Executive Summary: Multan) - Head Office of MCB Is Situated at Karachi. at

AN INTERNSHIP REPORT ON MCB
EXECUTIVE SUMMARY
According to our internship program, I completed my
six weeks internship at MCB (Chowk Shahabbas Branch
Multan). Head office of MCB is situated at Karachi. At
present 1214 branches of MCB are serving in various cities
of Pakistan. MCB have three important departments.
1. Retail /General banking operations department.
2. Credit operations department.
3. Foreign exchange department.
MCB offers different types of deposit schemes for
demand deposits and term deposits. MCB gives mark up on
these schemes which are fixed by management. This profit
rate is revised in care of profit. Local remittances are
transfer of funds with in the country in the shape of
Telegraphic Transfer (T/T) & Demand Draft (D/D). Cheque
clearance, where all the Cheques are checked and the
authorized officer verify the balance of each account holder.
DEPARTMENT OF MANAGEMENT SCIENCES 1

After that process, encashment is completed on the cash
counter.
Advances department deals various finance facilities to
industrial and commercial business. There are two types of
finance facilities to industrialists and commercial business,
fund based facilities and Non fund based facilities.
The world-renowned financial magazine “Euro Money”
has announced, “Euro money Awards for Excellence
2000” to MCB. Now MCB has been declared the “Best
Domestic Bank in Pakistan”.
With the completion of my internship, I perceived that
MCB overall performance is better as compared to other
private commercial Banks.
Management is trying hard to establish and maintain
the trust of its customers.

WHAT IS ABOUT BANKING
Bank is derived from Bancus or Banque or Back. History
of banking is traced to 2000 B.C. in Greece. Priests and
goldsmiths acted as financial agents by keeping money and
valuables of people in temples in strong safes. Thus the first
stage in the development of modern banking was accepting
of deposits cash from those who had surplus money with
them.
The goldsmiths issued receipts for the money deposited
with them which began to pass from hand to hand in
settlement of transactions as people had confidence in the
integrity and solvency of goldsmiths. The receipts were
drawn in a way that it entitled the holder to claim the
specified amount of money from goldsmiths. These receipts
were the earlier bank notes. Thus the second stage in the
development of banking was the issue of bank notes. The
goldsmiths discovered all the people who had deposited
money did not come to withdraw their funds in cash. Only a

few people presented the receipts for encashment during a
given period of time and they also found that most of the
money deposited with them was lying idle. They also found
they were being constantly requested for loans on good
security. They thus thought it profitable to lend at least
some of the money to the needy persons. This proved
profitable for them. Instead of charging interest from
depositors, they began to give interest on money deposited
with them.
Through experience, banks came to know that they
could keep a small proportion of total deposits for meeting
demands of customers for cash and could easily lend the
rest.
They allowed depositors to draw over and above than
the money standing to their credit. They thus allowed the
overdraft facilities to their depositors and this was the fourth
stage in the development of banking.
Every bank issued receipts and most allowed overdraft
facilities and this caused too much confusion in the system.

In order to earn profits, banks not keep adequate reserves to
meet demands of customers’ demands for cash. This failure
on the part of bankers to return money caused widespread
distress among people.
In order to create confidence among people, steps were
taken to regulate the banking organization. A conference
was held in Nuremberg in 1548 where it was decided that a
bank should be set up by the state, which would streamline
the banking organization. The first central bank was thus
formed in Geneva in 1694. The responsibility of issuing notes
is now entrusted to a central bank in each country.
With the passage of time, activities of commercial
banks increased. They dealt with large number of issues
such as obtaining funds, advancing loans to businesses,
farmers, households, making investments in stocks,
discounting bills of exchange etc. commercial banks are now
multi-service organizations and play a very important role in
financial markets.

What is a commercial Bank?

“A bank or banker is a dealer in credit or more properly
a dealer in money. It is an intermediate party between the
borrower and the lender. It borrows from one party and
lends to another and the difference between the terms on
which it borrows and those on which it lends forms the
source of its profit”.
Or
“A bank is a dealer in debts—his own and of other

people”

HISTORY OF MCB
Muslim Commercial Bank Ltd. was established on July 9,
1947 at Calcutta on the express wishes of the founder of
Pakistan Qauid-e-Azam Muhammad Ali Jinnah who was
deeply concerned with the plight of banking among the
Muslim community in India. Muslims in general were at that
time not favorably inclined towards joining the banking
profession. This was therefore a right step taken by the
founder of Pakistan to induct.
Muslim Commercial Bank first shifted its head office to
Chittagong on August 17, 1947, immediately after
independence and finally to Karachi on July 15, 1954, which
was the federal capital at that time. With the independence
of the country, whatever scarce human resources available
were utilized in the banking sector. However, as the branch
network was expanding, so was the de for trained manpower
to man the newly setup branches as well as the controlling
offices. In the period 1947 till 1965, young university

graduates were recruited and trained for a year by the
training department of SBP and then assigned to the
commercial banks.
In January 1974, the government of Pakistan decided to
nationalize all banks in Pakistan under Pakistan Banks Act
1974. By January 1991, MCB was privatized. The bank has
done well since then.

MCB’s MISSION AND

VISION
Mission
“To become the preferred provider of quality financial
services in the country with profitability and responsibility
and to be the Best Place to Work”
Our Vision
By the year 2002, MCB will have a highly motivated
professional team who will provide quality customer service,
expand and penetrate the customer base, in order to
improve profitability so that we can pay regular dividend
and increase our share value.

OBJECTIVE OF MCB
1- Saving Mobilization.
MCB has opened up branches in urban and rural areas
to mobilize savings of the people and channels them into
productive investment. Their financial position, good
management has motivated the people to open their
accounts with MCB.
2- Export / Import Promotion.
MCB has created a separate department in their main
branches all over Pakistan to cater for the needs of
exporters and importers, MCB facilitate the foreign trade by
issuing letters of credit and it offers loans in foreign
currencies for importers. Further more with the passage of
time MCB has started foreign exchange or in other branches
international banking departments, which are in charge of
all business concerning of all business concerning other
countries.

3- Provide Loans to Agricultural Sector.
Agriculture is a backbone of Pakistan; MCB has
provided credit to this sector for the improvement of their
products, buying machines, fertilizers insecticides, etc.
4- Provide Loans to Industrial Sector.
MCB provides loans to trade and industry. The various
credit instruments (like Cheques, promissory notes and Bill
of Exchange) have made it possible to make all the
transactions in money.

PERFORMANCE AFTER
PRIVATIZATION
The following successes were achieved by MCB since 1991:
The shareholders Equity of MCB, which was Rs.
1,613million in 1991, stands at Rs 4,483.670 as at
December 2000. This effectively demonstrates the Board of
Directors desire to have a sizable capital base so as to
enable the bank to fulfill the “Capital Adequacy”
requirement and also to enable the bank to have a larger
lending ability to its clients. The most satisfying aspect that
can be seen during the last six years since the banks
privatization is been the banks ability to mobilize deposits
which stand at Rs 135,990 million on December 2000
compared to Rs 35029 million as on December 1991
showing an increase of Rs 100,979 million.
The advance made by the bank have increased by
around 311% since 1991 where it stood at a figure of Rs

21000million and stands at Rs 86,313 million as at
December 2000. Investment made by the bank which stood
at Rs 13,047 million in 1991 stands at Rs 36,481 million, at
almost 179.6% increase.
The imports and export business which passed through
the bank as at December 2000 are Rs 66,910 million and
Rs 33,575 million respectively compared to Rs 18,119
million and Rs 13,390 million on December 1991, at the
time of privatization of the bank.
Since privatization, the MCB Ltd. has been able to open
its overseas operations in Sri Lanka, Bangladesh, and
Bahrain. In addition MCB also has successfully acquired and
is managing exchange companies in Dubai and Doha.
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Performance after privatization
BRANCHES OF MCB
At the onset of MCB Ltd. in 1947, only three branches
were under it. As time and years passed by, the bank has
continued to grow and as of December 2000, the had 1214
branches to its name. The distribution of the branches is as
follows:-
PROVINCES CIRCLE REGION BRANCHES
BALUCHISTAN 1 2
40
NWFP & AJK 5 9
244
PUNJAB 6 7
748
SINDH 10 12
282
___________________________________________________________________

DOMESTIC 22
1214
EXPORT PROCESSING ZONE
FOREIGN BRANCHES
______________________________________________________
TOTAL 22 30
1221
ORGANIZATIONAL
STRUCTURE
Chief
Manager
Operations Manager Credit

Manager International Manager
Banking

General/Domestic International Credits/Advances/

Banking Banking Loans
Cash Clearing Fixed

Remittances
Department Department Deposited
Department
Department
Departments and Their

Works
Basically the branch of farid gate is performing three
types of operations. On the bases of those operations the
bank is divided into three departments.
1. Retail /General banking operations department.
2. Foreign exchange operations department.
3. Credit operations department.

Retail/General Banking Operations

Department
The general banking operations department is
concerned with maintenance of the accounts of the branch,
the expenditure and revenue of the branch is controlled and
monitored in this department. This department is
responsible for preparing the financial statements of the
branch. Preparation of these statements is done daily and
all transactions which have taken place in the other
departments are posted in this department to counter check
that the whole banks working for the day is balanced. It is
also the job of this department to prepare Pay orders as
these are computerized in this particular branch and most of
the other branches of MCB.
This department divide into four other sections in which the
bank is performing different functions performs.
 Cash section.
 Remittances section.
 Fixed deposit section.

 Clearing section.
1) Cash Section
The cash department is in charge of all cash
transactions that are under taken in the bank. These
transactions mainly deal with the bank clients. The
transactions are of two types:
a) Receipts or Deposits
Receipts or Deposits are the amounts of money which
clients of the bank pay to the cashiers to either be credited
into their accounts or for other transactions such as for any
kind of transfer to other banks (mail transfer, telegraphic
transfers, etc.) or even other payments in favor of the bank
such as payments for Cheque books by the clients.
b) Payments or Withdrawals
Payments or withdrawals are amounts of money that
clients of the bank come to take or withdraw from their own
particular accounts or from accounts of other persons if a
check has been issued to the with drawers by the owners of

the accounts. The cash department handles this transaction.
All withdrawals are through Cheques, which have been
issued by the bank’s branch.
2) Remittance section
Remittances are sums of money sent in payment for or
against something. The remittance department is mainly
concerned with these payments. Remittances are divided
into two types:
a. Inward remittances
Inward remittances refer to payments in favor of the
banks account holders. Inward remittance includes all
cheques received for collection.

b. Outward remittances
Outward remittances are all payments made to other
people on behalf of the account holders in the bank.
Outward remittances can also be done for none account
holders who deposit cash in the bank and remittance tools
are prepared for them.
Among the work done by the clearing department is
receiving credit advises in favor of the banks account
holders and also debit advises against the account holder’s
accounts. There are various tools of remittances to the
customers who want to use the facility of remittance. These
are:
 Telegraphic Transfer (TT).
 Mail Transfer (MT).
 Demand Draft (DD).
 Pay Order (PO).
(i) Telegraphic/Fax Transfer

This mode of remittance is the fastest in terms of time
taken for the message to arrive as the telephone or the fax
machine is used to convey the message. This remittance is
used for all banks whether in the same city or in different
cities.
(ii) Mail Transfer
As the name suggests, this mode of remittance is
through the mail channels through either registered mail or
through special couriers. Mail transfers are mostly for out of
city remittances. A minimum charge for the mailing is
charged depending on the mail service to be used.
(iii) Demand Draft
This mode of remittance is normally used for payment
to out of city beneficiaries. They are normally also drawn on
banks near the beneficiary’s residence.
(iv) Pay order
Pay orders are mostly used when a customer wants to
pay someone who is in the same city as he is and who
prefers non cash payments for any service or goods that

he/she has sold. This remittance facility is provided to the
general public as a whole. But during my internship period
no pay order was made.
3) Fixed deposit section
All deposits in the account should be accompanied by
pay in slip showing the title, number of account to be
credited. The entry will be verified by signature of an official
of the bank under bank stamp on the counterfoil of the pay
in slip. Customer has to fill the credit or voucher slip in which
he write the amount in words and in digits in the form of

cash, the name of the depositor and the date of the amount
deposited. These deposits are:
a. Demand Deposits
These are deposits, which can be withdrawn at any one
time at the discretion of the account holders. Demand
deposits are further categorized into:
1) Current Accounts
A current account is a running account that is
continuously in operation. A customer to transfer money or
to withdraw deposits on demand uses it. The current
accounts of the customers are maintained in a current
account ledger by the bank. The bank has to honor the
cheques provided they are within the limits of the account.
For the customers who need a liquid balance, they maintain
a current deposits account.
Banks do not usually pay interest on such type of
deposits, as they can be withdrawn without prior notice. In
this case, the bank acts only as the custodian of money. The
bank cannot employ these funds for other purposes due to

the fear of withdraw without notice. The bank has to keep a
high reserve ratio to meet these demand liabilities.
2) Saving account
These are important sources of funds for the bank and
are of various categories.
i) Profit and Loss Sharing (PLS) Account
A saving account is an important source of fund for the
commercial banks. It is opened and offered to encourage
savings among persons of meager means. In Pakistan, PLS
account was introduced in January 1982. the main value of
PLS accounts are as under:
1) The PLS account can be opened with a sum of not less
than Rs.500.
2) A credit balance of Rs. 100 is eligible of sharing profit and
loss of the bank.
3) The bank has full right to make investment of credit /
deposits in the PLS
Account.

4) Withdrawals from PLS account are allowed often more
than 8 times in a calendar month and for a total amount not
exceeding Rs. 15000. for withdrawal of larger amounts, 7
days notice in writing is required to be given.
5) Withdrawal can only be made by means of a cheque
issued by the bank.
6) Statement of account is to be supplied to the account
holder at periodical intervals.
7) The profit /loss earned on PLS account will be credited
/debited as determined by the bank on the basis of its
networking result at the end of each half/full year.
ii) Profit and Loss saving 365 Account
In this particular account being offered by MCB, account
holders of PLS 365 are required to maintain a minimum
balance of rupees 250,000 in their respective accounts.
MCB offers a profit rate calculated on daily basis for this type
of account on the balance if equal to or in excess of the
minimum requirement. The balance can at certain time go
below the minimum requirement and in such cases does not

pay the profit for that particular month in which the deposits
are below minimum.
iii) Khushali Bachat Account
This account has been introduced for the first time in
Pakistan. This account helps the account holders to pay
utility bills through their accounts. The account offers an
8.4% rate of return per annum and the return is calculated
on the daily average balance and paid twice in a year. A
minimum of rupees 2,500.00 is required as a balance for this
account to avail the profit facility.
b. Term/Time Deposits
As the name suggests, these types of deposits are for
a particular time period. Each deposit is offered a profit rate
depending on its time period. The following are the terms
deposits schemes that are offered by MCB with their
underlying profit rates declare:

Category of Deposit Profit
Per Annum.
7 to 29 days
5.8%
Over 30 days
6.7%
For 1 month
9.2%
For 2 months
10%
For 3 months
10.25%
For 6 months
10.8%
For 1 year &above
11.3%
For 2 year &above
12.3%

For 3 year &above
13.3%
For 4 year &above
14.2%
For 5 year &above
14.6%
The five year and above deposits are of two types namely:
• Capital Growth Scheme
In this scheme, deposits are to stay with the bank
for five years and every six months the profit is calculated
and added into the initial deposit so it is a form of
compounding. The initial deposit is to double after the five
years period.
• Mahana Khushali Scheme
In this scheme, a profit is calculated and paid to the
depositors every month for the whole period of five years.

OPENING OF AN
ACCOUNT
Requirements for Opening of New Account;
♦ Account opening Form
♦ Initial Cash opening Form
♦ National Identity Card Copy
Partnership
Requirements for Opening of New Account:
♦ Initial Cash Deposit
♦ National Identity Card Copies of all persons
♦ Application on Letter Head
♦ Partnership Deed
Sole proprietorship

♦ National Identity Card Copy
Companies
♦ National Identity Card Copies of Directors
♦ Memorandum of Association/ Article of Association
♦ Certificate of Incorporation
♦ List of Directors duly signed.
In account opening first of all a form (AOF) is given to a
person who wants to open the account. For each account a
specific form is used. The from is filled with necessary
information from the person who wants to open the account,

in which the photocopy of his national identity card,
signature on the specimen of signature card and a guarantee
is taken from the existing account holder. The minimum
amount for account opening is Rs. 2500. A checkbook is
issued to the person after completing the procedure. The
amount is deposit by a voucher and receipt is given to the
person or who wants to open the account.
MAINTENANCE OF EXISTING ACCOUNT
Main responsibility have the account department is to
maintain the account of the account holder. Account holder.
When the account holder deposit the amount. The account
department credits the account the account holder. Or when
he draws the amount the department credits make the
transaction in his account. It may be due to out side
payments to account
holder. Or he makes payment to out side’s parties to make
his personal business transactions. If sometime the
chequebook is lost from the customers the bank charges

Rs.100 for new chequebook issuance. But at the time of
account opening there are no charges for new chequebook.
CLOSING OF ACCOUNT
It is also the responsibility of account opening department.
For this purpose the account holder for closing of account
gives an application. Then the department closed the
accounts and gives the entire deposit amount to the holder.
The bank collects the chequebook from the concerned
person extracts him from the books.
SPECIALIZED PRODUCTS
MCB has a good number of specialized products, which
contains the largest network of automated teller machines in
Pakistan.
1- AUTOMATED TELLER MACHINES (ATMs)
The MCB Automated Teller Machine launched in 1995 is
a means of providing customer with 24 cash convenience.
Over the years its success has encouraged the bank to
expand its network to major cities. In the past six-year, we

have installed this convenience in Karachi, Lahore,
Hyderabad, Rawalpindi, Islamabad, Faisalabad, Multan,
Gujranwala, Multan, Quetta, Sialkot, and Peshawar. 24-hour
cash convenience is also available at Karachi, Lahore and
Islamabad airports. MCB has the largest ATM network with
80 ATM locations in major cities and over 100 online
branches where ATM card are issued.
With the MCB ATM 24 hour cash card a Muslim
Commercial Bank customer can:
♦ Access 80 ATM machines in eleven major cities of
Pakistan.
♦ Select between two languages, Urdu and English, for
the non-screen transactions.
♦ Withdraw cash immediately instead of waiting in long
queues and delays at the branch.
(a) MCB ATM REGULAR CARD
The MCB ATM regular card allows withdrawal up to
Rs.10,000 per day and a maximum of 3 withdrawals per day
per card.

(b) MCB ATM GOLD CARD
The MCB ATM Gold Card allows withdrawals up to
Rs25000 per day and a maximum of 6 withdrawals per day
per card. The cardholder has to make at least two
transactions to withdraw the full amount of Rs. 25,000.
2- MCB MASTER CARD
People have tried to find more convenient ways to pay,
from gold to paper money and now checks. Today, money is
moving away from distinct hard currencies and towards
universal payment products that transcend national borders,
time zones, and, with the Internet, even physical space.
MasterCard International has expanded globally in more
locations in the world than any other card. The card was
introduced by Muslim Commercial Bank Limited in 1995 and
now offers card members over 15 million outlets in 232
countries.

♦ Photo security- the first bank in Pakistan to introduce
the enhanced feature of photograph on the card
limiting fraud in case of card loss.
♦ Welcomed at over 3,000 outlets in Pakistan.
♦ Provides up to 45 days Free Credits.
♦ Joining and Annual Fees to suit you.
♦ Free travel Insurance of Rs. 3.5 million.
♦ 24 Hour Customer Services Call 111-700-700 and you
can get information from customer services
representatives on new card application or have your
queries resolved anytime of the day.
♦ Cash advance Facilities available in Pakistan and
Worldwide.
3- MCB RUPEE TRAVELER CHEQUES
Muslim Commercial Bank has been at the forefront of
providing its customers with new and innovative products
and financial instruments that are safe, secure and

profitable. MCB Rupee Traveler Cheques were first
introduced in 1993 as a safe way to pay for high valued
purchases. The product has been extremely popular and is
used by consumers in all walks of life for business dealing;
high value transactions for purchases, MCB Rupee Travelers
Cheques are Ideal for Every Deal. MCB Rupee Travelers
Cheques- The safest way to Carry Cash.
♦ As good as cash: the most convenient substitute for
cash for all kinds of purchases, business, and property
and trade transactions.
♦ Easily available: Buy them from any of the designated
branches in Pakistan.
♦ Easily enchased: At any designated MCB branch.
♦ Easily refunded: in case of loss or theft, you can get the
full amount back.
♦ Exclusive security features: Due to special printing and
safety precautions, Cheques cannot be faked or
duplicated.

♦ Denominations: Available in denominations of Rs. 1000,
Rs. 10,000 and Rs. 50,000 and Rs.100,000.
♦ Valid until Used: Validity of Cheques indefinite.
♦ 24 hour Service available at Airport MCB booths
Karachi, Lahore & Islamabad.
4) Clearing section
The clearing department is in charge of processing all
cheques, pay orders, or demand drafts deposited or sent to
the bank by the banks customers for clearing. The cheques
are categorized into the following:
• Cheques of the same branch (MCB Fried gate
Branch) in favor of another client of the same
bank.
• Cheques of MCB originating from other parts of the
country such as from branches of MCB in Lahore,
Karachi, etc.
• A cheque of other banks such as Habib Bank
Limited, Citibank. Allied Bank, etc, situated in

other parts of the country such as in Karachi,
Lahore, etc.
Processing of these cheques is done with different
procedures and these procedures can be broadly
categorized into the following:
a. Clearing.
This procedure is done for cheques of other banks
(Habib, Allied, etc.) lying in the jurisdiction of fried gate and
which have been deposited or sent to MCB Farid gate Branch
by the banks accountholders.
b. Transfer delivery
Transfer delivery procedure is done for all cheques of
MCB branches in the jurisdictions of Farid gate respectively
which account holders in the bank have deposited with the
bank.
c. Cheques for Collection.

The collection procedure is done for all cheques
originating from other parts of the country otherwise known
as outstation cheques both belonging to MCB branches and
to other banks as well. The only variation is to where the
cheques are sent for collection.
• Cheques coming from MCB branches around the
country are sent directly to the respective branches for
collection.
• Cheques of other banks coming from around the
country are sent to MCB main branches otherwise
known as responding branches, in the area where the
bank from which the cheque is originating is situated.
The MCB main branch then presents the cheque for
clearing and once the proceeds are collected, advises
the originating branch, which credits the account holder
who deposited the cheque.

Foreign Exchange
Department
The foreign exchange department deals with daily
exchange rates. It is an important department because it
deals with foreign exchange like US dollar, German mark,
Saudi reyal, Japanese yan and etc. according to this
department the rates change daily to daily.
MCB FOREIGN CURRENCY ACCOUNT
1- FOREIGN CURRENT SAVINGS ACCOUNT

MCB’s Foreign Currency Savings Account offers the
attractive returns on your Foreign Currency investment. One
can invest in any of the four currencies i.e. US Dollar, UK
Pound Sterling, Japanese Yen or Deutsche Mark.
The foreign currency account is exempted from Zakat and
withholding tax.
2- FOREIGN CURRENCY ACCOUNT
MCB Foreign Currency account offers the convenience
of unlimited withdrawals i.e. access to the funds whenever
you want without any notice. There is no limit on the number
of transactions you make in a day.
 You can invest in any of the four currencies i.e. US
Dollar, UK Pound Sterling, Japanese Yen or Deutsche
Mark
 Your foreign currency account is zakat and withholding
tax exempted.

 You can avail a credit facility up to 75% of the total
deposit value
3- FOREIGN CURRENCY TERM DEPOSITS
Place your investment in a MCB Foreign Currency Term
Deposit and receive a higher rate of return. Avail your choice
of 1 month, 3 months, 6 months, 1 year, 2 years, 3 years, 4
years and 5 years term deposits. For more information or to
open an account at MCB, contact one of our designated
foreign currency branches.
Credit/Advance/Loan
Department
MCB in conducting its business and helping its
customers and the public in their business is involved in
advancing and giving loans. The credit department has the
duties of issuance of short and long-term loans to customers.
All advance proposals of all shapes and sizes from
customers with different backgrounds and line of business

are presented to the bank through the advances department
for consideration. Lending or advances offered are of two
main types.
a) Fund Based Financing
This type of advances or financing involves the physical
movement of cash from the bank reserves to the customer
who applies and is successful for a loan.
b) Non Fund Based Financing
This type of financing does not involve the physical
movement of cash or funds from the banks reserves although
sometimes this finance can become a fund based finance if
the applicant fails to pay his commitments. This type of
financing is of the type of letters of credit. These finances can
be of short-term, medium or long-term in nature. The bank
gives various facilities in this regard such as: the running
finance. MCB before lending to any customer has their own

procedures and principle’s of lending which are meant to
reduce the banks risks in the face of loan defaulters.
• Fund based Financing

1- Running Finance
Among the various modes of Bank financing, credit
lines afforded to customers under the above head (Running
Finance) are most commonly used. Withdrawals on the
Current balance, which the customer has maintained,
thereby creating running finance.
Under this type of financial accommodation, the
borrower is required to adjust the finance provided by the
Bank with the stipulated expiry period.
The account may, however, be freely operated, by way
of multi transactions, provided that the sanctioned limit is
not, at any time, exceeded, and also provided that the
account is operated strictly in accordance with the approved
Limit terms and conditions.
2- Demand Finance

This type of finance is for personal needs and is payable
on demand for one year. The client is bound to repay it in the
monthly installments and whole amount is supposed to be
adjusted within one year along with mark up. In case of
Demand Finance whole amount is credited in his account
and he will pay interest on whole amount.
3- Cash Finance
The bank provides cash finance for short period less
than one year for seasonal businesses. The loan is provided
against the goods. The goods are pledged with the bank.
4- Staff Finance
It is the type of loan that is provided to the members of
the staff up to a certain limit. The loan is provided for house,
car, motorcycle, purchasing piece of land etc. The house
loan is provided to its staff members up to a certain limit
where there is no interest. The loan for a motorcycle is

provided to clerical staff. The officers can also apply for this
loan.
• Non-Fund based financing
1- Letters of Credit
A letter of credit is the most widely used modes of
settling trade debts on an international level. It is also the
convenient important method of obtaining short-term
financial accommodation for banks by customers.
2- Guarantees
It includes performance guarantees, bid bonds,
shipping guarantees, mobilization guarantees and security
deposit guarantees.
1- Performance Guarantees
These are generally requested by customers,
guaranteeing completion of work or supplies, as per terms of
contract and or mutual agreement. In such instances, the
Branch Manager or chief manager should exercise special
care is given below.

i) The guarantees are not for projects,
which are in any way uncertain or speculative.
ii) The contractor is well experienced in his
line of work, having executed similar contracts
satisfactorily in the past earthquake. All insurance
premium costs shall be borne by the customer. It shall
be the responsibility of the Branch Manager or the Chief
Manager to ensure that premises always remain
adequately insured. The Branch should directly pay the
premium to the debit of customer’s account if the
customer does not insure the premises promptly,
despite branch reminders.
2- Bid Bonds
The bank is often requested by its customers to issue
Bank Bonds in lieu of deposit of earnest money against bids
for tenders.
In case of breach of the Bid Bonds terms, on the
customer’s part, the bank could be applied upon to make
payment.

3- Shipping Guarantees
There are instance where the importers need to
obtain delivery of goods without production of the relevant
bill of lading. In such cases the Bank is requested by the
customers (importers) to issue a Shipping Guarantee in
favor of the concerned Shipping Company.
4- Mobilization Guarantees
Under these, the Bank guarantees the performance of
a contract or other work, as specified in the guarantee. The
bank guarantees the amount of advance payment made to
the customers in this connection, for satisfactory
performance of the contract.
5- Security Deposit Guarantees
These guarantees are issued in lieu of security deposit,
generally to Utility Service organizations for connection
supply of electricity, telephone, gas, etc to the customers

Banking Terminologies
1- Transaction Period
The period runs from the date of financing (i.e.,
first disbursement in part or full amount of financing) to the
date of payment of last installment (inclusive of grace
period) to amortize the Marked-up price of the house/flat. It
may be/expressed in “number of years”.
2- Grace Period
This is the period during which the party shall not
pay any installment. Installments will fall due for payment
after the expiry of grace period. Grace period may be
allowed when financing is made against a house or flat,
which is to be constructed, or for completion of a partly
constructed house or flat. In case of outright purchase of a
completed house or flat, normally no grade period is
allowed.
3- Cushion Period

In Mark-up financing, Mark-up on Mark-up is not
permissible. In case of default, the Bank shall stop earning.
While calculating the Marked-up price (for agreement
purpose) additional Mark-up for a period of 210 days (7
months) will be applied, in anticipation that the amount of
financing shall be recovered within the additional period of 7
months through persuasion or through legal process
MCB INTERNATIONAL
The International Division provides one of the fastest
means of remittance from the Middle East and other
countries and also has Pak Rupee and Dollar drawing
arrangements.
• Speed Cash
A Drawing Arrangement specifically arranged with
Citibank Karachi and the Saudi American Bank in
Riyadh ensures doorstep delivery of drafts within 48

hours anywhere in Pakistan where courier service is
available.
• Home Remittance
Demand draft and telex transfer facilities offered to
cover 35 Companies and Banks in the Middle East.
• Drawing Arrangements
Have been arranged for both Pak Rupees and Dollar
through designated branches and arrangements through
Local and foreign Banks.

SWOT Analysis
When I go for the internal analysis of the MCB it

indicates many areas where it posses strength and a
competitive edge over others as well as there are
some weakness in its structure and in operational
activities.
STRENGTHS
 Management is taking initiative in every field

and making innovations to serve their
customers better.
 MCB has a qualified management in their

knowledge and experience and bank takes
benefits from their expertise.
 MCB is injecting new qualified staff on regular

bases.
 Having a large scale of deposits, MCB is

providing an efficient service to their
customers in the form of giving loan to
different sectors of the economy.

 Over 1200 branches network enables of the

MCB to serve the maximum areas of the
economy.
 Being a private Bank, MCB does not observe

any sort of political influence.
 MCB is charging less rate of markup from their

customers on advances as compared to other
banks with minimum hurdles of operations.
 MCB’s Master Card and ATM card are becoming

more popular among people huge numbers of
people are using this facility.
 Most of MCB’s branches are computerized;

high investments are being made in
technology, using SWIFT and other fastest
sources for delivering the messages.
 The Account and Products are competitive in market

against the nationalize commercial banks as well as
privatize Commercial bank
 MCB is the pioneer in introducing the Rupee

Traveler Cheques in the country and are
widely used in the business transactions.

 MCB credit cards are used all over the world as well
as in Pakistan.
 The most industries & organizations have their

accounts with MCB.
 First bank to be privatized, which has now become

the leader in market with largest on-line ATM
network in the country.
 Extension and improvement in services to domestic

as well as foreign customers.
WEAKNESSES
 Some potential zones have no ATM facility.
 MCB being a private bank cannot pursue its

customers, as they prefer the government
banks to deposit their money.
 MCB is facing an internal politics problem.
 MCB has few foreign branches that is why it

has to pay large commissions in business with
others countries banks.
 MCB has large scale of advances so has a high

level of Bad Debts; this indicates its internal
weakness for recoveries of the loans.

 There is a need of new branches in many

developing areas.
 Some potential zones have no ATM facility.
 In some cities the number of ATM are greater than
the requirement and some potential zones are
missing them.
 MCB RTC. Market leading but it is useable in Pakistan
only.
 Some branches have no computer facility.
 Customers having accounts with small amounts are
not given same services and dealing given to those
with high accounts.
OPPORTUNITIES
 MCB has an opportunity to install the

Automated Teller Machines in all over the
country.
 MCB can develop a nationwide systematic

network of On-Line branches.

 There is potential to grow in banking sector.

The use of advance banking techniques and
technology has become an opportunity for the
banks to be a leader in business sector.
 Customers' feed back on different products and
accounts can really improved the bank performance
and encouraged the atmosphere for other future
policies.
 Due to efficient and experienced management

group, MCB can also improve well and expand its
foreign operation successfully.
 Increasing need and potential of leasing in Pakistan
provide MCB an opportunity to utilize its skills and
efficiencies in leasing business as well.
THREATS
 Inconsistency in government's policies regarding to

business and economic sector.
 Loss of confidence of overseas prospects/customers

due to freezing of accounts.
 Government Banks when privatized, then they

produce stiff competition to MCB.

A rapid capture of market by Askari

Commercial Bank Limited.
 Increasing number of foreign banks in the country.
 MCB has attained a status in the country, the

growth of other bank are potential threat for
the Bank. Different schemes launched by other
banks because difficulties and competition is
increasing.

Suggestions and
Recommendation
Upon the completion of my internship program with
MCB Limited, I offer the following recommendations:
 International Branches should be

opened instead of relying on foreign `
banks. Bank should increase the
foreign contact through its own
branches.
 An effective recovery system should be

formulated in order to block the
increasing bad debts.
 By an employee, Job Rotation is not

accepted willingly and it decreases both
performance and satisfaction. It should
be changed.
 Downsizing has created frustration

among employees and work burden on

the employees has increased which is

de-motivating employees.
 To be pioneer, Bank should install

Automated Teller Machines in the City
Multan and in other cities.
 Internal politics and lobbying should be

removed which has bad impact on the
performance of the bank.
 Bank should hire the fresh MBA persons

instead of selecting the commerce
graduates.
 An inquiry or a reception desk should be

established in order to direct and give
information to customers as I noticed that
many people came in to ask for various types
of information and there was not any one in
particular to deal with them.
 The line of services to the customers could

also be increased.

 There should be market research and more

branches in the potential areas should be
opened.
Conclusion
MCB should continue with the same spirit to serve the
Pakistani citizens in the country and all over the world. The
financial position of the bank is very strong, as compared to
some of the nationalized banks and even some of the private
banks. MCB has tried to provide the best services and safety
to the public by introducing the Rupees Travelers Cheques
and by having the largest network of Automated Teller
Machines. The environment in MCB is a very friendly
environment, which is really impressive. The employees try
to help each other in times when there is a lot of work on
somebody else’s hand and this is to be complemented.

In general and in short MCB is destined to go places
given time and more thorough planning. My congratulations
and thanks to all in MCB farid gate Branch for their
cooperation and their friendly help.

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AN INTERNSHIP REPORT ON MCB

six weeks internship at MCB (Chowk Shahabbas Branch

Multan). Head office of MCB is situated at Karachi. At

present 1214 branches of MCB are serving in various cities

of Pakistan. MCB have three important departments.

1. Retail /General banking operations department.

2. Credit operations department.

3. Foreign exchange department.

MCB offers different types of deposit schemes for

demand deposits and term deposits. MCB gives mark up on

these schemes which are fixed by management. This profit

rate is revised in care of profit. Local remittances are

transfer of funds with in the country in the shape of

Telegraphic Transfer (T/T) & Demand Draft (D/D). Cheque

clearance, where all the Cheques are checked and the

authorized officer verify the balance of each account holder.

DEPARTMENT OF MANAGEMENT SCIENCES 1

After that process, encashment is completed on the cash

Advances department deals various finance facilities to

industrial and commercial business. There are two types of

finance facilities to industrialists and commercial business,

fund based facilities and Non fund based facilities.

The world-renowned financial magazine “Euro Money”

has announced, “Euro money Awards for Excellence

2000” to MCB. Now MCB has been declared the “Best

Domestic Bank in Pakistan”.

With the completion of my internship, I perceived that

MCB overall performance is better as compared to other

private commercial Banks.

Management is trying hard to establish and maintain

the trust of its customers.

DEPARTMENT OF MANAGEMENT SCIENCES 2

WHAT IS ABOUT BANKING

Bank is derived from Bancus or Banque or Back. History

of banking is traced to 2000 B.C. in Greece. Priests and

goldsmiths acted as financial agents by keeping money and

valuables of people in temples in strong safes. Thus the first

stage in the development of modern banking was accepting

of deposits cash from those who had surplus money with

The goldsmiths issued receipts for the money deposited

with them which began to pass from hand to hand in

settlement of transactions as people had confidence in the

integrity and solvency of goldsmiths. The receipts were

drawn in a way that it entitled the holder to claim the

specified amount of money from goldsmiths. These receipts

development of banking was the issue of bank notes. The

goldsmiths discovered all the people who had deposited

money did not come to withdraw their funds in cash. Only a

DEPARTMENT OF MANAGEMENT SCIENCES 3

few people presented the receipts for encashment during a

they were being constantly requested for loans on good

security. They thus thought it profitable to lend at least

some of the money to the needy persons. This proved

profitable for them. Instead of charging interest from

depositors, they began to give interest on money deposited

Through experience, banks came to know that they

could keep a small proportion of total deposits for meeting

demands of customers for cash and could easily lend the