Bilal

INTERNSHIP REPORT ON
MCB BANK
MAIN BRANCH ABBOTTABAD (0585)
Submitted by: Muhammad Waqas

Roll# 822
Supervised by: Sardar Ejaz Ahmed
Government College of Management Sciences

Abbottabad
SESSION
2013-2015
INTERNSHIP REPORT ON
MCB BANK
MAIN BRANCH ABBOTTABAD (0585)
Submitted by: Muhammad Waqas
Roll# 822
Supervised by: Sardar Ejaz Ahmed
This internship report is submitted in partial fulfillment of the
requirements for the degree of Masters of Commerce awarded by
the Hazara University,
Mansehra

Abbottabad
SESSION
2013-2015

Abbottabad
APPROVAL SHEET
Approval Committee
1 External Examiner
Mr.______________________ Signature______________________
2 Supervisor
Signature______________________
Sardar Ejaz Ahmed
Designation Assistant Professor
3 Head of department
Mr. Mushtaq Ahmad____________ Signature_____________________
Designation
Principal
DEDICATION
I would like to dedicate this effort to Parents. There is no doubt in my mind that
without their continued support and counsel I could not have completed my
Studies
ABSTRACT
The purpose of internship report is to evaluate the performance of organization and give
concrete recommendation for further improvements. Another aspect of this internship is that
it makes of a student imaginative and be dynamic and takes him away from bookish and
impractical philosophy. So it makes the student a practical man and helps him to face
difficulties of practical life and the solution of problems. Through internship a student can
judge his qualities and expertise, whish he gained from books.
As a compulsory requirement of Professional Degree M.Com I opted to join Muslim
Commercial Bank Limited, to fulfill my degree requirement. My reason for choosing MCB
was to enhance my skills in Management Finance and Accounts, so that to provide myself the
opportunity to cope with real life situation. To better understand the report my
recommendation would be to look into different parts mainly covering the overview of MCB,
overall management of Finance and Accounts.
The bank staff was very much cooperative to me, they have provided me relevant material to
write a report.
Table of Contents
APPROVAL SHEET...............................................................................................................iii
DEDICATION..........................................................................................................................iv
Chapter 1....................................................................................................................................1
Introduction to the Report..........................................................................................................1
1.1 Introduction......................................................................................................................1
1.2 Background of the study..................................................................................................1
1.3 Purpose of the Study........................................................................................................2
1.4 Scope of the study............................................................................................................2
1.5 Limitation of the study.....................................................................................................2
1.6 Objectives.........................................................................................................................2
1.7 Methodology....................................................................................................................3
1.7.1 Primary Data:............................................................................................................3
1.7.2 Secondary Data:........................................................................................................3
1.8 Organization.....................................................................................................................3
1.9 HISTORY OF MCB BANK LIMITED...........................................................................4
1.10 VISION AND MISSION OF MCB...............................................................................8
1.11 Values of MCB...............................................................................................................9
Chapter 2..................................................................................................................................12
ROLE OF SECTOR AND ORGANIZATION.........................................................................12
2.1 Introduction....................................................................................................................12
2.2 Overall respective sectors in Pakistan............................................................................12
2.3 Commercial Banking In Pakistan...................................................................................12
Chapter 3..................................................................................................................................15
ORGANIZATIONAL STRUCTURE OF MCB......................................................................15
3.1 Introduction....................................................................................................................15
3.2 STRUCTURE ON THE BASIS OF EXECUTIVES.........................................................16
3.3
Departmentation On The Basis Of Employees Designation........................................17
3.4 Geographical Departmentation of MCB........................................................................18

3.5 STRUCTURE ON THE BASIS OF GEOGRAPHICAL LOCATION..........................19
3.6 STRUCTURE ON THE BASIS OF FUNCTIONS.......................................................20
3.7 Departmentation On The Basis Of Functions................................................................20
Chapter 4..................................................................................................................................22
DEPARTMENTALIZATION OF MCB AND ITS FUNCTION.............................................22
4.1 Cash Department............................................................................................................22
4.1.1 Cash Receipt:...........................................................................................................23

4.1.2 Payments:................................................................................................................23
4.2 Account Opening Department:.......................................................................................23
4.3 Clearance Department:...................................................................................................24
4.4 Remittance Department..................................................................................................25
4.5 Advances Department....................................................................................................25
4.6. Forms of lending:..........................................................................................................25
4.6.1 Cash Finance:..........................................................................................................26
4.6.2 Overdraft:................................................................................................................26
4.6.3 Fixed loans:.............................................................................................................26
Chapter 5..................................................................................................................................27
PRODUCT AND SERVICES..................................................................................................27
5.1 Deposits:.........................................................................................................................27
5.1.1
Demand Deposits (DD):.....................................................................................27
5.1.2 Term DEPOSITS/Fixed Deposit:............................................................................27

5.1.3 Savings Deposits:....................................................................................................28
5.2 Services and Products................................................................................................28
5.2.1 Khushali Bachat Account (KBA):...........................................................................28
5.2.2 Hajj Mubarak Savings Scheme:..............................................................................28
5.2.3 Khanam Bachat Account Scheme (KBA):..............................................................29
5.2.4 PLS Savings............................................................................................................29
5.2.5Export Promotion Scheme:......................................................................................30
5.2.6 Credit Cards:...........................................................................................................30
5.2.7 Rupee Travelers Cheques (RTC):............................................................................30
5.2.8 Automated Teller Machines (ATM):.......................................................................30
5.2.9 Capital Growth Certificate Scheme (CGC):............................................................31
Chapter-6..................................................................................................................................32
Financial ANALYSIS...............................................................................................................32
6.1 BALANCE SHEET.......................................................................................................32
6.2 Income Statement...........................................................................................................34
6.3VERTICAL ANALYSIS.................................................................................................36
6.4 HORIZONTAL ANALYSIS..........................................................................................38
6.5 RESULT ON THE BASIS OF VERTICAL & HORIZONTAL ANALYSIS................40
6.6 PEST ANALYSES.........................................................................................................45
Chapter 7..................................................................................................................................47
FINDINGS AND RECOMMENDATIONS............................................................................47
References................................................................................................................................53
ACKNOWLEDGEMENT
I express my gratitude to Almighty Allah for his unlimited graciousness because Words are
scarce and knowledge is limited to express his majesty. I have the pearls of my eyes to admire
the blessings of the compassionate, omnipotent, the Merciful and the beneficent Allah who is
the entire source of knowledge and wisdom. Due to his blessings, I become able to contribute
this comprehensive assignment towards the deep ocean of knowledge already exist. Heart is
warm with love and thoughts have turned to the city of knowledge The Holy Prophet
(P.B.U.H) His saying Learn from to Cradle to Grave inspired the strong desire in me to
undertake this course of valuable studies. I deem it as a great opportunity to offer my heartiest
gratitude to my venerable teacher Sardar Ejaz Ahmed, for his great efforts to make us
understand and to conduct this kind of activities of giving the great opportunity for learning
beyond your existing area of scope. I am thankful to bank manager for his nice co-operation
and proper guidance throughout my internship. Express my heartiest and sincerest sense of
gratitude to all of them for providing megrand exposure to gain multifarious experience, May
Allah The Almighty bless my parents and well-wishers who are the permanent source of
prayers for me and my successes in this world.
Muhammad Waqas
LIST OF ABBREVIATIONS
MCB
IDBP
SBP
MNCs
ADBP
L/C
L/G
ATM
APD
IPD
IT
BTF
NIT
FC
PLS
HRM
SBU
NDFC
RTCs
MT
ETD
MIS
FDD
FS
ETD
Muslim Commercial Bank

Industrial Development Bank of Pakistan
State Bank of Pakistan
Multi-National Companies
Agricultural Development Bank of Pakistan
Letter of Credit
Letter of Guarantee
Auto Teller Machine
Assets Product Division
Investment Product Division
Information Technology
Balance Transferred Facility
National Investment Trust
Foreign Currency
Profit & Loss Sharing
Human Resource Management
Strategic business unit
National Development Finance Corporation
Rupee Travelers Cheques
Mail Transfer
Electronic Technology Department
Management Information System
Foreign Demand Draft
Financial Statement
Electronic Technology Department
10
EXECUTIVE SUMMARY
MCB Bank Limited has a solid foundation of over 50 years in Pakistan, with a network of over
1000 branches, over 850 of which are Automated Branches, over 450 MCB ATMs in 41 cities
nation wide and a network of over 12 banks on the MNET ATM Switch. MCB's operations
continued to be streamlined with focus on rationalization of expenses, re-alignment of backend processing to increase productivity, enhancement of customer service standards, process
efficiency and controls. The Bank has taken the lead in introducing the innovative concept of
centralizing Trade Services in the country by providing centralized foreign trade services to
branches with a view to improve efficiency, expertise and reduce delivery cost.
This bank was incorporated under companies act 1913 on 9th July 1947 (just before
partition) at Calcutta. But due to changing scenario of the region, the certificate of
incorporation was issued on 17th August, 1948 with a delay of almost 1 year; the certificate
was issued at Chittagong. The first Head office of the company was established at Dacca and
Mr. G.M.Adamjee was appointed its first chairman. It was incorporated with an authorized
capital of Rs. 15 million. After some time the registered office of the company was shifted to
Karachi on August 23rd, 1956 through a special resolution, now recently the Head office of
MCB has been transferred to Islamabad in July, 1999 and now Head office is termed as
Principle Office. This institute was nationalized with other on January 1st, 1974. At that time
it had 506 branches and deposits amounting to Rs. 1,640 million. Although. MCB has
reputation of a conservative bank but nationalization also left its effects on this institutes well
and by end of year 1991 in which it was privatized the total number of branches were 1.287
and deposits amounting to as high as Rs. 35,029 million. When privatization policy was
announced in 1990, MCB was the first to be privatized upon recommendations of World
Bank and IMF. The reason for this choice was the better profitability condition of the
organization and less risky credit portfolio which made'' it a good choice for investors.
On April 8th, 1991, the management control was handed over to National Group (the highest
bidders). Initially only 26% of shares were sold to private sector at Rs. 56 per share.
11
During my internship in MCB, I worked in All departments and I successfully

completed all the task/duties that were assigned to me.
During the course of internship, I learned about different functions performed by
Finance Department as a whole. I also learned banks correspondence with their employees
and within branches. I learned about documentation requirements and record keeping
for different activities and processes, especially the documentation requirement for different
kinds of activities.
12
Chapter 1
Introduction to the Report
1.1 Introduction
The basic objective of this study is to know about the current position of the MCB in
sphere of its overall analysis and to suggest meaningful and feasible recommendations for
the bank so as to improve its performance and to restain its previous position in banking
sector.
The objective of this report is to studying and analyzing the MCB Bank in
general and Main Branch (0585) ABBOTTABAD, in particular, As the partial fulfillment
for the degree of M.Com from Government
College Of Management Sciences
Abbottabad, this report is prepared and submitted to the Hazara university.

MCB is an equal opportunity employer. It offers great incentives and benefits of their
employees throughout the country and out of country. It provides full opportunities for
improving their careers and skills; it also gives more incentives to their employees and
increasing the rank of the smart and hard workers. In this report the methodology is use as
primary data and secondary data. Primary data is collected through observation and
interviews and secondary data is collected through annual report, circulars, brochures,
newspaper, manuals, internet and relevant books.
As part of the academic requirement for completing M.Com of the students are required
to under go six weeks of internship with an organization. The internship is to serve the
purpose of acquainting the students with the practice of knowledge of the discipline of
banking administration.
1.2 Background of the study

Internship training program during Masters in Commerce Programs necessary for the partial
fulfillment of the completion of Degree of Master in Commerce. It is necessary for me to
complete an internship session of about 6 weeks in some manufacturing or service industry
relevant to my area of interest and specialization. So, I choose the Banking field because I
have the interest in this sector because my study background is related with this sector.
1.3 Purpose of the Study

Internship is the capstone experience that provides me with hands-on, real-world experience
in a work setting. Ideally, internship will enable interns to:
(a) Integrate and use my knowledge and skills from the classroom
(b) Discover where further competence is needed
(c) Take steps to gain that competence under educational supervision, and
(d) Become better acquainted with the types of work settings in which such
competence can be applied.
1.4 Scope of the study

This study will facilitate the students regarding the working of Banking sector of Pakistan
because most of the teachers during their lectures use the examples of Banks like MCB,
National Bank, UBL, Bank Al Falah and many others, students should study this report so
that they must grasp the functioning of such Banks.
1.5 Limitation of the study

The study is done with the sole purpose of doing the best work but there were certain
limitation faced during the internship period. The most important limitation from which the
study suffers is the non-availability of information in a manner required for analysis and the
secrecy of the bank. Another important limitation of the study is time and space constraint.
1.6 Objectives
I worked as an internee in MCB Abbottabad mainBranch. The main objectives to study in
MCB were:
To get some experience in working with well reputed organization.
To gain knowledge about the professional environment of the bank.

To know about the technology utilized in the banks.
To deal and manage with the situation of stress.
1.7 Methodology
There are mainly two methods that are used for the collection of data.
1.7.1 Primary Data:
Observation of functions of organization on the spot.
Observation of different processes of organization on the spot.
1.7.2 Secondary Data:
Internet is very helpful for me to study more about banking sector of Pakistan.
Different type of booklets of the Bank.
Annual reports
Journals
Newspapers
1.8 Organization
MCB is one of the leading banks of Pakistan with a deposit base of about Rs.280
billion and total assets of around Rs.300 billion. Incorporated in 1947, MCB soon earned the
reputation of a solid and conservative financial institution managed by expatriate executives.
In 1974, MCB was nationalized along with all other private sector banks.
The Bank has a customer base of approximately 4 million, a nationwide distribution
network of over 1,000 branches and over 450 ATMs in the market.
During the last fifteen years, the Bank has concentrated on growth through improving
service quality, investment in technology and people, utilizing its extensive branch network,
developing a large and stable deposit base.
1.9 HISTORY OF MCB BANK LIMITED

This bank was incorporated under companies act 1913 on 9th July 1947 (just before
partition) at Calcutta. But due to changing scenario of the region, the certificate of
incorporation was issued on 17th August, 1948 with a delay of almost 1 year; the certificate
was issued at Chittagong. The first Head office of the company was established at Dacca and
Mr. G.M.Adamjee was appointed its first chairman. It was incorporated with an authorized
capital of Rs. 15 million. After some time the registered office of the company was shifted to
Karachi on August 23rd, 1956 through a special resolution, now recently the Head office of
MCB has been transferred to Islamabad in July, 1999 and now Head office is termed as
Principle Office. This institute was nationalized with other on January 1st, 1974. At that time
it had 506 branches and deposits amounting to Rs. 1,640 million. Although. MCB has
reputation of a conservative bank but nationalization also left its effects on this institutes well
and by end of year 1991 in which it was privatized the total number of branches were 1.287
and deposits amounting to as high as Rs. 35,029 million. When privatization policy was
announced in 1990, MCB was the first to be privatized upon recommendations of World
Bank and IMF. The reason for this choice was the better profitability condition of the
organization and less risky credit portfolio which made'' it a good choice for investors.
On April 8th, 1991, the management control was handed over to National Group (the highest
bidders). Initially only 26% of shares were sold to private sector at Rs. 56 per share.
Privatization:
A wave of economic reforms swept Pakistan in the lattes introducing the Need for
privatization of state owned banks and companies. This was the first bank to be privatized in
1991 and the bank was purchased by a consortium of Pakistani corporate groups led by
Nishat Group. Nishat Group is one of the leading and most diversified business groups in
Pakistan. The group has strong presence in the most important business sectors of the country
such as banking, textile, cement and insurance. Mian Mohammad Mansha is the Chairman of
the group (and also MCB) and has played instrumental role in its success. In recognition of
Mr. Manshas contribution, the Government of Pakistan has conferred him with "Sitara-eImtiaz", one of the most prestigious civil awards of the country.
Developments:
After privatization, the growth in every department of the bank has been observed. Following
are some key developments:
1. Launching of different deposit schemes to increase saving level.
2.Increased participation on foreign trade.
3 . B e t t e r me n t o f b r a n c h e s a n d s t a ff s e r v i c e l e v e l .
4.Introduction of Rupee Traveler Cheques & Photo Credit Card f or the first time in
Pakistan.
5.Extended use of information technology which is evident from the fact that t here
are 768 fully automated branches, 243 online branches (integrated networking), 151 ATMS in
27 cities nationwide and MCB continuously innovates new product.
MCB As An Organization:
Over the years MCB has developed strong relationships with its customers by understanding
their needs and treating them with respect, dignity and importance. The driving force behind
its commitment and services is its focus on customers ensuring that it not only meets, but also
exceeds their expectation. The Bank has a customer base of approximately 4 million.
They strive to achieve excellence by ensuring that every moment of their time is spent in
adding value, making sure that they do things right, first time, and every time. With the quest
of quality MCB has always taken initiatives bringing banking into a new arena; from cash to
the convenience of plastic; from branch banking to internet banking and from face to face
customer interaction to online accessibility.
MCB now focuses on three core businesses namely Corporate, Commercial and Consumer
Banking. Corporate clientele includes public sector companies as well as large local and
multinational concerns. MCB is also catering to the growing middleclass by providing new
asset and liability products. MCB Bank Limited has a solid foundation of over 63 years in
Pakistan, the Bank provides 24 hour banking convenience with a network of over 1000
branches, the largest ATM network in Pakistan over 450 ATM locations in the market.
Profitability:
MCB is Pakistans fourth largest bank by assets having an asset base of US$ 5.9 billion, and
the largest by market capitalization having a market capitalization of US$ 1.8 billion. The
Bank has a customer base of approximately 4 million and a nationwide distribution network
of 1,081 branches, including 8 Islamic banking branches, and over 300 ATMs, in a market
with a population of over160 million.
In 2009, MCB reported a profit after tax of PKR 15.5 billion (appx.US$183million) and
generated a return on average equity of 27.35% and a return on assets of 3.25%. The Banks
asset quality is strong with a gross NPL ratio of 8.62%.
During the last fifteen years, the Bank has concentrated on growth throughimproving service
quality, investment in technology and people, utilizing its extensive branch network,
developing a large and stable deposit base and managing its non- performing loans via
improved risk management processes.
MCB has 1081 branches (as of 31st December, 2009) including local branches,and business
establishments in Sri Lanka and Bahrain including newly established Rep.Office in Dubai,
UAE. The Bank has also formed a private company in Hong Kong(fully owned subsidiary of
MCB) in partnership with Standard Chartered Bank, handling trade transactions of select
countries in the Asia-Pacific region.
MCB has been successful in turning around its operations since its privatization and is
moving forward to set high performance standards with the continuous support of its
customers and leadership in banking technology. To further strengthen its financial services
base, MCB has also incorporated an Asset Management Company in the year 2005 known as
MCB Asset Management Company. MCB has also incorporated a leasing company in
Azerbaijan in 2009.
Business Strategy:
The business strategy of MCB is to provide financial solutions to major segments of its
customer base, namely retail and corporate. Separate business groups have been set up to
ensure a more focused approach in satisfying the diversified customer segments. The Bank
has also established an Islamic Banking unit to offer Shariah compliant products and services,
with dedicated Islamic banking branches in six cities. The plan for future is to further realize
the capacity of Islamic Financial Systems and to bring Shariah compliant network parallel to
current retail network of traditional banking. Wholesale Banking Group caters to the top tier
local and multinational companies. As a result of organizational restructuring, including
reinvigorating Investment Banking and beefing up relationship teams, the Group is in line
with the industrys best practices. MCB has closed some large deals and is currently working
on a number of large transactions including advisory business. It is a strong competitor in
cash management and structured financing activities. Retail Banking Group focuses on
trading and middle market segment primarily for building risk assets and trade related
business. MCB caters to their needs of financing foreign and local trade, funds transfer and
other seasonal requirements. The Bank has renovated a large number of branches and staff
has been trained for meeting the requirements of SMEs and other retail customers. A separate
SME Financing Division has been set up to provide customized financing solutions to this
very important segment of the economy. The Group also focuses on the development of
innovative consumer asset products for satisfying the personal needs of the customers. MCB
has a significant share of consumer financing business with its House and Car Financing
schemes. The recently launched running financing facility against the mortgage of property is
also expected to go a long way in increasing the quality consumer credit portfolio of the
bank. With the experience gained in the past few years, the Bank is fast progressing towards
becoming the leading bank in consumer business.
Information Technology:
MCBs name is synonymous with ATM facility in the country as the Bank has been a pioneer
in introducing 24-hour cash withdrawal facility and on-screen transactions. MCB ATM/Debit
Card, the most multifunctional card of the country, with its collaboration with Cirrus and
Maestro can be used globally. The Bank has also deployed an extensive network of Point of
Sale Terminals at thousands of merchants in major cities of the country, thus having the
privilege of being the first and only bank with full-fledged card acquiring and issuing
systems. The Bank also pioneered the idea of sharing its ATM network with other banks by
establishing an electronic platform for enhanced network accessibility and secure son-line
transactions. MCB mobile banking was launched in mid-CY09, and volumes on the platform
have already crossed the PKR 1 billion mark. While the services are free for now, going
forward this entails improvement in fee income as well as generation of sticky zero-cost
deposits. Technological leadership has helped the Bank in providing multiple delivery
channels to the customers and satisfying their needs anytime & anywhere in the world.MCB
offers the most comprehensive Internet banking solution in the country. MCB Virtual-Internet
Banking with its wide ranging banking solutions for the customers for individual as well as
corporate customers has become the most preferred Internet banking solution in the country.
1.10 VISION AND MISSION OF MCB

Vision Statement:
To be the obvious choice for financial services in the region and beyond
To be the leading, financial services provider, and partnering with our customers for amore
prosperous and secure future. Our vision statement underlies our aspirations to establish the
MCB group as the benchmark reference for the provision of financial services in the region
and even further, in line with the increased needs of our customers operating in the global
economy.
Mission Statement:
Pursuing the voyage towards excellence
We are a team of committed professionals, providing innovative and efficient financial
solutions to create and nurture long-term relationships with our customers. Indoing so, we
ensure that our shareholders can invest with confidence in us.
Providing innovative
Efficient financial solutions
Long-term relationships with our customers
Shareholders invest with confidenceOur mission statement testifies to our unrelenting

commitment to best practices inthe provision of financial services throughout the group
against the backdrop of creating shareholder value.
1.11 Values of MCB

Integrity:
We are the trustees of public funds and serve our community with integrity. We believe in
being the best at always doing the right thing. We deliver on our responsibilities and
commitments to our customers as well as our colleagues.
Respect:
We respect our customers values, beliefs, culture and history. We value the equality of
gender and diversity of experience and education that our employees bring with them. We
create an environment where each individual is enabled to succeed.
Excellence:
We take personal responsibility for our role as leaders in the pursuit of excellence. We are a
performance driven, result oriented organization where merit isthe only criterion for reward.
Knowledge:
A strong commitment to nurture our human capital through life long development & learning
toward achieving our goal described in our mission.
Customer Centricity:
Our customers are at the heart of everything we do. We thrive on the challengeof
understanding their needs and aspirations, both realized and unrealized. We makeevery effort
to exceed customer expectations through superior services and solutions.
Innovation:
We encourage and reward people who challenge the status quo and think beyond the
boundaries of the conventional. Our teams work together for the smoothand efficient
implementation of ideas and initiatives.
Customer Care:
The assurance of providing quick, dedicated and unrivalled services to our valuable
customers.
Team Work:
Our approach, towards synergistic potential among our people between the companies of the
group alongside leveraging individual skills & competencies.
10
1.12
11
AWARDS OF MCB
1.12.1 EUROMONEY AWARDS:
Best Bank In Asia Award 2008
MCB has been awarded as a Euro money Award 2008 for the Best Bank in Asia"
Best Bank In Pakistan Award 2006:
MCB has yet again received the esteemed Euro money Award for the Best Bank in Pakistan.
It is the only bank to receive the Euro money Award for Excellence for the sixthtime in the
past seven years.
MCB has again received the esteemed Euro money Award for the Best bank in Pakistan.
12
It is the only bank to receive the Euro money Award for Excellence for the fifth time in the
last six years.
In a continuous winning streak, MCB once again takes pride in being conferred with
Euromoney's prestigious award of excellence, for being the "Best Bank in Pakistan" for the
fourth time in the last five years.
MCB believes in you. Together we work with quality, integrity and dedication, striving
toachieve collective success by understanding changing trends and assimilating into
diversecultures. Your trust in our ability and our commitment to deliver has again won us the
Euromoney Award 2003 for the "Best Bank in Pakistan".
Your trust and our commitment is always an award winning combination MCB was
awarded as a Euro money Award 2001 for the " Best Bank in Pakistan".
Best Domestic Bank Award 2000:
MCB was awarded as a Euro money Award 2000 for the " Best Domestic Bank inPakistan".
1.12.2 ASIA MONEY AWARDS:

The Best Domestic Commercial Bank Award 2005
MCB Continues to shine as once again Asia Money declares MCB as
"The Best Domestic Commercial Bank in Pakistan"
for the year 2005.
The Best Domestic Commercial Bank Award 2004
MCB has a distinction of winning the Asia Money 2004 award for being
"The BestDomestic Commercial Bank in Pakistan"
13
Chapter 2
ROLE OF SECTOR AND ORGANIZATION
2.1 Introduction
This chapter will summarize that whats the current situation of the banking sector in
Pakistan. What elaborate the importance of MCB in the banking sector of Pakistan? This
chapter will explore the role of MCB in the economic & social development of Pakistan.
Moreover this will also tells you about the functions thats the organization is performing and
about the internship office.
2.2 Overall respective sectors in Pakistan

Banking is one of the most sensitive businesses all over the world. Banks play very important
role in the economy of a country and Pakistan is no exemption. Banks are custodian to the
assets of the general masses. The banking sector plays a significant role in a contemporary
world of money and economy. It influences and facilitates many different but integrated
economic activities like resources mobilization, poverty elimination, production and
distribution of public finance.
2.3 Commercial Banking In Pakistan

The interesting point which I observed during the span of mine internship was the historical
background of Banking & Financial sector which is the one in which great improvement and
growth is observed since the formation of Pakistan. For studying the growth of this sector we
can divide it into three stages, which are as follow:
a) Pre-Nationalization Era
b) Nationalization Era
c) Post Nationalization Era
a)
Pre Nationalization Period:
There were only two Muslim banks in Indo Pak before partition, they were; Habib Bank Ltd.
(estd. in 1941 at Bombay) & Australia Bank Ltd. (estd. In 1944 at Lahore). All other banks, at
that time, were either owned by Hindus or Foreigners. At the time of partition there were 631
14
bank branches in area which came under Pakistani control. But due to bloodshed and
violence at large scale, mostly branches were closed and the disparity can be assessed from
the fact that on July 1948 there were195 branches with deposits of Rs.88 crore (880 million)
only. Also a factor lagging in Pakistani industry was a central bank of its own, by that time
Reserve Bank of India was acting as central bank for both countries and same currency notes
were used in both territories. But Reserve Bank of India was biased and Set down Pakistan on
many occasions such as the issue of funds transfer etc. In this period drastic steps were taken
in government sector for the improvement of overall position. The private sector also
responded to these changes and some very positive changes were observed. Some of the steps
taken by the government in this regard were as under:
1)
Inauguration of State Bank of Pakistan (SBP) on 1st July, 1948.2) Setting

up of National Bank of Pakistan in November, 1949 to control the'jute'
export in East Pakistan and to act as agent of SBP.3) Larger powers were
given to SBP through SBP Act (1956) for controlling purposes.4) Banking
Companies Ordinance 1962 for protection and guidance to banks.5)
Establishment of specialized banks, such as ADBP (1952);
a) HBFC (Nov, 1952);

b) P1CIC (Oct, 1957);
c) IDBP (Aug. 1961);
d) NDFC (Jan, 1973).
These were the steps, which built a strong banking sector in Pakistan. This is also
obvious from the facts that by 1973 there were almost 10 foreign banks were working
in Pakistan and all over deposit position was around Rs.2300 crore (23,000million).
b) Nationalization period
On January 01, 1974 all Pakistani banks were nationalized through Nationalization Act 1974.
Under this law all Pakistani banks became a public property. All small banks were merged in
bigger banks to create 5 major Pakistani banks Pakistani banks. These banks were to control
by Pakistan Banking Council. There are still controversies about this act of government as
15
whether it contributed in success of failure of banks. However the major changes after
nationalization were as follows:
Working of banks was extended to under developed areas.
Market expansion for credit and deposits.
Decrease in service level of bank officers.
Decrease in profitability as well. However the effect of expansion was enormous and it can
also be depicted with the help of table 2 which shows the deposit & branch positions of
different nationalized banks.
c) Post-Nationalization Era
In 1990 the government decided to denationalize all the nationalized institutes. Some was
also suggested in banking sector. For this purpose, amendments were made to Nationalization
Act 1974 and two nationalized banks were privatized. Along with this a permission to open
banks in private sector was also granted. The rules regarding establishment of new banks and
for incoming foreign banks were also relaxed. The-three privatized banks are a) MCB taken
up by a private group in April, 1991 b) ABL taken up by its own employees in September,
1991.1c) UBL taken up by UAE party in 2002.After these changes a large number of private
and foreign banks started their operations in Pakistan.
16
Chapter 3
ORGANIZATIONAL STRUCTURE OF MCB
3.1 Introduction
Structure refers to designate relationships among resources of the management system. The
purpose of structure is to facilitate the use of each resource, both individually and
collectively, as the management system attempts to attain its objectives. Two basic types of
structures exist within management systems; formal structure and informal structure. Formal
structure is defined as relationships between organizational resources as outlined by
management. On the contrary, informal structure is defined as patterns of relations that
develop because of the informal existence of organizational members. Informal structure
evolves naturally and tends to be molded by individual norms, values and/or social
relationships. Informal structure coexists with formal structure but is not necessarily identical
to it.
Formal structure can be made on different basis which are as follows:
17
3.2 STRUCTURE ON THE BASIS OF EXECUTIVES

Chairman
Board of Directors
Chief Executive / President
Senior Executive / Vice President
Executive Vice President
Senior Vice President
Vice
President
Clerical
Staff
Assistant
Vice President
OG 1
OG 2
OG 3
18
BOARD OF DIRECTORS
Non Clerical Staff
Name
Mian Mohammad Mansha
Mr. S. M. Muneer
Mr. Tariq Rafi
Mr. Shahzad Saleem
Sarmad Amin
Dato' Mohammed Hussein
Source: (MCB Annual Report 2014)
Mr. Raza Mansha
Mian Umar Mansha
Mr. Muhammad Ali Zeb
Dato' Seri Ismail Shahudin
Mr. M U A Usmani
Designation
Chairman
Vice-Chairman
Director
Director
Director
Director
Director
Director
Director
Director
President/CEO
SOURCE: (Annual Report 2014).
3.3 Departmentation On The Basis Of Employees Designation
A board of directors under the chairmanship of Mr. Main Muhammad Mansha runs the bank.
It has a Chief Executive, who is answerable to the board and responsible for the activities of
the five Senior Executive Vice Presidents (SEVP). Four SEVPs manage the activities in each
province and the fifth one is responsible for the overseas operations. The Executive Vice
Presidents are answerable to the SEVP and responsible for their subordinate Vice Presidents.
Under each Vice President are the Assistant Vice Presidents (AVP), Officers Grade 1 (OG1),
Officers Grade 2 (OG2), and Officers Grade 3 (OG 3) with decreasing level of authority as
we move down the list.
19
3.4 Geographical Departmentation of MCB

The Head Office of the bank is located in Karachi. Then we have two Area Offices namely:
Area Office South
Area Office North
Area Office, South manages the operations in Sindh and Balochistan while Area Office North
is responsible for the activities in Punjab, N.W.F.P, and AJK. Each Area Office is in turn
divided in to circles. To make administration easier, each circle is divided into various
regions. The regional offices are responsible for the affaires of the branches operating in their
domain.
20
3.5 STRUCTURE ON THE BASIS OF GEOGRAPHICAL LOCATION
HEAD OFFICE
()
Area Of The Office
NWFP
10
Circles
25
Regions
601 Branches
2
Circle
7
Regions
112 Branches
Overseas Branches
Area Office South
12
Sindh
Balochistan
5
Circles
1
Circle
Regions
217 Branches
Sri
Lanka
Regions
35 Branches
Source: (MCB Annual Report 2013)
21
3.6 STRUCTURE ON THE BASIS OF FUNCTIONS
M a n a g e r B r a n c h O p e r a t io n s ( O .G . 1
C a s h D e p tt.
B ills D e p tt .
F orex
C r e d it
R /F
D /F
R e m itta n c e s
C /F
In w a rd
F o r e ig n
R e m it ta n c e s
P a y m en ts
O u tw a r d
B ills
C o lle c t io n s
In w a rd
B ills
ATC
O u tw a r d
F o r e ig n
C u r r e n c y A /C
S a v in g B a n k
D e p o s its
C le a r in g
A c c o u n ts D e p tt.
D em and
D e p o s its
F ix e d
D e p o s its
O ffe r e d
S chem es
ATM
3.7 Departmentation On The Basis Of Functions
22
MCB performs its functions in accordance with its memorandum and articles of association
in the same manner as do other banks in Pakistan.
The important functions performed by the Bank are:
Acceptance of Deposits
To receive deposits is a basic function of all commercial banks because the entire banking
system is based on the funds borrowed from the public, as banks own capital is not enough
to sure the operations.
MCB accepts main deposits such as Current, Savings and Fixed deposits and offers different
schemes such as MCB Saving-365, MCB Saving-365 Gold, Mahana Khushali Scheme,
Khushali Bachat Scheme and many more in order to increase customers attraction.
Providing Funds
A bank is a profit-seeking institution. It attracts surplus balances from the customers at low
rate of interest and makes advances at a higher rate of the individuals and business firms.
MCB, while providing funds, aims at both liquidity and profitability. There are three types of
advances provided by MCB:
Running Finance
Demand Finance
Cash Finance
Working as an Agent
MCB performs the following agency functions:
Dividends Collection
Cheques Collection
Acting as a trustee or executor
Execution of standing instructions
General Utility Services

This include the following areas:
Clearance of utility bills
Providing locker facility
23
Accepting Bills of Exchange
Supply of information
24
Chapter 4
DEPARTMENTALIZATION OF MCB AND ITS FUNCTION
Organizing is something which is to decide how best to group Organizational activities and
resources. There are a lot of things which comes under the head of organizing
departmentalization is one of that the question is that what is departmentalization
according to Griffin Departmentalization is the process of grouping jobs according to
some logical arrangement
When the organization is small, the owner-manager can personally oversee everyone
Who works there. As an organization grows ,however, personally supervising all the
employees becomes more and more difficult for the owner-manager, consequently ,new
manager position are created to supervise the work of other employees are not assigned to
particular managers randomly. rather, jobs are grouped according to some plan. The logic
embodied in such a plan is the basis for all departmentalization.
With respect to Muslim commercial bank every one knows that this bank is a huge
organization and this organization needs departmentalization and in Muslim commercial bank
there is functional departmentalization. With in each Branch Office, including MCB Main
Branch Abbottabad , the commonly maintained departments include the cash department,
remittances department, advances department, account opening department, clearing
department and in some cases there is a foreign exchange department too. Some of the
departments and their activities are as follows:
Cash department
Accounts opening department
Clearance department
Advances department
Remittance department
4.1 Cash Department

A well known economist says that banker is dealer in capital or more precisely dealer in
money. As the bank deals in money its mean that the most important department of the bank
is cash department. There are two basic functions of the cash departments that are;
25
Cash receipt
Cash payment
4.1.1 Cash Receipt:

There are different types of accounts in Muslim commercial bank and cash department
receives money from different customers and crediting to their respective accounts .for
depositing the money in accounts it is necessary for every customers to fill the slip named
pay-in-slip which contains different information which has to fill e.g. account number name
of the account holder date amount deposited etc.
4.1.2 Payments:
According to the banking company ordinance it is the function of the bank that bank pays the
money to the depositors on demand and the money can be withdrawn through cheques
drafts or otherwise. Bank want to satisfy himself before paying the cash but what type of
satisfaction, bank satisfy himself that the instrument is valid and there is sufficient balance In
the account holder to support the payment. There is formal procedure to receive the
payment this formal procedure is to present the cheque to the signature verification
department then cashier and cashier makes the payment to the customers.
4.2 Account Opening Department:

In order to operate with bank, a customer has to open an account. In large branches, grade I,
grade II or grade III officers are responsible for opening new accounts. In opening the
account with the Muslim commercial bank there is a formal procedure and there is a special
account opening form called SF-1AA which contain information
1
Type of account
Currency
Nature of account
Particular of deposits
Operational instructions
Other services
26
Zakat deduction
Particulars of accounts
Authority to contact
10
Details of others bank accounts
11
Special instructions
12
Personal accounts
13
Acknowledgement
14
Specimen signature card
4.3 Clearance Department:

The concept of the clearance is taken from the State Bank who perform the function of
clearing house .A clearing house is a place where the representative of commercial banks
meet to exchange the cheques drawn on each other and then settle the difference owned to
each other.when there is no State Bank in a specified region then National Bank of Pakistan
perform the duties of clearing house. Why there is need of clearance house for the banks
because there is a huge development in the banking system in the 20th century and with
increase the peoples confident on banks there is increased in the use of banking instruments
and these instruments are settled through the function of clearing house.
If the person receive Cheque from another person and he is not a client of that bank then that
customer give this cheque to his bank and that bank collect money on his behalf from the
bank of other person. Muslim commercial bank is also the part of that circle .The
representative of the local commercial banks meet a fixed time once a day on all the working
day of week. The meeting is held in the office of the National bank which officially performs
the duties of clearing house.
The clearing activities are recorded in two types of books
1
Inward clearing book
Outward clearing book
27
4.4 Remittance Department

Today the business are scattered all over the world and businessman wants to transfer its
funds safely to other place. This function of transferring the funds are performed by the
Remittance department .The instruments used by Muslim commercial bank to transfer money
from one bank to other are;
1
Telegraphic Transfer (TT)
Mail transfer
Pay order (PO)
Demand draft (DD)
(MT)
4.5 Advances Department

According to banking companies ordinance 1962 banker mean, a person transacting the
business of accepting for the purpose of lending and investment .its mean that the primary
function of the bank is to receive for the purpose of lending .same is the function of Muslin
Commercial Bank it receive cash from customers and invest it in different ways .Before
giving the credit to the client whether it is a business or personality the bank wanted to satisfy
himself with respect of
1 Safety
1
Character of the customer
Capacity of customer
Capital
Liquidity
Dispersal
Suitability
4.6. Forms of lending:

The various forms of advances by Muslim commercial bank are
28
4.6.1 Cash Finance:

This is very common form of borrowing by commercial and industrial concerns and is made
available either against pledge or hypothecation of goods, produce or merchandise. In cash
finance, a borrower is allowed to borrow money from the banker up to a certain limit, either
at once or as and when demand. The buyers prefers this form of lending due to the facility of
paying markup only on the amount he actually utilize
4.6.2 Overdraft:
By this method, bank allowed his reliable customer to draw over and above the money
actually deposited by them in their account .This facility is allowed through cheques only to
current account holders this facility of overdraft is not provided to all account holders, but
only those who have good financial and credit standing. The interest on overdraft is charged
on the basis of daily debt balance on actual amount drawn from the date
4.6.3 Fixed loans:

In case of fixed loans, Muslim commercial bank advances fixed amount repayable either in
fixed monthly or yearly installments or in lump sum. It is usually borrowed to meet with the
long term requirement of the capital .Interest is charged on the full amount of the loan
sanctioned for whole of the period whether utilized or not by the borrower .This type of loan
are granted against the security like real estate machinery etc. These securities are put to
cover the risk for the return of the loan.
29
Chapter 5
PRODUCT AND SERVICES
Commercial banking is regarded as a Conservative business because the rewards are
modest and the penalties of bad banking are many. As a trustee of the public funds, they have
a greater responsibility for safety and prudence. Many businesses can enjoy some slack in
their affairs, commercial banks cannot afford this, since commercial banks must make a
living by putting the money at their disposal to work, they are faced with the problem of
making a living without jeopardizing the safety of their institution. The art of commercial
banking is solving this basically conflicting requirements, that of being safe and yet profitable
5.1 Deposits:
Deposits are the main source of banks funds and without them banks cannot exist. It is very
important for an individual bank to get funds and to put them to work safely and profitably.
The larger the difference between the rates at which these deposits are borrowed and lent out,
the greater will be the profit margin of the bank.
Deposits are broadly divided into the following:
Demand Deposits
Fixed Deposits
Saving deposit
5.1.1 Demand Deposits (DD):

Demand Deposits are also called Current Deposits. These are payable to the customer
whenever they are demanded. Bank does not allow any profit or return on these deposits, and
customers are required to maintain a minimum balance, failing which incidental charges are
deducted from such accounts. Most of the depositors of these accounts are businessmen.
30
5.1.2 Term DEPOSITS/Fixed Deposit:

Term Deposits are also called Fixed Deposits. These can be withdrawn after a specified
period of time.. The rate of return varies with the duration for which the amount is kept with
the bank.
5.1.3 Savings Deposits:
Savings Deposits refer to deposits which are made-up of thrift and are kept by the customer
to ill-effects of an unexpected outlay or a failure of receipts to safeguard financial outlay.
Profit is paid at a flexible rate calculated on half-yearly basis under the interest-free banking
system. There is no restriction on the withdrawals from the deposit account but the amount of
money withdrawn is deleted from the amount to be taken for calculation of products for
assessment of profit to be paid to the account holder.
5.2 Services and Products

The Bank provides a complete range of domestic and international services to its customers.
Additionally, the following products have been developed:
5.2.1 Khushali Bachat Account (KBA):

This scheme has been introduced to inculcate the habit of savings among the people.
Salient Features:
Introduced for the first time in Pakistan.
Expected profit is as high as 2.76% percent per annum.
Profit is paid on half yearly basis and calculated on daily products.
Provides the facility to pay accounts holders utility bills through
His/her accounts, without making queues and delays.
Customers can pay its utility bills from his account
The minimum initial deposit is 3600 rupees
31
5.2.2 Hajj Mubarak Savings Scheme:

This is a Term Deposit Scheme started for fulfilling the life-time ambition of every Muslim to
perform Hajj.
Salient Features:
Duration of the scheme is 2 years and 3 years.
Under Hajj Mubarak 2 years and 3 years schemes, a monthly deposit of Rs. 1800 and
Rs. 1200 is required respectively.
Upon maturity of 2&3 years schemes, the Bank will pay approximately Rs. 48,160
and Rs. 51,200 respectively2.
Account may be opened by an intending Hajji, who will also nominate his/her
successor.
Premature encashment is permissible subject to commensurate adjustment in profit.
Deduction of withholding Tax and Zakat as per government rules in force.
5.2.3 Khanam Bachat Account Scheme (KBA):

Under this scheme, the customer is required to deposit a sum of Rs. 1,000 regularly for 10
years. Profit is paid on or before the 6th of each month and at maturity. According to the
average prevailing rate of profit, it is expected that the total amount would be around Rs.
257,000 subject to deduction of Zakat and Withholding Tax. Account may be opened in the
personal name of an individual or in joint names of two persons with proper introduction in
the manner prescribed for opening other deposit accounts.
5.2.4 PLS Savings

This is a specially designed PLS Savings Account Scheme which gives the depositor a very
high profit with complete flexibility and convenience of a Current Account. Under this
scheme, profit will be paid on daily product basis at the same rate as for PLS Saving Scheme.
Salient Features:
Account may be opened in personal or joint names in four global currencies namely
US dollar, Pound Sterling, Japanese Yen and Deutsche Mark.
32
No restrictions on withdrawals and transfer or remitting the amount to any part of the
world.
Expected profit is as high as 2.76% per annum3.
Exempted from all forms of taxes.
PLS saving account-366 is opened with minimum balance of 600000 rupees
Profit is calculated on daily basis
5.2.5Export Promotion Scheme:

This scheme 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.
5.2.6 Credit Cards:

The Bank offers the largest and most comprehensive credit facility to its customers who may
have Master Card, Cirrus and Maestro local or international Credit Cards at their choice. With
worldwide acceptability and a wide range of ancillary services to the cardholder, these are the
worlds foremost credit cards.
5.2.7 Rupee Travelers Cheques (RTC):

The Bank also offers Rupee Travelers Cheques to its customers which are as good as cash
and are accepted at the major shops, travel agents, hotels, business establishments and MCB
branches across the country and abroad. MCB Rupee Travelers Cheques bear multiple
benefits to the users such as wider acceptability, safety, convenience, validity without anytime
limit and easy refund in case of loss etc.
Rupee Travelers Cheques of the Bank can be purchased from about 400 branches in
denomination of Rs. 1,000, Rs. 6000 and Rs. 10000.
33
5.2.8 Automated Teller Machines (ATM):

The Bank has the largest network of Auto Teller Machines in Pakistan. These ATMs have
been installed at airports, major business centers, leading gas stations and other important
places all over the country. This facility is provided for extending round the clock money
withdrawals facility to Banks clients.
Currently, 550 ATMs are in operation and over 465, 0008 ATM card have been issued.
5.2.9 Capital Growth Certificate Scheme (CGC):

This is a Term Deposit Scheme under which the growth of deposit is quite fast accelerating
with the passage of time. The amount would be more than double in 5 years.
Salient Features:
Account may be opened with a minimum initial deposit of Rs. 10,000 with no limit
on maximum amount4.
Deposit may be placed for a minimum period of five years.
Profit is paid on maturity of the deposit.
Growth of deposit accelerates with the passage of time. A deposit of Rs. 100,000 is
expected to grow (at current rates) as under:
The rate of interest on capital growth certificate are 6.6% per annum5
The account holder can use its money up to 76% of its account
Premature encashment is permissible subject to commensurate adjustment is profit.
Deposit may be placed by individuals, proprietorship concerns, partnership firms,

public or private companies, corporations, institutions, trusts, funds etc.
Deductions of Withholding Tax & Zakat as per government rules in force.
34
Chapter-6
Financial ANALYSIS
6.1 BALANCE SHEET
BALANCE SHEET
AS AT 31 December 2014.2013.2012
2014
2013
(Rs. In '000')
(Rs. In '000')
ASSETS
Cash and balances with treasury banks
Balances with other banks
Lending to financial institutions
Investments
Advances
operating fixed assets
deferred tax assets
Other Assets
LIABILITIES
Bills payable
Borrowings from financial institutions
Deposits and other accounts
Sub-ordinate loans
Liabilities against assets subject to
finance lease
Other liabilities
NET ASSETS
REPRESENTED BY:
Share capital
Reserves
Unappropriated profits
Minority interest
2012
(Rs. In '000')
39,631,219
4,106,526
4,100,079
97,790,391
262,508,830
17,320,485
19,828,228
445,285,758
39,683,883
3,867,591
1,051,372
115,358,590
218,959,786
16,082,781
17,896,838
412,900,841
32465976.00
6649659.00
21081800.00
64450761.00
198236682.00
9073276.00
174886.00
11044909.00
343177949.00
10,551,468
22,663,840
330,245,080
10,479,058
39,406,831
292,088,347
7089678
23943476
257185110
440,295
21,252,942
385,153,625
60,132,133
479,232
1,183,586
11,716,465
355,353,519
57,547,322
1597440
11177125
300992830
42185119
6,282,768
36,772,321
11,065,723
54,120,812
69
6,282,768
34,000,927
7,054,472
47,338,167
63
5463276
24662446
6278593
36404315
52
54,120,881
6,011,252
60,132,133
47,338,230
10,209,092
57,547,322
36404367
5780752
42185119
Surplus/ (deficit ) on revaluation of

securities
35
6.2 Income Statement

Income Statement
For the Years 2014.2013.2012
2014
Rs. In '000'
Mark-up /return/ intertest earned
40,049,505
Mark-up/ return/ interest expensed
11,592,922
Net Mark-up /return/ intertest income
28,456,583
Provision for diminution in the value of
2013
Rs. In '000'
31791754
7858819
23932935
2012
Rs. In '000'
25784853
4509146
21275707
investment - nrt
Provision against non-performing loans and
2,683,994
105269
121197
advances - net
Bad debts written off directly
1,335,127
4,019,121
24,437,462
2959583
199
3065051
20867884
1014540
47000
1182737
20092970
2,878,663
21,867
451,312
727,564
748,139
(99,531)
2,772,615
5,859
535,813
693,408
1,507,610
(3,329)
2325171
483
746276
692012
605865
1,201,834
5,929,848
30,367,310
1,002,160
6,514,136
27,382,020
577703
4947508
25040478
7580302
5,440,305
10120
(3,743)
920991
642,780
8511413
6,079,342
30843
1,223,633
21886740 22,526,311
6505576
11411
66708
6583695
474030
Net mark-up /interest income after provisions

Non-mark-up / interest income
Fee, commission and brokerage income
Income earned as trustee to various funds
Dividend income
Income from dealing in foreign currencies
Gain on sale of securities - net
Unrealized loss on revaluation of investments
classified as held for trading
Other income - net
Total non-mark-up / interest income
Non-mark-up / interest expenses
Administrative expenses
Other provision / (reversal) - net
Other charges
Total non-mark-up / interest expenses
Share of profit of associated undertaking
Extra ordinary / unusual item
Profit before taxation
Taxation
Current year
Prior years
Deferred
Share of tax of associated undertaking
Profit after taxation
Basic and diluted earnings per share - after tax
7387345 6,463,560
-865344 -1294586
16348
899,898
25164
15,769
6563513
6,084,641
15323227 16,441,670
24.39 26.17
18930813
5709140
593906
61213
25675
6389934
12540879
19.96
36
6.3VERTICAL ANALYSIS
BALANCE SHEET
AS AT 31 December 2014
ASSETS
2014
%
2013
%
2012
%

8.90
0.92
9.61
0.94
9.46
1.94
Lending to financial institutions

Investments
0.92
21.96
0.25
27.94
6.14
18.78
Advances
58.95
3.89
53.03
3.90
57.76
2.64
4.45
4.33
0.05
3.22
100.00
100.00
100.00
Bills payable
2.37
5.09
2.54
9.54
2.07
6.98

Sub-ordianted loans
74.16
70.74
0.12
74.94
0.47
Deferred tax liabilities

Other liabilities
0.10
4.77
0.29
2.84
0.00
3.26
total liabilities
86.50
86.06
87.71
REPRESENTED BY:
Share capital
1.41
1.52
1.59
Reserves
8.26
2.49
8.23
1.71
7.19
1.83
total common stockholder equity

Surplus/ (deficit ) on revaluation of securities
12.15
1.35
11.46
2.47
10.61
1.68
total liabilities & equity
100.00
100.00
100.00
deferred tax assets

Other Assets
total assets
LIABILITIES
37
Income Statement
For the Years 2014.2013.2012

Provision for diminution in the value of investment - nrt
Provision against non-performing loans and advances - net
Total Provisions
2014
%
100
28.95
71.05
6.70
3.33
2013
%
100
24.72
75.28
0.33
9.31
0.00
9.64
65.64
0.00
0.00
8.72
0.02
1.69
2.18
4.74
0.00
-0.01
3.15
20.49
86.13
0.00
17.11
-0.01
2.02
19.12
3.85
70.86
0.00
20.33
-4.07
2.83
0.05
19.14
51.72
10.04
61.02
0.00
0.00
7.19
0.05
1.13
1.82
1.87
0.00
-0.25
3.00
14.81
75.82
0.00
18.93
0.03
2.30
21.25
0.08
54.65
0.00
18.45
-2.16
0.04
0.06
16.39
38.26
24.39 26.17

Dividend income
Other income - net
Other charges
Taxation
Current year
Prior years
Deferred
2012%
100
17.49
82.51
0.47
3.93
0.18
4.59
77.93
0.00
0.00
9.02
0.00
2.89
2.68
2.35
0.00
0.00
2.24
19.19
97.11
0.00
25.23
0.04
0.26
25.53
1.84
73.42
0.00
22.14
2.30
0.24
0.10
24.78
48.64
19.96
38
6.4 HORIZONTAL ANALYSIS

BALANCE SHEET
AS AT 31 December 2014
2014
2013
2012
ASSETS
122
122
100
62
58
100
Lendings to financial institutions
19
100
Investments
152
179
100
Advances
132
110
100
191
177
100
deferred tax assets
100
Other Assets
180
162
100
130
120
100
Bills payable
149
148
100
95
165
100
128
114
100
30
100
LIABILITIES
Sub-ordianted loans
Liabilities against assets subjectto finance lease
100
Deferred tax liabilities
100
Other liabilities
190
105
100
128
118
100
143
136
100
Share capital
115
115
100
Reserves
149
138
100
176
112
100
149
130
100
133
121
100
149
130
100
104
177
100
143
136
100
NET ASSETS
REPRESENTED BY:
Minority interest
Surplus/ (deficit ) on revaluation of securities
Income Statement
39
For the Years 2014.2013.2012

Provision for diminution in the value of investment - nrt
Provision against non-performing loans and advances - net
Total Provisions
Dividend income
Other income - net
Other charges
Extra ordinary / unusual item
Taxation
Current year
Prior years
Deferred
2014
%
155.32
257.10
133.75
2214.57
131.60
339.82
121.62
2013
%
123.30
174.29
112.49
86.86
291.72
0.42
259.15
103.86
2012
%
100
100
100
100
100
100
100
100
123.80
4527.33
60.48
105.14
123.48
119.24
1213.04
71.80
100.20
248.84
100
100
100
100
100
208.04
119.86
121.27
173.47
131.66
109.35
100
100
100
116.52
88.69
1380.63
129.28
6.51
83.63
-32.80
963.57
92.34
258.13
100
100
100
100
100
115.61
118.99
100
129.40
-145.70
26.71
98.01
102.72
122.19
122.19
113.21
-217.98
1470.11
61.42
95.22
131.10
131.11
100
100
100
100
100
100
100
40
6.5 RESULT ON THE BASIS OF VERTICAL & HORIZONTAL

ANALYSIS
From the above mentioned analysis following are my Result about the Operations of
branches of MCB for the year 2014, MCBs income by operations has been increased by
122.19% than 2013. Companys Total Assets in Pakistan has been increased by 130% than
2013. Deficit has been decreased by 104 % in comparison with year 2013 Due to financial
crisis in the world investment activities are slowed down in year 2014 and they are decreased
by 152% than year 2013. Due to its sound financial policies MCBs borrowing from financial
institutions has been decreased by 95 % than year 2013.
6.6 SWOT ANALYSIS

The overall evaluation of a companys strengths, weaknesses, opportunities and threats
Strengths (S) include internal capabilities, resources and positive situational factors that may
help the company to serve its customers and achieve its objectives Weaknesses include
internal limitations and negative situational factors that may interfere with the companys
performance. Opportunities are favorable factors or trends in the external environment that
the company may be able to exploit to its advantage. And Threats are unfavorable external
factors or trends that may present challenges to performance. A scan of the internal and
external environment is an important part of the strategic planning process.
STRENGTHS
MCB is the first Pakistani privatized bank and because of its quality management, marketing,
innovation in products and services. Owing to all such factors they have established a good
reputation in the banking market. The name of MCB makes you recall the highly cooperative
and professional individuals ready to serve you with maximum zeal and zest.
The joining of experienced people, advanced management, advance setup and facilities gave
MCB an edge over its competitors.
41
MCB BANKS IMAGE:

MCB is a reputable financial organization and is well known all over the Pakistan.
Perception is of producing a high quality services.
CUSTOMER CARE:
The Bank not only provides high quality services but it also look for the comfort and
convenience of the clients, MCB always preferred their customers.
MARKET SHARE:
MCB has covered much of the potential market and the net profit is increasing years after
years. Deposits and advances have sufficiently increased.
LARGE NUMBER OF DIVERSIFY PRODUCTS:

This is also its main strength as it has diversified in many products such as:
Debit Card
Visa Card
Car Financing
Agriculture Financing
BRANCH NETWORK
It is the greatest strength of the Bank. In 2004, five more branches were added to the network
and by the end of the year 2005 the total number of branches was raised from just 53 to 143.
MCB has also planned to open more branches in next coming years.
SOUND MARKETING:
Skillful marketing of the products is being achieving countrywide goals of Muslim
Commercial Bank Limited.
PHONE BANKING:
Every account holder can conform its balance on Phone and may ask for any query. There are
also 24 hours help lines for customers.
42
MOBILE BANKING:
It has been launched recently. It helps in getting accounts details and making transactions
using mobiles.
HIGHLY AUTOMATED BANK:

MCB in Pakistan is the also in the list of highly automated banks, about 750, like Emirates
because of its modern style of banking through fully computerized control and twenty four
hour banking.
FASTER BANKING SERVICE:

MCB have faster banking services that are making it more prominent in the banking industry
especially in operations and Foreign exchange. The customer prefers this bank not only
because of its faster speedy service rather due to reasonable service charges.
INTERNATIONALLY DESIGNED PRODUCTS:

MCBs products are internationally designed products. These are valuable and operational in
all over the world.
CONTRACT WITH CIRRUS:

Now MCB has also entered into a contract with Cirrus which is a subsidiary of
MasterCard. This contract will enable an ATM card holder to use his account even when he
is out of country at all the ATMs where Cirrus logo is displayed.
WEAKNESSES
ADVERTISEMENT:
The majority of people are not well aware about the products of MCB. Therefore it should
advertise extensively especially RTC and Master Cards.
ACCOMMODATE BEHAVIORALLY:
43
A behavior has been noted that bank tries to feel at ease with good looking, rich and educated
people and the poor looking customers feel some bit strange in the environment of the bank.
The bank employees should try to accommodate behaviorally all type of customers.
MISMANAGEMENT OF TIME:
Mismanagement of time is another big mistake in MCB branches, the bank official time of
closing is 5:30pm but due mismanagement of time allocation and work the staff is normally
on their seats till 7:00 or 8:00 clock.
AND ALSO,
Costly documents are required for loan sanctioning.
Some times bank also never meets stated rate of profit
OPPORTUNITIES
PRIVATIZATION:
As on December 31, 1998, sixty-eight scheduled banks with 9,106 branches are operating in
Pakistan. As on this date, total population of Pakistan is 140.03 million. Total number of
personal accounts with all scheduled banks as on December 31,1997, are 28.98 million. If we
consider the population statistics of working age group as on December 31,1997, it stands to
the figure of 96.64 million. Thus we can say those 28% of working age people of Pakistan are
having accounts with banks while 72% are unbanked.
The need of privatization has made people to switch to banks to satisfy their needs of lending
and borrowing. This not only increases the deposits but also the credit business.
DIVERSIFICATION:
They may enter in New business or any other consumer-durable product in order to promote
their name, by introducing Loan for the students, small businesses, and handicraft industry.
SOME MORE OPPERTUNITIES:

Information Technology.
44
Credit cards can give more earning.

Establishing more foreign Branches.
They should introduce Student Finance Facility.
They should also introduce mobile ATM
THREATS
CHANGE IN GOVERNMENT POLICIES:
Change in government policies has affected the banking business. Still banks have to wait to
get permission of state bank. The freezing of foreign currency accounts is a vital example of
letting people not to trust on banks.
COMPETITION:
The Competition has become severe by the entrants of so many banks, So to exist one will
have to prove himself in its services through excellent management and will have to satisfy
its shareholders. Otherwise he will be out the market.
LOW INVESTMENT:
The decrease purchasing power of consumer in the current economic situation of the country
affecting the business activity speed too much and the result is the low investment from the
investors in new projects can create problem for the bank because it is working a lot in trade.
STATE BANK REGULATION:

As the Bank introduces unique products so they face problem if State Bank Of Pakistan
employ taxes on them which force them to increase the rate of Interest.
EXPECTATIONS OF THE PEOPLE:

Due to huge competition among those banks and MCB,, people are the basic beneficiaries
from it and thus their expectations tend to increase about the products and the relative rate of
interest thus creating a threat for MCB.
45
6.6 PEST ANALYSES

PEST analyses tell How Political, Economical, Social and technological factors affect MCB.
These are the external factors which affects the whole organization.
POLITICO-LEGAL FACTORS:
Stable government
Stable policies in favor of business
Improved relation with outside world
Law and order.
UNSTABLE GOVERNMENT:
Due to this reason foreigners hesitate to invest their savings in banks, as a result of economy
of our country is going downward and banks suffer.
ADVERSE LAW AND ORDER SITUATION:
The situation of law and order is adverse. The policies are not very handy and beneficial for
the country. The Govt. passes such rules which are not in the favour of bank e.g. The Govt. of
Pakistan has passed a rule that if anyone withdraws more than Rs.25000 then he will be
charged 0.30% on withdrawal.
ECONOMIC FACTORS:
Pakistan's economy is going weaker and weaker. 9/11 has a great influence on the economic
crisis of all over the world. With economic factors the bank influenced very much that are as
under:
Impact of WTO force to cost reduction methodology.
Low interest rate
Inflation
Low GDP growth
Budget deficit
46
Increase in Govt. duties

Fluctuation in exchange rates
SOCIAL FACTORS:
Social environment includes family, friends, a person's role and status. An individuals life
directly by society and the person acts according to his or her society. Cultural environment
includes norms, values, religion, conception and perception.
If we see the religion point of view then interest is not allowed that's why most of the people
hesitate to invest their savings in banks and yet they are not aware of ISLAMIC BANKING.
Traditional business men do not like the business with bank. They pay their creditors through
cash not through cheque. They do not want to get the bank facilities.
TECHNOLOGICAL FACTORS:
Today is the era of technology. In the every aspect of life technology plays an important role.
Due to rapid change in technology every bank has to change its technology
to compete other ones.
Increasing issue of securities due to technology resulted increase in cyber

crime. Cyber crime means manipulation. One person can easily transfer
amount from any other's account to his account.
47
Chapter 7
FINDINGS AND RECOMMENDATIONS
7.1 Conclusions
During the six weeks of internship in MCB Main Branch Abbottabad (0585) I observed and
made discussions with customer and staff of the bank, I have noted all Information and I
have, found out some problems and weaknesses in the bank, which can be solved with little
efforts which will improve the efficiency of the bank and will enable it to achieve its targets.
If I have to express my experience of internship in MCB Bank main Branch Abbottabad I
would briefly say that MCB Bank is a good Organization in the way that anybody can join it
for his/ her long-term career. Overall working environment is comfortable. Management of
branch cares a lot of its employees and considers them as the Asset of bank. Behavior of
senior executive of bank is very polite and they are caring about the individuals career and
their growth.
I experienced that the management is hesitate to give internee chance of working in the cash
department because they are not take any risk. Also some branches have not full decorated
and in some branches there is no installation of rotation camera which is not good for the
security.
I conclude through the study and perpetration of the ratio analysis I conclude that the
Net profit margin of the company decrease and it is need to be improved and Gross spread
ratio also decrease need to be improved, non interest income to total income is relatively
increase which is good sign for organization . Debt ratio of the company decreased over the
years. Re turn on asset (ROA) increasing on the year base its good because the organization
use its asset effectively and efficiently and there is also need to improve the return on equity.
Price earn ratio is stabilizing over the period of time and the return of equity has been
decreased.
Finally I conclude that by keep the entire thing in mind that organization doing good
business overall but the need to make the policies of the organization is more effective and
48
stabilized which makes the organization more sound reliable and strong. During my
internship in MCB it has a good experience of 6 weeks and I learn so much about the banking
and the working and I also observe many thing in which some thing are good for the banking
business and I observe some weakness in the MCB branches. the good thing is that most of
the branches are online and connected with the main Bank and the online system which I like
and observe is secure and time saving and there is less chances of the mistake as compare to
non-online bank branches there is also facility of ATM machine almost all the branches of
MCB bank which is good for bank and the customer too and the working and the functioning
of the MCB bank is smooth and customer oriented and the management is good but there is
also the drawback is that some employees has not professional degree which makes the
difference as compare to the work of the professional degree holder some employee not paid
full attention to the customer and not use the proper business language with the customer but
the professional have the very good manner and they give proper attention to there customer.
However management is very demanding about the targets but good reward at the
achievement of assigned targets is awarded. Employees at Bank are quite efficient. The
employees work more than their working hours and it is all according to their will. It also
shows their loyalty, commitment to organization. Employees are given the benefits like
bonus, gratuity funds, loans, increments, and medical. All the customers are entertained
individually. Same kind of behavior and attention is given to all the customers. Getting ideas
for improvement from customer side is a new idea and that is working very well in MCB
Bank.
Prioritizing its product portfolio in line with its corporate and consumer needs and wants the
bank is committed to develop products that give more value to its customers in both the
sectors. In bank, the work is done on computers as well as manually. All the entries are made
in computer. Balance is fed into the computer. This increases efficiency of the bank.
During my internship training I gathered information regarding how a successful bank
operational aspect decorticated with the practical. I found my internship training at MCB
Bank Main Branch Abbottabad to be a very rewarding experience. The training was
beneficial because it helpful me to aware a real life working environment.
So far my learning is concerned; all the employees at branch were quite cooperative. They
helped me to understand the activities of a bank to possible extent. Their good attitude gave
49
me more confidence to learn more and to ask if I have any query in my mind. Besides their
ever going activities they never get irritant by my questioning. I had made an honest efferent
to present the working & operation at Branch in simplest way. I feel pleasure that I have
really gained a lot during 6 weeks & enjoyed working with experienced cooperative &
intelligent staff.
7.2 Problems and Recommendations

Nothing in this world is permanent but change. And response to change still needs greater
change. All it means that nothing is perfect but there is always some room for improvement.
It is always a hard working and some taking activity to make on institution on sound basis
and to maintain its performance as steps to improve the performance.
7.2.1 Providing Customer Services
In the market economy and age of competition the customer is the king; customer satisfaction
is the road to success. The bank should implement such strategies and facilities which attracts
and satisfy more customers. As most of remittances are sent through informal means of
hawala/hundi. MCB has to play a vital role in mobilizing such remittances.
7.2.2 Training and education of the staff
Development and change are the two inevitable characteristics of progress. And change has to
be there in this process of progress of progress if not then every thing will come to a stand
still situation. In such situation only those will survive who accept the change and take
measures for adapting to these changes.
For imparting various skills and behavior a sound training policy has be formulated by MCB.
The training in under to be more effective should be given by highly qualified and
experienced trainer. In the year 1998 the banks has given training to its upper and middle
management officer, but still a lot of work is required to be done in this connection.
7.2.3 Full Control and Authority
For every organization to run on sound footing it should be given the decision making
authority and unnecessary intervention from outside is avoided. For this the management
should be given more authority. The management should be given more authority in decision
50
making in areas of finance, recruitment of staff, posting/promotion. And the upper

management should take such steps.
7.2.4 Discipline in financial performance
It is an important responsibility of every organization to decrease expenses and checks are
required for the management. All the loopholes must be checked that are incurring expenses
in report of vehicles, fuel charges, entertainment, traveling, telephones, medical allowances,
foreign benefits etc. The bank will get more if it analyze every activity or cost benefit basis.
7.2.5 Recovery Form Defaulters
One of the biggest problems of MCBs is the recovery of the stuck up loans or finances. For
this purpose the bank has taken some major steps so that the process of recoveries is
accelerated. Total recoveries and restructuring of non-performing loans during the year
amounted to Rs. 9.4 Billion. This amount also includes Rs.3.2 billion in cash recoveries.
Provisions for non-performing loans decreased from 57% of total advance 18 months ago to
29% as of December 1998. Further achievements this connection will depend upon the
following factors.
More bold and impartial policies have to be implemented.
More authority should be given to the recovery division.
7.2.6 Delegation of Power

The business environment has changed considerably and so is the business mood people /
customer wants the satisfaction of their needs at the earliest. For making prompt decision to
the middle management. This will facilitate the process of handling transaction with great
pace, and resulting in increasing the good image of the bank.
7.2.7 Profit Haunt
Like every business entity, the bank too is always profit conscious. Profit can be increased
either by increasing deposits or by decreasing expenses. As the performance of each branch
and department is evaluated, mostly on the basis of profitability. And those branches and
department which are incurring consistent losses, and it is impossible to turn into profit
producing units, may be closed.
51
7.2.8 Introduction of improved technologies

Technology plays an important role in this regard. No body can stop the process of
innovations. This process is not limited to any particular branch or area. This is also
happening in the field of science and technology. Computer is the out put of such activities.
Application of computer in the field of banking is not a novelty any more. For this purpose if
a separate research wing is established, it will greatly benefit the bank. Because this wing will
asses new technologies that can be adopted by the bank.
7.2.9 Allocation of targets
Allocation of targets to the staff is a very important area. It is through this allocation and
achievements of targets that the performance of staff is evaluated. So to allocate such targets
which are achievable will definitely bring good and positive response from the staff. This
measure will help the employees and the employer alike.
7.2.10 Communication
Swift communication in any organization is the inevitable need. But reliable, swift and
workable communication is of utmost importance to the bank. All the operation of the bank
are very much depend on inward an outward communication. And any disturbance in the free
flow of information will being drastic consequences. So to avoid such situation a more swift
flow of information is to be maintained. So for the written or oral communications are
concerned that 7cs are desired to be considered in bank.
7.2.11 Monitoring of bank operation
Monitoring of the on going activities is very important because without monitoring you may
not be able to take remedial measures in due time. For this purpose of reporting information
is placing unnecessary burden on the branches. This burden can be minimized through the
application information technology (I.T).
7.3 SUGGESTIONS
7.3.1 Lack of proper training
There is not proper training system among the staff. Training is necessary to show good
performance and efficiency.I suggest that an arrangement of refresher courses and in service
52
training must be made to increase the knowledge and skills of the employees. This will help
enabling them to meet modern banking requirement and to fill the efficient staff qualities.
7.3.2 Branch environment
It is recommended that the emoloyees should be trained to be polite and maintain silence as
much as possible and not to discuss politics or personal problems with each other during
work hours. This distirbes the working environment of the bank and other employees can not
perform their work properly.
.
7.3.3 Delegation of authority
There is no proper delegation of authority
Executive at all level should be given sufficient power and authority to make quick decisions.
This will increase the effectiveness and efficiency of the organization.
7.3.4 Distribution of work
There is no proper distribution of work.
All work must be distributed properly among the employees.
7.3.5 In adequacy of staff
In my observation, I felt that the strength of the present staff is insufficient. The staff is
affecting badly due to burden of over work.
The shortage of staff must be fulfilled immediately, in this way, the staff will be able to
perform its duties appropriately.
53
References
http://www.finance.gov.pk/
http://www.wikipedia.com
http://www.thebankers.com
http://www.sbp.com
http://www.mcb.com.pk/ir/fin_data_rep.asp
Annual Report, 2012
Annual Report, 2013
Annual Report, 2014
54

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INTERNSHIP REPORT ON

Submitted by: Muhammad Waqas

Government College of Management Sciences

Government College of Management Sciences

Government College of Management Sciences

Sardar Ejaz Ahmed

Designation Assistant Professor

Departmentation On The Basis Of Employees Designation........................................17

3.4 Geographical Departmentation of MCB........................................................................18

4.1.1 Cash Receipt:...........................................................................................................23

Demand Deposits (DD):.....................................................................................27

5.1.2 Term DEPOSITS/Fixed Deposit:............................................................................27

Muslim Commercial Bank

During my internship in MCB, I worked in All departments and I successfully

College Of Management Sciences

Abbottabad, this report is prepared and submitted to the Hazara university.

1.2 Background of the study

1.3 Purpose of the Study

1.4 Scope of the study

1.5 Limitation of the study

To gain knowledge about the professional environment of the bank.

1.9 HISTORY OF MCB BANK LIMITED

1.10 VISION AND MISSION OF MCB

Shareholders invest with confidenceOur mission statement testifies to our unrelenting

1.11 Values of MCB

1.12.2 ASIA MONEY AWARDS:

2.2 Overall respective sectors in Pakistan

2.3 Commercial Banking In Pakistan

Pre Nationalization Period:

Inauguration of State Bank of Pakistan (SBP) on 1st July, 1948.2) Setting

a) HBFC (Nov, 1952);

3.2 STRUCTURE ON THE BASIS OF EXECUTIVES

Chief Executive / President

Senior Executive / Vice President

Executive Vice President

Senior Vice President

SOURCE: (Annual Report 2014).

3.3 Departmentation On The Basis Of Employees Designation

3.4 Geographical Departmentation of MCB

Area Office South

Area Office North

3.5 STRUCTURE ON THE BASIS OF GEOGRAPHICAL LOCATION

Area Of The Office

Area Office South

Source: (MCB Annual Report 2013)

3.6 STRUCTURE ON THE BASIS OF FUNCTIONS

3.7 Departmentation On The Basis Of Functions

Acting as a trustee or executor

Execution of standing instructions

General Utility Services

Clearance of utility bills

Providing locker facility

Accepting Bills of Exchange

Accounts opening department

4.1 Cash Department

4.1.1 Cash Receipt:

4.2 Account Opening Department:

Details of others bank accounts

Specimen signature card

4.3 Clearance Department:

Inward clearing book

Outward clearing book

4.4 Remittance Department

Telegraphic Transfer (TT)