Chapter 1

PROFILE OF INDUSTRY THE BANKING SECTOR

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1.1 PROFILE OF THE INDUSTRY

Commercial banks operating in Pakistan are going through a transitory period. Avoiding

the transition is not possible. The factors responsible for gradual but profound change are

growing liquidity, declining interest rates and shrinking spreads. The yield on

government securities has also come down drastically. Till couple of years back

government securities were the biggest source of earnings for most of the commercial

banks. In the absence of corresponding growth in private sector demand for credit, banks

have no option but to explore new business potentials to resist decline in their

profitability.

The banking sector is experiencing drastic changes forcing the players to redefine their

strategies. State Bank of Pakistan continues to update and amend its regulations and

instructions to enable the commercial banks to improve their solvency and to enhance

their capital strength and competitive capabilities. The central bank has opened new

business opportunities by eliminating certain restrictions. Now banks are allowed to

implement their own credit policies. They enjoy more freedom to tap many segments of

the market, which were previously unexplored.

The consumer banking activities has enhanced as many players are coming up with

branded products. The competition in this area has intensified as larger banks continue to

play a significant role by improving the quality of products and services they offer. New

players have joined them with innovative solutions and new services benchmarks.

Competition in this area is expected to get fiercer. The winners will be those who could

excel in customer services, improve quality of products and continue innovations.

Local banks are posing a bigger challenge to foreign banks. Larger banks, having the

advantage of greater reach, are threatening the existence of smaller banks. Larger banks

have adopted a more aggressive but accommodating approach by focusing on client

needs, improving response time and increasing use of technology. Many banks have

started exploring rural areas with special focus on advances to agriculture sector and

related activities.

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1.2 State of Economy

Before looking into the performance of commercial banks operating in Pakistan, it is

necessary to keep in mind the geopolitical conditions in the region, the adverse impact of

9/11 and subsequent events to which Pakistan could not remain immune. After the 9/11

the world plunged into 'synchronized global recession' affecting even the most developed

economies. As against them Pakistan's economy was very fragile and was suffering from

a number of structural problems, external debt crisis being the most contentious one.

However, in the post 9/11 era, the external debt issue has been resolved to a large extent,

easing the debt servicing pressure. Entry of fresh aid and grants and reduced debt

servicing requirements enabled the country to accumulate foreign exchange reserves. The

SBP's buying of foreign exchange from the market, in an attempt to avoid massive

appreciation of rupee against dollar, also helped in building foreign exchange reserves.

1.3 Banking Sector

Commercial banks operating in the country can be divided into four distinct categories,

private banks, foreign banks, privatized banks and nationalized commercial banks

(NCBs). The number of private banks has remained almost constant ever since they

commenced operations in early nineties. However, ownership of a number of private

banks has changed over the years. Lately, with the take over of Prudential Bank and

Platinum Bank by the new sponsors their names were changed to Saudi Pak Commercial

Bank and KASB Bank respectively. Earlier, ownership of Union Bank was acquired by

Standard Chartered, PICIC Commercial Bank was acquired by the NIB Bank and Prime

Bank was acquired by ABN Amro. National Bank of Pakistan has been listed at local

stock exchanges and parts of its shares were off loaded.

Meezan Bank was created as a result of merger of Al-Meezan Investment Bank and

Societe Generale. The first ever license to operate as a Scheduled Islamic Commercial

Bank was granted to Meezan Bank on January 31, 2002. Pakistan operations of Societe

Generale were amalgamated into Meezan Bank on May 01, 2002. At the end of year

2002 it had six branches, three in Karachi and one each in Islamabad, Lahore and

Faisalabad.

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1.4 Outlook

After the good performance of the commercial banks, the operating environment for

banking sector poses great challenges particularly in the environment of declining interest

rates and shrinking spreads. Banks are forced to take new initiative to combat fierce

competition and eroding profits margins. Though the economy is set to grow, the growth

of banking sector will largely depend on the growth of private sector credit demand.

One of the key success factors for a commercial bank in future will be its ability to reach

out to its clients through multiple delivery channels, ranging from a traditional brick and

mortar branch network to a state-of-the-art customer contact centers, comprehensive

ATM network and Internet-based banking facilities.

Banks are expected to redefine their marketing strategy. Most of them will focus more

intently on retail banking products such as personal loans, small business finance,

mortgages and investment products, the consumers will be reached through technology

dependent channels of distribution such as ATMS, Debit and Credit cards. While there

has been persistent and substantial increase in deposits, the credit off take has remained

comparatively low. The commercial banks that are operating in Pakistan these days are

listed below.

1.5 BANKS OPERATING IN PAKISTAN

The banks that are members of the State Bank of Pakistan are listed below:

1.5.1 Government Owned Banks

1 Industrial Development Bank of Pakistan

2 Khushhali Bank

3 National Bank of Pakistan

4 SME Bank Limited

5 The Bank of Khyber

6 The Bank of Punjab

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7 The Punjab Provincial Co-operative Bank Limited

8 Zarai Taraqiati Bank Limited

1.5.2 PRIVATIZED BANKS

Allied Bank Limited

Habib Bank Limited

MCB Bank Limited

United Bank Limited

1.5.3 PRIVATE BANKS

Arif Habib Bank Limited

Askari Bank Limited

Atlas Bank Limited

Bank Al-Falah Ltd.

Bank Al-Habib Ltd.

BankIslami Pakistan Ltd.

Crescent Commercial Bank Ltd.

Dawood Islamic Bank Limited

Dubai Islamic Bank

Emirates Global Islamic Bank Limited

Faysal Bank Ltd.

Habib Metropolitan Bank Ltd. (Merged with Habib Bank AG Zurich in October

2006)

JS Bank Limited

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KASB Commercial Bank Ltd.

Meezan Bank Ltd.

MY Bank Ltd.

NDLC-IFIC Bank Ltd. (NIB)

Saudi-Pak Commercial Bank Ltd. 

Soneri Bank Ltd.

Standard Chartered Bank (Pak) limited (Re-constituted in December 2006)

1.5.4 DFIS (DEVELOPMENT FINANCIAL INSTITUTIONS)

Pakistan Industrial Credit and Investment Corp. Ltd.

Pak Kuwait Investment Company (Pvt) Ltd.

Pak Libya Holding Company (Pvt) Ltd.

Pak-Oman Investment Company (Pvt) Ltd.

Saudi Pak Industrial and Agricultural Investment Company (Pvt) Ltd.

House Building Finance Corporation

National Investment Trust Limited

1.5.5 NON MEMBER BANKS

Bank of Tokyo Mitsubishi UFJ Limited, Pakistan

Network Micro Finance Bank Limited

Rozgar Micro Finance Bank

Tameer Micro Finance Bank Limited

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CHAPTER 2

PROFILE OF INSTITUTION MCB BANK

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2.1 ABOUT MCB

MCB is one of the leading banks of Pakistan with a deposit base of about Rs. 280 billion

and total assets of around Rs.300 billion. Incorporated in 1947, MCB soon earned the

reputation of a solid and conservative financial institution managed by expatriate

executives.  In 1974, MCB was nationalized along with all other private sector banks. 

This led to deterioration in the quality of the Bank’s loan portfolio and service quality. 

Eventually, MCB was privatized in 1991.

During the last fifteen years, the Bank has concentrated on growth through improving

service quality, investment in technology and people, utilizing its extensive branch

network, developing a large and stable deposit base and managing its non-performing

loans via improved risk management processes.

2.2 VISION STATEMENT

To be the leading financial services provider, partnering with our customers for a more

prosperous and secure future.

2.3 MISSION STATEMENT

We are a team of committed professionals, providing innovative and efficient financial

solutions to create and nurture long-term relationships with our customers. In doing so,

we ensure that our shareholders can invest in us with confidence.

2.4 History & Background of MCB (Ltd)

MCB has an edge over other local banks, as it was the first privatized bank. The State

Bank of Pakistan has restricted the number of branches that can be opened by foreign

banks, an advantage that MCB capitalizes because of its extensive branch network.

Ten years after privatization, MCB is now in a consolidation stage designed to lock in the

gains made in recent years and prepare the groundwork for future growth. The bank has

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restructured its asset portfolio and rationalized the cost structure in order to remain a low

cost producer.

MCB now focuses on three core businesses namely Corporate, Commercial and

Consumer Banking. Corporate clientele includes public sector companies as well as large

local and multi national concerns. MCB is also catering to the growing middle class by

providing new asset and liability products. The Bank provides 24 hour banking

convenience with the largest ATM network in Pakistan covering 30 cities with over 197

ATM locations. The Bank’s Rupee Traveler Cheques have been market leaders for the

past six years and have recently launched their Gift Cheque Scheme.

MCB looks with confidence at year 2007 and beyond, making strides towards fulfillment

of its mission, "to become the preferred provider of quality financial services in the

country with profitability and responsibility and to be the best place to work

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2.5 ORGANIZATION CHART

ORGANIZATION CHART OF M.C.B. Limited

Nishatabad FAISALABAD

Branch Manager

Finance Remittance Account IT Cash Clerical Advances Department Department Department Department

Staff

Branch Manager

Advance Finances (G 2)

Remittance Accounts Department Department (G 3) (G 3)

Computer Operator

Cash Officers

Clerical Staff

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2.6 Services of the MCB BANK

The bank provides all types of banking services such as:

Deposits in local currency

Deposits in Foreign Currency

Advances to Businesses

Advances to Trade

Consumer Financing

Agriculture Financing

Corporate Financing

ATM Facility

Lockers Facility

On-Line Banking

E-Banking

Commission free Remittance

Collection of Utility Bills

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CHAPTER 3

BUSINESS PROCESS OF MCB BANK

3.1 BUSINESS PROCESS

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The business processes here means all the activities that take place in a bank and I am

going to tell you about some processes which I experienced and worked on in the MCB

BANK during my period of internship here. These include the everyday processes which

take place in the bank and they are explained and discussed in detail further in the report.

3.2 ACCOUNT OPENING

To open a big account is one of the major objectives of the banks because when a

customer opens an account in the bank then the deposits belongs to that branch and the

business is carried out from these deposits.

To open an account an account opening form has been specifically designed for everyone

who wishes to open an account in that bank. I am just going to run you through some of

the important point to which the account opening form caters to and also I have attached

an account opening form at the end of the report for your viewing so that it might be

clearer to you and easily understandable.

BRANCH NAME & CODE

The account opening form is designed for all the branches of the MCB BANK so it

has a single fixed format so first of all to make the form property of that branch, the

branch name and the branch code is to be mentioned very clearly.

3.2.1 TYPES OF ACCOUNTS

Here the type of account the customer chooses to open has to be selected by the client

as the bank offers many types of accounts. Some of the available accounts are

(i) Current deposit account

(ii) Profit & loss account

(iii) Basic Banking Account

(iv) Savings Extra

(v) Business Account

(vi) Savings 365 Gold

(vii) Savings 365

(viii) Khushhali Bachat Account (KBA)

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(ix) Smart Savings Account

(x) Enhance Savings Account

3.2.1.1 CURRENCY OF ACCOUNT

Here the client has the right the choose which currency he or she wants to operate

his or her account in as the rules are very different for an account in local currency

as compared to the account in foreign currency

3.2.1.2 TITLE OF ACCOUNT

Here the name which the client wishes to give to the account shall be written and the

account will be operated under that name.

3.2.1.3 CONTACT INFORMATION

In this category the information of the customer is mentioned by which he or she can

be contacted with. This includes, address, alternate address, phone number, cell phone

number, fax number and email address. This is very important because in specific

circumstances the bank may have the need to contact the account holder.

3.2.1.4 CATEGORY OF ACCOUNT

In this category it is selected by the client whether he wishes the account to be

individual, joint, proprietorship, public limited or private limited company account.

All these accounts have different requirements for opening.

3.2.1.5 OCCUPATION

The occupation of the client has to be mentioned here.

3.2.1.6 OPERATIONAL INSTRUCTIONS

In this category the account holder nominates anyone other than himself who may

also operate the account.

3.2.1.7 INTRODUCER / REFERENCE

This is one of the requirements to open an account. Reference of any other account

holder is needed to open an account because in case a person commits fraud then

the bank must have someone to question.

3.2.1.8 KNOW INFORMATION NEXT (KIN)

This is very important information to write the name of a close relative. This is taken

so that in case the account holder does not contact the bank for three years then the

bank would get in contact with the name mentioned as in the next to kin.

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3.2.1.9 ADDITIONAL INFORMATION

In this the account holder mentions if he has any account in any other branches of

banks. This rationale shows the strength of the customer.

3.2.1.10 SPECIMEN SIGNATURE CARD

Along with the account opening form we also get the client to fill in and sign four

times on a purposely designed specimen signature card. We use this Specimen

Signature card to confirm the signatures on instruments issued by the client. This is

very important to prevent fraudulent cases. It is vital that we have this card filled

because from this we verify the signatures on the cheques before any value of money

can be transferred or paid in cash.

When the account opening form is completed the officer in charge must view the

original CNIC and also attach a photocopy of it. Also it is necessary to have an

introducer when to open an account. And it is also vital to obtain the CNIC of the

next to kin.

3.2.1.11 FLOWCHART OF ACCOUNT OPENING

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Customer

3.3 ACCOUNT CLOSING

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Fill up a/c opening form

Attach all required Documents of the client by officer

Final Verification by Manager

Verification by another officer

Computer Generates the A/c No.

A/c No. isentered in the

A/c opening form

Account of the customer is opened

NIC copy

Service Letter if employee

Reference letter

Request application on letter pad if business A/C

For the purpose of account closing a form has been constructed to aide this process.

Whenever the client wants to close the account, the only responsibility of the bank is to

collect the issued cheque book from the customer and to get the constructed application

form of account closing completely filled. After that the payment of the entire amount in

the account is paid to the client.

3.3.1 FLOWCHART OF ACCOUNT CLOSING

3.3.2 Dormant / Inoperative Accounts:

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Cheque book returned by the customer

Submit account closing application form

Officer closes the Account

Payment of all balance in the account is made

by the bank

Dormant or inoperative accounts are those accounts in which no transaction is happened

for the last six months or more than six months are called dormant accounts, and no body

comes into the bank and inform about this account or in other words we can say that

these are dead accounts.

3.3.3 Deceased Customer Accounts:

Deceased Customer Accounts are those accounts in which the actual account holder is

dead, but amount is still is available in his account is called deceased accounts, in order to

clear this problem if the relatives of this account holder came to the bank and inform that

this person is now no more, so the bank verify this statement that either it is true or not, if

it is true than bank asked to the relatives of this account holder that please provide us the

copy of death certificate of this account holder, than bank legally distribute the equal

amount of the remaining income which is left in his account.

3.3.4 Unclaimed Accounts:

Unclaimed Accounts are those accounts in which no transaction is occurred for the last

fifteen years, and no body come in to the bank and ask about this amount which is still

remaining in this account, than we send this amount to our Head Office and head office

will give this amount to the Government of Pakistan. Because no body claim this amount

for last fifteen years.

3.4 CLEARING

There are two types of clearing activities which take place in a bank

(i) Inward Clearing

(ii) Outward Clearing

To understand the process of clearing we first need to understand and comprehend the

workings and the purpose of the state banks institution called NIFT.

3.4.1 NIFT

NATIONAL INSTITUTIONAL OF FACILITATION TECHNOLOGY

In the process of clearing NIFT plays a very important role. NIFT (national institutional

facilitation technology) has a very vital role as it is the “middle man” in the purpose of

clearing and issuances of cheque books to the customer on demand of the bank or branch.

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This institution has been formed by the State Bank of Pakistan and it performs the duties

of receiving all the clearing cheques from all the branches of all the banks and taking

them to the state bank. At the SBP first the NIFT forms a list of all the cheques from all

the banks and then forwards it to the SBP representative. That person categorizes all

these cheques according to their respective banks and branches and forms another list of

his own. Then these sorted cheques are again given to the NIFT agent and he then takes

them to the head offices of their respective banks and from there they are distributed to

the respective branches also through NIFT. This way NIFT delivers all the cheques to

their parent branch from which they have been issued.

3.4.2 FLOW CHART OF WORKING OF NIFT

3.4.3 In Ward Clearing:

In the morning time I am received the in ward clearing from the NIFT employee

And then i count the instruments which I received and match with the summery which is

also attached with these instruments. Than give these instruments to the computer

operator who posts these instruments, after posting all these instruments then he again

give me the instruments and I enter all these instruments into the clearing sheet in his

Debit side.

3.4.3.1 Memo on Cheques Return:

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NIFT

SBP State Bank of Pakistan (Sorting of cheques)

NIFT

Head office of MCB

Branchesof MCB

Also prepare the Memo on (S.F 16) in which the details of objections are given that for

purpose we return this instrument, and charge RS 200/- per instrument.

3.4.3.2 Calculate the Difference Vouchers of Clearing:

Difference voucher means the difference between the Out ward Clearing and In Ward

Clearing. If the liabilities are outstanding on our side which means that our branch will

pay this difference amount than I will prepare the H-O Credit Voucher, and if the

Liabilities are outstanding on there side which means that now we are receiving the

difference amount so I will prepare the H-O Debit Voucher.

If liabilities are outstanding on our side than made Credit voucher i.e.

Cr

H-O

If liabilities are outstanding are on there side than made Debit Voucher i.e.

Dr

H-O

3.4.3.3 Calculate the Difference Vouchers of Clearing Return:

I have also made the difference voucher of those cheques which are R.U.P means Return

Un Paid. Means those cheques which our branch is returned and those cheques which

other banks returned our cheques which we send for clearing and it had been rejected.

If liabilities are outstanding on our side than made Credit voucher i.e.

Cr

H-O

If liabilities are outstanding are on there side than made Debit Voucher i.e.

Dr

H-O

Than finally enter all these difference vouchers in to the clearing sheet and balancing

with the computer. So this the complete process of Clearing.

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3.4.3.4 FLOWCHART OF INWARD CLEARING

3.4.4 OUTWARD CLEARING

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Customer gives cheque of MCB to other party

CHQ holder goes where he has his own A/C

At evening bank send that CHQ to

Bank keeps CHQ and makes transaction

NIFT send MCB CHQ next morning to that branch whose name is mention on CHQ

MCB receives CHQ and checks the following things

MCB Dr. the A/C of customer and Cr. A/C of NIFT

NIFT transfer amount to the drawer bank

Their own branch instrumentDate of instrumentDate of clearingOver writingAmount in figures and words

When the account holder of our bank receives payment from any other party in the form

of cheque, and that cheque is not of our bank or branch, and our account holder deposits

it in his MCB account then that cheque has to pass from the process of outward clearing.

All the cheques deposited in one day of other banks are then again sent through the NIFT

to the SBP which sends them to the head offices of their respective banks which through

NIFT sends the instruments to the respective branches from which they were issued. This

process of outward clearing is exactly opposite to the process of inward clearing which I

explained in detail before. This process of outward clearing is also of three days.

Procedure of Out Ward Clearing:

First of all receive the instrument from different customers which they present

on our branch.

Separate these instruments with in city clearing wise and inter city wise.

Giving the receiving slip to the customers.

Write Down the detail of these entire instruments which I received from

customer in to the Clearing Register.

Paste the Cross Stamp and clearing stamp at the front of these instruments

face.

Paste the Payees Account Credited stamp at the back of these instruments.

Calculate the amount of all these instruments

Prepare the delivery summery report

Prepare the Clearing Bundle Cover

Also prepare the Add List

After each and every thing is completed now put all these instruments into the NIFT bag

and closed this bag with seal. Than the third copy of delivery summery along with

deposit slips keeps in our custody, and then enter all these vouchers in to the clearing

sheet in his Credit side so this is the complete procedure of out ward clearing.

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3.4.4.1 FLOWCHART OF OUT WARD CLEARING

3.4.5 Intercity Clearing:

There is the new concept of clearing which is named as inter city clearing. State Bank of

Pakistan now revises his policies and introduces this concept, because before this action

if any instrument which is belong to out of city, so in order to clear this instrument we

sent this cheque through CC Cheque Collection. Under cheque collection procedure it

took five to six days which time taking even though the CC procedure is not yet finished

but minimum up to the certain extent. Now in most of the big cities inter city Clearing

performing his job instead of CC, with the help of inter city clearing time duration is

definitely minimum.

Facility of Inter City Clearing is now offer in these cities

Karachi

Lahore

Mulatn

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A/C holder of other bank gives cheque to the A/C holder of MCB

The A/C holder of MCB present cheque in MCB

At evening bank send that CHQ to

Bank keeps CHQ and makes transaction

NIFT send MCB CHQ next morning to that branch whose Cheque is.

Other Bank receives CHQ and checks the following things

Their own branch instrumentDate of instrumentDate of clearingOver writingAmount in figures and words

Other Bank Dr. the A/C of his customer and Cr. A/C of NIFT

NIFT transfer amount to the drawee bank

Gujranwala

Rawalpindi

D.G Khan

Hyderabad

Islamabad

Sialkot

Bahawalpur

Quetta

Peshawar

Procedure of Intercity Clearing: First of all receive the instrument from different customers which they present

on our branch.

Separate these instruments inter city clearing wise.

Giving the receiving slip to the customers.

Write Down the detail of these entire instruments which I received from

customer in to the inter city Clearing Register.

Paste the Cross Stamp, clearing stamp and inter city stamp at the front of these

instruments face.

Paste the Payees Account Credited stamp at the back of these instruments.

Calculate the amount of all these instruments

Prepare the delivery summery report for each city

Prepare the Clearing Bundle Cover for each city

After each and every thing is completed now put all these instruments city wise into the

separate envelope of every city and all these envelopes put in to the NIFT bag and closed

this bag with seal. Than the third copy of delivery summery along with deposit slips

keeps in our custody city wise.

But inter city payment procedure is different I can not credit the particular account until

or unless I am receive the NILL value voucher through NIFT, and also receive the

summery from NIFT about all these instruments which I am sent separately into different

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cities. When I receive the NILL value voucher then enter these vouchers into the clearing

sheet

Dr

H-O

To

Cr

A /C

Also charge the commission on inter city Clearing which is RS 200/- per instrument. And

also made the commission voucher that is account Debit and Mise Earning is Credit

Dr

A /C

TO

Cr

Mise Earning

(General)

3.5 REMITTANCE FORM

Remittance form is used for the issuance of the following matters; these are equal to pure

cash and are issued only on the full payment of their amount plus their charges. They are,

Term Deposit Receipt (TDR)

Call Deposit Receipt (CDR)

Demand Draft (DD)

Telegraph Transfer

Pay Order

3.5.1 Term Deposit Receipt:

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Term Deposit Receipt is basically used for the saving purpose, and it is also use for

transfer purpose, which means amount moves from one account to another account, in

term deposit receipt specific time period is mentioned and during this particular period

no one can withdraw this amount from his account, so when we talk about some specific

time period it may be three months, six months three years etc basically it depends open

on customer according to his desire I made this Term deposit receipt. Term Deposit

Receipt is basically a profit oriented instrument, because customer deposits his money for

specific period of time and on behalf of this bank will pay some percentage of profit

which depends upon the amount of deposit higher the deposit higher will be the

percentage of profit.

Basically TDR is profit oriented instrument so that’s why zakat is also applicable on it,

no commission is charged on this term deposit receipt

Procedure of Issuance of Term Deposit Receipt:First of all receive the request letter from customer on (S.F 265)

Also receive the cheque which is transfer from cheque to TDR.

The client can also made his TDR by depositing cash but his account must be opened in

our branch which is necessary because TDR payment is made only through account no

counter payment is made on behalf of this TDR.

Fills the TDR block and write down the complete information on it. i.e.

Date of issued TDR

Received from

On Account of

Amount in wards

Amount in Figures

Also mentioned the TDR number on that is 58/15

Than send this TDR for signature one from the Accountant and one from the

Manager.

Taking all this information in to the TDR register that is TDR

Serial number 58/15

Customer name

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Account number

Issued date

Expiry of this TDR

Deposit Receipt which is TDR block Number

Renewal of Term Deposit Receipt:When the customer fills the S.F 265 which is TDR application form, in this form one

option is given and the option is

Rollover the Same Tenure:If the customer tick this option while filling this form than automatically the renewal of

TDR is happened no need for any customer request, which means that customer is agree

with rules and regulation, and if the customer is not tick this option than he again gives us

the request letter on which he wants to extend this time period of TDR, for this purpose

he will also come to the branch with original TDR and change the date which is

mentioned on this TDR.

Payment Procedure of Term Deposit Receipt:The payment procedure of TDR is only made through account no counter payment is

made for this Term Deposit Receipt. Customer transfer this TDR at the expiry of this

TDR in to his own account and than present a cheque and mention the required amount

which he wants to withdraw.

Deduction of Zakat Thereon:Because TDR is profit oriented instrument so that’s why zakat is applicable on it, now the

percentage of zakat which is deducted form the whole amount which is available in his

account is 2.5%. So this is the simple rule of Zakat deduction.

Voucher in Sheet of TDR:

Dr Cheque

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TO CR Term Deposit Receipt (General)3.5.2 Call Deposit Receipt:

CDR is just like a hard cash, basically CDR is used for transfer purpose means amount

transfer from one account to another account, CDR is used for Bidding purpose or some

time government introduces different housing scheme and here he mentioned that you

must submit the CDR instead if net cash, but in now a days when the government of

Pakistan impose .2% withholding tax of the amount which is withdrawal over RS.25000/-

in a day, then the

Issuance of Call Deposit Receipt:

Receive the request letter from customer and also receive the cheque and verify this

cheque weather this post dated, stale cheque or not and also check the sign verification of

this customer which is mentioned on this cheque and compare with signature card which

is scanned in computer.

Than send this cheque for posting here and see that is it enough amount in his account

which he written down on this cheque, if yes than further processing.

Fills the CDR block and write down the following information on it

Issue date of this CDR

In favour of

On account of

Amount in wards

Amount in figures

CDR serial number i.e. 58/07

Than take the signature, account number his contact number at the back side of

the copy which we kept as record

Paste stamps on this cheque that is Branch crossing stamp

Transfer stamp on this cheque

Charges of CDR:

Bank charge Rupees 50/- per CDR

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Enter these vouchers into Transfer sheet:

Debit Cheque TO Credit CDRAlso made commission voucher, and this commission is deducted from his account the

customer may this commission charger through cash or I can charge from his account.

Debit Account TO Credit MISE Earning

(General)

Maintenance of Records of CDR:

For the purpose of maintenance of CDR record I used the CDR register. This register

uses to write down the following things

Date of Deposit

Deposit number i.e. 58/10

Deposit Receipt i.e. 770012

Depositor name

Account number

Due Date (At Call)

At Call means that the bank will provide the same amount to the customer who made this

CDR at any time.

Payment procedure of Call Deposit Receipt:

The customer whose name, account number is mentioned on this CDR he is only person

who can take this amount through his account not in counter payment. Basically CDR is

mostly used for transfer purpose that’s why his payment is made only through account.

DIFFERENCE BETWEEN CDR AND TDR:

CDR VS TDR

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Non interest bearing instrument Interest bearing instrument

Demand at Call Demand after the specific period

No Zakat is deducted Zakat is deducted

Use for Transfer Purpose Use for saving Purpose

Charges on CDR No Charges on TDR

Payment through account Payment through account

3.5.3 Demand Draft:

This transfer remit is made when the customers need to send money to another city or

country. The original instrument is handed over to the customers and the name of the

receiver is printed on the DD. The bank keeps only the form of DD in which all the

information is given like Account number of sender and receiver, address of sender and

receiver and phone number of receiver on (SF100).

Procedure of Issuance of Demand Draft:

First of all receive the request form from customers on SF 100, In this SF 100

customers writhe down the Favoring person’s name his account number, and also

mentioned the city name form where the demand draft is sent, also write down his

name account number is well on this SF 100, the customer should mention the

amount of this SF 100 which he is give to the other party. Than I calculate the

commission charges of the whole amount and mention on this form along with

postage charges and excise duty.

Enter all the information into the Demand Draft out Ward Register and get the

DD serial number i.e. 58/ 70 etc. along with the DD block number on it.

Than prepare the Demand Draft

After preparing the Demand Draft than the next process is to make the advice of

this Demand Draft send to the relevant branch.

Than putting all this information into the Dak dispatch Register in order to get

reference number.

Commission Charges on DD

Up to 100000 010% Minimum RS 50

30

Over 100000 0.05% Minimum RS 100

Postages Charges is Rs. 75

Excise Duty charge 5 % of the Commission Amount

Also take the vouchers of DD into the Sheets i.e.

Debit

Cheque TO Credit H –OAlso take the commission vouchers that is

Debit

Account

TO Credit

Commission charges on DD

Postage charges on DD

Excise Duty on DD

3.5.3.1 Procedure of In Ward Demand Draft:

Some time receive the advice of demand draft which is drawn on us.

First of all enter this advice in to the Dak Received Register and paste the Dak

received stamp on it.

Enter this DD advice in to the DD payable Register.

Also made the voucher in to the sheet when I receive only the advice of this DD

Debit

H – O

TO

Credit

DD Payable

31

And when I receive the original Demand Draft then the made the two more voucher DD

payable Debit to Account Credit

Debit TO Credit

DD Payable Account

And also mark the date in to the DD Payable register the date in which I received this

original DD and amount credit to the account.

3.5.3.2 Cancellation Procedure of Demand Draft:

Receive the Request letter form customer in his letter pad or plane paper.

Purchaser along with Demand Draft physically comes to the branch

Under DD cancellation no need to sign or stamp of the favoring Person but some

time

Purchaser is the authorized person to cancel this Demand Draft.

If i have already sent the DD advice to the relevant branch than I will send the

Debit voucher by the same amount in which the DD is made because if I did not

send the Debit voucher to the branch the entry will outstand in there side so in

order to clear this entry I will send this Debit voucher to the relevant branch.

Commission charges for DD cancellation are

RS 100/- charge form Account Holder

RS 150/- Charge from Non Account Holder.

Cancellation code of Demand Draft is 0543

3.5.3.3 Issuance of Duplicate Demand Draft:

Reason for duplicate demand Draft:

It may be lost.

It may be theft by some body.

It may be tore in to pieces.

Procedure of Duplicate DD:

First receive the request letter form customer

32

Also fills the (CF 15) indemnity Form in this form the customers gives the under

taking that in this particular time period if the payment is made on this DD than

the bank is not responsible for this action, and he also said that during this period

if he founds the original DD than he will not present again this Demand Draft for

payment purpose.

Charges for Duplicate Demand Draft 5

RS 200/- for Account Holder

RS 250/- for Non Account Holder

Then I sent the copy of the customer request letter along with the CF 15 to the

relevant who will respond this Demand Draft and ask the current status of this

Demand Draft is the payment is paid or not, and if payment is made on behalf of

this demand Draft than we will provide the complete information the customer

and now the deal is happened between the party and the particular customer who

will take this payment.

If payment is not made yet then I ask to the branch manager that please stop

payment of this Demand Draft.

I than I will issue the duplicate Demand Draft to the party, for example if the

pervious Demand Draft serial number is 58/ 100 and Block number is 951380,

and after some now the serial number is 58/ 150 and Block Number is 951430

now write down the following thing on this duplicate DD,

58 / 100 951431 (In lieu of DD NO 58 / 100 951380) mentioned with red ink on

this Demand Draft, no more commission is charged.

3.5.4 Telegraph Transfer (TT):

Telegraphic Transfer is also used by the bank to send money to outstation banks to pay

the money to the specific person on whom the instrument is drawn. The bank sends

information to that bank where the TT is transferring. The sending branch gives a receipt

only to the customer.

This sort of instrument is used out of city and the main purpose is to get payments in a

very short time. And it is not locally used, through Fax for example if there is a deal

between two parties one is sitting in Faisalabad and the parity is in Karachi and the

Faisalabad party purchase some thing and the other party said we want payments through

33

TT. Then the Faisalabad party come in the bank, first open his account in bank, then he

fills the application for remittance and our procedure is start. After receiving the

application our next procedure is made TT advice in this advice we enroll the TT No, R

No Amount, Fevering of the particular parson is mentioned his account No, Write Test

And Date is mentioned in this advice .After completing the advice we write the TT No R

No in TT Dispatch register and enroll in the TT Remittance register then we enroll all

these things in Fax paper and last thing is the reference no is mentioned on TT.

Procedure of Telegraph Transfer

Application For Remittance on (SF 100)

T.T Out Ward Register

T.T Remittance Register

In Roll in Fax paper

Code Test

T.T dispatch outward

Right down all the information onT.T Message Book

Commission Charges by the bank on TT (0400)

UP TO RS 100,000 .10 %Rs.50 Minimum

OVER RS 100,000 .05 % Minimum Rs 100

Postage Charges:

Postage charges is fixes up to Rs.75

Telegram / Fax Charges on TT:

Minimum RS 100/-

3.5.4.1 Procedure of Out Ward Telegraph Transfer TT:

First of all receive the request form from customer on SF100 in which the favoring name,

his account number, purchaser name his account number, TT amount in words as well as

in figures, branch name and code of the particular city where TT is sent, and finally

mentioned the commission postage charges on this SF 100.

34

Than enter all the information in to the TT Out Ward Register also take the TT Number

along with Remittance Number, R Number starts from 01 TO 100 and if the year is not

finished and R number goes to 100 than R Number again starts from 01, and TT number

shows that how many times I sent this TT to this branch in a year.

Also made the commission charges on this TT, that commission on TT, Postage on TT,

and Excise Duty on TT.

To make the TT Advice on (SF 89-A) and write down all the information which is

important regarding this TT, also prepare the Fax Pad,

Than taken all these information in to the TT Message Book.

Enter all this information in to Dak dispatch Register in order to get Reference Number.

Finally code the Test on this TT

Vouchers of this TT in to the Sheet Debit Credit Cheque TO H – O

Commission Vouchers in to the Sheet Debit Credit TO Account Commission on TT

Postage charges on TT

Excise duty on TT

3.5.4.2 Procedure of In Ward Telegraph Transfer TT :

First of all receive the advice of Telegraph Transfer which is drawn on us.

Enter this advice in to the Dak Received Register and paste the Dak

received stamp on it.

Enter this TT advice in to the TT payable Register and mark the TT number R number,

date issued of this TT date Paid of this TT favoring name his A/C etc.

Also made the vouchers when I received the advice of this TT

Debit Credit

H – O TO TT Payable

TT Payable Account

35

Also enter these vouchers in to the Sheet that is H-o debit in to the General head, and TT

payable Credit in to the Other head, than TT Payable Debit in to the Other Head and

Account Credit either it is Current or PLS.

3.5.4.3 Cancellation Procedure of Telegraph Transfer:

Receive the Request letter form customer in his letter pad or plane paper.

Purchaser along with Telegraph physically comes to the branch

Under TT cancellation no need to sign or stamp of the favoring Person

Purchaser is the authorized person to cancel this Telegraph Transfer.

If i have already sent the TT advice to the relevant branch than I will send the

Debit voucher by the same amount in which the TT is made because if I did not

send the Debit voucher to the branch the entry will outstand in there side so in

order to clear this entry I will send this Debit voucher to the relevant branch.

Also take the reversal vouchers in to the sheet after cancellation that is

Debit Credit

H –O Account

Commission charges for TT cancellation are

RS 100/- charge form Account Holder

RS 150/- Charge from Non Account Holder.

Cancellation code of Telegraph Transfer is 0443

3.5.5 Pay Order:

Pay Order is used to send money within the city. The instrument is given to the

customer. He sends or gives it to that person who is receiving the payment from the

payer. The holder of the PO claims for money.

This sort of instrument is locally used and pay in the same branch that made this pay

order. Pay Order has no advice because it is locally used and payment is received from

the bank that made this pay order.

Pay Order is locally used and dealing between two parties, for example Mr. Asif is

dealing with Adil industries Pvt Ltd and purchase sugar and give them money inform of

pay order, the Mr. Asif give his cheque or give the net cash in bank, and bank made pay

order on favoring of Adil Industries Pvt Ltd. If deal is happened then Adil Industries Pvt

36

Ltd sent this pay order to the branch where his account is open and post the stamp on pay

order that he receive the amount and then account is credited of Adil Industries Pvt

Ltd .And if the deal is not happened then Adil Industries Pvt Ltd sign on pay order it

means that there deal is not confirmed with Mr. Asif and give the pay order and he

deposit this amount into his account.

If a person has no account than what happened how the person withdrawal the amount

from the bank, he receive token and an account holder give the verification of that

particular person and bank check the verification of the account holder with the help of

that token the favoring person is liable to get amount from bank.

If the pay order is up to Rs. 10,000 then revenue ticket is posted an amount Rs.5 on that

pay order

If the amount on pay order is less then 10,000 then posted revenue ticket of Rs. 2 on pay

order.

Procedure of Issuance of Pay Order:

Receive the request letter from customer on SF 100.

Write down the commission charges and excise duty on this SF 100

Enter all the information in to the Pay order Book

Putting the vouchers in to the Transfer Sheet

Prepare the Pay Order.

Purchaser made this Pay Order with net cash or presenting a cheque in case of

cheque first of all I send this cheque to the computer operator for posting purpose

in order to know the balance in his account.

Mark this Pay Order to the Pay Order Day Book

3.5.5.1 PAY Order Charges:

In pay order no limit of amount is required and it’s up to you how much amount written

on pay order and bank charge Rs. 100 per pay order

And if any person who made pay order from M.C.B and his account is also over there

then bank give facility in form of relaxation for that particular person and receive pay

order face is Rs. 50 and excise duty on this Pay order is 5 % of the commission amount.

3.5.5.2 Maintenance of Pay Order Record:

37

For this purpose Day Book is used for the purposing of balancing of Pay Order, and write

down each and every Pay Order in this Day Book which I a5m prepared and credit side

fills when physically Pay Order received for payment purpose it may be presented

through Clearing or may be Party Physically come in to the Branch in order to get

payment on behalf of this Pay Order.

3.5.5.3 Cancellation Procedure of Pay Order:

Receive the Request letter form customer in his letter pad or plane paper.

Purchaser along with Pay Order physically comes in to the branch

Under Pay Order cancellation the Favoring Party Should sign at the back of this

Pay order in order to cancel this Pay Order, because with out Signature or stamp

of the favoring pay order is not canceled.

Pay Order is cancelled with mutual understanding of both parties.

Also take the reversal vouchers in to the sheet after cancellation that is

Debit Credit

Pay Order Account

Commission charges for Pay Order cancellation are

RS 100/- charge form Account Holder

RS 150/- Charge from Non Account Holder.

Also verify the signature of the client who gives the request of Pay Order

Cancellation and match his signature on (SF 100) which he was filled.

3.5.5.4 Issuance of Duplicate Pay Order:

Reason for duplicate demand Draft:

It may be lost.

It may be theft by some body.

It may be tore in to pieces.

Procedure of Duplicate Pay Order:

First receive the request letter form customer

Also fills the (CF 15) indemnity Form in this form the customer gives the under

taking that in this particular time period if the payment is made on this Pay Order

than the bank is not responsible for this action, and he also said that during this

38

period if he founds the original Pay Order than he will not present again this Pay

Order for payment purpose.

Charges for Duplicate Pay Order

RS 100/- for Account Holder

RS 200/- for Non Account Holder.

I than I will issue the duplicate Pay Order to the party, for example if the

pervious Pay Order serial number is 58/ 200 and Block number is 311520, and

after some now the serial number is 58/ 250 and Block Number is 311570 now

write don the following thing on this duplicate Pay Order,

3.6 ON Line Transaction:

Here I am working under the kind supervision of Mr. Imran who gives me every possible

information which is beneficial for me. M.C.B also providing the facility of on line

transaction and has wide range of this online network, for example if one party purchase

the material from other party which is in Karachi then the party said that give me

payment through online. For this purpose the person whose account is open in M.C.B can

use this facility, to provide this facility bank charge the commission and the amount

transfer to Karachi through online .if online transaction is not possible then we send the

amount through post and the instrument which is used for this purpose is Inter Branch

Credit Advice S.F 179. this voucher consists of three copies one copy is send to the

responding branch and the other two copies and the slip is under the control of bank, in

this instrument following things are mentioned like originating branch, responding

branch, reference no, amount in figure and in word is well and also coated the Test on

this advice which is send to the relevant branch. Similarly when we receive the following

sort of advice from other bank through, then we made the credit voucher S.F 10. By

amount of C.B.T means cross branch transaction from the branch Karachi Main (0001),

control no 134050, dated 17- 09- 09, and made the following entry from our side

Debit Credit

H -O TO Account

39

ON LINE TRANSACTION CHARGES

RS 1 to 1 Million Rs. 200 + 10 = 210

Here RS 200 is the Commission Charges and RS 10 is the Excise Duty.

3.7 VOUCHERS

Vouchers are used to keep the record of all the work performed in the branch of the bank

through out the whole day and is organized by an officer of the bank each day for each

and every transaction that took place on the previous day. It is a very vital part of the

work as it is the record keeping of everything that happens in the banks and evidence is

attached with it and it is viewed and confirmed and checked in very much detail by the

auditors of that bank.

PROCEDURE

The process by which the vouchers are attached with the supplementary sheets is

explained in detail below;

There are two parts of vouchers that the MCB Bank used to keep the record of each day.

(i) First bundle of vouchers includes Cash on Hand, Current Deposit voucher,

PLS vouchers and the all the general vouchers inclusive of all the debit and

credit entries done throughout the day and respective is attached along with it.

(ii) Second bundle of voucher includes HO (head office) vouchers and all the

income and expenditure vouchers also inclusive of all the debit and credit

entries throughout the day along with the evidence attached.

The evidences mentioned here are all the instruments which the bank received throughout

the day including deposit slips, cheques, pay orders, remittance forms, demand drafts,

Online’s, advices, HO advice etc.

40

For binding and checking these vouchers the officer has to,

(i) Sort all of the instruments according to the supplementary sheets

(ii) Ticking of all of the amounts that are mentioned on the supplementary sheets

against the amounts mentioned on the original instruments to avoid mistakes

and errors and also for the checking of any missing instruments.

(iii) After all the binding of the vouchers has been done than all the debit and

credit entries of the vouchers have to summed up and the total has to be

shown on the title page attached to the vouchers.

3.7.1 FIRST BUNDLE OF VOUCHERS DISTRIBUTION

The first bundle includes

3.7.1.1 CASH ON HAND

This shows the detail of the amount paid to the customers or withdrawals done by

the customer throughout the day

Utility bills received ( SNGPL,WASA, FESCO,PTCL )

Attachments: CPM ( cash position memo )

3.7.1.2 CD VOUCHERS

All the debit vouchers which are the CD cheques are attached with the

supplementary sheets.

All the credit vouchers which are the deposit slips for the CD accounts are

attached with the supplementary sheets.

Form of internal transfer is a form which is used to transfer funds from one

account into another and if this transfer transaction takes place then this form has

also to be attached as evidence with the account to which the money is

transferred.

3.7.1.3 PLS VOUCHERS

All the debit vouchers which are the PLS cheques are attached with the

supplementary sheets.

41

All the credit vouchers which are the deposit slips for the PLS accounts are

attached with the supplementary sheets.

Form of internal transfer is a form which is used to transfer funds from one

account into another and if this transfer transaction takes place then this form has

also to be attached as evidence with the account to which the money is

transferred.

3.7.1.4 GENERAL

Some of the important instruments have to be attached with general supplementary sheets

Pay Orders issued (PO)

Call Deposits issued (CDR)

Basic Business Account instruments (BBA)

Smart Saving Account instruments (SSA)

Online payments

Demand Drafts (DD)

ATM Credit and debit vouchers

Vouchers of commission and federal excise duty

Voucher of commission on FESCO

And the rest of supplementary sheets which are included in general may or may not

require any instruments to be attached to them at the time of voucher binding.

3.7.2 SECOND BUNDLE OF VOUCHERS DISTRIBUTION

This bundle includes vouchers and supplementary sheets of the head office and all the

sheets of income and expenditure for the bank. The second bundle includes,

HEAD OFFICE

The advice of head office issued against the clearing of the cheques

Bank transfer scroll that are issued by the NIFT

All advices issued against the head office of the bank

All the “online” credit slips processed throughout the day.

INCOME AND EXPENDITURE

42

All sort of bank commissions

All sort of bank charges

All the vouchers for expenses of stationary.

All the vouchers for expenses of maintenance bills.

All the vouchers for expenses of entertainment of staff bills.

3.7.3 SECOND BUNDLE OF VOUCHERS DISTRIBUTION

This bundle includes vouchers and supplementary sheets of the head office and all the

sheets of income and expenditure for the bank. The second bundle includes,

HEAD OFFICE

The advice of head office issued against the clearing of the cheques

Bank transfer scroll that are issued by the NIFT

All advices issued against the head office of the bank

All the “online” credit slips processed throughout the day.

INCOME AND EXPENDITURE

All sort of bank commissions

All sort of bank charges

All the vouchers for expenses of stationary.

All the vouchers for expenses of maintenance bills.

All the vouchers for expenses of entertainment of staff bills.

IMPORTANCE OF VOUCHERS

(i) The main reason for making these vouchers is to keep the record of the bank up to date

of all the work that has been performed in the bank throughout the day.

(ii) In case there is any misunderstanding of any instrument, it can be confirmed from

these sheets and traced out as every detail of each transaction is mentioned here.

43

(iii) This can be easily reviewed by officers for inspection and it has to be signed and

checked by a senior officer on a daily basis to keep a check on the workings of the

branch.

FLOWCHART OF MAINTAINING SUPPLEMENTARY SHEETS

44

Debit Cheque of PLS and CD received form

cash counter

Customer

Advices form head Office (debit)

Receiving form head Office

Customer (account holder/non account holder)

3.8 ATM DEBIT CARD

ATM stands for automatic teller machines. This is one of the product of MCB Bank in

order to provide convenience to their customers after bank timing have ended and he or

she can still withdraw an amount of cash by using the ATM debit card. MCB offers 4

types of ATM/ Debit cards.

1. local classic

45

Required DD, pay order, online and CDR (Credit)

Deposit form of CD and PLS received form cash counter (credit)

NIFT Scroll

System

Run Day end

Data Transfer to IT department

Printing OfSupplementary

Sheets

Collection of all the instruments debit and credit vouchers from officers and cash department

Attachments of sheets with all vouchers/Instruments

2. local gold

3. international classic

4. International gold.

PROCEDURE FOR ATM CARD

To hold an ATM card the person must be an account holder of the bank

They would be required to fill the application form of the ATM debit card

The MCB Bank would deduct ATM card charges

The card would be processed by IT and then sent to the MCB Bank branch from

which it was initiated

The card would then be issued to the customer

In the end to activate the card the client would have to call the given number and confirm

his information for it to start working. Or customer request to the relevant branch to

active the card. Branch sends a request through email to the IT department Karachi to

activate the card and within few minutes the card is activated. Normally, when the card is

given to the customer branch officers make it sure that the card is activated.

3.8.1 CHARGES FOR ATM DEBIT CARD:

CHARGES FOR ATM DEBIT

CARD

Local

Classic

Local

Gold

International

Classic

International

Gold

1 Issuance of new card 250 350 400 500

2 Renewal Charges 250 350 400 500

3 Issuance of supplementary card 100 100 200 200

4 Re- Issuance 250 350 400 500

5 Balance Inquiry at MCB ATM Rs.2.00 Rs.2.00 US 1$ US 1$

6

Balance Inquiry MCB customer at MNET

member Bank Rs. 4.00

Rs.

4.00

7 Balance Inquiry MCB Customer at 1 link

ATM

As per 1

link charges

As per

1 link

charges

As per 1 link

charges

As per 1 link

charges

46

8 MCB Customers using other bank’s ATM

for cash withdrawal

Rs. 10 Rs. 10 Rs. 10 Rs. 10

BENEFITS OF THE ATM DEBIT CARD

Less time is required for withdrawals as compared to withdrawals by cheque

Cash withdrawals can be made in all 24 hours everyday throughout the year

Cash withdrawals can be made from any ATM machine from any bank so this offers

maximum convenience to the client

The PIN code takes care of the clients’ security and the personalization of their card.

3.8.2 FLOWCHART FOR ATM CARD

3.9 MCB VISA CARD:

MCB Visa is not just another card in your wallet. It not only provides the conventional

credit card services in a manner that is superior in comparison, but goes an extra mile.

47

Fill the application form ATM card

For activation must fill date of birth and mother name

ATM charges deducted Rs 250

Process by IT

With in 10 Days card send by IT department to MCB Branch

Issue card to customer

Activate the card by calling on universal number

MCB VISA offers you a wide range of products that will cater to your diversified taste

perfectly.

Buy now and pay off latter in easy and affordable monthly installments.

You need cash and want to pay back in installments.

Now Experience peace of mind of having a credit card free from fraud or misuse.

3.9.1 CHARGES FOR MCB VISA CARD:

MCB Visa Card Gold Classic

Joining fee Rs. 0 Rs. 0

Annual Fee Rs. 0 Rs. 0

Annual chip maintenance

fee

Rs. 500 p.a Rs. 350 p.a

Service fee/ mark up on

cash transactions

2.83% per month 2.83% per month

Card replacement fee Up to Rs. 500 Up to Rs. 500

Card re issuance fee Rs. 500 Rs. 500

3.10 Lockers:

Basically it is a facility which is provided by the bank to its customers in order to secure

there money gold important property documents etc. before this locker concept people

are very much worried about the lose of there money, gold and important documents so

now the people are very much relax because now they use this facility quite frequently,

3.10.1 Issuance of License:

It is not an easy task to get the licence of opening the locker facility in the branch for

every bank, for this purpose the bank should get permission from State Bank of Pakistan

who is the banker’s bank; with out his permission no body can provide this facility to the

customers. The branch who wants to get licence he must sent a written request letter to

State Bank than the state bank officer visit this branch and see that is there enough place

48

to provide the licence of lockers to this branch or not? If they are satisfy they charge the

licence fee from this branch.

3.10.2 Types of Lockers:

Small Size ( Rent RS 1000 per Annum)

Medium Size ( Rent RS 1500 per Annum)

Large Size ( Rent RS 3000 per Annum)

3.10.3 Insurance of Lockers:

Bank will also pay the insurance on behalf of this lockers so in case of any bank

misshape then the insurance company will accept the certain claim but it depends open

the size of the lockers

Small Size Locker Claim up to RS 500,000/-

Medium Size Locker Claim up to RS 10, 00,000/-

Large Size Locker Claim up to RS 15, 00,000/-

3.10.4 Renewal / Expiry of Lockers:

Usually the time period of this facility is one year, at the end of the time period the bank

will ask to the client that weather he will continue this facility or not if the customer says

yes then he will pay the charges again in order to use this facility which is provided by

the bank.

Procedure of Use of Lockers:One key is given to the customer and the other key is handed over to any bank person

who is the authorized person, and the locker is opened with both keys.

Customers can use this locker during the banking hour that is 9: Am to 5: PM.

49

CHAPTER 4

SWOT Analysis of MCB BANK

4.1 SWOT ANALYSIS

The SWOT Analysis of the MCB Bank in my view is as follows;

4.2 STRENGTHS

One of the largest banks in Pakistan

Automatic Operations

Full Day Banking

50

ATM Network

Customized Solutions

Customer Oriented Banking

Electronic Banking

Electronic Funds Transfer

Phone Banking

Wide Countrywide branches network

Strong potential for growth

Steady increase in Customer Deposits

4.3 WEAKNESSES

High Employees Turnover.

High charges.

Less attractive rate of return.

Dissatisfied Employees

Lack of proper trainings.

Less efficiency of SYMBOL System due to disconnectivity .

Gap between Management and Employees

Old Branch Structure

Old Employee Appraisal System

4.4 OPPORTUNITIES

Overseas Operations.

Branches in Rural Areas.

Additional benefits to employees as well as customers.

Launch the more effective and modern banking online system.

Growing Market

New Products and Schemes

Increase in Branch Network

E-Banking

51

4.5 THREATS

Economic conditions of country

Social, Cultural, demographic and environmental forces

Political, Governmental and Legal forces

Technological forces

Competitive forces

Increase in Banking Institutions

Instability

52

CHAPTER 5FINANCIAL STATEMENTS AND ANALYSIS

53

5.1 Balance Sheet Muslim Commercial Bank Limited

Balance SheetAs on 31st December

2006 2007 2008

AssetsCash and balances with treasury banks

23,665,549 32,465,976 39,683,883

Balances with other banks 1,469,333 6,577,017 3,807,519Lending to financial intuitions 9,998,828 21,081,800 1,051,372Investments 69,481,487 63,486,316 113,089,261Advances 180,322,753 198,239,155 218,960,598Operating fixed assets 8,182,454 9,054,156 16,024,123Deferred tax assets 191,967 172,373 -Other assets 5,464,426 11,031,450 17,868,761

298,776,797 342,108,243 410,485,517LiabilitiesBills payable 8,536,674 7,089,679 10,479,058Borrowings 27,377,502 23,943,476 39,406,831Deposits and Other accounts 229,345,178 257,461,838 292,098,066Sub-ordinated loans 1,598,080 1,597,440 479,232Liabilities against assets subject to finance lease

- - -

Deffered tax liabilities - - 1,180,162Other liabilities 8,611,600 11,171,496 11,722,493

275,469,034 301,263,929 355,365,842

Net assets 23,307,763 40,844,314 55,119,675Represented by:Share capital 4,265,327 5,463,276 6,282,768Reserves 13,408,005 24,662,426 34,000,638Unappropriateed profit 210,662 5,530,973 5,130,750

17,883,994 35,656,675 45,414,156Surplus on revaluation of assets 5,423,769 5,187,639 9,705,519

23,307,763 40,844,314 55,119,675

54

5.2` Profit & Loss AccountMuslim Commercial Bank Limited

Profit and Loss AccountAs on 31st December

2006 2007 2008

Markup/ return/ interest earned 17,756,232 25,778,061 31,786,595Mark up/ return/ interest expense 2,781,468 4,525,359 7,865,533Net mark up/ interest income 14,974,764 21,252,702 23,921,062

- Provision for dimininution in the value of investment

(98,982) 121,197 105,269

- Provision against loans and advances 1,242,153 1,014,540 2,959,583- Bad debts written off directly 1,184 47,000 199

1,144,355 1,182,737 3,065,051

Net mark up/interest income after provisions

13,830,409 20,069,965 20,856,011

Non mark up/interest income

Fee, commission and brokerage income 2,448,950 2,311,235 2,634,610Dividend income 480,344 811,801 632,300Income from dealing in foreign currencies 531,455 692,010 693,408Gain on investment 866,895 605,865 1,500,865Unrealized gain/ loss on revaluation of investment

851 - (13,105)

Other income 1,084,576 570,505 563,213

Total non mark up interest income 5,413,071 4,991,416 6,011,291

Income after interest income 19,243,480 25,061,381 26,867,302

Non mark up/interest expense- Administrative expenses 6,459,490 6,482,592 5,022,416- Restructuring expenses - - -- Other proposition/write off (72,740) 11,411 (3,743)-Other charges 178,841 66,708 540,594

Total non mark up/ interest expense 6,565,591 6,560,711 5,559,267

Extra ordinary/unusual items 340,598 - -Profit before taxation 13,018,487 18,500,670 21,308,035

55

Taxation-Current year 4,611,359 5,701,443 6,442,356-Prior years (149,763) 593,497 (1,294,473)-Defferd (365,524) 63,332 894,590

4,096,072 6,358,272 6,042,473Profit after taxation 8,922,415 12,142,398 15,265,562

Unappropriate profit brought forward 165,208 4,990,260 5,530,973

Transfer from surplus on revaluation of fixed assets

83,749 32,166 11,855

248,957 5,022,426 5,542,828

Profit available for appropriation 9,171,372 17,164,824 20,808,390Basic/diluted earning per share 21.36 23.40 24.30

5.3 RATIOS ANALYSIS:

Liquidity Ratios

Liquidity ratios measure the short-term solvency of a firm. Liquidity ratios present the picture

of the ability of the firm to pay its short-term obligations. The ratio holds different meaning for

creditors and owners of the firm. For owner, high liquidity means inefficiency of the

management and vice versa, while high liquidity of the firm is considered favorable by the

creditors as they see it as that the firm can pay their obligations and vice versa. Following are

most common type of liquidity ratios used by analysts to determine the liquidity of the firm.

5.3.1 Current Ratio:

The current ratio measures the number of items of the firm s current assets cover its current

liabilities. The current ratio should be part of your business' basic financial planning, meaning it

should be tracked monthly or quarterly. By keeping a close eye on this figure, you will

recognize if it begins to get out of line. This will allow you to take early action to prevent your

business from ending up in a difficult position.

56

Current ratio=current asset/ current liabilities

2006

Current asset 284,937,950

Current liabilities 266,857,434

Current ratio 106.80%

2007

Current asset 321,850,264

Current liabilities 290,092,433

Current ratio 111.00%

2008

Current asset 376,592,633

Current liabilities 342,463,187

Current ratio 110.00%

Current Ratio

Years 2006 2007 2008

Percentage 106.80% 111.00% 110.00%

Current Ratio

104.00%

105.00%

106.00%

107.00%

108.00%

109.00%

110.00%

111.00%

112.00%

2006 2007 2008

Current Ratio

57

Analysis of current ratios of MCB:

Current ratio shows a firm’s ability to cover its current liabilities with its current

assets. It is obtained by dividing current assets of the firm by its current liabilities.

Current ratio of 1 or higher means that the firm can pay all its current liabilities from

its current assets, while a value less than 1 means that the firm will be unable to pay

its current liabilities completely by its current assets. A lower value means

aggressive approach of the management toward business, but has opposite meaning

for creditors, who don’t like aggressive approaches of the management.

In MCB bank limited 2007s current ratio is strong than other two years. It shows

that this year’s liabilities could be recovered with its assets. After 2007, a bank has

maintained good current ratio in 2007

Current ratio does not show the true picture of the organization. Sometimes it shows that

organization has ability to pay its obligations but its profitability ratio tells that it has not

ability to pay its obligation. But still it is very useful for the analysts especially for

the creditors.

5.3.2 Quick ratios:

Quick ratio shows a firm’s ability to meets it current liabilities with its current assets

excluding inventories and prepaid expenses, which are least liquid portion of the current

assets. Since banks don’t have any sorts of inventories, therefore only prepaid

expenses are subtracted from the current assets of the bank.

This is an important planning tool, especially for businesses that can tie up a lot of

assets in inventory. By tracking it monthly, management can keep an eye out for

negative trends that could hamper their business' ability to meet its obligations.

Quick ration can also use to evaluate the financial health of potential customers,

since it also indicates whether a business can pay off its debts quickly. A firm with a

low quick ratio may be more likely to delay payments because its assets are tied up

elsewhere.

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Current assets - inventories divided by current liabilities

2006

Current assets 284,937,950

Inventories 69,481,487

Current liabilities 266,857,434

Quick ratios 80.74

2007

Current assets 321,850,264

Inventories 63,486,316

Current liabilities 290,092,433

Quick ratios 89.06

2008

Current assets 376,592,633

Inventories 113,089,261

Current liabilities 342,463,187

Quick ratios 76.94

Quick ratio

Years 2006 2007 2008

Percentage 80.74% 89.06% 76.94%

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Analysis of the quick ratio:

Inventories are considered as current assets so they are included in current ratio

calculation. Inventories are less liquid. Normally it is not easily converted into cash on

short notice. In 2007 quick ratio is better than other years it show that bank can easily

recover its liabilities on short notice.

5.3.3 Working capital:

Working capital is the difference between current assets and current liabilities. Working

capital is often considered a measure of liquidity by it self. This ratio shows the amount

of liquidity. Working capital is used to check liquidity of the organization.

Working capital=current asset-current liability

2006

Current asset 284,937,950

Current liabilities 266,857,434

Working capital 18,080,516

2007

Current asset 321,850,264

Current liabilities 290,092,433

Working capital 31,757,831

2008

Current asset 376,592,633

Current liabilities 342,463,187

Working capital 34,129,446

Working capital

Years 2006 2007 2008Working Capital 18,080,516 31,757,831 34,129,446

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Working Capital

0

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

35,000,000

40,000,000

2006 2007 2008

Working Capital

Analysis of the working capital:

Working capital is better in 2008, which is 34,129,446. It means that are

assets utilized more economically in 2008 as compared to 2006, 2007

5.3.4. Cash ratio:

Cash and cash equilent /total assets

Cash and equilent are the most liquid assets. The cash ratio shows the proportion of the

assets held in the most liquid possible form. It is used to check the liquidity of the

organization

2006

Cash equivalent 25,134,882

Total assets 298,776,797

Cash Ratio 8.41

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2007

2008

Cash ratio

Years 2006 2007 2008

Percentage 8.41% 11.41% 10.60%

Cash Ratio

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

2006 2007 2008

Cash Ratio

Analysis of cash ratios of MCB:

Higher cash ratio also shows the higher rate of satisfaction like other liquidity

Cash equivalent 39,042,993

Total assets 342,108,243

Cash Ratio 11.41

Cash equivalent 43,491,402

Total assets 410,485,517

Cash Ratio 10.60

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ratios. Cash ratio is more important liquidity ratio. In 2006 cash ratio was, 8.41% it

increased very quickly in 2007 by 11.41%, but in 2008 it declined. 2007 was

the best year as it shows 11.41% ratio,

In short working capital and cash ratio are more realistic and more important ratios,

which describe the true picture of any organization. In MCB 2007 is the year in which the

liquidity ratios are shown better than other years. So 2007 is mentioned a good year of

the Muslim Commercial Bank.

5.3.5 Leverage Ratios:

Leverage ratios of a firm show the extent to which a firm finances its operation from

the outside sources and money. The leverage can be determined from analysis of

owner equity in business, total liabilities, current and long-term liabilities, long-term

assets and total assets of the business. Following are the common leverage ratios to

show the degree of leverage the bank is using to finance its activities and assets by

liabilities.

5.3.6 Debt-To-Total-Assets Ratio

It shows that how much assets have been financed by liabilities and it also shows the

margin of protection available for the creditors.

Debt ratio

Debt ratio=Total debt/ Total assets

2006

Total debt 275,469,034

Total assets 298,776,797

Debt Ratio 92.20

2007

Total debt 301,263,929

Total assets 342,108,243

Debt Ratio 88.06

2008

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Total debt 355,365,842

Total assets 410,485,517

Debt Ratio 86.57

Debt ratio

Years 2006 2007 2008

Percentage 92.20% 88.06% 86.57%

Debt Ratio

83.00%84.00%85.00%86.00%87.00%88.00%89.00%90.00%91.00%92.00%93.00%

2006 2007 2008

Debt Ratio

Analysis of leverage ratio:

Financial leverage is the extent to which a firm is financed with debt. The amount

of the debt a firm uses has both positive and negative effects. The more debt the

more it is that the firm will have trouble meeting its obligations. Thus the more debts

higher profitability of the financial distress and even bankruptcy. Further more the

chance of the financial distress and debt obligation generally may create conflicts of

interest among the stakeholders. In Muslim Commercial bank, year 2006 was

heavily financed because debt was the major source of financing in 2006. Debt also

had lower transaction cost. But better year was 2007 because Muslim Commercial

Bank in this year was not heavily financed and had not trouble to pay its obligations.

5.3.7 Debt-To-Equity Ratio:

64

Debt-to-Equity ratio shows the extent to which debt financing is used relative to equity

financing. Debt equity is calculated by dividing total liabilities of the bank by the total

owner equity.

Total debt divided by shareholders equity

Debt to equity ratio=Total debt / shareholders equity or Debt ratio/1-Debt ratio

2006

Total debt 275,469,034

Shares holder equity 4,265,327

Debt to equity Ratio 64.58

2007

Total debt 301,263,929

Shares holder equity 5,463,276

Debt to equity Ratio 55.14

2008

Debt to equity ratio

Years 2006 2007 2008

Percentage 64.58% 55.14% 56.56%

Total debt 355,365,842

Shares holder equity 6,282,768

Debt to equityRatio 56.56

65

Debt to equity ratio

50.00%

52.00%

54.00%

56.00%

58.00%

60.00%

62.00%

64.00%

66.00%

2006 2007 2008

Debt to equity ratio

Analysis of the Debt to equity ratio

The debt equity ratio is a simple rearranged of the debt ratio. Debt equity ratio shows

how the firm’s stockholder bears the risk of the firm. Greater the debt greater risk for the

firm s shareholders .In 2007 risk for the share holders was very low as compared to the

other years decrease debt to equity ratio was very small on the contrast risk was very high

in 2006 because of heavy financing.

5.3.8 Equity multiplier:

Owner equity to fixed assets ratio:

“Owner equity to fixed assets ratio” shows that how much money downer in

relation to fixed assets invest. If the owner equity exceeds the fixed asseoes ts, it means

that owner finances a part of current assets. When owner equity is less than fixed

assets it means that creditor’s obligations have been used to finance a part of fixed

assets.

Total owner equity divided by fixed assets

Equity multiplier=Total assets /shareholders equity

2006

Total Assets 298,776,797

66

Shares Holder equity 4,265,327

Equity Multiplier 70.05

2007

Total Assets 342,108,243

Shares Holder equity 5,463,276

Equity Multiplier 62.62

2008

Total Assets 410,485,517

Shares Holder equity 6,282,768

Equity Multiplier 65.34

Equity multiplier

Years 2006 2007 2008

Percentage 70.05% 62.62% 65.34%

Equity multiplier

58.00%60.00%62.00%64.00%66.00%68.00%70.00%72.00%

2006 2007 2008

Equity multiplier

Analysis of the equity multiplier:

Equity multiplier is yet another representation of the same information. It shows how

much total assets the firm has for each dollar of equity. In MCB it is better in 2006 it

means that bank has about 70.05 in total assets of 100 of equity.

Coverage Analysis:

Coverage ratios analyze the ability of a firm to cover or service its financial

67

obligations. Most common coverage ratios are explained below.

5.3.9 Interest Coverage Ratio

Interest coverage ratio shows the ability of a firm to cover up its interest charges on the

income before interest and taxes. The ratio is obtained through dividing earning before

interest and taxes (EBIT) of the bank by its interest expenses.

EBIT divided by interest expense

Interest coverage ratio=EBIT/Interest expense

2006

EBIT 13,018,487

Interest expense 2,781,468

Interest coverage ratio 468.04

2007

EBIT 18,500,670

Intrest expense 4,525,359

Intrest coverage ratio 408.82

2008

EBIT 21,308,035

Interest expense 7,865,533

Interest coverage ratio 270.90

Interest coverage ratio

Years 2006 2007 2008Percentage 468.04% 408.82% 270.90%

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Intrest coverage ratio

0.00%50.00%

100.00%150.00%200.00%250.00%300.00%350.00%400.00%450.00%500.00%

2006 2007 2008

Intrest coverage ratio

Analysis of the interest coverage ratio:

Coverage ratio shows the number of the times a firm can recover or meet particular

financial obligations. The interest coverage ratio, which is also called the time

interest earned ratio, measure the coverage of the firm s interest expense.2006 is the best

comparative better coverage of its interest and fixed charged obligations. After 2006,

2007 is better than 2008

Profitability Analysis:

Profitability ratios are of two types those showing profitability in relation to sales and

those showing profitability in relation to investment. Together, these ratios indicate the

bank’s overall effectiveness of operation. It creates a relationship between income

statement and balance sheet of the firm. Following are the some typical profitability

ratios used to analyze the profits of firms.

5.3.10 Cost To Sales Ratio:

Cost to sales ratio determines the cost incurred in generating the sales of the bank.

The net sales of banks are its interest/mark up earned while costs of sales are its

interest/mark up expense incurred. The ratio is obtained by dividing cost of sales by

net sales. The following table shows the cost of sales of MCB over five years of

operations.

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Interest or mark up expensed divided by interest or mark up earned

2006

Interest expense 2,781,468

Interest earned 17,756,232

Cost to sales ratio 15.66

2007

Interest expense 4,525,359

Interest earned 25,778,061

Cost to sales ratio 17.56

2008

Interest expense 7,865,533

Interest earned 31,786,595

Cost to sales ratio 24.74

Cost to sales ratio

Years 2006 2007 2008

Percentage 15.66% 17.56% 24.74%

Cost to sales ratio

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

2006 2007 2008

Years

Perc

en

tag

e

Cost to sales ratio

70

Analysis of the cost to sales ratio:

Cost to sales ratio shows the cost incurred in generating the sales of the bank. In 2008 the

cost to generate the sales is higher with respect to other financial years. After 2008, 2007

had also higher cost. Year 2006 is best one for MCB.

5.3.11 Return on Investment:

Return on investment measure the ratio of profit generated in relation to the total assets

employed. Net profit after tax divided by total assets gives the return on investment.

Return on investment is an indicator of how profitable a company is. By using this ratio

annually, we compare business' performance to industry's norms.

Net profit after tax divided by Total assets

Return on investment= Net profit after tax/Total assets

2006

Profit after tax 8,922,415

Total assets 298,776,797

Return on Investment 2.99

2007

Profit after tax 12,142,398

Total assets 342,108,243

Return on Investment 3.55

2008

Profit after tax 15,265,562

Total assets 410,485,517

Return on Investment 3.72

71

Return on investment

Years 2006 2007 2008

Percentage 2.99% 3.55% 3.72%

Return on investment

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

4.00%

2006 2007 2008

Return on investment

Analysis of the return on investment ratio

Profitability ratios focus on the profit generating performance of the firm. These ratios

measure how effectively the firm is generating its profit. They reflect its performance, its

risk ness and the effect of leverage. Muslim commercial bank was heavily financed in

2008 that financing was used in investment that’s why return on investment is high in

2006 as compare to the other years.

5.3.12 Return On Equity:

Return on equity is another summary measure of overall bank’s performance. It can

be calculated by dividing the net profit by the owner equity. This ratio tells us the

earning power on shareholder’s book value investment and is frequently used in

comparing two or more firms in any industry. A high return one quite often reflects

the firm’s acceptance of strong investment opportunities and effective expense

management.

72

2006

Profit after tax 8,922,415

Sharesholders equity 4,265,327

Return on Equity 209.18

2007

Profit after tax 12,142,398

Sharesholders equity 5,463,276

Return on Equity 222.25

2008

Profit after tax 15,265,562

Sharesholders equity 6,282,768

Return on Equity 242.98

Return on Equity

Years 2006 2007 2008

Percentage 209.18% 222.25% 242.98%

Return on equity

190.00%

200.00%

210.00%

220.00%

230.00%

240.00%

250.00%

2006 2007 2008

Return on equity

73

Analysis of the Return on equity

Return on equity is an indicator of how profitable a company is. Use this ratio

annually to compare your business' performance to your industry's norms. In year

2008, MCB has a strong investment opportunities’ which reflects a high return, after

this 2007 also depicts a high return, whereas, 2006 are not

satisfied.

Market value ratios:

5.3.13 P/E ratio

Price earning ratio=Market price per share/ earning per share

2006

Market price per share 167.80

Earning per share 21.36

P/E ratio 785.58

2007

Market price per share 246.10

Earning per share 23.40

P/E ratio 1,051.71

2008

Market price per share 399.95

Earning per share 24.30

P/E ratio 1,645.88

Price earning ratio

Years 2006 2007 2008Percentage 785.58% 1051.71% 1645.88%

74

Price earning ratio

0.00%200.00%

400.00%600.00%

800.00%1000.00%

1200.00%1400.00%

1600.00%1800.00%

2006 2007 2008

Price earning ratio

Analysis of the Price earning ratio:

Price earning ratio of MCB bank is high in 2008 as compared to the other years. Because

the market price per share is high in 2008. Because in this year MCB generate an

excellent profit. 2007 is also good but 2006 is worst all of them.

5.3.14 Earning yield:

Earning yield=Earning per share/Market price per share

2006

Earning per share 21.36

Market price per share 167.80

Earning Yeild 12.73

2007

Earning per share 23.40

Market price per share 246.10

Earning Yeild 9.51

2008

Earning per share 24.30

Market price per share 399.95

75

Earning Yield 6.08

Earning yield

Years 2006 2007 2008

Percentage 12.73% 9.51% 6.08%

Earning yield

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

2006 2007 2008

Earning yield

Analysis of the earning yield:

Earning yield of MCB bank is high in 2006 as compared to the other years. Because the

market price per share and earning per share is low in 2006. Earning yield is unsatisfied

in 2008.

5.3.15 Earning Per Share:

This ratio determines the amount of income that has been earned on each share

outstanding. Net profit after tax divided by total numbers of shares outstanding gives the

amount earned on each share.

76

Net profit after tax divided by total number of shares outstanding Earning per share=Net profit after tax/ Total no of shares

2006

Profit after tax 8,922,415

Total number of shares 426,532

Earning per share 21.00

2007

Profit after tax 12,142,398

Total number of shares 546,327

Earning per share 22.23

2008

Profit after tax 15,265,562

Total number of shares 628,227

Earning per share 24.30

Earning per share

Years 2006 2007 2008

Percentage 21.00% 22.23% 24.30%

77

Earnig per share

19.00%

20.00%

21.00%

22.00%

23.00%

24.00%

25.00%

2006 2007 2008

Earnig per share

16 Income/ expense ratio:

2006

Total Income 23,169,303

Total expenses 10,491,414

Income/ expense ratio 2.21

2007

Total Income 30,769,477

Total expenses 12,268,807

Income/ expense ratio 2.51

2008

Total Income 37,797,886

Total expenses 16,489,851

Income/ expense ratio 2.29

Income /expense ratio:

Years 2006 2007 2008

Percentage 2.21% 2.51% 2.29%

78

Analysis of Income/ expense ratio:

Income/ expense ratio of MCB bank is high in 2007 as compared to the other years. Because in

this year the expenses as compared to earnings are very low. After this 2006 and 2008 also

depicts an excellent income/ expense ratio.

5.4 Horizontal Analysis of Balance Sheet

2006 2007 2008

Assets 100% 137% 168%100% 448% 259%

Cash and balances with treasury banks 100% 211% 11%Balances with other banks 100% 91% 163%Lending to financial intuitions 100% 110% 121%Investments 100% 111% 196%Advances 100% 90%Operating fixed assets 100% 202% 327%Deferred tax assets 100% 115% 137%Other assets

100% 83% 123%Liabilities 100% 87% 144%Bills payable 100% 112% 127%Borrowings 100% 100% 30%Deposits and Other accountsSub-ordinated loansLiabilities against assets subject to finance

79

leaseDeffered tax

100% 130% 136%liabilities 100% 109% 129%Other liabilities 100% 175% 236%

Net assets 100% 128% 147%Represented by: 100% 184% 254%Share capital 100% 2626% 2436%Reserves 100% 199% 254%Un-appropriated profit 100% 96% 179%

Surplus on revaluation of assets 100% 175% 236%

5.5 Vertical Analysis

2006 2007 2008(Rupees '000)

Assets

Cash and balances with treasury\ banks 7.92 9.49 9.67

Balances with other banks 0.49 1.92 0.93Lending to financial instutions 3.35 6.16 0.26Investments 23.26 18.56 27.55Advances 60.35 57.95 53.34Operating fixed assets 2.74 2.65 3.90Deffered tax assets 0.06 0.05 -Other assets 1.83 3.22 4.35

100 100 100LiabilitiesBills payable 2.86 2.07 2.55

80

Borrowings 9.16 7.00 9.60Deposits and Other accounts 76.76 75.26 71.16Sub-ordinated loans 0.53 0.47 0.12Liabilities against assets subject to finance leaseDeffered tax liabilities - - 0.29Other liabilities 2.88 3.27 2.86

92.20 88.06 86.57

Net assets 7.80 11.94 13.43Represented by:Share capital 1.43 1.60 1.53Reserves 4.49 7.21 8.28Unappropriated profit 0.07 1.62 1.25

5.99 10.42 11.06Surplus on revaluation of assets 1.82 1.52 2.36

7.80 11.94 13.43

CONCLUSION

81

With Cooperation of all branch members, I have been able to learn and experience many

new things related to the banking sector and the banks workings. I am able to handle the

public with respect to many different workings on many different instances and also in

account opening for customers and can handle many other tasks as well.

Finally I concluded that MCB is a good organization for a person for his long term career

workings. Overall working and environment of the bank is very comfortable and the staff

is very helpful and respectful of each other and it still maintains a professional

environment. Management of the bank is very strong.

Employees of MCB Nishatabad branch work more than their working hours and all the

workings take place in a very friendly atmosphere that does not induce pressure on the

person working there. It also shows their loyalty and commitment to the organization.

This branch of MCB relatively small and has climbed its way up very quickly and all that

only because of the employee’s efforts and consideration for each other

Understanding and the effective management of the human resources is the most difficult

challenge faced not only by the bank but by all the organizations. Even though the people

have been sacrificed in the new organizational developments, it is becoming clear that the

true lasting competitive advantage comes through human resources and how they are

managed. MCB seems to not focusing on this highly critical issue as the job satisfaction

level of the employees working at MCB, was quite low.

RECOMMENDATIONS

After doing a deep study and witnessing everything that goes on in a branch, I would then

like to make the recommendations that;

First of all, the management needs to overlook the major problems that the organization

82

is currently facing and then develop strategies to eradicate them. Some of the suggestions

that I would like to give at the end are:

Promotion and Mass Media Publicity

MCB Bank can improve its Marketing strategies to acquire more promotion and mass

media publicity by the use of effective channels of promotions like TV, Newspaper

Advertisements. It can also improve its magazine publication that it releases each month.

Need Introduce friendly Products

In order to compete in the ever-expanding market both nationally and internationally,

introducing new and efficient products is one of its major requirements.

Centralized Structure

Centralized Structure that enables employee involvement needs to be formed.

Better Reward System

Better reward system is one of the most important requirements in order to reduce the problem of Employee retention and improve Employee motivation.

Continuous Training Of Employees

There is lack of proper and continuous training of employees that needs to be solved.

Creation of enhanced performance appraisal system.

Proper use of stationary.

Implementation of enhanced Marketing system.

ATM Machines Maintained

ATM machine must be maintained properly to make it more convenient for the customers

and to decrease the load of work to the employees of the bank especially in the salary

days.

Salary Packages

Improvement should be made in the salary package of the employees as it is

comparatively less when compared to the other operating banks in Pakistan.

Staff Member

In branch only two employees in cash counter and it must be increased to four person for

proper handling of cash because there is heavy load work.

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SYMBOL SYSTEM

To make the SYMBOL system more efficient and make sure its connectivity all the time

in order to provides more convenience to customers.

Job Rotation for Employees

84