objection memo is sent to the customer who deposited the same in his account. INWARD CLEARING OF THE BRANCH: The particulars of the instruments are compared with the list. 

The instruments are detached and sorted out department-wise.



The entry is made in the Inward Clearing Register (Serial Number, instrument number, Account number and amount of instrument is written).



The instruments are sent to the respective departments against acknowledgement in the Inward Clearing Register.



The instruments are scrutinized in each respect before honoring the same.

OUTWARD CHEQUES RETURNED UNPAID: These are the cheques returned unpaid by us presented to us in Inward Clearing due to some objections. INWARD CHEQUES RETURNED UNPAID: These are the cheques returned unpaid to us, which were lodged by us in Outward Clearing. RETURN OF CHEQUES AFTER CLEARING HOUSE: Suppose all cheques received in the inward clearing are passed and later on it is found that a cheque should have been returned. In such cases, we contact the collecting branch and request them not to make payment against the proceeds of the cheque which was not returned unpaid by us in due time. The cheque with

54 Muslim Commercial Bank objection memo along with a covering letter is sent to the collecting branch, making request to issue a payment order in our favor. To balance the cash-cum-day book we may debit Suspense A/c Sundry Debtors with the approval of the manager. When the payment order is received, it is lodged in clearing and the Suspense A/c -Sundry Debtor is adjusted accordingly. SPECIAL CLEARING: In addition to the normal clearing function at Clearing House it is mutually agreed to hold an extra clearing at the Clearing House on a particular day and time, which is known, as "Special Clearing". It is arranged due to rush of work arising out of say, more holidays declared by the Central Government at a time, but normally special clearing is held on last working day of our half yearly and yearly closing, i.e. 30th June and 31st December every year. Bills Collection: The bills collection is the key department in each and main branch. The objective of this department is to receive the cheque of different bank of different area. Often the cheque is drawn to the customer of another bank or account holder of the MCB and similarly the customer of another bank draw cheque to MCB account. In both cases the cheque is cleared, endorsement conformed, or takes the disbursed guarantee. And then deposit to the corresponding department or banks or whatever the case may be.

Financial Statements

55 Muslim Commercial Bank

SWOT ANALYSIS

56 Muslim Commercial Bank

STRENGTHS •

MCB is Successive and Market oriented.

•

MCB investing huge sums on HR development and training.

•

Customer default rate is lower as compared to other banks.

•

MCB has the largest ATM network in the country.

•

Meeting the challenges of latest Technology by introducing Smart card remit express, mobile banking etc.

•

One of the major strengths of MCB is that it has very stable deposit base.

•

MCB is largest private bank in Pakistan with around 1000 branches, which cover almost every part of Pakistan.

•

The bank enjoys competitive advantage over other banks in Pakistan.

•

The bank enjoys competitive profitability in the industry.

•

MCB has captured majority of potential customers in Pakistan.

•

MCB has the accounts of big organizations like OGDCL, PTCL, EFU, PTC etc.

57 Muslim Commercial Bank

WEAKNESSES •

Low motivational level; non-aggressive marketing.

•

Employees’ dissatisfaction due to ill treatment and improper reward system.

•

Favoritism and Nepotism in recruitment.

•

Interest rate is very meager.

•

Decision making process is very slow.

•

It is not having greater no. of branches abroad.

•

Though ATM network is the largest in Pakistan, still some potential areas don’t have the ATM.

•

MCB RTC is useable only in Pakistan.

•

Some management positrons needed are not professional.

•

Although most of the branches are computerized now, still some important branches don’t have computers.

•

Opportunities: •

Leasing sector is growing in Pakistan for the last two to three years which provides opportunity to MCB to go ahead in this area as well.

•

MCB is providing Consumer Finances at comparatively lower rates which paves a way to grab more customers

•

Financing to small/medium cottage industries will definitely increase its advances and profitability as well.

58 •

Muslim Commercial Bank Islamic Trading Based Banking can enhance the business of the bank.

THREATS  Other private commercial bank with sound profitability is also a threat to MCB e.g. UBL, Alfalah, HBL etc.  For the last of many years, Pakistan is facing economic and political instability which is a big threat.  Afghan war and Iraq war has a deep effect on the economy of Pakistan, which may affect MCB.  Foreign banks are flourishing in field of consumer financing. People don’t prefer banking culture. They mostly prefer cash transactions

59 Muslim Commercial Bank Work Performed By Me I joined Muslim Commercial Bank, Kot Fareed Branch, Sahiwal 18th July 2008. First day I reached there at 9’O clock and reported to manager who introduced me about the functioning of the branch and its staff. During these two months I worked in different sections of the branch to learn the maximum practices of banking system. GENERAL BANKING First of all, I was asked to work in different sections of General Banking. Here I was attached Mr. Ayaz Ahmad who has good command on this section. Here we dealt with new customers who wanted to get information about the branch and will to deal with the branch. This is a very interesting department because here we met people of different types and deal with them accordingly. In this section, I observed the following functions: CHEQUE AT COUNTER. A cheque is presented on the counter with the two signatures of the bearer on the back of the cheque. Operation’s manager verifies the following points: The cheque number Cheque Date The cheque signature with the signature specimen card position in the officer signature received at the time of opening the customer’s account in the presence of the officer Cheque amount in figure and words Branch stamp in the front of the cheque Check the nature of cheque, bearer cheque, cross cheque etc. CHEQUE PAYMENT PROCEDURE. Receiving and scrutinizing the cheque Fixing the stamp Scripting and receipt by the authorized officer

60 Muslim Commercial Bank ISSUANCE OF DEMAND DRAFT A demand draft is provided to the client in whom he has to specify that on which bank it is drawn. The amount both in words and figures is written on the demand draft. BILLS COLLECTIONS DEPARTMENT I spent second week of my training in bills collection department. Miss Sumaira is the in charge of this section. Here we collected utility bills like electricity bill. BILLS REMITTANCE DEPARTMENT. It is most important and interesting department. This section deals with the transfer of money from one branch to another branch. Nearly six drafts issued daily from this department. Here I know the amount transferred and what is the procedure. This department also deals with T.T. transfer of money. I worked nearly three weeks in this department. DEPOSIT DEPARTMENT. Deposit department deals with current, saving fixed accounts for a long period. In current account the bank does not offer any interest you can deposit or withdraw any amount during banking hours. In PLS account we can only withdraw up to Rs. 25OOO/ without notice if you want to withdraw more than a notification must he given to the bank. In Fixed account people normally of old age are more interested because they get a lump sum amount every month as a markup or interest. These accounts are normally for two to five years. CLEARING DEPARTMENT. In clearing department we deal with cheques of our clients drawn on different banks. Here I also watched the working of clearing house up to 12.00 pm all the branches send their cheques to main branch. Where they stored and presented in the State Bank of Pakistan.

61 Muslim Commercial Bank FINDINGS

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ormally which we study the performance of Muslim Commercial Bank it is considered that on the whole bank is contributing a lot towards the industrial development and capital formation in the country. As it is exhibited from the data regarding the banks financial performance as shown in this report that the bank is sharing major banking business of the country. Further the policies and schemes as are introduced and carried on by the bank are of great source of help in industrial and trading growth. All these things reflect the great and valuable efforts on the part of executive command of the bank which is finally responsible for the productive performance of the bank. But as it is said that nothing is perfect in this work. This might stand true in the case of Muslim Commercial Bank also. So far as my own observations are concerned. I have concluded a major drawback in the inner current banking system. In addition to the I have also learnt some disciplinary wrong practices on the part of staff of the bank branches. NO QUALITY IN ATTITUDE. The attitude of the bankers with all of their customers is not the same, they pay more attention and good service to some of the customers and neglect a major portion of them. Some of the customers approach to the bank officials and get their work done before others; it is not a good practice. NO PROPER GUIDANCE There are so many customers who don’t know how to fill cheques, pay-in-slip, application form, etc. They waste a lot of time of the bank stall.

RECOMMANDATIONS

62 Muslim Commercial Bank PROPER PLANNING Bank should make a plan to gear up its recovery efforts on war footing and reorganize the recovery function of global bases. In addition, bank should tighten up control on expenditure. PROPER GUIDANCE. Bank should adopt such an induction plan that when a customer opens his account with the bank he should be supplied with a booklet which enables him to know the procedure of filing the cheques, pay-in-slip etc. It will save a lot of time of the bank staff afterward during the conduct of the account of that customer. DIVISION OF WORK. The billing system of MCB must be improved to facilitate the customers and workers. The work should be divided among the staff e.g. collection of bills. Countering of cash and then entry of these. CHECK OF EXPENDITURES. Expenditure must be controlled. Which are very high and unnecessary? BORROWING AT LOW COST. Deposits must be taken at a lower cost and given at higher interest rates.