Internship Report Mcb

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HISTORY OF BANKINGHISTORY OF BANKING

Evolution of BankingEvolution of Banking

It has not so far been decided as to how the word ‘Bank’

originated. The explanation of this origin is attributed to

the fact that the jews in Lombardy transacted the business

of money exchange on banches in the market place and

when the business failed, the people destroyed the Bank.

Incidentally, the word ‘bankrupt’ is said to have been

evolved from this practice. The opponents of this opinion

argue that it was so, then how is that the Italian

moneychangers were never called ‘Banchierei’ in the

Middle Ages?

Other authorities hold the opinion that the word ‘Bank’ is

derived from the German word back which means joined

stock fund. Then ‘Back’ was Italianize into ‘Bank’.

Early GrowthEarly Growth

Banking in fact is as primitive as human society for

eversince man came to realise the importance of money as

a medium of exchange. Perhaps it was the Babylonians

who developed banking system as early as 2000 B.C. It is

evident that the Temples of Babylon were used as ‘Banks’

because of the prevalent respect and confidence in the

clergy.

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King Hamurabi ( 1728 – 1686 B.C ), the founder of the

Babylonian empire, drew up accede where in he laid down

standard rules of procedure for banking operations by

temples and great landlords. He got his code inscribed on

the block of diorite about 8 feet tall, containing about 150

paragraphs which deals with nearly all aspects of loans,

interest, pledges, guarantees, natural accidents, loss, theft

etc. Later on Sumerians, Babylonians, Hitties and

Assyrians standardised the values of the goods in silver,

copper and bronze.

It is not certain as to whom invented money but history

recess that king of Lydia castled electrum ingots of

identical shapes and of uniform weights with a triple

emblem engraved on it as an official guarantee of value in

687 B.C. In 1401 a German public bank was framed

comprising the operations of discounting and transferring

of money. By the 16th century, some more public banks

were formed in Venice, Milan, Amsterdam, Hamburg and

Nuremburg. In order to streamline Banking organisations

and techniques, conferences were held in Nuremburg

from 1548 to 1551 and it was agreed that the commercial

interest of the time needed a bank with facilities of growth

and transfer but it should not be a bank run by private

individuals. Ultimately in 1587, a State Bank under the

name of banco DI rialto was formed in Genoa. Later the

bank of Amsterdam was also formed in 1609. This Bank

had a guarantee by the State and rendered valuable

services to the Netherlands traders upto the year 1795.

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Similarly in 1690, the Bank of Hamburg came into

existence in Hamburg with the business of accepting

deposits of fine silver or of foreign money and to run

accounts on these deposits. This Bank rendered great

service to the merchants as well as countries it dealt with

until 1873, when it was merged with the Reich bank. By

the year 1700, the bank of England was not only issuing

notes but also conducting accounts for customers. Its

directors were conducting the business like that of limited

companies. The bank had the monopoly of issuing banking

notes. Upto 1813 or there about in England, the main

profit of bank was derived from the circulation of notes.

Development of Modern BankingDevelopment of Modern Banking

In 1918 came into being eleven clearing banks of today.

The effect of this historical development of banking in

England has been fairly wide. First, emergence of a small

number of large banks with wide network of branches.

Second, increase in the popularity of bank accounts and a

large-scale use of cheques.

In 1946, the labour government nationalised the bank of

England and transferred the existing stock to the nominee

of British treasury. In 1955, the British Banks made a

departure from traditional banking by undertaking hire-

purchase finance for companies buying industrial plants

and machinery and took interest on hire-purchase finance.

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Banking In PakistanBanking In Pakistan

At the time of independence, there were 631 offices of

scheduled banks in Pakistan, of which 487 were located in

West Pakistan alone. As a new country without resources

it was very difficult for Pakistan to run its own banking

system immediately. Therefore, the expert committee

recommended that the Reserve Bank of India should

continue to function in Pakistan until 30th September

1948, so that problems of time and demand liability,

coinage currencies, exchange etc. be settled between

India and Pakistan. The non-Muslims started transferring

their funds and accounts to India. By the end of June 1948

the number of officers of scheduled banks in Pakistan

declined from 631 to 225. There were 19 foreign banks

with the status of small branch offices that were engaged

solely in export of crop from Pakistan, while there were

only two Pakistani institutions, Habib Bank of Pakistan

and the Australasia Bank. The customers of the bank are

not satisfied with the uncertain condition of banking.

Similarly the Reserve Bank of India was not in the favour

of Govt. of Pakistan. The Govt. of Pakistan decided to

establish a full-fledge central bank. Consequently the

Governor-general of Pakistan Quaid-I-Azam inaugurated

the State Bank of Pakistan on July 1, 1948. Thus a

landmark was made in the history of banking when the

state bank of Pakistan assumed full control of banking and

currency in Pakistan.

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The banking structure in Pakistan comprises of the

following types.

1) State Bank of Pakistan.

2) Commercial Bank of Pakistan.

3) Saving banks.

4) Co-operative banks

5) Specialised credit institutions.

Up to December 31, 1973, there were 14 Pakistan

commercial banks that functioned all over the country and

in some foreign countries through a network of branches.

All these commercial banks were nationalised in January

1, 1974, and were recognised and merged into the

following five banks:

1) National Bank of Pakistan

2) Muslim commercial bank limited

3) Habib Bank Limited

4) United Bank Limited

5) Allied Bank of Pakistan

The state bank of Pakistan is the Central bank of the

country and was established on July 1, 1948.The

separation of East Pakistan and its repercussion in the

form of economic depression has caused a lot of

difficulties to the banking system in Pakistan. The

network of bank branches now covers a very large

segment of national economy. The numbers of branches

have increased appreciably and there is now on branch of

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bank for every 3000 heads of population approximately.

There is done reasonable growth in deposits from the

establishment of Pakistan. Besides this growth,

specialised credit and financial institutions have also

developed over the years.

The Government of Pakistan in the late 90’s introducing

the need for the privatisation of state owned banks and

companies. The private sector has accepted the challenge

and most of the banks are privatised today. The State

Bank of Pakistan issues the shares of these periodically.

Bank employees and other common peoples can also

purchase these shares and earn profit.

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MUSLIM COMMERCIAL BANK LIMITEDMUSLIM COMMERCIAL BANK LIMITED

History of Muslim Commercial BankHistory of Muslim Commercial Bank

Muslim Commercial Bank (MCB) unfolds 52 years of

growth. MCB is not an overnight success story. The bank

started corporate life in Calcutta on July 9, 1947. After

the partition of the Indo-Pak Subcontinent, the bank

moved to Dhaka from where it commenced business in

August 1948. In 1956, the Bank transferred its

Registered office to Karachi, where the Head Office is

presently located. Thus, the bank inherits a 52-year

legacy of trust in its customers and the citizens of

Pakistan.

NationalizationNationalization

In January 1974, the Government of Pakistan nationalized

MCB following the banks (Nationalization) Act 1947,

Premier Bank Limited merged with MCB.

PrivatizationPrivatization

A wave of economic reforms swept Pakistan in the late

1990, introducing the need for privatization of state

owned banks companies. In April 1991, MCB became

Pakistan’s first privatized bank. The government of

Pakistan transferred the management of the Bank to

National Group, a group of leading industrialists of the

country by selling 26% shares of the bank.

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In terms of agreement between the Government of

Pakistan and the National Group, the group, making their

holding 50% has purchased additional 24% shares. Now,

25% is purchased by the Government, which shall be sold

in the near future.

Board of DirectorsBoard of Directors

The board of directors has the authority in guiding Bank

affairs and in making general policies. Some directors are

the personnel of the MCB Bank and others are successful

businessperson and executives of other major

organization. Ten members are included in board of

directors, see in a list.

Mian Muhammad Mansha Chairman and chief Executive.

Mr. Tariq Rafi Vice Chairman

DirectorsDirectors

Ten directors are:

1) Mr. S. M. Muneer.

2) Sh. Mukhtar Ahmed

3) Mr. Muhammad Arshad

4) Mr. Shahzad Saleem

5) Mr. Raza Mansha

6) Mr. Sarmad Amin

7) Mr. Umar Mansha

8) Dr. Aleem Mehmood

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9) Mr. Tanveer Ali Agha

10) Dr. Najeeb Samie

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Structure of MCBStructure of MCB

PRESIDENT AND CEO

EXECUTIVE EXECUTIVEDIRECTOR DIRECTOR

INT SAMG INSPECTION OPERATION GSDDIV & FRAUD FORGERY

CONSUMER CORPORATE HRD BANKING BANKING GROUP GROUP

(continued)

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CONSUMER CORPORATEBANKING BANKINGGROUP GROUP

GENERALMANAGER

REGIONALMANAGER

CHIEFMANAGER

MANAGER

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Structure of MCB – General Bus Stand Structure of MCB – General Bus Stand Branch (1412)Branch (1412)

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Overall performance Of MCB in 1998Overall performance Of MCB in 1998

Net ProfitNet Profit

Profit after taxation in 1998 was Rs. 399.2 million, an

increase of 67% from Rs. 238.8 million in 1997. Since a

complete provision for non-performing assets has been

made, the balance of the bank now reflects its true

strength. For the first time after MCB’s privatization in

1991, a dividend of 15% was declared last year. It gives

me great pleasure to state that for the year 1998 it has

been decided to announce an increased dividend of 17.5%.

Reserve Fund/EquityReserve Fund/Equity

A sum of Rs. 79.8 million has been transferred to

Statutory Reserve this year, raising the total Reserves to

Rs. 1,796.6 million at the end of 1998, from Rs. 1,716.8

million as last year.

DepositsDeposits

Deposits with the Bank at the end of year 1998 stood at

Rs. 123.8 billion as compared to Rs. 124.4 billion in 1997.

The reason for this slight decrease of 0.4% was the

withdrawal of Foreign Currency Accounts as a result of

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Government’s decision to freeze Foreign Currency

Accounts in May 1998. Let me assure you with confidence

that the depositors have complete faith in MCB, which is

evident from the fact that in the very first month of

launching the MCB Maal-a-Maal Rupee Deposit

Certificates Scheme attracted Rs. 7.6 billion.

AdvancesAdvances

Total Advances at the end of 1998 were Rs. 62.9 billion as

compared to Rs. 64.4 billion in 1997 showing a fall of

2.3%. This is mainly due to the slowing down of economy

following the events described above, as well as, in

keeping with our policy of prudent lending.

InvestmentsInvestments

Investments slightly declined by 0.2%. The current policy

of the management is to dispose off Investment in shares

of listed and unlisted companies at the best possible

prices.

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RecoveriesRecoveries

The recovery position in the year 1998 was most

encouraging. Bank recovered Rs. 1.04 billion in cash. The

bank also disposed off properties which were acquired in

settlement of accounts. The recovery of loans shall remain

a priority in 1999.

Foreign TradeForeign Trade

The bank conducted Import business during the year

amounting to Rs. 54.0 billion as compared to Rs. 56.4

billion in 1997. The export business slightly improved to

Rs. 36.9 billion from Rs. 35.1 billion in 1997. Home

remittances declined to Rs. 16.7 billion from 30.6 billion.

The decline in home remittances business was due to

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freezing of Foreign Currency Accounts, which has effected

the confidence of the Pakistanis working overseas.

Rupee Travellers ChequesRupee Travellers Cheques

Muslim Commercial Bank who are pioneers of Rupee

Travellers Cheque in Pakistan maintained their leadership

position and sales recovered during the year 1998 were

Rs. 67 billion an increase of 57% over the previous year.

Human ResourcesHuman Resources

To induct fresh blood in the bank and cater for future

needs, a new batch of management trainees was selected

strictly on merit. After thorough training these offices

have been inducted in various divisions and branches.

Attention was paid to upgrade operational and managerial

skills of staff and a number of professional courses were

conducted at MCB Staff and Training Institutes during the

year. We have continued our programme of hiring of some

senior level Banking Executives from the market,

wherever necessary.

Year 2000 ComplianceYear 2000 Compliance

The management and the staff of relevant divisions are

fully aware about the Millenium issues. All the core

computer systems operating in MCB are in full

compliance. All the necessary steps had been taken and

MCB was very much aware about the Y2K bug.

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AutomationAutomation

The progress is as per plan. At the end of 1998, 75

branches were online and 241 branches have been

computerized with multi terminal systems. 66 ATMs were

in operation and over 50,000 ATM Cards had been issued.

The commercial cities of Faisalabad and Multan were

added on the MCB ATM Network. Plans are in hand for

expanding the online network to major cities and covering

all the four provinces thereby providing the ATM network

true national coverage and maintaining our in this service.

Social SectorSocial Sector

The bank had been actively participating in ex-Prime

Minister’s Self Employment Scheme (SES). The

applications received from various applicants were being

processed on merit and disposed off as quickly as

possible. Nowadays, no new loans are being granted as

per the order of Chief Executive of Pakistan.

Foreign OperationsForeign Operations

Our bank’s foreign operations in Bangladesh and Sri

Lanka continue to remain profitable. In April 1999, the

bank opened its third branch in Sri Lanka at Maradana a

suburb of Colombo.

Our country is passing through a critical phase of its

history. Pakistan’s economy continues to remain under

pressure as it adjusts to new economic challenges and

realities. The performance of the economy directly

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influences the performance of the financial sector. MCB is

cognizance of its role in the national economy, and will

continue to play its role as a lead bank.

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Chairman’s ReviewChairman’s Review

1998 was an eventful year for our country. Pakistan joined

the polity of nuclear powers and strategic imbalance

created in the region due to a nuclear test by a

neighboring country was restored.

The May 1998 Nuclear Test led to the imposition of

sanctions and suspension of multilateral assistance by the

leading Western Aid giving countries, putting the

Pakistan’s economy and balance of payment position

under severe pressure.

The Government of Pakistan took a number of far

reaching decisions in the wake of the Nuclear Test which

included freezing of Foreign Currency Accounts,

introduction of three Foreign Exchange rates and increase

in Petrol prices and Sales Tax.

Overall 1998 was difficult and challenging year for the

nation especially for trade and commerce and industrial

sectors.

However, as a result of various corrective measures taken

by the Government, the economy is now slowly coming

back to normal. According to a recent statement of the

Federal Finance Minister, the inflation rate has been

brought down to around 6% and the Foreign Exchange

Reserves which had touched US$ 440 Million in 1998,

were at US$ 1.8 Billion by the end of April 1999.

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In keeping with the W.T.O. requirement, the Government

also had to reduce the custom duty on Imports. There has

been a small drop in electricity tariff for industrial and

commercial consumers. The State Bank of Pakistan

reduced the Repo rates from 16.5% to 15.5% and then to

14%. This resulted in reduction in mark up rates by the

large commercial banks in April 1999, which is bound to

encourage higher credit growth.

The economy still faces major challenges. The growth rate

of economy has gone down to around 4% from 6%. The

Export target of US$10 billion for the current financial

year ending June 30, 1999, has been reduced to US$8

billion (this figure is static for the last few years now).

However, there is likely to be significant reduction in the

Trade Deficit during 1998-99.

A very significant achievement of 1998 was holding of

population census after 17 years, which was necessary to

formulate various socio-economic policies by the

Government.

Keeping with the above economic scenario in view, the

over-all performance of Muslim Commercial Bank, during

1998 can be termed as very satisfactory

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ADVANCES DEPARTMENTADVANCES DEPARTMENT

MCB provides the facility to the people who need advance

money to meet their requirements. For getting the

advance the following steps are there:

1) Information required by the bank

2) Preparation of credit proposals

3) Sanction advice

1.1. Initial Information Initial Information

Following information is required to be submitted to bank.

Nature & structure of borrower business.

Names of proprietors, partners or directors.

Detail of all firms or companies associated with borrower.

Financial condition of borrower business.

An assessment of his business abilities.

Accurate and upto date financial statements of last two years for comparison purposes.

Market report on the borrower where borrower has maintained an account with another bank, a report from his bank should also be obtained.

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

2.2. Preparation of Credit ProposalPreparation of Credit Proposal

At first a formal application for credit approval is obtained

from the party along with complete group position. The

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party’s credibility report is obtained from the bank with

which the bank is doing its business. The party’s

credibility report is also taken from the Head office of

Trade Information Division.

For obtaining credit, party has to submit the last two

years Balance Sheet and Profit & Loss statement duly

attested by authorised auditors. If the party is also

involved in export or import business then the bank also

considers the data of three years about import & export.

Current debt and equity ratio is also calculated by the

bank. The type of data required to prepare the credit

proposal is to be gathered from the different departments.

Some data is obtained from the foreign Exchange

department. Some data is available in Advance

Department. The purpose of obtaining Credit should be

explained clearly. The securities offered by the party to

the bank are also evaluated. In case of pledging of

property in shape of land or building the complete

evaluation of the property should also be attached.

After all the necessary documents for applying for

advance is fulfilled by the party then the case is sent to

Manager for approval. If the credit limit is in his range

then he can decide over it otherwise the case is forwarded

to seniors. If there is any discrepancy then the party is

informed of it.

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3.3. Sanction AdviceSanction Advice

When the documents required are complete and there is

no ambiguity then the party is advised that their credit or

loan is approved and will be available to you soon. There

is a separate form for every annual approval or in case of

a new facility (See Annex - ).

The form contains following information:

Nature and amount of limit.

Purpose

Security/ Collateral

Margin (%).

Mark up/ Charges

Validity

Other Terms and ConditionsOther Terms and Conditions

1) The bank reserves the rights to revise / amend / modify the rates of mark-up commission or any other conditions of the liabilities within the period so decided by the Bank.

2) The bank shall have full authority to cancel the facilities allowed without assigning any reason and to call for adjustment of the liabilities within the period decided by the bank.

3) The facilities granted are subject to SBP’s Prudential regulations.

4) The hypothecationed goods, building and machinery must be insured at all times against the risk of fire, riots, strike, burglary, malicious damage risks withthe bank as the mortgage and yourself as a mortgager, and the relevent policy held by us.

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5) Assets hypothecated to the bank will have to be insured at all times for full market value. The insurance policy will be made in the joint name of the company and the bank. The relevent insurance policy will be held by the bank along with the premium payment receipt.

6) Stock statements together with a list of book debts are to be submitted at the end of each month to reach us by the first week of the following month.

7) The bank would undertake the inspection of stocks from time to time and in any case atleast once in the calendar year.

8) SBP has imposed Prudential regulations on all the banks. These facilities are being offered withthe understanding that your company’s financial condition will comply with these regulations.

9) Audited accounts should be submitted to the bank within six months of date from the date of your financial year end.

10) All levies and taxes now or at any time hereafter levied and payable in respect of the financial accommodation and banking facilities set out in this letter will be exclusively borne by you.

11) All requisites charge forms to be submitted duly filled in and signed by the authorised persons.

12) For any change in any ownership, prior permission of bank shall be obtained otherwise existing owners shall also continue to be liable.

13) In normal banking practice the facility is repayable on demand and we reserve to ourselves the right to vary the terms and condition or ask for repayment if circumstances arrive which in our opinion justify our doing so.

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Types of AdvancesTypes of Advances

MCB provides advances, which are of two types. These

are as following:

Fund Based Advances

Non Fund Based Advances

1.1. Fund Based AdvancesFund Based Advances

Funds are given to customer according to their

requirement against securities.

These loan are given specially to traders, business, small

industrial units, including cottage industries,

agriculturists, thus ensuring an equitable distribution of

bank credit among various sectors of the country’s

economy.

There are following types of advances, which are given to

customer on fund basis.

1) Industrial loan

2) Commercial loan

3) Agricultural loan

Industrial LoanIndustrial Loan

Loans are given to industrial units including cottage

industries up to or less than RS. 20 million. Loans and

advances shall not exceed amount specified by marginal

restriction on the type of securities offered. Industrial

loans are granted to the manufacturing section of the

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economy including finance for fixed investments and

working capital requirements of small industries.

Loan Period

Loans are allowed for a maximum period of 5 years

including a maximum grace period of 1 year. In special

case up to 10 years also, depending upon the merit of the

case.

Commercial LoanCommercial Loan

Total principal amount of loans to a single

enterprise/borrower shall not exceed RS. 0.5 million.

Maximum maturity is 3 years, depending upon the nature

and type of advances, decided upon case to case basis.

Mark-up

Both for commercial and industrial loan, mark-up will be

charges as per existing rate, subject to changes from time

to time. Presently it is 0.51 RS per day per RS. 1000/-.

Mode of Repayment

Equal monthly, quarterly or half-yearly, repayment of

principal and interest or as per term of approval.

Securities and Margin

Loans can be made against any or more of the following

securities mortgages of immovable property (land and

building), pledge of stocks, raw materials, and finished

goods, hypothecation of stocks, raw material, and finished

goods, State bank of Pakistan guarantee.

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Types Of Advances by MCBTypes Of Advances by MCB

1. Fund based Advances1. Fund based Advances

Following are the Fund based Advances:

Running Finance(RF)

Cash Finance(CF)

Finance against imported goods(FIM)

Export Refinance part-I (Pre-shipment)

Export Refinance Part-II

Finance against purchase collection(FAPC)

Finance against foreign bills(FAFB)

Foreign bill purchases(FBP)

Local Manufacturing Machinery(LMM)

Payment Against Document(PAD)

Demand Finance(DF)

Khud Rozgar Scheme

The detail of above-mentioned items are given below:

a.a. Running Finance (RF) Running Finance (RF)

The max time of repayment is one year. It is according to

will of customer. This type of advances are given to Trade,

Commerce and manufacturing general purposes. These

finances as evident by the name are given to meet their

daily needs. The mark up is charged on daily balances.

Normally 0.54 paisa per thousand is charged on daily

basis. It is drawn through cheque.

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b.b. Demand Finance (DF)Demand Finance (DF)

The duration of DF is more than running or Cash Finance.

These are made in Lump sum and are there is a

permission to repay the amount in periodic instalment.

Upon receipt of documents negotiated by the seller bank,

the opening bank makes sure that documents are

according to terms and conditions of the credit. Bank

makes the payment to the party against document and

upon expire date, bank receives back money with mark up

rate.

c.c. Payment Against Document (PAD)Payment Against Document (PAD)

LMM funds are provided by the SBP. The bank provides

the facility to the businessman who wants to buy the local

manufactured machinery.

d.d. Local Manufacturing Machinery (LMM) Local Manufacturing Machinery (LMM)

It is a long term financing. MCB also gives loan under the

head of demand finance to individuals, industrial units and

commercial business etc. This is a type of secured loan

and demand loan is never allowed without security.

e.e. Foreign Bills Purchases (FBP)Foreign Bills Purchases (FBP)

The exporters, which are under L/C are also provided with

the facility of loan. Amount is given to the exporter after

the approval of L/C by the issuing bank.

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f.f. Cash Finance (CF) Cash Finance (CF)

MCB gives the facility of cash credit to the business. The

borrower gives a specific reason for the need of cash. The

amount is passed through voucher and credited to party’s

account. Normally 0.52 paisa per thousand is charged on

daily basis to customers.

g.g. Finance against Imported Goods (FIM)Finance against Imported Goods (FIM)

These types of advances are granted against the pledge of

imported goods. These goods are pledged by the bank.

Bank pays all the charges to customs and keeps the goods

in its control. The bank releases the good on payment

from the client to bank.

h.h. Export Refinance Part-1 (Pre-Shipment)Export Refinance Part-1 (Pre-Shipment)

The government pursues the banks to provide the loanto

the exporters to promote the export. The bank provides

this type of advance facility to only those exporters who

have not enough money to make shipment. Bank provides

the loans to the customer at the rate of specific % for

period of 150 days.

i.i. Export Refinance Part-1 (Post Shipment) Export Refinance Part-1 (Post Shipment)

This means that the customer has enough amount to make

first shipment but not more. So the bank issues a loan to

the exporter. This financing is for period of 150 days.

Finance is provided by the SBP to the exporters for

purchase of raw material, its processing, Packing and

shipment. In case, if the party is unable to make the

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shipment within 150 days of financing. The party has to

pay certain amount of finance as asked by the SBP and

after 150 days the rate of mark up also goes up @ 51

paisa per thousand per day. So usually exporters try to

make the shipment within the fixed period set by the SBP

which is usually 150 days.

j.j. Export Refinance Part-11Export Refinance Part-11

In this case the bank after receiving the performance of

years in export business of party sets the limit for the

period of one year. Here the limit cannot be set by the

terms pledged of the permission of the bank.

k.k. Finance Against Purchase Collection (FAPC)Finance Against Purchase Collection (FAPC)

A bill may be purchased by the bank. If a client is in

urgent need of money and he has a bill whose clearance

may take a few days then he sells it to bank. Bank pays

the amount to the client after deducting its commission.

l.l. Finance Against Foreign Bills (FAFB) Finance Against Foreign Bills (FAFB)

Bank also provides finance against the foreign bills. This

facility is given to the exporter, if he needs an urgent

money. He gives bill of exchange to the bank as security

and bank sends these bills for collection and gives money

to exporter.

m.m. Khud Rozgar SchemeKhud Rozgar Scheme

Limit for loan

The limit of this loan is from Rs 10,000 to Rs 500,000

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Security/Pledge

A personal security is required to obtain loan otherwise anyother security will be required.

Total business assets will have to be hypothecated.

Mark up & return of loan

Mark up will be at the rate of 15 % for timely return of loan otherwise rate of mark up will be 16 % per annum.

The payment of mark up on loan will start after 12 months of payment of principal amount.

Eligibility of Applicant

1) The age of applicant should not be less than 19 years and he has not applied for any type of loan from any bank.

2) Applicant has been living in the residence shown as address for atleast one year.

3) Applicant is not the student nor the employee of any govt organisation.

Eligibility of Guarantor

1) He has been living at the given address atleast for one year.

2) He is not the employee nor the family member of MCB.

3) He is not the officer of any Govt organisation.

Fees for Loan

A fee of Rs 100 will have to be submitted which will be

non-refundable.

Important documents required

Two copies of application form (one original & one photocopy).

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Original Identity card will have to be shown. Similarly two photo copies of ID card will also be required.

Two passport size snaps of both applicant & guarantor.

Original & attested documents of asset of guarantor.

Conditions

The application of loan can be rejected in case of

incomplete or wrong information. Approved loan can be

cancelled. It should be informed that the rejection and

acceptance of loan are sole right of bank. If the rent of

loan is not paid for more than 3 months then the

remaining amount will be required to refund immediately

with 16 % mark up.

Agricultural LoanAgricultural Loan

Bank provides the agriculture advances in order to

enhance and support the agriculture sector of the country.

Bank’s Agriculture division deals with the agriculture

advances. These advances are of following types:

1) Farm Credit

2) Non Farm Credit

Farm CreditFarm Credit

These are the credits provided by the MCB or purchases

of inputs for development of agriculture sector. Following

are two main Sub classes of Farm credit:

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Production Finance

These are short term loans. These laons are provided to

farmers for purchases of different types of input, for

example seeds, fertiliser, and pesticides.

Development Finance

These are medium or long term loans. These loans are

provided for the development of agricultural sector. Main

Purposes of these loans are as under:

To purchase tractors

To purchase implements (Trolley, Threshers, Drill etc).

For installation of tube wells

For planting of gardens

Non Farm CreditNon Farm Credit

The second major form of agriculture advance is Non

Farm credit. These loans are provided to boost up

agriculture sector to provide the sources of earning of

foreign exchange as well as to provide employment

opportunities to people. These loans are provide against

mortgage of land as security or pledge of equipment as

collateral security. These are long term or medium term

investment depending upon the project.

Following are the different types of small industries for

which loans are provided to improve the economy of the

country.

Fish Farm

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Cattle Farm

Poultry Farm

Dairy Farm

2.2. Non Fund Based AdvancesNon Fund Based Advances

When an applicant for an advance cannot offer any

tangible security the banker may rely on personal

guarantees, letters of credit to protect himself against loss

on advance or loan.

There are two type of advances which come under Non

Fund Advances.

Guarantees.

Letter Of Credit.

Letter Of Credit is explained in Foreign Exchange

Department while Guarantees are elaborated below.

GuaranteesGuarantees

Introduction

Bank examines customer’s relation with the bank 7 the

nature of the business. Bank also sees his past business

with the bank. Sometimes bank issues Guarantee on the

behalf of the customer by getting some margin from him.

This margin may vary from customer to customer.

Requirements for Guarantee

Banks issue guarantee on the behalf of customers. Limit

proposals covering transactions should be submitted

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with full detailsfor the approval of appropriate sanctioning

authority.

Generally Guarantees are issued in favouring of Shipping

companies, Govt Departments guaranteeing specific

payments at future dates by customer on whose behalf the

guarantees are issued. While executing a guarantee, the

terms and conditions of the guarantee are closely

examined in order to determine the extent of bank

obligations and financial liability under the guarantee

and the type of guarantee, all condition are contained in

the guarantee.

Procedure

Bank charges a commission on the amount for which

guarantee is issued. Normally the validity period of

guarantee does not exceed one year. After the guarantee

has been issued, a copy of same is issued to the counter

guarantee issued to the customer.

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DEPOSIT DEPARTMENTDEPOSIT DEPARTMENT

Account OpeningAccount Opening

The general banking performs various functions among

them the first and most important function is A/C opening.

The process of opening an account is very simple and any

body who would like to open his account could do it easily

without any difficulty.

Types of AccountsTypes of Accounts

There are three types of accounts

CURRENT ACCOUNT

SAVING ACCOUNT

TERM DEPOSITS ACCOUNT

Procedure for Account OpeningProcedure for Account Opening

1) Application Form1) Application Form

The customer would like to open his account is required to

meet with the manager or second officer, who will give

him an “APPLICATION FORM” specifically used for

account opening. Separate colour-coded Application

Form is available for each type of account. So that a

particular coloured form is given to the customer to fill in

for opening a related account.

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2) Specimen Card2) Specimen Card

As I have already mentioned about “SIGNATURE

SPECIMEN CARD”. This card contains three signatures

of an applicant, applicant A/c no, A/c type, branch code,

title of A/c, it will be attached with an application form.

Banker uses this card at the time when he receives the

cheque; he compares customer’s signature with the

signature on the cheque for avoiding fraud.

Manager has every right not to accept this contract if he

is not satisfied by the details provided by the customer.

3) Account Opening Register3) Account Opening Register

The manager records the necessary details into this

register and allots an a/c number from this a/c opening

register. This register is maintained for each type of

account and the a/c numbers are allotted serially. After

opening a saving and current account every applicant’s

data is entered into the computer to maintain a safe

record and application form is properly filled so that it can

be available when necessary. For fixed deposit only that

application form is needed which is prepared manually,

because most of the procedure of fixed deposit is done

manually.

4) Cheque Book4) Cheque Book

Cheque book is issued to the customer when the bank

accepts the A/C opening application form.

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Types Of CustomersTypes Of Customers

1) Individual1) Individual

Only one person can operate this a/c. We can call it a

personnel or individual a/c.

2) Joint2) Joint

In case of joint A/c, applicant mentions that how much

person will operate the A/c. Instruction are given for joint

A/c such that the account shall be operated by

a) Any one of us or survivor. a) Any one of us or survivor.

In first case if one of the a/c holders died then the other

can operate the a/c individually.

b) Any two/All of us jointly.b) Any two/All of us jointly.

In second case if one of the a/c holders died then the other

partner can’t operate this a/c individually without having

permission from the court.

3) Partnership A/C3) Partnership A/C

For partnership a/c, along with the application form

signature card. Other documents are also needed such as

Registration Certificate

Agreement among partners

Commencement of business

NoteNote

In case of addition or withdrawal of any partner a new

agreement will be required.

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4) Company Account4) Company Account

For company accounts following documents are required:

-

Private registration

Resolution of board of directors

Commencement of business

Memorandum and Articles of Association

Balance sheet

Letter of ThanksLetter of Thanks

Bank prepares two ‘LETTER OF THANKS’ one for the new

customer and the other for his introducer. This act

promotes good will among the customer and the

introducer.

Closing of an AccountClosing of an Account

There are no. of reasons of closing an account. Some are

listed below:

1) If customer desires to close his account

2) In case of death of one account holder.

3) Bankruptcy of the account holder.

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

Before closing any account, bank send letter to the

account hold for informing him that his account is going to

be closed. There is need an approval form higher

authority to close any account.

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Importance of Deposits for BankImportance of Deposits for Bank

The primary economic function of the commercial bank is

to receive surplus income of individuals, firms, public

houses, institutions, companies and to honour cheque

drawn upon it. Deposits are to bank as a backbone is to

the body of a man. It is the lifeblood of a bank. The

deposits of a bank are useful in many ways.

The bank borrows money from the general public by

accepting deposits by offering suitable rates of interest to

them or simply promise to repay on demand.

Types Of Accounts in MCBTypes Of Accounts in MCB

The fund deposited in the MCB bank can be classified

under the main heads:

CURRENT OR DEMAND DEPOSITS

SAVIGN DEPIOSITS

FIXED OR TERM DEPOSITS

CALL DEPOSITS

1) Current Deposits (Or) Demand Deposits1) Current Deposits (Or) Demand Deposits

Current deposits are those which are payable to bank whenever demanded by the customer.

Bank does not pay any profit on current deposits.

There are of different scheme of saving deposits, which are classified under different duration purpose and rate of interest.

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Rules for Current AccountRules for Current Account

Current a/c holder opens Current Accounts on proper

introduction only. However, introduction of a PLS Saving

Account holder of repute may be accepted at the

discretion of the manager.

A) Minimum Balance

A sum not less then RS. 1,000/- in cash as initial deposit is

required for opening a current account and the same may

be maintained as minimum average running credit

balance.

B) Profit

No profit will be paid on credit balances held in current accounts.

The bank reserves the right to allow opening of current a/c at its description.

All deposits and withdrawal from a current a/c will take place only at the branch where the account is being maintained.

Current a/c cannot be overdrawn, except by prior agreed agreements with the bank.

The correspondence relating to current A/Cs should be addressed to manager of the branch where the account is being maintained.A

A distinctive number will be allotted to each current account and shall be quoted on all correspondence relating to the respective account and at the time of making deposits and withdraws

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C) Issuance of Cheque Book

The Cheque book is issued against the valid requisition

slip signed by the account holder as per signature

provided by the bank. The account holder can draw sums

from his account by means of cheque supplied to him by

the bank for that particular account. In drawing cheques

the amount in words and figures should be written

distinctively and the cheque should be drawn in such a

way as to prevent the insertion of any other word or

figure. Account holder should take well care of the

cheque books issued to them. The account holder will pay

excise duty of Rs.4 per leaf to the government.

2) Saving Account2) Saving Account

Saving accounts are opened on proper introduction with

sums of credit balance within certain limit for individual

(single, joint) institutions, companies, educational

institutions etc.

MCB has introduced various schemes under saving a/c,

PLS ACCOUNT

CAPITAL GROWTH SCHEME

MAHANA KHUSHALI SCHEME

KHANM BACHAT SCHEME

KHUSHALI BACHAT ACCOUNT

MALA MAAL SCHEME

SAVING 365 ACCOUNT

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1. Profit and Loss Sharing Account1. Profit and Loss Sharing Account

PLS saving account having a running minimum credit

balance of RS. 1,000/- would be eligible for sharing

profit/loss of the bank. The bank would be within its

rights to make investment of credit balances in the PLS

saving accounts in any manner at its sole discretion and to

make use of the fund to the best of its judgement in the

banking business under the PLS system.

Withdrawals

Withdrawals from PLS saving account are allowed not

more than 8 times in a calendar month and for a total

amount not exceeding RS. 15000/- without the approval of

bank manager. For withdrawal of larger amount, 7 days

notice in writing is required to be given.

Profit/Loss

The profit/loss will be credited/debited on the basis of its

net working results at the end of each half-year.

Calculation of products on PLS saving A/c will be made for

each calendar month on the lowest credit balance of an

account between the close of business on the 6th day and

the last day of the month. If the balance is less than

Rs.100/- the product will be nil.

Rules for PLS

Account holder can only withdraw sums from his account by means of cheques supplied to him by the bank for that particular account.

Post dated and stale cheques shall not be paid.

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The bank reserve to itself the rights to close any account without previous notice any account which has not satisfactory account credit balance.

If the account holder withdrawals the money under 7 days notice, the profit loss earning products will be computed on the monthly minimum balance. Zakat is deducted every year on non-exempted accounts.

2. Khanam Bachat Scheme2. Khanam Bachat Scheme

Target Market

Individuals planning to save funds for education & marriages of their young sons /daughters.

Individuals interested in long term deposits.

Individuals in low class middle group.

Individuals showing confidence in Bank’s long term schemes than schemes of similar maturities offered by others.

The loving parents that want best for their children.

Deposit Amount

We will have to deposit Rs 1000 on monthly basis t the

time birth of your baby or at later stage. It will continue

for upto 10 years without making any withdrawal.

Conditions

The account can be opened singly or jointly.

Account in the name of miner can be operated by mother, father or jointly as guardian.

No advance can be extended against a minor account.

If anybody withdraws prematurely then profit will be calculated on prevailing PLS account.

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The bank reserves the right to refuse any depositor in the scheme without giving any reason.

This account can be opened in any MCB branch.

Interest

The interest is given on yearly basis.

Tax & Zakat will be deducted according to rule at the time of maturity and payment.

3. Mahana Khush-hali Scheme3. Mahana Khush-hali Scheme

Target Market

Individual interested investing for five years saving schemes.

Individuals who want monthly return on investment.

Middle class income group.

For the persons residing abroad and family in Pakistan.

For retired persons who want regular monthly return on investment.

Conditions

Minimum amount required is Rs 25000 and Maximum is Rs 1 million.

This scheme can be adopted by individuals ( Single or Joint) in their names.

This certificate will mature after 5 years.

Interest

The bank will give profit on monthly basis.

Zakat is deducted on payments and profit according to government rules.

Services

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We 7 our nominee can collect cross pay order.

Profit amount can be send to you by postal money order & demand draft.

Profit will be paid from that branch where you have opened Khush-hali Account.

If a customer has a saving or current account in this bank then profit can be deposited in that account.

The following table gives the monthly returns on various

amounts, based method of calculation.

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AMOUNT (Rupees) MONTHLY PROFIT (Rupees)

1,000,000 10,830

500,000 5,416

100,000 1,083

50,000 541

25,000 270

In Case of Premature Encashment

The following rates of profit will apply:

If the certificate is held for less then 90 daysNo profit

If the Certificate is held for 3 months but less than 6 months PLS rate

If the Certificate is held for 6 months but less than 1 yearPLS rate

If the Certificate is held for 1 year but less than 2 yearPLS rate




4. Khush-hali Bachat Account4. Khush-hali Bachat Account

Target Market

Individuals who want to pay dues of insurance, HBFC& instalment.

Individuals living abroad but their families are in Pakistan.

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Busy individuals who don’t have time to pay their dues monthly.

Special Incentives

Return is calculated on daily average balance.

Profit is paid half yearly.

It can be operated at mostly all the branches of MCB.

5. Capital Growth Certificate5. Capital Growth Certificate

MCB has a risk-free return scheme by which your capital

can grow to nearly double the amount in just a few year

time. All that is required is a minimum amount of deposit.

At the end of the stipulated period, the bank returns close

to twice as much.

Target Market

Individuals interested in medium term saving schemes.

Individuals of middle income class group.

Individuals keeping excessive balance in current accounts.

Individuals interested to save fund for lump sum, education & marriages.

Individuals seeking protection against increasing inflation rate.

Conditions

Minimum deposit will be Rs 10,000 with no limit for maximum.

Time span is minimum five years can be expanded to 5 years.

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Interest

Initial Deposit(Rupees)

Payment upto maturity (approx.)(Rupees)

10,000/- 20,000/-

50,000/- 100,000/-

100,000/- 200,000/-

1,000,000/- 2,000,000/-

In case of premature encashment of certificates, the depositor will be given “PLS Saving Accounts “ profit rates declared by the bank for that particular period.

Depositors will be required to fill in Account Opening Forms.

6. Fixed deposits6. Fixed deposits

Fixed deposits are those deposits which are by the bank

under the conditions that they will not be payable on

demand but will be payable under fixed or determinable

future time date.

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FOREIGN EXCHANGE DEPARTMENTFOREIGN EXCHANGE DEPARTMENT

ImportImport

This department provides the facility to their customers to

import machinery or products from other countries. It is

necessary for the importers to have the licenses, which is

issued by the chief controller of imports and exports.

Before obtaining an import license the license must be

registered with the chief controller of import and export.

For having the license, an individual or firm submits the

application through his bank.

Documents RequiredDocuments Required

Filled application form for Register

The National Identity Card of the applicant

National Tax Certificate issued by the Income Tax department

In case of firm or company, the Memorandum and the Article of Association.

Banker issues the letter of credit normally in the response

of the Performa Invoice. The seller sends this invoice to

the buyer and it contains seller name, product quality.

Rate, mode of shipment, and other terms and conditions.

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Letter of CreditLetter of Credit

Definition of letter of creditDefinition of letter of credit

A letter of credit is a written instrument issued by a bank

authorising the seller to draw in accordance with certain

terms and stipulating legal forms, that all such bills will

be honoured.

Explanatory DefinitionExplanatory Definition

A letter of credit consist of an undertaking by an issuing

bank that bills drawn by the exporter will be duly owner

provided the comply with the terms of credit.

Reasons For L/CReasons For L/C

1) The exporters are uncertain of the importer capacity to pay.

2) The importers are unwilling to pay the amount unless the goods are actually shipped and the documents received by the bank.

3) In case of non-payment the seller should be assured to legal rights in foreign country.

4) There should be an agency, which should meet the seller’s need of finance when the goods are shipped.

5) The commercial banks come to the help of exporters and importers.

6) The importers can undertake the obligation to pay to the exporter for the purchase made by the importer and this is usually done through a letter of credit.

ExplanationExplanation

A letter of credit is a:

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1) Written undertaking by importers bank to a third party i.e. the exporter.

2) That it will be pay or accept draft (letter of credit) drawn upon it up to a started sum of money within a specified time.

3) That the payment will only be made to the exporter if he complies with the specified terms of credit.

Parties Involved in a Letter of CreditParties Involved in a Letter of Credit

There are four parties involved in a letter of credit

Account party

Issuing party

Exporter

Paying or negotiating bank

Account party or ImporterAccount party or Importer

The buyer or the importer on whose account and request

the letter of credit is opened is known as account party.

Issuing partyIssuing party

The bank, which issues or opens a letter of credit at the

request of importer, it is called the issuing bank.

ExporterExporter

The seller or the party in whose favour the letter of credit

is draw is the third party and it is also known as

beneficiary.

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Paying or negotiating bankPaying or negotiating bank

The paying bank in the exporter’s country on which the

draft is drawn is called the paying bank.

Operation of a letter of creditOperation of a letter of credit

1) The importer of buyer contacts the seller in foreign country for the purchase of a particular good or goods.

2) He settles with the seller the quantity and quality of the goods to be importer.

3) The sale contract also includes the method of payment.

4) The importer then submits an application to his bank for the issuing of an individual letter of credit.

5) The form on which the importer employees for a letter of credit is supplied by the bank.

6) This form contains all the necessary details discussed between the importer and exporter for the shipment of goods which include the description of merchandise, port of shipment, port of unloading, the documents against which the bank is the honour the draft, the total value of the goods etc.

7) If the documents supplied by the seller conform to the terms of contract the exporter will be paid.

8) The issuing bank will not be responsible if there is any fraud or the merchandise does not conform to the sales contract.

9) The obligation of the buyers bank is,

To issue letter of credit on agreed terms and condition with the buyer.

To have a proper examination of the documents.

To honour draft when presented with proper documents..

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Types of Letter of CreditTypes of Letter of Credit

1) Irrevocable letter of credit

2) Revocable letter of credit

3) Confirmed letter of credit

4) Unconfirmed letter of credit

5) Documentary letter of credit

1. Irrevocable letter of credit1. Irrevocable letter of credit

It is the one in which the issuing bank gives a lasting

undertaking to accept and in due course to pay bills

drawn upon it provided the exporter fulfils the terms and

conditions. It gives a complete protection to the exporter.

2. Revocable letter of credit2. Revocable letter of credit

It is the one in which can be modified or cancelled by the

issuing bank at any time without any obligation on its

part. They are not acceptable to the businessman.

3. Confirmed letter of credit3. Confirmed letter of credit

It is that which has the protection of the credit standing of

the importers as well as the exporter’s bank. The exporter

bank, which confirms the letter of credit, takes the

liability of paying in case the issuing bank fails to make

payment to the exporter.

4. Unconfirmed letter of credit4. Unconfirmed letter of credit

It is one under which the exporter’s bank does not give

any guarantee to the exporter that the bills drawn will be

honoured by the issuing bank. It is the commitment of the

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issuing bank to honour the draft. From the exporter’s

point of view, the confirm irrevocable letter of credit is the

best form of receiving payment.

5. Documentary letter of credit5. Documentary letter of credit

It is the one of which provides for bills to be accompanied

by documents of title to goods such as the bills of landing,

invoice, the policy of insurance etc.

How a letter of credit is opened?How a letter of credit is opened?

1) Application for a letter of credit

2) Line of credit

3) Opening of the letter of credit

4) Handling of the documents

5) Payment by the importer to the bank

6) Liability of the issuing bank

1. Application for a letter of credit1. Application for a letter of credit

An importer prepares an application on the prescribed

form available from the bank. The information which are

supplied in the application are based on the contract of

sale and include only the importer feature of contract such

as the value of the merchandise, port of shipment, port of

unloading, expiry date of the papers and brief description

of the goods. If the bank is satisfied with the applications,

it will signed and acceptance agreement with the

importer.

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2. Line of credit2. Line of credit

Before issuing a letter of credit, bank takes all necessary

precautions for securing its credit. The bank first

examines the customers credit standing, the type of goods

to be imported, the market demand for the goods, the

collateral offered to cover the credit. Then it establishes

the amount i.e. the line of credit.

3. Opening of letter of credit3. Opening of letter of credit

The letter of credit can be opened by mail or by cable.

When it is opened by mail, the issuing bank sends letter of

credit and to carbon copies to the importer. The importer

then dispatches the letter of credit to the exporter in

foreign country by mail. One carbon copy is kept for the

record. The second carbon copy after signing is sent to

the bank by the importer. If an importer directs the bank

to open letter of credit by cable, the importer’s bank sends

a cable to the corresponding bank in the foreign country

with a request to notify the exporter.

4. Handling of the documents4. Handling of the documents

When the exporter receives a letter of credit, he presents

the required documents and the draft to the bank in his

own country after shipping of documents. If the bank is

satisfied with the documents in the importing country and

pays the exporter at official rate in the currency of his

own country.

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5. Payment by importer to the bank5. Payment by importer to the bank

When a bank approves the application of a customer for

opening letter of credit, it does not lend money to the

importer. The bank only lends the importer to use the

credit standing of the bank to the exporter in the foreign

country. The bank makes a contract with the importer

that when the draft if send by the negotiating bank for

payment the importer will make the payment to the bank

not later then the day only the bank is to honour the

obligation. In case of a sight letter of credit the payment

to the corresponding bank is to be made on the day the

draft and documents are received. When the time of letter

of credit is used the importer is to arrange the payment

not later than the day on which the draft is to mature.

6. Liability of the issuing bank6. Liability of the issuing bank

The liability of the issuing bank is to examine the

documents in order to confirm their validity. If the

documents on the face appear to be in order the payment

should be released. If any defect is found in the

documents and the issuing bank honours the draft, the

importer can claim damages. The banker is not

responsible to see whether the merchandise conform the

sale of contract or they physically exist. The issuing bank

is only responsible for the completeness and regularity of

the documents relating to the letter of credit.

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Importance of Letter of CreditImportance of Letter of Credit

The bank charges nominal commission on financing the

import and export shipment.

Benefits to the BanksBenefits to the Banks

Increased balances

Commission

New business opportunities

Increased balancesIncreased balances

The balances are the lifeblood of every commercial bank.

The banks get mark up on the credit and this mark up increases the money of the bank

CommissionCommission

The commission charged by the banks varies with the

kinds of letters issued by them. Though the commissions

are small, yet when counted on the whole, they form an

important part of earning of the banks.

New Business OpportunityNew Business Opportunity

The letter of credit provides new business opportunity to

the bank. The firms, which are engaged in the export and

import of merchandise, are introduced to the banks, which

by serving them develop profitable relationship.

Opening of Letter Of Credit In MCBOpening of Letter Of Credit In MCB

Before opening of L/C certain requirements are necessary

that are

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The applicant must has import registration #

He must has account in that bank

He must pledges his security against the L/C amount

He must have IB-8 form, indent or agent form, and performance invoice.

Bank ChargesBank Charges

The bank takes commission @ 0.40 % of amount of L/C for one quarter and 0.25% for two or more quarters.

If L/C amount is low then minimum bank commission is RS 500/-

Postal charges are RS. 1200/-.

Stamp duty is calculated @ 0.50% of L/C amount.

Mark up is calculated at RS 0.50 per day per 1000.

For Collection For Collection

In case of sight payment service charges are calculated @ 0.10 % of bill amount and minimum charges are RS. 500/-and handling commission is RS. 500

In case of D/A L/C, commission is calculated @ 0.10 % per month

Advantages of Letter of CreditAdvantages of Letter of Credit

Advantages Of letter of credit to the importer and

exporter

Provision of finance

Credit standing

Legal right

Risk covered

Business expansion

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Bridges credit gulf

Payment in domestic currency

Shipping TermsShipping Terms

The following shipping terms are used in international

trade.

EX-works

FCA ( free carrier)

FAS(free along side)

FOB( free on board)

CFR(cost & freight)

CIF(cost insurance freight)

DAF(delivered at frontier)

DES(delivered EX-ship)

DEQ(delivered EX-quay)

DDU(delivered duty unpaid)

DDP(delivered duty paid)

DocumentsDocuments

Documents are the most important part of international

trade. Without them trade cannot be completed.

Documents are of five types.

1) Commercial documents

2) Transport documents

3) Insurance documents

4) Financial documents

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5) Official documents

1. Commercial Documents1. Commercial Documents

Commercial documents consist of following forms.

Invoice form

Certificate of origin

Weight note

Packing list

Quality or insurance certificate

2. Transport Documents2. Transport Documents

These documents are related with transfer of goods.

These documents consist of following forms,

Airway bill

Bill of lading

Rail consignment note

Roadway bill

Combined transport bill of lading

3. Insurance Documents3. Insurance Documents

Insurance documents consist of following forms.

Letter of insurance

Insurance policy

4. Financial Documents4. Financial Documents

These documents are concerned with the payments of

goods. These documents consist of following forms.

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Bill of exchange

Clean bill

Short bill

Documentary bill

Bank bill

Delivery against acceptance

Delivery against payment

Promissory note

5. Official Documents5. Official Documents

These documents consist of following forms.

Black listed certificate

Consular invoice

Health, Vetenary, Sanitation certificate

ExportExport

Usually the exporter does not rely on the credit of a

banker in the country of importer, and insist on a

confirmation from a banker carrying on business in his

own country. Thus this department of a bank helps the

exporters to settle down their financial affairs. For

exporting it is necessary for exporter to get export license

from the chief controller of import and export after

registration.

Documents are required for the registration such as N. I.

C. Card, income tax certificate, bank certificate which

shows that the exporter is his account holder and have a

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good dealing with them. In response to the letter of credit

exporter submit the following documents to the

negotiating bank.

Bill of exchange

Invoice

Bill of lading or Airway bill/railway receipt/truck receipt

Insurance documents

Packing list

Any other documents, if so required.

The negotiating bank will send the same documents to the

issuing bank. In accordance with the terms and condition

laid down in letter of credit.

Security of DocumentsSecurity of Documents

Whether documents received are meant for the opening

bank and specifically for the branch which established the

letter of credit. The documents would be negotiated

within the validity of L/C. The goods have been shipped

within the time allowed under L/C. The goods are

mentioned in invoice and other documents (e.g. bill of

lading, packing list etc) are in accordance with

merchandise clause L/C.

Whether the documents received pertains to L/C ,

established by the opening bank and the documents

negotiated are within or equal to L/C amount. In case

where the value of documents exceeds the L/C amount,

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the foreign bank may negotiate the documents for amount

being marginally excess or sends them on collection,

remittance may be allowed in excess subject to the

following conditions

The amount does not exceed 5% of the amount of L/C subject to the maximum of US$ 500/-

The importers holds a valid import license against which the excess amount is adjusted-provided remittance is effected within 1.5 year from the date of issue of import license.

The name of the importer on the Bill of Exchange does not

differ from that on the import license. The tenor of the bill

should be valid. See that the goods are not shipped prior

to the date of opening of L/C or the documents are not

stated.

The goods are consigned or endorsed in the favor of the

bank only opening the letter of credit, and in no case it

should be consigned to the importer directly.

Retirement of DocumentsRetirement of Documents

When the opening bank against a letter of credit receives

documents. The customer retires the documents under

different arrangements e.g.

Retirement against payment by the importer

Retirement of documents in case of None-payment by the importer

Retirement of documents under trust receipt

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Retirement Against Payment by the ImporterRetirement Against Payment by the Importer

The importer approaches the bank for retirement of the

shipping documents. Mark is calculated and recovered on

the bill amount for 230 days @ 12.55% for each RS. 100/-

or part thereof on payment against documents (PAD) for

intimation purpose only.

Entries Passed by the BankEntries Passed by the Bank

Debit importer a/c

Credit PLS-payment against documents A/C

Credit: PLS-income a/c mark-up recovered on PAD

Credit: telegram/telex/postage charges a/c.

Retirement of Documents under Trust ReceiptRetirement of Documents under Trust Receipt

Shipping documents are released to the importer on trust,

that he may get the goods cleared from the custom

authority by himself, sell the good, and later pay back the

bank. Trust receipt financing is limited to first class

customers only as the bank reposed fullest confidence on

the importer. Documents are obtained from the customer.

The finance is provided for the period of 45 days only.

Calculation of Amount of Finance

Rupee value of bill plus foreign bank charges plus taxes,

less SBP margin restriction = Amount of finance

Mark up is calculated @ 0.43 RS. Per 1000 per day on the

amount of finance utilized.

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After the retirement of documents the opening bank then

transmit the funds to the negotiating bank. The exporter

will receive the payment from the negotiating bank.

Export Re–FinancingExport Re–Financing

It is most important features of export. Export

refinancing is used to enhance the export of the country.

It was firstly started in 1977 and re-established in 1994.

Here the exporting companies can get advances at a very

low mark up i.e. lower then inflation rate. Banks get

advances from State bank at 6% and provide advances to

the exporting companies at 8% and 2% is spread of the

bank i.e. is the income of the bank. This export-

refinancing advance can only be used for export and not

for other purposes, state bank gets information about

export through E – form. There are two parts of export

refinancing.

P-1

P-II

P-1P-1

Two forms of P-1 are pre-shipment and port shipment

P-1 Pre-shipmentP-1 Pre-shipment

In P-1 pre-shipment companies make an agreement with

foreign companies and get loan from the bank to make

products and shipping them to foreign countries i.e. they

get advance before shipping the products.

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P-1 Post-shipmentP-1 Post-shipment

In P-1 the post-shipment companies make an agreement

with foreign countries and produce some of the products

and ship them and get advance from the bank to complete

the shipment.

P-IIP-II

In P-II pre-shipment companies get lumpsum for the

whole next year and the entire amount can be used to

export the products. The companies have to export

double than the advance gets through P-II shipment. In P-

II pre-shipment the lumpsum amount can be calculated on

the basis of performance of the last year. If a company is

unable to make double export than the advance, then bank

makes some penalty in the forms of amount against the

company.

Special ProductsSpecial Products

Export refinancing cannot be applied for exporting all

types of products. Some products are

Cotton cloth

Cotton products

Finished leather

Refined sugar

High quality yarn i.e. more than thirty count

Each company has different limit at a time and bank has

to make a report at the end of each month and one copy of

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that report is sent to state bank and one copy to head

office at Karachi. Different limits are,

Cash finance

Running finance

Demand finance

Export refinancing I

Export refinancing II

FAFB

FBP

Forms of Export Re Financing Forms of Export Re Financing

Different forms are required for export refinancing. These

forms are

Undertaking as per Annexe UT-DE-1

Form DE-1

Form DE-2

Original contract

Undertaking as per Annexe A

Certificate of non-availment of loan.

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CLEARING DEPARTMENTCLEARING DEPARTMENT

ChequesCheques

When we talk of cheques then there are two types of

cheques

1) Open Cheque1) Open Cheque

Open cheque has following properties:

The word Bearer is not crossed.

Cross stamp is not there

Cheque is not of limited companies.

Self or name should be written on the cheque.

Token Token

A token is given on open cheques when presented to bank

for payment. In this case payment is made at the spot to

the cheque holder. First of all cheque is presented to bank

for payment. The name of holder, no of cheque and

amount is written on the register by the bank employee &

token is given to cheque holder. Then Cheque reaches the

computer department. There it is again feeded in

computer & it is stamped after checking the holder has

enough amount in his account or not. After feeding in

computer ( debiting holder’s A/C ) , the cheque reaches

the cash department where the holder can receives his

cash by giving token to the cashier provided that he has

enough amount in his A/C.

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2) Crossed cheque2) Crossed cheque

When the cheque does not fulfil the requirement of open

cheque then it is known as crossed cheque.

A) Transfer DeliveryA) Transfer Delivery

When cheque has following properties then it is

proceeded as Transfer Delivery.

Cheque is crossed.

Cheque is of MCB.

Cheque is from local branch.

In this situation cheques are collected separately as

transfer Delivery.

Procedure

In Transfer Delivery following process is done.

First of all cheques are noted in Transfer Delivery Ledger

with the date in advance because it takes one day to reach

cheque issuing branch in the same city. In T.D Ledger

Name of account holder, Number & amount of Cheque

are written and two copies , one original and one carbon

copy of voucher SF-73 B are prepared. Original copy of

voucher along with cheque is send to issuing branch while

carbon copy and Pay-In-Slip is with the bank.

The cheque with voucher goes to Main branch then to

issuing branch and then reverse from issuing branch to

main branch and then to our branch.

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B) ClearingB) Clearing

In clearing the cheques which are

crossed

limited company

different bank in the same city

Procedure

Such cheques are collected as clearing cheques and are

noted in Clearing Ledger. Two copies of voucher SF-37

are prepared (See Annexe ) . Original voucher with the

cheques are send to Main branch which then send to S.B.P

in advance date. The payment is not given at hand but it is

transferred to account of account holder. In case if cheque

is returned due to number of reasons then the objection is

finished and again send to main branch but this time a

credit voucher along with original cheque is send to main

branch instead of any Pay-In-Slip.

Advance ClearingAdvance Clearing

When cheque is sorted for clearing because of different

branch in the same city then we note these cheques in two

days advance date because it takes more time to reach

that faraway branch . For example HBL of Baha-ud-Din

Zakariya University Multan.

Procedure of Payment of Cheque of Foreign CurrencyProcedure of Payment of Cheque of Foreign Currency

When cheques are denominated in foreign currency then

procedure is not like that of ordinary cheques of Rs. First

of all cheques are issued and the person give cheque to

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another person. When any party receives cheque in

foreign currency to deposit in his account then it gives it

to the ban where he has his bank account. The Bank sends

this cheque to its Head Office. Head Office send it to the

country where transaction is done over that currency.

Then cheque goes to New York. From there it is send to

that issuing bank (domestic) from where party has

received cheque whose bank whose cheque it is. N.Y is

credited and that bank is debited by that amount. N.Y

send it to head office of our Bank. Then H.O is credited

and N.Y is debited. Amount of Foreign currency is then

send to main or local branch where the party has its

account. Now the account of that person is credited and

the H.O is debited

Now there may be two cases:

1) Either account is in Pak Rs.

2) Or account is in that country

3) Or account is in Foreign Currency other than the currency in cheque.

C) Cheque CollectionC) Cheque Collection

When cheque is from another city then it is grouped as

C.C.

Procedure

SF-37 form is used in Cheque collection (See Annexe )

Original voucher with cheque is send to main branch.

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Carbon copy with Pay-In-Slip is taken by bank for record

purposes.

Pay-In-SlipPay-In-Slip

Here it is very necessary to have knowledge about Pay-In-

Slip

Purpose

It is used for two purposes

Whenever we want to deposit cash in our account then pay-in-slip is used by writing amount on it and depositing it to cashier along with money.

Whenever we have cheque from any party to be collected in our account we fill pay-in-slip . One part is attached with cheque and another is given to cheque holder as a receipt.

Types

It is of two types depending upon the type of account.

Green Pay-In-Slip is used for Saving Account (See Annexe )

Blue Pay-In-Slip is used for Current Account (See Annexe )

Stamps Used In Bank (MCB)Stamps Used In Bank (MCB)Following stamps are used in for different purposes.

(1)Cross Stamp(1)Cross Stamp

This stamp is used to cross the cheque. Crossing can be

done by 3 ways.

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a) General Crossing

Sometimes the cheque is crossed by the drawing two

lines on the upper left corner of the cheque without

writing any sentence on the cheque.

b) Written Crossing

Cheque can also be crossed by stamping it with sentence

“Pays Account Only”

c) Special Crossing

Crossing can also be done by stamping a cheque with the

words “MCB GBS Branch”. This means that now cheque is

in use of bank only. If it is lost or dropped then it is of no

use to anybody because now it is a cheque of bank. This

cheque will not be cashed any where else.

(2) “Payees Account Will be Credited on Realisation”(2) “Payees Account Will be Credited on Realisation”

This is used to stamp on the back of following

instruments.

Cheque (simple). 2) Travellers Cheque. 3) Pay Order. 4)

Speed Cash.

This means that the account of the payee will be credited

provided that cheque is accepted by Drawer’s bank

otherwise not.

(3) Disbursement Guaranteed; Payees Account will (3) Disbursement Guaranteed; Payees Account will be credited on Realisationbe credited on Realisation

It is used to stamp on the back of following instruments

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1) Demand Draft . 2) Foreign Remittance

(4) Payees Account Credited(4) Payees Account Credited

This stamp is used on back of those cheques which are of

the same branch. It is of guarantee that if there is no

problem with the cheque or A/C then Payees account will

be credited.

(5) Clearing Stamp(5) Clearing Stamp

This stamp is placed in front of clearing voucher on the

same day in which clearing was made (one day advance

date). Or the date in which it is presented by Main branch

in State Bank Of Pakistan.

(( 6) Round Stamp MCB6) Round Stamp MCB

It is used in two places.

When we are dealing with C.C then we write the number of C.C which is written inside the stamp. One stamp is on cheque and other on Pays-In-Slip.

When we fill Pay-In-Slip and give it to the bank officer along with cheque then he places this round stamp on the face of one part of Pay-In-Slip and marks his signature on it and give it to the customer as a evidence.

(7) Pay Cash(7) Pay Cash

This stamp is used when cheque is not crossed, it is open

cheque. The officer places this stamp on the front of

cheque and writes token number on it. This means that

payment in cash will be made of this cheque on

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presentation of token to cashier. This is like indication for

cashier to pay cash.

Reasons for Cheque returned unpaid in Cross Reasons for Cheque returned unpaid in Cross ChequesCheques

Following are the reasons for the cheque return.

Cheque incomplete

Clearing stamp Required.

Drawer’s sign incomplete

Drawer’s sign different from specimen

Post Dated

Payment stopped by drawer.

Amount in words and figures differ.

Report of Lost or Stolen cheque Report of Lost or Stolen cheque

In case of lost or stolen incidents following procedure is

performed.

Cheque no of lost cheque

Whether it was single or double signed.

Whether it was crossed or related to someone

Phone / Fax of reporter.

NIC no of reporter.

Signature of reporter.

How cheque was lost.

FIR Lodged or not.

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Green SheetGreen Sheet

At the end of banking time ( 1:30 o’ clock), three Green

sheets are prepared for clearing , cash and account side.

One Green Sheet is also prepared by clearing department.

Heads in Green Sheet Heads in Green Sheet

Green Sheet has following Heads:

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1) Current A/C(2) Saving or PLS A/C (3) Other A/C(4)

General A/C

M.T Payable H.O A/C

T.T Payable Other than 3,2 &1

Pay order

D.D Payable

Sides of Green sheetSides of Green sheet

There are two sides of green sheet: Debit Side &

Credit side.

Both sides should tally in figure amount. If Debit total =

Credit total then sheet is balanced and there is no

mistake. It should be taken care that cheques are always

debit and pay-in-slip is always credit. If voucher is of Pink

colour then it will be on credit side and if it is of blue

colour then it is debit side.

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RTC DEPARTMENTRTC DEPARTMENT

This department deals in RTC. It stands for Rupees

Travellers Cheques. MCB RTC has the largest share of the

total RTC Market. Over 1.5 Million satisfied customers

have made MCB RTCs. These are printed in the UK and

carry a thread watermark- a feature that prevent

counterfeiting.

Important FeaturesImportant Features

As good as cashAs good as cash

The most convenient substitute for cash for all kinds of

transactions(property, trade, personal etc).

Denominations Denominations

Cheques are available in the denomination of Rs 1,000 Rs

10,000 Rs 50,000.

Easily EncashedEasily Encashed

They can be encashed at any MCB branch.

Easily refundableEasily refundable

In case of Loss Or Theft we can get the full amount back.

Exclusive Security FeaturesExclusive Security Features

MCB RTCs can’t be duplicated. Various security features

both in design and materials make counterfeiting or

fraudulent alteration extremely difficult.

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Valid Until Used Valid Until Used

Validity of Cheque is indefinite. We can use them for a

week, a year or more after the date of purchase.

Televerification System Televerification System

It enables us to check the validity of cheque 24 hours a

day . Televerification UAN (021) 111-000-456.

Procedure Procedure

First of all RTC-10 is given to customer. It is filled and

then cash is deposited to cash department . One copy is

for office and one copy is given to the customer and RTC

are issued at that time. When RTCs are sold then H.O A/C

is credited by using form no RTC-20.

It has five copies:

A,B,C,D,E.

A= H.O copy, B= RTC Dept, C& D= Branch.

When RTCs are returned or purchased by the MCB then

H.O is debited by that amount by using form RTC-30.

Summary of al RTC purchased by branch is made on form

RTC-40.

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REMITTANCE DEPARTMENTREMITTANCE DEPARTMENT

RemittanceRemittance

Transfer of money or equivalent to money from one

branch to another branch of the same bank is called

remittance.

Important TermsImportant Terms

Originating branchOriginating branch

It is the branch from which money is send to another

branch or the point of origin of remittance.

Responding branchResponding branch

The branch which receives the instrument or money for

remittance is known as Responding Branch.

Types of RemittanceTypes of Remittance

Remittance is classified into following four types:

INWARD REMITTANCE

OUTWARD REMITTANCE

INLAND REMITTANCE

FOREIGN REMITTANCE

a) Inward Remittancea) Inward Remittance

The branch which receives the instrument(T.T, D.D etc)

directly from the customer or from the originating branch

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and is responsible to pay to party is called inward

remittance. For example if some D.D is drawn on our bank

and we have to pay the party( to whom it was send).

b) Outward Remittanceb) Outward Remittance

The branch which issues or sold the instrument to the

responding branch is called outward remittance. In this

case we are sending remittance to another branch of the

same bank in any location.

c) Inland Remittancec) Inland Remittance

Transfer of money from one branch to another branch of

the same bank within the same country is called inland

remittance. In this case both originating branch and

responding branch will be situated in the same country.

d) Foreign Remittanced) Foreign Remittance

Transfer of money from one country to another country is

called foreign remittance.

Modes of paymentModes of payment

MCB uses following four types of modes of payment

1) DEMAND DRAFT (DD).

2) PAY ORDER (PO0.

3) MAIL TRANSFER (MT).

4) TELEGRAPHIC TRANSFER (TT).

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1. Demand Draft1. Demand Draft

Demand Draft is used for the transfer of money outside station.

A draft is an instrument drawn by a bank in favour of any person on a branch of its own bank or any other bank to pay a certain amount of money which is demanded to the person named on it.

It is not necessary for the demand draft that applicant or recipient account should be open in originating and responding branches.

It is one of the cheapest methods of transference of money within the country or outside the country.

Applicant has to fill in the application form for availing the facility of demand draft. After depositing the amount of draft, remittance officer prepares the cheque of demand draft.

When banker issue draft to the customer, he also records customer particulars in a demand draft register where record is maintained branch wise.

Responding branch and originating branch debit/credit the head office account and send the daily statement of transaction to head office.

2. Pay Order2. Pay Order

Pay Order is used as instrument for transfer of money within station or city.

Pay order is written order, which is issued and received by the same bank or drawn and payable on same branch.

For pay order it is not necessary that applicant should be account holder.

It is used for local transference of money from one person to another.

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The bank charges excise duty and flat rate from the applicant.

3.3. Mail TransferMail Transfer

The transfer of money from one branch to another branch of the same bank through mail or courier service is called mail transfer.

The applicant should be the regular customer or the account holder of the responding as well as originating branch.

4.4. Telegraphic TransferTelegraphic Transfer

Originating branch send funds to responding branch instantly and immediately through telegram and fax.

Bank charges commission, telegram/fax charges on telegraphic transfer.

Documents PreparedDocuments Prepared

a. Application Form (SF-100) a. Application Form (SF-100)

Firstly, the application(see annexure ) is filled by the

applicant in which he writes the name of payee, his a/c #

& the name of branch to which TT is sent as well as the

depositor’s name, his a/c # & address. Then in the office,

they collect the charges, commission & excise duty.

Same prescribed application form will be used for MT, TT,

DD, and PO.

It is understood that in case of T.T or M.T the remittance

is being sent at our entire risk .In case of T.T Or M.T,

there are two options:

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1: Advise & Pay 1: Advise & Pay

Here the bank informs the beneficiary (to whom the

money is sent ) through telephone or personal contact

about the incoming cash.

2: Credit Account No2: Credit Account No

In this case, if the beneficiary has Account with the

Responding Bank then his account is credited by the

incoming amount without informing him.

When the applicant completely fills the application form

then he is asked to sign at the bottom of the page. After

signing, the applicant deposits the cash (cash to be sent

+ Charges) at the cash counter and receives the

application back by having stamped and signed by the

cashier. This application is then submitted to officer.

b. Memorandum (SF-237) b. Memorandum (SF-237)

The officer gives Memorandum to the applicant as a

evidence of Remittance (see annexe ). Bank charges

along with some information about Remittance is written

on it. Officer signs at the end of the form.

c. Fax/ Telegraphic Message c. Fax/ Telegraphic Message

In case if the Remittance is being sent through

FAX/Telegraph then a special form known as “

Fax/Telegraphic Message” (see annexe )

I t contains following information:

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T.T No, R.No, Control, Total Rs Amount, Favour, A/C No

Of Beneficiary, Test & Date.

T.T No & R.No:T.T No & R.No:

These numbers are noted from T.T register which contains

every information of every T.T sent to different cities( T.T

register will be explained more in coming pages).

ControlControl

It is the number written on the form “Confirmation Of

Cable Sent”

( SF-89A).(See annexe )

Favour & A/C NoFavour & A/C No

It shows the name of person & his account to whom the

cash is being sent.

d. Confirmation Of Cable Sent (SF-89-A)d. Confirmation Of Cable Sent (SF-89-A)

These are two vouchers A & B. Special features of this

form are Originating branch, Responding branch, Date

Total amount & Branch code of both branches. For

Example Branch code of MCB GBS Multan is (1412).

These vouchers are used to credit & debit purposes (see

annexe ).

e. T.T Register e. T.T Register

T.T.No R.No Control Favour Amount Date

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Head Office AccountHead Office Account

All transaction relating to remittance will be routed

through head officer account. All the branches of MCB

have an account of “Head Office”. Through this Head

Office account it become easier for branches to do the

transaction with other branches and update their books.

Whole ProcedureWhole Procedure

1) First of all application is filled by the applicant. Cash is deposited in the cash department. Applicant is provided with Memorandum as an evidence.

2) Now starts the work of Bank officer. The officer enters the information on the Register. In case of T.T, the T.T No, R.No, Name of Beneficiary, Branch, Code Of branch, Date, Account of beneficiary is written on the register.

3) Then “Fax / Telegraphic message” is filled which also contains the same information as that of register.

4) Two Vouchers are prepared (SF-89-A & SF-89-B) which are in Green & Pink colour. Amount of T.T is written on them. They also contain the heads of Originating Branch and Responding branch.

5) Then Test Is written on the extreme left column( T.T, M.T, P.O No). The procedure of it’s calculation is written above.

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FINANCIAL ANALYSIS OF MCBFINANCIAL ANALYSIS OF MCB

For Year 1997-98

Ratios 1998 1997

Interest earned / Advances 27.33 % 26.32 %

Interest paid / Deposits 8.94 % 8.17 %

Admin Expenses / Deposits 4.85 % 4.85 %

Investment / Deposits 46.75 % 46.70 %

Advances / Deposits 50.81 % 51.74 %

EBT / Deposits 0.76 % 0.99 %

ROA 0.27 % 0.21 %

ROE 11 % 9 %

EPS Rs 2.19 Rs 1.31

Cash Dividend / Share Rs 1.75 Rs 1.50

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ExplanationExplanation

Interest earned to advances increased in 1998, which is a positive sign and shows increased income of the bank, and its improving financial position.

Interest paid to deposits, investment to deposits and administration expenses to deposits, the firm has been able to sustained its position and expenses. There is an increase in the income of the bank, but there is no major increase in expenses. This shows a satisfactory position of the bank.

The ratios of advances to deposits and EBT to deposits are not showing a healthy sign due to:

The bank has paid a big amount as a cost/return on deposits

The bank has given less advances in 1998 as compared to 1997

The return on assets and return on equity are showing a good position, which refers to an improved financial position.

The EPS and cost dividend ratios are showing an increasing trend, which means the firm is enjoying a good financial position.

Overall MCB has a good and healthy position. The profitability and income is increasing, which is attracting new depositors and investors.

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PREFACEPREFACE

Prerequisite of MBA study is to undergo internship. I got

the opportunity to join the MCB General Bus Stand

Branch, Multan for the said purpose for a period of 6

weeks.

Practical involvement was a great experience as

interactions both with the experienced executives and

clients cemented the base of knowledge I have been

acquiring in the classroom.

This internship report includes the material about MCB

and different departments along with their working

procedure.

For the completion of this project I met the various

persons of these organizations. As far as my knowledge

and hard work is concerned this report will provide a

good in sight of MCB.

I have special thanks for following persons who have

encouraged & guide me lot. I learned very much under

their guidance.

Mr. Muhammad Saleem Khan Branch Manager.

Mr. Liaqat Raza Jaffery Accountant.

Mr. Masroor Mehmood Officer.

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Riaz Hussain

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ACKNOWLEDGEMENTACKNOWLEDGEMENT

All praise to Allah, the Beneficent, the merciful, and

respect for His Prophet “Peace Be Upon Him” who made

us recognize our creator.

First of all I am highly obliged to my honorable teachers

Mr. Muhammad Shoukat Malik and Mr. Muhammad

Rizwan because of them I could be able to do an

internship in the MCB.

I am also thankful to the Employees of MCB who provided

me a friendly and knowledgeable environment through

which I learned a lot.

Riaz Hussain

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CONTENTSCONTENTS

HISTORY OF BANKING 1

EVOLUTION OF BANKING 1EARLY GROWTH 1DEVELOPMENT OF MODERN BANKING 2BANKING IN PAKISTAN 3

MUSLIM COMMERCIAL BANK LIMITED 6

HISTORY OF MUSLIM COMMERCIAL BANK 6BOARD OF DIRECTORS 7STRUCTURE OF MCB 8STRUCTURE OF MCB – GENERAL BUS STAND BRANCH (1412) 10OVERALL PERFORMANCE OF MCB IN 1998 11CHAIRMAN’S REVIEW 16

ADVANCES DEPARTMENT 18

1. INITIAL INFORMATION 182. PREPARATION OF CREDIT PROPOSAL 183. SANCTION ADVICE 19OTHER TERMS AND CONDITIONS 20TYPES OF ADVANCES 21TYPES OF ADVANCES BY MCB 22

DEPOSIT DEPARTMENT 31

ACCOUNT OPENING 31TYPES OF ACCOUNTS 31PROCEDURE FOR ACCOUNT OPENING 31TYPES OF CUSTOMERS 32CLOSING OF AN ACCOUNT 34IMPORTANCE OF DEPOSITS FOR BANK 34TYPES OF ACCOUNTS IN MCB 34

FOREIGN EXCHANGE DEPARTMENT 43

IMPORT 43DOCUMENTS REQUIRED 43LETTER OF CREDIT 43EXPORT 54EXPORT RE–FINANCING 56SPECIAL PRODUCTS 58FORMS OF EXPORT RE FINANCING 58

CLEARING DEPARTMENT 60

CHEQUES 60

RTC DEPARTMENT 68

IMPORTANT FEATURES 68PROCEDURE 69

REMITTANCE DEPARTMENT 70

REMITTANCE 70

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IMPORTANT TERMS 70TYPES OF REMITTANCE 70MODES OF PAYMENT 71DOCUMENTS PREPARED 73HEAD OFFICE ACCOUNT 75

FINANCIAL ANALYSIS OF MCB 76

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