Professional Documents
Culture Documents
Submitted by:
Naveed Anjum 8248
GC university FSD
Subject Introduction:
The main purpose of credit management is to provide comprehensive information about a
customer in terms of their business and loan record. The credit management system helps
the banks and financial institutions to estimate that what type of advances should
provided to the customers and how to control excess amount of debts to minimize NPLs.
It is one of the important tasks to manage the credit. You should make a credit portfolio
which will help in obtaining better loan rates, lower interest rates and reduces the fees
linked with credit cards. If credit is not managed properly it leads to the repossessions
and bankruptcy. It is necessary for the credit worthiness and daily financial functioning of
a bank and financial institution. It is not necessary that if a business is successfully
creates sales, it is also successfully paying its financial obligation. Credit management
comprises several functions that contribute the financial health of the business.
Vision
To be the leading financial services provider, partnering with our customers for a more
prosperous and secure future.
Board of Directors
Chairman
Vice chairman
S. M. Muneer
Director
Tariq Rafi .
Director
Shahzad Saleem
Director
Sarmad Amin
Director
Director
Director
Director
Trust:
MCB is the trustee of public funds. It shows full commitment and integrity. MCB gives
strong importance to ethical behavior. It adopts full cooperation with internal and
external policies and procedures and operating with the legal framework.
Customer focus:
MCB always focus on developing long term relationship with its customers. It always
tries to retain its customers by fulfilling their expectations.
Innovation:
MCB always try hard to lead market in innovation of product and service offering.
Teamwork:
Our strength is the variety of our people. For achieving cooperative interaction among the
groups we work together and challenge and inspire each other.
Achievement:
Our most valuable assets are our people. Our commitment is our Result oriented culture.
Goals are very clear to us. Merit is an only criterion of rewards.
Social responsibility:
As a responsible citizen we contribute to the social welfare community.
Branches of MCB:
There are 3 types of braches MCB
1.
Corporate branches
20
2.
Consumer branches
637
3.
Number of employees:
For its customer and employees MCB has more potential bank. With the passage of time
MCB increases its volume and its employees in this way MCB offering great working
opportunities for people who are interested to do job in MCB. MCB motivate its
employees with higher salaries according to their work and experience. Round about
9946 employees including permanent and contractual are working in MCB.
Card categories;
MCB ATM regular card:
The MCB ATM card allows withdrawal of up to Rs.10, 000 per day and maximum of 3
withdrawals per day per card.
Bill payments:
MCB easy bill pay offers convenience to pay utility bills and mobile phone bills or
recharge pre-paid mobile phone accounts.
MCB Lockers:
MCB Lockers are the best protection for your valuables. Lockers of different capacities
are available nationwide.
ACCOUNTS:
Saving Account:
Most convenient way of saving rupees is saving account of MCB. Its basic features are as
follows;
Current account:
Discover the quick, easy and convenient way to manage and use your money with an
MCB current account.
Features;
Affordable lockers.
Term deposit:
It is very valuable scheme. Customer can avail on choice of 1 month, 3 month, 1 year, 2
year, 3 year, 4 year, 5 year term deposit. Profit is provided on half yearly basis. Customer
can avail the credit facility up to 75% of total deposit.
Travelers cheques:
In 1993 MCB introduced travelers cheque for the first time as safe cash for traveling and
travel related purposes. This product has been very popular. Customer prefers it over cash
for traveling and for all walks of life.
MCB Schemes:
MCB introduced following schemes to develop the saving habit in people.
8% rate of return is given per annum. Return is calculated on daily basis and paid half
yearly. Through this facility customer can pay their utility bills (electricity, gas and
telephone) without making any queues and delay.
It is reviewed in 6 month
Departments of MCB:
Following departments situated in MCB;
1. Cash department
2. Operations department
3. Customer service department
4. Remittances department
5.Clearing department
6.Trade department
7.Advance department
10
Branch introduction:
This branch is a corporative located at circular road, Faisalabad. In this branch total
numbers of employees 45 And Branch Code 0326.
Asif Awan
Branch manager
Ifkhtar Ahmad
Advance department
Naveed Akhtar
Adnan Zafar
Cash department
Rashad Ali
Remittance department
Ashar Ali
Cashier
Wajid Ali
Peon
Muddassar
Security guard
Muhammad Waris
11
Chief Manager
Branch Manager
Department
Advance
Foreign Exch
Operational
Remittance
Cash
Cr.Manager
Forex Manger
A/c Officer
officer
Supervisor
Cr.officer
Forex officer
GBO
Casheir
teller
sorter
12
Chapter No. 2
Corporate Financing
Financial services specifically offered to corporations, such
as cash management, financing, underwriting, and issuing of stocks, bonds, or other
instruments. Financial institutions often maintain specific divisions for handling the
needs of corporate clients, separate from consumer or retail banking activities for
individual accounts.
Target Market:
Target Market of circular Branch, Faisalabad is corporations, mills etc.
In these corporations following industries are included;
Textile industry
Sugar industry
Beverage industry
Electronic industry
Chemical industry
Rice industry
FESCO
Existing Client:
Existing corporate clients of our branch are as follows;
Nishat textile
MTM
B.B.Jaan
Crescent textile
Madina Group of industries
13
1. Funded facilities
2. Non funded facilities
In Funded Facilities funds/cash of bank is directly involved.
While in Non-Funded facilities Undertaking of bank is involved. In Non-Funded facilities
14
Running Finance
Cash Finance
Primary purpose of this facility is to finance Plant and Machinery, Land, Building etc.
Freight Charges
Handling Charges
Purchase of Goods
6.Running Finance
Running finance facility is provided to a customer, allowing withdrawals from the current
account in excess of the credit balance maintained by the customer with the bank.
This account is allowed to be operated freely allowing multi transactions but only in case
If the sanctioned limit is not violated and account is operated in accordance with
approved terms and conditions.
7.Cash Finance
It is a facility in which amount is disbursed against pledge of a merchandise. The amount
after retaining the prescribed percentage on stocks is transferred in a separate cash flow
account of customer.
Banks Guarantee
Board Resolution
17
Promissory note.
Hypothecation
Personal guarantee
Promissory note:
It is a written agreement, Signed by two parties. It is unconditional promise by the maker
of agreement to pay a specific amount of money to payee on demand or at some future
date.
Hypothecation:
It is a weakest form of security. It is based on inventories.
The possession of security or inventory with the borrower. Ownership is also with the
customer. Bank only sign a letter from customer that borrower cannot sale the whole
property. He can sale only a specific limit of inventory equals or more than the loan
amount.
Personal guarantee:
Borrower can give the guarantee of third party. Guarantor cannot charge any fee from the
borrower other than the charges of documentation. Borrower will pay the charges to
guarantor.
Collateral / Margin:
Collateral means secondary nature. The security which is obtained for the purpose of loan
is secondary in nature. The main purpose of the bank is not to sell the property. Main
purpose of the bank is to recover the loan amount. Bank recovers the payment from the
cash flows of client. If borrower cannot make payments then bank sale the property to
recover the amount of loan.
Commercial property 25%
Residential property
75%
Stock margin
30% to 40%
Credit Analysis
The bank does qualitative as well as quantitative analysis of client before sanctioning of
loan.
1. Qualitative Analysis:
(i) Industry Analysis:
Industry analysis is conducted by the bank that if the condition of that industry is good
than give loan in that industry
(ii) Business Analysis:
Bank while sanctioning of loan analyze its business position by personal visits and
estimate their sales and may contact to their suppliers to know their transactions with the
client and their customers and consumers. Age of business is also important for
sanctioning of loan.
(iii) Management Analysis:
Bank always analyze the management coordination and communication within the
company and outside the company. If the coordination is good it shows that every
department is interlinked with other one and they doing the task within time which
increase companys goodwill as well as the revenue and if revenue increases then bank at
a safe point to recover his loan.
19
2. Quantitative Analysis:
(i) Financial Analysis:
Take financials such as income statement and balance sheet of the business of clients to
check the financial position of the business.
(ii) Ratio Analysis:
The Bank does ratio analysis of the clients business to check the position of business.
Interest Rate on Loan:
All loans are sanctioned on KIBOR plus the margin of the bank which varies according
to the nature of clients and their relationship with the bank which is mostly 2 or 3% etc.
And it also different for different products offered by the bank. Bank margin depends
upon risk .If risk is high margin will be high.
Recovery process:
The recovery process in MCB is deals by a department named as SMP (special asset
management).When a customer is default the matter is sent to SMP only if the amount is
more than 2 million. In case of recovery the bank not charges SMR (standard mark up)
but also charge COF (cost of fund).
The default situation is lies on 3 categories
20
1. Substandard
When a customer not pays amount after 90 days of due date the bank considered 25% of
outstanding amount as loss
2. Doubtful
In this case if customer not pays amount of his debt after spending the 180 days of due
date the bank considered 50% of outstanding amount as loss.
3. Loss
In case of spending the 365 days after the due date the whole amount (100%) is
considered as loss.
The following documents will be seen in case of customer default.
4. IB forms
IB-06 mark up
Simple means bank profit. Its difference b/w the rate of interest at which loan
taken and at the rate at which loan is given to customer.
IB-29 guarantee
guarantee vary from customer to customer.
5. Margin
The customer has to pay /deposit security over and above the loan
amount the bank normally 30% margin in order to in order to cover
the credit default risk. Its means bank require RS:100 security for
granting RS:70 loan.
6. Security
Primary (hypothecation )
Its weakest form of security in which bank pledge an asset normally stock and
grant loan. The ownership is remain with customer. . Bank only sign a letter from
customer that borrower cannot sale the whole property. He can sale only a
specific limit of inventory equals or more than the loan amount.
secondary
The bank require land and building as a security.
22
Recovery method:
From ethical point of view;
1. Recovery letter:
In recovery latter we take these points into account;
They use polite words .Show courtesy They never show his default
Wait some time for reply
First reminder
2nd reminder
Chapter No. 3
Small Medium Enterprise
SME financing:
MCB Bank has created a special area of activity in providing customized financial
solutions for SMEs. MCB as your bank for life we understand the success of your
business what derives you. We have variety of financial products, flexible rates and
expert advice; your business can become competitively edged in the market place.
There are above 100 MCB branches which are providing services to SMEs
SME is further divided into two following categories;
Number of employees
*Up to 20
Up to Rs. 75 million
24
*No.
Entity
Manufacturing
service MEs
of
Annual sales
employees
turnover
21-250
&
Trading MEs
21-50
25
Target market:
SME financing is mostly provided to those clients who are professionally traders or
manufacturers. In market, MCB provides SME financing to the traders of:
Electric appliances
Yarn
Medicine
Sugar
Cotton
Wheat
Financing is required by all of them.
Existing client:
Chenab market
Medicine distributers
Traders
Pepsi distributers
26
1. Funded facilities:
Following are the funded facilities;
Running finance
Running finance facility is provided to a customer, allowing withdrawals from the current
account in excess of the credit balance maintained by the customer with the bank.
This account is allowed to be operated freely allowing multi transactions but only
in case If the sanctioned limit is not violated and account is operated in
accordance with approved terms and condition
Cash finance
It is a facility in which amount is disbursed against pledge of a merchandise. The amount
after retaining the prescribed percentage on stocks is transferred in a separate cash flow
account of customer.
ERF stands for Export Running Finance. These are for pre-shipment and
post-
shipment.
It is stands for Finance against Trust Receipt. It is provided after the use of L.C.
Finance against Importer Merchant (FIM)
It is stands for Finance against Importer Merchant.
Foreign Currency Export Finance (FCEF)
It is stands for Foreign Currency Export Finance. It is provided in foreign currency.
Foreign Bills Purchased (FBP)
It is stands for Foreign Bills Purchased.
27
Bill of Lending
(BL)
B. Non-Funded facilities:
In these facilities risk is not directly involved. These are the major facilities of MCB.
Bank Guarantee
(BG)
It is stands for Bank Guarantee. For this facility bank take any security from customer
and issue bonds to him.
It is stands for Documents delivered against Acceptance. It is Usunce basis. Days are
involved in this. Collateral is used in it. Payment is received after 90 to 120 or 180 days.
28
Existing facilities
Required facilities
Securities detail
Financial analysis
Mark up history
Collateral analysis
Risk analysis
Account strategy
Customer information
Recommendations
29
Credit analysis:
Annual revenue
Performance
Current ratio
Inventory
Profit comparison
opinion.
policy.
30
Payback period:
For short period of time. They decide any three continuous days of a year for
payback.
Recovery method:
From ethical point of view;
1. Recovery letter:
In recovery latter we take these points into account;
They use polite words .Show courtesy They never show his default
Wait some time for reply
First reminder
2nd reminder
31
They try to go at his work place. They never go his personal place means never go
at his home.
4. Recovery agencies:
If these processes fail then they hire strong persons at commission for recovery.
5. Legal action:
We file suit
32
Chapter No. 4
Consumer Financing
Consumer financing is the segment of financial service industry that lends
money to individual consumer. Its include credit cards, car financing and
mortgage loans.
Many banks in Pakistan provide the consumer financing facility to consumer. By
using this facility consumer meet our day to day needs, expenses and fulfill our
day to day needs.
Target Market:
Salaried persons: who have minimum Rs.60000
Business persons: who have bank statement oflast two years.
Existing client:
Massod textile
B.B.Jan
6. Business sarmaya
1.
Credit card:
MCB mostly focus on this product
They charge no mark up on this facility. Interest rate is fixed on this facility.
Interest is 0.25%.
2. Personal loan:
This facility is temporary. For this facility MCB do qualitative analysis of
client.
3. Auto loan:
For this facility MCB focus on the physical security of client i-e Car.
From this facility bank save 50%. MCB mostly work on this facility.
4. House Financing:
It is also a temporary facility in MCB. In this facility plot is receive as
security.
5. Debit card:
MCB pay attention on this product also. No interest is charged on this facility.
6. Business sarmaya:
It is closed in our branch.
Interest rate:
It is vary from client to client. 3 month KIBOR plus interest charged.
It is known as borrowers basic fact sheet. It is according to the format given by SBP. It is
a type of request letter provided by the client to the bank for loan.
LAF:
It is the loan application form which a customer has to submit with the bank for
sanctioning of the loan in which he has to mention his personal information and purpose
of loan.
Income Certificate:
The client must have to provide the bank his income certificate through which the bank
check his daily cash flows of income and judge whether that person is eligible for
advancing the loan or not and he will be able to repay the loan and through it they can
easily estimates the risk criteria of client.
Others:
Other formalities or documents are also required by the bank while sanctioning a
personal loan to customer which may includes a copy of valid CNIC of the client and if
he is a salaried person attached his salary slip and the salary cheque he is given by the
firm or organization where he works with the other documents.
Board Resolution
Promissory note.
Hypothecation
Personal guarantee
35
Promissory note:
It is a written agreement, Signed by two parties. It is unconditional promise by the
maker of agreement to pay a definite sum of money to payee on demand or at
some future specified date.
Hypothecation:
It is a weakest form of security. It is based on inventories.
The possession of security or inventory with the borrower. Ownership is also with
the customer. Bank only sign a letter from customer that borrower cannot sale the
whole property. He can sale only a specific limit of inventory equals or more than
the loan amount.
Personal guarantee:
Borrower can give the guarantee of third party. Guarantor cannot charge any fee
from the borrower other than the charges of documentation. Borrower will pay the
charges to guarantor.
Collateral / Margin:
Collateral means secondary nature. The security which is obtained for the purpose
of loan is secondary in nature. The main purpose of the bank is not to sell the
property. Main purpose of the bank is to recover the loan amount. Bank recovers
the payment from the cash flows of client. If borrower cannot make payments
then bank sale the property to recover the amount of loan.
36
75%
Stock margin
30% to 40%
Payback period:
In case of default for S.E (small enterprises) it is 90 days.
For M.E (Medium Enterprises) it is 180 days.
For substandard it is 90 days and provision is 25%.
For doubtful it is 180 days and provision 50%.
In case off loss it is one year plus and provision will 100%.
Recovery method:
From ethical point of view;
1. Recovery letter:
In recovery latter we take these points into account;
They use polite words .Show courtesy They never show his default
Wait some time for reply
First reminder
2nd reminder
37
2. Telephone calls:
Make two or three calls.
3. Personal visits:
They try to go at his work place. They never go his personal place means never go
at his home.
4. Recovery agencies:
If these processes fail then they hire strong persons at commission for recovery.
5. Legal action:
We file suit
38