INTERNSHIP REPORT

ON

Clifton Branch, Karachi

By

Faisal Hayat

MBA (Finance)

Submission Date: 03/01/2012

ACKNOWLEDGEMENT

First of all I would like to thanks to Allah Almightywho has given me a chance and ability to think andjudge the matters and then to make use of theblessed abilities. I also want to show my gratitude tomy loving parents and most respectable teacherswho directed me to apply our abilities in the requireddirection. I also thanks to the management of MCBBank limited for their support in completing thisvaluable internship report.

Table of Content

Particulars Page1. Preface / Introduction of the Organization

1.1 History 11.2 Mission Statement 11.3 Values 21.4 Departments &Hierarchy 31.5 Organization Culture 5

2. Purpose of Internship2.1 Reason of choice 62.2 Personal Objectives 6

3. Field of Activity3.1 Reporting duties 73.2 Job performed 83.3 Overview of a process 93.4 Product and Services 103.5 Self-Assessment 11

4. What have I done? 12

5. Suggestions and Recommendations5.1 SWOT Analysis 185.2 Problem identification 205.3 Suggestion for improvements/ Solution recommendations 20

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1. Introduction of the Organization

1.1 Brief History

MCB Bank Limited (Formerly Muslim Commercial Bank) wasincorporated by the Adamjee Group on July 9, 1947, under the IndianCompanies Act, VII of 1913 as a limited company. The bank wasestablished with a view to provide banking facilities to the businesscommunity of the South Asia. The bank was nationalized in 1974 duringthe government of Zulfikar Ali Bhutto. This was the first bank to beprivatized in 1991 and the bank was purchased by a consortium ofPakistani corporate groups led by Nishat Group. As of June 2008, theNishat Group owns a majority stake in the bank. The president of thebank is M.U.A Usmani.

Founded in 1948, Nishat Group is one of the leading and mostdiversified business groups in Pakistan. The group has strong presencein the most important business sectors of the country such as banking,textile, cement and insurance.

1.2 Vision StatementTo be the leading financial services provider, partnering with ourcustomers for a more prosperous and secure future.

1.2 Mission StatementWe are a team of committed professionals, providing innovative andefficient financial solutions to create and nurture long-term relationshipswith our customers. In doing so, we ensure that our shareholders caninvest with confidence in us.

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1.3 Values

Integrity: We are the trustees of public funds and serve our communitywith integrity. We believe in being the best at always doing the rightthing. We deliver on our responsibilities and commitments to ourcustomers as well as our colleagues.

Respect: We respect our customer’s values, beliefs, culture and history.We value the equality of gender and diversity of experience and educationthat our employees bring with them. We create an environment whereeach individual is enabled to succeed.

Excellence: We take personal responsibility for our role as leaders in thepursuit of excellence. We are a performance driven, result orientedorganization where merit is the only criterion for reward.

Customer centricity: Our customers are at the heart of everything wedo. We thrive on the challenge of understanding their needs andaspirations, both realized and unrealized. We make every effort to exceedcustomer expectations through superior services and solutions.

Innovation: We encourage and reward people who challenge the statusquo and think beyond the boundaries of the conventional. Our teamswork together for the smooth and efficient implementation of ideas andinitiatives.

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1.4 Departments & Hierarchy

Relationship between Head Office and Branch Offices

Departments at MCB Head office

Human Resource Banks operation Financial Institution& overseas

Financial control &Audit

Credit & riskmanagement Corporate banking

Consumer banking Treasury & FX Assets management/ Fraud control

InformationTechnology

HeadOffice

Section

Branch Offices

Decisions,Strategies &

Policies

Implement

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Organization Hierarchy

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1.5 Organization Culture

Officers of the bank don't need to spend a lot of time into whether theyshould consider issues or ideas. They just know their certain parametersbeyond which they won't go.

The employees in the organization are well dressed, well communicatedand well co-operative.

Officers learn what these parameters are through their experience withvarious committees-through a process osmosis. In visiting and inparticipating on committees, individuals get to see what their cohorts aredoing. Cross - fertilization of ideas occurs and, often, morale is helped.Major corporate policy changes occur through a process of involvementby levels of management.

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2. Purpose of Internship

2.1 Reason of choice

It is very important to have a good start in every walks of life especially incareer and what do you think what is good start in career? It issomething choosing a best Organization for a job according to his/herown field. My name is Faisal Hayat and I am a MBA (finance) student ofIqra University. I found MCB the best opportunity for my internshipbecause it is very a well-known financial institution among the top mostfinancial institutions in Pakistan. It has a sound environment and goodemployees who always out there to help. As a Finance student I thinkthat this is a right organization specifically for the finance student to getsome positive experience.

2.2 Personal Objectives

I worked as an internee in MCB Clifton branch and my personalobjectives are:

To get some experience in working with well reputed organization. To gain knowledge about the professional environment of the bank. To give finest performance and get the job.

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BranchManager

OperationManager

Remittance Officer

Clearing Officer

Cash Officer

ForexOfficer

Advance /Credit Manager

Advance /Credit Officer

3. Field of Activity

3.1 Reporting duties

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3.2 Job Performed

Home Remittance Remittance customer dealing & paid voucher to customer. Making telegraphic transfer & demand draft on software.Advances/ Credit Manages, supervises and directs all loan and credit activities. Identifies credit risk situations and provides guidance to line-of

business lending managers and staff. Monitors and reviews credit relationships to determine adequacy

of under writing.Foreign exchange and trade Maintaining Standard Settlement Instructions. Prepare MIS reports as directed. Validating deal economics of Money Market trades and applying

relevant settlement instructions maintained. Creating SWIFT MTOperations (Clearing) Raising clearing entries on a daily basis. Reconciling all clearing accounts on a daily basis. Perform call back function on all inward clearing checks.

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3.3 Overview of a Process

Home remittance

A remittance is a transfer of money by a foreign worker to his or herhome country. MCB brings FAST and FREE Home Remittance service tobeneficiaries in Pakistan. With our large network of over 1100 branches,MCB can deliver your remittances to every part of Pakistan. For receivingthe money receiver are required to provide Reference Number andoriginal CNIC to the home remittance officer.

Advances and Credit

Advances and credit is basically a department / job in which productsuch as Running Finance, Cash Finance, Demand Finance/ Termfinance, FIM (Finance against importer merchandise are offer to theclients according to their business need.

Foreign exchange and trade

Foreign exchange and trade deals with modes of payment of tradeinclude; Letter of Credit (LC), Document Purchase, Registered Contractand foreign remittance is also dealt in this department which includesinward remittance and outward remittance.

Operations (Clearing)

Clearing process starts with the customer submitting deposit slips andcheques in favoring the customers so the amount is credit to his accountafter some banking process.

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3.4 Products & Services

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3.5 Self-Assessment

Working with MCB Bank Limited, Clifton Branch(0074) was a greatlearning experience for me, as the whole branch staff was very supportivespecially Branch Manager: Saqib Sharif, ATM Custodian: Khurram Mirzaand Credit Officer: Zeeshan they provide a very good learningenvironment as each staff member was supportive and helpful. I amthankful to all for their support and sharing their experience with me, itwas very fruitful for my future corporate career.

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4. What have I done?I was appointed as an internee at MCB Bank Limited Clifton branch forsix weeks internship program from Nov11th, 2011 to Dec23rd, 2011.During the period of entire program I was rotated in several departmentswhich includes; Home Remittance, Foreign Exchange/ Trade Advances andOperations (Clearing)

Overview of the Entire Experience:

1. Home Remittance:

In the first week of the internship I was trained under the supervisionof Khurram Mirza (Remittances Incharge), I learnt to manage the homeremittance service; the most familiar companies with which the bankdeals are Xpress money, Money gram and the other 36 companies aredealt with MCB payments software. Under the same Incharge, I assistedin the issuance of cheque books to the customers, understood theprocess of feeding the cheque book requests in the system and helped inmaintaining the record of the cheque books and ATM cards delivered.

2. FOREIGN EXCHANGE/TRADE:

In the following two weeks I was trained under the supervision of Mr.Arshad Ali Memon and Madam Sheila Perveen. In this department Ilearnt about the modes of payment of trade. The modes of payment oftrade include;

Letter of Credit (LC)

Document Purchase

Registered Contract

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Letter of Credit (LC)

Letter of credit is a written undertaking by an issuing bank given to theseller (beneficiary) at the request and instructions of the buyer(applicant) to pay at sight or at a determinable future date. The uniquefeature of LC is that the bank is liable for the payment to the exporter, ifthe buyer fails to make payment. The bank normally charges 0.4% perquarter on the entire amount of the LC.

There are two types of LC:

LC at Sight

Documents acceptance (DA)

The only difference between the two is that in LC Sight the payment ismade with in the five working days of approval by TSC (Trade ServiceCenter). Where as in the DA, the customer is has to make the paymentwithin 180 days.

The documents required to open LC are:

IB8 Form worth of RS. 500

Performa invoice

LC open request

Sanction Slip (defines Limit)

Document forwarding Letter (Issued by Bank)

Insurance letter

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Document of Purchase

In this the customers buys the documents from the bank and submits itto the customs office and receives the shipment. The bank is not liablefor the payment.

Registered Contract

The process in which the customer has registered a contract with thebank, in which the import documents are received by the customers andthe payment, is made through the bank to the beneficiary. The bankcharges 0.4% of the total amount.

Foreign remittance is also dealt in this department,which includes;

Inward Remittance

It is when the payment has been received by the bank from some foreignsource. The bank checks the details of the payment and the purpose ofthe payment from the customer, and then the account of the receivingcustomer is credited.

Outward Remittance

It is when the payment is made to a foreign beneficiary, for this theapplicant provides the following details;

Beneficiary details

Beneficiary’s bank name

Account number

Swift code or sort code

Title of account

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Once these details are presented to the bank, bank makes a foreigndemand draft (FDD) favoring the beneficiary bank. Once the FDD is sentthe bank send the swift message (110) to the beneficiary informing himabout the payment.

3. Advances

I spent my next two weeks under the supervision of Mr. Syed Zeeshanand Mr. Abdul Qadeer Dayo.

In this department I learnt about the main objective of Funded Facilities,which includes

Running Finance Cash Finance Demand Finance/ Term finance FIM (Finance against importer merchandise)

1) Running Finance

Running finance is provided for working capital requirements. The RFaccount is allowed to be operated freely by way of multi-transactions,provided that the sanctioned limit is not violated and the account isoperated strictly in accordance with the approved terms and conditionsat all times. However borrower is required to adjust the finance providedby the bank with the stipulated expiry period (normally once a year) asper state bank requirement.

RF is further divided into two sub category:

RF instant

RF General

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Rf Instant:

Totally secured, and it can easily be cashed at any time in the market.

Rf General:

In this the bank keeps some property of the beneficiary as a security.

2) Cash Finance

Cash finance is the facility where an amount is disbursed against pledgeof locally procured goods and merchandise. The amount after retainingthe prescribed percentage of margin on stocks is transferred in aseparate C/F account of the customer. Delivery of pledged stocks isallowed on payment of finance along with markup for relevanttransaction.

3) Demand Finance/ Term Finance

Under this type of facility finance is allowed to the borrower for a fixedperiod usually exceeding one year, repayable either in periodicinstallments or in lump sum, at a finance date. This type of finance is ofnon-revolving in nature. The primary purpose is to finance fixed assetssuch as plant and machinery, Land & Building.

4) FIM (Finance Against Importer Merchendise)

This facility is allowed against the commodity imported from othercountries using LC (Letter of Credit), sometimes the importer does nothave enough amount for paying imported merchandise, so they requestbank to pay all dues to the exporter against security of importedmerchandise. Banks pays the amount to exporter and releases the goodswhen the importer clears its liabilities.

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4. OPERATION- CLEARINGI spent my last week in the operations department under the supervision of Mr.Irshad and Mr. Adnan. The clearing process starts with the customersubmitting deposit slips and cheques in favoring the customers so the amountis credit to his account after some banking process. There are four steps ofclearing:

Inter City Clearing

In inter-city there are around 20 to 21station nationwide which facilitate inthe intercity services. The cheque is sent in intercity clearing if the payeeaccount is in some other city. This process takes 3 to 4 working days andthe charges for intercity clearing is RS. 200 and FED RS. 32.

Same Day Clearing

The branches that are in 10 km range of NIFT can only avail this facility.The minimum amount for this is Rs. 500000 and the bank charges are Rs.348.

Normal Clearing

In this the customer has the cheque of another bank, so the cheque is sentto that particular bank for verification through NIFT. This process takes 2working days to clear the payment of the customer.

Collection Cheques (Cc)

The payer account is in the city where the intercity facility is not availableso the cheque is sent in CC where the cheque is directly sent to therespective bank through NIFT. Bank charges for this RS. 100 minimum or0.25% of the entire amount, 16% FED and postal charges RS. 75.

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5. Suggestions & Recommendations

5.1 SWOT Analysis

The overall evaluation of a company’s strength, weakness, opportunitiesand threats are called SWOT analysis.

Strength:

MCB is reputed as one of the soundest financial institution and asone of the leading banks in Pakistan with a deposit base of PKR. 462bln (apprx.) and total assets of PKR 605 bln (apprx.).

MCB has a largest network of over 1,130 branches and 600 ATMsacross Pakistan with a customer base of 4.5 million (apprx.)

MCB in one of the largest foreign banks in Sri Lanka, the first bank inPakistan to launch Global Depository Receipts (GDR) in 2006, hasstrategic foreign partnership with Maybank of Malaysia which holds20% shares in MCB through its wholly owned subsidiary MaybanInternational Trust (Labuan) Berhad since 2008, has internationalindirect regional presence in Dubai (UAE), Bahrain, Azerbaijan, HongKong and Sri Lanka.

The bank has also been acknowledged though prestigious recognitionand awards by Euromoney, MMT, Asia Money, SAFA (SAARC), TheAsset and The Asian Banker.

MCB has captured majority of potential customers in Pakistan.

Meeting the challenges of latest Technology by introducing Smart cardremitexpress, mobile banking etc.

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Weakness:

Staff is overburdened with unproductivity tasks from themanagement. One employee is performing four person tasks at a time.

Decision making process is very slow.

Most of the branches are computerized now; still not performing.

Opportunities:

The bank management should use the modern ways ofcommunicating with staff and staff in return to the customers, so thatflow of information leads to rapid and positive results.

The bank management should introduce various new courses for thestaff to keep them abreast.

The bank should enter into new market segments.

Increase the product range to meet the broader range of customers’needs.

Threats:

Government policies changing day by day and government stability isnot there.

Weak economic condition of Pakistan is producing hindrance in theway to progress because people are not in good financial position to dobusiness themselves or to finance it from the banks.

Growing global technological advancements and adaptation of modernstyle of management in banking sectors.

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5.2 Problem Identification

i. Shortage of StaffShortage of staff is the main problem in MCB. One employee handle 3 to 4employees work at a time as a result:

Concentration lapses Employees feel overburden Employees fail to deliver the best customer service Mistakes always happen.

ii. Staff is not adequately trainedThe second main issue is staff in almost branches except Clifton Branch hasnot adequately trained; even not aware about the innovative products likehome remittances is one of the most prominent issue for them to deal.

5.3 Suggestion for Improvements/ SolutionRecommendations

I have heard a policy from the staff that trainees and internees/elseare not allow to access system. I want to suggest you to please allowtrainees and internees to access system because it adds lot ofconfidence in them to step in real-world.

There has to be a proper guideline for internees in terms of work detailand with proper schedule.