INTERNSHIP REPORT

On
MUSLIM COMMERCIAL BANK

Submitted By
B.Com (Hons)
Roll No:
Session: 2016-17
Submitted To
MR. RAFI ULLAH KHAN

DEPARTMENT OF COMMERCE
Gomal University D.I.Khan

APPROVAL SHEET
Internship report on Muslim Commercial Bank submitted to Gomal
University D.I.Khan in partial fulfillment of the requirements for the degree of
B.Com (Hons) 4Years.

Advisor:Signature

__________________

Name:

Comments: -

__________________

External Examiner:Signature

__________________

Name:

__________________

Comments: -

__________________

Preface
Banking industry has always played a vital role in the success of
economies. The practice is carried out since primitive ages. Multinational banks
are now dealing in money and are laying the foundations for countries to stand
on their own feet. The internship proved to be extremely helpful in learning
about the functions and operations of a bank and how different kindof
procedures at bank are carried out. Although an eight weeks internship is not
enough time to know delicately about every aspect, but somehow it had the
initial touch of being in a practical world.
I owe very much too so many people whose help and support at different
stages of my work enabled me to write this report.

SAFEER AKHTAR
B.Com (Hons)
Roll No. 854

Acknowledgements
This study is conducted under the great support and supervision of
Prof: RAFI ULLAH KHAN Department of Business Administration Gomal
University D.I.Khan. We are thankful to him from the core of our heats that he
fully assisted us throughout the Internship report was very kind to us at each
step.
All his guidance made us to achieve this goal successfully.
We are thankful to whole administration of Abdul Rehman Sohail who
helped us in collection of Data.

SAFEER AKHTAR
B.Com (Hons)
Session 2011-15

Contents
CHAPTER # 1.........................................................................................................
INTRODUCTION...................................................................................................
Product Toolkit......................................................................................................
General Banking...................................................................................................
Types of Deposits..................................................................................................
Types of Company:.............................................................................................
Marketing In Banking.........................................................................................
The Marketing Mix In Banking Sector...............................................................
Distribution.........................................................................................................
Advertising..........................................................................................................
Public Relations..................................................................................................
Relationship Marketing.......................................................................................
Organizational Structure.....................................................................................
Evolution And Growth Of Modern Banking......................................................
Commercial Bank:..............................................................................................
Vision & Mission................................................................................................
BRIEF HISTORY OF MCB.................................................................................
Nationalization:...................................................................................................
OBJECTIVES OF MCB.....................................................................................
Effective Reward Punishment Policy.................................................................
Divisions of MCB...............................................................................................
Organizational Structure of MCB.......................................................................
CHAPTER -3..................................................................................................
ADVANCES AND CREDIT DEPARTMENT....................................................
Banks Credit Policy...........................................................................................
Classification of advances...................................................................................
Loans Application Procedure:.............................................................................
Products & Services............................................................................................
SAVINGS ACCOUNT........................................................................................
MCB ONLINE BANKING................................................................................
MCB PROJECT & STRUCTURED FINANCE................................................
MCBTRADE PRODUCTS................................................................................
MCB INVESTMENT SERVICES......................................................................
Market Statistics of MCBs Share.......................................................................
Equity and Dividends..........................................................................................
Profit and Loss account.......................................................................................
Operating Expenses............................................................................................
Products & Services............................................................................................
MCBTRADE PRODUCTS................................................................................

Review of Six Years' Performance......................................................................

ADVANCES:......................................................................................................
Bank for Life ANNUAL RF.PORT 20114..........................................................
ACCEPTANCE OF DEPOSITS..........................................................................
Opening of an Account:......................................................................................
Classification Of Deposits:.................................................................................
Zakat & Tax Calculation:....................................................................................
Overdue Capital Growth Certificates:................................................................
Re Investment on Maturity:................................................................................
Haj Mubarak Saving Accounts...........................................................................
Opening of an Hms Account:..............................................................................
KHANUM BACHAT ACCOUNT SCHEME:...................................................
Opening of the Account:.....................................................................................
Cash Department:................................................................................................
CHEQUE:...........................................................................................................
Kinds of Cheques:...............................................................................................
Remittance Department:.....................................................................................
Kinds of Remittances:.........................................................................................
Deductions on All Transfers:..............................................................................
PROBLEMS AND RECOMMENDATIONS.....................................................
Information to Customers:..................................................................................
Job Analysis and Wages:.....................................................................................
Performance Appraisal:.......................................................................................
Introduction of Female Desk Program in the branch:.........................................
Provision of Computer:.......................................................................................
Socializing:.........................................................................................................
SWOT ANALYSIS................................................................................................
Strengths:............................................................................................................
Weakness:............................................................................................................
Threats:...............................................................................................................
Recommendations for Improvement...................................................................
CONCLUSION.....................................................................................................
BIBLIOGRAPHY.................................................................................................
REFERENCES......................................................................................................

CHAPTER # 1

INTRODUCTION

Product Toolkit
MCB Bank Limited is one of the leading banks in Pakistan, renowned for providing
quality banking services, technological development and professional management. Today,
the Bank is reputed as a sound financial institution with the highest market capitalization
21.4% (as at 31st December, 2014). It is pertinent to mention that MCB Bank Limited is one
of the few institutions in Pakistan that is recognized and traded in the international market as
its Gd Rs (Global Depository Receipts) are listed on the London Stock Exchange Professional Securities Market. The Bank has to its credit several prestigious international
awards namely:
Euro money 2012 for Best Bank in PakistanAsia-money Awards 2014 for Best of
the Best Domestic Bank The Asian Banker 2014 for The Strongest Bank by Balance Sheet
in PakistanHaving said that, MCB Bank Ltd is proud to announce the launch of it's first
Wholesale Banking branch in Dubai, UAE. This is in line with MCBs International
expansion vision. We now have a growing presence in the world with operational network in
Srilanka, Bahrain and a strategic partnership with May bank of Malaysia, that owns 20%
share of MCB Bank.

General Banking
General Banking consists the management of deposit, cash, clearing house, bills, account
opening, security instruments handling, customer services, locker facilities and other
ancillary services of the bank besides Advance and Foreign Trade.
General Banking Services

Current Account

Savings Account

Time Deposit

Scheme Deposits

Bank Certification

Wealth Management Service

Other Services

Types of Deposits
Deposit is the major source of fund for commercial banks. The deposit-mix may be
categorized in the following manner
(a) No-cost deposit
(b) Low-cost deposit
(c) High-cost deposit.
Opening of bank account requires different types of prescribed forms/ documents for
different nature of accounts. The account-holders or authorized signatories are allowed to
operate their bank account on the basis of instruction given by them at the time of opening of
account.
1.

Individual:

An individual can open an account under the following terms and conditions:
01.Name of the branch and date
03.Name of the account: in Bengali and in
English (capital letter)
05. Fathers name
07. Husband / Wifes name
09. Special Instruction of the account holder
11.Permanent address
13. Occupation
15. Passport number, if any
17.Tax ID number (TIN)
19. Other accounts of the customer, if any
21.Two copies of photograph attested by the
introduced
23. Nominee Information
25. KYC profile form
27. Declaration and Signature

Account number

04.Type of account
06. Mothers name
08. Currency
10. Present address
12. Date of birth
14. National ID number
16. Driving license, if any
18. Vat registration number, if any
20. Introduce details
22. Initial deposit
24. Source of Fund
26. TP (transaction profile)
28. Signature of the Authorised

29. Specimen Signature Card

31. Other Terms and Conditions

Officer
30. Cheque Requisition Slip

2. Joint Account:
1. The account should be opened only on receiving application signed by all persons.
2. The Bank should obtain specific directions as to whether one or more of the joint account
holders shall operate the account.
3. A joint account holder cannot delegate his authority to operate the account
4. When the intention is that all joint account holders should jointly operate the account: the
account shall be operated by all jointly.
5. When the intention is that any one can operate the account: the account shall be operated
by either or survivor.
6. In case of partnership firm the clause will be : All partners to operate jointly or Any one
partner can operate the account.
7. The authority of operation in the joint account shall stand automatically revoked on
account of death, insanity or insolvency of any person giving the authority.
8. In case of death of one or more joint account holders, any balance in the account is payable
to the legal representative.
9.In case of a joint account holder dies while the account is showing a debit balance, his legal
representative jointly with the surviving joint account holders remain liable for the debt.
10. Any other formalities as contained under Individual account will be applicable.

3. Sole-Proprietorship Firm:
A sole-proprietorship firm is a business concern carried on by an individual owner in a trade
name.

Formalities/ Guidelines:
(a) The title of the account shall be in the name of the business establishment;
(b) A declaration should be obtained from the owner of the firm to the effect that he is the
sole- proprietor and no other person has any interest in the business as partner or otherwise.
(c) The declaration should also contain that the owner, as the proprietor, will be personally
liable for all dealings and obligation in the name of the business.
(d) Specimen signature should be obtained on the specimen signature card.
(e) Seal of the proprietor of the firm to be affixed.
(f) Other formalities:
4. Partnership Firm:
Partnership arises of the contract between persons and by virtue of this contract , they
associate themselves with a business.
Formalities and Guidelines:
(a) The title of the account should be in the name of the firm.
(b) Special Instruction should be specific in the account opening form.
The Authorized persons should sign on the specimen signature card.
(d) The letter of partnership should be signed by all the partners to the effect that they are
jointly and severally liable for the debts of the firm.
(e) Valid Trade License.
(f) Partnership deed ( if registered, registration certificate to be obtained).
(g) VAT Registration ( if any).
(h) Any partner, on behalf of the partnership firm, is empowered to sign on the document.

10

(i) Any partner, on behalf of the partnership firm, is authorized to borrow money.
(j) A partnership firm is dissolved on the death, insanity and insolvency of a partner.
(k) A partner relinquishes his responsibility on being retired.
(l) Other formalities as stated under proprietorship firm.

5. Joint Stock Company:

A company means a company formed and registered under Companies Act 1913 as revised in
1994.

Types of Company:
(a) Private Limited Company
(b) Public Limited Company
1 Company Limited by Shares
2 Company Limited by Guarantee
Formalities and Guidelines:
(a) The title should be in the name of the company.
(b) Special Instructions should be specifically spelled out in the application form as per
resolution of the board / Memorandum of Association.
Signature of the Authorized Person as per resolution of the board / Memorandum of
Association.
(d) Memorandum of Association.
(e) Articles of Association.

11

6. Club, Society, School, College, University etc.

Formalities and Guidelines:
(a) The title should be in the name of the respective institution.
(b) Rules / By-laws of the institution.
Copy of Resolution of meeting of Managing Committee / Governing Body for operation in
the account.
5. Autonomous / Local Bodies:
Formalities and Guidelines:
(a) The title should be in the name of the respective authorities.
(b) Special Act or Statutes should be referred to regarding formation and constitution of the
organization.
Specific Instructions should be noted for selection of bank regarding dealing with its funds.
(d) Specific Rules and Special Instructions regarding mode of operation of the account.

General Banking Knowledge

Self-paced Internet-delivered courses (ABA eLearning) can typically be completed in two to
four hours, although actualtime required varies by title. Students can begin at any time, on
any day, since all readings, coursework and quizzes arecompleted online.
Banking Today
This course introduces new employees to the essential principles, concepts and operations of
banking and explores the impact of banking on the economy, trends on how banks operate as
a business, as well as developing trends in banking today. This course provides a "big
picture" perspective of the financial services industry and banking.
$95 Members / $130 Nonmembers AIB Credit: .25

12

Ethical Issues for Bankers

This course teaches general guidelines that determine banking ethics, helps students gain the
knowledge and skills needed to perform ethical decision-making, and prepares them to
observe their institution's code of conduct and Federal laws. This course also explores typical
ethical dilemmas that tend to occur in financial institutions, and how to apply a thoughtful
three-step approach to such dilemmas.
$95 Members / $130 Nonmembers ICB - 1.75 All
Understanding Bank Products
This course is designed to give students an overview of the products and services offered by
banks to meet the needs of consumers and small businesses. Gaining knowledge in the range
of products offered by a bank will enable students to recognize when a client has a need and
then suggest the appropriate product to meet that need. The bank product information
contained in this course is presented in broad strokes and describes the products from the
perspective of clients and their needs. Students also have the opportunity to learn beyond the
scope of the course with activities they perform on their own.
$95 Members / $130 Nonmembers AIB Credits: .25
For more information, visit ilbanker.com or contact IBAs Denise Perez at
dperez@ilbanker.com or 312-347-3400.
SERVICE MARKETING IN BANKING SECTOR ANDRECENT PERCEPTIONS IN
MARKETING THOUGHTS OF SERVICES
Key Words:
Marketing, services, price, distribution, promotion, advertising, internal marketing, network
marketing, relationship marketing

Marketing In Banking
Marketing approach in banking sector had taken significance after 1950 in western
countries and then after 1980 in Turkey. New banking perceptiveness oriented toward market
had influenced banks to create new market. Banks had started to perform marketing and
planning techniques in banking in order to be able to offer their new services efficiently.
Marketing scope in banking sector should be considered under the service marketing
framework. Performed marketing strategy is the case which is determination of the place of
financial institutions on customers mind. Bank marketing does not only include service
selling of the bank but also is the function which gets personality and image for bank on its

13

customers mind. On the other hand, financial marketing is the function which relates un
congenitally, differences and non similar applications between financial institutions and
judgments standards of their customers.
The reasons for marketing scope to have importance in banking and for banks to
interest in marketing subject can be arranged as:
Change in demographic structure: Differentiation of population in the number and
composition affect quality and attribute of customer whom benefits from banking services.
Intense competition in financial service sector: The competition became intense due
to the growing international banking perceptiveness and recently being non limiting for new
enterprises in the sector. Increase in liberalization of interest rates has intensified the
competition.
Banks wish for increasing profit: Banks have to increase their profits to create new
markets, to protect and develop their market shares and to survive on the basis of intense
competition and demographic chance levels.
The marketing comprehensions that are performed by banks since 1950 can be shown as in
following five stages:
1. Promotion oriented marketing comprehension
2. Marketing comprehension based on having close relations for customers
3. Reformist marketing comprehension
4. Marketing comprehension that focused on specializing in certain areas
5. Research, planning and control oriented marketing comprehension.
Structure of Bank Market
Marketing activities of firms begin with determination of the market that they offer
their services or goods. Firms must find out the features of the market that it f anging market
condition. While marketing manager is arranging the variables under firms control, she/he
should also adopt the external variables. We could call the factors that affect banks market as
technological developments, legal arrangements and competition.

The Marketing Mix In Banking Sector

SERVICE
Recently, banks are in a period that they earn money in servicing beyond selling
money. The prestige is get as they offer their services to the masses.
Like other services, banking services are also intangible. Banking services are about
the money in different types and attributes like lending, depositing and transferring

14

procedures. These intangible services are shaped in contracts. The structure of banking
services affects the success of institution in long term. Besides the basic attributes like speed,
security and ease in banking services, the rights like consultancy for services to be
compounded are also preferred.
PRICE
The price which is an important component of marketing mix is named differently in
the base of transaction exchange that it takes place. Banks have to estimate the prices of their
services offered. By performing this, they keep their relations with extant customers and take
new ones. The prices in banking have names like interest, commission and expenses. Price is
the sole element of marketing variables that create earnings, while others cause expenditure.
While marketing mix elements other than price affect sales volume, price affect both profit
and sales volume directly.
Banks should be very careful in determining their prices and price policies. Because
mistakes in pricing cause customers shift toward the rivals offering likewise services.
Traditionally, banks use three methods called cost-plus, transaction volume base
and challenging leader in pricing of their services.

Distribution
The complexities of banking services are resulted from different kinds of them. The
most important feature of banking is the persuasion of customers benefiting from services.
Most banks services are complex in attribute and when this feature joins the intangibility
characteristics, offerings take also mental intangibility in addition to physical intangibility.
On the other hand, value of service and benefits taken from it mostly depend on knowledge,
capability and participation of customers besides features of offerings. This is resulted from
the fact that production and consumption have non separable characteristics in those services.
Most authors argue that those features of banking services make personal interaction between
customer and bank obligatory and the direct distribution is the sole alternative. Due to this
reason, like preceding applications in recent years, branch offices use traditional method in
distribution of banking service.
Promotion
One of the most important element of marketing mix of services is promotion which
is consist of personal selling, advertising, public relations, and selling promotional tools.
Personal Selling

15

Due to the characteristics of banking services, personal selling is the way that most
banks prefer in expanding selling and use of them.
Personal selling occurs in two ways. First occurs in a way that customer and banker
perform interaction face to face at branch office. In this case, whole personnel, bank
employees, chief and office manager, takes part in selling. Second occurs in a way that
customer representatives go to customers place. Customer representatives are specialist in
banks services to be offered and they shape the relationship between bank and customer.

16

Advertising
Banks have too many goals which they want to achieve. Those goals are for
accomplishing the objectives as follows in a way that banks develop advertising campaigns
and use media.
1. Conceive customers to examine all kinds of services that banks offer
2. Increase use of services
3. Create well fit image about banks and services
4. Change customers attitudes
5. Introduce services of banks
6. Support personal selling
7. Emphasize well service
Advertising media and channels that banks prefer are newspaper, magazine, radio,
direct posting and outdoor ads and TV commercials. In the selection of media, target market
should be determined and the media that reach this target easily and cheaply must be
preferred.
Banks should care about following criteria for selection of media.
1. Which media the target market prefer
2. Characteristics of service
3. Content of message
4. Cost
5. Situation of rivals
Ads should be mostly educative, image making and provide the information as follows:
1. Activities of banks, results, programs, new services
2. Situation of market, government decisions, future developments
3. The opportunities offered for industry branches whose development meets national
benefits.

17

Public Relations
Public relations in banking should provide;
1. Establishing most effective communication system
2. Creating sympathy about relationship between bank and customer
3. Giving broadest information about activities of bank.
It is observed that the banks in Turkey perform their own publications, magazine and
sponsoring activities.
Selling Promotional Tools
Another element of the promotion mixes of banks is improvement of selling. Mostly
used selling improvement tools are layout at selling point, rewarding personnel, seminaries,
special gifts, premiums, contests
Development In Marketing Scope At The Aspect Of Service Marketing
Marketing scope develops day to day. These developments carry special significance
for service sector in which customer and service producer interact closely.
Internal Marketing
Especially in service sector like external relations, internal relations also have
significance. It requires finding and keeping successful personnel.
For personnel of the organization to be considered their own goals and service situation,
values of the organization are sold to them. The communication techniques carried out for
customers are also performed for the personnel in internal marketing and this two techniques
go together. For example, the ads that aim creating firms image should be prepared with
regarding to audience which is composed of firms personnel.
Network Marketing
This approach takes the organization as a sequence which involves producer and
customer that market services to each other in the organization. In this structure, the activities
of departments that compose organization would be more focused on market. This will also
affect the structure of organization.

Relationship Marketing
It was mentioned that close relationship was established between producer and
customer in service sector. In addition to this, life cycle of a customer relationship was also
mentioned under the product outline.

18

According to the researchers, maintaining the relationship for extant customer

increases the profit of firms. It should be emphasized that this fact has an importance for
service sector.
Life cycle of a customer relationship is composed of three stages. At the first stage,
firms try to be well known and to acquire new customers. At the second stage, the connection
between customer and firm has been achieved. During the stage, firms intensified their
activities on acquired customers and both of them promises mutually. At the third stage, these
promises are accomplished and the service is consumed. During the stage, firms face Reality
Instants which could possibly achieve satisfaction of customer and continuous relationship.
This could be also true for second stage. So, these instants should be managed successfully.
Implementation of close relations with customer successively and true applications at
reality instants could not be accomplished by responsibilities of a marketing personnel.
Besides, it should be remembered that consumption and production of service are closely
interrelated. At this context, marketing should have role not only in production-consumption
between instants, but also at points that these intersect. In this case, 4P that was mentioned at
second section would be insufficient. So, we could divide service marketing into two parts as
specialist function (marketing mix, marketing researches) and marketing function (buyerseller interactions)
Efforts in first stage in which customers are not so clear, at the customer relationship
life cycle could be minimized for lasting customers. This is achieved by successful customer
relations. In this approach, marketing may be defined as; Marketing is for establishing,
keeping, developing relationship with customers in a manner that profit is got (especially in
long term). So, objectives of two relevant sides would be achieved. This would be
accomplished by shared promises and carrying out the promises.

19

Organizational Structure

20

Evolution And Growth Of Modern Banking

History of the bank is very old, it is traced back to as early as 2000 BC The priest in Greece
used to keep money and valuables of the people in temples. Its origin is also traced to early
goldsmiths. They used to keep strong safe, for storing the surplus money and other valuables
of the people. The first stage in the development of banking was the acceptance of deposits
from people.
Later on goldsmiths began to issue receipts for the money deposited with them to settle
transactions. These receipts were used in payment of debt and acceptable to all. This was the
second stage towards the development of banking.
When goldsmiths realized that they had surplus money therefore they intended to lend some
portion of money to the nearly traders and Merchants who constantly requested for loan. This
business was quite profitable and they instead of charging interest from depositors began to
give interest on the money deposited with them to attract more people. This was the third
stage towards the development of banking.
They also planned to allow the customer to withdraw in excess of the amount deposited to
meet the customer needs. This facility was called overdraft and they used to keep some
portion of money for this purpose.
After some time there was then started too much confusion in the banking system and they
were not able to meet the demands of the customers. This failure on the part of moneylender
to return money caused distress among the people.
To overcome this problem people felt that there must be a bank, to control the banking
activities of different lending organization. As a result of conference held in Nuremberg in
1548 the decision was taken in favor of establishing a bank to regulate the banking activities.
The first central bank was found in Geneva in 1587. Later on many other banks were
established with the same objective.
We can conclude that commercial banking system actually developed in 19 th century. Now a
day the banking activities have greatly increased. Commercial banks are now multi service
organizations and play an important role in financial markets and in the economic
development of a country.
Interpretation Of The Word Bank
The word Bank has been derived from French word banque or bancus which means
bench, office or institution for the keeping, lending and exchanging of money. Some other

21

authorities have the opinion that Bank is derived from the German word back, which refer
to the meaning of joint stock fund. Bank is a financial institution that borrows money from
one party and lends money to another party (Government, individual, business) and the
difference between borrowing and lending make profit for the bank. Banks borrow and lend
money on interest basis. Banks are classified according to their sphere of activities, the main
types of banks are as under:

Commercial Banks.

Industrial Bank.

Agricultural Banks.

Saving Banks.

Exchange Banks

Central Banks.

Cooperative Banks.

Commercial Bank:
Commercial bank is engaged in performing the routine duties of banking business. Such bank
collects surplus money from the people (as borrowing) and extends the same money as a loan
for development purposes. Commercial Bank plays a vital role in the economic development
of a country by performing the variety of functions as given below:
1. Accepting of deposits (Current, saving and fixed account)
2. Making loans and advances (Running finance, cash credit, discounting bill.
3. Agency services to customers (Collection of cheques, dividends, electricity, water and
gas bills, purchase and sale of securities, and acts as a trustee.
4. General utility services (Forex Business, Issue travelers cheque, providing trade
information)
Role of Commercial Banks In Economic Development Of Pakistan
With the passage of time, the activities of the commercial banks have been substantially
increased and such banks are now multi-service organizations, and are providing safe and
convenient places for money to the general public. In this way banks make the best use of the
fund collected for the enhancement of economic growth and development. In country such
like Pakistan, commercial banks have great contribution to the financial market, and as a
whole Pakistan development. Pakistan is a less developed country where there is lack of good
system for financial institution and specially the primary institutions including commercial

22

banks. But despite of all these drawbacks. No one can deny the importance of commercial
banks and their role in the economic development of Pakistan. Such banks contributing
toward Pakistan by providing the following valuable services to the nation.
1. Fund mobilization.
2. Encourage habit of saving.
3. Investing fund for economic development projects.
4. Lending for rehabilitation of sick units.
5. Issuing letter of credits for import and export purposes.
6. Strengthening capital and money markets.
7. Increase GNP.
8. Job opportunities.
9. Expansion in trade and industry.
10. Issue of travelers cheques.
11. Interest free banking.

Vision & Mission

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 effective financial
solutions to create and nurture long-term relationship with our customers .In doing so, we
ensure that our shareholders can invest with confident in us.
Strategic Objectives
Delivering remarkable returns to stakeholders, sustainable performance exceeding market
and shareholders expectations.
Providing value added services through operational expansion geography and upgraded
systems.
Building a corporate culture of equality, trust and team sprit as we remain dedicated to be
a socially responsible organization.

23

CHAPTER -2

BRIEF HISTORY OF MCB

A banker is described as a person transacting the business of accepting for the purpose of
lending or investment of deposits of money from the public, repayable on demand and with
draw-able by cheque, drafts.
On 14th August 1947, there were 487 branches of different banks working in Pakistan. By 30 th
June 1948, 292 branches winded up their business in Pakistan and remaining 105 branches
restricted their banking operations to a minimum level. The only bank which shifted its head
office from Bombay to Karachi, was Habib Bank Limited
Muslim Commercial Bank with the assistance of Quid-e-Azam Mohammad Ali Jinnah,
started operations in July 9, 1947 with an authorized capital of Rs.3 crores indo pak sub
continent, the bank moved to Dhaka from where it commenced its business in August 1948.
And in 1956 the bank shifted its head office to Karachi, where it is still working, in 1948 Ms.
Ispahani and Mr. Abdul Hameed Ademjee purchased the bank. At that time the bank showed
a historical performance and profit Mian Muhammad Mansha is the President and Chief
Executive of MCB. Bank performance is well and is also listed on the stock exchanges of
Pakistan.

Nationalization:
Owing to bad performance of the banks and financial institution the Government of Pakistan
introduced nationalization act in 1974. Under this act, MCB was the first bank which was
nationalized. Other nationalized commercial banks were Habib bank, Allied Bank, United
bank etc. In the same year premier bank was merged with MCB and it started work as a
government bank, nationalization effected the bank badly.
Privatization:
Nationalization result was not good and again the government felt a big need to privatize
these banks. In 1991 most of the banks were privatized again to show good results, MCB was
also privatized by selling 50% shares to a one of leading national group, 25% to general
public and 25% shares are held by the government. However privatization was a good step at
that time and till now we are receiving its benefits in shape of productivity enhancement,
Mobilization of fund, consistency services, recovery of loan and improving the economy
level.

24

OBJECTIVES OF MCB
Every organization is established to accomplish certain objectives. The main objectives of the
MCB includes:

Improved Customer Service.

Quick Disposal, of Credit Claims.

Efficient operation of the officers in co-operative environment.

Communication with other branches.

Controlling officers.

Introducing new products in order to attract more customers, such as profit plan schemes,
Khushal Scheme, Khanum Bachat Accounts etc.
Increasing in foreign exchange reserve.
The bank has played a very important role in mobilizing the public foreign exchange
reserves. Deposit mix of the bank depicts that, round about 60% of the present volume have
been mustered in the form of foreign currency accounts.
Communal Services:
For the purpose of building high image in the community, the subject bank has contributed
two crore rupees during 1997 for plantation in the country, It is providing free services to the
charitable organization such as Edhi Trust, Shaukat Khanum Memorial Trust. Similarly it also
sponsors recreational activities such as sports and refreshment. Programs have been
sponsored during the recent past.
Providing Employment:
Unemployment is our national problem. The bank is playing a very useful role to tackle it.
MCB have a vast network of 1300 branches, with a staff of round about 16,000 people
working in it.

25

STRATEGIES TO ACHIEVE OBJECTIVES OF THE BANK

MCB Limited is a business entity and all its activities are directed towards the prime
objectives, which is profit. But the only difference is that it sells the intangible products i.e.
the services.
Now in order to achieve this important goal, the management has evolved multidimensional
policies. Especially after privatization of the bank on April 1991, a very enlightened
management took the charge of MCB limited. Mr. Hussain Lawai the renowned and
experienced banker assumed the office of the Chief Executive i.e. the President of MCB.
Major aspects of concentration are the following:
Effective Use of Electronic Media.
For the first time in the banking history of Pakistan a very effective campaign was launched
on T.V, Radio, reputed newspapers, journals, bill etc. MCB changed its monogram, after a
long trial of selection. Impressive slogans were developed, very modern and attractive ads
were presented to the general public, Above all, the services of electronic media were hired in
the prime time and the messages were repeated over and over again. As that was a lake off
point for MCB, therefore, very heavy expenditures were incurred, on development and
repetition of some very useful and attractive advertisements.
Enlightened Personnel Policies.
In addition to very effective promotional campaign, MCB Human Resource Division played
a very constructive role in formulating very enlightened human resource development
programs. Mainly the whole program was based on the following few points.
1. To hire the highly qualified as well as experienced staff from the open market. Special
preference was given to MBAs and then to the experienced staff of BCCI. Ultimately the
Ist batch of MBAs was hired in July 1992. The management was aware of the fact that if
you offer peanuts, you will find only monkeys, therefore they offered attractive packages
and thus were able to succeed in skimming cream of the market.
2. A comprehensive six months theoretical training program was devised at MCB Staff
Colleges, located at Karachi and Lahore for providing some reasonable knowledge to the
newly hired qualified staff. The stated theoretical training program was supplemented by
the practical branch training. Not only the new staff but also the old staff was provided
the essential training to cope with the forthcoming challenges.
Compatible Package:
The MCB management is aware of the fact that only a satisfied worker can provide the
required level of services to the customers. Therefore after privatization the staff salaries have

26

been revised three times. The first rise was 35% the second was 32% and the last one was
20%. Now on the aggregate the MCB worker is getting the most competitive salary and
benefit package.
Excellent Working Environment
In order to cater for all segments of our society, a new concept of corporate banking was
introduced for the first time in our country in 1992. Some model branches were prepared in
all big cities like Karachi, Lahore, Islamabad etc. The qualified staff was deputed in these
branches in addition to very impressive decoration of the premises.
Modernization of Branches
In order to attract the customer, huge expenditures were incurred on computerization of
branches. In addition to telex and fax, the SWIFT system has been installed at particular
branches for the sake of last and less expensive communication throughout the SWIFT
member countries. This is the sole privilege of MCB in our country. Further to it Auto Teller
Machines (ATM) have been installed at specific branches to ease the payment procedure for
the customers.
Launching of New Products
MCB research department has also excelled the other competitors by offering some very
special products, exactly in line with the needs of different classes of customers. Example is
Rupees Travelers Cheques, Capital Growth Certificate, PLS 365 Accounts Mahana Khushali
Scheme etc.
Decentralization of Authority
In order to avoid the unnecessary delay in decision making, MCB has adopted the policy of
decentralization, where the General Manager, the Regional Manager and the Branch Manager
have been empowered by the Head Office to make some important decision within the limit
of their respective powers. This way a lot of problems faced by MCB customers are solved at
the grass root level without referring it to the Head Office Karachi. Ultimately customers
problems are solved well in time, which has resulted in tremendous growth of the bank in all
aspects.

Effective Reward Punishment Policy

For the sake of increasing efficiency of the staff a very useful policy, of rewarding the extra
ordinary performance and punishments for the deliberate wrongdoing has been adopted by
the present management. Or example good staff members are awarded with early promotion
and special increments. At the same time many staff members have been sacked in the recent

27

past for committing blunders or minor frauds. In short on account of very positive approach
due regards for the clients and timely attention towards the aforesaid policy aspect MCB
limited have become the market leader with regard to growth in profit, business and deposits.
For example the deposit of the bank have raised from 21 billion rupees in 1991 to
Rs.137billion 1 1997. Similar is the ratio of business of profit of this August institution.
Branch Network
MCB is a huge organization, having branch network throughout the country. From
management point of view the branches are grouped under regions, and regions under circles.
22 circles are working under which there was 50 regions an 1,326 branches through out the
country and five branches are working abroad. Province wise position of circle, regions and
branches is as under:
Province

Circles

Regions

Branches

Baluchistan

40

NWFPand AJK

251

Punjab.

11

27

752

Sindh

12

283

50

1326

Total.

22
Source: MCB Annual Report.

Divisions of MCB

Agriculture Division.

General Services Division.

Special Assets Management Group.

Business Development and Marketing Division.

HRD Division.

RTC and Master Card Division.

Central Accounts Division.

industrial Credit Division.

O&M Division.

Corporate Affairs Division.

Information Management.

Legal Affairs Division.

Credit Management Division.

28

Inspection and Audit Division.

Islamization Division.

Finance and Treasury Division.

Investment Banking Group.

International Division.

Training Division.

Foreign Trade and exchange Operation Division.

Organizational Structure of MCB

MCB is a very large and complicated organization having many divisions, branches, and
administrative offices all over the country and outside the country. So it has no specific
organizational structure, we can make so many structures on different basis which are given
below,

On the basis of Geographical Locations.

On the basis of executives.

Span of Control

MCB is a very large organization with many branches in different areas of the country and
different divisions under the Head Office. So it is managed through broad span of control
with decentralization of authority. All the Executives, including SEVPs, GMs, RMs, VPs
and Branch Managers are delegated with a certain amounts of authority.
But still many decisions of small importance, are made by Top Management for control
purposes, So there is a mix of centralized and decentralized authority in this respect.

29

CHAPTER -3

ADVANCES AND CREDIT DEPARTMENT

Banks Credit Policy
A bank is a profit oriented institution. It collects money from the customers at low rate of
interest and make advances at higher rate of interest to the individuals and business firms.
All financing facilities are extended subject to the credit policy of SBP.

Classification of advances
Advance department is responsible to provide various types of advances in different
fields.

Running finance.

Cash finance.

Demand finance.

Finance against imported merchandise (FIM).

Finance against export merchandise.

Staff financing.

Agriculture financing.

1. Running Finance
It is short term loan usually allowed by the land for the period of one year. Running finance
a/c can be operated on daily sale proceeds can be deposited into the a/c. The most up is
recovered on the products of daily outstanding balance. It is suitable for meeting day to day
financial needs of the business.
2. Cash Finance.
It is allowed against pledge of goods/hypothecate to the businessman for short loan as for one
year period. The bank allow the business firms to borrow upto a certain limits either in
lumpsum or in installments. Borrower has to pay interest on the amount borrowed. Cash
finance is the favourite loan of the large commercial industrial concerns. The customer can
borrow the amount as and when he require.
3. Demand Finance.
Demand finance may be for short, long and medium term. It is dispersed in lump sum or in
accordance with the agreed disbursement schedule and it is repayable as per agreed

30

installments which may be monthly, quarterly, biannually or annually. Demand finance is

extended against security.
4. Finance Against Imported Merchandise Of FIM:
It is a short term facility given to such importers who are not in the position to collect their
documents due to unavailability of funds for time being or lack of finance against letter of
credit L/C. FIM account should be adjusted within three months after the lapse of six months.
Bank charges mark up for the valuable services provided to the customer in respect of FIM.
5. Finance For Export Merchandise:
The bank also makes available finance for export, such finance may be pre shipment or post
shipment. The pre shipment finance is to meet the financial requirements of the export order
before the shipment, whereas post shipment finance is made available by the bank after
shipment of export consignment. The post shipment finance may be in the form of finance
against Export bill, negotiation of foreign bills or purchase of foreign bills.
6.

Agriculture Financing:

Bank under agricultural financing scheme envisaged by the SBP extends short, medium and
long term, farm and no farm credits. The farm credits are extended for production (inputs)
and the development purposes. Non farm credits are allowed for livestock (goats, sheep and
cattle), poultry, factory including social forestry and fisheries (inland and marine excluding
deep sea fishing).
7. Staff Financing:
Bank also provides various financing schemes for the whole stock working in the
organization including loan for home, loan for car, loan for motor cycle etc.

Loans Application Procedure:

Being a financial institution, Bank extends loans for different purposes with an attempt to
earn profit and develop economy. Bank is interested to recover the extended loan amount
immediately as possible. To achieve this purpose, bank usually frame strict criteria for loan
extension to ensure the recovery and to avoid failures and to avoid defaults of credit money.
Any customer who apply for loan must have current account with the bank branch
concerned.When approval comes bank gives terms and conditions to the party. Bank does not
advance loans 100% loan against security.
The borrower has to provide some important documents as:
a. Two personal guarantees.

31

b. Charge form.
c. Confidential report.
d. Income certificate.
If the customer fails to pay back the loan amount to the bank then he is considered as
bankrupt as per banks law and case may be submitted in the court of low against the defaulter
for recovery of loan. The bank may sell the pledge property to recover loan on default by
customer of loan.
However MCB has strict rules while extending loan to different customers. It scrutiny all the
documents and collect every possible information related to the credit worthiness position of
the borrower. In this way it secure its loan which is a sign of efficiency and good banking.

Products & Services

Current Account
MCB Bank offers a variety of current accounts in local and foreign currency to cater to the
everyday transactional needs of various customers. These accounts ensure ease and freedom
to bank from any of the 1200+ branches across the country. The different accounts include:
the Basic Banking Account that has no minimum balance requirement; Business Account
offering free online transactions, demand drafts, pay orders and lots more to meet the day-today business requirements; Current Life Account that offers the security of life insurance free
of cost; and for all others, the conventional Current Account

SAVINGS ACCOUNT
MCB Bank offers a wide array of local and foreign currency savings products that suit shortterm growth and transactional needs. Our savings accounts offer attractive profit rates to
diverse customer strata; have a tiered profit payment and different profit payment
frequencies. The customers have an attractive Savings Accounts menu to choose from, like
Savings 365 Gold Account for high-end depositors desiring higher refurns, along with other
attractive rate options for high, medium and low end savers and the generic Profit & Loss
Saving Account for all other depositors. MCB savings accounts have something for
everyone!
TERM DEPOSIT
MCB Term Deposits offer attractive short to mid-term investment options with flexibility,
convenience and security. With various tenor options available, customers can choose one

32

that suits their needs. This is combined with different profit pay-oul options and the added
facility of being able to avail credit facility against their deposits.
MCB FUN CLUB - BANKING FOR KIDS
MCB Fun Club - Banking for Kids is a product designed for the minors. This product offers
two types of accounts; Savings & Current. The main features of this product include:
customized and branded chequebook and debit card that are issued in the name of the minor
& guardian both. The debit card is loaded with various deals and discount offered at several
outlets across Pakistan. In addition to this. Fun Club also offers two augmented features;
WWF-Tag a Plant, where the minor gets to tag a tree in his name and Adamjeelife Education Plan, that acts as an insurance cover for the minor's education.

MCB ONLINE BANKING

MCB has a fast growing network of 1200+ online branches in the country providing
customers real-time online transaction facilities.
MCB MNET
MNET is an electronic inter-bank connectivity platform for online transactions on ATM and
other remote banking channels. It offers other value added services that include a portfolio of
e-banking and payment system products as well as management and day-to-day operations of
the same. Members include 10 local and foreign financial institutions enjoying ATM sharing
and value added services. '
MCB CASH MANAGEMENT
Cash Management provides a wide range of value-added services to large corporations
through its vast network of online branches. Our structured and customized products enable
our customers to realize their sales proceeds swiftly from all over the country, supported by
real-time MIS. Cash Management also provides payment solutions through MCB network,
dividend pay-outs, custodian banking and utility companies' bills processing.
MCB CHANNEL FINANCING
MCB Channel financing provides working capital facilities to dealers and vendors of selected
companies under a structured product programme. This product enables our customer's
dealers to leverage themselves and increase their business capacity with their respective
business partners.
MCB HOME REMITTANCE
MCB Home Remittances offers unmatched services for overseas Pakistanis to send money
home FAST and FREE at no cost across Pakistan through MCB's large network of over 1200

33

branches. Money can be sent FREE & INSTANT through our international send agents like
MoneyGram, Xpress Money and many others.
MCB MOTHERLAND ACCOUNT
The Motherland account allows Non-Resident Pakistani's to open accounts in their home
country while residing abroad. It is designed to allow transferring of funds to family & loved
ones back home with the convenience of your own personal account.
MCB TRANSACTION BANKING
Transaction Banking provides"a wide range of value-added sen/ices to large corporations
through its vast network of online branches. Our structured and customized products enable
our customers to realize their sales proceeds swiftly from all across the country, supported by
real-time MIS. Transaction Banking also provides payment solutions on MCB & other bank's
network.
TBD-ONLINE FUNDTRANSFER (OKI')
This web based electronic fund transfer facility has been specifically designed to enable large
network of franchises /dealers/distributors to conduct real time branch less transactions
through secured MCB web site.
TBD-TEJARAT CARD
Tejarat card is a closed loop debit card designed for cash-less electronic cash transactions
empowering businesses to conduct branchless transactions through Point of Sale (POS)
terminal with 24-hour Call Center Support 111-000-622(MCB). TBD-Sub Clearing
Arrangement.
Micro finance banks that do not have operating licenses for clearing can now rely on MCB to
act as their sub clearing agent for processing transactions through NIFT.
TBD-DIVIDEND WARRANT MANAGEMENT
TBD provides a complete and comprehensive dividend solution to customers, from printing
of dividend warrants to subsequent encashment though MCB branches & followed by a
complete reconciliation. Foreign dividends through remittances are also processed by TBD.
MCB LOCAL CORRESPONDENT BANKING
Local Correspondents Banking Department at MCB provides Cash Management Services to
Financial Institutions such as Asset Management Companies, Mutual Funds, Insurance and
Leasing companies.
Local Rupee Drawing Arrangements, a product for small banks and financial institutions to
use our vast branch network platform to make payments in areas where their own branch
network does not exist, thus extends their reach nationwide.

34

MCB CORPORATE FINANCING

MCB Corporate Financing provides access to diversified financing options, including
working capital loans, term loans, trade finance services and investment banking.

MCB PROJECT & STRUCTURED FINANCE

MCB Project & Structured Finance involves financing complex projects, usually in SPV
structure, where the loan is tightly structured around the cash flows, risks are allocated
amongst various stakeholders, and there is limited or no recourse to the sponsors.
MCB Syndicated Loans and Debt Capital Markets
MCB Syndicated Loans and Debt Capital Markets involves arrangement, underwriting and
placement services for significant financing requirements by large corporate and institutional
clients to other financial institutions or through the debt capital markets.
MCB QUASI LCJUITV/HYBRID INSTRUMENTS
MCB Quasi Equity/Hybrid Instruments structure and place a category of debt lhat has some
characteristics of equity such as being unsecured, subordinated or with a potential equity
upside.
MCB EQUITY CAPITAL RAISING
MCB Equity Capital Raising relates to raising capital for our clients by offering common or
preferred equity to public or private investors, through initial public offers, offers for sale,
rights issues and private equity placements,
MCB ADVISORY SERVICES
Financial and Capital Raising Advisory provides our clients with financial advisory services,
commercial structuring support and access to capital resources to help companies
successfully finance their business/project.
. MCB Islamic Banking MCB-lslamic Banking Group (IBG) provides Shariah-compliant
solutions to its valued customers to fullfill their deposit's as well as financing needs.
Customers' needs on deposit side are being satisfied keeping in view of their business, short
term and long term investment requirements; whereas on financing side, the Working Capital,
Capital Expenditures, Trade Business and Consumer requirements are being satisfied through
available sharia compliant financing products. In addition to existing IB products, IBG
believe in facilitating it's customer by offering new products both on assets and liability side.
This year, IBG has introduced a new asset based product for satisfying exporter's preshipment financing needs by offering "Istisna Pre-shipment Export Finance". And for its

35

valued depositors, a special term deposit scheme with attractive profit rates for senior citizens
and widows under the name of "Aasoodgi" was also introduced.
MCB-lslamic Banking is offering its product through its 27 dedicated Islamic Banking
branches in 14 cities across the country. In order to facilitate it's customer and to increase
outreach of Islamic banking deposit products, an initiative was taken by introducing Islamic
banking windows in conventional branches. This initiative was taken up with 50+ IB
windows, which is expected to further enhance in future.
MCB AGRI PRODUCT
MCB is committed to the farming community to support their national objectives of selfsufficiency and food security to the people ol Pakistan. Dedicated and specialized staff,
supervised by the Agri Credit Division, is posted in lending branches to cater for strong
business relationships and facilitation. The bank's extensive branch network in all the
provinces and diversified product range extends our reach of agri credit facilities to
encompass both crop and non-crop sectors.

MCBTRADE PRODUCTS
Trade Products provides a wide range of standard as well as tailor-made products and
solutions to trade customers from all walks of life. Despite having inventory of standard
market products in refined shape, specific new-to-markel products include: "Quick-LC",
which is an internal design of desktop application allowing customers to type-in and print out
LC application lorm. The "XFlex" solution facilitates external export business for customers
in cases where transportation of documents is not available at the counters of MCB's
discounting/financing branch on the date of extending financing. "MCB-TRIMS" facilitates
the financing ol inland trade through the involvement of MCB at both ends thereby allowing
an exporter to get receivables discounted, i.e. the exporter receives payment in a given time
(in 48 hours) after performing obligations. "Econ-LC" product program allows drafts/bills of
exchange to be waived as a requirement under LCs available by negotiation; as a
consequence, there is reduction in overall transaction cost. "Avalization (Export)" has been
designed to facilitate the financing of export by allowing an Exporter (Seller) to discount its
receivables under credit granted to a counter party, i.e. Importer (Buyer), without taking
payment risk on the Importer (Buyer) under a contract (non LC transactions). Under this
"China LC Confirmation programme" branches of MCB's partner bank located in Hong Kong
and China add "Confirmation" to MCB LCs on "Free of Cost" basis thus increasing
acceptability of MCB's Import LCs and facilitate import customers.

36

We overwhelmingly cherish and stay committed to support the farmers in view ol unparallel
significance of agri sector in our national life aligned witheconomic priorities of the country
and role of our bank as a responsible corporate citizen.
MCB Privilege
As the first local bank to introduce high end retail banking, MCB Privilege through its
dedicated, world-class Privilege Centers offers a higher level of personalized services, more
rewarding in-branch experience and a wide array of deposit and investment products that are
tailored to meet the financial expectations of our affluent clientele. As members of MCB
Privilege, customers experience unparalleled advantages that put them ahead of others.
MCB's dedicated Privilege Centers wait to welcome you in Karachi, Lahore, Islamabad,
iFaisalabad. Sialkot, Rawalpindi and Multan with plans to expand to more locations.
(MCB Salarv Club
A payroll solution designed to make life easy; it simplifies all the monthly payroll related
banking needs of employers and opens the door to a world of special offers lor employees.
Salary Club provides the convenience ol having an extensive range of financial services
available to employees at their place of work.

MCB INVESTMENT SERVICES

Investment Services operate with the aim to help you make the most of your wealth with
investment opportunities that match your unique financial aspirations. MCB Investment
Services offers distribution of mutual funds managed by the leading fund managers ol
Pakistan. We can suggest the products most suited for your needs, or work with you to create
a personalized solution completely focused on your expectations of the capital markets.

37

Market Statistics of MCBs Share

Share Price

Closing GDRs

Market

MCB Scrip (Rs.)

(REG

S) F ree Float

Capitalisation

Low

USD .

Shares

Capital

.. (Mln) ,9BH

Value

2014
December

31, 303.25

2014
September
2014
June 30, 2014

245.00

281.17 4.20

382,39 37.79% 10,118 284,501

30, 314.85

240.50

263.05 4.92

5
381.35 37.69% 10.118 266.166

323.00

188.86

242.59 1.94

5
380.89 37.64% 10,118 245,464

189.29 2.44

0
374,87 37.05% 10,118 191,532

March 31, 2014 239.30

182.20

9
2013
December

31, 216.75

180.63 209.76

4.32 336.953 36.63% 9,199 192.950

2013
September

30, 192.34

165.85 186.03

3.92 335,126 36.43% 9.199 171.122

2013
June 30, 2013
184.24
March 31, 2013 190.9
Dividend and Bonus

154.00 166.24
133.00 175.44
2014

3.52 335,221 36.44% 9,199 152.918

3.86 334,435 36.36% 9,199 161.380
2013

Equity and Dividends

The paid-up capital of the Bank has grown from Rs. 6.2B in 2008 to Rs. 10.1B in 2014,
meeting the capital requirements set by the Central Bank.
In 2008, most affluence strategic partnership occurred in Pakistan where the largest Bank of
Malaysia, Maybank Berhad, acquired 20% holding in MCB Bank Limited. This brought
synergies in technology, human resource and decision making.
The equity base of the Bank is reflective of the outstanding financial results and underlying
financial strength achieved through consistent performance over years.. The capital base of
the Bank can be rated as strong which is substantiated by the reported CAR pf 22.25% as at
December 31, 2014 against the statutory specified percentage of 10%. The Shareholders'
equity stands at Rs. 97B as at December 31, 2014 growing from Rs. 52B in 2008.

38

 The Bank has been amongst the leading distributor of cash dividends with regular interim
dividends and remains one of the prime stocks preferred by foreign institutions / stakeholders.

Profit and Loss account

Net interest Margin
The composition of markup income has seen a shift in the last six years on the back of
volumetric shift in the earning asset base of the Bank. The contribution from markup income
earned on advances has reduced from 75.6% in 2008 to 38.4% in 2014 while markup income
from investments has increased to 60.3% (2008: 21.7%).
The volatility in the net interest margin of the Bank is on account of the movement in the
monetary policy rate and the setting of the minimum deposit rates to be offered on saving and
fixed deposits and its linkage with interest rate corridor.
However, the Bank has been able to capitalize on the lower cost of deposits due to significant
CASA base, translating into higher profitability numbers.
Non-Markup Income
To coupe up with the interest rate volatility, the bank has strategically focused on the
increased contribution from non-markup based income. The product development teams of
the Bank have been tapping the unbanked segment of the population and offering them
tailored products to meet their specific financial requirements. Numbers of products have
been launched in past 6 years in order to increase non-markup income like credit card, mobile
banking, visa debit card, MCB Lite, prepaid cards etc.
The fee, commission and brokerage block of the Bank has been constantly increasing over
years with major contributions coming from commission earned on bancassurance business,
remittances and intercity / intra-city cash transfers.
The equity investment base of the Bank has been providing outstanding dividend yields
with dividend income registering the second highest contribution to non-markup income.
During the year 2014, substantial capital gains were earned, benefitting from the record levels
posted by the equity markets.

39

Operating Expenses
Owing to the strengthened risk management framework, the provision charge of the Bank
has been on a declining trend over years. The provision and write-off charge was reported at
Rs. 7.4billion for the year 2009 which has reduced substantially to Rs. 291M for the year
2013. For the year 2014, the Bank reversed provisions to the tune of Rs. 2.8 billion based on
the recoveries posted in loss categorized advances. It is pertinent to add that the Bank has
been conservative on the provision side and has not taken the benefit of FSV in specific
provision calculation for the year 2014.
The growth in administrative block of the bank has been nominal considering the
inflationary patterns followed over the period of six years and falls within the budgetary
limits set. The management has been able to introduce cost effective techniques / methods to
exercise control over the administrative expenses. This has helped the Bank to register one of
the lowest cost to income ratios in the industry despite the inflationary pressures on core
operating expenses which has currently been reported at 40.05% (2008:24.41%).
Profit before tax and Profit after tax:
MCB Bank has been able to post outstanding profitability numbers over the period of last
six years as corroborated by the highest EPS arid remarkable return on asset. The annual pretax profitability numbers have grown from Rs. 21.9 billion for 2008 to Rs. 32.3 billion for
2014.
The profitability ratios have been one of the best in the banking industry which are
reflective of the effective management of the affairs and adoption of prudent strategies.
Other statistics
The Bank has generated 1 million additional customers in the past six years and now a total
number of customers are close to 5 million mark and has expanded its operational network by
157 new branches.
With active participation in trade, MCB Bank has been able to improve trade volume in last
6 years which have increased to Rs. 421 billion for imports and Rs. 209 billion for exports.
The Bank has been able to increase its market share in the remittance business growing
from Rs. 26 billion in 2008, the Bank has now volume of above Rs. 150 billion in a year.
After its launch in 2007, MCB internet banking has been a preferred choice of our large
customer base. We have been able to increase our customer base gradually with transactions
volume in excess off 1.6 million.

40

 In 2008, the Bank launched Bancassurance which was a unique cross functional service to
the customers of the Bank. With only 131 policies and 129 customers in 2008, MCB
i Bank now manages approximately 15,000 policies and customers with premium amount of
over Rs. 2.5 billion.
MCB Bank launched mobile banking in 2009 with approximately 53K customers reported
by the end ofthe year. As of 2014, the numbers of mobile customers have grown to
approximately 542 K , with transaction volume of above Rs. 10 billion.
The Bank launched Privilege Banking in 2009 targeting a specific customer base. As of
2014, Privilege Bank proposition serves 2,389 customers.

Products & Services

Current Account
MCB Bank offers a variety of current accounts in local and foreign currency to cater to the
everyday transactional needs of various customers. These accounts ensure ease and freedom
to bank from any of the 1200+ branches across the country. The different accounts include:
the Basic Banking Account that has no minimum balance requirement; Business Account
offering free online transactions, demand drafts, pay orders and lots more to meet the day-today business requirements; Current Life Account that offers the security of life insurance free
of cost; and for all others, the conventional Current Account.
Savings Account
MCB Bank offers a wide array of local and foreign currency savings products that suif shortterm growth and transactional needs. Our savings accounts offer attractive profit rates to
diverse customer strata; have a tiered profit payment and different profit payment
frequencies. The customers have an attractive Savings Accounts menu to choose from, like
Savings 365 Gold Account for high-end depositors desiring higher returns, along with other
attractive rate options for high, medium and low end savers and the generic Profit & Loss
Saving Account for all other depositors. MCB savings accounts have something for
everyone!
TERM DEPOSIT
MCB Term Deposits offer attractive short to mid-term investment options with flexibility,
convenience and security. With various tenor options available, customers can choose one
that suits their needs. This is combined with different profit pay-out options and the added
facility of being able to avail credit facility against their deposits.
MCB Fun Club - Banking for Kids

41

MCB Fun Club - Banking for Kids is a product designed for the minors. This product offers
two types of accounts', Savings & Current. The main features of this product include:
customized and branded chequebook and debit card that are issued in the name of the minor
& guardian both. The debit card is loaded with various deals and discount offered at several
outlets across Pakistan. In addition to this. Fun Club also offers two augmented features;
WWF-Tag a Plant, where the minor gets to tag a tree in his name and Adamjeelife Education Plan, that acts as an insurance cover for the minor's education.
MCB ONLINE BANKING
MCB has a fast growing network of 1200+ online branches in the country providing
customers real-time online transaction facilities.
MCB MNET
MNET is an electronic inter-bank connectivity platform for online transactions on ATM and
other remote banking channels. It offers other value added services that include a portfolio of
e-banking and payment system products as well as management and day-to-day operations of
the same. Members include 10 local and foreign financial institutions enjoying ATM sharing
and value added services. '
MCB CASH MANAGEMENT
Cash Management provides a wide range of value-added services to large corporations
through its vast network of online branches. Our structured and customized products enable
our customers to realize their sales proceeds swiftly from all over the country, supported by
real-time MIS. Cash Management also provides payment solutions through MCB network,
dividend pay-outs, custodian banking and utility companies' bills processing.
MCB Channel financing
MCB Channel financing provides working capital facilities to dealers and vendors of selected
companies under a structured product programme. This product enables our customer's
dealers to leverage themselves and increase their business capacity with their respective
business partners.
MCB HOME REMITTANCE
MCB Home Remittances offers unmatched services for overseas Pakistanis to send money
home FAST and FREE at no cost across Pakistan through MCB's large network of over 1200
branches. Money can be sent FREE & INSTANT through our international send agents like
MoneyGram, Xpress Money and many others.

42

MCB MOTHERLAND ACCOUNT

The Motherland account allows Non-Resident Pakistani's to open accounts in their home
country while residing abroad. It is designed to allow transferring of funds to family & loved
ones back home with the convenience of your own personal account.
MCB TRANSACTION BANKING
Transaction Banking provides'a wide range of value-added services to large corporations
through its vast network of online branches. Our structured and customized products enable
our customers to realize their sales proceeds swiftly from all across the country, supported by
real-time MIS. Transaction Banking also provides payment solutions on MCB & other bank's
network.
TBD-ONLINE FUNDTRANSFER (OFF)
This web based electronic fund transfer facility has been specifically designed to enable large
network of franchises /dealers/distributors to conduct real time branch less transactions
through secured MCB web site.
TBD-TEJARAT CARD
Tejarat card is a closed loop debit card designed for cash-less electronic cash transactions
empowering businesses to conduct branchless transactions through Point of Sale (POS)
terminal with 24-hour Call Center Support 111-000-622(MCB). TBD-Sub Clearing
Arrangement
Micro finance banks that do not have operating licenses for clearing can now rely on MCB to
act as their sub clearing agent for processing transactions through NIFT.
TBD-DIVIDEND WARRANT MANAGEMENT
TBD provides a complete and comprehensive dividend solution to customers, from printing
ot dividend warrants to subsequent encashment though MCB branches & followed by a
complete reconciliation. Foreign dividends through remittances are also processed by TBD.
MCB Local Correspondent Banking
Local Correspondents Banking Department at MCB provides Cash Management Services to
Financial Institutions such as Asset Management Companies, Mutual Funds, Insurance and
Leasing companies.
Local Rupee Drawing Arrangements, a product for small banks and financial institutions to
use our vast branch network platform to make payments in areas where their own branch
network does not exist, thus extends their reach nationwide.

43

MCB CORPORATE FINANCING

MCB Corporate Financing provides access to diversified financing options, including
working capital loans, term loans, trade finance services and investment banking.
MCB PROJECT & STRUCTURED FINANCE
MCB Project & Structured Finance involves financing complex projects, usually in SPV
structure, where the loan is tightly structured around the cash flows, risks are allocated
amongst various stakeholders, and there is limited or no recourse to the sponsors.
MCB Syndicated Loans and Debt Capital Markets
MCB Syndicated Loans and Debt Capital Markets involves arrangement, underwriting and
placement services for significant financing requirements by large corporate and institutional
clients to other financial institutions or through the debt capital markets.
MCB QUASI LCJIIIIV/HYBRID INSTRUMENTS
MCB Quasi Equity/Hybrid Instruments structure and place a category of debt that has some
characteristics of equity such as being unsecured, subordinated or with a potential equity
upside.
MCB EQUITY CAPITAL RAISING
MCB Equity 'Capital Raising relates to raising capital for our clients by offering common or
preferred equity to public or private investors, through initial public offers, offers for sale,
rights issues and private equity placements.
MCB ADVISORV SERVICES
Financial and Capital Raising Advisory provides our clients with financial advisory services,
commercial structuring support and access to capital resources to help companies
successfully finance their business/project.
. MCB Islamic Banking MCB-lslamic Banking Group (IBG) provides Shariah-compliant
solutions to its valued customers to fullfill their deposit's as well as financing needs.
Customers' needs on deposit side are being satisfied keeping in view of their business, short
term and long term investment requirements; whereas on financing side, the Working Capital,
Capital Expenditures, Trade Business and Consumer requirements are being satisfied through
available sharia compliant financing products. In addition to existing IB products, IBG
believe in facilitating it's customer by offering new products both on assets and liability side.
This year, IBG has introduced a new asset based product for satisfying exporter's preshipment financing needs by offering "Istisna Pre-shipment Export Finance". And for its
valued depositors, a special term deposit scheme with attractive profit rates for senior ctizens
and widows under the name of "Aasoodgi" was also introduced.

44

MCB-lslamic Banking is offering its product through its 27 dedicated Islamic Banking
branches in 14 cities across the country. In order to facilitate it's customer and to increase
outreach of Islamic banking deposit products, an initiative was taken by introducing Islamic
banking windows in conventional branches. This initiative was taken up with 50+ IB
windows, which is expected to further enhance in future.
MCB AGRI PRODUCT!)
MCB is committed to the farming community to support their national objectives of selfsufficiency and food security to the people of Pakistan. Dedicated and specialized staff,
supervised by the Agri Credit Division, is posted in lending branches to cater for strong
business relationships and facilitation. The bank's extensive branch network in all the
provinces and diversified product range extends our reach of agri credit facilities to
encompass both crop and non-crop sectors.

MCBTRADE PRODUCTS
Trade Products provides a wide range of standard as well as tailor-made products and
solutions to trade customers from all walks of life. Despite having inventory of standard
market products in refined shape, specific new-to-market products include: "Quick-LC",
which is an internal design of desktop application allowing customers to type-in and print out
LC application form. The "XFlex" solution facilitates external export business for customers
in cases where transportation of documents is not available af the counters of MCB's
discounting/financing branch on the date of extending financing. "MCB-TRIMS" facilitates
the financing of inland trade through the involvement of MCB at both ends thereby allowing
an exporter to get receivables discounted, i.e. the exporter receives payment in a given time
(in 48 hours) after performing obligations. "Econ-LC" product program allows drafts/bills of
exchange to be waived as a requirement under LCs available by negotiation; as a
consequence, there is reduction in overall transaction cost. "Avalization (Export)" has been
designed to facilitate the financing of export by allowing an Exporter (Seller) to discount its
receivables under credit granted to a counter party, i.e. Importer (Buyer), without taking
payment risk on the Importer (Buyer) under a contract (non LC transactions). Under this
"China LC Confirmation programme" branches of MCB's partner bank located in Hong Kong
and China add "Confirmation" to MCB LCs on "Free of Cost" basis thus increasing
acceptability of MCB's Import LCs and facilitate import customers.

45

We overwhelmingly cherish and stay committed to support the farmers in view of unparallel
significance of agri sector in our national life aligned witheconomic priorities of the country
and role of our bank as a responsible corporate citizen.
MCB PRIVILEGE
As the first local bank to introduce high end retail banking, MCB Privilege through its
dedicated, world-class Privilege Centers offers a higher level of personalized services, more
rewarding in-branch experience and a wide array of deposit and investment products that are
tailored to meet the financial expectations of our affluent clientele. As members of MCB
Privilege, customers experience unparalleled advantages that put them ahead of others.
MCB's dedicated Privilege Centers wait to welcome you in Karachi, Lahore, Islamabad,
iFaisalabad, Sialkot, Rawalpindi and Multan with plans to expand to more locations.
MCB SALARV CLUB
A payroll solution designed to make life easy; it simplifies all the monthly payroll related
banking needs of employers and opens the door to a world of special offers for employees.
Salary Club provides the convenience of having an extensive range of financial services
available to employees at their place of work.
MCB Investment Services
Investment Services operate with the aim to help you make the most of your wealth with
investment opportunities that match your unique financial aspirations. MCB Investment
Services offers distribution of mutual funds managed by the leading fund managers ol
Pakistan. We can suggest the products most suited for your needs, or work with you to create
a personalized solution completely focused on your expectations of the capital markets.

Review of Six Years' Performance

In this section, commentary on the six years' performance of the Bank is being provided,
covering most prominent highlights;
Statement of Financial Position
Total Assets:
The asset base of the Bank has almost doubled over the last 6 years growing from Rs. 443
billion as at December 31, 2008 to Rs. 815 billion at the end of financial year 2014,
translating into an annual growth of 12% for the last six years; Prime contributors to the said
increase have been advances and investments over years, which increased contributions from
investments in the recent years. MCB Bank has been prudently able to manage the risks and
returns of its earning asset base to deliver maximum return to its stakeholders.

46

ADVANCES:
The macro-economic instability coupled with energy crisis has adversely affected the private
sector credit demand of the local banking industry and a similar pattern can be observed for
MCB Bank Limited. Being mainstream business line of the Bank, credit growth remained
prime focus of the Bank but the lack of credit opportunities and intense competition resulted
in a moderate growth in gross advances base. However, based on significant additions
recorded in investment base, the ADR had been decreased as a result of shift in asset mix
from 83% reported in 2008 to 42% reported for 2014.
Non-performing Loans:
Based on the stringent risk management policies and strengthened framework, the Bank has
been able to control the infection in asset quality. The quality of asset has been one of the
prime focus areas of the Bank and the significant recoveries posted in the last two years
clearly spell out the efforts that have been direcied in this achieving this goal. After
registering a decrease of Rs. 1.1 billion in NPLS in 2013, the NPL base has further contracted
by Rs. 2.3 billion in 2014. The Bank has been conservative on the provisioning side which is
substantiated by the fact that the Bank carries an unencumbered provision charge of Rs.
268M as general provision and has not taken the benefit of "FSV", in its specific provision
classification. The coverage ratio of the Bank has improved from 54.17% in 2008 to 83.59%
in 2014. Moreover, the NPLs classified in "loss" category constitute more than 90% of the
NPLs base as at December 31, 2014, which specifies the adequacy of provision held in the
books of the Bank.
Investments:
The lacks of credit opportunities have paved way for build-up in investment base over the
years. The investment base of the Bank has increased extravagantly from Rs. 96 billion in
2008 to Rs. 449 billion in 2014 with major concentration levels in risk free Market Treasury
bills and Pakistan Investment Bonds.
Deposits: i
The deposit base of the Bank has steadily grown over the last six years, with absolute
numbers increasing from Rs. 330B in 2008 to Rs. 632B in 2014. MCB Bank's competitive
edge has been the highest CASA base, supporting its lower cost of deposits. The Bank has
been constantly shifting its high cost deposit to low cost deposits, as CASA base has more
than doubled in last 6 years, increasing from Rs. 268 billion in 2008 to Rs. 568 billion in
2014; MCB Bank has been able to maintain its share in the domestic industry deposit pie with

47

an average share of approximately 8%. As depicted by the deposit categorization, the quality
of service and returns provided by the Bank has enabled to keep the CASA base above 80%
for the last six years.
Six Years Financial Summary 2008 - 2014

48

2013

2012

2011

2010

2009

Profit & Loss account

2014

Ma^k-up/ return earned

Rs. Mln
Mark-up/ return expensed
Fund based income
Fee, Commission, brokerage & FX income
Dividend Income & Capital gains
Total income
Operating expenses
Operating profit before tax and provision
Provisions / write-offs

65.064
27,196
37,868
8,108
3,063
49,039
19,639
29,400

68,356
27.500
40.856
7.-31
2,022
50,010
18,077
31,933
291

68,147
23,620
44,526
6,373
1,739
52.639
-.5,987
35,651
4.168

54,821
17,988
36,834
5,310
956
43,099
13,160
29,938
3,685

51,616
15,837
35,779
4,409
1,234
41,422
10,801
30,620
7,465

40,044
11,561
28,483
4,537
1,255
34,275
8,365
25,910
4,042

(2,888)
32,288
21.495
14,166
1,012

31,642
20,673
11.959
920

31,483
19,425
10.036
836

26,253
16,873
8,743
760

23,155
15,495
7,602
691

21,868
15,375
7,225
628

Authorised capital
Paid up capital
Reserves
Unappropriated Profit
Shareholder's equity
Surplus on revaluation of assets - net of

15,000
10,118
46,601
40,552
97.272
12,959

10,000
9,199
44,253
35,425
88,877
13,594

10.000
8.362
42.186
28,724
79.273
9.887

10,000
7,602
40.163
21,416
69,180
10,024

10,000
6,911
38,386
15,779
61,076
8,664

10,000
6,283
36.769
9,193
52,245
6,191

tax
Net Assets
Total Assets

110,231
815,508

102,471
767,075

89,160
653,782

79,203
567,553

69,740
509,224

58,436
443,61

Earning Assets

718,990

663,330

569,128

494,605

444,188

6
380,18

Gross Advances

268,192

262,392

249,914

274,144

269,722

7
272,84

Advances - net of provisions

248,243

239,583

227,580

254,552

253,249

7
262,13

Non-Performing Loans (NPLs)

Investments
Tota Liabilities

23,268
449,006
705,277

25,562
402,069
664,604

26,665
316,652
56A622

24,544
213,061
488,349

23,239
167,134
439,484

5
18,269
96,632
385,18

Deposits & other accounts

632,330

545,061

491,189

431,372

367,605

0
330,18

Current & Saving Deposits (CASA)

567,728

464,411

399,687

351,298

304,953

2
268,50

Borrowings
Interest bearing Liabilities

36,543
456,348

78,95"
434,619

39,101
362.843

25,685
305,902

44,662
283,369

1
22.664
240,47

Contingencies and Commitments

Profitability Ratios:

265,428

143,803

165.014

136,246

119,922

0
266,251

49.63%

46.29%

46.20%

47.89%

44.86%

54.61

Gross Yield on Average Earning Assets

9.42%
Gross Yield on Avg. Earning Assets (inci. dividend 9.86%

11.08%
11.42%

12.80%
13.14%

11.68%
11.88%

12.52%
12.82%

%
11.07%
11.42%

& capital gains) '"

Gross Spread
Non nterest income to total income
Return on average equity (ROE)
Return on average assets (ROA)

59.77%
18.30%
24.64%
2.91%

65.34%
15.41%
26.23%
3.18%

67.19%
14.54%
25.91%
3.13%

69.32%
13.62%
27.35%
3.25%

71.13%
16.90%
31.49%
3.60%

Profit before tax

Profit after tax
Cash Dividends'
Bonus shares'
Statement of Financial Position

Profit before tax ratio

58.20%
22.78%
23.09%
2.72%

49

Return on Capital Employed (ROCE)

z:.D9%

24.64%

26.23%

25.91%

27.35%

31.49

Cost to income ratio

Cost to income ratio (excluding pf reversal)
Investment ratios:

40.05%
43.52%

36.15%
40.01%

32.27%
36.43%

30.54%
38.01%

26.08%
35.55%

%
24.41%
40.16%

Earnings per share (after tax)"

Rs.
21.24
Earnings per share (before tax)"
31.91
Breakup value per share (excl. surplus on rev. of 96.13

20.43
31.27
87.84

19.20
31.11
77.99

16.68
25.95
68.37

15.31
22.88
60.36

15.19
21.61
51.63

assets)"
Net assets per share"
Market Ratios

108.94

110.62

96.54

94.71

83.40

69.88

140%
10.00%

130%
10.00%

120%
10.00%

115%
10.00%

110%
10.00%

115%
10.00

, 4.98%
70.61%
2.92
13.24
1.52

6.20%
62.29%
2.39
10.27
1.75

8.92%
55.97%
1.73
7.01
1.94

5.03%
56.32%
3.34
13.71
1.75

5.01%
53.52%
3.64
14.35
1.68

%
9.14%
"5108%
2.44
8.28
1.60

Cash Dividend
Bonus Shares Issued

Dividend Yield ratio (based on cash dividend)

Dividend Payout ratio
Price to book value ratio
Times
Price to earninq ratio
Dividend cover ratio

Bank for Life ANNUAL RF.PORT 20114

Reduced substantially to Rs. 291M for the year 2013. For the year 2014, the Bank
reversed provisions to the tune of Rs. 2.8 billion based on the recoveries posted in loss
categorized advances. It is pertinent to add that the Bank has been conservative on the
provision side and has not taken the benefit of FSV in specific provision calculation for the
year 2014.

The growth in administrative block of the bank has been nominal considering the
inflationary patterns followed over the period of six years and falls within the
budgetary limits set. The management has been able to introduce cost effective
techniques / methods to exercise control over the administrative expenses. This has
helped the Bank to register one of the lowest cost to income ratios in the industry
despite the inflationary pressures on core operating expenses which has currently been
reported at 40.05% (2008:24.41%).

Profit before tax and Profit after tax:

MCB Bank has been able to post outstanding profitability numbers over the period of
last six years as corroborated by the highest EPS arid remarkable return on asset. The
annual pre-tax profitability numbers have grown from Rs. 21.9 billion for 2008 to Rs.
32.3 billion for 2014.

50

The profitability ratios have been one of the best in the banking industry which are
reflective of the effective management of the affairs and adoption of prudent
strategies.

Other statistics

The Bank has generated 1 million additional customers in the past six years and now a
total number of customers are close to 5 million mark and has expanded its

operational network by 157 new branches.

With active participation in trade, MCB Bank has been able to improve trade volume
in last 6 years which have increased to Rs. 421 billion for imports and Rs. 209 billion

for exports.
The Bank has been able to increase its market share in the remittance business
growing from Rs. 26 billion in 2008, the Bank has now volume of above Rs. 150

billion in a year.
After its launch in 2007, MCB internet banking has been a preferred choice of our
large customer base. We have been able to increase our customer base gradually with

transactions volume in excess off 1.6 million.

In 2008, the Bank launched Bancassurance which was a unique cross functional
service to the customers of the Bank. With only 131 policies and 129 customers in

2008, MCB
i.
Bank now manages approximately 15,000 policies and customers with premium

amount of over Rs. 2.5 billion.

MCB Bank launched mobile banking in 2009 with approximately 53K customers
reported by the end ofthe year. As of 2014, the numbers of mobile customers have

grown to approximately 542 K , with transaction volume of above Rs. 10 billion.

The Bank launched Privilege Banking in 2009 targeting a specific customer base. As
of 2014, Privilege Bank proposition serves 2,389 customers.

51

CHAPTER -4

ACCEPTANCE OF DEPOSITS
There are two basic principles of banking, first deposits and secondly advances. Deposits
play a pivotal role in commercial banking. In deposits it could be initiated by the cash pay in
slip which a customer enter into the bank he will fill up the pay in slip for which he must
have an account to enter into a valid contract, which is called customer banker relationship.
This contract could be launched of on opening of account.

Opening of an Account:
The banking history is reputed with various instances of fraud due to incorrect opening of
account. Therefore, he branch manager and other officer had to taken care and exercised
required precautions at the time of opening of account. At the time of opening of account,
officers and manager should tactfully obtain as much information as possible about the
character and integrity of the person. His /her correct name, address and occupation. This
infect will be the only opportunity when they will be able to talk to prospective customer in
the friendly and frank atmosphere. The customer can be classified as follows.
1. Individuals.
2. Partnership firms.
3. Joint Stock companies.
4. Agent.
5. Clubs.
6. Societies and associations.
7. Executives and administrators.
8. Trusts local bodies etc.
For opening of account, the person should meet the following requirements;

He/She should be a major one.

He/She should have attained the age of 18 and having allotted NIC No.

He/She should be a same person i.e. He/She should understand the terms and
conditions of the contract.

He/She must not be a bankrupt and his/her liabilities should not exceed than that
of the assets declared by him/her.

Classification Of Deposits:
Deposits can be classified in the following way:

52

Current Deposits.

2.

PLS Deposits.

1. Current Deposits.
These are those kind of deposits which are not remunerative in nature i.e, no profit is given
on these deposits.
There is no limit on withdrawal within the banking hours customer can present number of
cheques. Every type of customer meeting the conditions of account opening can open these
accounts.
2. PLS Deposits: (Profit And Loss Sharing)
There are called remunerative deposits i.e. profit paying to these account holder profit is paid.
We can classify these types of accounts in the following categories.

Saving bank account.

Short notice term deposits 7 days.

Short notice term deposits 30 days.

Term deposits receipts 3 months.

Term deposits receipts 6 months.

Term deposits receipt 1-5 years.

On saving bank deposits the bank pays, periodical profits paid on the minimum closing
balance.
Schemes Offered By MCB
To inculcate the habit of saving among the people and public, MCB has introduced
remunerative schemes, which include.
1. Khushali Bachat Account.
As the name indicate, this scheme has been started to encourage savings.
The main features of this account are Introduced for the first time in Pakistan.

8% rate of return is given per annum.

Return are calculated on daily product basis and paid half yearly.

53

It provides the facility of helping the account holders to pay utility bills
(electricity, telephone and gas) through their account without making any
queues and delay.

2. Mahana Khushali Scheme.

MCB has introduced this scheme to encourage investment by paying profit month after
month.
The salient features of this scheme are:

Khushali certificates can be purchased by individuals (singly or jointly), by the

proprietorship partnership concerns or companies etc, in their name.

Minimum amount of investment shall be Rs.10,000 and maximum amount can be

1,0000,000.

The Khushali certificate will be of five years maturity.

14.70% per annum profit is paid monthly. It is reviewed in six months.

AMOUNT IN RS

MONTHLY PROFITS

1000,000

12,25000.

500,000

6,12500.

100,000

122,500.

50,000

61,250.

25,000

306,25

10,000

122,50.

On profit by MCB branches at the time of paying the profit on monthly basis.Payment of
profit is done by either crossed pay order or any other way of transfer of money. In case the
account holder does not receive the profit, it will be credited to his account and for the next
month the profit will be paid on new balance.
In case the premature encasement is desired PLS, profit saving rate will be applied as the
bank announces for a particular period. If the certificate is held for less than 90 days no profit
will be given.
3. Capital Growth Scheme.
This scheme is based on half yearly profit, but is not paid to the customer or credited to
his/her account.

54

The amount of profit so provided on six monthly intervals is treated as being reinvested, to
attract profit at the applicable rate like the principal amount of deposit. In other words, under
this scheme, the half yearly profit is provided on a cumulative basis and retains with the bank,
until final payment on maternity or open completion of the period set out for Haji Mobarak
Account.
4. Capital Growth Certificate.
At the time of issuing a capital growth certificate, the branch will make an entry in the
standard book SB 133, in the manner as required for an entry of tern deposit in SB-9, in
chronological order, Each page of this book has a provision of bearing one years record of the
deposit receipts, including the provision of declared profit, twice a year, on a six monthly
basis. His first six columns of this book relate to the particulars of deposit, while column no-7
refers to the amount; in addition, up to date profit provided to each deposit receipt. Column
Nos-9 and 12 are meant for calculation of six monthly profit and these columns will only be
used when the rate of profit is declared
The profit so calculated would be added to the previous cumulative amount of each deposit
receipt and total thereof will be noted in the next column of cumulative amount. The profit
will not be disbursed or paid to thecustomer/depositor as it will be treated as being re
invested, for attracting profit on the entire accumulated amount of each deposit certificate.
Pre Mature With Drawl:
The CGCs are originally issued for a total period of five years and maturity the face value
amount becomes approximately double one premature withdrawal, profit is allowed at the
simple rate, applicable for the period the deposit has remained with the Bank. For this
purpose, the branch is advised to keep a schedule containing the monthly declared rates of all
the previous periods, duly updated, so that the calculation of profit in such cases can easily be
made. The actual amount calculated along with the depositor, by debiting the profit payable
account (GGC) and capital growth certificate account, respectively. The payment entry,
recovery of Zakat and withholding tax, wherever applicable, will also be noted in SB-133
simultaneously, for updating the deposit record. Amount of zakat and tax will as usual, be
credited other respective account.
The profit on each deposit certificate is regularly provided, on a six monthly basis and up to
date record of provision is available in SB-133 against every individual deposit certificate. As

55

such, upon premature withdrawals the branch shall pay the actual calculated profit for the
period of deposit, as per the rules indicated above, and will reverse the excess amount of
provision, if any, by passing and entry as follows.

Zakat &Tax Calculation:

In capital growth certificates the profits are only paid at the time of encashment, on either
maturely or before maturity. As such, the zakat, wherever applicable, is recovered on the total
encashment value of the deposit certificate (i.e. the face value plus accumulated profit there
upon) at 2.5%. The withholding tax is however, recovered only on the amount of
accumulated profit at the applicable rate.

Overdue Capital Growth Certificates:

The CGC already overdue for payment but which remain outstanding will not attract profit
after maturity. In order to keep these deposits separate from other regular deposits, branch
will carry for the details of such deposits on separate folio to be reserved for overdue deposits
in SB-133, and the original entry of the deposit, in the folio of regular deposits, will be
closed. In order to segregate the figure of overdue deposit in SB-9-A, A separate folio will
also be reserved, and the cumulative value as appearing in SB-133 against the each overdue
CGC will be transferred from regular record to this overdue section of SB-9-A. After
transferring to overdue, no further profit on these deposits, except for the intervening period
(the period between the last half, year end, and the maturely date of the deposit) will be
applied on declaration of profit rate for the period in which the intervening period is covered.
In case the depositor withdraw before the declaration of profit the arrears of profit intervening
period will be added at the prescribed rate of provision or must deposit and paid to the
depositor. If, however, the deposit is withdrawn after the declaration of profit, the actual
amount on the declared rate will be calculated for this remaining period and paid to the
depositor, in the prescribed manner. The entries for such amount of profit will only be passed
at the time of deposit or declaration of profit rate, whichever is earlier.

Re Investment on Maturity:
On maturity of a capital growth certificate, the customer may desire to reinvest the total
amount including profit, for a like period of 5 years. In such cases the branch will treat the
reinvestment of deposit in CGC, as a fresh deposit and payment of existing certificate will be
made in the manner set out above. However if the customer visits the branch after three
months or more from the date of maturity, with a intention to redeposit the amount, the

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branch will calculate the profit for the overdue period, at the applicable rate, on it last
accumulated value before transfer to overdue Deposit certificates. This amount of profit will
first, be provided, along with the profit of the intervening period at six monthly and annual
closing, and thereafter, the process of encashment, in the presented manner, will be followed.
A new capital growth certificate, for a rounded amount as desired by the customer, will be
issued for the encashment proceeds of the existing CGC, and the balance amount, if any will
be paid to the customer.

Haj Mubarak Saving Accounts

Haj Mubarak Saving Accounts are the non chequing account in which a monthly installment
is deposited by the customer for pilling up an amount including profit, nearly equivalent to
the cost of passage for performing Haji, within the specified period of two or three years at
the option of the depositor. The monthly installment for such deposit has been fixed by
estimating the period and the total amount required to be accumulated in the account until the
time submitting Haji application by the depositor.
Haj Mubarak savings deposit scheme, is slightly different from capital growth certificates as
in CGC the amount of deposit certificate remains constant, whereas HMS, the balance
fluctuated regularly, as a result of monthly deposits in each account. Considering this factor,
no special book has been devised for maintaining these accounts.

Opening of an Hms Account:

After completion of the application form and related formalities of a Hajj Mubarik savings
accounts, the particulars of account will be noted on the left side folio of the ledger and the
credit entry of initial deposit will be passed in the account. On the top of the page, a note
should be given to signify the duration period of account and amount of monthly installment
to be deposited by the customer. The right hand folio of the ledger should be reserved for
recording the profit on the HMS Account; in no case should this folio be used for opening a
new account. On top of this page in the space provided for the heading, the words profit
provision on HMS should be written to identify the folio for computing profit on the
balances of accounts appearing in the specified time.
Default In Installments:
In Haj Mubarak savings account, the depositor/intending Haji is required to deposit certain
specified amount in the specified duration period. In case of default, this period is
automatically extended up to the number of months that payment was defaulted. For having a

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watch on regular payments by the customers, the branch will check the ledger on the last day
of each month to note the names and account numbers of the defaulters, If the customer does
not pay the installments, for three continuous months, a reminder in writing on the given
access should be sent to get the account regularized.
With-Drawl from the Scheme:
A customer may request to withdraw the funds from his/her HMS accounts before completing
the period of deposit or to discontinue participating in the scheme. In such cases, the branch
will apply profit on the deposit in declared for PLS SB accounts, during the period of deposit
for each term of six months. The calculation of profit will be made on monthly product basis
as per SB rules, and paid along with the original deposit, through cash detail voucher after
completing the relevant formalities for closure of account as per procedure.
The amount of Zakat and withholding tax should be deducted from the amount of profit and
credited to the respective accounts.
Payment on Completion of Period:
By the time of completion of the stipulated duration period of an account, the total amount in
a HMS Account would have accumulated to a sum nearly equivalent to the passage cost for
performing Haji by the account holder or his/her nominee in case of his/her death. At the time
of calling applications from the intending Haji pilgrims, the branch will review the ledger of
HMS accounts and note the names of account holders who have already completed the total
number of installments as specified for such account of who are about to complete the period
for depositing the installments in the account. The branch, requesting them to call on the bank
to complete the application and other formalities of Haji passage will intimate all such
customers. A blank Haji application form should also be sent to the customer at his/her
address to enable him/her to apply for the Haji,before the closing date for submitting Haji
application. When the customer visits the branch, the calculation of the available amount in
HMS account should be made, and by closing the account in the prescribed manner, the entire
amount would be used towards recovery of Haji Dues against his/her Haji application. The
customer would pay any short fall in the amount.

KHANUM BACHAT ACCOUNT SCHEME:

Under Khanum Bachat account scheme a monthly sum of Rs. 1000/- will have to be
deposited by a customer regularly for ten years, on or before the 6 th day of each month and at
maturity, a lump sum payment including profit will be made to the account holder. According
to the average prevailing rate of profit, it is expected that the total amount would be amount

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Rs.257, 000 subject to deduction of zakat and withholding tax etc, wherever applicable at the
time of maturity payment.
Expected rate of profit is, 14, 77% per annum, exactly the same rate normally declared for 5
years term deposits, subject to change according to the market situation.

Opening of the Account:

Khanum Bachat Account scheme is slightly different from CGC and other term deposits as in
all these schemes the amount of deposit remains constant, whereas in KBS, the balance
fluctuates regularly, because of monthly deposit in each account. Considering this factor, no
special book has been devised for maintaining these accounts.
After completion of the application form and related formalities of a Khanum Bachat
Account, the particulars of account will be noted on the ledger and the credit entry of initial
deposit will be passed in the account. On top of this page, in the space provided for the
heading the words profit provision on KHB should be written.
With-Drawl from the Scheme:
A customer may request to withdraw the funds from his/her KHB account before completing
the period of deposit or to discontinue to participate in the scheme. In such cases, the branch
will apply profit on the deposit in KHB account at a simple rate of profit declared for PLS SB
accounts, during the period of deposit for each term of six month. The calculation of profit
will be made on monthly product basis as per SB rules, and paid along with the original
deposit through cash debit voucher after completing the relevant formalities for closure of
account as per procedure.
Deduction of Tax &Zakat from Profits:
At the time of payment of deposit amount including profit, either on maturity or before
maturity, the amount of withholding tax and zakat wherever applicable, will be deducted in
the prescribed manner.
Rules Governing Pls Khanum Bachat Account Schemes:
1. PLS KHAB Account is a non chequing account, which can be opened, in the personal
name of an individual, including that of a minor, proper introduction, in the manner
prescribed for opening other deposit account.
2. The customer participating in PLS Khanum bachat account must be regular in making
monthly deposits of the stipulated amount of Rs.1000/- without any lapse. Relaxation
of two monthly payment sin a year would be available but only in exceptional genuine
cases, subject to depositing the same in subsequent months, and default for more than

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two months, either continuously or with a gap, in any one year would result in
customers withdrawal from the scheme.
3. For the delay in payment, the profitability of the account would be adversely affected
as profit and such amounts would be calculated from the date of deposit. If the
payment for the defaulted amount is not subsequently made, the total period of the
scheme for such account, would automatically be extended accordingly, to cover the
number of monthly payment.
4. The Bank reserves its right to refuse any deposit in this scheme, from any person or
class of persons, without assigning any reason, and for such refusal, no right or claim
would be entertained by the bank or its officer.
5. The bank would be within its rights to invest the funds raised form the deposits in
PLS Khanam Bachat Account in any manner at its discretion and to make use on the
funds to the be judgment in the banking business under the PLS system.
6. PLS KHB account in the name of guardians of the minor either singly or jointly and,
on maturity, the payment of the accumulated amount along with profit will be made to
the guardians or in a joint account to either or survivor, unless on attaining majority
age, the minor exercises his right to such deposit with the consent of the guardians.
Maal A Maal Scheme:
Recently MCB has announced Maal a Maal scheme for its customer this is prizes oriented
scheme of the bank, In such scheme the individual is received to deposit Rs.25000/- cash in
any branch of the bank so as to count his name in the draw. The bank will arrange drain after
every month and the successful winners will be given prizes like, Toyota cars, big prize of
Rs.20,000,000 lack and other attractive prizes.

Cash Department:
Cash department performs the following functions.
a. Receipts.
b. Payments.
1. Receipts.
The money will either come in or go out from the bank. Its records should be kept, cash
department performs this functions. The deposits of all customer of the bank are controlled
by mean of ledger account. Every customer has its own ledger account and has separate
ledger cards.

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2. Payments.
Payment made by cash department could be easily explained under the following headings.

CHEQUE:
Cheque is defined as written order of a depositor upon a bank to pay or to order of a
designated party or to bearer, a specified sum of money on demand.

Kinds of Cheques:
1. Bearer cheque:
It is cashable at the counter; this cheque can also be collected through clearing.
2. Order Cheque:
It is also cashable on the counter but its holder must satisfy the banker that he is the proper
man to collect the payment of the cheque and he has to show his identify through an account
holder of the bank. It can also be collected through clearing.
3. Crossed cheque.
It is not cashable at the counter, it can only be credited to the payees account, If there are
persons having accounts at the same bank, one of the account holders issues a cross cheque in
favour of the other account holder. Then the cheque will be credited to the account of the
person to whom the cheque was issued and debited from the account of the person who has
actually issued the cheque.
Issuing a Cheque Book:
One of the functions of account opening department is to issue the cheque books. When any
customer applies for a new cheque book he/she has to present the cheque book issue
requisition slip with his/her two signatures to the officer concerned the officer will verify the
signature and on the verification of signature, the cheque book will be issued.
The saving account PLS cheque book consists of ten pages, while the current account cheque
book may have 20,50 or 100 leers, An excise duty of Rs. 2 per leaf is charged. It is paid by
either the customer or his account is debited against excise duty.
MCB Rupees Travelers Cheques: (Rtc)
These are used only in Pakistan, It is a sort of undertaking RTC are as good as cash, because
with RTC one has the power to purchase and a feeling of security that should one lose them,
one will got a refund.

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RTC are accepted at major shops, travel agents, hotels, business establishments and MCB
branches, One does not have to be a MCB account holder to buy the Rupee Travelers cheeses.
Any body can purchase them.
RTC are a safe and convenient way to conduct everyday business. The person goes to MCB
branch and asks for the issuance of RTC. Then he deposits the money on the cash counter and
give receipt to RTC officer. He issues RTC in his name stamp. The buyer must sign the
cheques because it blank/unsigned cheques are lost, he will lose protection.
RTC are in different denomination, i.e. Rs. 10,000 and Rs.60, 000 per leaf, one can purchase
RTC of maximum Rs. 50,000 at one time from one branch. RTC should be counter signed at
the space provided in cheque only at the time of encashment and in presence of officials of
encashing branch.
About 400 branches of MCB are authorized to sell RTC, MCB RTC are controlled by RTC
are controlled by RTC Division in Head Office. When one purchases RTC from a branch, and
when it is encahsed, it is debited to HO on the same day.
RTC is a very profitable scheme for MCB. Because the money deposited by customer for
MCB RTC is at HQ disposal as far as RTC is not encashed. The more
the period between issuance and encashment, the more profit for MCB.
MCB also takes 1% commission on RTC. In case the RTC are stolen/lost, one must report to
the nearest branch of MCB and report to nearest police station. The party reporting loss
should contact original MCB branch that had issued the cheque and complete refund
procedure as per their advice.

Remittance Department:
MCB along with other services is also providing the facility of transfer of funds from one
bank to other bank and from one place to another place. The transfer of funds is the main
responsibility of the remittances department.

Kinds of Remittances:
MCB transfers money by the following means:

Pay Order.

Mail Transfer.

Demand Draft.

Telegraphic transfer.

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1. Pay Order.
Pay order is the most convenient sample and secure way of transfer of money. Pay order is
used for local transfer only.
Payment order is meant for banks own payments but in practice, these are also issued to
customers for making payments. It is issued by and drawn upon and payable by the same
branch of the bank. It is neither transferable nor negotiable and such it is payable to the payee
named their in.
The following are the parties to a pay order.
1. Purchaser is a person, firm, company or local authority.
2. Issuing/paying branch: which issues/pays on presentation.
3. Payee is a person named there in.
2. Mail Transfer.
When a customer requests the bank to transfer his money from this bank to any other bank or
the branch of some other bank in the only, outside the country, the first thing he has to do is to
fill an application form. In which he states that I want to transfer the money from this bank to
that bank by mail. If the customer is the account holder of the bank, it will debit his account
and the concerned officer will fill the six different forms to make the mail transfer complete.
The five forms used for this purpose are listed below:

Branch Mail Transfer Form.

Issuing Branch Register copy.

Debit Voucher.

Beneficiarys Advice.

Advice to customer.

If the customer is not the account holder of this bank, then firstly, he has to deposit the money
and than above procedure will be adopted to transfer his money.
3. Demand Draft.
Demand Draft is another way of transfer of money from one bank to another bank. Unlike
pay order, a form is required to be filled for the issuance of the demand draft in which
necessary particulars about the beneficiary and sends are given. The sender deposits the
amount of DD plus commission and other charges on the bank counter, from where he is
given a receipt and in accordance with this receipt he is issued a demand draft.

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After issuing the demand draft, the remittances department sends credit advice to the branch
to which the DD is sent. When the responsible branch receives the DD from the originating
branch, they credit it, and when the DD come for cleaning they debit the account.
MCB deals with two types of DDs.
1. Open DD.
Open DD is one, which is, payable directly at the counter, and there is no need of crediting it
to the account
2. Cross DD.
Cross DD is one of which payment is done through account, the amount of the DD is credited
to the favoring account and then he can branch in ordinary way through cheque.
DD charges in MCB change proportionately with the amount of the DD. In MCB different
charges of the DD in Pak Rupee are:
Up to 10,000 is 15%.
From 10,000 to 100,00-0 is 11%
From 100,000 to 500,000 is .05%.
In addition to the above charges a fixed excise duty of Rs.2 per draft is charged.
4. Telegraphic Transfer.
With the changing requirements of the customer, MCB has introduced the fastest transfer of
money. Like DD the sender is required to apply through a form in which he will give all the
necessary details about the sender and beneficiary. The sender deposits the money to be
transferred plus bank charges at the bank counter, the remittances officials send a telegram to
concerned branch and they make payment to the customer. Vouchers are sent by ordinary
mail to keep the record. On TT, no excise duty is charged only commission and telegram
charges are charged.

Deductions on All Transfers:

Following deduction are made by MCB according to SBP rules and regulations.
1. Excise duty.
2. Commission (%age) with amount transferred.
3. In case of T.T (Fax) charges are deducted by MCB @ 200/Fax.
Other deduction as per bank rule.

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CHAPTER-5

PROBLEMS AND RECOMMENDATIONS

MCB is effectively operating and carrying out all the activities normally under specific
system. The system is used in the bank from beginning and it is moderated and modernized
with the passage of time, but still have some observations and recommendation, which can
add, some input for efficiency of MCB Bahter branch. The problems and recommendation are
as follows:

Information to Customers:
It is usually the policy of the bank to send the balances and compute transaction record of the
proceedings of the month to customer after every three months. But according to my
observation, this information is sent regularly to large organizations with large deposits. His
service should be provided to all customers without comparing the deposits.

Job Analysis and Wages:

As we have learned from our personnel administration course, that job analysis is very
important for any organization. In job analysis we describe the job and specify the person for
equitable wage system. In MCB Bahter Branch there is no concept of job analysis that is why
wages are not according to the work performed by the workers e.g. two workers of the same
grade and with the same salary are performing different kinds of jobs, one with less
responsibility and the other performing a complex one. This creates dissatisfaction among the
workers, so it is recommended, to have a fair and equitable wage structure for the
organization.

Performance Appraisal:
The system of performance appraisal as we learn in one course is some how different because
MCB workers are appraised by the management and not by the immediate supervisor. The
element of subjectivity is very high as further promotion is very much dependent on this
appraisal report, so a manager can run or build the career of any worker by giving his/her
own subjectivity judgement.
Lack of Special Training.
MCB does not provide the facility of specialized training to its staff. Training is provided on
the basis of centralization.

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As the worker finishes his/her training, he/she is introduced in a specific field. Since he/she
does not have knowledge about the specific job assigned to him, thus he/she faces difficulties
in performing the job/It is recommended that both generalized and specialized training should
be provided to fresh as well as old workers to maintain the high standard of service.
Replacement of Token System:
MCB Bahter Branch is a busy branch. Where a large number businessmen and individuals
visit for depositing cash, withdrawing money from accounts, Making drafts, opening LCs etc.
Customer want quick service but it cant provide quick service because still there is use of
token system which delay cash payment to customers and every one wait for a long time to
receive money. To overcome this problem it is recommended that the computerized system
should introduced that will really accelerate the bank service.
Shortage of Staff:
This is also one of the most serious problem of the MCB. As far the MCB Bahter branch is
concerned there is lack of working staff due to which inefficiency is resulted. This is only one
branch in this area and mostly people have accounts in the MCB. People are also unhappy
with the services provided by this branch. To improve the branch performance, top
management should take immediate steps to hire more workers in the said branch and also in
the other where there is such problem.

Introduction of Female Desk Program in the branch:

Another problem confusing the MCB is the non existence of female desk service. In most of
banks female workers are very less because in our society only few female visiting banks for
depositing and withdrawal of money etc. But this service should be provided in MCB Bahter
branch there no female worker available to handle female customers, however the concerned
authorities should think over this problem and should resolve it as early as possible.

Provision of Computer:
This is the computer age. It is being extensively used in all business oriented organization to
expedite the service. As I have told earlier the MCB Bahter Branch is a busy branch where all
work is done Manually. Manual work is subjected to more errors and mistakes. Computer can
do a lot of work in minutes very accurately. To avoid this retired situation computerized
system should be introduced with the help of which bank activities can easily be controlled.
In this way the bank performance and customer services will certainly increase in a very
positive manner.

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Socializing:
The most important recommendation is that the branches should have more social gathering
e.g. parties, and evenings where the employees are invited so it will be a source of motivation
for them because working all the time is harmful for productivity.
All these are the problems and valuable suggestions and recommendations to resolve these
problems. It is in the good interest of the bank to take these problems seriously and to come
out will a positive step to resolve these problems as early as possible. This will certainly
enhance the long run performance of the MCB.

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CHAPTER-6

SWOT ANALYSIS
Strengths:
One of the major strengths of MCB is that it has very stable deposit base.
MCB is largest private bank in Pakistan with around 1000 branches, which cover
almost every part of Pakistan.
The bank enjoys competitive advantage over other banks in Pakistan.
The bank enjoys competitive profitability in the industry.
MCB has captured majority of potential customers in Pakistan.
MCB has the accounts of big organizations like OGDCL, PTCL, EFU, PTC etc.
MCB is Successive and Market oriented.
MCB investing huge sums on HR development and training.
Customer default rate is lower as compared to other banks.
MCB has the largest ATM network in the country.
Meeting the challenges of latest Technology by introducing Smart card remit
express, mobile banking etc.

Weakness:
Decision making process is very slow.
It is not having greater no. of branches abroad.
Though ATM network is the largest in Pakistan, still some potential areas dont
have the ATM.
MCB RTC is useable only in Pakistan.
Some management positrons needed are not professional.
Although most of the branches are computerized now, still some important
branches dont have computers.
Low motivational level; non-aggressive marketing.
Employees dissatisfaction due to ill treatment and improper reward system.
Favoritism and Nepotism in recruitment.
Interest rate is very meager.

Opportunities:

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 Leasing sector is growing in Pakistan for the last two to three years which
provides opportunity to MCB to go ahead in this area as well.
MCB is providing Consumer Finances at comparatively lower rates which paves
a way to grab more customers
Financing to small/medium cottage industries will definitely increase its
advances and profitability as well.
Islamic Trading Based Banking can enhance the business of the bank.
Targeting of Hundi / Hawalla through networking and IT potential of MCB.

Threats:
Other private commercial bank with sound profitability is also a threat to MCB
e.g. UBL, Al-Falah, HBL etc.
For the last of many years, Pakistan is facing economic and political instability
which is a big threat.
Afghan war and Iraq war has a deep effect on the economy of Pakistan, which
may affect MCB.
Foreign banks are flourishing in field of consumer financing.
People dont prefer banking culture. They mostly prefer cash transactions.

Recommendations for Improvement

Unproductive branches in remote areas should be closed down to reduce the
administrative costs.
The branches that are facing losses should be given special attention to improve those
branches.
Efforts should be made to increase the market share.
Aggressive and proactive management style should be followed to increase HR
efficiency.
Time deposits should be properly administered.
Stuck up portfolio of Finances should be effectively reduced.
Dormant/Non-Operating accounts should be closed to save account maintenance
costs.
Fund Investments should be made after careful analysis.
Bank should disburse its loans to diversified fields.

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 EURO Money Awards for MCB should be publicized and propagated to get more
positive opinion of the people.
Bank should expand its branch network abroad.

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CONCLUSION
The achievements in communication techniques and e-trade gave rise to many results for
marketing practices and perceptions. But, one of them is especially important that occurred in
banking sector in marketing. Today, marketing services are of great emphasis on both
customer and bank. The quality and quantity of banking products increased and a result of
this, recent developments in marketing thoughts in services such as internal marketing,
network marketing, data base marketing and relationship marketing became more favorable
practices
Future Outlook for the Banking Sector Technology
The use of Information Technology in Pakistan is quite limited. An example of this is the fact
that Credit cards have been used very commonly abroad as a medium of transaction, still it is
not considered as a reliable mode of transaction. Acceptability of credit card transactions in
Pakistan is limited from the users' end because:
Cash is still the most comfortable mode of transaction, because of cultural dislike for
borrowing from the formal sector (issues of riba [interest] and easier access to informal
channels,) and also because of the presence of high denomination currency, which could be
carried easily. The fear of transaction information being made available to the authorities is
giving rise to questions on sources of income.
Over the last four years, mainly as there result of aggressive marketing by the foreign banks,
credit cards have been able to penetrate the middle and upper income salary class to a high
degree, while the business community is still uncomfortable with the idea given the second
reason stated above. Foreign banks continue to dominate this business segment with CITI
bank and Standard Chartered leading, with more than hundred thousand card members each.
ATMs have recently gained importance as marketing and cross selling tool. Here the lead has
been taken by MCB, which according to its 2001 annual report has online network of 170
branches and 100 ATMs, including 4 offsite. Further more, MCB has linked up its ATM
network to MasterCard, Cirrus and Maestro, effectively becoming part of the largest ATM
network in the world, and has, or is in the process of creating linkages of this sort, with

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domestic and multinational banks in Pakistan. Three MNC bank has already signed MoUs
with MCB.
Internet banking is at embryonic stage in Pakistan because of the limited net penetration and
low level of computer literacy. This should gradually improve in the next few years as IT
education at college and university level becomes more common, and the use of computers at
the workplace increases, as this will reduce the discomfort of using transaction methods that
are not completely understood. But it may be at least five or six years before these have any
significant impact on bank earnings. Here, Askari Commercial Bank has taken the lead with a
website with basic services already in place. However, we do not feel that it will generate a
substantial advantage from the early entry, since the expected payoff time horizon is lengthy.
In the past five years, MCB has already made significant progress in reducing unproductive
expenditures. The key concern is the capital constraint that MCB faces, which would call for
the bank to accelerate profit retention over the next few years while containing loan growth.
ORGANIZING FOR THE FUTURE
MCB restructured the Bank in three business groups Together with their segment alignment,
with a more focused support organization including induction of a new professional treasury
team was introduced The new organization structure will enable MCB to successfully steer
through the low interest rate environment and position themselves to address future
challenges and program towards the achievement of their vision of being the quality provider
of financial services in Pakistan.

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BIBLIOGRAPHY

Annual Report 1998.

Business recorder Saturday 1 August 1998

Money and banking by M.Saeed Nasir.

Information collected from Branch Manager (Miranshah Main Branch North

Wazirestan Agency) during special meeting with him.

Information collected from MCB staff at Miranshah Branch during rotation of

departments.
.

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REFERENCES
[1] C. Grnroos., Service Management and Marketing Managing the Moments of Truth
in Service Competition, Lexington Books, USA, 1990.
[2] A. Palmer., Principles of Services Marketing, McGraw Hill Book Company, UK,
1994.
[3] . Cemalclar., Pazarlama, A. Yaynlar, Eskiehir, 1995.
[4] N. Timur., Banka ve Sigorta Pazarlamas, A. AF. Yaynlar, Eskiehir, 1994.
[5] Y. Fidan., Hizmetlerin retim ve Pazarlanmas, Pazarlama Dnyas, Vol. 53, 1995.
[6] N. Uray., Banka Hizmetlerinin Datmnda Araclarn Yeri, Pazarlama Dnyas,
Vol. 38, 1993.

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