Introduction

Muslim commercial Bank (MCB) is one of the leading bank in Pakistan, working smoothly and efficiently in the economy of the country which is subject to the fluctuations most of the time. Now a days MCB is having the objective to focus on consumer banking and their services, which gives them edge over the rest of the banks in the country its consumers banking provides consumers with innovative saving schemes, products and services. So far MCB has shown remarkable achievements in fulfilling all of its objectives along with the profit limits. Its products has also presented an admirable response by its clients and contributed a lot in developing the banks repute as well as the economy which is really appreciable.

Background of the study

The economic growth of a country, among many other factors, depends mainly on the strength of the financial institutions operating in a country. The banking sector is one of the example of financial institutions which can play a very vital role in development of the over all economy of a country. Banking sector has now become a very challenging field with the advent of modern technology and increased competition.

Purpose of the study

The main purpose of this study was the fulfillment of the degree requirements of bachelor in management sciences of the institute of management studies (IMS) University of Peshawar. Other purpose of the study is to analyze the daily procedures of Muslim commercial bank (MCB).

Scope of Work
The scope of this particular study is confined to the MCB Main Branch, Mardan, N.W.F.P.

Limitations of the Study

As the functions of a financial institution are much wider in scope so it is very difficult to clearly understand all these functions in a limited time. Therefore, the performance of the Accounts Department of MCB Main Branch, Mardan, is viewed in detail and the rest of the departments are just glanced through.

Methodology of the Study

To complete the study in a more meaningful and practical way, the following methods of data collections were used.

1.

Primary Data
The data collected for the first time is called primary data which was through

Interviews
The senior and the experienced staff at the branch level were interviewed to know their views about the different problems faced by them in their routine duties.

Observations
Being an internee, different methods, procedures and rules used by the staff members while working there routine jobs were observed.

2.

Secondary Data
The data, which has gone through mathematical and statistical techniques after its collection, is called secondary data. The main sources of secondary data are different publications of MCB. They include annual reports, manuals, newsletters, website of MCB and brochures etc.

Scheme of the Report

Chapter
of study.

This chapter contains the background, purpose, scope, limitations and methodology

Chapter
and products.

This chapter contains the overview of overall MCB including its different schemes

Chapter
departments.

This chapter views the main the MCB Main Branch, Mardan, and its different

Chapter

In this chapter the critical analysis of the bank are made and strengths, weaknesses, opportunities and threats are highlighted.

Chapter

In this chapter recommendations along with the action plan are made for the efficient performance of the bank.

Executive Summery
Banking plays a vital role in the economic development of a country. Its importance for an economy is as important as a heart for the body. The function of heart is to pumping of blood to whole body and if there is any problem in the functioning of heart the whole body suffers. Similar is the case of banking in any economy. Credit plays the role of blood in the economy and if there is any problem in the circulation of credit the economy may suffer and this circulation of credit is carried out by the banking sector. Credit expantion during recession and contration during inflation bring about stability in the economy. Monetory policy of the central of the central bank is the mirror of the economic conditions of the country. If central is persuing as easy money policy it shows the recissionary trends in the economy and vice versa. For stable economy there must be a stable money and capital market working in flexible way and independent way. Combined with other economic policies of the Govt banking sector can control economic evils like inflation, deflation, recession, unemployment etc. The purpose of this report is to analyze daily procedures of MCB. It is a part of the banking sector of Pakistan, which plays its due role in combating the economic evils with 1,054 domestic, and 6 foreign branches. MCB has been launching different schemes from time to time to ease the job of businessmen and hence ultimately contributing in the improvement of the economy. MCB operates with the following objectives. a. Improved Customer Service. b. Quick Disposal of Credit Claims. c. Efficient operation of the officers in co-operative environment. d. Effective Communication with other banks. e. To ensure growth and development of the bank. f. To procure greater business i.e. to acquire more deposits, which are considered to be the raw material of the bank. g. To channalize the resources of the bank productively and increase the wealth of stock holders.

h. To reduce the general trend of cash transaction and make the people more bank oriented. i. To participate in economic development of the country. j. Introducing new products in order to attract more customers. k. To increase foreign exchange reserves.

Report Findings
MCB continuing its focus on consumer banking has provided consumers with innovative saving schemes, products and services. The bank ATM (Automated Teller Machine) network is the largest in Pakistan and Pak rupee traveler cheques are the market leaders. Besides, MCB was the first to introduce photo card with the introduction of MCB Master Card adding extra feature to an already existing product in the market. Its corporate banking ensures assistance from a dedicated team of professional financial advisors for under writing project finance or corporate advisory services. Hence bank has shown remarkable achievements in fulfilling up of all its objectives along with the targeted profit limits. At present the bank is considered with an efficient and largest network bank with high potential and committed team towards their respective tasks and responsibilities.

MCB Today
MCB today represents a bank that has grown with time and experience. At present it is a major financial institution in scope and size. it symbolizes a fully grown tree, ever green, strong and firmly rooted. NET PROFIT The Earning After Taxation (EAT) in 2001 is Rs.999.2 million as compares to Rs.322.8 million in 2000 showing an increase of 67%. As after privatization of MCB in 1991 the dividend of 15% was declared last year, which is a matter of pleasure for management to state that they have announced an increased dividend of 17.5% in the year 2001.

RESERVE FUND/EQUITY A sum of Rs.79.8 million has been transferred to Statutory Reserve this year,

raising the total reserves to Rs.1.796.6 million at the end of 2001, from Rs.1.1716.8 million as last year. DEPOSITS Deposits with the Bank at the end of year 2001 stood at Rs. 154544 Million as compared to Rs.135990 Million in 2000. It is clear that he depositors have complete faith in MCB, which is evident from the fact that in the very first month of launching the MCB Mall-a-Mall Rupee term Deposit Certificates Scheme attracted Rs.7.6. billion. ADVANCES Total advances at the 2001 were Rs. 76586Million as compared to Rs.86359 Million in 2000 showing a fall of 2.3%. This is mainly due to the slowing down of economy following the events described above, as well as, in keeping with MCBs policy of prudent lending. INVESTMENTS Investments of MCB has also been slightly declined by 0.2% because the current policy of the management is to dispose off Investment in shares of listed and unlisted companies at the best possible prices. RECOVERIES The recovery position in the year 2001 was most encouraging. Bank recovered Rs. 104 billion in cash. The bank also disposed off properties which were acquired in settlement of accounts. Where the recovery of loans outstanding has become the priority in 2000.

Report recommendations
Looking at the above facts though it is considered that MCB has done well so far, but now the bank seem to fail to achieve its objectives to provide improved services to customers, its lengthy procedures as compared to newly established private banks causes problems for customers. Also MCB being considering itself as an established

bank now does not feel so much competition in the market, which in long run will not be favorable. So in short instead of having the mark of leading bank in their minds it will have to operate just like as if it has to start and rise yet with aggressive mode for competition. It can be through 1. 2. 3. 4. Improved working environment. Fast communication Recruitment of professional personnel. Use of latest technology.

Overview of the Organization

Overview of MCB
The Muslim Commercial Bank Ltd is one of the leading commercial bank of Pakistan with network of 1054 domestic and six foreign branches. The bank was registered as commercial bank in July 1947 in Calcutta (India) After the partition in August 1948, the bank shifted its head office to the Dacca (Bangladesh) and in 1956 the bank shifted its head office to Karachi, where it is still working. In 1948 Mr. Ispahani and Mr. Hameed Adamjee purchased the bank. At that time the bank showed a historical performance and profit. In 1974 the Government felt a harsh need of nationalization of banks and financial institutions and nationalization act was introduced. Under this act MCB was the first bank, which was nationalized. In the same year Premier Bank was merged with MCB and it started work as a government bank. This nationalization affected the bank badly. All the financial institutions and banks did not show good performance after nationalization, and again the government felt a big need to privatize these banks. In 1991 the bank was privatize during Nawaz Sharif government. The government of Pakistan transferred the management of the bank to National group, one of the leading groups in the field of business. They were sold 25% shares. Now this group is having 50% of the total shares. Government is having 25% shares and general public is also having the same shares. Now a days MCBs main focus remains on consumer banking and its growing reputation as full service provider, gives the bank an edge in front of increased competition in the banking sector in Pakistan with a network of over 1216 branches and team of dedicated professionals. MCB with an international out look and regional focus ensures prompt customer service and innovative solutions to business and personal needs. The consumer banking provides consumers with innovative saving schemes, products and services. The bank ATM (Automated Teller Machine) network is the

largest in Pakistan and Pak rupee traveler cheque are the market leaders. Besides, MCB was the first to introduce photo card with the introduction of MCB Master Card adding extra feature to an already existing product in the market. Its corporate banking ensures assistance from a dedicated team of professional financial advisors for under writing project finance or corporate advisory services. Hence till mid 1999 bank has shown remarkable achievements in fulfilling up of all its objectives along with the targeted profit limits. At present the bank is considered with an efficient and largest network bank with high potential and committed team towards their respective tasks and responsibilities. All MCBs products have also presented an admirable response by its clients and contributed a lot in developing the banks repute as well as the economy, which is really appreciable. The profit earning position of bank is being improved every year..

MCB AT A GLANCE 2000 (Rs in Million) Authorized share Capital. Paid up share capital Served Fund & other reserved. Surp:on evaluation of fixed assets. Total assets (Exc: Contra) Deposits Advances. Investments Imports Exports Home Profit before tax: Profit after tax: No. of Branches. No of employees No of accounts. 3500 2203 2278 1109 174723 135900 86359 43122 66910 33575 10060 1330 590 1210 12133 5062364 2001 (Rs in Million) 3500 2423 2279 1900 187074 154544 76586 55432 53008 34968 24703 2101 1000 1016 11614 4392164

1.5

OBJECTIVES OF MCB. Every Organization is established to accomplish certain objectives. In this connection, the main objectives of the MCB include: l. Improved Customer Service. m. Quick Disposal of Credit Claims. n. Efficient operation of the officers in co-operative environment. o. Effective Communication with other banks. p. To ensure growth and development of the bank. q. To procure greater business i.e. to acquire more deposits, which are considered to be the raw material of the bank. r. To channalize the resources of the bank productively and increase the wealth of stockholders.

s. To reduce the general trend of cash transaction and make the people more banks oriented. t. To participate in economic development of the country. u. Introducing new products in order to attract more customers. To increase foreign exchange reserves.. Muslim Commercial Bank is not an over night story of success: They started business in Calcutta on July 9th 1947. After the partition of IndoPak sub-continent the bank moved to Dhaka from where they commenced business in August 1948. In 1956, the bank transferred it registered office to Karachi, where the Head Office is presently located. According to the MCB Annual Report 2001, the bank inherits a 55 years of legacy of trust in its customers and citizens of Pakistan. Where as till now MCBs role in development in economy as well as its services have showed a remarkable performance, which mind it to be as the ideal bank in future. At present the bank is operating with its total 1061 branches out of them six are located out side the country. The total bank deposit in Jun 1948 were only Rs 88 corers (880 millions) and credit amounted to Rs.20 corers (200 million) but in December 2001 the deposits of bank have risen up to Rs. (154,544 million) as compared to Rs.(135990 million) in 2000 and total advances have reached to Rs.76586 million as compared to 86359 million last year. 1.8. NATIONALIZATION OF MCB After spending 27 years of its operation since establishment in January 1974, the government of Pakistan nationalized MCB by following. Concentration of wealth in few hands. Inappropriate use of credit. Unbalanced distribution of credit. Protection of Black Money. Unhealthy competition among banks.

 1.9.

Exploitation of Banks Employees. Favoritism. Low efficiency of foreign bank branches.

PRIVATIZATION OF MCB A wave of economic reforms swept Pakistan in late 1990, introducing the

need for privatization of state owned banks and companies. In April 1991, MCB becomes Pakistans first bank, which was decided to be privatized. The government of Pakistan transferred the management of the bank to a national group of leading industrialists of the country by selling 25% shares of the bank also with a view to broaden equity holding the government sold 25% and the paid up capital to the General Public as well. In term of agreement b/w government of Pakistan and national group, additional 25% shares were again offered to the group of purchasing and making their holding to 50%. Now 25% of remaining shares are retained by government which shall be sold in near future. MCB PRODUCTS AND DIFFERENT SCHEMES The privatization expansion and diversification of economic activities in the country also need innovation in banking. The Muslim Commercial Bank has taken an initiative in this regard by introducing different schemes since past, in order to expand the services and to have efficient survival as well, which are really made well come and encouraged by the clients. Hence the bank provides a choice of products and accounts to its customers which suit best to their life style and needs. These schemes are mentioned below:

4.8.

CAPITAL GROWTH CERTIFICATE SCHEME: This is a risk free scheme by which the customer can double his investment in just 5 years. The main features of these schemes are described below: a. b. c. Minimum amount of investment is 10,000 with no limit on maximum amount. The time period for certificate scheme is 5 years, which in renewable for further period of 5 years. Upon maturity of certificate the following returns are expected to made after deduction of Zakat wherever applicable and with holding tax. d. Incase of premature encashment of certificates the depositors will be given PLS saving account profit rates decided by the bank for that particular period. e. There is no other special requirement except the depositor will be required to fill in the account opening form.

Initial deposit. Rupees 10,000,00 50,000,00. 100,000,00 1,000,000,00 4.9. MAHANA KHUSHALI SCHEME.

Payment upon maturity Rupees 20,000,00 100,000,00 200,000,00 2,000,000,00

Through Mahana Khushali Scheme the customer can get a steady income month after month on his investment at his door step. Any one can invest in this scheme with minimum of Rs.10,000/- and the maximum of Rs.1,000,000 for the maturity of five years. The guaranteed (interim) rate of profit offered will minimum 1% per month. If the profit declared by the bank is higher, additional profit well go paid to the depositors which they will be informed by the branch from time to time.

The following table give the monthly return on various amounts, based method of calculation. Amount Rupees 1,000,000,00 500,000,00. 100,000,00. 50,000,00. 25,000,00. 10,000,00. Monthly Profit. Ruppes. 12417,00. 6,208,00. 1,242,00. 621,00. 310,00. 124,00.

Zakat will be applicable once a year on the principle amount of investment, and tax will be collected on profit monthly at the time of payment. Where the monthly profit payment procedure will be made through crossed pay order collected by the depositor or through crossed postal money order/demand draft at the door step. In case of depositor have saving/current account with the bank may be credit by the amount of profit. 4.10. PRIME CURRENCY SCHEME. This scheme is launched to collect deposit for foreign currency account which allows the depositors to earn attractive rates of interest in Foreign Currency. The account can be opened in four global currencies like: US Dollar, Pound, Sterling, Yen and the Deutsche Mark with the personal or joint names. MCB invites to customers whether residents or a non-resident Pakistani to operate a foreign currency account and allow to draw any amount of foreign exchange from the account and transfer or remit the amount freely to any part of world without any restrictions. The bank allows 7% profit per annum on the scheme which is (tax free) i.e. exempted from all form of taxes. 4.11. SAVING 365. Under this scheme a checking account can be opened on which profit will be paid on daily product basis at the same rate as for PLS saving scheme. Where under this account the holder is also provided with the facilities of current A/C.

4.12.

EXPORT PROMOTION SCHEME. Under this scheme bank deals with financial matters relating to exports and

extension of export credit at Confessional rates in order to boost up the exports of the country. The bank also plays a role of a major dealer of export refinancing scheme of the State Bank of Pakistan. 4.13. MCB RUPEE TRAVELLERS CHEQUES (RTC) MCB rupee travelers cheques are as good as cash. The MCB travelers cheques are accepted at the major shops, travel agents, hotels business establishment and MCB branches all over the country and abroad. This service is being offered to facilitate instant fund availability to travelers and business people who used to carry a large sum of money with them. So this eliminates the degree of risk involved and prove to be a safest way to carry cash for high value cash transaction. The (RTC) can be purchased from MCB branches in denomination Rs.1,00/- Rs. 10,000/- Rs. 50,000/-.

4.14.

HAJ MUBARAK SAVINGS SCHEME. The MCB also participate in fulfilling of life time ambition of every Muslim

to perform Hajj. The salient features of banks Hajj Mubarak Saving schemes are as follows: a. b. c. The duration of Hajj Mubarak scheme will be 2 and 3 years. Under the 2 year scheme, a monthly deposits of Rs. 1800/- and under 3 years scheme a monthly deposit of Rs.1200/- will be required. Upon expiry of 2 or 3 years the bank will pay approximately Rs.4860/- or Rs. 512000/- respectively less Zakat deduction and with holding tax application to the client in against of his account.

d.

Each intending Hajj will need to fill account opening form along with a copy of his or her national identity card and other particulars and also nominate his or her successor.

e.

Incase of withdrawal from the scheme the participant will be entitled to the profit rate of the PLS saving account for that particular period. In the event of death of the participant the successor will take the role of participant if he or she agrees to pay the remaining installments of the scheme.

4.16.

MCB MALL-A-MALL RUPEE DEPOSIT CERTIFICATE: These certificates were launched by the bank in April 1999, which has

received an excellent response from all over the country. Any one can purchase MCB MAAL-A-MALL certificate with the deposit of Rs.25,000/- only and is offered to be the participant of lucky draw every month in which you can win various prizes in against of your deposit like: 20 Lake cash, Honda City Car, 100 Tola Gold and many more, along with the profit rate of 10%. The minimum duration for the investment is 2,4,8 and 12 months where the depositor is allowed to liquidate his certificate just after 2 months of his deposit. Besides the bank also offers the facility of loan to a certificate holder after fulfilling of few requirement. MCB (ATMs) 24 HOURS CASH: Muslim commercial bank has also installed a number of Automated Teller Machines at several branches, in major and busy cities of Pakistan and claims to be the bank with largest ATM network in Pakistan. The facility is provided for extending round the clock money withdrawals facility to bank clients. At present 91 ATMs are in operation and over 60,000 ATM cards have been issued which are planned to increase and improve further at the end of 2000, by expanding the network to the all provinces of country. Besides MCB has also provided opportunity its ATM card holders to become Lakhon Main Aik, through a lucky draw in which the card holder can win Rs. 100,000/ plus a host of exciting prizes.

4.17.

MCB MASTER CARD. MCB master card is simply a credit facility to its clients. The card holder have

a facility to shop to a particular limit from over 12 million merchants welcoming the card with in the country and globally as well.

Management and organization

MANAGEMENT AND ORGANIZATION The group of management of Muslim Commercial Bank consist of 10 members including, Chairman, Chief Executive, one Vice Chairman and seven directors who are responsible for the banks business and making planning and policies and provides the guidelines to whole staff to achieve required objectives and targets. At present there are 20 circle offices and 46 regions. The incharge of circle office is called General Manager (GM) who handles the matters and affairs of branches under his circle as directed by the higher authorities. Where every circle office consists of regional offices which are normally from 3 to 6 in ever circle. Name of Prov: Baluchistan NWFP and AJK Punjab Sindh Domestic Export Processing zone Foreign Branches Total Circle. 1 2 10 7 20 20 Regions. 2 7 25 12 46 46 34 155 633 232 1054 1 6 1061 Branches

2.6.

MCB RE-ORGANIZATION During the past few years, MCB has taken major stride in terms of business

direction, marketing strategy, human resource development etc. the managements concentrated its efforts towards consolidation in certain areas while expansion in others which has resulted in cost savings and revenue enhancement as well as introduction of new products and schemas and improvement in customer service. The management feel itself fortunate in attracting a number of professionals from a variety of specialized backgrounds and have also been feeling very proud to retain a highly dedicated group of individuals who have been associated with the bank for past several years, having a potential to compete efficiently in this competitive ear. While in order to have major thrust in the market a strong need to focus on each and every system of business has remained the MCB managements top preference, and by from a geographical to a functional organization structure. 2.7. MCB CORPORATE AND CONSUMERS BANKING Since, after privatization MCB is striving by utilizing its committed staffs efficiency and all possible resources towards the convenience and excellent services for its customers by realizing their needs and problems relating to their life style which is really appreciable. So, far the MCBs policies are concerned they are purely customer oriented, having target on all types of prospects showing highly encouragement by them in the feed back which has provided an edge to this bank among all the banks competing at present, with in the country. The bank is now putting its attention systematically and technically to formulate the policies by dividing its efforts in to three segments to satisfy the customers more accurately, for successfully achieving the company objectives they are like.

i.

MCB CONSUMERS BANKING. Specialized Products / Facilities and Accounts: MCB provides different saving accounts with attractive returns and

Investment products that give the monthly profits as well as the convenient payment instruments to save the purpose of safety in high valuable transactions, having high acceptance aroung the world. a. Specialized Products. Convenient 24 hours banking services through the largest ATM network in Pakistan. The MCB PAK RUPEE TRAVELLERS CHEQUES are the safest way to carry cash for high value cash transactions. The MCB MASTER CARD is the future of money with over 12 million merchants welcoming the card globally for you to buy without paying cash on the spot. You have never seen convenience like this before. MCBs REMIT EXPRESS is the fastest way of getting your money across to Pakistan, through the bank service, which saves your previous time. b. Specialized Accounts: MCB provide its customers to open an account that fits their requirements and life style in best way. MCB RUPEE MAXIMIZER ACCOUNT provides an opportunity to convert your foreign currency account in to Pak. In Pak. Rupee or foreign currency accounts the bank provide with a selection of accounts suiting your needs. The KHUSHALI BACHAT or DOLLAR KHUSHALI ACCOUNT, both require a low minimum income deposits plus you receive profit on daily product basis. Under SAVING 365 ACCOUNT, MCB offers youre a saving account with current account facilities. MCB products are designed to cater to all your financial needs. They include:

The

CAPITAL

GROWTHINVESTMENT

provides

you

an

opportunity to double your amount and also receive monthly profits through monthly KHUSHALI. MBC MALAMAL DEPOSIT also provide the customer with incentive of different prizes along with saving of their amount for a particular period at a predetermined rate of profit. More over the MCBs policies relating too customer with innovative saving schemes, products and services. Its ATM network is largest in Pakistan and Pak Rupee Travelers cheques are market leaders. MCB also claims to be the first to introduce the photo card with the introduction of MCB Master Card for adding additional security to its customers. MCB CORPORATE BANKING MCB corporate banking is providing its customers with professional financial advisor that give personal attention to your banking needs. They are specialists in connection with the services like under writing corporate advisory, project finance, equity placements and a lot more. The Banks experienced corporate banking team assures you to be assisted with all your financial needs and requirements by offering different exclusive schemes and credit policies with the objectives to: 2.6. Help the process of industrialization in the country. Provide employment opportunities to skilled and unskilled labour. Encourage local and overseas Pakistanis for investment. Increase production and boost exports. MCB INVESTMENT BANKINGGROUP The Investment Bank Group (IBG) has emerged as a leading player in Pakistans investment banking area. The group handles advisory, corporate finance, project finance and capital market related transactions.

CAPITAL MARKETS The Capital Markets (CM) teams participate in some of the largest capital

markets transactions emanating from Pakistan. IBG has been involved in all major corporate bond transactions as Lead Manager or Lead Underwriter. CORPORATE FINANCE The Corporate Finance (CF) team is involved in some of the major Merger and Acquisition transactions taking place in Pakistan. The team identifies potential targets or acquires and arranges funds foor the merger or acquisitions. PROJECT FINANCE The team at Muslim Commercial Bank is trained in conducting comprehensive risk analysis of the projects under consideration, devise the financing in structure according to the needs and cash flows of the project and arranges the required funds through syndication. 2.7. DEPARTMENTION IN MCB in MCB there is departmentation by function. There are twenty divisions working under Head Office, each of which is having his own field of work, these divisions are: 1. AGRICULTURE DIVISION. This division work for the development of agriculture in the country. It advances loans for agricultural purpose and recovers all loans already given for the said purpose. This division also assists World Bank and other donors in their agriculture development project. 2. AUDIT DIVISION. Previously IT was called inspection and Audit Division. It conducts audit in Banks branches and it delegated enough authority from the Board of Directors so OTB that it can work without any fear. It appoints audit teams and all the irregularities are reported to this division.

3.

BUSINESS DEVELOPMENT & MARKETING DIVISION. This is the most important division working under H.O, the main function of

this division is business development. This division on the basis of market survey introduces new schemes and all the marketing activities for the promotion of the new products are carried out by this division. Changes in the existing connection with bank & customer scheme is also the responsibility of this division. 4. CENTRAL ACCOUNTS DIVISION. The main responsibility of this division is to keep accounts of branches and record of all inter branch transitions and of branches with HO. Calculation of profit on the accounts of branches maintained with HO is also the responsibility of this division. 5. CORPORATE AFFAIR DIVISION. It deals with the affairs of public and private limited companies. It includes financing of large and specialized corporations, projects. In short it manages the corporate financing. It also directly controls those branches which are designated as corporate branches. 6. CREDIT MANAGEMENT DIVISION. Main function of this division is to form credit rules and regulation in accordance with the prudential rules and regulation framed by SBP. It deals with all credit proposals submitted by advances departments of different branches and defines their limits of loans. Marketing activities about the loan is also carried out by this division. This division keeps contacts with all valuable clients and considers their view about he loans/advances procedure and tries to make the procedures as simple as possible. Action necessary for the recovery of loan is also taken by this division. 7. FINANCE AND TREASURY DIVISION.

This division manages all the assets of MCB Management of income tax and central excise duty is the function of this division. The most important function it performs is the announcement of profit rate On different schemes from time to time. 8. FOREIGN TRADE AND EXCHANGE OPERATION DIVISION. The main function of this division is to arrange foreign currency reserves, for day to day requirements of bank. It frames all rules and regulations regarding foreign exchange and L/C opening in the light of prudential rules and regulations of SBP, and instructions of Export Promotion Bureau (EPB) and Ministry of Commerce and Industry. 9. GENERAL SERVICE SECTION. This division deals with construction and maintenance of branches, purchase and maintenance of vehicles and lasing of banks property. The supply of stationery and equipments is also the responsibility of this division. 10. HUMAN RESOURCES DEVELOPMENT DIVISION. It is the most important division of HO. Dealing with the most important asset of the bank i.e Human Resource. It deals with all the personnel functions of recruitment, transfer, promotion, resignation, and separation. It settles all salary matters and matters relating to increments, bonuses and fringe benefits. It maintains records of employees and conducts performance appraisal and disciplinary actions. 11. INFORMATION MANAGEMENT DIVISION. It is fully computerized division, which provides all sorts of information to top management. This division monitors the information system of all branches and is playing s a very important role in computerization of MCB. 12. INDUSTRIAL CREDIT DIVISION. Previously it was part of Credit Management division, but now it works under the said division. It deals only with the advances to industrial units.

13.

INTERNATIONAL DIVISION. It looks after all the matters relating to foreign banks including the branches of

MCB abroad. It looks after all deals which Muslim Commercial Bank carries out with banks and financial institution of foreign countries. Management of Umra and Hajj operations is also the responsibility of this division. The management and conditions of seminars and training programs outside the country and to send its officials for the training abroad is the responsibility of this division. 14. INVESTMENT BANKING GROUP. It is the unit which under takes investment with respect to the product of the banks. It deals with capital market at national and international level and also managers syndicates in case of issuing of shares etc. 15. ISLAMIZATION DIVISION. This division was established in Zia regime, after the introduction of Islamic Banking in Pakistan. This division administers Zakat deductions, Iqra surcharge and Qarze Hasna mode of financing. This division also gives suggestions on the adoption of interest free banking in Pakistan. 16. LEGAL AFFAIR DIVISION. This division deals with the legal affairs if the back, it handles all the cases filed against someone and to defend all the cases filed against MCB. It alsi five suggestions in framing of new rules and regulations to other divisions. 17. ORGANIZATION AND METHOD DIVISION This division firms methods and procedures to be adopted by different branches. This division is also responsible for construction and review of organizational structure of MCB as a whole and the braches. The division collects data and suggestions or MCB as a whole and the branches. This division collects data and suggestions for the improvement of he organizational structure and procedures.

18.

RUPEES TRAVELER CHEQUE AND CREDIT CARD DIVISION This division is responsible fir maintaining all records to Rupees travelers

cheque and master card. 19. SPECIAL ASSETS MANAEMENT DIVISION This division is created to give suggestions and fins new ways and means to recover the stuck up loans of bank. 20. TRAINING DIVISION.

The division is responsible for arranging training fir all level of employees. It administers the staff colleges of MCB. This division keeps aware itself from the introduction of new banking techniques, and provides a full opportunity to its employees to learn what ever new.

BOARD OF DIRECTORS Mian Muhammad Mansha. Mr. S.M. Muneer DIRECTORS. 1. 2. 3. 4. 5. 6. 7. Mr. Tariq Rafi. Shaikh Mukhtar Ahmad Mr. Shahzad Saleem Mr. Raza Mansha Mr. Sarmad Amin Mian Umar Mansha Mr. Muhstaq Ahmad Malik (Nominated by the Govt: of Pakistan). (Chairman) (Vice Chairman)

PRESIDENT OF CHIEF EXECTIVE Mr. Muhammad Aftab Manzoor.

ORGANIZATIONAL CHART.

Teller

All of the above mentioned department are operating at their excellent pace under the guidance and supervision of well trained and skilled persons whose struggles have boosted the branches performance and services in the eyes of customers as well as the management.

MCB MAIN BRANCH MARDAN

Background of MCB Mardan The MCB main branch bank road Mardan is considered as most active and productive branch of the city. It was established on 7th March 1959. The bank is currently operating with an excellent deposit base and the efficient staff category which are the back bone in Improving the branch performance and upgrading of its foreign exchange department to increase banks contact with customers with in the region while the branch is headed by a Chief Manager guiding to different functions operating within the branch and a sub manager taking the responsibility of staffs efficiency working in foreign exchange department. Where as the branch is completely equipped and decorated with modern furniture and a pleasant internal atmosphere which really attracts the customers that to get feel easy during their dealing with bank specially in rush hours.

DEPARTMENTS OF BRANCH. The departments functioning at, MCB main branch bank Mardan briefed by its concerned officers during the internship are: 3.1. 3.2. 3.3. 3.4. Accounts department. Remittance department. Foreign Exchange Department. Advance department.

ACCOUNTS DEPARTMENT The function of Accounts department is to post daily activities of each and every section. Every department is sending the detailed report of daily progress to the Account Department for posting the same in the cash book, also allowed the clean cash register. The transaction then will be shifted to their appropriate heads. Accounts department deals in two types of registers. In the income ledger the transactions relating to the income of the bank are to be posted, like commission from parties, maintenance etc. all the development expenses of the bank including salaries expenses of the staff, rent expenses etc are to be posted in the expense ledger. Accounts department also maintains the deposits, and also prepares the weekly and daily statements of the affairs of the branch. It is just like a balance sheet. THE DEPOSIST SECTION. The deposits is one of the most fundamental sections of any bank. This section had been set up with a view to accept deposits from general public and which was also a central idea to create a bank. It will not wrong to say that the banking starts from this section.

FUNCTIONS OF THE SECTION The deposits section carries out many significant functions, besides providing other required facilities and information to its customers. Some of key functions are given under: OPENING NEW ACCOUNT Opening of new account is like a contract between the banker and customer, which is at MCB main branch Mardan is guided by the people under deposits. It is the preliminary function of the deposits section to open various types of account, by allotting them numbers. Types of Accounts. Keeping in view the purpose and duration for which deposits are to be kept with the deposits section in the bank, the deposits can be classified into two categories, Demand deposits and Time or Fixed Deposits. The demand deposits are ones which are payable by the bank whenever demanded y the depositors. This category includes current and savings deposits accounts. While on the other hand the deposits which are accepted by the bank under the condition that they will not be payable on demand but will be payable on a fixed or predetermined future time or date are called Time or Fixed Deposits. Following are the types of accounts the deposits department opens. i. Current Accounts These are running accounts and are opened by the individuals/businessmen, public institutions and groups, that make deposits and withdrawals frequently. The deposits and withdrawals can be made through cheques, demands drafts, pay orders, etc, drawn on the branch. As these accounts are payable whenever the depositors demand and the Bank by accepting these deposits incurs the obligation of paying all types of orders to the extent of the credit balance in the depositors accounts. These deposits represent current liabilities of the bank. So, the bank has to keep sufficient funds in its hand to meet the requirements of the depositors of these deposits.

Furthermore the businessmen, who require money frequently, open current accounts. The bank can not apply the proceeds of such expenses, fees, commission, markup etc arising out of any dealing or services with the branch. i. j. The account holder is expected to maintain a minimum balance of Rs.500/- in his account or whatever the minimum amount is prescribed for the purpose. These accounts are completely exempted from withholding tax and zakat deduction. ii. (PLS) Saving Accounts: These are also one kind of demand deposits and are kept to develop the saving sense in the citizens of the country. These accounts are opened mainly by those customers whose banking transactions are not frequent and numerous. Lower and middle income groups, small traders, professionals, farmers and other salaried classes usually make such deposits, so as to save small amounts for the small or big needs, like purchase of television, refrigerator, car or house. Funds can be deposited frequently through cash, cheques, demand drafts, pay orders, telegraphic transfers and other such instruments. But the withdrawals are restricted to twice a week. From the banks point of view a considerably percentage of such deposits can safely be invested and the Bank need not keep larger reserves to satisfy the daily demand upon such deposits. At the same time the bank pays the profit at competitive rates on such deposits in long period investments. The bank can, on the request of its depositors, pay their utility and other bills out of their accounts. The profit is not paid on these deposits. As a result the bank earns maximum profit from these kinds of accounts. Providing banking investment with the proceeds of these deposits and providing, under an agreement, overdraft facilities to the depositors are the main proposes of the bank by keeping such deposits. SALIENT FEATURE a. To maintain requirement for opening account is rs.500/b. There is no limit for maximum deposit.

c. No limit of deposits and withdrawals is defined. d. The deposits can be lodged in both local as well as foreign currencies. e. The bank collects cheques, demand drafts, etc and pay all the bills, cheques, pay orders, etc, on the behalf of its depositors. f. The current accounts can be made by: g. h. Individuals (single or jointly) Proprietorship, Proprietorship, and companies in their names. Such other groups and organization.

All cheques and other instruments should be crossed, before they are deposited for credit into account. The bank would not require any prior permission from the account holder for debiting his/her account for charging deposits, which varies from time to time usually after every six months. The objectives of the bank to keep deposits are to earn maximum profit by

investing the proceeds of the deposits, to help small savers, to fulfill their banking needs and to provide assistance in uplifting the economy. SALIENT FEATURES a. b. c. d. e. The minimum requirement for opening the account is Rs.100/The maximum limit for the deposit is Rs.200,000. The deposits can be made in both local and foreign currencies. The depositors are allowed to make as many amount withdrawals as they want, but only twice a week: The deposits can be made. f. Individuals (Single or jointly) Trusts, charitable institutions and provident funds. Such other groups and institutions.

The account statements are provided to the depositors as per their instructions.

iii.

(PLS) TERMS DEPOSITS The deposit which is acceptable by the bank under the condition that it will

not be payable on demand, but will be payable on a fixed or predetermined future time or date, is called fixed deposit. But after the islamization of banking system in 1985, its name has been changed from fixed to PLS Terms Deposit. These deposits represent such surplus funds of the depositors which are not required by them for sufficiently long periods. The bank need not to keep greater reserves in respect of such deposits. The bank can made long term investments from the credit balances of such deposits. The deposits are accepted for the range from 3 months to above. Of course, the longer the period, the higher is the rate of profit offered. People generally deposit larger amounts of money in these account. The bank can advance loan to businessmen out of these deposits because they are fixed for a particular period. But for the premature withdrawal of amount a prior notice to the bank is necessary. For the amount placed on the term deposit, the bank issues a deposit certificate (receipt), which states the amount received, the name of the depositor and the period for which the deposit is placed. Being a deposit receipt it can not be negotiated or transferred. The bank accepts these deposits with the purposes, to make minimum profit by using the proceeds of such deposits, to appeal customers by offering them a high rate of return, to meet their entire banking needs, and to help economy to grow. SALIENT FEATURE a. b. c. The minimum deposits is accepted by the bank with the sum of Rs.1000/The maximum deposit has got no limit. The deposits are accepted for the period form three months maximum to above.

d. The PLS term depositors would be eligible for sharing profit/loses with the bank at true rate determined by the bank. e. Where profits and losses would be distributed on half yearly basis. f. On the maturity, the depositors shall have an option either to draw the deposit and the amount of his profit share if any or renew the deposit. g. Incase of premature withdrawal a prior notice must be given by the depositor to the bank on which bank is eligible to maximize the profit ratio of depositor or to deduct some charges of its services.

3.2.

REMITTANCE DEPARTMENT According to concerned officer of this department, the bank promoted the

facility of remitting the funds within certain limits. Remittance department here consists of two major section. a. b. Inland remittance. Foreign remittance. a. INLAND REMITTANCE. The term inland remittance means transfer of funds from one branch too another within the country through following banking instruments. Demand draft. Telegraph transfer. Mail transfer. Pay order. It is written drawn by one branch of a bank upon another branch of the same bank or upon branch of any other bank working with in the country under special arrangement to pay certain sum of money to or to the order of specified person. MCB DEALS WITH TWO TYPES OF DD. Open DD: Open DD is one which is payable directly at the counter and there is no need of crediting to the account. Cross DD: Cross DD is one whose payment is done through account, the amount of the DD is credited to the favoring accounts and then he can transact in ordinary way through cheque. Telegraph transfer (TT):

Demand draft (DD).

Transfer of funds form one branch to another of the same bank or upon other banks under special arrangements for the payment to beneficiary, through telegram, telex, fax is allied telegraph transfer. iv. MAIL TRANSFER. Transfer of funds from one branch of the same bank inside or outside the country through mail/courier service is called. Mail transfer are same as for telegraph transfer, but if a persons account is not existed in the said branch, in this case the sending branch will shift the amount to the concerned branch and advice will be sent to the other bank in which his account exists. In suspense account the party will have to prove identity. v. PAY ORDER. A pay order is a written authorization for payment made in a receipt from issued and payable by the bank to the person named and addressed there, on this giving a proper discharge there on. Pay order can be made for the branch of same bank with in the same city. There is option to change bank (name) But that banks branch should be in the same city. The Banks commission is fixed as 5% for any amount. b. FOREIGN REMITTANCE The bank provides the facilities of foreign remittance to the domestic residential and foreigners to send money from one country to another. The bank also provides foreign exchange in the shape of travelers cheques to intending visitors. Travelers cheque is an order drawn by the bank in favor of travelers upon specific bank to pay him specific amount on demand after proper identification abroad. The travelers first pay the amount of money to the issuing bank, which is responsible to pay the amount to the foreign bank upon which it is drawn.

Organizational Chart of MCB Main Branch Mardan

Teller

3.4.

FOREIGN EXCHANGE DEPARTMENT Foreign exchange department plays a vital role in the international trade of

any country. By realizing so, MCB has also concentrated and improved, well its foreign exchange operation as for the efficiency of its employees and customers satisfaction is concerned. Under foreign trade operations normal transaction starts with the sales contract where by the buyer tenders value and the seller goods. There is a degree of risk involved in the exchange of goods against payment, if geographic distance increase. The problem is furthered by the fact that buyer and seller belong to two different countries. Thus in the first place they dont know each other and in second place they cannot ascertain the risk involved and finally the problems is worsened by the fact that laws of the land differ in each country. Thus in the ordinary course of business, following four forms of transactions can take place in international trade: a. b. c. d. a. Advance payment. Open account. Documentary collection. Documentary crudity. ADVANCE PAYMENT In advance payment, the payments is made by the importer first and goods are received later on. b. on. OPEN ACCOUNT In the open account exporter sends the goods first and payment is made later

c.

DOCUMENTARY COLLECTILON In the documentary collection, the remitting back sends the documents and the

importer bank delivers documents against payment. It may be dawn under sight or acceptance basis. d. DOCUMENTARY CREDIT. Documentary Credit reduces the risk attached to either importer or exporter hence an L/C (Letter of credit) is established by the issuing back on the request of importer and the L/C is sent to the advising bank in the exporter country which then collects the documents and sends them to the issuing bank provided they confirm to the terms and conditions of the credit which are then tendered by issuing bank of payment acceptance as per terms of the L/C. The Muslim Commercial Bank Road Mardan foreign exchange Department is divided into the following sections: i. ii. iii. iv. i. Licensing section. Import section. Foreign Exchange Remittance Section. Foreign currency account section. Licensing Section. Licensing section it working under chief controller of imports. The main function of this section is to grant the registration to importers. ii. Imports. Imports can be defined as bringing any commodity good into a country from out side the country through any way or channel. In Pakistan imports are regulated by Ministry of Commerce, under the export and import act 1950 and the notification issue there under: All the imports are done through letter of Credit L/C which is an understanding or a letter of guarantee issued to the exporter by the bank on behalf of

importer says defaulter the bank will pay and in case the exporter do not follow the terms and conditions of the L/C the bank will be liable to the importer. TYPES OF LETER OF CREDIT An irrevocable letter of Credit can not be altered or canceled without the consent of all the parties, i.e. the opener, the opening bank, the confirming bank and the beneficiary. This credit becomes confirmed as soon as the advising bank at the request of opening bank confirm the credit to the beneficiary. In this way the exports gets the double satisfaction of receiving the payment for goods from the confirming bank, provided he submits the shipping documents strictly in terms of credit. a. Revocable Letter of Credit This letter can be modified or canceled by the issuing bank at any time without any obligation or its part. This letter is usually not acceptable to the business men. b. Confirmed The exporters bank which confirms the letter of credit takes the liability of paying exporters in case the issuing bank fails to make payment to the exporter. c. Unconfirmed L/C Unconfirmed letter of credit, the bank through whom the credit is negotiated does not give any guarantee to the exporter that the bills drawn will be honored by the issuing bank. From exporters point of view the confirmed irrevocable L/C is the best form of receiving payment. d. Clean L/C There these are no conditions attached to bill and the issuing banks makes payment up to the limit credit, the letter is called a Clean L/C.

OPENING OF LETTER OF CREDIT The mechanism of financing international through LC is quite simple. The importer needing some foreign goods, will first of all contact the exporter outside the country or their agents working here in Pakistan. They both will sign a contact which will contain all the necessary information about the goods to be imported. The importer then will apply for the issuance of letter of credit through a form, this form contains all the necessary information like the description of merchandise, port of shipment, port of unloading and quality and quantity of the commodity. Following documents are required for the issuance of LC. a. b. c. d. e. 3. Application for L.C through a form. Proforma invoice of sending of foreign company. Membership certificate of chamber of commerce or association. Issuance certificate. IBS charge form.

REMITTANCES IN FOREIGN EXCHANGE MCB provides the opportunity to his customers to transfer his money from

one country to another, the customer must have an account in foreign currency in the bank. MCB provides all modes of foreign remittance similar to local remittances i.e. FDD, FTT, FMT. 4. FOREIGN CURRENCY ACCOUNT SECTION The section deals in foreign currency accounts. Foreign currency account scheme was started from April 1991 in Muslim Commercial Bank under the name of Prime Currency Account. The account can be opened in personal name or joint names by Pakistan residents or non-residents or non-residents foreign Nationals. Foreign currency account can be opened in four global currencies i.e. US Dollar, Pound Sterling, Japanees Yen and Deutsche Mark.

Travelers cheques and foreign currency notes can also be issued to the holders of the personal and joint account. Remittances from abroad. Travelers cheques foreign currency notes and foreign exchange generated by enchasing (F.E.B.Cs). Foreign Bearer Certificate may be deposited in these accounts. Rupee loan facility is also available against this account. The foreign currency account holder can draw any amount of foreign exchange from foreign currency account and transfer or remit the amount freely to any part of the World without any restrictions. The restrictions imposed by State Bank of Pakistan for the opening of Foreign Currency Account in absence of passports, work permit and resident visa have been withdrawn. The account will be restriction free. The prime currency scheme is exempted from all form of taxes including income tax, wealth tax and zakat dedications. The return on the scheme is up to 10% pe rannum, payable in foreign currency only.

a.

MCB FOREIGN CURRENCY ACCOUNTS DETAILS (PRIME CURRENCY ACCOUTNS)

Types. i. ii. Currencies a. b. c. d. US DOLLAR. POUND STERLING. DEUTSCHE MARK. JAPANEES YEN. Saving. Current.

Who can open these accounts? All resident Pakistanis. All non-resident Pakistanis. Foreign companies. Charitable trusts. Resident Companies locally incorporated.

Minimum Amount of Deposit US DOLLAR POUNDS STERLING. JAPANEES YEN. DEUTSCHE MARK. 1000. 500. 150,000. 2000.

Other Opportunities Free from taxation. Free from deduction of Zakat. Free from any sort of questioning regarding the source of funds. Free from restriction of remittance.

b.

DOLLAR KHUSAHLI ACCOUNT. Long term investment in foreign exchange was not so attractive, so MCB

introduced this scheme in Nov. 1993, to attract customer to deposit foreign currency even for short time. The minimum amount for opening of this account is USS 100/- or equivalent in other acceptable currencies. The profit on this account is given on daily basis. Who can open this account. i. ii. c. All resident Pakistanis. Free from deduction of Zakat.

PRIME CURRENCY FIXED DEPOSIT RECEIPTS. This scheme was introduced in 16th Oct, 1991. the minimum amount of

investment is USS 200 or equivalent in other acceptable currencies. The time period for this scheme is from 3 to 36 months. Who can open this account scheme. i. ii. iii. iv. All resident Pakistanis. All Non resident Pakistanis. Charitable trusts. Firms and companies.

Opportunities. i. ii. 3.5. Free from taxation. Free from Zakat. ADVANCES DEPARTMENT As told by the concerned officers of this department. Advances department is lending loans to individuals, Companies, Corporations etc for different purposes. It provides loans for agricultural and industrial development. Its provides the following finances.

1.

RUNNING FINANCE It is provided only to the current account holder, zonal office can sanction the

loan up to 3 lakes. General Manager of the circle has the power to sanction the loan up to 1 million, beyond this limit the head office will be sanctioning authority. The loan can be granted on personal guarantee, or any thing tangible which is acceptable to the bank like stock property must be ensured by the party. The mark up will be charged as 51 paisa per thousand on daily product basis. The yearly interest rate is 18.2% the repayment of the loan will be made from time to time. In running finance the loan up to 3 lakes is called commercial loan beyond this, the loan is called general loan. 2. DEMAND FINANCE. The rules in demand finance are same as for running finance. PLS Account holder can also take the loan after meeting with all the requirements and standard set by the bank for financing. The repayment of the loan will be made in monthly equal installments. The mark up will be charged on the expiry of the scheduled date of loan. 3. STAFF FINANCE. Where MCB also permits to its staff members for getting loans when needed for the following purpose. a. House Building. The employee having served for 5 years in the bank, either clerk or an officer will be granted 80 basic pays as a loan for building house. If the granted loan exceed Rs. 160,000 the 10% interest rate will be charged. b. Motor Cycle Car, and Personal Vehicle. The car loan may be granted to those employees whose minimum basic pay is at least Rs. 10,000 and have served for at least 3 years. The employee will be granted 18 basic pays as loan. If the amount is

exceeding Rs. 160,000 the 10% interest rate will be charged. The maximum Motor Cycle Loan is 56,000. In this case the officers of above Grade will pay 5% interest. c. Over Drafting (OD). MCB gives the facility of drawing more than the balance to the reliable and established customer, by over drafting we mean that drawing more than the balance held with MCB. After over drafting the bank will show debit balance of the customer, and will charge interest on the amount over drawn. This type of facility is provided occasionally and for short term. There are three types of over drafts. 1. Temporary Overdrafts. This type of facility is totally under direction of the branch and requires no security, but the limit is fixed by the State Bank of Pakistan, MCB can arrange over draft upto 25,000 rupees. 2. Secured over draft. It is a continues facility and the branch can not provide it under his own discretion. Credit Management Division of Head Office sanction is the sanctioning authority. 3. Clean over Draft. It is a continues facility and its limit is fixed by the State Bank of Pakistan. No security is required in this case. 4. Finance Against Imported Merchandise (FIM). It is a short term facility provided to such importers who are not in a position of paying and clearing documents due to un availability to funds for the time being or lack of finance against L.C.

In such cases the importer makes arrangements with MCB, the bank pledge the imported goods and pays the obligations against L.C. When the importer pays the amount to the bank he will get goods.

ANALYSIS General analysis MCB today represents a bank that has grown with time and experience. At present it is a major financial institution in scope and size. it symbolizes a fully grown tree, ever green, strong and firmly rooted. NET PROFIT The Earning After Taxation (EAT) in 2001 is Rs.999.2 million as compares to Rs.322.8 million in 2000 showing an increase of 67%. As after privatization of MCB in 1991 the dividend of 15% was declared last year, which is a matter of pleasure for management to state that they have announced an increased dividend of 17.5% in the year 2001. RESERVE FUND/EQUITY A sum of Rs.79.8 million has been transferred to Statutory Reserve this year, raising the total reserves to Rs.1.796.6 million at the end of 2001, from Rs.1.1716.8 million as last year. DEPOSITS Deposits with the Bank at the end of year 2001 stood at Rs. 154544 Million as compared to Rs.135990 Million in 2000. It is clear that he depositors have complete faith in MCB, which is evident from the fact that in the very first month of launching the MCB Mall-a-Mall Rupee term Deposit Certificates Scheme attracted Rs.7.6. billion. ADVANCES Total advances at the 2001 were Rs. 76586Million as compared to Rs.86359 Million in 2000 showing a fall of 2.3%. This is mainly due to the slowing down of economy following the events described above, as well as, in keeping with MCBs policy of prudent lending. INVESTMENTS Investments of MCB has also been slightly declined by 0.2% because the current policy of the management is to dispose off Investment in shares of listed and unlisted companies at the best possible prices.

RECOVERIES The recovery position in the year 2001 was most encouraging. Bank recovered

Rs. 104 billion in cash. The bank also disposed off properties which were acquired in settlement of accounts. Where the recovery of loans outstanding has become the priority in 2000. FOREIGN TRADE The bank conducted import business during the year 2001 amounting to Rs. 54.00 billion as compared to Rs.66.9 billion in 2000. The export business slightly improved to Rs. 36.9 billion from Rs.35.1 billion in 2000. Home remittances declined to Rs. 16.7 billion from 30.6 billion. The decline in home remittances business was due to freezing of Foreign Currency Accounts, which has effected the confidence of the Pakistanies working overseas. RUPEE TRAVELLERS CHEQUE Muslim Commercial Bank who are pioneers of Rupee Travelers Cheque in Pakistan maintained their leadership position and sales recovered during the year 2001 were Rs. 67 billion an increased of 57% over the previous year. HUMAN RESOURCES To induct fresh blood in the bank and cater for future needs, a new batch of management trainees has been selected strictly on merit. After through training these officers have been inducted in various divisions and branches. Attention is paid to upgrade operational and managerial skills of staff and a number of professional courses are conducted at MCB staff and Training Institutes during the year 2001. the management has also continued the program of hiring of some senior level Banking Executives from the market, whenever necessary. AUTOMATION A Y2K program was put into place ensuring that by third quarter 99 all systems are Y2K compliant. The progress is as per plan. At the end of 2001, 75 branches were online and 241 branches had been computerized with multi terminal systems. Where as 91 ATMs are in operation and over 60,000 ATM Cards had been issued up till mid 99. The commercial cities of Faisalabad, Multan and Hyderabad

have also been added of MCB ATM Network. Where plans are in hand for expanding online network to major cities and covering all the four provinces thereby providing the ATM network true national coverage and maintaining the leadership in this service. SOCIAL SECTOR The bank is actively participating in Prime Minister Self Employment Scheme (SES). The applications revived from various applicants are being processed on merit and disposed off as quickly as possible. FOREIGN OPERATIONS The banks foreign operations in Bangladeshand Sri Lanka continue to remain profitable. In 1999, the bank opened its third branch in Sri Lanka at Maradana a suburb of Colombo. ACCOUNTS POSITION OF MCB The total number of accounts till 2001 were decreased from 5062364 to 4392164. BRANCHES OF THE MCB The total number of MCB branches in Pakistan and abroad has reached to 1061 now from 1210 in 2000. The difference exists due to the closing of few extra branches, which were considered non profitable. EMPLOYMENT POSITION The number of employees in 2001 has also been declined to 11614 in against of 12133 last year ANALYSIS OF ORGANISATION STRUCTURE OF MCB A) MANAGENMENT SPAN: In the opinion of Harold Koontz "a manager can manage eight to fifteen at the lower level and four to eight at higher level". In MCB, the branch manager is supervising 37 persons, in which one is executive. 23 officers and 13 are clerical and non-clerical staff. This structure leads to delegation of authority, clear-cut policies and efficient subordinates. But the disadvantage or problems in this structure are the following. I) Group Cohesiveness & Group dynamics. Group dynamics are concerned with the integration and forces among group members in a social situation. In such a large organization

problems of groups are created and sub groups' emerge The whole organization atmosphere is disturbed and it create problems in the smooth functioning of organization. 3) Status and Authority Problem. In flat structure the problem of status and authority is created. Especially the authority relationship among officers and clerical staff. 4 Non of the above clerical staff do not work properly. 4) Decision-Making. In this structure decision making is very difficult. It often results in conflicts and Oppositions. 5). Control. In wide span, control is not effective. It is very difficult to control so many people at a time by one person, e.g. when the chief manager is not the chair, the .employees usually do not work properly. They start chatting and doing their private works.' B) INDUSTRIAL CREDIT DIVISION. Departmention by territory is at the lowest level. For this purpose, MCB has established General Manager officers. Regional Manager offices. But the expenditure on these offices is extra burden on the revenue of MCB, A huge amount is annually spent on the maintance of these office salaries of staff, furniture and equipment etc. Q COMMUNICATION. Communication problem in flat structure is very complicated and results in serious problems. In MCB communication and information . flows is not according to standard. Usually vouchers are not communicated properly. T.T and D,D to the accounts holder account are not recorded properly. D) DELEGATION OF AUTHORITY. In. MCB delegation of authority is very limited, MCB to a great extent is a centralized bank. Manager has very limited authority especially in cases of advances. He has to take the approval of GM and R.M. In branch the officers has limited authority. They have to take approval of chief manager even in case of minor issue. These crate problems when the manager is not present in his office, the customers have to wait for hours. This discourages both customers and officers because they have to suffer a lot. In newly established ban there is comparatively more delegation of authority as compared to MCB, that is why their deposits and business is improving day by day. E) AUTHORITY AND RESPONSIBILIT RELATIONSHIP. One of the purpose of organization is to show the hierarchy of position. For this authority and responsibility must be structured in a' systematic manner. In MCB authority and. responsibility is set on scalar principle. In other words there is top to bottom flow of authority. In functional dept, head of the dept makes all the decisions and he is responsible

for its success or failure. He is not responsible for the success or failure of the entire organization. Only the Chief executives of the organization is responsible for the success or failure of organization. WORKING CONDITIONS. Working conditions are not favorable in MCB Mardan branch. There is shortage of space, which creates hurdles in .the free movement of the staff and customers. furniture neither sufficient nor in good conditions. There is not a proper setting arrangement for the customers. Very little attention is paid for the maintance of the branch. Lights are very dim, so when one enters in the branch, he feels as if he has entered in a dared cell.

SWOT ANALYSIS OF MCB

MCB AT ITS STRENGTHS WEAKNESSES OPPORTUNITIES AND THREATS
5.1. MCB AT ITS STRENGTH WEAKNESSES OPPORTUNITIES AND THREATS. STRENGTH: The largest private sector bank in Pakistan with a network of 1054 domestic, six foreign branches. Experience of operations, as the bank was incorporated/established in 1947. Fist bank to privatized which has now become the leader in market with largest on line ATM network in the country. Banks emphasis on consumer banking by providing them with innovative saving schemes, products and services suiting best to their life style. Extension and improvement in services to domestic as well as foreign customers.

Attractive and higher interest rates and prizes on various accounts/products. Best and optional policies and attractive compensation packages for employees, which has really improved their commitment dedication and hard work towards the accomplishment of banks objectives.

Human resource development and employment of technology towards modern development. 24 hours cash access and safe payment products of high value transaction. MCB instant financing products for customers warning instant loan facilities at MCB branches. Pioneer in introduction of MCB master card with photograph and rupee travelers cheque (RTC) which minimize the degree of friskiness.

Attention and sensitivity to competition prevailing in the country. An efficient and experienced private management group also involved in other interests like; textile and cement industries. Easy access to the customers at their residential localities through a high number of branches.

WEAKNESS. also. Slow down in advances growth in the short term as MCB focuses on quality customers in the market. Customers having accounts with small amounts are not given same services and dealing given to those with high accounts. No of branches is decreasing every year, due to that employees at the low profitable branches feel unsecured to their jobs. Management group is also having huge investments in other interest like: Textile and cement industries, which may divided their attention and resources

Political pressures from vested interest group. No transparent system of recruitment and selection. OPPORTUNITIES Due To largest ATM network, MCB can expand its 24 hours cash facilities to other cities of the country in order to meet the growing market demand. Increasing focus/target on different types of customers, MCB can open women branches specially in those areas where women class want to get involved but couldnt due to environmental restrictions. Growing policies of government on business and commerce sector provides MCB and opportunity to efficiently meet with the business peoples requirements of instant cash and financing facilities. Customers feed back on different products and accounts has really improved the bank performance and encouraged the atmosphere for other future policies. MCB also has an opportunity to expand its new technological advancement like: Tele bank and internet banking facilities in order to serve the customers more efficiently. Due to efficient and experienced management group, MCB can also improve well and expand its foreign operation successfully. THREATS Increasing number of foreign banks in the country. Privatization of other domestic banks. Highly specialized and attractive services provided by foreign banks to their customers. Un consistency in governments policies regarding to business and economic sector. Growing global technological advancement.

Strict regulations by the government over credit facilities to the customers as well as to meet the prudential regulations. Loss of confidence of overseas prospects/customers due to freesing of accounts.

From SWOT analysis we can conclude that the management of the Bank should adopt systematic planning for the Bank growth, introduce new schemes like Mall-a-Mall certificate from this scheme MCB received Rs. 13 billion deposit from the customers, this is a great achievement for the bank. MCB have more customers as compare to other banks, if they given proper attention to every customer then in few year it will be the leading bank of the country.

5.3.

CRITICAL ANALYSIS. Critical analysis is the most important part of the report, because it depends on the author, only a good, keen and comprehensive analysis leads to good recommendations for the improvement of the existing conditions, therefore, in MCB I have observed mush of thing and have analysis them to the extreme of my effort MCB faces the following problems. 1. The main objective of MCB is to provide improved services to customers, but now the bank seem to fail to achieve its objective, its lengthy procedures as compared to newly established private banks causes problems for customers. 2. 3. MCB being an established bank now does not fell so much competition in the market which in long run will not be favorable. MCB is not keeping pace with the changing market environment, the main reason for which is lack of new policies, and also the existing policies remain unchanged for a long period of time. 4. 5. MCB being a so established bank upto now used the traditional procedure and have not adopted a lot the modern banking techniques. Top level management is having a lot of influence in all decision making, and they always do not consult the lower level management will not have adequate data about the problems organize at lower level. 6. 7. Sometimes in MCB there arise the overlapping of functions e.g HRD and training division of HO overlap some of each other functions. In advances department the process of loan sanctioning is very lengthy, which affect the customer, some time a valuable customer in big need of money does not get loan in time only due to this lengthy process.

RECOMMENDATIONS
1. 2. 3. 4. 5. 6. MCB should take care while conducting marketing research and adopting new policies and procedures for getting its marketing share regarding advances. The existing policies should be reviewed and there should be permanent revision of these policies from time to time. MCB should adopt once again aggressive strategy because the number of its competitors is increasing day by day. There should be clear cut delegation of authority and responsibility. All the departmental head should be given full authority and responsibility. Since in MCB there is overlapping of functions, therefore each department should be functionally defined, and all those departments should be amalgamated whose functions are similar, to reduce cost. 7. 8. 9. 10. The communication system of the bank should be improved by installing new equipments. Co-ordination can be improved among different department by adopting proper channels of communication. Proper survey and research should be conducted before the introduction of any new schemes, i.e. cost and benefit analysis should be viewed. A secure system for transfer of money should be established and with out the receipt of legal document no payment should be made. The test key codes should be revised from time to time and should be kept secret. 11. 12. 13. 14. While credit extension prudential regulations should be kept under consideration. Loan procedure should not be cumbersome and should be made easy, so as to case the customers. Prolonged documentation should be avoided. Proper sector wise loan should be disbursed in order that every sector should get appropriate portion and all these sectors should simultaneously develop. 15.In order to mitigate inefficiency, the management should adopt some management principles i.e proper job, clear cut division of work should be introduced. 14) the advances department should be made free from political influence in

Order to enable the deserving persons to get the loan. 15) The bank should prefer tangible securities before advancing loan. 16) the bank should take care that the loan which it has advanced is being utilized for the purpose for which it is advanced. 17) The process of bill collection should be made faster, by in time delivery and receipt of the credit claims. 18) Foreign exchange should be equipped with modem ways, so as t receive foreign currency rate with in due lime. 19) Recruitment in the bank should be made purely on merit basis, and the HRD should be fully free from any influence of higher authority and staff union in conduction of tests and in the selection of candidates. 20) There should be proper training (Up todate) for newly selected employees. 21) There should be refresher courses for officers then to tackle marketing complexities. 22) MCB should also send employees for training and seminar arranged by other banks, so that they can compare the procedures adopted by other bank, and adopt what ever better and new. 23) Salaries should commensurate with job, for this purpose a proper job analysis system should be introduced. . 24) On passing IBP MC13 give only cash prize and advance increments, it should be replaced by promotion so that the new highly qualified person can get promotion. 25) There should be interdepartmental transfer of employees, so that they should know about all departments, in this way a proper coordination could be achieved. 26) Transfer for punishment purpose should be avoided because it not only disturbs the prevailing branch conditions but it also effects employee's efficiency. More over the transfer should be made fee from union influence. 27) Before transferring a person to a place, his qualification and experience should be matched with responsibilities of the post.

28) In MCB on President and General Secretary of Staff Union are exempted from duties, but all those who re the members of union do not attend the bank in time, so the responsibilities of these persons should be clearly defined for which they will be asked. .

biBLIOGRAPHY.
1. Asrar, H. Siddiqi, Practice and law of Banking in Pakistan. 5th ed, Royal Book Company, Karachi, 1993. 2. Allen Louis A, Management and Organizaiton. Ist ed, Tokyo McGraw Hill, Kogakusha Ltd. 3. 4. 5. 6. 7. 8. 9. 10. MCB Annual Report, 2001. MCB ATM brochures, 1999. MCB Master Card Brochure. Banking Products and Services of MCB, 1999. MCB Capital Growth Scheme brochure, Yaqeen Art Press. MCB MAHANA KHUSHALI Scheme brochure, Yaqeen Art Press. MCB RTC Brohure 1998. MCB Mall-a-Mall Brochure.

INTERNSHIP REPORT
ON

MUSLIM COMMERCIAL BANK Main Branch, MARDAN

BY

AHMAD SHAH
B.Sc (H) SESSION 1999-2002

Institute of management studies University of Peshawar

With Blessing of Almighty Allah and Love and Respect for My dear parents for their Valuable efforts and contribution in making my Education a success.

Table of Contents
Chapter No.
1.

Title
PREFACE ACKNOWLEDGEMENT INTRODCUTION MCB at Glance. MCB Vision Historical Background of Banking in Pakistan. An Overview of MCB. Nationalization of MCB. Privatization of MCB. MCB today and its progress. MCB Different Products and Schemes MANAGEMENT AND ORGANIZATION. Management and Organization. MCB Re-Organization. MCB corporate and consumers Banking. MCB investment Banking group. Departmentation in MCB. Board of Directors. Organizational Chart. DEPARTMENT OF MCB MAIN BRANCH MARDAN SECTION-1 Historical Development of MCB Main Branch Mardan. Accounts Department of MCB Main Branch Mardan. Remittance department of MCB Main Branch Mardan. Organizational chart of MCB Main Branch Mardan. SECTION-2 Foreign Exchange Department of MCB Main Branch Mardan. Advances department of MCB Main Branch Mardan. SWOT ANALYSIS. CRITICAL ANALAYSIS RECOMONENDATIONS. BIBLIOGRAPHY.

Page No.
1 3 3 4 5 6 6 6 10 15 15 16 16 18 19 24 25 27 27 28 34 36 37 43 47 51 52 53

2.

3.

4.

PREFACE.
Report writing is the last step of Internship Program. It is very important, because without writing report the whole training process will end in smoke. Computation and purification of data become fruitful when it comes in the shape of information. It is very hard to convert data into information, it requires wide span of time, but in this short time, I collected the rough data and shaped this report. Since banking is a wide spread profession, it is impossible to jot out each and every function, so I highlighted few functions of banking. Being a student of Business Administration I mostly emphasized on functions of management, but due to shortage of time only touching become possible. I mostly avoided law and rules and put light on practice. The process of motivation and communication also slightly discussed, but these are only observed. This report is consisting of few chapters, like management organization, departments of MCB, functions like deposits, remittances, improvement in services after privatization and other general banking items. Advances are also discussed, since advances are wide spread technical subject, a bet documentation is undertaken. The importance of foreign exchange can never be avoided I discussed a few aspects of foreign currency deposits. Muslim Commercial Bank is financial commercial institution. It works for betterment of public economy. I discussed its contribution toward countrys development and growth. There are so much stones which are lift unturned. Since this is not a perfect report, so positive criticism are welcomed. Mansoor Ihsan MBA (Final) Session 2000-2002.

ACKNOWLEDGMENT
Most humbly I express my thanks to the supreme Ruler, the ALLAH Almighty, the most Benevolent, ever Merciful, Whose divine helped me to complete my Internship and this report Successfully. Then I am thankful to the Department of Business Administration which provide me such a great opportunity of practical work. In order to enhance my knowledge about day to day working of the Banking. I am also thankful to my advisor Mr.Naveed, who supervised my writing activity. The staff in the MCB Main Branch Mardan was very cooperative, they helped me a lot in my work. I am specially thanked full to Mr.fazli Rabi who guides me and helped me during my internship program. I am also thankful to all the staff of MCB Main Branch Mardan who co-operated me.

Ahmad shah B.Sc (Hl) Session (1999-2002) University of Peshawar .

CHAPTER # 1
INTRODCUTION MCB at Glance. MCB Vision Objectives of MCB Historical Background of Banking in Pakistan. An Overview of MCB. Nationalization of MCB. Privatization of MCB. MCB today and its progress. MCB Different Products and Schemes Net Profit Reserve Fund/Equity Deposits Advances Investments Recoveries Foreign Trade Rupee Travelers Cheque Human Resources Automation Social Sector Foreign Operations Accounts Position of MCB Branches of MCB Employment Position MCB Products and Different Schemes. Capital growth certificate Scheme Mahana Khushali Scheme Prime Currency Scheme Saving 365 Export promotion Scheme MCB Rupee travellers cheques HAJ Mubarak Savings Scheme MCB Mall-A-Mall Rupee Deposit Certificate MCB (ATMs) 24 Hours Cash MCB Master Card

CHAPTER # 2
Management and Organization. MCB Re-Organization. MCB corporate and consumers Banking. MCB investment Banking group. Capital Markets. Corporate Finance Project Finance Departmentation in MCB. Agriculture Division Audit Division Business Development Marketing Division. Central Accounts Division. Corporate Affair Division. Credit Management Division. Finance and Treasury Division. Foreign Trade and Exchange Operation Division. General Service Section. Human Resources Division. Information Management Division. Industrial Credit Division. International Division. Investment Banking Group Islamization Division. Legal Affair Division. Organization and Method Division. Rupees Traveler cheque and Credit card Division. Special Assets Management Division. Training Division. Board of Directors Organizational Chart.

CHAPTER # 3
SECTION-1 MCB Main Branch Mardan. Departments of MCB Main Branch Mardan. Accounts Department The Deposit Section Functions of the section. Opening new account Types of Accounts Current Accounts (PLS) Saving Accounts (PLS) Terms Deposits Remittance Department In land Remittance Foreign Remittance Organizational Chart of MCB main Branch Mardan SECTION-2 Foreign Exchange Department Advances payment Open Account Documentary Collection Advance Department Running Finance Demand Finance Staff Finance

CHAPTER # 4

SOWT Analysis of MCB MCB at Its Strength, Weaknesses, Opportunities and Threats.

Critical Analysis. Recommendations Bibliography.