University of Central Punjab

Internship Report on MCB, RMG Dept.

Course: Internship Report: Su !itted ": %ni ID: Su !ission Date: B S Hons. Applied Accounting MCB Bank Ltd Gohar #ouro$e L&S&'BSAA('&) &* Septe! er ('&&

Preface:
It is the requirement of the Bs Applied Accounting course University of Central Punjab, that all students of BSAA have to spend Si !ee"s in any organi#ation to get practical e posure and to get familiari#ed !ith the !ays to live in the organi#ational environment !hich is dramatically different from the educational environment$ %hat si !ee"s period called &Internship Period &, if spent properly and sincerely, enables the students to be more confident, more "no!ledgeable, more responsible and, above all, more committed to its !or" in the practical field$ I have also been assigned to do internship of si !ee"s period in Alfalah ban" , 'ain Branch (ujran!ala$ It has enabled me to understand the practical scenario and sharpen our decision ma"ing po!er and utili#ing the resources in an effective manner, so that our resources generate ma imum profit$ In preparing this report, I have put all of my best efforts and tried my level best to give ma imum "no!ledge$ )espite of my all the coherent efforts, I do believe that there !ill al!ays be a room for improvement in the efforts of learner li"e me$

Gohar Nouroze

Acknowledgement
Person is not a perfect in all the conte ts of his life, *e has a limited mind and mind thin"ing approaches$ It is the guidance from Almighty Allah that sho!s the man light in the dar"ness and the person find his !ay in the light$ +ithout this helping light, person is nothing but a helpless creation$ %he teaching of the *oly Prophet 'uhammad ,PBU*- !ere also the continuous source of guidance for me especially his order of getting "no!ledge and fulfilling once duty honestly !as "ey motivation force for me$ I also !ant to sho! my gratitude to my loving parents and humble teachers !ho ma"e me able to be at this position$ and as they appreciate me to do this$ And I !ould li"e to than"s 'r$ .i#!an Chughtai , 'r$ Shahid *assan, 'r$ +asif %ahir, 'r$ /arhaj 0a#i, 'r$ Shahba# Bo"hari and 'r$ Bilal %ahir especially as they helped me remar"ably for this project$

EXECUTIVE SUMMARY
%his term report is an essential part of the course 1rgani#ational behavior because through this, students come to "no! the real difference bet!een theory and practice and they are also introduced to the outside business !orld$ An important requirement of this study program is to compile a report about the activities of that organi#ation in !hich the student has studied the organi#ation behavior$

I survey organi#ational behavior in 'CB BA23 4I'I%5)$ %his report provided me great opportunity to equip myself !ith "no!ledge, techniques, application and tools used in an organi#ation$

%he report covers various features of "no!ledge$ It starts !ith the brief history of Ban", covers current status, mission statement, vision statement, the ban" position today and in the past decade, hierarchy etc$

%he major portion of this report e plains the activities of .is" 'anagement and !hat is ris" and !hat is 'ar"et ris" 'anagement and my learning e perience elaborates ho! much these visits !ere useful for me$

Concluding the report there are certain recommendations and suggestions for the ban" in order to have improvements$

%he source of information for the preparation of report includes the !ritten notes e tracts from ban"ing literature and verbal discussion !ith ban" officials$

I hope this report !ill help in understanding various aspects and features of 'CB BA23 4%)$ And !ill be equally important for business administration students and persons ma"ing future ban"ing$

TABLE OF CONTENTS
DESCRIPTION +rgani$ational Background,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,Mission . /ision state!ent,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,0 A1ards . Accolades,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,&' Core /alues,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,&& + 2ecti3es o4 MCB,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,&( +rgani$ation 5ro4ile,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,&6 Manage!ent Le3el,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,&6 Board o4 Directors,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,&* +rgani$ational Hierarch" o4 MCB,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,&7 +rgani$ational Setup o4 MCB,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,&8 Branch #et1ork,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,&5attern o4 Share Holdings,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,&) +rgani$ational Structure o4 MCB,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,&0 5roducts o4 MCB Bank ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,(' 5olicies,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,(7 Risk Manage!ent Group,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,(0 Managing credit risk,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,6& Managing Market Risk,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,6* Managing Li9uidit" Risk,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,6) PAGE

DESCRIPTION

PAGE

Managing +perational Risk,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,*' :inancial Anal"sis o4 MCB,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,*( Ratio Anal"sis o4 MCB,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,*8 S;+< Anal"sis,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,*0 5=S< Anal"sis and =n3iron!ental Scan,,,,,,,,,,,,,,,,,,,,,,7( Conclusion,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,7* Suggestion,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,77 Glossar",,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,7Re4erences,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,70 Cop" Right,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,8'

ORGANIZATIONAL BACKGROUND
Brie4 Histor" o4 MCB BA#> LIMI<=D 6

Before separation of Indo Pa", the need for more 'uslim ban"s !as felt$ And 'uslims having strong financial capacity !ere thin"ing to invest in this sector as !ell$ %his !as the idea !hich provided the !ay for setting up 'US4I' C1''5.CIA4 BA23 4td "no!n as 'CB$ %his !as the third 'uslim ban" in the subcontinent$

Histor"

%his ban" !as incorporated under companies6 act 7879 on 8th :uly, 78;< ,just before partition- at Calcutta$ But due to changing scenario of the region, the certificate of incorporation !as issued on &-th August, &0*) !ith a delay of almost 7 year= the certificate !as issued at Chitagong$ %he first *ead office of the company !as established at )acca and 'r$ ($'$ Adamjee !as appointed its first chairman$ It !as incorporated !ith an authori#ed capital of .s$ 7> million$ After some time the registered office of the company !as shifted to 3arachi on August ?9rd, 78>@ through a special resolution, no! recently the *ead office of 'CB has been transferred to Islamabad in :uly, 7888 and no! *ead office is termed as Principle 1ffice$ %his institute !as nationali#ed !ith other on :anuary 7st, 78<;$ At that time it had >A@ branches and deposits amounting to .s$ 7,@;A million$

5RI/A<I?A<I+#

+hen privati#ation policy !as announced in 788A, 'CB !as the first to be privati#ed upon recommendations of +orld Ban" and I'/$ %he reason for this choice !as the better profitability condition of the organi#ation and less ris"y credit portfolio !hich madeBB it a good choice for investors$ 1n April Cth, 7887, the management control !as handed over to 2ational (roup ,the highest bidders-$ Initially only ?@D of shares !ere sold to private sector at .s$ >@ per share$

A:<=R 5RI/A<I?A<I+#

%en years after privati#ation, 'CB is no! in a consolidation stage designed to loc" in the gains made in recent years and prepare the ground!or" for future gro!th$ %he ban" has
7

restructured its asset portfolio and rationali#ed the cost structure in order to remain a lo! cost producer$ After privati#ation, the gro!th in every department of the ban" has been observed$ /ollo!ing are some "ey developmentsE 4aunching of different deposit schemes to increase saving level$ Increased participation on foreign trade$ Betterment of branches and staff service level$ Introduction of .upee %raveler Cheques F Photo Credit Card for the first time in Pa"istan$

MCB BA#> <+DA@:

'CB today, represents a ban" that has gro!n !ith time and e perience$ A major financial institution, in scope and si#e, it symboli#es a fully gro!ing tree evergreen, strong, and firmly rooted$ 'CB is one of the leading ban"s of Pa"istan !ith a deposit base of about .s$ ?CA billion and total assets of around .s$9AA billion$ %he Ban" has a customer base of appro imately ; million, a nation!ide distribution net!or" of over 7,AAA branches and over ;>A A%'s in the mar"et$ )uring the last fifteen years, the Ban" has concentrated on gro!th through improving service quality, investment in technology and people, utili#ing its e tensive branch net!or", developing a large and stable deposit base$

S+CIAL S=C<+R:

%he ban" activity participating in the Prime 'inister selfGemployment Scheme$ %he application received from various applicants is being processed on merit and disposed off as quic"ly as possible$

!ISSION " #ISION STATE!ENT

/ision State!ent To be the leading financial provider, partnering with our customers for a more prosperous & secure future 8

Mission State!ent We are a team of committed professionals, providing innovative and efficient financial solutions to create and nurture long-term relationships with our customers. In doing so, we ensure that our shareholders can invest with confidence in us

A$ARDS " ACCOLADES

'CB Ban" has !on many a!ards, !hich is a clear proof of its good performance$ It has !on 5uro money a!ards and Asia 'oney a!ards$

 =uro !one" A1ards

Be%t

Bank Award &''(

Be%t Bank )n Pak)%tan Award &''* Be%t Bank )n Pak)%tan Award &''+ Be%t Bank )n Pak)%tan Award &'', Be%t Bank )n Pak)%tan Award &'' E.ro mone/ Award &''- for the 0Be%t Bank )n Pak)%tan0. Be%t Bank )n Pak)%tan Award &''1 Be%t Dome%t)c Bank Award &'''

Asia Mone" A1ards T2e Be%t Dome%t)c Commerc)al Bank Award &''+ T2e Be%t Dome%t)c Commerc)al Bank Award &'',

CORE #AL3ES

I#<=GRI<@:

+e are the trustees of public funds and serve our community !ith integrity$ +e believe in being the best at al!ays doing the right thing$ +e deliver on our responsibilities and commitments to our customers as !ell as our colleagues$

10

R=S5=C<

+e respect our customer6s values, beliefs, culture and history$ +e value the equality of gender and diversity of e perience and education that our employees bring !ith them$ +e create an environment !here each individual is enabled to succeed$

=AC=LL=#C=:

+e ta"e personal responsibility for our role as leaders in the pursuit of e cellence$ +e are a performance driven, result oriented organi#ation !here merit is the only criterion for re!ard$

C%S<+M=R C=#<RICI<@:

1ur customers are at the heart of everything !e do$ +e thrive on the challenge of understanding their needs and aspirations, both reali#ed and unreali#ed$ +e ma"e every effort to e ceed customer e pectations through superior services and solutions$

I##+/A<I+#:

+e encourage and re!ard people !ho challenge the status quo and thin" beyond the boundaries of the conventional$ 1ur teams !or" together for the smooth and efficient implementation of ideas and initiatives$

OB4ECTI#ES OF !CB
%he follo!ing are the objectives of 'CB Ban" 4imited$

aB CR=A<I#G A#D MA#AGI#G /AL%=S:

%he first objective of 'CB Ban" limited is to create and manage the values, !hich is one of the bac" bones of the objective of any !ell organi#ed and managed organi#ation$

11

B H%MA# CA5I<AL:

%he second objective of 'CB Ban" is to ta"e care of the *uman capital, !hich is a necessary thing for the development and prosperity of any !ell established organi#ation$

cB B=S< 5LAC= <+ ;+R>:

%he third objective of 'CB Ban" 4imited is to ma"e it a place, !hich is much feasible and comfortable for employees of the ban"$ %he 'CB is al!ays conscious in developing such place !here employees of the ban" feel easiness$

dB <=CH#+L+G@:

%he forth objective of 'CB Ban" 4imited is to bring ne! and latest technology in the operations of the ban"$ A% 'CB, technology has a direct relation !ith your needs= it is a mean for creating value and convenience for the customer$ 1ver the last fe! years 'CB has invested heavily into strengthening its technology bac"bone$ %oday it is leading the !ay in ban"ing technology and setting ne! standards for the ban"ing industry, penetrating into the local mar"et, listening to the needs of the people and educating them of simple financial products and services that create both value and convenience$ 'CB6s strength lies in providing a technological base at the grass roots level of the society !ith a challenge to educate and assimilate such systems across vast cultural and economic bac"grounds$

Organ)5at)on Prof)le:
2ame of 1rgani#ationE ChairmanE 4ocationE UA2E 'CB *ouse$ 'ain 'ohammad 'ansha 7>G'ain :ail .oad, (ulberg 4ahore$ ,A-;?777AAA777

12

+ebsiteE

!!!$mcb$com$p"

MA#AG=M=#< L=/=L
%he organi#ation chart !ithin a department and in different offices is as follo!sE

)ivisional *eads

HHH$$HHHHHHHH *ead 1ffice

.egional *ead ,5IP- HHH$$HHHHHHHH .egional 1ffice Jonal *ead ,IPBranch 'anager HHH$$HHHHHHHH Jonal 1ffice HHH$$HHHHHHHH Branch

,IP, AIP, (.A)5 7, ?, 9-

Board of D)rector%
'ian 'ohammad 'ansha 'r$ S$ '$ 'uneer 'r$ '$U$A$ Usmani 'r$ %ariq .afi 'r$ Shah#ad Saleem Chairman Iice Chairman President K C51 'ember 'ember

13

'r$ Sarmad Amin )r$ 'uhammad Laqub 'ian .a#a 'ansha )atoB 'ohammed *ussein 'r$ Aftab Ahmad 3han 'r$ Abdul /arid Bin Alias 'ian Umer 'ansha 'r$ 'uhammad Ali Jeb

'ember 'ember 'ember 'ember 'ember 'ember 'ember 'ember

ORGANIZATIONAL HIERARCHY OF MCB

P.5SI)52%

S52I1. 5M5CU%II5 IIC5 P.5SI)52%

5M5CU%II5 IIC5 P.5SI)52%

S52I1. IIC5 P.5SI)52%

14

IIC5 P.5SI)52%

ASSIS%A2% IIC5 P.5SI)52%

1//IC5.S (.A)5 I II III ASSIS%A2%S

CAS*I5.

P512S

ORGANI6ATIONAL SET3P OF !CB

P.1II2CIA4 *5A) 0UA.%5.S

*5A) 0UA.%5.

4A*1.5

PU2:AB

4A*1.5

SI2)*

3A.AC*I

BA41C*IS%A2

P5S*A+A.

2+/P F AJA) 3AS*'I.

0U5%%A

CI.C45 1//IC5S

15
B.A2C* 1//IC5S

BRANC7 NET$OR8
%he follo!ing is the Branch 2et!or" of 'CB Ban" 4imited$ Sector !ise position of circle is as follo!s=

Con%.mer Sector (1' Branc2e%

16

,ain .ahore 1 (ranch

Pattern of S2are 7old)ng%

De%cr)9t)on S2are2old)ng Percentage

Directors, CEO and children 7.5521 ssociated Co!"anies 49.8705 #$% & $C' (an)s, D*$ & #(*$ $ns+rance Co!"anies 6.5872 ,odara-as & ,+t+al *+nds

57,412,411

379,123,038

131,567 1,582,229 50,076,792

0.0173 0.2081

6,677,686

0.8784 17

/eneral '+-lic 0.ocal1 /eneral '+-lic 0*orei2n1 Others *orei2n Co!"anies

110,658,668 2,770,691 29,408,417 122,373,480 0.3645

14.5562

3.8684 16.0972

Com9an/ Total

:*';&1,;<:<

1''=''

ORGANIZATIONAL STRUCTURE OF MCB

As 'CB is a ban"ing company listed in stoc" e change therefore it follo!s all the legalities !hich are imposed by concerned statutes 'r$ 'uhammad 'ansha is Chairman F Chief 5 ecutive of the company !ith a team of 7A directors and 7 vice chairman to help in the business control and strategy ma"ing for the company$ 1perational 'anagement of the ban" is being handled by a team of 7A professionals$ %his team is also headed by 'r$ 'uhammad 'ansha$ %he different operational departments are Consumer Ban"ing F I% division, financial division F Inter branch division, Ban"ing operations division, *. F 4egal division, financial control F Audit division, Credit management division, Commercial Ban"ing division, Corporate Ban"ing division, %reasury management F /M (roup and lastly Special Assets 'anagement ,SA'- (roup$ /or effective handling of branches, it has been categori#ed into three segments !ith different people handling each category$ %hese categories areE abcCorporate Ban"ing Commercial Ban"ing Consumer Ban"ing

Cor9orate Bank)ng:

%hese are branches !hich have an e posure of over .s$ 7AA million$ Usually includes multinational F public sector companies$

18

Commerc)al Bank)ng:

%he branches !hich has a credit e posure of less than .s$ 7AA million but having a credit portfolio of more than .s$ ?A million ,e cluding staff loansUsually branches in large mar"ets and commercial areas come under this category$

Con%.mer Bank)ng:

%hese are the branches !hich have e posure up to .s$ ?A million and these include all the branches !hich are neither corporate nor commercial branches$

PROD3CTS OF !CB BAN8

1= !CB R.9ee Tra>eler C2e?.e%

'CB .upee %ravelers Cheques are as good as cash, inGfact better$ Better because !ith .upee %ravelers Cheques you have the po!er to purchase and a feeling of security that should you lose them, you !ill get a refund$ 'CB .upee %ravelers Cheques are accepted at major shops, travel agents, hotels, business establishments and 'CB branches all over Pa"istan$ Lou donBt have to be an 'CB account holder to buy the .upee %raveler Cheques$ Anybody can purchase them$ ItBs a safe and convenient !ay to conduct everyday business$ At a time !hen thefts and robberies are on the increase, you are better off carrying %ravelers Cheques rather than money$

&= !a2nama 82.%2al) Sc2eme

A >Gyear fi ed )eposit Scheme, targeted to persons !ith small savings !ho !ould desire a regular monthly return on their investment$

-= !CB 82.%2al) Bac2at Acco.nt

Sal)ent Feat.re%

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CD rate of return per annum$ .eturns calculated on daily$ Average balance and paid half yearly$ Introduced first time in Pa"istan$ %he facility of helping account holders pays utility bills ,electricity, telephone and gasthrough their account$ 2o queues$ 2o delays$

,= Ca9)tal Sc2eme

Growt2

Cert)f)cate

/or long term depositors under !hich the amount deposited almost doubles at the end of > years$ /or the scheme, the minimum amount of deposits is .s$ 7AAAA !hile there is no ma imum limit$ In case of premature encashment of the certificate, the depositor !ill profit at the same rates as that of P4 Saving Account$

+=

F.nd !anagement Sc2eme

%his scheme is offered to corporate and customers and is aimed at providing better rate of return up to 7>D per annum$ 1ne of the objectives of the scheme is to develop secondary mar"et for (overnment Securities$

*= Fa@ Pre%%
%his product !as first of its "ind introduced by using modem technology of %he /a 'achine$ It facilitates speedy transfer of funds !ithin Pa"istan$ %he service guarantees transfer of from one city to another, !ithin an hour$

:=

3t)l)t/ B)ll Collect)on

+ith the aim of e tending this service to !ider range of customers, the number of 'CB branches collecting Utility Bills more than 8AA$

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(=

!CB !oA)le Bank)ng

At the forefront of technological e cellence, 'CB proudly introduces 'CB '1BI45 BA23I2($ %he convenience of accessing account balance information and mini statements !henever !ant or !herever may need them, !ith comfort and peace of mind$ 'CB 'obile Ban"ing service is available to all 'CB A%' cardholders, ?; hours G 9@> days$

!OBILE BAN8ING AT A GLANCE

'CB 'obile Ban"ing gives easy and quic" access to account,s- at a time find convenient, including all holidays$

+ith 'CB 'obile Ban"ing Chec" balance Iie! the last ; transactions of your 'CB account,s-$

Ban"ing at fingertips

)ial in anytime to get information regarding balance and mini statements$

<=

!CB I%lam)c Bank)ng Ser>)ce%

Islamic ban"ing services through e clusive unitsKbranches offering a range of liability and asset based Sharia compliant products li"e 'ushari"a, 'urabaha, Ijara and Istasana$

1'=

!CB Car Ca%2

Car financing and leasing at competitive rates !ith fle ible options Car cash finances both semiGcommercial and nonGcommercial vehicles for personal and business use$

11=

!CB Locker

Best protection for valuable things$ 4oc"ers of different capacities are available in the branches but only for valued customers$

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1&= !CB !a%ter T7E F3T3RE OF !ONEB :

Card

Since the beginning of time, people have tried to find more convenient !ays to pay, from gold to paper money and chec"s$ %oday, money is moving a!ay from distinct hard currencies and to!ards universal payment products that transcend national borders, time #ones, and, !ith the Internet, even physical space$ Plastic or NvirtualN money, credit, debit, and electronic cash products, inevitably !ill displace cash and chec"s as the money of the future$

Ca%2 Ad>ance Fac)l)t)e%

Available in Pa"istan and !orld!ide !ith a net!or" of over 7,AAA branches and a team of dedicated professionals, 'CB is Pa"istan6s largest private sector commercial ban"$ 1ur Consumer Ban"ing provides customers !ith innovative saving schemes, products and services$ 1ur A%' net!or" is the largest in Pa"istan and our Pa" .upee %ravelers Cheques are mar"et leaders$ +e !ere the first to introduce the photo card !ith the introduction of the 'asterCard$ 1ur Corporate Ban"ing ensures assistance from a dedicated team of professional financial advisors for under!riting, project finance or corporate advisory services$ +hen it comes to ban"ing practices, you can depend on us$ +e6ve been around for over fifty years$

13.

!CB Smart Card

'CB no! brings you 'CB S!artCard Ga secure and convenient instrument of payment !ith unmatched functionalities$ It provides ?;Ghour direct access to your ban" account %he convenience and fle ibility of 'CB S!artCard !ill help live a smarter life$ It not only helps you manage your e penses, but also avoids undue interest on your day to day credit card transactions$Lour balance is al!ays !ithin your reach and you spend accordingly$ 'CB is the only ban" to introduce a debit card that gives the option to choose from domestic and international card for local and global usage respectively
14.

Rem)t E@9re%%

Fastest to Pakistan Anywhere in Pakistan. /astest !ay of getting your money across Pa"istan$ .emit 5 press offers lo! cost remittance from U$A$5$ and Saudi
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Arabia$ Lour relatives, friends or business associates receive drafts !ithin <? hours$ 'CB .emit 5 press has been specifically designed to meet the needs of the e patriate Pa"istani community residing in the (ulf countries$

1+=

!CB P/ara G2ar

'CB gives dream home at the lo!est and best possible mar"Gup rates$ Lou can choose either one of our t!o mar"Gup rate optionsG fi ed or variable$ 5arly repayment option tailorGmade to allo! ma"ing partial prepayments at dates that suit$

16.

!CB #)rt.al

'CB Iirtual provides the continence of ban"ing on internet$ +hether !e are at home, in office or doing travel$ 4og on at !!!$mcb$com$p" and enjoy ?; hours access of all your accounts for the largest array of service$

17.

!CB B.%)ne%% Sarma/a

'CB Business Sarmaya is a running finance against your residential property$ It offers running finance up to ?A millions !ith lo! mar"up$

18.

!CB Car , 3

'CB car ; u auto finance is a po!er move that gets you not only a car of your o!n choice but leads you best in life$ It is affordable !ith competitive mar"up, fle ible conditioning and easy processing and above all no hidden cost$

C NE$LB LA3NC7ED PROD3CT

2o! a day 'CB is offering a ne! product called as &SA.'ALA '5*/11J /U2)O$ %his fund is valid upGtill 7<th April, ?A7A$ 8$>D profit ratio has been allocated for this fund$ this is a one year and 7 month investment ,79 months-$ And no ta !ould be deducted on this investment$ /or e ample if a person deposited 7A,AAA,AA than he !ill get .s$8>AAA profit P his principle amount after completing 79 months$
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Policies:
Internship Policy:
'CB is the ban" that serves all type of customers and ma"es its policies according to their needs and demands here the 'CB has the policy to serve the students that is si !ee"s internship$

MCB has no gender bias

/or the selection of the employee 'CB focus on merit rather than gender$ %here is no any "ind of discrimination on the basis of male or female, a person having the s"ills and "no!ledge and is perfect of that particular job can be selected as the employee$

Opening account policy

Prior to establishing a relationship !ith ne! customer 'CB obtains basic information i$e$ business, source of income, e pected level of activity in the account and reasons for opening the account$

Training of employees
'CB has the program through !hich all the employees of the ban" get proper training and then !or" for the achieving the goals$

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Revenue Recognition
'CB recogni#ed its revenue on accrual basis$ /or e ample if 'CB invest in some different securities and entitled for the profit yet not received, the profit is recorded as !hen it earned not !hen it received$

Investments Policy
'CB also invest its money other than the advances, !hile investing in the securities 'CB has the follo!ing policy to invest in a- *eld for trading b- *eld to maturity In the light SBP regulations quoted securities are sho!n at mar"et values and any changes arising are ta"en to profit and loss account only upon actual reali#ation$

RIS

M!"!#$M$"T
%he ban" is primarily subject to interest rate, credit and currency ris"s$ %he ban" has

designated and implemented a frame !or" of controls to identify, monitor and manage these ris"s are as follo!

MCB%s Competitive Strategies

%o be competitive the Ban" has further reinforced its position in the Consumer ban"ing area by streamlining and reGlaunching the consumer financing products and introducing more convenience based solutions$ +ith the reGlaunch of auto finance and house finance products, the Ban" pushed the products !ith full thrust$ %he Ban" has also launched a running finance facility against mortgage of property$ %echnology continued to play an important role in improving and e panding product offerings$ %he Ban" introduced more I% based products to cater to the changing lifestyles and needs of the customers$

25

'CB IirtualGInternet Ban"ing !as launched !ith !ide ranging ban"ing solutions for the customers ranging from individual to corporate customers and it has become the most preferred Internet ban"ing solution in the country$ 'CB also had the privilege of being the first Ban" in Pa"istan to launch the comprehensive bill payment facility through its alternate delivery channels !hich include Internet Ban"ing, A%'s and 'CB Call Centre, currently !ith si payment partners$ Similarly, the Ban" also too" initiatives to increase the usage of debit facility$ %o provide timely and updated information, 'CB has also provided a ne! loo" to its !ebsite !hich is user friendly and considerably easy to bro!se$ %he Islamic Ban"ing initiative has been very successful in attracting ne! customer, both individuals and companies$ Similarly, those relationships, !hich !ere confined only to current account facility, have gro!n into stronger business relationships$ %he branch net!or" !as e panded to 4ahore and 'ultan during the last year and recently been e tended to *yderabad and /aisalabad$ %he Ban" plans to further e pand its Islamic Ban"ing branch net!or" to other metropolitan areas and also to introduce ne! sharia compliant ban"ing solutions to a !ider range of customers for satisfying their individual and business needs$ Some !ideGranging ne! strategic initiatives !ere also ta"en up !hich !ill be important for the Ban" in years to come$ A private company has been formed in *ong 3ong ,fully o!ned subsidiary of 'CB- in partnership !ith Standard Chartered Ban", handling trade transactions of select countries in the AsiaGPacific region$ It is projected to earn USQ 7 million in its first year of operations$ %o increase its international presence, the Ban" !ill be opening its representative office in )ubai and entering into major strategic alliances !ith ban"s in the UA5K especially for mar"eting our consumer ban"ing products to nonGresident Pa"istanis$ /urthermore, feasibility is also being carried out for entering other international mar"ets$ 'CBBs operations continued to be streamlined !ith focus on rationali#ation of e penses, reGalignment of bac"Gend processing to increase productivity, enhancement of customer service standards, process efficiency and controls$ %he Ban" has ta"en the lead in introducing the innovative concept of centrali#ing %rade Services in the country by providing centrali#ed foreign trade services to branches !ith a vie! to improve efficiency, e pertise and reduce delivery cost$ 'anagement of *uman .esources has been one of our core focus areas$ 'CB is committed to!ards attracting, retaining and motivating outstanding people$ Challenge for
26

'CB is to provide an environment in !hich employees can better reali#e their potential$ %he Ban" introduced Bre!ard for performanceB !here high potential officers !ere identified and re!arded accordingly$ In vie! of the competitive environment, the Ban" is focusing on performance and introducing a more robust performance management system$ 'CB is also strongly committed to training its staff at all levels$ %he Ban" !ill also be implementing the full suite of the latest version of SL'B14S Iersion C$ 'CB Ban" !ill run SL'B14S 5G/inance modules to deliver personali#ed services to its customers over multiple delivery channels, !hile SL'B14S 5nterprise 1perations Center !ill serve as its core ban"ing transactionGprocessing engine$ By implementing SL'B14S, 'CB Ban" aims to raise the level of its customer service and its time to mar"et in ne! product offerings for its three core ban"ing businesses in Corporate, Commercial and Consumer Ban"ing R retaining its mar"et leadership as Pa"istanBs progressive Ban"$

Summ !":
'CB has the policy to serve the students that is si !ee"s internship$ 'CB focus on merit rather than gender$ %o be competitive the Ban" has further reinforced its position in the Consumer ban"ing area by streamlining and reGlaunching the consumer financing products and introducing more convenience based solutions$

RIS8 !ANAGE!ENT GRO3P

27

RIS>:

.is"s are usually defined by the adverse impact on profitability of several distinct sources of uncertainty$ +hile the types and degree of ris"s an organi#ation may be e posed to depend upon a number of factors such as its si#e, comple ity business activities, volume etc$ it is believed that generally the ban"s face credit, mar"et, liquidity, operational, compliance and reputational ris"s$ Before reaching these ris" categories, given belo! are some basics about ris" management and some guiding principles to manage ris"s in ban"ing organi#ation$
RIS> MA#AG=M=#<:

.is" 'anagement is a discipline at the core of every financial institution and encompasses all the activities that affect its ris" profile$ It involves identification, measurement, monitoring and controlling ris"s to ensure that a- %he individuals !ho ta"e or manage ris"s clearly understand it$ b- %he organi#ation6s .is" e posure is !ithin the limits established by Board of )irectors$ c- .is" ta"ing )ecisions are in line !ith the business strategy and objectives set by B1)$ d- %he e pected payoffs compensate for the ris"s ta"en e- .is" ta"ing decisions are e plicit and clear$ f- Sufficient capital as a buffer is available to ta"e ris" %he acceptance and management of financial ris" is inherent to the business of ban"ing and ban"s6 roles as financial intermediaries$ .is" management as commonly perceived does not mean minimi#ing ris"= rather the goal of ris" management is to optimi#e ris"Gre!ard trade Goff$ 2ot!ithstanding the fact that ban"s are in the business of ta"ing ris", it should be recogni#ed that an institution need not engage in business in a manner that unnecessarily imposes ris" upon itE nor it should absorb ris" that can be transferred to other participants$ .ather it should accept those ris"s that are uniquely part of the array of ban"6s services$
Di44erent hierarch" le3els:

In every financial institution, ris" management activities broadly ta"e place simultaneously at follo!ing different hierarchy levels$
28

.
aB Strategic le3el:

It encompasses ris" management functions performed by senior management and B1)$ /or instance definition of ris"s, ascertaining institutions ris" appetite, formulating strategy and policies for managing ris"s and establish adequate systems and controls to ensure that overall ris" remain !ithin acceptable level and the re!ard compensate for the ris" ta"en $
B Macro Le3el:

It encompasses ris" management !ithin a business area or across business lines$ (enerally the ris" management activities performed by middle management or units devoted to ris" revie!s fall into this category$
cB Micro Le3el:

It involves S1nGtheGline6 ris" management !here ris"s are actually created$ %his is the ris" management activities performed by individuals !ho ta"e ris" on organi#ation6s behalf such as front office and loan origination functions$ %he ris" management in those areas is confined to follo!ing operational procedures and guidelines set by management$
Board and senior Manage!ent o3ersight:

%o be effective, the concern and tone for ris" management must start at the top$ +hile the overall responsibility of ris" management rests !ith the B1), it is the duty of senior management to transform strategic direction set by board in the shape of policies and procedures and to institute an effective hierarchy to e ecute and implement those policies$ %o ensure that the policies are consistent !ith the ris" tolerances of shareholders the same should be approved from board$

Risk Manage!ent 4ra!e1ork:

A ris" management frame!or" encompasses the scope of ris"s to be managed, the processKsystems and procedures to manage ris" and the roles and responsibilities of individuals involved in ris" management$ %he frame!or" should be comprehensive enough to capture all ris"s a ban" is e posed to and have fle ibility to accommodate any change in business activities$
Integration o4 Risk Manage!ent:

.is"s must not be vie!ed and assessed in isolation, not only because a single transaction might have a number of ris"s but also one type of ris" can trigger other ris"s$ Since interaction of various ris"s could result in diminution or increase in ris", the ris" management process should recogni#e and reflect ris" interactions in all business activities as appropriate$ +hile assessing and managing ris" the management should have an overall vie! of ris"s the institution is e posed to$ %his requires having a structure in place to loo" at ris" interrelationships across the organi#ation$

29

Business Line Accounta ilit":

In every ban"ing organi#ation there are people !ho are dedicated to ris" management activities, such as ris" revie!, internal audit etc$ It must not be construed that ris" management is something to be performed by a fe! individuals or a department$ Business lines are equally responsible for the ris"s they are ta"ing$ Because line personnel, more than anyone e lse, understand the ris"s of the business, such a lac" of accountability can lead to problems$
Independent re3ie1:

1ne of the most important aspects in ris" management philosophy is to ma"e sure that those !ho ta"e or accept ris" on behalf of the institution are not the ones !ho measure, monitor and evaluate the ris"s$ Again the managerial structure and hierarchy of ris" revie! function may vary across ban"s depending upon their si#e and nature of the business, the "ey is independence$ %o be effective the revie! functions should have sufficient authority, e pertise and corporate stature so that the identification and reporting of their findings could be accomplished !ithout any hindrance$ %he findings of their revie!s should be reported to business units, Senior 'anagement and, !here appropriate, the Board$

!anag)ng cred)t r)%k

&Credit ris" arises from the potential that an obligor is either un!illing to perform on an obligation or its ability to perform such obligation is impaired resulting in economic loss to the ban"O Co!ponents o4 credit risk !anage!ent A typical Credit ris" management frame!or" in a financial institution may be broadly categori#ed into follo!ing main componentsE aB Board and senior 'anagement6s 1versight B 1rgani#ational structure cB Systems and procedures for identification, acceptance, measurement, monitoring and control ris"s$ &B Board and Senior Manage!entCs +3ersight It is the overall responsibility of ban"6s Board to approve ban"6s credit ris" strategy and significant policies relating to credit ris" and its management !hich should be based on the ban"6s overall business strategy$ %o "eep it current, the overall strategy has to be revie!ed by the board, preferably annually$ %he responsibilities of the Board !ith regard to credit ris" management shall, interalia, include E
30

a- )elineate ban"6s overall ris" tolerance in relation to credit ris"$ b- 5nsure that ban"6s overall credit ris" e posure is maintained at prudent levels and consistent !ith the available capital c- 5nsure that top management as !ell as individuals responsible for credit ris" management possess sound e pertise and "no!ledge to accomplish the ris" management function d- 5nsure that the ban" implements sound fundamental principles that facilitate the identification, measurement, monitoring and control of credit ris"$ e- 5nsure that appropriate plans and procedures for credit ris" management are in place$

(B +rgani$ational Structure: 5ach ban", depending upon its si#e, should constitute a Credit .is" 'anagement Committee ,C.'C-, ideally comprising of head of credit ris" management )epartment, credit department and treasury$ %his committee reporting to ban"6s ris" management committee should be empo!ered to oversee credit ris" ta"ing activities and overall credi t ris" management function$ %he C.'C should be mainly responsible for a) %he implementation of the credit ris" policy K strategy approved by the Board$ b) 'onitor credit ris" on a ban"G!ide basis and ensure compliance !ith limits approved by the Board$ c) .ecommend to the Board, for its approval, clear policies on standards for presentation of credit proposals, financial covenants, rating standards and benchmar"s$ d) )ecide delegation of credit approving po!ers, prudential limits on large credit e posures, standards for loan collateral, portfolio management, loan revie! mechanism, ris" concentrations, ris" monitoring and evaluation, pricing of loans, provisioning, regulatoryKlegal compliance, etc$

-D S/%tem% and Proced.re%:

31

Credit +riginationE

Ban"s must operate !ithin a sound and !ellGdefined criteria for ne! credits as !ell as the e pansion of e isting credits$ Credits should be e tended !ithin the target mar"ets and lending strategy of the institution$ Before allo!ing a credit facility, the ban" must ma"e an assessment of ris" profile of the customerKtransaction$ %his may includeE a- Credit assessment of the borro!er6s industry, and macro economic factors$ b- %he purpose of credit and source of repayment$ c- %he trac" record K repayment history of borro!er$ d- AssessKevaluate the repayment capacity of the borro!er$ e- %he Proposed terms and conditions and covenants$ f- Adequacy and enforceability of collaterals$
g- Approval from appropriate authority

Li!it setting:

An important element of credit ris" management is to establish e posure limits for single obligors and group of connected obligors$ %he measurement of credit ris" is of vital importance in credit ris" management$ A number of qualitative and quantitative techniques to measure ris" inherent in credit portfolio are evolving$
Internal Risk RatingE

Credit ris" rating is summary indicator of a ban"6s individual credit e posure$ An internal rating system categori#es all credits into various classes on the basis of underlying credit quality$ A !ellGstructured credit rating frame!or" is an important tool for monitoring and controlling ris" inherent in individual credits as !ell as in credit portfolios of a ban" or a business line$ %he importance of internal credit rating frame!or" becomes more eminent due to the fact that historically major losses to ban"s stemmed from default in loan portfolios$

Managing Market Risk

&It is the ris" that the value of on and offGbalance sheet positions of a financial institution !ill be adversely affected by movements in mar"et rates or prices such as interest rates, foreign e change rates, equity prices, credit spreads andKor commodity prices resulting in a loss to earnings and capitalO

32

Interest rate risk:

Interest rate ris" arises !hen there is a mismatch bet!een positions, !hich are subject to interest rate adjustment !ithin a specified period$ %he ban"6s lending, funding and investment activities give rise to interest rate ris"$ %he immediate impact of variation in interest rate is on ban"6s net interest income, !hile a long term impact is on ban"6s net !orth since the economic value of ban"6s assets, liabilities and offGbalance sheet e posures are affected$ Consequently there are t!o common perspectives for the assessment of interest rate ris"$
a- =arning perspecti3e:

In earning perspective, the focus of analysis is the impact of variation in interest rates on accrual or reported earnings$ %his is a traditional approach to interest rate ris" assessment and obtained by measuring the changes in the 2et Interest Income ,2II- or 2et Interest 'argin ,2I'- i$e$ the difference bet!een the total interest income and the total interest e pense$
b=cono!ic /alue perspecti3e:

It reflects the impact of fluctuation in the interest rates on economic value of a financial institution$ 5conomic value of the ban" can be vie!ed as the present value of future cash flo!s$ In this respect economic value is affected both by changes in future cash flo!s and discount rate used for determining present value$ 5conomic value perspective considers the potential longerGterm impact of interest rates on an institution$
=9uit" price risk:

It is ris" to earnings or capital that results from adverse changes in the value of equity related portfolios of a financial institution$ Price ris" associated !ith equities could be systematic or unsystematic$ %he former refers to sensitivity of portfolio6s value to changes in overall level of equity prices, !hile the later is associated !ith price volatility that is determined by firm specific characteristics$

=le!ents o4 Market Risk !anage!ent:

Board and senior Manage!ent +3ersight: 4i"e!ise other ris"s, the concern for management of 'ar"et ris" must start from the top management$ 5ffective board and senior management oversight of the ban"6s overall mar"et ris" e posure is cornerstone of ris" management process$ /or its part, the board of directors has follo!ing responsibilities$ a- )elineate ban"s overall ris" tolerance in relation to mar"et ris"$ b- 5nsure that ban"6s overall mar"et ris" e posure is maintained at prudent levels and consistent !ith the available capital$
33

c- 5nsure that top management as !ell as individuals responsible for mar"et ris" management possess sound e pertise and "no!ledge to accomplish the ris" management function$ d- 5nsure that the ban" implements sound fundamental principles that facilitate the identification, measurement, monitoring and control of mar"et ris"$ e- 5nsure that adequate resources ,technical as !ell as human- are devoted to mar"et ris" management$ +rgani$ational Structure$ %he organi#ational structure used to manage mar"et ris" vary depending upon the nature si#e and scope of business activities of the institution, ho!ever, any structure does not absolve the directors of their fiduciary responsibilities of ensuring safety and soundness of institution$ +hile the structure varies depending upon the si#e, scope and comple ity of business, at a minimum it should ta"e into account follo!ing aspe ct$ a- %he structure should conform to the overall strategy and ris" policy set by the B1)$ b- %hose !ho ta"e ris" ,front office- must "no! the organi#ation6s ris" profile, products that they are allo!ed to trade, and the approved limits$ c- %he ris" management function should be independent, reporting directly to senior management or B1)$ d- %he structure should be reinforced by a strong 'IS for controlling, monitoring and reporting mar"et ris", including transactions bet!een an institution and its affiliates$
Asset,Lia ilit" Co!!ittee:

Popularly "no!n as A4C1, is senior management level committee responsible for supervision K management of 'ar"et .is" ,mainly interest rate and 4iquidity ris"s-$ %he committee generally comprises of senior managers from treasury, Chief /inancial 1fficer, business heads generating and using the funds of the ban", credit, and individuals from the departments having direct lin" !ith interest rate and liquidity ris"s$ %he C51 or some senior person nominated by C51 should be head of the committee$ %he si#e as !ell as composition of A4C1 could depend on the si#e of each institution, business mi and organi#ational comple ity$ %o be effective A4C1 should have members from each area of the ban" that significantly influences liquidity ris"$ In addition, the head of the Information system )epartment ,if any- may be an invitee for building up of 'IS and related computeri#ation$ 'ajor responsibilities of the committee includeE a- %o "eep an eye on the structure Kcomposition of ban"6s assets and liabilities and decide about product pricing for deposits and advances$ b- )ecide on required maturity profile and mi of incremental assets and liabilities$ c- Articulate interest rate vie! of the ban" and deciding on the future business strategy$ d- .evie! and articulate funding policy$ e- )ecide the transfer pricing policy of the ban"$ f- 5valuate mar"et ris" involved in launching of ne! products$ A4C1 should ensure that ris" management is not confined to collection of data$ .ather, it !ill ensure that detailed analysis of assets and liabilities is carried out so as to assess the overall balance sheet structure and ris" profile of the ban"$ %he A4C1 should cover the entire balance sheetKbusiness of the ban" !hile carrying out the periodic analysis$
Middle +44ice:$ 34

%he ris" management functions relating to treasury operations are mainly performed by middle office$ %he concept of middle office has recently been introduced so as to independently monitor, measure and analy#e ris"s inherent in treasury operations of ban"s$ Besides the unit also prepares reports for the information of senior management as !ell as ban"6s A4C1$ Basically the middle office performs ris" revie! function of dayGtoGday activities$ Being a highly speciali#ed function, it should be staffed by people !ho have relevant e pertise and "no!ledge$ %he methodology of analysis and reporting may vary from ban" to ban" depending on their degree of sophistication and e posure to mar"et ris"s$ %hese same criteria !ill govern the reporting requirements demanded of the 'iddle 1ffice, !hich may vary from simple gap analysis to computeri#ed Ia. modeling$ 'iddle 1ffice staff may prepare forecasts ,simulations- sho!ing the effects of various possible changes in mar"et conditions related to ris" e posures$ Ban"s using Ia. or modeling methodologies should ensure that its A4C1 is a!are of and understand the nature of the output, ho! it is derived, assumptions and variables used in generating the outcome and any shortcomings of the methodology employed$ Segregation of duties should be evident in the middle office, !hich must report to A4C1 independently of the treasury function$ In respect of ban"s !ithout a formal 'iddle 1ffice, it should be ensured that ris" control and analysis should rest !ith a department !ith clear reporting independence from %reasury or ris" ta"ing units, until normal 'iddle 1ffice frame!or" is established$
/alue at Risk:

Ialue at .is" ,IA.- is generally accepted and !idely used tool for measuring mar"et ris" inherent in trading portfolios$ It follo!s the concept that reasonable e pectation of loss can be deduced by evaluating mar"et rates, prices observed volatility and correlation$ IA. summari#es the predicted ma imum loss ,or !orst loss- over a target hori#on !ithin a given confidence level$ %he !ellG"no!n proprietary models that use IA. approaches are :P 'organ6s .is" metrics, Ban"er6s trust .is" Adjusted .eturn on Capital, and Chase6s Ialue at ris"$ (enerally there are three !ays of computing IA. a- Parametric method or Iariance covariance approach b- *istorical Simulation c- 'onte Carlo method Ban"s are encouraged to calculate their ris" profile using IA. models$ At the minimum ban"s are e pected to adopt relatively simple ris" measurement methodologies such as maturity mismatches, sensitivity analysis etc$
Risk Monitoring:

.is" monitoring processes are established to evaluate the performance of ban"6s ris" strategiesKpolicies and procedures in achieving overall goals$ +hether the monitoring function is performed by middleGoffice or it is a part of ban"s internal audit it is important that the monitoring function should be independent of units ta"ing ris" and report directly to the top managementKboard$
Audit:

Ban"s need to revie! and validate each step of mar"et ris" measurement process$ %his revie! function can be performed by a number of units in the organi#ation including internal
35

auditKcontrol department or A4C1 support staff$ In small ban"s, e ternal auditors or consultants can perform the function$

Risk li!its:

As stated earlier it is the board that has to determine ban"6s overall ris" appetite and e posure limit in relation to its mar"et ris" strategy$ Based on these tolerances the senior management should establish appropriate ris" limits$ .is" limits for business units, should be compatible !ith the institution6s strategies, ris" management systems and ris" tolerance$ %he limits should be approved and periodically revie!ed by the Board of )irectors andKor senior management, !ith changes in mar"et Conditions or resources prompting a reassessment of limits$ Institutions need to ensure consistency bet!een the different types of limits$
aB Gap Li!its:

%he gap limits e pressed in terms of interest sensitive ratio for a given time band aims at managing potential e posure to a ban"6s earnings K capital due to changes in interest rates$ Setting such limits is useful !ay to limit the volume of a ban"6s repricing e posures and is an adequate and effective method of communicating the ris" profile of the ban" to senior management$ Such gap limits can be set on a net notional basis ,net of asset K liability amounts for both on and off balance sheet items- or a durationG!eighted basis, in each time band$ ,)uration is the !eighted average term to maturity of a security6s cash flo!$ /or instance a .s 7AA > year CD ,semi Annual- coupon bond having yield of CD !ill have a duration of ;$?7< years as already e plained in the footnotes-$
c- :actor Sensiti3it" Li!its:

%he factor sensitivity of interest rate position is calculated by discounting the position using current mar"et interest rate and then using the current mar"et interest rate increase or decrease by one basis point$ %he difference in the t!o values "no!n as factor sensitivity is the potential for loss given one basis point change in interest rate$ Ban"s may introduce such limits for each time band as !ell as total e posure across all time bands$ %he factor sensitivity limit or PIA7 limit measures the change in portfolio present value given one basis point fluctuation in underlying interest rate$

!anag)ng L)?.)d)t/ R)%k

&4iquidity ris" is the potential for loss to an institution arising from either its inability to meet its obligations or to fund increases in assets as they fall due !ithout incurring unacceptable cost or losses.

Board and Senior Manage!ent +3ersight:

%he prerequisites of an effective liquidity ris" management include an informed board, capable management, staff having relevant e pertise and efficient systems and procedures$ It is primarily the duty of board of directors to understand the liquidity ris" profile of the ban" and the tools used to manage liquidity ris"$ %he board has to ensure that the ban" has
36

necessary liquidity ris" management frame!or" and ban" is capable of confronting uneven liquidity scenarios$
Li9uidit" Risk Strateg"E

%he liquidity ris" strategy defined by board should enunciate specific policies on particular aspects of liquidity ris" management, such asE
a. Co!position o4 Assets and Lia ilities:

%he strategy should outline the mi of assets and liabilities to maintain liquidity$ 4iquidity ris" management and assetKliability management should be integrated to avoid steep costs associated !ith having to rapidly reconfigure the asset liability profile from ma imum profitability to increased liquidity$
. Di3ersi4ication and Sta ilit" o4 Lia ilities:

A funding concentration e ists !hen a single decision or a single factor has the potential to result in a significant and sudden !ithdra!al of funds$ Since such a situation could lead to an increased ris", the Board of )irectors and senior management should specify guidance relating to funding sources and ensure that the ban" have a diversified sources of funding dayGtoGday liquidity requirements$ An institution !ould be more resilient to tight mar"et liquidity conditions if its liabilities !ere derived from more stable sources$ %o comprehensively analy#e the stability of liabilitiesKfunding sources the ban" need to identifyE o 4iabilities that !ould stay !ith the institution under any circumstances= o 4iabilities that runGoff gradually if problems arise= and o %hat runGoff immediately at the first sign of problems$
c. Access to Inter, ank Market:

%he interGban" mar"et can be important source of liquidity$ *o!ever, the strategies should ta"e into account the fact that in crisis situations access to inter ban" mar"et could be difficult as !ell as costly$
ALC+DIn3est!ent Co!!ittee:

%he responsibility for managing the overall liquidity of the ban" should be delegated to a specific, identified group !ithin the ban"$ %his might be in the form of an Asset 4iability Committee ,A4C1- comprised of senior management, the treasury function or the ris" management department$
Li9uidit" Risk Manage!ent 5rocess:

Besides the organi#ational structure discussed earlier, an effective liquidity ris" management include systems to identify, measure, monitor and control its liquidity e posures$ 'anagement should be able to accurately identify and quantify the primary sources of a ban"Bs liquidity ris" in a timely manner$ %o properly identify the sources, management should
37

understand both e isting as !ell as future ris" that the institution can be e posed to$ 'anagement should al!ays be alert for ne! sources of liquidity ris" at both the transaction and portfolio levels$
Scope o4 C:5:

%he sophistication of a C/P depends upon the si#e, nature, comple ity of business, ris" e posure, and organi#ational structure$
Li9uidit" Ratios and Li!its:

Ban"s may use a variety of ratios to quantify liquidity$ %hese ratios can also be used to create limits for liquidity management$ *o!ever, such ratios !ould be meaningless unless used regularly and interpreted ta"ing into account qualitative factors$ .atios should al!ays be used in conjunction !ith more qualitative information about borro!ing capacity, such as the li"elihood of increased requests for early !ithdra!als, decreases in credit lines, decreases in transaction si#e, or shortening of term funds available to the ban"$

!anag)ng O9erat)onal R)%k

&1perational ris" is the ris" of loss resulting from inadequate or failed internal processes, people and system or from e ternal eventsO
1perational ris" is associated !ith human error, system failures and inadequate procedures and controls$ It is the ris" of loss arising from the potential that inadequate information system= technology failures, breaches in internal controls, fraud, unforeseen catastrophes, or other operational problems may result in une pected losses or reputation problems$ 1perational ris" e ists in all products and business activities$

Risk Assess!ent and Euanti4ication:

Ban"s should identify and assess the operational ris" inherent in all material products, activities, processes and systems and its vulnerability to these ris"s$ Ban"s should also ensure that before ne! products, activities, processes and systems are introduced or underta"en, the operational ris" inherent in them is subject to adequate

38

assessment procedures. +hile a number of techniques are evolving, operating ris" remains the most difficult ris" category to quantify$ It !ould not be feasible at the moment to e pect ban"s to develop such measures *o!ever the ban"s could systematically trac" and record frequency, severity and other information on individual loss events$ Such a data could provide a meaningful information for assessing the ban"6s e posure to operational ris" and developing a policy to mitigate K control that ris"$

Risk Monitoring:
An effective monitoring process is essential for adequately managing operational ris"$ .egular monitoring activities can offer the advantage of quic"ly detecting and correcting deficiencies in the policies, processes and procedures for managing operational ris"$ Promptly detecting and addressing these deficiencies can substantially reduce the potential frequency andKor severity of a loss$ %here should be regular reporting of pertinent information to senior management and the board of directors that supports the proactive management of operational ris"$ Senior 'anagement should establish a programme toE a- 'onitor assessment of the e posure to all types of operational ris" faced by the institution= b- Assess the quality and appropriateness of mitigating actions, including the e tent to !hich identifiable ris"s can be transferred outside the institution= and c- 5nsure that adequate controls and systems are in place to identify and address problems before they become major concerns$

Risk Reporting:
'anagement should ensure that information is received by the appropriate people, on a timely basis, in a form and format that !ill aid in the monitoring and control of the business$

=sta lishing Control Mechanis!:

Although a frame!or" of formal, !ritten policies and procedures is critical, it needs to be reinforced through a strong control culture that promotes sound ris" management practices$ Ban"s should have policies, processes and procedures to control or mitigate material operational ris"s$ Ban"s should assess the feasibility of alternative ris" limitation and control strategies and should adjust their operational ris" profile using appropriate strategies, in light of their overall ris" appetite and profile$ %o be effective, control activities should be an integral part of the regular activities of a ban"$

39

F)nanc)al Anal/%)% of !CB

7or)5ontal Anal/%)%
Muslim Commercial Ban& 'imited Balance Sheet !s on ()st *ecember $te!s
Cash and -alances 3ith treas+r4 -an)s (alances 3ith other -an)s .endin2s to financial instit+tions $n7est!ents 8 net d7ances 8 net O"eratin2 fi9ed assets Other assets 8 net Total A%%et% (ills "a4a-le (orro3in2s De"osits and other acco+nts :+-8ordinated loan .ia-ilities a2ainst assets s+-;ect to finance lease Deferred ta9 lia-ilities 8 net Other lia-ilities 4,934,018 16,092,319 3,196,743 15,819,082 545 25 &'1' 45,407,183 1,478,569 4,401,781 213,060,882 254,551,589 20,947,540 27,705,069 +*:;++&;*110,265,537 25,684,593 431,371,937 &''< 38,774,871 6,009,993 3,000,000 167,134,465 253,249,407 18,014,896 23,040,095 +'<;&&-;:&: 8,201,090 44,662,088 367,604,711 &'1'E&''<F&''< 175 6755 475 275 15 165 205 115 255 6425 175

40

Total L)aA)l)t)e% Net a%%et% Re9re%ented A/: :hare ca"ital <eser7es =na""ro"riated "rofit :+r"l+s on re7al+ation of assets 8 net of ta9

,((;-,(;,', :<;&',;&'<

,-<;,(-;:1, *<;:,';'1-

115 145

7,602,150 40,162,906 21,414,955 *<;1(';'11 10,024,198 :<;&',;&'<

6,911,045 38,385,760 15,779,127 *1;':+;<-& 8,664,081 *<;:,';'1-

105 55 365 135 165 145

7or)5ontal Anal/%)%
!.%l)m Commerc)al Bank L)m)ted Prof)t and Lo%% Acco.nt A% on -1%t DecemAer &'1' 54,821,29 6 17,987,76 7 -*;(--;+& < 444,476 3,100,594 52,047 --;&-*;,1 & 4,129,540 543,906 632,346 411,834 547,680 *;&*+;-'* -<;+'1;:1 ( 12,173,94 2 &''< 51,616,00 7 15,837,32 2 -+;::(;*( + 1,484,218 5,796,527 41,576 &(;,+*;-* , 3,455,948 459,741 341,402 773,768 612,026 +;*,&;((+ -,;'<<;&, < 10,111,33 0 G&'1'E &''<DF&''<

,ar)8+" > ret+rn > interest earned ,ar)8+" > ret+rn > interest e9"ensed Net markH.9 F )ntere%t )ncome 'ro7ision for di!in+tion in the 7al+e of in7est!ents 8 net 'ro7ision a2ainst loans and ad7ances 8 net (ad de-ts 3ritten off directl4 Net markH.9 F )ntere%t )ncome after 9ro>)%)on% NonHmarkH.9 F )ntere%t )ncome *ee, co!!ission and -ro)era2e inco!e Di7idend inco!e $nco!e fro! dealin2 in forei2n c+rrencies /ain on sale of sec+rities 8 net Other inco!e Total nonmarkup / interest income Income after )ntere%t )ncome NonHmarkH.9 F )ntere%t e@9en%e% d!inistrati7e e9"enses

65 145 -I 6705 6475 255 1:I 195 185 855 6475 6115 11I 1*I

205

41

Other "ro7ision 8 net Other char2es Total nonmarkup / interest expenses Prof)t Aefore ta@at)on %a9ation Prof)t after ta@at)on =na""ro"riated "rofit -ro+2ht for3ard %ransfer fro! s+r"l+s on re7al+ation of fi9ed assets 8 net of ta9

88,261 986,440 13,248,64 3 &*;&+-;': + 9,379,900 1*;(:-;1: + 15,779,12 7 21,792 1+;('';<1 < 32,674,09 4 &&=&

142,824 690,150 10,944,30 4 &-;1+,;<, + 7,659,648 1+;,<+;&< : 9,193,332 22,324 <;&1+;*+* 24,710,95 3 &&=-(

6385 435 215 1-I 225 <I 725 625 :1I 325 E1I

'rofit a7aila-le for a""ro"riation (asic and dil+ted earnin2s "er share 8 after ta9

#ert)cal Anal/%)%
!.%l)m Commerc)al Bank L)m)ted Balance S2eet A% on -1%t DecemAer >ert)ca &'1' l
45,407,183 1,478,569 4,401,781 213,060,882 254,551,589 20,947,540 27,705,069 +*:;++&;*110,265,537 25,684,593 431,371,937 575 25 65 2695 3215 265 355 7175 135 325 5455 05

A%%et%

>ert)ca &''< l
38,774,871 6,009,993 3,000,000 167,134,465 253,249,407 18,014,896 23,040,095 +'<;&&-;:&: 8,201,090 44,662,088 367,604,711 565 95 45 2405 3635 265 335 7305 125 645 5275 05

Cash and -alances 3ith treas+r4 -an)s (alances 3ith other -an)s .endin2s to financial instit+tions $n7est!ents 8 net d7ances 8 net O"eratin2 fi9ed assets Other assets 8 net Total A%%et% (ills "a4a-le (orro3in2s De"osits and other acco+nts :+-8ordinated loan

42

.ia-ilities a2ainst assets s+-;ect to finance lease Deferred ta9 lia-ilities 8 net Other lia-ilities Total L)aA)l)t)e% Net a%%et% Re9re%ented A/: :hare ca"ital <eser7es =na""ro"riated "rofit :+r"l+s on re7al+ation of assets 8 net of ta9

4,934,018 16,092,319 ,((;-,(;,', :<;&',;&'<

05 65 205 6175 05 1005

3,196,743 15,819,082 ,-<;,(-;:1, *<;:,';'1-

05 55 235 6305 05 1005

7,602,150 40,162,906 21,414,955 *<;1(';'11 10,024,198 :<;&',;&'<

105 515 275 875 135 1005

6,911,045 38,385,760 15,779,127 *1;':+;<-& 8,664,081 *<;:,';'1-

105 555 235 885 125 1005

43

#ert)cal Anal/%)%

44

!.%l)m Commerc)al Bank L)m)ted Prof)t and Lo%% Acco.nt A% on -1%t DecemAer >ert)c &'1' al
,ar)8+" > ret+rn > interest earned ,ar)8+" > ret+rn > interest e9"ensed Net markH.9 F )ntere%t )ncome 'ro7ision for di!in+tion in the 7al+e of in7est!ents 8 net 'ro7ision a2ainst loans and ad7ances 8 net (ad de-ts 3ritten off directl4 Net markH.9 F )ntere%t )ncome after 9ro>)%)on% NonHmarkH.9 F )ntere%t )ncome *ee, co!!ission and -ro)era2e inco!e Di7idend inco!e $nco!e fro! dealin2 in forei2n c+rrencies /ain on sale of sec+rities 8 net Other inco!e Total nonmar up ! interest income Income after )ntere%t )ncome NonHmarkH.9 F )ntere%t e@9en%e% d!inistrati7e e9"enses Other "ro7ision 8 net Other char2es Total nonmar up ! interest e"penses Prof)t Aefore ta@at)on %a9ation Prof)t after ta@at)on =na""ro"riated "rofit -ro+2ht for3ard %ransfer fro! s+r"l+s on re7al+ation of fi9ed assets 8 net of ta9 12,173,94 2 88,261 986,440 1-;&,(;*, &*;&+-;': + 9,379,900 1*;(:-;1: + 15,779,12 7 21,792 1+;('';<1 < 32,674,09 4 &&=& 54,821,29 6 17,987,76 7 -*;(--;+& < 444,476 3,100,594 52,047 --;&-*;,1 & 4,129,540 543,906 632,346 411,834 547,680 *;&*+;-'* -<;+'1;:1 ( 3255 1075 &1(I 35 185 05 1<:I 05 245 35 45 25 35 -:I 2345 05 725 15 65 :<I 1565 565 1''I 945 05 945 1945 05 10,111,33 0 142,824 690,150 1';<,,;-' , &-;1+,;<, + 7,659,648 1+;,<+;&< : 9,193,332 22,324 <;&1+;*+* 24,710,95 3 &&=-(

>ert)c &''< al
51,616,00 7 15,837,32 2 -+;::(;*( + 1,484,218 5,796,527 41,576 &(;,+*;-* , 3,455,948 459,741 341,402 773,768 612,026 +;*,&;((+ -,;'<<;&, < 3335 1025 &-1I 105 375 05 1(,I 05 225 35 25 55 45 -*I 2205 05 655 15 45 :1I 1495 495 1''I 595 05 595

'rofit a7aila-le for a""ro"riation (asic and dil+ted earnin2s "er share 8 after ta9

4505

1595

Rat)o Anal/%)% of !CB

&An inde number by otherO .atio Analysis is an important and ageGold technique of financial analysis$ It simplifies the comprehension of financial statements$ .atios tell the !hole story of changes in the financial condition of business$ It provides data fro inter firm comparison$ %hey also reveal strong firms and !ea" firms, overG valued and undervalued firms$ .atio analysis also ma"es possible comparison of the performance of different divisions of the firm$ %he ratios are helpful in decision about their efficiency of other!ise in the past and li"ely performance in future$ .atios also help in Investment decisions in the investors and lending decisions in the case of ban"ers etc$ /ollo!ing are the main types of ratios that I am going to calculate in this report to compare and highlight the financial performance of 'CB in ?A7A !ith ?AA8 that relates t!o accounting numbers and is obtained by dividing one

46

2010 '<O*$% %O DE'O:$% < %$O <E%=<# O# ?E< /E E@=$%A 0<OE1 *$CED DE'O:$% %O %O% . DE'O:$% < %$O 'rofit fter %a9 EB+it4 Ca"ital <atio 051 *i9ed De"osit s %otal De"osit s <atio 051 'rofit d7anc es <atio 051 'rofit De"osit <atio 051 16,873,175 431,371,93 7 3.905

2009

15,495,297 367,604,71 1 4.205

16,873,175 69,180,011 33.615 80,073,848 431,371,93 7 18.565 16,873,175 254,551,58 9 6.635 2010

15,495,297 61,075,932 25.375 62,651,531 367,604,71 1 17.045 15,495,297 253,249,40 7 6.125 2009

'<O*$% %O D? #CE: < %$O

D,$# EC'E#:E: %O DE'O:$% < %$O

d!in E9"ens es De"osit <atio 051

12,173,942 431,371,93 7 2.825

10,111,330 367,604,71 1 2.755

47

Details:

)eposits are increased in ?A7A and profit on deposits also increased$ 5quity Capital increased in ?A7A and return also increase$ Profit margin increase in ?A7A as compare to ?AA8$ %otal )eposits are also more than ?AA8, !ith increasing ratio$ Profits are more in ?A7A as compare to ?AA8$ Advances Increases in ?A7A$ Admin e penses are more as compare to ?AA8$ )eposits increases in ?A7A$

Interpretation:

%he past t!o years data sho!s an increase in all return ,i$e$ interest earned, interest income, Profit after ta ation- !hich is a positive sign$ But mostly e penses ,i$e$ Admin e penses, Provisions, %a ation- are also increase !hich sho! negative sign of business$ %he Ban" should have to revie! its policies to decrease e penses$

S$OT ANALBSIS

48

S<R=#G<HS:

1ne of the main strength of 'CB that I thin" is the faster ban"ing services and more prominent in ban"ing industry especially in operations and /oreign 5 change$ Speedy services and reasonable services charges are attracting the people to do their business !ith 'CB$ 'CB has fully computeri#ed control on its ban"ing system due to this facility the 'CB is in the list of highly automated ban"$ Internal control and monitoring of the 'CB Ban" is very effective 0uality Control 5 pert visits t!ice a !ee" at ban" branches !hich helps the employees to improve their !or"$ )ue to fast ban"ing services, prominent ban"ing services and fully computeri#ed computer system resulted in joining of e perienced people, advanced management, advance setup and facilities gave 'CB an edge over its competitors$ 'ost private ban"s have still not online all of their branches in Pa"istan but the 'CB has all its branches online$ %hey have !ide area net!or" in all over the Pa"istan, so that they cover a lot of portion of cash transactions and ma"e customer satisfied %he Ban" has very strict rules and regulations about the customerBs complaints$ %he customers are treated as very special persons in the Ban"$ 'CB has got the Strongest Ban" in Pa"istan A!ard ?A7A$ 'CB also got the 4eadership Achievement A!ard ?A7A$ 'CB has been a!arded as =uro !one" A1ard ('') for the FBest Bank in Asia.

49

Best Bank In 5akistan A1ard: 'CB has been a!arded the best ban" in Pa"istan since ?AAA, ?AA7, ?AA9, ?AA;, and ?AA@

;=A>#=SS:

'CB offers different types of products to the customers therefore majority of people are not !ell a!are about the products of 'CB$ /or e amples if a person !ants to open an account !ith 'CB say it is current but he does not "no! !hat type of Current Account he should open does not "no! this the major !ea"ness for the 'CB$ 2o entertainment facilities are available in the ban" !hen customer visits Ban" and !ait for at longer time$ %hese facilities can be the 2e!spaper$ 'aga#ines, etc$ 1ut loo" of the 'CB branches is not attractive to the people$ In this era of competition most of the ban"s advertising their different products and services but no commercial I have seen on any channel regarding their products and services$ 5quality should be observed throughout ban"ing system$ %here should no discrimination among the customers$ As I observed at the branch !here I !or"ed !ealthy customers !ere given the more entertaining services !hile the customers !ho have lo! investment !ith the ban" !aited for long for their turn$ At private local ban"s there is normally transfer of employees after a normal period of one and a half years or t!o years !hile at 'CB branch !here I did my internship most of the employees are !or"ing more than three years$ :ob .otation help the employees to learn about different segments of the business !hich I thin" is missing at 'CB$

+55%R<%#I<I=S:

'CB has got the Strongest Ban" in Pa"istan A!ard ?A7A$ 'CB also got the 4eadership Achievement A!ard ?A7A$ 'CB has been a!arded as 5uro money A!ard ?AAC for the &Best Ban" in Asia$
50

Best Ban" in Pa"istan A!ardE 'CB has been a!arded the best ban" in Pa"istan since ?AAA, ?AA7, ?AA9, ?AA;, and ?AA@$ %hese a!ards create an edge in the mind of people to invest and borro! from this ban"$ Before privati#ation people !ere not satisfied !ith the services of the ban"$ After the privati#ation people have different alternatives to invest and borro! from$ %he 'CB due to its over 7A years performance it has the opportunities to attract the customers

<HR=A<S:

%he decreased purchasing po!er of consumer in the current economic situation of the country affecting the business activity speed too much and the result is the lo! investment from the investors in ne! projects can create problem for the han" because it is !or"ing a lot in trade$ %he Competition has become severe by the entrants of so many ban"s$ So to e ist one !ill have to prove himself in its services through e cellent management and !ill have to satisfy its shareholders$ 1ther!ise it !ill he out the mar"et 2e! Privates Ban" coped !ith emerging ne! %echnology of I%$ %his ease of entry in the mar"et is the threat to the 'CB ban"$

Change in government policies has affected the ban"ing business$ Still ban"s have to !ait to get permission from the State Ban" of Pa"istan$ %he free#ing of foreign currency accounts is a vital e ample of letting people not to trust on ban"s

PEST ANALBSIS AND EN#IRON!ENTAL SCAN

A broad vie! of mar"et is important !hen management is interested in introducing better services for customers$ .apid technological change, global competition and the
51

diversity of buyers preferences in many mar"ets require the constant attention of the mar"et vouchers to identify promises business opportunities, see the shifting requirements of the buyers, evaluate changes in competitors positioning and guide the choice of !hich buyers to target and classify them according to respective segments$ Identification of e ternal and macro factors that influence buyers and thus change the si#e and composition of mar"et overtime involves initially building customer profiles$ %hese influences includeE Political and legal environment 5conomic trends Socio cultural environment %echnological factors

5+LI<ICAL A#D L=GAL =#/IR+#M=#<:

Ban"s are strongly affected by the political and legal considerations$ %his environment is composed of regulatory agencies and government la! that influence and limit various organi#ations and individuals$ 'ostly these la!s create ne! opportunities for business$ Business legislation has follo!ing main purposes o %o protect ban"ing companies from unfair competition$ o %o protect consumers from unfair business practices adopted by ban"ing companies o %o protect the interest of the society from unbridled business behavior$
=C+#+MIC <R=#DS:

A ban"ing mar"et requires better consumer mar"et in volume along !ith higher borro!ing po!er$ %he available borro!ing po!er depends onE o Consumer income o Saving rates o Consumption patrons

52

o .ates of interest o Budget deficit o 5 change rates o Cost of living o Inflation

S+CI+,C%L<%RAL =#/IR+#M=#<:

A society is shaped by beliefs, norms and values$ People in a society consciously and unconsciously interact !ithE

%hemselves 1thers 1rgani#ation Society

<=CH#+L+GICAL :AC<+RS:

/orces of technological advancement have played the most dramatic role in shaping the lives of people$ %he rate of change of technology has greatly affected the rate of gro!th of economy$ 2e! technology is creating deep rooted affects !hich could be observed in long run$ %he improvement techniques involved in on line ban"ing$ In brief P5S% analysis affects the overall ban"ing companies and provides us the information about the e ternal macro condition$

53

CONCL3SION
It is evident from this report that 'CB is ma"ing progress by leaps and bounds$ %he profits of 'CB have gro!n considerably during the last fe! years and this trend is e pected to continue into the future$ %herefore !e conclude that 'CB has a very prosperous present and future, !hich assures the shareholders of !ealth ma imi#ation$ Side by side of it I thin" that if ban" !ould be able to cover and control on the above mentioned recommendations then it !ould be in such a situation that !ill really lead it to!ards the road of prosperity, development and integrity$ And !ith the above mentioned sentences I thin" there is too fault of the customers and in order to ma"e the proper !or"ing of the ban" the customers should Also cooperate !ith the ban" !hich !ill be really a good, ambitious and diligent condition for the ban"$ And then ban" !ill be really in such a situation and position to compete its competitors in the country as !ell as on international level$

54

S3GGESTIONS
Ban" must let potential customers "no! that all attractions for ban"ing e ist$ %his is done by advertising on television and obtaining press coverage, in conjunction !ith direct mail, !indo! displays, leaflet in branches and in appropriate other locations ,such as hotels, shops, etc$- and including leaflets in statement of accounts sent to e isting customers in the hope that they !ill tell potential customers about the services provided by our ban"$ /inancially unsophisticated people might feel ban" accounts, cheque boo"s, credit cards, etc$ are difficult to understand and to "eep control thereof$ Some personal sector customers prefer not to come to branch$ %hey increasingly !ant to deal !ith the ban" in other !ays, such as home ban"ing or use of Automated %eller 'achines ,A%'s-, !hich need to be at the branch or some important shopping pla#as$

It is !idely "no!n that there is a substantial Blac" 5conomy in Pa"istan, +here people earn income that is undisclosed to the revenues authorities$ Payments for goods and services in the blac" economy are necessarily in cash, because transactions by cheques are more li"ely to be e posed to the revenue authorities$ Some people !ill therefore avoid ban" accounts to preserve secrecy of earnings$ 1ne !ay to retain the personal sector customers is to offer a !ide range of services such as ta advice, free life insurance equivalent to amount deposited, shares portfolio management, fund management facility, etc$, complimentary to the core services$ Ban"s must have a slightly different mi of services$ Ban"s must have a slightly different mi of services and mean of providing these such that customers can choose the mi that suits them best$ Arguably, there has been a little encouragement from ban"s to persuade people to open a ban" account$ 1pening hours are restricted, and there is a commonly held belief that ban"s operate for their convenience and not for the convenience of the customers$ A logic leads to promotional campaign through employers !ho are customers of the ban"s and their employees are paid in cash$ Such business accounts should be encouraged to open the accounts of their employees !ith the ban"s$ It might be !orth offering free ban"ing for a specific period to ne! accounts or simply publici#ing the services available by means of posters at the employer6s premises$ It might be possible to attract another type of personal customers through business accounts, namely directors and denier employees, etc$ Again an incentive pac"age could be put together$
55

%he ban"s may choose to ma"e its e isting products distinctive or to introduce ne! products$ It is often easier to benefit from adverse changes made by other ban"s than to attract customers by innovations$ A short term promotional technique is to offer price incentives, for e ample, lo! interest rates on advances or limited issue high profit bearing term deposits$ 4onger term, a 4oss 4eader may be offered$ /or e ample, profit bearing current accounts are not very lucrative but any ban" can not afford not to offer these$ %he reduced profits can be augmented by profits made on other products$ It is also possible to attractKretain personal customers by investment in ne! technology li"e A%'s and %elephone Ban"ing facilities, !hich made the services quic"er, easier, cheaper and more fle ible$

56

Glo%%ar/

!CB AT! FED $7T TDR CDR PBA BBA PLS TD AOF A!O 8BC SSC GBO

,+sli! Co!!ercial (an) +to!atic %eller ,achine *ederal E9cise D+t4 3ith Doldin2 %a9 %er! De"osit <ecei"ts Call De"osit <ecei"ts 'ersonal (an)in2 d7isor (asic (an)in2 cco+nt 'rofit and .oss >C %er! De"osit cco+nt o"enin2 *oa! cco+nt !aintenance officer Eno3 4o+r c+sto!ers :"eci!en :i2nat+re card /eneral -an)in2 officer

57

ICO CSO DD PO FTA CPD NIFT TDR RTC IBC OBC !O 7O

$nternal control officer C+sto!er ser7ice officer De!and Draft 'a4 Order *+nd %ransfer ""lication Central 'rocessin2 Di7ision #ational $nstit+te of *acilitation %echnolo24 %er! De"osit <ecei"t <+"ee %ra7el CheB+e $n3ard (ills for Collection O+t3ard (ills for Collections ,ain Office Dead Office

REFERENCES

58

htt"F>>en.3i)i"edia.or2>3i)i>Econo!4GofG'a)istan

htt"F>>333.!c-.co!.")>!c->a-o+tG!c-.as"

htt"F>>333.o""a"ers.co!>essa4s>'a)istans6(an)in26:ector6$nd+str4 nal4sis>181995

htt"F>>333.s-".or2.")>re"orts>ann+al>arf409>anne9Ginde9.ht!

htt"F>>en.3i)i"edia.or2>3i)i>,+sli!GCo!!ercialG(an)

htt"F>>333.-l+rtit.co!>B501915.ht!l

'CB Brochures 'anuals Annual .eport

59

COPB RIG7T
Attention is dra!n to the fact that the copy right of this report rests !ith author$ %his copy of report has been supplied on condition that any one !ho consults it is the understood to recogni#e that its copy right !ith its author and no information derived from it may be published !ithout the prior !ritten consent author$ %his report contains material, !hich is the property of the 'CB 4imited, 3arachi and is clearly mar"ed as such$ Although they have given me their "ind permission for its reproduction$ %his material remains protected under their copy right$ %his report may be made available for consultation !ithin University K )epartment of Commerce library and may be published on or lent to other libraries for the purpose of consultation$

60