INTERNSHIP REPORT ON MUSLIM BANK COMMERCIAL

MOHAMMAD ZAHIR
A report submitted in partial fulfillment of the requirements of the degree of M.COM

AT

QUAID E COMMERCE Sep,2011

AZAM

COLLEGE

OF OF

UNIVERSITY PESHAWAR

Acknowledgement
Person is not a perfect in all the contexts of his life, He has a limited mind and mind thinking approaches. It is the guidance from Almighty Allah that shows the man light in the darkness and the person find his way in the light. Without this helping light, person is nothing but a helpless creation.

The teaching of the Holy Prophet Muhammad (PBUH) were also the continuous source of guidance for me especially his order of getting knowledge and fulfilling once duty honestly was key motivation force for me.

With prayers of my parentsand support of my report. I pay high regards to them.

teachersit became possible to formulate this

I am also thankful to all my to complete this hard task.

friends and class fellows who helped me and provided me support

Letter of Transmittal

Quaid e azam College of Commerce, Peshawar University ,

Dear Sir,

It is to present you the internship report which is executed at MCB Bank Limited as required by the university as a degree requirement for (M.COM)program.

This report has been prepared in accordance with the guidelines issued by the department. It is the result of my first professional experience. The report is a practical application of whatever I studied as a commerece graduate. In this report, I have covered the introduction of MCB, detail of my working and learning in general banking of MCB. I had assisted the manager operation for assignments, but for learning assist incharge of each department.

I have put all the efforts to summarize my knowledge and experience in this report, to make it comprehensive and to meet readers expectations.

Sincerely,

Mohammad Zahir

II

Executive Summary
MCB was incorporated in 1997 and was later privatized by the Government of Pakistan. The Nishat Group bought the majority shares of the bank and so got the rights to control the banks operations. Since the privatization of the bank, MCB has implement different policies to make it one of the best banks of Pakistan, which included introducing new products and services and increase its operations by opening new branches in Pakistan. I did my six weeks internship at MCB Qissa khwani branch 0786 , and worked in account

opening department, operations department, accounts department, Remmittance, Customer Service department. Some of the work that I did in these departments included collecting cheques, filling account opening forms, activity checking and stop payments and closing of accounts. Although there were no such big problems found in the working of MCB, there were some problems in training of the employees, incentive schemes and product innovation. Some of the recommendations include workshops for employees, job rotation, teams work to find innovative products and scholarship programs for employees. Lastly MCB has seen a rapid growth in its activities by introducing a range of products and services and showing its presence in the country by opening new branches and in future should keep this momentum and always strive to become the best.

III

Table of Contents

TOPICS Acknowledgement Letter of Transmittal Executive Summary Introduction

1.1 Introduction 1.2Background of the study 1.3Purpose 1.4Scope 1.5Methodology 1.6Summary

PAGE NO. I II III

01 01 01 02 03 04

History and About MCB

2.1HISTORICAL BACKGROUN 2.2About MCB 05 06

2.4VISION & MISSION

11

2.4.1VALUES OF MCB 2.4.2Awards and Achievement 2.5Branches network 2.5.1Organization Structure (MCB 0187)

12 14 16 18

PRODUCT &SEVICES
3.1Accounts 3.1.1CURRENT ACCOUNT 3.1.2BASIC BANKING ACCOUNT 3.1.3Smart Dollar Account 3.1.4Foreign currency Account 3.1.5SMART SAVINGS ACCOUNT 3.1.6KHUSHALI BACHAT AC COUNT 3.1.7PLS SAVINGS 365 TERM DEPOSIT 3.2.1SPECIAL RUPEE TERM DEPOSIT (STD) 3.2.2SPECIAL NOTICE DEPOSIT (SND) Account Opening Documentation Requirement 3.3.1Individuals Accounts 3.3.2Partnership Account 3.3.3Joint Stock Companies 3.3.4Clubs, Societies and Associations 3.3.5Minor Accounts: (Age below: 18) 3.3.8Illiterate / Photo/ Disable Persons Accounts Client/Account Opening Process Steps Classification of Accounts 3.5.1Dormant Accounts 3.5.2Inoperative Accounts 51 51 39 40 41 41 43 43 44 35 37 19 19 21 23 24 26 28 30

3.5.3Unclaimed Deposit Account 3.6Account Closure Overview of cheque 3.7.1Procedure for Issuance of Cheque books 3.7.2Collection of Cheque book by the Customer REMITTANCES 3.8.1Demand Draft 3.8.1.1 Parties involved in the Demand Draft 3.8.1.2 Accounting entry for DD issuance 3.8.1.3 Accounting entry for DD Payable Branch 3.8.2Payment Order 3.8.2.1 Characteristics of the Payment Order 3.8.2.2 Accounting entries for P.O issuance 3.8.2.3 ACCOUNTING ENTRY WHEN PAY 3.8.3Term Deposit Receipt 3.8.4Call Deposit Receipt DIFFERENCE BETWEEN CDR AND TDR Clearing 3.9.1NIFT 3.9.1.1FLOW CHART OF WORKING OF NIFT 3.9.2In Ward Clearing 3.9.3OUTWARD CLEARING 3.9.4Intercity Clearing

51 55

59 63

66 67 67 68 69 70 71 71 71 74 77

78 79 79 82 83

Lockers 3.10.1Issuance of License 3.10.2Types of Lockers 3.10.3Insurance of Lockers 3.10.4Renewal / Expiry of Lockers 86 86 87 87 88 89 89 91 93

Self Experience Financial Analysis of MCB

4.1Horizontal Analysis 4.2Vertical Analysis 4.3RATIO ANALYSIS

Annual Financial statement of MCB

5.1 Balance sheet 5.2 Income Statement 5.3 Cash Flow Statement 5.4 Statement Of Change In Equity 98 99 100 101

SWOT ANALYSIS CONCLUSIONS RECOMMENDATION 106 SKILLS ACQUIRED GLOSSARY References

108

102 105

113 114

Chapter # 1

Introduction

1.2 Introduction

Chapter one is about introduction of report. As a part of requirement of MBA degree six week internship is necessary for student. This chapter includes background, purpose, scope,

objectives and methodology of the study. It also include introduction of organization.

1.2 Background of the study

Internship training program during Master in Business administration Program is necessary for the partial fulfillment of the completion of Degree of Master in Commerec as per HEC ( Hire education commission ) requirement. 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
Internship is the capstone experience that provides me with hands-on, real-world

experience in a work setting. Ideally, internship will enable internees to:

Use my knowledge and skills get from the classroom, Discover where further competence is needed, Convert the bookish knowledge into practical life, and become better acquainted with the types of work settings in which such Competence can be applied.

1.4 Scope

This study will facilitate to me 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 Alfalfa and many others, Students should study about the functioning of such Banks. It will help full for me in future.

1.5 Limitation of the Study:

T he 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

3 and the secrecy of the bank. Another important limitation of the study is time and space constraint.

In the Branch fraud was held by chief cashier and operation manager so an Audit Team was there and management was busy in providing information to auditor and sat s claims of customers.

1.6 Objectives:

I worked as an internee in MCB Qissa khwani branch Peshawar. 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.

4 Primary Data Secondary Data

(A) Primary Data:

Observation of functions of Branch operations on the spot. Observation of different processes of Branch on the spot.

(B) 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 Summary
This is the first chapter of the report containing the detail introduction of the report. Internship training program during Master in Business administration Program is necessary for the partial fulfillment of the completion of Degree of Master in Business

5 Administration. Internship will enable internees to integrate and use knowledge and skills

from the classroom. This study will facilitate me regarding the working of banking sector of Pakistan. For achieving my purposes, objectives and for the preparation of the internship report I required some kind of data, I used both methods of data collection that are primary sources and secondary sources for that purpose.

Chapter # 2 History and About MCB

2.1 HISTORICAL BACKGROUN

MCB Bank Limited formerly known as Muslim Commercial Bank Limited MCB Bank is not an overnight success story. It was incorporated by the Adamjee Group on July 9, 1947, under the Indian Companies Act, VII of 1913 as a limited company. The bank was established with a view to provide banking facilities to the business community of the South Asia

After the partition of the Indo-Pak subcontinent, the bank moved to Dhaka (then the capital of former East Pakistan) from where it commenced business in August 1948. In 1956, the bank transferred its registered office to Karachi, Where the head office is presently located. Thus, the bank inherits a 59 years legacy of trust of its customers and the citizens of Pakistan .

6 2.1.1 NATIONALIZATION:

In January 1974, the Government of Pakistan nationalized MCB following the Banks (Nationalization) Act 1974. MCB was the only bank which was nationalized solely as neither it nor any other bank being merged with it due to its consistent and firm policies and its sound position.

2.1.2 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-e-Imtiaz", one of the most prestigious civil awards of the country.

2.2 About MCB:

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.

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 multi national concerns. MCB is also catering to the growing middle class by providing new asset and liability products. MCB Bank Limited (Formerly Muslim Commercial 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.

2.3 Organization Profile

Name of Organization: MCB Limited. Chairman: Main Mohammad Mansha Location: New Garden Town Lahore. Branch code: 1080 Phone: +92-042-7727456 / 7720054 UAN: 111-000-622 (MCB) Website: www.mcb.com.pk

2.3.1 Pattern of Share Holdings

Description Shareholding

Percentage

Directors, CEO and children Associated Companies NIT & ICP 57,009,034 0.0008

52,190,877 8.2490

7.5518

5,835

Banks, DFI & NBFI Insurance Companies

2,239,307

0.3240 6.6635 1.0431

46,052,057 7,208,703

Modarabas & Mutual Funds

9 Public Sector Cos. & Corp. 131,749,731 14.7364 0.3473 19.0636

General Public (Local) 101,843,819 General Public (Foreign) Others 44,237,663 2,400,126

6.4010 246,167,375 35.6194

Foreign Companies

Company Total

691,104,527 100.00

ORGANIZATION STRUCTURE

As MCB is a banking company listed in stock exchange therefore it follows all the legalities, which are imposed by concerned statutes. MR. Mian Mohammed Mansha is chairman & chief executive of the company with a team of 10 directors and 1 vice chairman to help in the

business control and strategy making for the company.

A team of 10 professionals is handling operational management of the bank. MR. Mian Mohammed Mansha also heads this team.

The different operational departments are:

Consumer Banking & IT Division

10 Financial & Inter Branch Division Banking Operations Divisions HRD & Legal Division Financial Control & Audit Division Credit Management Division Commercial Banking Division Corporate Banking Division

2.3.2 Board of Directors

Mian Mohammad Mansha Chairman

Mr. S. M. Muneer Vice Chairman Mr. Tariq Rafi Mr. Shahzad Saleem Member Mr. Sarmad Amin Dr. Muhammad Yaqub Member Mian Raza Mansha Member Dato' Mohammed Hussein Member Mr. Aftab Ahmad Khan Member Member Member

11 Mr. Abdul Farid Bin Alias Member Mian Umer Mansha Member Mr. Muhammad Ali Zeb Member

Mr. Atif Bajwa President / CEO

2. 4VISION & MISSION Vision Statement

To be the leading financial services provider, partnering with our customers for a more prosperous and secure future.

Mission Statement

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

Providing innovative Efficient financial solutions Long- term relationships with our customers Shareholders invest with confidence

12

2.4.1 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 is the only criterion for reward.

CUSTOMER CENTRICITY

Our customers are at the heart of everything we do. We thrive on the challenge of understanding their needs and aspirations, both realized and unrealized. We make every effort to exceed customer expectations through superior services and solutions.

13

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 smooth and efficient implementation of ideas and initiatives.

MC B

TODA Y

MCB is one of the leading banks of Pakistan with a deposit base of Rs. 368 Billion and total assets over Rs.500 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.

14

2.4.2 Awards and Achievement:

Euromoney Awards

Best Bank in Asia Award 2008

MCB has been awarded as a Euromoney Award 2008 for the Best Bank in Asia" .

Best Bank in Pakistan Award 2006

MCB has yet again received the esteemed Euromoney Award for the

Best Bank in Pakistan .

It is the only bank to receive the Euromoney Award for Excellence for the sixth time in the past seven years.

Best Bank in Pakistan Award 2005

15 Best Bank in Pakistan Award 2004 Best Bank in Pakistan Award 2003 Best Bank in Pakistan Award 2001 Best Domestic Bank Award 2000

MCB was awarded as a Euromoney Award 2000 for the Best Domestic Bank in Pakistan" .

Asia Money Awards

The Best Domestic Commercial Bank Award 2005

MCB Continues to shine as once again Asia Money declares MCB as Commercial Bank in Pakistan "for the year 2005.

"The Best Domestic

The Best Domestic Commercial Bank Award 2004

MCB has a distinction of winning the Asia Money 2004 award for being Commercial Bank in Pakistan ".

"The Best Domestic

2.5 Branches network

(Domestic operation) (Overseas operation)

16 8

(Branches) 1057

Commercial = 986 Consumers = 44 Bahrain = 1 WBG Islamic = 11 = 11 UAE =1

Sri Lanka = 5

EPZ

=1

Sub branches 05

MCB New Garden Town Branch (1080) Detail of staff as on 30.8.2010

Serial No. Employee No. Permanent/Outsource

Employee

Name

Department