INTERNSHIP REPORT

s INTERNSHIP REPORT

ONMCB BANK LTD Submitted to: Sir Faisal Iqbal Department: MBA (Evening) Sec: ( I )

Submit Date : JUNE 27,2014

DEPARTMENT OF BUSINESS ADMINISTRATION

Executive Summary

I am pleased to present my final project to the most respected members of the UNIVERSITY OF GUJRAT, Gujrat. In this project I have tried to explain all the aspects of MCB Bank of Pakistan starting with an introduction to its environment and scope of its activities.

In this report I am discussing the operations of MCB Bank of Pakistan Bank Wadala Sundhwan branch, SIALKOT. I have explained a brief history of the bank following with the banks operational structure and services of MCB.

I have also tried to turn the attention of the readers towards the functions, policies, practices and styles of field of activities of the bank. I have explained these activities, which include deposit, cash dealing, credit and remittance that I have observed during my tenure in that bank. In addition to that I have also explained its financial analysis, which proves that financially it is very strong.

In the last part of the report. I have tried to put some useful recommendations for the betterment of the banks activities according to my study.

ACKNOWLEDGEMENT

Every praise is due to Allah alone the merciful and his Apostle (peace be upon him) who is forever a torch of guidance and knowledge for humanity as whole. This report is also the result of help & guidance, which I received from my teachers and my institution (APTECH Sialkot), who gave me lot of information and guidance in making this report.

I met different staff members of the Muslim Commercial Bank of Pakistan. For getting information to complete my internship report. Therefore, it is difficult for me to mention all the names of these people, but there are some special persons from the management of Muslim Commercial Bank of Pakistan from whom I learned very much.

Sayed Hassan Raza (Branch Manager)

Rana Dilshad Ahmed (Operational Manager)

Imran Bukhari (Credit Manager)

Aruzia Maqbool (Chief Cashier)

Sr.#TABLE OF CONTENTSPage #

1EXECUTIVE SUMMARY 02

2OBJECTIVES OF STUDYING 05

3OVERVIEW OF THE ORGANIZATION06

History VISION MISSION06-07

Nature of the Organization07-08

MCB Business Volume 09-11

NO. of Employees12

Product Lines13-18

4ORGANIZATIONAL STRUCTURE OF MCB19

Overall Organizational Structure 19-20

Structure of Wadala Sundhwan Branch21-22

Review of the Various Departments 23-24

Cash Department 24

Deposit Department25-31

Clearing Department 32-34

Advance Department35-38

Remittance Department39

Technology Department41-43

Finance / Accounts Department43-45

5STRUCTURE AND FUNCTION OF THE ACCOUNTS DEPARTMENT46

Structure of Finance Department46

Finance & Accounting Operations47

Role of Financial Manger47-49

Use of Electronic Data in Decision Making49

2. OBJECTIVES OF STUDYING:

Ensure that its performance in all facts of its operations more than matches that of its competitors.

To provide services to their customers and assistance in the development of commerce and trade.

Maintains a comprehensive range of domestic and international activities.

Maximize contributions from its key sources of personal machines brands representation and capital.

Be innovative progressive and the need of its customers with in the frame work of operational and prudent risk taker.

Act as a reputable efficient and responsible organization.

MCB bank also has another responsibility to give service to their communities. It watches the growth and development of his community especially the commerce and business of the area.

To get awareness about the business development & financial techniques.

Policies followed by the organization enforced through laws of SBP.

Study the facilities provided by the organization to common public in various forms.

To study the terms & conditions for fringe benefits provided to employees of the organization at the age of superannuation.

To get MBA (B/F) degree.

To apply theoretical concepts in practical aspects.

To develop interpersonal communication

To work practically in an organization.

Pursue personal policies which recognize the aspirations and performance of individual and which are suited to the devise levels of skills.

3. OVERVIEW OF THE ORGANIZATION:Before separation of Indo Pak, the need for more Muslim banks was felt. In addition, Muslims having strong financial capacity were thinking to invest in this sector as well. This was the idea, which paved the way for setting up Muslim Commercial Bank Ltd known as MCB Bank Limited. This was the third Muslim bank in the subcontinent.

3.1 HISTORY:

MCB Bank Limited, with more than 60 years of experience as one of the leading banks in Pakistan, was incorporated on July 9 in 1947. The bank has journeyed remarkable tenure of more than half a century of competitively edged and well positioned heights of success by deploying quality banking, heads on technological developments, professionally leading management and prudent and ethical work methodologies. MCB was nationalized along with other private banks in 1974 as part of Government of Pakistan's economic reform movement and was later privatized to Nishat Group lead consortium in 1991.

Since privatization, MCB's growth has been phenomenal. Today, MCB in one of the largest foreign banks in Sri Lanka, the first bank in Pakistan to launch Global Depository Receipts (GDR) in 2006, has strategic foreign partnership with Maybank of Malaysia which holds 20% shares in MCB through its wholly owned subsidiary Mayban International Trust (Labuan) Berhad since 2008, has international indirect regional presence in Dubai (UAE), Bahrain, Azerbaijan, Hong Kong and Sri Lanka and serving through a domestic network of over 1,130 branches and 600 ATMs across Pakistan with a customer base of 4.5 million (apprx.)

MCB is reputed as one of the most sound financial institution and as one of the leading banks in Pakistan with a deposit base of PKR. 462 bln (apprx.) and total assets of PKR 605 bln (apprx.). The bank is versed as one of the oldest and most responsible banks in Pakistan and has played pivotal role in representing the country on global platforms while being one of the few institutions that are recognised and traded in the international market.

Vision:To be the leading financial services provider, partnering with our customers

for a more prosperous and secure future.

Mission: 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 confidence in us.

DEVELOPMENTS:

After privatization, the growth in every department of the bank has been observed. Following are some key developments:

1. Launching of different deposit schemes to increase saving level.

2. Increased participation on foreign trade.

3. Betterment of branches and staff service level.

4. Introduction of Rupee Traveler Cheques & Photo Credit Card for the first Time in Pakistan.

5. Extended use of information technology which is evident from the fact that networking), 151 ATMS in 27 cities nation wide and a M.C.B continuously innovate new product.

3.2 NATURE OF MCB BANK:MCB Bank Limited is a banking company incorporated in Pakistan and is engaged in commercial banking and related services. The Bank's ordinary shares are listed on all the stock exchanges in Pakistan whereas its Global Depository Receipts (GDRs) representing two ordinary shares (2008: two ordinary shares) are traded on the International Order Book (IOB) system of the London Stock Exchange. The Bank's Registered Office and Principal Office are situated at MCB Building, Jinnah Avenue, Islamabad and MCB -15 Main Gulberg, Lahore, respectively. The Bank operates 1,074 branches including 11 Islamic banking branches (2008: 1,040 branches including 11 Islamic banking branches) within Pakistan and 7 branches (2008: 7 branches) outside the country (including the Karachi Export Processing Zone branch).

The purpose of banks is to provide some services to the public. Moreover, for this purpose different banks provide different services to the people in different forms. The Muslim Commercial Bank (MCB) is a commercial bank, in modern time commercial banks play a very important role and their functions are manifold. The main functions and services that MCB Bank Limited provides to different peoples are as follows.

a. Open Different accounts for different peoples.

b. Accepting various types of deposits.

c. Granting loans & advances.

Undertaking of agency services and general utility functions, few of those are listed below:a. Collecting cheques and bill of exchange for the customers.

b. Collecting interest due, dividend, pensions and other sum due to customers.

c. Transfer of money from place to place.

d. Acting an executor, trustee or attorney for the customers.

e Providing safe custody and facilities to keep jewellery, documents or Securities.

f. Issuing of travelers cheques and letters of credit to give credit facilities to Travel.

g. Accepting bills of exchange on behalf of customers.

h. Purchasing shares for the customers.

i. Undertaking foreign exchange business.

j. Furnishing trade information and tendering advice to customers.

3.3 BUSINESS VOLUME of MCB BANK LIMITED:Five years Financial Analysis is mentioned here.

Table No.1 (In Millions)

Particular20062007200820092010

Deposits362865637395492331465571717463426602367604711

Advances(Net)140547374161265760220794075268838779253249407

Total Revenue---738616-1477232

Profit before tax60448119008708119776011905602823,154,945

Shareholder Equity37303844103422492410659089276,911,045

Profit after tax2253385419810361953721270944415495297

Investments143524971166195619149350096156985686167134465

EPS(Rs Per Share)4.786.806.316.4310.2

Source: http://www.MCB.com.pk/FinancialStatementComments on Business Performance:

The last five years MCB Bank continue its journey of remarkable growth and performance this performance is a reflection of the strategic business and organizational initiatives taken over the last five years coupled with the consistent and effective economic policies of the Punjab government leading to impressive growth in all the sectors of the economy. Separate analyses for Performance Indicators of MCB Bank Limited is briefed on next pages.

Advances & Deposit:

Advances & Deposits are the most important sources of income for all banks. The Chart shows the nine year data now we analysis last five year about the advances & deposits of MCB Bank Limited. The deposits of the bank in 2005 are Rs. 362865637 million and advances of banks are Rs. 140547374 million.

In last year the deposits of the bank are Rs. 367604711 and advances of the bank are Rs. 253249407. In 2008 deposits & advances shows the high ratio if we comparison to others years. In spite of many economics barriers in the world and especially in Pakistan, The MCB Bank Limited also shows better performances.

Profit ANALYSIS:

The chart shows the nine year data now we discuss last five year profit analysis of MCB. There are two lines shows increasing and decreasing trends of profit. According to the above table profit before tax in last year is Rs. 23,154,945 in millions and profit after tax is Rs. 15495297 that shows the profit increase before tax of the bank, and profit decrease after tax of the bank. It shows the relative increase in the taxes of the bank.

Shareholders EQUITY:

Shareholder equity shows the nine year data now we discuss the last five year progress of the bank. In current year shareholders equity is Rs. 6,911,045 that is very high than past four years compression. In 2009 shareholder Equity show the highest progress but 2005 show very low progress than other four years.

Investments:

The chart shows the nine year data now we discuss about last five year Investments progress of the MCB. In 2009 the MCB invested more money as compare other years. The investment is the main source of earn profit and make the organization strong. The bank invests money in these sectors which help to make our economic strong. In current year MCB investments is Rs. 167134465 that is high than the past year.

Earning Per Share:

EPS shows the ratio of nine year now we analysis last five years. According to above table In 2007 EPS (Rs. per Share) is 6.31, in 2008 EPS that was 6.43 that show better condition of the bank and in current year table shows the highest EPS is (10.2) that also show the better condition of the bank in EPS of the bank during the current year.

3.4 Number of Employees (Cadre Wise)

The following list represents the details about the total number of employees of MCB Bank.

3.5 PRODUCT LINE OF MCB Bank Limited:

PRODUCTS AND SERVICES OF MCB:Following are some products of MCB that are introduced by Muslim Commercial Bank after privatization.-MCB RUPEE TRAVELLER CHEQUE:

MCB Rupee Travelers Cheques are as good as cash, infect better. Better because with Rupee Travelers Cheques customer has the power to purchase and a feeling of security that should lose them and will get a refund.

MCB Rupee Travelers Cheques are accepted at major shops, travel agents, hotels, business establishments and MCB branches all over Pakistan. If any one don't have to be an MCB account holder to buy the Rupee Traveler Cheques. Anybody can purchase them. It's a safe and convenient way to conduct everyday business. At a time when thefts and robberies are on the increase, then use better off carrying Travelers Cheques rather than money.

MAHNAMA KHUSHALI SCHEME:

A 5- year fixed Deposit Scheme, targeted to persons with small savings who would desire a regular monthly return on their investment.

SALIENT FEATURE:

1. Minimum amount of investment shall be Rs.0.010m and the maximum amount of investment would be Rs. 1.000m.

2. Khushhali Certificates can be purchased by individuals (singly or jointly) or by the Proprietorship/Partnership concerns or Companies, etc. in their name.

3. The Khushhali Certificate will be of five years maturity.

4. The interim rate of profit offered will be minimum 1% per month. If the profit declared by the bank is higher, additional profit will be paid.

5. Zakat will be deducted wherever applicable on yearly basis whether account holder will be receiving profit or encashing certificates.

6. As per Government Directions, tax on the profit / return is to be deducted by MCB branches at the time of payment.

HAJJ MUBARAK SCHEME:

A saving scheme, of 2/3 years duration, for the convenience of persons, with a limited income, who desire to perform Hajj, was introduced. Under the 2 years scheme, a monthly deposit of Rs.1800 is required, whereas under the 3 years scheme, the required monthly deposit is only Rs.1200.

CAPITAL GROWTH CERTIFICATE SCHEME:

For long term depositors under which the amount deposited almost doubles at the end of 5 years. For the scheme, the minimum amount of deposits is Rs. 10000 while there is no maximum limit. In case of premature encashment of the certificate, the depositor will profit at the same rates as that of PL Saving Account.

FUND MANAGEMENT SCHEME:

This scheme is offered to corporate and customers and is aimed at providing better rate of return up to 15% per annum. One of the objectives of the scheme is to develop secondary market for Government Securities.

CONSULTANCY SERVICES:

In the process of privatization of public sector units, prospective buyers need professional assistance and MCB, with its expertise, offers to them specialized service for valuation of the market value of the industrial unit, preparing bid documents and arranging finance for the purchase of the unit.SELF SUPPORTING SCHEME:

For the benefits of genuine worker/borrowers who are poor and needy and for small entrepreneur the bank as evolved a self supporting scheme: maximum amount of loan Rs.25000 and minimum Rs.5000 per individual. Loan will be totally free of mark-up.

FAX PRESS:

This product was first of its kind introduced by using modem technology of The Fax Machine. It facilitates speedy transfer of funds within Pakistan. The service guarantees transfer of from one city to another, within an hour.

NIGHT BANKING SERVICE:

For the convenience of the account holder, service has, especially, been introduced at busy commercial centers. Traders and other clients can now make deposit, with case, at such centers up to 8.00PM.

UTILITY BILLS COLLECTION:

With the aim of extending this service to wider range of customers, the number of MCB branches collecting Utility Bills more than 900.

MCB MOBILE:

MCB mobile banking dial in any time to get information regarding balance and mini statements.

PYARA GHAR:

Flexible and competitive home financing facility with options of home purchase, construction and renovation.

ISLAMIC BANKING SERVICES:

Islamic banking services through exclusive units/branches offering a range of liability and asset based Sharia compliant products like Musharika, Murabaha, Ijara and Istasana.

LOCKERS:The best protection for valuable items. Lockers of different capacities are available nationwide.

ON-LINE:

The largest network of over 315 on-line branches in the country and growing. Providing customers with 24 * 7 real time on-line transaction facilities.

MCB FULL DAY BANKING:

Enjoy the convenience of extended banking hours from 9 to 5, even on Saturdays, for satisfying banking needs at all MCB Full Day Banking branches across the country where every one is now served with a wide range of services through the day.

PLS 365:

A deposit account for customers with substantial balances, offering profit on a daily product basis with the facility of unlimited withdrawals.

MCB SPECIAL RUPEE TERM DEPOSITS:

MCBs Special Rupee Term Deposits offer a very attractive term investment option with ease and convenience. Tenors options available are of 3 months, 6 months, 1 year, 3 years and 5 years. Here also available a credit facility up to 75% of total deposits.

MCB REMIT EXPRESS:

International remittances with a two-way messaging facility delivered at customers doorstop within 24 to 72 hours.

MCB CARDS:

A local Point of Sale acquiring network facilitating acceptance of all major card brands.

CIRRUS:

MCB Smart Card and ATM card holders can avail cash withdrawal facility at over 900,000 ATMS worldwide.

MAESTRO:

MCB Smart Card and ATM card holders enjoy the convenience of shopping at over 5 million POS locations globally.

MCB VIRTUAL INTERNET BANKING:

MCB provides the convenience of banking on the internet. Whether at office, home or traveling log on to www.mcb.com.pk and enjoy 24-hour access to all accounts at MCB for the largest array of services.

MCB CALL CENTRE:

Call now for answers to queries about banking services. ATM services, mobile banking services, RTC services, tele-banking services and MCB product information.

MCB ATM 24-HOURS CASH:

The nations largest network of over 210 ATMs and growing. Get 24-hour convenience of cash withdrawal, mini-statement, bill payment and funds transfer services.

MNET:

MNET is an electronic hub for ATM sharing plus other touch points. Members include 12 local financial institutions enjoying ATM sharing and bureau services. Pakistans largest operating switch with the highest transactions volume.

MCB SMART CARDS:

MCB Smart Card - a secure instrument of payment, offering Cash Free convenience. It provides 24-hour direct access to bank account and unmatched functionalities.

MCB EASY BILL PAY:

MCB Easy Bill Pay is an easy solution to pay Utility and Mobile Phone bills. MCB ATM Card or MCB Smart Card holders can easy pay their bills through MCB ATMs, MCB Virtual-Internet Banking and MCB Call Centre with security and peace of mind.

CORPORATE FINANCING:

Providing access to diversified financing options, including working capital loans, term loans, trade finance services and investment banking.

INSTANT FINANCING:

Get a loan instantly at any MCB branch. Offering same day financing facility against liquid collateral at competitive pricing.

MCB BUSINESS SARMAYA:

MCB Business Sarmaya is a Running Finance facility against residential property. It offers Running Financing up to 20 million with low mark-up and BTF at competitive rates.

MCB CAR 4 U:

MCB CAR 4 U Auto Finance is a facility provided by the bank to car at own choice. It is affordable with competitive mark-up, flexible conditions, easy processing and above all, no hidden costs.

4. ORGANIZATIONAL STRUCTURE:

4.1 OVERALL ORGANIZATIONAL STRUCTURE:

As MCB Bank Limited is a banking company listed in stock exchange therefore it follows all the legalities which are imposed by concerned statutes Mr. Muhammad Mansha is chairman & chief executive of the company with a team of 10 directors and 1 vice chairman to help in the business control and strategy making for the company.

Operational Management of the bank is being handled by a team of 10 professionals. This team is also headed by Mr. Muhammad Mansha. The different operational departments are Consumer Banking & IT div; Financial & Inter branch div; Banking operations div; HR & Legal div; financial control & Audit div; Credit management div; Commercial Banking div; Corporate Banking div; Treasury management & FX Group and lastly Special Assets Management (SAM) Group.

For effective handling of branches, it has been categorized into three segments with different people handling each category. These categories are mentioned below.

i. Finance Division

ii. Special Assets Management Division

iii. Treasury Division

iv. International Division

v. Operations Division

vi. Information Technology Division

vii. Human Resource Division

viii. Audit & Inspection Division

Ix. Credit Administration Division

Further the MCB Bank Ltd. is divided into following regions:

Lahore Region

Faisalabad Region

Gujranwala Region

Rawalpindi Region

Karachi/Quetta Region

Multan Region

Peshawar RegionEach region controls the bankin operation of branches under its control. At regional level, Regional Chief is designated for purpose of controlling the branches in region. For assistance to the Regional Chief, Regional Operations Head is designated for assisting in operational activities of branches in the region.

4.2 Departmental Structure of MCB Wadala Sundhwan Branch:I did my internship in MCB Bank Limited Bank square Branch Sialkot. And some important information about my branch which I observed is as follows:

CASH DEPARTMENT:

The following books are maintained in the Cash Department:

1. Receiving Cash Book 2. Paying Cash Book3. Token Book4. Scroll Book

5. Cash Balance Book

When cash is received in counter, it is entered in the Scroll Book and Receiving Cashier Book. At the close of the day, these are balanced with each other.When the cheques or any negotiable instrument is presented at counter for payment, it is entered in the token book and token is issued to the customer. The token clerk and the Cashier make entries in the paying book and payment is made to payee. At the close of day, the Token Book and Paying Cashier Book are balanced.The consolidated figure of receipt and payment of cash is entered in the cash balance book and drawn closing balance of cash.

Opening Balance + Receipts - Payments = closing Balance.

This is very important department because cash is the most liquid asset and mostly frauds are made in this department, therefore, extra care is taken in this department and nobody is allowed to enter or leave the area freely. Mostly, cash area is grilled and its door is under supervision of the head of that department. All the books maintained in this department are checked by an officer.

DEPOSIT DEPARTMENT:

Bank deals in money and they are merely mobilizing funds within the economy. They borrow from one person and lend to another, the difference between the rate of borrowing lending forms their spread or gross profit. Therefore we can rightly state that deposits are the blood of the bank which causes the body of an institution to get to work. These deposits are liability of the bank so from point of view of bank we can refer to them as liabilities.

The total deposits of MCB are growing since its inauguration but after privatization there is a sharp incline in over all deposits of the bank. The increase in deposits is also a cause of increase on total number of accounts; bank has progressed in both aspects.

CLEARING DEPARTMENT:

Every banker acts both as a paying as well as a collecting banker, It is however an important function of crossed cheques. A large part of this work is carried out through the bankers clearing house.

A clearing house is a place where representative of all banks of the city get together and settle the receipts and payment of cheques drawn on each other. As the collecting banker runs certain risks in receipt of their ownership the law has provided certain protections to the banks.

The Negotiable Instrument Act, 1881, lays down hat drawer or holder of a cheque or draft may cross the instrument generally or specially. It further lies down that a crossed cheque can only be paid to a banker, who collects it for a customer in good faith and without negligence.

TYPES OF CHEQUES COLLECTED:

1. Transfer cheques

2. Clearing

3. Collection cheques

Note:

Branch Hierarchy is attached at the end.

4.3 REVIEW OF THE VARIOUS DEPARTMENTS:

The purpose of banks is to provide some services to the general public. And for this purpose different banks provide different services to the people in different forms. The Muslim Commercial Bank (MCB) is a commercial bank, in modern time commercial banks play a very important role and their functions are manifold. The main functions and services which MCB Bank Limited provides to different peoples are as follows.

1) Open Different accounts for different peoples2) Accepting various types of deposits4) Granting loans & advances5) Undertaking of agency services and also general utility functions, few of those are as under: a) Collecting cheques and bill of exchange for the customers. b) Collecting interest due, dividend, pensions and other sum due to customers. c) Transfer of money from place to place. d) Acting an executor, trustee or attorney for the customers.

e) Providing safe custody and facilities to keep jewellery, documents or securities. f) Issuing of travelers cheques and letters of credit to give credit facilities to travel. g) Accepting bills of exchange on behalf of customers.

h) Purchasing shares for the customers. i) Undertaking foreign exchange business. j) Furnishing trade information and tendering advice to customers.

For proper functioning of branches and the over all bank has work is there for improvement of functions and also it is easy to control the situation. The general division in a branch is as follows:

1) Cash department 2) Deposit department3) Advances & credit department4) Foreign exchange department Technology department (new addition in order to cop with the growing needs of day to day technology requirements)

4.3.1 CASH DEPARTMENT:

The following books are maintained in the Cash Department:1. Receiving Cash Book 2. Paying Cash Book3. Token Book4. Scroll Book5. Cash Balance Book

When cash is received in counter, it is entered in the Scroll Book and Receiving Cashier Book. At the close of the day, these are balanced with each other. When the cheques or any negotiable instrument is presented at counter for payment, it is entered in the token book and token is issued to the customer. The token clerk and the Cashier make entries in the paying book and payment is made to payee. At the close of day, the Token Book and Paying Cashier Book are balanced. The consolidated figure of receipt and payment of cash is entered in the cash balance book and drawn closing balance of cash.Opening Balance + Receipts - Payments = closing Balance.

This is very important department because cash is the most liquid asset and mostly frauds are made in this department, therefore, extra care is taken in this department and nobody is allowed to enter or leave the area freely. Mostly, cash area is grilled and its door is under supervision of the head of that department. All the books maintained in this department are checked by an officer.

4.3.2 DEPOSIT DEPARTMENT:

Bank deals in money and they are merely mobilizing funds within the economy. They borrow from one person and lend to another, the difference between the rate of borrowing lending forms their spread or gross profit. Therefore we can rightly state that deposits are the blood of the bank which causes the body of an institution to get to work. These deposits are liability of the bank so from point of view of bank we can refer to them as liabilities.

The total deposits of MCB Bank Limited are growing since its inauguration but after privatization there is a sharp incline in over all deposits of the bank. The increase in deposits is also a cause of increase on total number of accounts; bank has progressed in both aspects.

TYPES OF DEPOSITS:

Deposits can be segregated on two bases, one is the duration in which there funds are expected to be with the bank and second is the cost of getting these funds. So divide deposits in two classes according to duration of deposits i.e.

1) Time deposits / liabilities

2) Demand deposits / liabilities

And on the basis of the cost to acquire these funds, a deposit can be classified as any one of following four, High Cost Medium Cost, Low Cost No Cost. Banks has different kinds of deposit schemes in order to induce deposits. These schemes are a mixture of the above mentioned two types of deposits with an addition of different services & requirements such as minimum balance' requirement, mode of transaction, basis for calculation of profit, deductions, additional benefits, eligibility for different groups.In the similar fashion, MCB has a large variety of deposit schemes and some of them are as follows:

CURRENT A/C (CD):

In this type of accounts the client is allowed to deposit or withdraw money as and when he likes. He may, thus, deposits or withdraws money several times in a day if he likes. There is also no restriction of amount to be deposited or withdrawn. However, there is requirement of minimum balance maintenance of Rs. 1000/-. Usually this type of account is opened by the businessmen. No profit is paid by the bank and no service charges are deducted by the bank on current deposits account. These types of deposits are also exempt from compulsory deduction of Zakat.

PLS SAVING BANK A/C (SA):

This type of account is for those persons who want to make small savings'. This type of account is opened with a minimum deposit of Rs. 1000/-. Under this scheme deposits can be made only up to a-costing amount and withdrawals are allowed twice a week or 8 times a month. If a big amount is required a seven days notice is required before the withdrawal. The profit is paid on these accounts on the minimum balance during a month for the whole of that month. Zakat & other withholding taxes are deducted as per rules of the government.

KUSHALI BACHAT A/C (KBA):

This is an advance form of PLS saving a/c, in this type of account. The minimum balance requirement for this type is Rs. 2500/-. There is also restriction on the number of withdrawals as well, i.e. up to 4 times in a calendar month. For maintaining this extra balance the customer gets the benefits of profit calculation on daily product basis and also free service of standing instructions of paying utility bills and HBFC installments. All other rules of saving account are applicable.

PLS 365 SAVING A/C:

This is a special type of saving account in which customer maintains a minimum balance of Rs. 300,000- and in turn he gets the benefits of daily profit calculations and also there is no restriction on the maximum number of withdrawals as was there in the case of KBA. There is also another advantage of this scheme that if balance on a particular day falls below the minimum balance then only the product of that day is ignored whereas in KBA, if balance falls below the minimum limit then all the products for that month are ignored on in other words no profit is paid for that month.

NOTE: PLS Saving, Khushhali Bachat & PLS 365 saving accounts can be opened in foreign currency also. Before nuclear tests of 1998 these accounts were opened in four major currencies but now these are only opened in USD ($). However, now bank discourages the opening of foreign currency accounts because no forward cover risk is provided by State Bank of Pakistan (SBP) and all the loss in case of devaluation or depreciation in local currency has to be born by bank himself. This increase in cost has left foreign currency account of no use, therefore, now bank prefers to accept deposits in local currency rather in foreign exchange.

KHANUM BACHAT SCHEME:

This is a type of term deposit, in this type of deposit an account is deposited and monthly payments of Rs. 1000/- are made by the account holder in this account for a minimum of 10 years. After the expiry of term, he receives his funds along with profit for the tenor. The distinctive feature of this product is that profit is calculated on monthly basis and charged to account on end of each half /ear. Then profit is also calculated on that amount of profit which is credited to the customer's account. So we can say that in this type of account there is a concept of accumulated profits on profit. This ends in getting a heavy return for the depositor at the end of tenor for his small savings. This product was actually introduced to promote saving habits in the people. Zakat and withholding taxes are deducted as per rules only at the time of maturity while making payment to the customer.

HAJJ MUBARIK SCHEME:

This is also very closely related with Khanum Bachat scheme. This was designed to help the persons who are willing to offer Hajj but are unable to save required funds. In this deposit schemes, 2 or 3 years agreement is entered with a customer. During this time he keeps on depositing monthly deposits and his account is charged with the accumulated profits calculated on 6 monthly basis. The scheme is so designed that total amount to be received at the end of this scheme comes equal to the anticipated cost of offering Hajj at the end of tenor. Zakat & withholding tax are deducted at the time of payment.

MONTHLY KUSHALI SCHEME:This scheme is similar to CGC in the sense that an initial deposit is made in this case also but instead of lump sum payment at the end of the tenor, the person gets a monthly profit on his deposits. Under this scheme, the bank has guaranteed minimum rate of 1% per month but usually this rate is more than 1% per month. Zakat & withholding tax are calculated as per rules laid down by the government.

PLS TERM DEPOSIT RECEIPTS (TDRS):

This is a type of term deposit in which a receipt is issued for varying tenors ranging from 1 month to 5 years or more. These are in the form of receipts and profit on these receipts is paid biannually.

These receipts are encashables after expiry of the period for which they were issued. Different profit rates are applied to different type of TDRs.

SPECIAL NOTICE DEPOSITS (SND):

Under this deposit scheme, a deposit is received from the depositor under the condition that he will intimate the bank before a certain period in case of withdrawals. There are two types of SNDs, they are 7 days and 30 days notice deposits. The profit is paid on these deposits but it is nearly equivalent to saving account rate.

FUNCTIONS:

This was a brief review of different types of deposit schemes. The Deposit Department handles the account opening, profit payment and accounting of all types of deposit schemes.

ACCOUNT OPENING:

Account opening is an agreement in which customer offers his funds and bank accepts these funds, therefore the nature of relation between a banker and customer is of a contractual one and all the conditions applicable to this contract act are also applicable.

PROCEDURE FOR OPENING:

Procedure for opening of account is as follows:

A person, who wants to open any kind of account, has to fill in a printed form which is provided by the bank, free of cost. Separate account opening forms are used for different types of accounts.

Bank usually requires that new depositor must be introduced by some one. An introducer can be any person known to the bank but preferably it should be a customer of the bank. However, the manager can open the account by his own introduction.If the manager is satisfied, it will obtain the full signature of the customer- on the form and specimen signature card, makes the first deposit, and issues the cheques book.

The following are given to the customers:

Pay-in-slip is the proof of deposit. For every payment which is. to be deposited in the bank, the pay-in-slip is to be filled up. The object of this book is to provide the customer with the bank's acknowledgment for receipt of money to be credited this account.Cheques Book contains a number of cheques. It enables a customer to make withdrawal from this account or make payment of various parties by issue of cheques.Pass Book is a copy of the customers account as appears in the books of the bank. Balance is recorded in this book by the Clerk.

NOTE:

1. In case of partnership account partnership deed should be attached.

2. In case of companies memorandum and article of association, certificate of

Incorporation, certificates for commencement of business, list of directors and board

Resolution for opening of account is also obtained from the customer.

3. Accounts of Trusts, Executors & Administrators can also be opened but with the

Prior approval of the Head Office.

Profit payment & calculation is done in accordance with the rules of each type of deposit scheme-by the deposit department. The products for each deposit scheme are calculated separately and added till the end of 6 month period. Then the sum total of these products is multiplied with the respective profit rates which are issued by the Head Office at the end of each half yearly closing. The profit provisions for each type of deposits are also calculated on monthly basis by the same department in order to calculate the net profit or loss position of the branch.

Accounting entries are also made in the respective books of account by this department. However, in small and medium size branches, the accountant performs the book keeping duties for all kinds of ledgers.

LEDGERS OF DEPOSIT DEPARTMENT:

The following types of ledgers are concerned with deposit departments:

1.Saving Ledgers2. Current Ledgers3. Profit & Loss Sharing Ledgers4. Fix Deposit Register5. S.N.T.D. Register6. Call deposit register7. Cumulative deposit certificate register8. Cash book 9. Daily profit and loss summary book 10. Officer Spaceman signature book 11. Voucher registers

However, in computerized branches all these ledgers are no more there but only day books are maintained. The rest of the work is done on computers.

4.3.3 CLEARING DEPARTMENT:

Every banker acts both as a paying as well as a collecting banker, It is however an important function of crossed cheques. A large part of this work is carried out through the bankers clearing house.

A clearing house is a place where representative of all banks of the city get together and settle the receipts and payment of cheques drawn on each other. As the collecting banker runs certain risks in receipt of their ownership the law has provided certain protections to the banks.

The Negotiable Instrument Act, 1881, lays down hat drawer or holder of a cheque or draft may cross the instrument generally or specially. It further lies down that a crossed cheque can only be paid to a banker, who collects it for a customer in good faith and without negligence.

TYPES OF CHEQUES COLLECTED:

i. Transfer cheques:

Are those cheques, which are collected and paid by the same branch of bank?Transfer delivery cheques: are those cheques, which are collected and paid by two different branches of the same bank situated in the same city

ii. Clearing cheques:

Are those cheques, which are drawn on the branches of some other bank of the same city or of the same area, which is covered by a particular clearing house?

iii. Collection cheques:

Are those cheques, which are drawn on the branches of either the same bank or of another bank, but those branches, are not in the same city or they are not the members of clearing house.

FUNCTIONS OF CLEARING DEPARTMENT:

1. To accept Transfer, Transfer delivery, clearing and collection cheques from the

Customers of the branch and to arrange for their collection.

2. To arrange the payment of cheques drawn on the branch and given for collection to

any other branch on MCB or any other members or sub member of the local clearing

house.

3. To collect amount of cheques drawn on members, sub-member of local clearing

house, sent for collection by MCB Branches, not represented at the local clearing

house.

COMMON PROCEDURE FOR ALL CHEQUES:

i) Receiving and scrutinizing the cheques and other deposit instruments, and the pay-in-

slip at the counter

ii) Fixing the stamps.

iii) Scrutiny and receipt by the authorized officer.iv) Returning the counter file to the depositor.

v) Certificate and confirmation by the officer in charge of the department. vi) Separating the cheques into transfer, transfer delivery, and clearing cheques.

SCRUTINY OF CHEQUES:

a). The instrument should be neither stale/ nor post-dated.

b). If the instrument is crossed not negotiable it can be for the third party (an endorsee

of an order cheque, or a holder of bearer cheque).

c). The Instrument should not bear any unauthorized alternation.

d). The instrument should not be mutilated.

e). The amount in words and figures should be same.

f). The instrument should be drawn on any local branch.

g). If cheques are "crossed Account Payee's" only or "Payee's Account", it should only

be accepted for collection for the payee's account. .

h). The cheques or drafts should not be crossed specially to any other bank.

i). A cheques payable to a firm should not be accepted for credit to a partner's account.

j). A cheques payable to one of the joint account holders should not be collected for the

joint account without the payee's endorsement, or consent.

k). A cheques drawn by a customer in the capacity of agent, Attorney, or Manager of his

company or firm, should not be collected for credit to his personal account.

l). Pay orders, although negotiable should not be collected for third parties.

m). Do not collect an instrument in the account of an agent or of the servant of the payee

or endorsee of the instrument.

n). Not transferable" instruments, like Telegraphic Transfer, or Mail Transfer Receipt,

Pay-slips, and Treasury Receipts, should be collected for a person other payee.

o). If an account is new or the balance or operation of the account is not satisfactory,

satisfy your self about the title of the customers to the instruments before accepting

the deposits.

p). Branch agent's permission should be obtained before accepting a third party cheque

or draft for the credit of the member.

q). If the payee is a Government Department, Government Official, or a trust account

the instrument cannot be collected, but for the payee's account.

r). If the payee of an instrument is UBL, it can be collected for credit of the drawers

account, or the amount of the instrument may be utilized as desired by the drawer in

writing.

s). Cheques payable to a trust, account should not be collected for credit to a trustee's

account.

t). All the endorsement should be regular, and no endorsement should be missing.

Note: No charges are charged by the bank for this purpose.4.3.4 ADVANCES DEPARTMENT:

Advances are the most important source of earning for the banks. MCB is also giving full attention towards this aspect and it is also obvious from the growing portfolio of advances and from very low delinquency rate. The credit portfolio of this institution is in a very much better shape than other financial institutions of Pakistan and the credit goes to the management and the staff who are concerned about the quantity and quality as well.

A. LoansB. Cash CreditsC. Overdrafts

A. LOANS: Loans are monetary assistance by a financial institution to a business, individual etc. The loans are granted by the bank in lump sum, so these types called fixed or demand loans. Interest is charged on the whole amount of a fixed loan.

The borrower withdraws whole the amount of loan. This type of loan is normally granted against security of gold documents.

In case of demand loans against gold or documents, a demand promissory note for the amount of loan is taken from the borrower loans are granted under;

LOAN AGAINST GOLD:

Under this type of loan, which is granted to the borrower the Head Cashier estimates the value of Gold or Gold ornaments through an agent (Gold smith) and keeps a margin of 40 to 50 percent. After the opening the gold loan account a token is given to the borrower, which is a bank receipt.

On repayment of loan, the gold or ornaments held as security for it, together with the demand promissory note duly discharged is returned to the borrower and his receipt for the gold ornament taken in the demand loan ledger. This receipts states that he ornaments returned are complete and in order. Part delivery of ornaments is given against part payment of a loan but care is taken that the ornaments still in banks possession fully covers the balance of the loan outstanding. The interest gold loan is to be applied with quarterly.

LOAN AGAINST PLEDGED OF STOCK:

In case of advancing such types of loans, the following precautions are dept in the mind:

i) Stock pledged must be readily saleableii) Products should be readily saleableiii) Advance should be within the borrows means

REQUIREMENT FOR LOAN:

For granting loan to any party or individual, the bank checks following particulars of the client:

1) Credibility2) Feasibility Report

By Credibility, bank Judges the credibility of the client by his past bank record, CBI report etc. it is very important in making decision about giving him loan.Feasibility report is on the running or proposed business of the client. The report enables the bank to judge the likely return of the business.

B. CASH CREDIT:

Cinder such cash account is opened in the name of the customer who borrows from the bank. Customer is granted a loan up to a certain limit, sanctioned by the head office, from which he can draw when he requires and interest is charged on the amount actually utilized by the customer. In order to avoid the danger of idle fund, the bank charges a certain rate of interest, even if the customer does not withdraw any amount. The rate charged by the bank on cash credit in 46 paisa per thousand on daily basis. The credit is usually given against the securities of goods or merchandize as follows:

ADVANCES AGAINST PLEDGE STOCK IN TRADE OR PRODUCTS:

When a cash is granted against the pledge of stock or product, cash credit form is taken, from the certain products or stock, but the actual pledge is created when the stock or finished product are placed under the bank's lock or the document of title are duly endorsed to the bank by the borrower.

HYPOTHECATION OF STOCK ON FINISHED PRODUCTS:

The difference between pledge and hypothecation is that under a pledge the borrower's goods are placed in the bank's possession under own lock, whereas, under a hypothecation, they remain in the possession of the borrower or guarantor and are merely charged to the bank under documents signed by them. Even though the documents empower the bank to take possession of the goods hypothecated, but it is possible that the borrower may actually resist any attempt.

MORTGAGES OF PROPERTY:

Title deeds of immovable property are accepted by the bank only as collateral security or alternatively as unauthorized security.

MODES OF CREDIT FACILITIES:

There are two types of facilities

A FUNDED FACILITY :

1) Running finance.

2) Cash finance.

3) Demand finance.

4) Payment against documents.

5) Finance against imported merchandise.

6) Finance against trust receipt.

7) Export finance.

8) Foreign bill purchased.

9) Others.

NON FUNDED FACILITY :

1) Letter of credit 2) Letter of guarantees 3) Bid bonds 4) Performance bonds 5) Other facilities

4.3.5 REMITTANCES DEPARTMENT:

DEMAND DRAFT:Demand draft is a written order drawn by a branch of a bank upon the branch of same or any other bank to pay certain sum of money to or to the order of specified person.

2. Demand draft is a negotiable instrument.

3. Legal provisions are same as that of cheques.

4. It is to be ensured that purchaser can at least sign.

5. Thumb expression is not accepted on DD.

The following are the parties:

a) Purchaser

b) issuing branch

c) Drawee branch

d) payee

A demand draft may be issued against the written request of the customer before issuing it must be seen that the demand draft is in order.

SCRUTINY OF APPLICATION:

The DD application must be scrutinized by the counter clerk in respect of following points.

There should be branch where payment is to be made.

1. Full name of payer should be mentioned

2. Amount in words and figures must be same

3. Application to be signed by the purchaser

4. Telegraphic Transfer

Transfer of funds from one branch to another branch of the same bank or upon other bank under special arrangements.

Telegraphic transfer is not negotiable

The funds are not payable to bearer

Minor cannot avail this facility

PARTIES:

Following are the parties involved Applicant Drawing branch Drawee branch Beneficiary

Full name of the beneficiary or account number should be mentioned in the application form. Instruction regarding mode of payment should be obtained. a record in the remittance outward register should be maintained. all the remittance must be controlled through number.

MAIL TRANSFER:

Transfer of funds from one branch to another branch of the same bank with in or out side the city is called mail transfer. Mail transfer is not negotiable the procedure is same as for DD All precautions must be observed

PAY ORDERS:Pay order is meant for bank own payment but in practice they are also issued to customers. A pay order is written authorization for payment made in a receipt form issued and payable by the bank. To the person named and address.The following are the parties:

1. purchaser

2. issuing branch

3. Payee

Charges must be recovered at prescribed rate. Pay order should be prepared like demand draft. A record of all issued and paid should be maintained. Credit voucher should be prepared.

4.3.6 Information Technology Department:Technological advancements are also affecting the banking industry. The foreign banks have a competitive edge over all local banks in their technologies' advancements and automated systems. Local banks have also realized the gravity oil this situation and are striving to add computerized systems to their branches.

MCB is ahead of all other local banks in this field and now it is in a position to even compete with foreign banks. There are more than 1045 branches of MCB all over Pakistan and out of these more than 300 branches are fully computerized Almost all .the branches of big cities are computerized; therefore, the need for a technology department at each branch is growing. Now a day, a computer division is working in each city to provide service to ad the branches of that area.

MCB has also introduced the now concept of online banking. There are now more than 250 branches linked through this system and they can transact with each other directly using computer systems at their own branches. Now customers do not have to wait long for their transactions and can operate their account through all the online branches.

ATM NETWORK:

ATM stands for Automatic Teller Machine. This machine is used to transact in one's account without intervention of humans. These machines are basically used for taking cash, confirming balances and requesting statements / cheque books.MCB has the largest ATM network in the country at the moment with almost one ATM at each online branch and also ATM terminals at International Airports. This network covers more than the 27 cities of Pakistan including the provincial capitals and large commercial cities of the country.

ATMs are operated through a card issued to the valued customers and by application of Personal Identification Number (PIN number). A person can withdraw from any machine across Pakistan with having an account in only one branch of MCB. This was only possible with the help of online system. In this system all the machines are linked to central banking host at IRM division Karachi through either satellite or telephone controller. This system identifies the card holder and his PIN Number.

Now MCB has also entered into a contract with Cirrus which is a subsidiary of MasterCard. This contract will enable an ATM card holder to use his account even when he is out of country at all the ATMs where Cirrus logo is displayed. Green Cards are ordinary cards with a maximum withdrawal facility of Rs. 10,000/- in a day. The annual fee for this card is Rs. 300/- only.

Gold Cards are special cars with maximum withdrawal limit of Rs. 25000/- in a day. These cards are issued to the persons having more than Rs. 500000/- as their average balance. International Cards are issued in collaboration with Cirrus and are useable all over the world with maximum withdrawal facility according to the standards of Cirrus.

4.3.7 Finance Department:

Finance and Accounts department play a vital role in the development of the MCB Bank. The primary responsibility of Finance department is making planning, analyzing and valuation of financial resources and to provide consistent, reliable, and timely information to management, stakeholders, regulators and internal business groups to help management in appropriate decisions making for improved performance of the bank.

The main functions of the finance department are as follows.

To maintain inventory records

Finance activities

Audit preparation

To keep record of loans, accounts, cash and all banking transactions according to

accounting principles

Funds management

Preparation of cash flow, income statement and balance sheet

The Accounts department in MCB is functioning computerized as well as manual. It handles each and every transaction is being made into the bank, and control expenses and allocation of funds through appropriation of accounts. The work in accounts department is depending on vouchers and contra entries are passed through different heads.

The accounts department performs the following main function such as analyzing, controlling, budgeting, reporting and coordinating business activities.

Foreign Exchange Department:

This Department deals with the foreign business. The main functions of this department are:

L/C dealing

Foreign currency accounts dealing

L/C Dealing:

MCB is committed to offering its business customers the widest range of options in the area of money transfer. If you are a commercial enterprise then out Letter of Credit service is just what you are looking for. With competitive rates, security, and ease of transaction, MCB Letters of Credit are the best way to do your business transactions.

Foreign Currency Account Dealing:

This department deals with the foreign currency accounts which mainly include dollar account, euro account etc.

Mark Up Rates:

Fixed Rate Option:

Priced at 10 years PIB rates plus 3.5 % with re-pricing after 10 years(subject to a minimum floor)

Variable Rate Option:

MCB Discount Rate with 12 months re-pricing.

(Subject to a minimum floor)

Processing Fee:

For government employees including MCB employees irrespective of the finance amount Rs. 500/=For Others:

Financing below Rs. 1 million: Rs. 1,000

Financing between Rs. 1 to 4 million: Rs. 3,000

Financing above Rs. 4 million: Rs. 6,000

Other Charges:

Income Estimation, Legal and valuation Fee will be charged as per actual.

Prepayment (Complete/ Partial) Charges:

2% of the amount being prepaid if pre-payment occurs during the first (5) years of loan period. No penalty will be charged after five (5) years.

5. STRUCTURE OF ACCOUNTS & FINANCE DEPARTMENT

5.1 Structure of the Finance Department:

Finance department serves as backbone of any organization. Finance department in the MCB bank has several sections. Finance department is responsible for the entire accounting process of the organization, regarding the recording of the transactions, designing the accounting, preparing of financial statements and computer application to the accounting process.

The head of finance department/division is known as chief financial officer (cfo) who directly reports to the president of the bank. Credit committee of the bank plays advisory role in advances decision making such as credit policy making for prudent lending of the bank. Finance department further delegates his powers to the regional chief of the region who is responsible for preliminary credit approval at region level.

At branch level relationship manager is responsible for completing all formalities of loan cases with coordination of borrowers. Initial credit approval is initiated from the relationship manager of the branch that is further authenticated from the area manager of the area in which branch lies. Relationship manager of any branch prepares finance cases and submits to the area manager and after approval forwards the loan cases to respective regional chief for further approval.

After approval of regional chief loan cases are forwarded to head office for final approval of finance division.

5.2 Finance & Accounting Operations:

In the MCB Bank finance and accounting operations are performed under generally accepted banking principles. Operations division of the bank is designated to design and implement the procedure for finance and accounting operations. All the transactions are recorded in MCB-2001 system that is known as Telnet in the MCB Bank.

At first step one officer of the bank enters the transaction details in system while on other side second officer or manger of the bank authenticated the entry. Before authentication the entry remains floating on the system where as after authentication that entry is recorded in the system. Any entry before authentication can be vanished with simple procedure while after authentication special procedure is adopted for its vanishing. For purpose of finance operations external sources are also used for decision making such ECIB data that provide borrowers data having borrowed money of 0.5 million or above irrespective of purpose. For purpose of lending some confidential reports are also demanded directly form the lending bank/institution on its later head.

This report is kept confidential and only used for taking lending decision for particular applicant. At bank level some built in soft wares are also used in which data of the applicant is put and score rating is determined for each applicant. Based on score of the applicant financial soundness is estimated that is used to decide whether lending should be allowed or not the particular applicant.

5.3 Role of Financial Managers:

Generally the Chief Financial Officer presents the financial position relating to the period which has been over, and the period which has to come that is the financial position attained and the financial projection i.e. where the organization will be in future. Role of CFO can be discussed into following two board areas:

5.3.1 Responsibilities towards Board of Directors:

The Chief Financial Officer is required to furnish necessary and classified information to the board of directors along with his analysis and suggestions as the Chief Financial Officer attends the board meetings, any issue with financial implications is being discussed, the person likely to be most in command of these implication is on the spot and immediately available for questions. In order to strengthen and formalize corporate decision-making process, significant issues are required to be placed for the information, consideration and decision of the Board of Directors by the CFO. Those issues can be such as given in following lines:

Annual business planes, cash flow projection, forecasts and long term planes.

1. Budgets include capital, manpower and overhead budgets along with variance analyses.

2. Quarterly operating results of the company as a whole and in terms of its operating divisions or business segments.

3. Details of joint ventures or collaboration agreements or agreements with distributors, agents, etc.

4. Default in payment of principal and/or interest, including penalties on late payments and other dues, to a creditor, bank or financial institution, or default in payment of public deposit.

5. Failure to recover material amounts of loans, advances, and deposits

Made by the company, including trade debts and inter-corporate finances.

6. Significant public or product liability claims likely to be made against

7. The company, including any adverse judgment or order made on the

Conduct of the company.

5.3.2 Responsibilities towards Shareholders:

The Chief Financial Officer is required to provide all the necessary data to be presented in the Directors Report. For this purpose Chief Financial Officer must ensure that:

1. The financial statement, prepared by the management of company, present fairly its states of affairs, the results of its operation, cash flows and changes in equities.

2. Proper books of accounts of the company have been maintained

3. Appropriate accounting policies have been consistently applied in preparation in financial statements and accounting estimates are based on reasonable and prudent judgment.

4. International accounting standards, as applicable in Pakistan, have been followed in preparation of financial statements and any departure there from has been adequately disclosed.

5. The system of internal control is sound in design and has been effectively implemented and monitored.

6. There are no significant doubts upon the companies ability to continue as going concern.

7. There has been no material departure from the best practice of corporate governance as detailed in the listing regulations.

5.4 Use of Electronic Data in Decision Making:Electronic data gives exact values and figures which top level management required. Through electronic data the top management came across to know those minute things that impact a lot on final place. The top management can measure exact profit and loss accounts, assets and liabilities up to each branch level from where they can decide which should be kept and which should not. Through this top level management is able to decide which product should be taken into course for further level or which should stop. Use of electronic data makes management able to take decision at any point of time.

The MCB Bank has special designed soft wares to fulfill the entire accounting requirements according to banking standards. Following three main soft wares/systems are used in the MCB Bank for this purpose:

Telnet:

It is an operating system used by the MCB Bank in every branch. This system is used to record the transactions manually. It is centralized only within the branch. It has no links with other branches directly. There are number of modules in this software for generating various customized reports. These reports are used in determining financial position of the branches and customers queries for different purposes.

Management Information System (MIS):

It is a web based system used by the MCB Bank management for monitoring of braches and regions. This system is maintained by the IT division of the MCB Bank. In this system all the transactions are recorded automatically by each branches using said SOP of the bank. Data of this system is not centralized only within the branch but can also be accessed by every MCB officer and executive.

MCB On-Line:

The MCB Bank has software known as MCB on-line to interlink branches. It is basically networking based software. By this software all the branches are linked with each other directly. Now all the branches have access to other branches for crediting or debiting the customers accounts. No data other than customers account balance is provided on this system. Using this software the upper management aimed to more speedy access to process the information and to make accurate decisions at branch level.

5.5 Sources of Funds:

The MCB Bank finance policy is acquiring funds from the following two main sources:

1. Deposits of account holders.

2. Borrowings from other financial institutions.

Table No: 2 Amount in Millions

Items20062007200820092010

Borrowings6,791,0076,989,42417,842,91512,278,77344662088

Source: http://www.MCB.com.pk/Financial Statement Comments on Pooling of the Bank:Deposits:

There is upward trend in deposits of the bank during 2005 to 2009. This trend is resulted due to better services standards and interest rates of the bank offered to the customers during this period. In 2008 figure of this source of funds decreased due to internal crises of the bank and downward trend of interest rates offered to the customers on deposits.

Borrowings:

There is upward trend in borrowings of the bank from other financial institutions during 2005 to 2009. This trend is resulted due to increasing funds demand of the bank expansion of the banking business in this period. In 2008 figure of this source of funds decreased due to internal crises of the bank and avoiding behavior in advancing funds to the bank by the other financial institutions due poor financial position of the bank.

5.6 Generation of Funds:The MCB Bank generates funds from the following two main sources:

1. Mark-up / return / interest income earned on advances granted to the customers.

2. Non-mark-up / interest income earned by the bank for the services provided by the bank to the customers.

Table No. 3

Item20062007200820092010

Total Mark-up /

return / interest income1242833212716738143879352331196735774544

Total

mark-upnon

52090927248239825715994246255642885

interest income

Source: http://www.MCB.com.pk/Financial Statement Comments on Income Generation:

Mark-Up / Return / Interest Income:

There is upward trend in mark-up / return / interest income of the bank during 2005 to 2009. This trend is resulted due to prudent lending policies of the bank in this period. The bank advanced the funds to best possible extent in this period to regular parties having good pay back record.

Total Non-Mark-Up / Interest Income:

There is upward trend in non-mark-up / return / interest income of the bank during 2005 to 2008. This trend is resulted due to better services standards of the bank offered to the customers during this period. In 2009 figure of this income decreased due to internal crises of the bank and competition in market.

5.7 Allocation of Funds:

The MCB Bank allocates funds in following two main areas:

1. Investments

2. Advances

Table No. 4

Item20062007200820092010

Rupees ' 000

Net

Investments143524971166195619149350096156985686167134465

Net

Advances140547374161265760220794075268838779253249407

Source: http://www.MCB.com.pk/Financial Statement Comments on Funds Allocation:Net Investments:

There is upward trend in net investments of the bank during 2005 to 2006. This trend is resulted due to better funds generation position of the bank in this period and favorable investment environment in the country. In 2007 figure of this item decreased due to internal crises of the bank and financial crisis in the whole world.

Net Advances:

There is upward trend in net advances of the bank during 2005 to 2008. This trend is resulted due to better funds generation position of the bank that allowed advancing more to the customers in this period. In 2009 figure of this item decreased because of worst recovery behavior due to financial crisis in the whole world.

6. CRITICAL ANALYSIS OF THEORETICAL CONCEPTS:

It is sometimes heard that there is big difference in theoretical concepts and their practical implementations. In internship in the bank, I also aimed to observe that whether this concept is true or not. During internship I observed following practices that vary from theoretical banking concepts:

1. Theoretically all electronic transactions should be done within minutes but I observed that customers has to wait for long time for online transactions due failure of online system.

2. Theoretically a banker should follow banking SOPs but I observed that to maintain clients and their deposits in the bank violation of banking SOPs is routine of bankers.

3. Theoretically all banking businesses should be stopped after banking hours of the bank but I observed that banking activities remain for clients even after banking hours.

4. Theoretically there should be segregation of duties for each employee in any organization but in operations department of the branch no segregation of duties is observed. Each staff member is given multiple tasks that affect working efficiency of staff.

5. Theoretically in an organization there should not be shortage of staff but I observed shortage of staff member in the bank.

6. Theoretically all records should be daily updated but I observed that record some times record is not updated on daily basis.

7. Theoretically a call back procedure should be adopted for heavy transactions but I observed that some times A/C holders are not called for this purpose.

8. Theoretically all employees should avail 15 mandatory leaves in a year but I observed that some employees not avail these leaves or partially avail due work in load in the bank.

7.WEAKNESSES:

MCB major fault is that wasnt keeping its pace with on going changing in banking industry unlike other bank. Now this bank combining all it power and trying to approach other banks.

Latest reorganizing efforts are necessary to make it cost effective also making its facility accordingly to modern banking. These must continue.

Bank management has to put its all effort to change the prevailing culture of the bank and to put the foundation stone of business oriented culture. In which employees give important to the bank and its customer.

To attract the customer in the future MCB have to make extensive effort to give facilities of retail and consumer banking. Plus the technology in the banking which will be necessary for future banking is another week area need to be stressed.

The outlook and interior lay out of the branches is another thing, which needs to be improved.

The procedure of taking services from the bank must be made easier and straightforward not involving long difficult procedure for simple task To remain in the market bank need to be vigilant in the eyes of customer. One way is through promotion efforts, so that people aware about he services of the banking and any addition which the bank as made in the portfolio of its services.

CONCLUSION:

It is evident from this report and the financial statements of MCB that it is making progress rapidly. The profits of MCB have grown considerably during the last few years and this trend is expected to continue into the future. Therefore, it is conclude that MCB has a very prosperous present and future, which assures the shareholders of wealth maximization. Side by side of it I think that if bank would be able to cover and control on the above mentioned recommendations then it would be in such a situation that will really lead it towards the road of prosperity, development and integrity. Moreover, with the above-mentioned sentences I think there is too fault of the customers and in order to make the proper working of the bank the customers should also cooperate with the bank, which will be really a good, ambitious and diligent condition for the bank. Then bank will be really in such a situation and position to compete its competitors in the country as well as on international level.

SUGGESTIONS & RECOMMENDATIONS: Although MCB is included in ten top most banks of the world equity as well as assets wise, and it is only bank that got AAA from Paccar. But for the further improvement in various sectors my recommendations to the bank would be as follows:

MCB should become very specific about its competitors, so that it can understand who its competitor is in the first degree and who is in the second degree. Then the first-degree competitors should be watched closely

A research cell should continuously try to gather information about the present action so its competitors and expected future actions. So in this way strategies that are more effective can be formulated.

The performance reward linkage should be making strong as it is said, "A happy employee delivers more than he receives from the organization." The MCB should also try to make its employees happier.

There is immediate need, to reconstruct the personnel policies. Selection should be through newspaper advertisements. In this way, more intelligent, efficient and qualified staff can be formulated.

It is strongly recommended that MCB should go for computerization rather than manual work, which is very slow and time, consuming process. In this age MCB even does not have a partially computerized system where as other new competitor banks are now going towards on-line banking services.

Govt. should take keen interest to recover its bad debts, which can improve its financial position.

In case of giving the loans, it is necessary to check the repute of customer towards loan repayment. Bank should not advance the money to those people who are addict of rescheduling of loans due to their political influences. Instead providing loans to these persons, loans must be advanced to the well-reputed businesses and industries having good record of loan repayment.

Along with the officers, the training must also be given to the clerical staff. Because of MCB, are running on manual system and the training of its staff directly improving their efficiency of work?

Present training program for its officers is need to be improved, as this program instead of improving the efficiency of officers is merely a burden for the bank in the form of heavy T.A. , D.A. and cost.

Working conditions must be improved for the employees. Bank will definitely get more benefits after some expenditure on the working conditions as it improves efficiency and productivity of the employees.

MCB should flourish certain marketing plans to attract the customers by giving them certain incentives and beneficial schemes to the customers as other competitor banks are doing so.

There is also a need of proper recruitment and selection program. New young talent should be introduced to inject the new ideas.

Deterioration in efficiency is mostly due to promotion without merit. So promotions must be awarded on merit and when due.

Special attention should be given to the behavior of the employees towards the customers, as customer is the most important person for any bank.

Many employees are working on ad-hoc basis creating dissatisfaction. The deserved should be made permanent employees.

Political influences in the bank should be eliminated.

To motivate the employees of the bank, regular bonuses and incentives should be given to them.

There must be a friendly environment among all the employees as it enhances the trust and sincerity.

MCB should be focusing its attention towards the share of traveler cheque.

Branch manager should be trained in the field of selling to serve better according to the expectation of customers.

The recruitment policy should be fair and transparent.

Management should increase the branch limit of expenditure to fulfill the necessary expenditure of personnel. Relation.

8. REFRENCES:

Quresh, A. H., Hussain, Z., & Rehman, K. U. (n.d.). A Comparison between Islamic Banking and Conventional Banking Sector in Pakistan. Retrieved from http://ifrnd.org/IMBR/Vol%204/4(4)%20Apr%202012/6.pdf Sharmin, K. (2012). A CORELATIONAL STUDY ON AUTOMATED SERVICE QUALITY AND ITS RELATIONSHIP BETWEEN CLIENT SATISFACTION AND GENERAL BANKING IN CONTEXT OF BANK ASIA LIMITED. Retrieved from http://dir.iub.edu.bd:8081/handle/123456789/124

Sneath, W., & Pierce, A. (n.d.). Faculty & Staff Undergraduate Internship Guidebook. Policy, 14, 15.

Usman, M. (n.d.). The Effect of Ownership on Organizational Performance. Retrieved from http://btu.se/fou/cuppsats.nsf/all/286b1e07bd882742c12577a400664aa5/$file/Final_Thesis_Muhammad_Usman.doc

Naz, D., Naseem, M. A., & Iqbal, J. (2012). IMPACT OF PRIVATIZATION ON NON-PERFORMING LOANS OF CONVENTIONAL COMMERCIAL BANKS IN PAKISTAN. Retrieved from http://www.savap.org.pk/journals/ARInt./Vol.3(1)/2012(3.1-38).pdf

http://www.mcb.com.pk/ir/MCB%20A-Report2007.pdf12. Annexure:

Organograme of MCB(Fig. 1)

BRANCH ORGANOGRAM OF THE MCB BANK:

(Fig.2)

Hierarchy of Finance Department

(Fig.3)

NUMBER OF BRANCHES IN DIFFERENT LOCALITIES

Punjab732

Sindh282

NWFP230

Baluchistan77

Azad Kashmir71

Domestic1392

Overseas4

EPZ1

Total1397

Sri Lanka3

Bahrain1

Furthermore, the bank has some proposals under consideration to open more branches in some European countries and as well as in Japan & china

DesignationNumber of PostsChairman1President1Board of Directors10Sectary to the Board1Deputy CEO1Head Of the Departments30Officer Grade (I, II, III)2300 (Approx)Technical Staff615 (Approx)Security Staff575Office Boys, Khakroob800Total Employees4334 (Approx)

Branch Manager

MIAN IJAZ RASOOL

Operational Manager Rana Ubaid UR Rehman

Relationship Manager

Mr. sarmad

Grade I Officer

Mr. sada husaain

Cash Officer

Mr. Salman

ATM In charged

Mr. Huma

Office Boy and Guards

1

_153338488.doc

Chairman

Board of Directors

Managing Director

GM Marketing

C E O

Deputy C E O

Legal

Co. Affairs

Sale Deptt.

Advertisement Deptt.

Area Affairs

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