INTERNSHIP REPORT

MUSLIM COMMERCIAL BANK

SUBMITTED BY

Adnan sajid ROLL#100645-011 M.COM (FINANCE)

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PREFACE
Being aware of the importance of practical training, the Hailey College of Commerce, University Of The Punjab, requires every M.COM student to go through training for practical purpose as trainee. The internship program is to broaden the vision of practical experiences with theoretical knowledge as it increases ones capabilities to handle problems at various stages and the ability of decision. I tried my best to collect the valuable information and its relevant facts. This report is the result of my internship with Muslim Commercial Bank (MCB)

KHURRAM SHAHID
M.COM (FINANCE)

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All the praise for Almighty Allah, who enabled me, to carry a successful effort, to prepare a report on Muslim Commercial Bank(MCB)in the best possible way. Its also a great honor for me to present this effort to honorable Professor Nazir Ahmed, Principal Hailey college Of Commerce. Specially thanks to Sir. Prof. Fida Hussain Bukhari who gave me substantial support in compiling my work .May this effort prove to be beneficial for all, who go though it and hope that it will meet the examiners approval

KHURR AM SHAHID
M.COM (FINANCE)

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MCB-ITS SUCCESS STORY

History
Muslim Commercial Bank Ltd. Unfolds 52 years growth. MCB is not an overnight success story. The bank started corporate life in Calcutta on July 9, 1947. After the partition of the Indo-Pak Subcontinent, the bank moved to Dhaka from where it commenced business in August 1948. In 1956, the Bank transferred it Registered office to Karachi, where the Head Office is presently located. Thus, the bank inherits a 52-years legacy of trust in its customers and the citizens of Pakistan.

NATIONALIZATION
In January 1974, the government of Pakistan nationalized MCB following the banks Act 1947; Premier bank Limited merged with MCB.

PRIVATIZATION
A wave of economic reforms swept Pakistan in the late 1990, introducing the need for privatization of state owned banks companies. In April 1991, MCB became Pakistans first privatized bank. The government of Pakistan transferred the management of the Bank to National Group, a group of leading industrialists of the country by selling 26% shares of the bank. In term of agreement between the government of Pakistan and the National group, the Group, making their holding 50% has purchased additional 24% shares.

MUSLIM COMMERCIAL BANK TODAY

MCB today, a represents a bank that has grown with time, experience and Pakistan. A major financial institution, in scope and size, it symbolizes a fully growing tree evergreen, strong, and firmly rooted.
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FOREIGN TRADE
The bank conducted import business during the year amounting to RS. 54.0 billion as compare to RS. 56.4 Billion in 2000. The export business slightly improves to RS. 36.9 Billion from RS. 35.1 Billion in 2000.. Home remittances decline to RS. 16.7 Billion from 30.7 Billion the decline in home remittances business was due to freezing of Foreign Currency Accounts, which has effected the confidence of Pakistanis working overseas.

YEAR 2002 COMPLIANCE

MCBs strength lies in providing a technological base at the gross root level of the society with a challenge to educate and assimilate such systems across vast cultural and economic backgrounds. With over 768 automated branches, 243 online branches, over 151 MCB ATMs in 27 cities nationwide and a network of over 16 banks on the MNET ATM switch, MCB continuously innovates new products and services that harness technology for the customers benefits..

SOCIAL SECTOR
The bank activity participating in the Prime Minister self-employment Scheme. The application received from various applicants is being processed on merit and disposed off as quickly as possible.

FOREING OPERATION
Our banks foreign operation in Bangladesh and Sri Lanka continue to remain profitable. In April 1999 the Bank opened its third branch in Sri Lanka at Marinade a suburb of Colombo.

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BOARD OF DIRECTORS
The board of directors has the authority in guiding Bank affairs and in making general policies. Some directors are the personnel of the MCB and others are successful businessperson and executives of other major organization. Ten members are included in board of directors, see in a list.l 1. Mian Muhammad Mansha 2. Mr. S. M. Muneer DIRECTORS Nine Directors are: 1 2 3 4 5 6 7 8 9 Mr. Tariq Rafi Sheikh Mukhtar Ahmed Mr. Mohammed Arshad Mr. Shahzad Saleem Mr. Raza Mansha Mr. Sarmed Amin Mian Umer Mansha Mr. Mushtaq Ahmed Malik Mr. Mohammed Aftab Manzoor President & Chief Executive Chairman and chief executive Vice Chairman

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AUDITORS
A.F FERGUSON & CO. Chartered Accountants M.YOUSAF ADIL SALEEM & CO. Chartered Accountant

LEGAL ADVISORS
MANDVIWALLA & ZAFAR Advocate and Legal Consultants

REGISTERED OFFICE
MCB building, F6/G6, Jinnah Avenue, Islamabad

PRINCIPAL OFFICE
Adamjee House, 2nd Floor, I. I. Chundrigar Road, Karachi

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MAIN BRANCH MURIDKE

I went the branch of Muslim commercial bank for my internship training. It is the part of our M.Coms training to go for training at any well-established organization. Bank is the most suitable. The branch is situated at G T Road Muridke. Major customers of bank are businessmen, employees of different public and private organizations, salaried and non-salaried persons. Recently branch accounts worth RS. 102 million of 4560 account holders. Majority of accounts is PLS, current a joint accounts.

MANAGEMENT OF BRANCH OG-I (MANAGER) OG-II OG-II Cashier Assistants Security Guard 1 1 2 2 3 2

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GENERAL BANKING

ACCOUNT OPENING
The general banking department performs various functions among them the first and most important function is A/C opening. The bank reserves the right to open any account, which in its opinion is suitable as a customer. The process of opening an account is very simple and any body that would like to open his account can do sot easily without any difficulty.

There are three types of accounts 1. 2. 3. CURRECT ACCOUNT SAVING ACCOUNT TERM DEPOSITS ACCOUNT

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Procedure required to open an account

The customer that likes to open an account is required to meet with the manager or second officer, who will give him an APPLICATION FORM specifically used for account opening. Separate color-coded Application Form is available for each type of account. So that a particular colored form is given to the customer to fill in for opening a related account. Along with the form, a Card for specimen signature is also supplied to customer. Manager has every right to reject this contract if he is not satisfied by the details provided by the customer. But in case the contract is acceptable to both, the next step is official a/c opening. This begins with the ACCOUNT OPENING REGISTER which can be thought of as a customers master file. The manager records the necessary details into this register and allot an A/C number form this A/C opening register. This register is maintained for each type if account and the a/c nos are allotted serially. After opening a saving and current account every applicants data is entered into the computer to maintain a safe record and application form is properly filled so that it can be available when necessary. Checking officer is responsible to Tele the manual application form with the computerized A/C opening file. For fixed deposit only that application form is needed this is prepared manually, because most of the procedure of fixed deposit is done manually. As I had already mentioned about SIGNATURE SPECIMEN CARD. This card contains three signatures of an applicant. Banker uses this card at the time when he receives the cheque; he compares customers signature with the signature on the cheque for avoiding fraud.

CURRENT & SAVING ACCOUNTS ARE OPEND FOR: Individual Only one person can operate this account. an individual who can fulfill the requirement of bank can open this account. We can call it a personnel or individual a /c.
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Joint In case of joint a/c applicant mentions that how much person will operate the a/c. Instruction are given for joint a/c such that the account shall be operated by

Any one of us or survivor Any two/all of us jointly In first case if one of the a/c holders died then the other partner cant operate this a/c individually without having permission from the court. Partnership Account For partnership account, along with the application form signature card. Other documents are also needed such as Registration certificate Agreement among partners Commencement of business In case of addition or withdrawal of any partner a new agreement will be required. COMPANY ACCOUNT For company accounts following documents are required: Private registration Resolution of board of directors Commencement of business
Memorandum and Articles of Association

Balance sheet
Bank prepares two LETTER OF THANKS one for the new customer and the other for his introducer. This act promotes good will between the customer and the introducer.

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CHEQUE BOOK
Chequebook is issued to the customer when the bank accepts the A/C opening application form. Whenever a chequebook is issued to the applicant it is ensured that the series is input to system immediately.

CLOSING OF AN ACCOUNT
There are No of reasons of closing an account. Some are listed below. 1. If customer desires to close his account 2. In case of death of one account holder 3. Bankruptcy of the account holder
4.

If an account contain nil balance or not up to the requirement of rules Before closing any account, bank send letter to the account hold for informing him that his account is going to be closed. There is need an approval form higher authority to close any account.

DEPOSIT DEPARTMENT
The primary economic function of commercial bank is to receive surplus income of individuals, firms, public houses, institutions, companies and to honor cheque drawn upon it. Deposits are to bank as a backbone is to the body of man. It is the lifeblood of a bank. The deposit of a bank is useful in many ways. The bank borrow money from the general public by accepting deposits by offering suitable rates interest to them or simply promise to repay on demand.

The fund deposited in the MCB bank can be classified under the main heads;
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1. Current or Demand Deposits 2. Saving Deposits 3. Fixed or Term Deposits 4. Call Deposits

Current deposits are those which are payable to bank whenever demanded by the customer. Bank does not pay any profit on current deposits. There are of different scheme of saving deposits, which are classified under different duration purposes and rater of interest. Fixed deposits are those deposits which are by the bank under the conditions that they will not be payable on demand but will be payable under fixed determinable future time date.

RULES FOR CURRENT ACCOUNT

Current a/c holder opens current accounts on proper introduction only. However, introduction of a PLS Saving Account holder of repute may be accepted at the discretion of the manager.

MINIMUM BALANCE
A sum not less then RS. 500/- in cash as initial deposit is required for opening a current account and the same may be maintained as minimum average running credit balance.

MINORS
The minors will not be allowed to open current account directly.

PROFIT
No profit will be paid on credit balance held in current accounts. The bank reserves the right to allow opening of current a/c at its description. All deposits and withdrawal from a current a/c will take place only at the branch where the account is being maintained. Current a/c cannot be overdrawn, except by prior agreed agreements with the bank.
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The correspondence relating to current A/Cs should be addressed to manager of the branch where the account is being maintained. A distinctive number will be allotted to each current account and shall be quoted on all correspondence relating to the respective account and at the time of making deposits and withdraws.

ISSUANCE OF CHEQUE BOOK

The Chequebook is issued against the valid requisition slip signed by the account holder as per signature provided by the bank. The account holder can draw sums from his account by means of cheque supplied to him by the bank for that particular account. In drawing cheques the amount in words and figures should be written distinctively and the cheque should be drawn in such a way as to prevent the insertion of any other word or figure. Account holder should take well care of the chequebook issued to them. The account holder will pay excise duty of RS. 4 per leaf to the government.

PAY-IN SLIP
Pay-in slip is used for deposing the additional amount. The entries of cash receipt will be verified under the signature of two authorized officials of the bank. The depositor should collect the stamped and signed the counterfoil. The bank will accept the Pakistanis notes. All cheques and other instruments should be crossed before they are deposited for credit into the account there shall be no restriction on numbered of withdrawals in current account. The current account is computerized, thus it generate the statement of account for all account holders periodically. The account holder is expected to maintain a minimum running. Credit balance of RS. 500/. An account holder wishing to close his account must surrender the unused Cheques to the bank. Incidental charges are beard by the account holder if its credit balance is less than RS. 500/.

SAVING ACCOUNT

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Saving accounts are opened on proper introduction with sums of credit balance within certain limit for individual (single, joint) institutions,, educational institutions etc. MCB has introduced various schemes under saving account. PLS ACCOUNT CAPITAL GROWTH SCHEME

MAHANA KHUSHALI SCHEME KHANM BACHAT SCHEME KHUSHALI BACHAT ACCOUNT MALA MAAL ACHEME SAVING 365 ACCOUNT TERM DEPOSITS OR FIXED DEPOSITS

PROFIT AND LOSS SHARING ACCOUNT

PLS saving account having a running minimum credit balance of RS. 500/- would be eligible for sharing profit/loss of the bank. The bank would be within its rights to make investment of credit balances in the PLS saving accounts in any manner at its sole discretion and to make use of the fund to the best of its judgment in the banking business under the PLS system. Withdrawals from PLS saving account are allowed not more than 8 times in a calendar month and for a total amount not exceeding RS. 15000/- without the approval of bank manager. For withdrawal of larger amount, 7 days notice in writing is required to be given.

PROFIT/LOSS
The profit/loss will be credited on the basis of its net working results at the end of each halfyear. Calculation of products on PLS saving a/c will be made for each calendar month on

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the lowest credit balance if an account between the close of business on the 6th day and the last day of the month. If the balance is less than RS. 100/- the product will be nil.

RULES FOR PLS

Account holder can only withdraw sums from his account by means of cheques supplied to him by the bank for that particular account. Post dated and stale cheques shall not be paid. The bank reserve to itself the rights to close any account without previous notice any account, which has not satisfactory account credit, balance. If the account holder withdrawals the money under 7 days notice, the profit or loss earning products will be computed on the

monthly minimum balance. 10% withholding tax on profit is also applicable on profit/loss sharing account. Zakat is deducted every year @ 2.5% on non-exempted accounts.

SAVING 365 ACCOUNTS

The account will be opened with a limit sum of RS. 500,000/- however there will be no maximum limit for maintaining deposits under this scheme. Profit on deposits will be payable on daily basis under this scheme. Profit on deposits will be payable on daily product basis on balance of RS. 500,000/- and above. However, if balance in the account falls below RS. 500,000/- on any day, the product will be ignored. There will be no restriction on withdrawal from the account. Zakat and withholding Tax is also applicable on the account opened under this scheme.

FIXED DEPOSIT OR TERM DEPOSIT

MCB has an attractive term deposit scheme that is for both short term and long term investment. MCB has introduced the following scheme in term deposit; Special notice term deposits receipts 7 days notice 30 days notice 3 month TDR 6 month TDR
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1 year TDR 2year TDR 3 year TDR 4 year TDR 5year TDR The bank reserves the right to accept or reject the term deposit a/c opening application form of the applicant.

DEPOSIT RECEIPT
Deposit receipt is given to customer in response of accepting his application. Deposit receipt can be purchased either by depositing cash or by cheque. The issuance of certificate or receipt against cheque is subject to realization of the proceed of the cheque. The bank with sum of not less than accepts term deposits RS. 1000/- from individuals (single, joint) firms (proprietorship/partner ship companies and etc) against the issuance of non-transferable receipts in acknowledge of the PLS deposits received. On maturity of deposit receipt the depositor shall have the opinion either to withdraw the deposit or the amount of the profit or renew the deposit with or without the accumulated profit. The bank determines the profit on deposit receipts semiannually, on the basis of its net working result. Profit is given at the maturity of the deposit receipt. Profit for seven days and 30 days, short-term deposit are given on daily basis such as No of days X Rate X total amount If a person comes after three month for one month fixed then bank gives the profit for two months, and same in the case for three month fixed deposit. If customer withdraws his money before fixed period then profit is given to him on the basis of profit slab of Term Deposit Scheme. 10% withholding tax will be deducted from the profit at the time of disbursement.
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Zakat will be deducted at the rate of the end of the year. The bank reserves the right to use these investments in any business to the best of its judgment.

CAPITAL GROWTH CERTIFICATE

MCB has a risk-free return scheme by which your capital can grow to nearly double the amount in just a few year times. All that is required is a minimum amount of deposit. So you simply give the bank an initial amount and at the end of the stipulated period, the bank returns close to twice as much.

SALIENT FEATURES
Minimum amount of investment is RS. 10,000/- with no limit on the maximum amount Time period of the certificate scheme is 5 years and this scheme is renewable for a further period of 5 years. Upon the maturity of certificate, the following returns are expected to be made after deduction of Zakat whenever applicable and withholding as: Initial Deposit RS. 10,000/50,000/100,000/1,000,000/Payment upon Maturity RS. 20,000/100,000/200,000/2,000,000/-

In case of premature encashment of certificates, the depositor will be given PLS Saving Account profit rates declared by the bank for that particular period. Depositors will be required to fill in Account Opening Forms.
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INTERNSHIP REPORT MAHANA KHUSHALI SCHEME

Salient Features
Minimum amount of investment shall be RS. 25,000/- and the maximum amount of investment would be RS. 1.0 million. Khushali certificate can be purchased by individuals (singly or jointly) or by the proprietorship/partnership or companies etc. in their name. The khushali certificates will be of five years maturity.

The guaranteed rate of return will be minimum 1% per month. If the profit declared by the bank is higher, additional profit will be paid to depositors which the branch managers from time to time will inform them about. The following table gives the monthly returns on various amounts. AMOUNT RS. 1,000,000 500,000 100,000 50,000 25000 be collected monthly over the year. As per Government directives, tax on the profit/return is to be deducted by MCB branches at the time of payment.
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MONTHLY PROFIT RS. 10,830 5,416 1,083 541 270

Zakat will be deducted once a year on the principal amount of the investment but will

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PAYMENT PROCEDURE
The monthly payment (profit) will be made through the following convenient and efficient modes: Cross Pay Order, which may be collected by yourself or your authorized person? A cross Postal Money Order or Demand Draft which will be at the doorstep promptly each month. Personal collection of cash profit at the issuing bank branch.

INCASE OF PREMATURE ENCASHMENT The following rates of profit will apply:

If certificate is held for less then 90 days No Profit If the Certificate is held for3 months but less than 6 months PLS rate If the Certificate is held for 6 months but less than1 year If the Certificate is held for 1 year but less than 2 year If the Certificate is held for 2 year but less than 3 year If the Certificate is held for 3 year but less than 4 year If the Certificate is held for 4 year but less than 5 year PLS rate PLS rate PLS rate PLS rate PLS rate

MAAL-A-MALL SCHEME
Maal-a-mall is newly issuing scheme. It is the most profitable scheme of the bank and MCB has got RS. 20 Billions. This certificate is for Rs.25000/-.

PROCEDURE
The procedure of Mall-a-Mall certificate is very simple. The applicant has to fill the slip of certificate where he writes.
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Branch code Date Tenure Name of applicant, his ID No. his address and phone No. The tenure can be of 2 months, 4 months 8 months or 1 year and the profit percentages are different for different for different tenure i.e.2 % for 2 months, 3% for 4 months, 5% for 8 months 6.5% for 1 year tenure. These certificates are automatically renewable after maturity. Copy of ID card is attached with certificate. Profit is calculated at the time of drawing. At register, the officer writes reference or serial No. name of applicant, certificate No. date of issue and date of maturity. At Maal-a-Mall certificate, the officer write dates of issue, maturity date, and reference No. and name of applicant.

CALL DEPOSIT
It is one of the features of commercial institutions. Here the companies and institutions have the opportunity to withdraw the entire amount at any time. People deposit the amount for one project and can use this account during that project. They got the money from this amount whatever they needed for the project. The bank has been issuing deposit receipts or pay order at the request of their customer in favor of Government Departments.

CLEARING DEPARTMENT
This department receives the cheques and other negotiable instruments drawn on local branches of other banks. Nift has a clearing house, in which cheques and other negotiable instruments are brought by each local bank representative and the nutal claims of each bank on other is offset and a settlement is made by the payment of difference. Clearing system is helpful for both the customers and bank in saving currency, time and labor.

PROCEDURE
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The cheques and drafts come to then from different banks. They write them at one (daily voucher record sheet) and then separate different banks and write one banks slips at one schedule and then summary of banks and then balance with total drafts and total amount and giving them to representative. MCB is a member of State Bank of Pakistan (SBP) and has an account with SBP. The clearinghouse of SBP(NIFT), through whom branches forward/receive-clearing cheques along with a schedule conducts clearing. The clerk of forwarding branch prepares the schedule and vouchers of all the clearing cheque, which he received by the clerk on that day and sends these cheques to the checking officer. Checking officer pass these cheques and vouchers by his initials, endorsement stamp and branch special crossing stamp. Clerk posts the contra entries of these vouchers in the clearing register.. Representatives banks collect these cheques. Next day at 8:30 A.M. representatives of all local banks and foreign banks exchange their cheques, which are drawn on their banks.

This department receives the cheques and other negotiable instruments drawn on local branches of other banks. Nift has a clearing house, in which cheques and other negotiable instruments are brought by each local bank representative and the nutal claims of each bank on other is offset and a settlement is made by the payment of difference. Clearing system is helpful for both the customers and bank in saving currency, time and labor. The clearinghouse debits/credits the payee/receipt branch with the total amount of the cheques paid on their behalf. The settlement of book entries e.g. , if MCB is to gives RS 2 Million to UBL and UBL has to give RS.1 million to MCB then MCB will draw a cheque of 1 Million in favor of UBL. SBP will debit this amount from MCB account and credit of UBL account. In this way mutual cross obligation of banks settled by debiting and crediting in the books of SBP.

PROCEDURE FOR ADVISING HEAD OFFICE ACCOUNT

All that inter-bank adjustments will be effected through head office account it will be essential for the branch to advice head office account of each transaction so that they may also pass the
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necessary entries in their books. The Nift will send a consolidated debit/credit advice to the branches in respect of clearing cheques delivered to or received from the branches. The Amount of the advice will agree with the total amount appear5ing in the schedule of cheque deliver/received. The same office will similarly send advice to the branches of the returns, if any. Copies of all advice will be sent to the head office.

TRANSFER AND TRANSFER DELIVERY

Transfer is used for inter branch and transfer delivery is inter-branch. Branch receives the cheques and other negotiable instrument drawn on other branch of the same bank. Main branch of the MCB handles the transfer delivery of cheques. Three same clearing cheques procedure will be adopted in the transfer deliveries except not availing the facility of SBP. In case of cheques drawn on one branch and collected by an other branch for the credit of its constituents the branch delivering the cheques will send a consolidated debit advice will

Invariably agree with the total appearing in the transfer delivery schedule. If any cheque is returned unpaid, a credit advice will be sent to the branch returning the cheque. Clerk will also maintain the ledger for transfer delivery copies of all the advises will be endorsed to the head office as usual.

MODES OF PAYMENT
In banking system different modes of payment are used, some of them are; CHEQUES TRAVELLER CHEQUES MAIL TRANSFER TELEGRAPHIC TRANSFER LOCAL DEMAND DRAFT FOREIGN DEMAND DRAFT

DIFFERENCE BETWEEN CHEQUE & DRAFT

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Both are modes of payment. The difference is that the service charge excise duty and other charges are paid by the cheque holder (to whom cheque is issued) and in draft all charges are paid by cheque issuing deposit holder.

ADVICE FOR CHEQUE

It is used for enter branch communication. When a person has an a/c in MCB at G T Road branch and he got a cheque from Muridke branch of the same bank then he deposits that cheque in his account at G T Road branch that sends that cheque with advice to main branch and main branch sends that Advice with cheque to Muridke branch and that branch approve that cheque and sends back to main branch and main branch sends back to G T Road branch and dig. Branch deposits/credits that cheque to depositors account. If Muridke branch has no such amount then they refuse to approve it and send to main branch and main branch sends back (new advice) to G T Road branch and reserve process starts .If transfer delivery is used between different cities then the issuing cheque holder pays service

charges and mail or transfer charges. If a depositor in a branch (Karachi) gives cheque to another depositor (Lahore) then branch of second depositor makes an advice and transfer amount to first depositor and service charges and the second depositor pays postal or other transfer charges. Three vouchers are used. Main voucher and copy of draft or cheque are sent to first depositors branch. Main draft and one voucher are sent to head office and one voucher remains to II depositors branch.

SPEED CASH
It is a new mode of payment usually used for immediate payment. It can only be issued by Sheikh Sultan Trust branch and can send to any branch all over the country. Amounts from foreign countries come to Sheikh Sultan Trust branch from where it is sent to other branches. Payees bank manager can give amount after checking draft without any advice.

REMITTANCE DEPARTMENT
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Transfer of money or equivalent to money from one branch to another branch of the same bank is called remittance. Now it is become easier and safer method both for the client and banker to transfer their money from one branch to another within the city and outside the city.

ORIGINATING BRANCH
It is the branch, which receive the instrument for remittance.

RESPONDING BRANCH
The branch, which receives the instrument for remittance.

TYPES OF REMITTANCE
Remittance is classified into following four types. INWARD REMITTANCE OUTWARD REMITTANCE INLAND REMITTANCER FOREGIN REMITTANCE

INWARD REMITANCE
The branch receives the instrument directly from the customer or from the originating branch, and is responsible to pay to part is called inward remittance.

OUTWARD REMITTANCE
The branch, which issues or sold the instrument to the responding branch is, called outward remittance.

INLAND REMITTANCER
Transfer of money from one branch to another branch of the same bank within the same country is called inland remittance. In this case both originating branch and responding branch will be situated in the same country.

FOREGIN REMITTANCE
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Transfer of money from one country to another country is called foreign remittance. In such case may be originating or responding branch will be out of the country, and mostly conversion of foreign currency is involved.

MCB USES FOLLOWING FOUR TYPES OF MODES OF PAYMENT

1. Demand Draft (DD) 2. Pay order (PO) 3. Mail Transfer (MT) 4. Telegraphic Transfer (TT) When customer requires a facility of remittance, he should be asked to complete the prescribed application for. Same prescribed application form will used for MT, TT, DD, and PO. This application form is stated the amount of the remittance, the name and address of the payee, the name of originating and responding branch. The applicant and the bank officer who have been duly authorized to act on his behalf should sign this application form.

HEAD OFFICE ACCOUNT

All transaction relating to remittance will be routed through head officer account. All the branches of MCB have an account of Head Office. Through this Head Office account it become easier for branches to do the transaction with other branches and update their books.

DEMAND DRAFT
A draft is an instrument drawn by a bank in favor of any person on a branch of its own bank or any other bank to pay a certain amount of money which is demanded to the person named on it. It is not necessary for the demand draft that applicant or recipient account should be open in originating and responding branches. For demand draft bank charges excise duty and
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commission. It will be the bank income. It is one if the cheapest methods of transference of money within the country or outside the country.

PROCEDURE FOR DEMAND DRAFT

Applicant has to fill in the application form for availing the facility of demand draft. After depositing the amount of draft, remittance officer prepares the cheque of demand draft. Contra entry will be done on the two sides of cheque leaf, on the cheque there will be authorized signature and posted stamp of the bank. One copy of confirmation advice will be dispatch with the cheque and the other copy will be sent to the responding branch by the originating branch for the confirmation of draft. When banker issue draft to the customer, he also records customer particulars in a demand draft register where record is maintained branch wise .Responding branch and originating branch debit/credit the head office account and send the daily statement of transaction to head office.

INTER-BRANCH TRANSACTION
Suppose Main branch Muridke issues a DD on Lahore branch for RS. 1000/-. The following entries will pass in:

Main Branch Muridke

Debit customer A/C RS. 1000/ Credit Head office RS. 1000/-

Head office will pass the following entries in his book

Debit Main Branch Muridke 1000/ Credit Lahore RS 1000/-

On receipt of advice of draft Lahore branch will pass the following entries in their book.
Debit Head Office RS. 1000/ Credit Balance

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In case the draft is presented to Lahore branch the receipt of advice from G T Road branch the amount will be debited to Head office direct and a special advice sent to that effect to the drawer branch as well as Head Office.

PAY ORDER
Pay order is written order, which is issued and received by the same bank or drawn and payable on same branch. In this case originating and responding branches will be same for Pay Order it is not necessary that applicant should be account holder. It is used for local transference of money form one person to another. The bank charges excise duty and flat rate of Rs.10/- from the applicant.

MAIL TRANSFER
The transfer of money from one branch to another branch of the same bank through mail or courier service is called mail transfer. Bank is responsible for the transference of the applicant should be the regular customer or the account holder of the responding as well as originating branches.

TELEGRAPHIC TRANSFER
Through telegram and fax originating branch seen funds to responding branch instantly and immediately. Bank charges commission, telegram/fax charges of RS.20 on telegraphic transfer.

ACCOUNT DEPARTMENT
Account department is the backbone of a bank. It plays a vital role in performing different functions of a bank. The account department of MCB is computerized as well as manual. Accounting books of different departments are maintained under this department and with the help of these, accountant prepare the monthly, quarterly, semiannually and yearly financial statement and other statements of the whole bank. The entire transaction-taking places are recorded daily in the books of accounts and in computerized ledgers.

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For every transaction there is voucher prepared and through these vouchers contra entries are passed under different head. Good working of accounts department mainly depend on the voucher system. Accounts department is responsible for proper handling and maintenance of vouchers of different department.

Manual Functions Performed By Accounts Department

To Prepare and Maintain The Voucher
Accountant prepares vouchers for all daily activities of different departments. Checking officer checks and tallies these vouchers with their daily transactions and posts their entries under proper heads.

CASH BOOK
Cashbook is prepared daily to keep the record of DAILY RECEIPT and DAILY PAID vouchers. Cashbook contains the opening balance of working day. Before writing and balance the cash book firstly there is need to properly arrange all the vouchers of that day. TO MAINTAIN AND UPDATE THE LEDGER FOR TERM DEPOSITS One of the functions of accounts department is to maintain and update the term deposit ledgers and books manually. Term deposit receipt or TDR ledger is updated after every month for estimating profit on customers accounts. Accountant prepares different ledger for all schemes of term deposit. With the help of TDR ledger accountant prepare PROVISIONAL LEDGER. From this ledger accountant calculate the monthly product of each account and estimate the profit for a half-year. The semiannual profit on each account will be the expenses of branch.

COMPUTERZIED FUNCTION PERFORMED BY A/C DEPTT. To Update the General Ledger Account Department Receives the Following Output of General Ledger Daily general ledger expense Daily general ledger income Daily general ledger assets
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Daily general ledger liability Daily general ledger circle expense

Daily general ledger audit expense

The formats of all these ledgers are same. They contain the following heads A/C No. Description, previous balance, amount credit, amount debit and current balance. Codes are assigned to all these items. Income will be credited in the branch account and expenses will be debited in the branch account at the month end. All the expenses of circle, regional, audit; inspection office is debited in the head office account, because it is the responsibility of the head office to bear the expenses of its offices. For all the heads of general ledger there is closing balance and opening balance. These ledgers there are helpful in preparing the daily, monthly, semiannually and yearly statements. Some of these statements are prepared for the purpose of record keeping of branch and some are prepared to send to the circle office, head office, and State Bank of Pakistan.

SOME OF THESE STATEMENTS ARE

Statement of provisional income Statement of provisional expense Statement of head office account Summary of income and expenses Statement of profit and loss a/c Statement of profit and loss on PLS 365 a/c

Balance conformation report Statement of affairs

BILLS DEPARTMENT
The department deals in bills for collection for a kind such as cheques, draft, pay orders, call deposits etc with outstation branches of MCB or with other banks.
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It provides service to their customer to get payment from the nearer bank at nominal charges. The four main heads of bill departments are. 1. OUTWARD BILLS FOR COLLECTION (OBC) 2. INWARD BILLS FOR COLLECTION (IBC) 3. OUTWARD DOCUMENTARY BILLS FOR COLLECTION (ODBC) 4. INWARD DOCUMENTARY BILLS FOR COLLECTION (IDBC)

1. OUTWARD BILLS FOR COLLECTION (OBC)

Bill department receives cheques or other kinds of bills from it client whose account must be opened in that branch. This branch forwards the check with schedule or covering letter to that branch on which bill is drawn. The checking officer of bills department will cross the cheque with special bank stamp before forwarding the cheque. OBC Register is also maintained for proper record keeping of outward bills. This register is updated two times once at the confirmation advice of this check is received form the payable branch. Bank gets a commission 0.25% on per hundred and courier charges Rs.30 this service.

2. INWARD BILLS FOR COLLECTION (IBC)

The branches, which receive bills, have to verify these bills for payment. The party account must be opened in that branch. The responsibility of this branch is to verify the bills for collection within three days and send the advice to the originating branch. In case of verification of bills is approved bank debits the account of the respective account

holder and send a debit advice to originating branch and at the same time credit the head office account. For inward bills IBC Register is maintaining for keeping the proper record of the bills. 3. OUTWARD DOCUMENTARY BILLS FOR COLLECTION (ODBC)
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Originating branch receives the documentary bills from their clients and sent them to outstation branches of the same bank or other bank. Customer account must be opened in that branch. The documentary bills are i.e. trust, receipt, railway receipt, sale invoice, receipt of courier service etc. bank gets a commission 0.35% + postage charges+courier service charges of this service. Seller and purchaser both can avail the facility of bank in case of selling and purchasing their product or goods. 4. INWARD DOCUMENTARY BILLS FOR COLLECTION (IDBC)
Bank receives the documentary bills from the other outstation branches of the same bank or other bank for collection the amount from purchaser. In this case back acts as buyer acts as a buyers bank. When bank receives the documentary bills they send intimation to buyer about his arrival of goods. If the buyer is the account holder then bank will debit his account otherwise purchaser deposits the amount of the bill. Bank hand over these documents to purchaser, on behalf of which buyer receives the goods. Bank also charges commission.

ADVANCES DEPARTMENT
ADVANCE OF LOAN
When a customer borrows from a banker a fixed amount, which is repayable either in periodic installments or in lumps at a fixed future times. Customer has to pay mark-up on the entire amount.

The advance department has to prepare credit line proposal to ensure that the security for the advance is perfect and to provide all information required on the credit worthiness of the client. ADVANCES ARE GIVEN TO CUSTOMER ON THE FOLLOWING BASIS
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Experience, capacity and credit worthiness of the borrower Financial condition of his business Details about the customer dealings with other associated companies Account turnover position Average balance maintain

IN MCB ADVANCES ARE CALSSIFIED INTO FOLLOWING THREE TYPES

1. Demand Finance 2. Running Finance 3. Cash Finance

DEMAND FINANCE
The duration of repayment of this advance is longer than cash and running finance. These advances are made in lump sum and there is permission to repay the amount in periodic installments or in a lump sum. Big loans are sanctioned under this finance against reasonable. Mark-up is charged on daily basis 0.50 RS. Per day thousand.

RUNNING FINANCE & CASH FINANCE

The maximum time period of repayment the advance is one year. Its according to the will of the customer to repay it whenever, within this period. Customer can operate the running finance facility as a current account to meet these urgent and unexpired requirements. Running finance is the new name of overdraft.

Clean Overdraft Is One Of The Type Of Running Finance

Against clean overdraft bank does not keep any tangible security. This facility is permitted only against a promissory note or hypothecation of a stock or pledge of stocks.

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Mark-up is calculated on daily basis under the running or cash finance. Running finance is adjusted twice in three months. Bank gives the advance against bonds, shares, fixed deposit certificate, mortgages, hypothecation pledge etc and other tangible assets. MCB normally charges 14% per annum but this rate may be changed by bank. Mark-up is marked on daily basis which is 0.25% per thousand per day. Mostly in running and cash stock are hypothecated and pledge to the bank. In case of hypothecation, property in goods is charged as security for a loan to the bank but the ownership and possession is left with the borrower. The form of agreement obtained in case of a hypothecation provides that the bank can take ownership of goods if the borrower defaults in repaying the amount. In pledge case, goods and documents are delivered by a customer to this banker to be held as security for the repayment schedule of these advances are allowed to adjust in periodic or in lumps sum. FACILITIES MCB has provided two types of facilities in case of advances. 1. FUND FACULITY 2. NON FUND FACILITY

FUND FACULITY
Funds are given to customer according to their requirement against securities. There are following types of advances, which are given to customer on fund basis. Industrial loans Commercial loan Agricultural loan These loan are given specially to traders, business, small industrial units, including cottage industries, agriculturists, thus ensuring unquotable distribution of bank credit among various sectors of the countrys economy.

INDUSTRIAL LOAN

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Loans are given to industrial units including cottage up to or less than RS. 20 Million. Loans and advances shall not exceed amount specified by marginal restriction on the type of securities offered. Industrial loans are granted to the manufacturing section of the economy including finance for fixed investments and working capital requirements of small industries.

Loan Period
Loans are allowed of a maximum period of 5 years including a maximum grace period of 1 year. In special case up to 10 years also, depending upon the merit of the case.

Commercial Loan
Total principal amount of loans to a single enterprise/borrower shall not exceed RS. 0.5 million. Maximum maturity is 3 years, depending upon the nature and type of and of advances, decided upon case to case basis.

Mark-Up
Both for commercial and industrial loan, mark-up will be charges as per existing rate, subject to changes from time to time. Presently it is 051 RS. Per day per RS. 1000/-.

Mode of Repayment
Equal monthly, quarterly or half-yearly, repayment of principal and interest or as per term of approval.

Securities and Margin

Loans can be made against any or more of the following securities mortgages of immovable property (land and building), pledge of stocks, raw materials, and finished goods, hypothecation of stocks, raw material, and finished goods, SBP guarantee.

AGRICULTURE LOAN
The loan is advanced to those farmers who are cultivated agricultural land. It is classified into following two types.

1.

Production Finance
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2. Development Finance

Production Finance
This finance is advanced to the agriculturist for input requirement of land E.I. fertilizer, Pesticides, seeds etc. It is also called short-term loan.

Development Finance
These loans are advanced to the farmers for the purpose of development of the land or other development purposes belong to the agriculture sector tractor, thresher, and tubewells. It is called short, long, medium term loan. The repayment of loan is scheduled in periodic installments, which may be quarterly, half yearly or yearly. Mortgager of land is used as security for development finance .Mark up is charged on daily basis and changes time to time normally it is 0.50 RS. Per thousand per day.

Procedure for Advance

The applicant fills in the application form for loan. Bank provides the application form to his applicant. If the officer is satisfied with the application than he prepare the proposal in response to this application. The branch manager call for the following documents i.e. property deeds, mortgage of property etc. is patch these documents with proposal and forward the proposal to circle office. As soon as a proposal is received, the circle office advances department ensures that the requisite documents/reports are in order/favorable. Further they also make suitable inquiries about client business reliability and competitiveness. If the general manager has the power to sanction the loan then after processing, circle office will prepare the sanction advice and send it back to relevant branch, on the other hand proposal will be submitted to the head office.

NON FUND FACILITY

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When and applicant for an advance cannot offer any tangible security the banker may rely on personal guarantees, letters of credit to protect himself against loss on advance or loan.

Guarantees
Banks issue guarantees on behalf of customer. Limit proposals, covering such transactions should be submitted, with full details, for the approval of the appropriate sanctioning authority. Generally, customers, on whose behalf the guarantees are issued, issue guarantees. While executing a guarantee the terms and conditions of the guarantee is closely examined in order to determine the extent of banks obligation and/or financial liability under the guarantee and the type of guarantee, unusual conditions are contained in the guarantee. After the guarantee has been issued, a copy of the same is attached to the counter guarantee issued to the customer. Bank charges a commission 0.40% per quarter on the amount of the guarantee issued. Normally the validity period of guarantees does not, at a time, exceed on year.

FOREIGN EXC HANGE DEPARTMENT

This department deals with the foreign exchange transaction. The function of this department is just like general banking with the difference that it deals in foreign currency. Only the authorized dealer of SBP can deal in foreign exchange. MCB is also the authorized dealer and has a licensee of STATE BANK OF PAKISTAN. This department is further divided into following four main heads. Foreign Currency Account Import Export

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Foreign Currency Account

Foreign currency account can be open in US dollar, Pound Sterling, Dutesh Mark, Japanese Yen. Any individual firm or a company may open private foreign currency account irrespective of nationality or place or residence. Opening of account in the joint names of a resident and a non-resident is permitted. Foreign currency account holder opens foreign currency accounts on proper introduction. There is no limit on amount of deposits or withdrawals from these accounts. No question is asked on the source of funds received in such accounts. No Zakat, income tax or withholding tax is deducted. For opening a foreign currency account there is needed a photocopies of 4 pages of passport card. The State Bank of Pakistan national resident outside Pakistan against the security of balances in foreign currency account. The MCB Has Introduced Three Schemes In Foreign Currency Account Primary Currency Account Dollar Khushali Account Term Deposit Account

Primary Currency Account

A sum no less than dollar 100/- in cash as initial deposit is required for opening prime currency account and the same may be maintained as minimum average running credit balance. Profit will be calculated on monthly basis on minimum balance. Profit rates are different for different currencies. For standing instruction bank charges 2US $ on per transaction.

Dollar Khushali Account

This account is opened only with dollar currency. A sum not less than dollar 2000 for opening dollar khushali account and the same may be maintained as minimum average running credit balance other wise this account will be treated as prime currency account.

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Term Deposit Account

The term deposit account is negotiated in a manner so that the delivery dates fall on working days both in Pakistan and in the foreign country where delivery is to be given. These deposits are three months, six-month, nine months, one year, two-year, three years, and five years. There are different profit rates for different tenure. Following Ledger Documents Are Maintained For Currency Accounts General ledger Day book Cheque ledger Vouchers of debit and credit Pay in slip Daily statement account to head office After the freezing of accounts, now the banks have only one foreign currency account i.e. dollar accounts, and their tenure is not more that one year. The bank giving profit LIBOR rate+4%.

Import
This department provides the facility to their customer to import machinery or products from other countries. It is necessary for the import to have the licenses, which is issued by the chief controller of imports and exports. For having the license, an individual or firm submits the application through his bank.

The documents which are necessary for the registration and having the import license are following
Filled Application Form For Register The National Identity Card of the Applicant The National Tax Certificate issued by the Income Tax Department In case of firm or company, the Memorandum and the Article of the Association

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Banker is issues the letter of credit normally in the response of the Performa Invoice. The seller sends this invoice to the buyer and it contains seller name, product quality, and rate, mode of shipment, and other terms and conditions.

LETTER OF CREDIT
Definition of Letter Of Credit
A letter of credit consist of an undertaking by a bank authorized the seller to draw in accordance with certain terms and stipulating legal forms, that all such bill will be honored.

Explanation A letter of credit is a,

1. Written undertaking by importer bank to a third party i.e. the exporter. 2. That it will be pay or accept draft (letter of credit) drawn upon it up to a started sum of money within a specified time. 3. That the payment will only be made to the exporter if the complies with the specified terms of credit.

Parties Involve In A Letter Of Credit

Account party Issuing party Exporter Paying or negotiating bank

Account Party
The buyer or the importer on whose account and request the letter of credit is opened is known a s account party.

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Issuing Party
The bank, which issues or opens a letter of credit at the request of importer, it is called the issuing bank.

Exporter
The seller or the party in whose favor the letter of credit is draw is the third party and it is also known as beneficiary.

Paying or Negotiating Bank

The paying bank in the exporters country on which the draft is drawn is called the paying bank. REASON; WHY A LETTER OF CREDIT IS MADE? 1. The exporters are uncertain of the importer capacity to pay. 2. The importers are unwilling to pay the amount unless the goods are actually shipped and the documents received by the bnank. 3. In case of non-payment the seller should be assured to legal rights in foreign country. 4. There should be an agency, which should meet the sellers need of finance when the goods are shipped. 5. The commercial banks come to the help of exporters and importers. 6. The importers can undertake the obligation to pay to the exporter for the purchase made by the importer and this is usually done through a letter of credit.

OPERATION OF LETTER OF CREDIT

1. The importer of buyer contacts the seller in foreign country for the purchase of a particular good or good. 2. He settles with the seller the quantity and quality of the goods to be importer. 3. The sale contract also includes the method of payment 4. The importer then submits an application to his bank for the issuing of an individual letter of credit.
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5. The form on which the importer employees for letter of credit is supplied by the bank.

6. This form contains all the necessary details discussed between the importer an exporter for the shipment of goods which of unloading, the documents against which the bank is the honor the draft, total value of the goods etc. 7. If the documents supplied by the seller conform to the terms of contract the exporter will be paid. 8. The issuing bank will not be responsible if there is any fraud or the merchandise does not conform to the sales contract. 9. The obligation of the buyers bank is, a) To issue letter of credits on agreed terms and condition with buyer. b) To have a proper examination of the documents. c) To honor draft when presented with proper documents.

Types of Letter Of Credit

1. Irrevocable letter of credit 2. Revocable letter of credit 3. Confirmed letter of credit 4. Unconfirmed letter of credit 5. Documentary letter of credit

1) Irrevocable letter of credit

It is the one in which the issuing bank gives a lasting undertaking to accept and in due course to pay bills drawn upon it provided the exporter fulfills the terms and conditions. It gives a complete protection to the exporter.

2) Revocable letter of credit

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It is the one in which can be modified or cancelled by the issuing bank at any time without any obligation on its part. They are not acceptable to the business.

3) Confirmed letter of credit

It is that which has the protection of the credit standing of the importers as well as the exporters bank, which confirms the letter of credit, takes the liability of paying in case the issuing bank fails to make payment to the exporter

4) Unconfirmed letter of credit

It is one under which the exporters bank does not give any guarantee to the exporter that the bills drawn will be honored by the issuing bank to honor the draft. From the exporters point of view, the confirm irrevocable letter of credit is the best from of receiving payment.

5) Documentary letter of credit

It is the one of which provides for bills to be accompanied by documents of little to goods such as the bills of landing, invoice, the policy of insurance etc.

HOW A LETTER OF CREDIT IS OPENED

1. Application for a letter of credit 2. Line of credit 3. Opening of the letter of credit 4. Handling of the documents 5. Payment by the importer to the bank 6. Liability

1. Application for A Letter Of Credit

An importer prepares an application on the prescribed form available from the bank. The information which are supplied in the application are based on the contract of sale and include only the importer feature of contract such as the value of the merchandise, port of shipment,
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port of unloading, expiry date of the papers and brief description of the goods. If the bank is satisfied with the application, it will sign and acceptance agreement with the importer.

2. Line Of Credit
Before issuing a letter of credit, bank takes all necessary precautions for securing its credit. The bank first examines the customers credit standing, the type of goods to be imported, the market demand for the goods, the collateral offered to cover the credit. Then it establishes the amount i.e. the line of credit.

3. Opening Of Letter Of Credit

The letter of credit can be opened by mail or by cable. When it is opened by mail, the issuing bank sends letter of credit and to carbon copies to the importer. The importer then dispatches the letter of credit to the exporter in foreign country by mail. One carbon copy is kept for the record. The second carbon copy after signing is sent to the bank by the importer. If an importer. If an importer directs the bank to open letter of credit by cable, the importers bank sends a cable to the corresponding bank in the foreign country with a request to notify the exporter.

4. Handling of the Documents

When the exporter receives a letter of credit, he presents the required documents and the draft to the bank in his own country after shipping of documents. If the bank is satisfied with the documents in the importing country and pays the exporter at official rate in the currency of his own country.

5. Payment by Importer to the Bank

When a bank approves the application of a customer for opening letter of credit, it does not lend money to the importer. The bank only lends the importer to use the credit standing of the bank to the exporter in the foreign country. The bank makes a contract with the importer that

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when the draft if send by the negotiating bank for payment the importer will make the payment to the bank not later then the day only the bank is to honor the obligation. In case of a sight letter of credit the payment to the corresponding bank is to be made on the day the draft and

documents are received. When the time of letter of credit is used the importer is to arrange the payment not later than the day on which the draft is to mature.

6. Liability of the issuing Bank

The liability of the issuing bank is to examine the documents in order to confirm their validity. If the documents on the face appear to be in order the payment should be released. If any defect is found in the documents and the issuing bank honors the draft, the importer can claim damages. The banker is not responsible to see whether the merchandise conforms the sale of contract or they physically exist. The issuing bank is only responsible for the completeness and regularity of the documents relating to the letter of credit.

IMPORTANCE OF LETTER OF CREDIT

The bank charges nominal commission on financing the import and export shipment.

Benefits To the Bank

Increasing balances Commission New business opportunities

Increase Balances
The balances are the lifeblood of every commercial bank. The banks get marks up on the credit and this mark up increase the money of the bank.

Commission The commission charged by the banks varies with the kinds of letters issued by
them. Though the commissions are small, yet when counted on the whole, they form an important part of earning of the banks.
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New Business Opportunity
The letter of credit provides new business opportunity to the bank. The firms, which are engaged in the export and import of merchandise, are introduced to the banks, which by serving them develop profitable relationship.

OPENING OF LETTER OF CREDIT

Before opening of L/C certain requirements are necessary that are The applicant must have import registration No. He must has account in the bank He must pledges his security against the L/C amount He must have IB-8 form, and perform, and performance invoice.

Bank Charges
The bank takes commission @ 0.40% of amount of L/C for one quarter and 0.25% for two or more quarter. If L/C amount is low then minimum bank commission if RS 500/Postal charges are RS. 1200/ -Stamp duty is calculated @ 0.50% of L/C amount Mark up is calculated at RS. 0.50 per day per 1000

For Collection
In case of sight payment service charges are calculated @ 0.10% of bill amount and minimum charge are RS. 500/- and minimum charge is RS. 500/- and handling commission is RS. 500 In case of D/A L/C, commission is calculated @ 0.10% per month

ADVANTAGES OF LETTER OF CREDIT

Advantages letter of credit to the importer and exporter 1. Provision of finance 2. Credit standing
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3. Legal right 4. Risk covered 5. Business expansion 6. Bridges Credit gulf 7. Payment in domestic currency

Document
Documents are the most important part of international trade. Without them trade cannot be completed. Documents are of five types. 1. Commercial documents 2. Transport documents 3. Insurance documents 4. Financial documents 5. Official documents

Commercial Documents
Commercial documents consists of following Invoiced form Certificate of origin Weight note Packing list Quality or insurance certificate

Transport Documents
These documents are related with transfer of goods. These documents consist of following forms. Airway bill
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Bill of landing Rail consignment note Roadway bill Combined transport bill o landing

Insurance Documents
Insurance documents consist of following forms Letter of insurance Insurance policy

Financial Documents
These documents are concerned with the payments of goods. These documents consist of following forms Bill of exchange Clean bill Short bill Documentary bill Long bill Bank bill Delivery against acceptance Delivery against payment Promissory note

Official Documents
Black listed certificate Consular invoice
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Health, vetenary, sanitation certificate

Export
Usually the exporter does not rely on the credit of a banker in the country of importer, and insist on a confirmation from a banker carrying on business in his own country. Thus this department of a bank helps the exporters to settle down their financial affairs. For exporting it

is necessary for exporter to get export license from the chief controller of import and export after registration. Documents are required for the registration such as N.I.C, income tax Certificate, bank certificate that shows that the exporter is his account holder and has a good dealing with them. In response to the letter of credit exporter submit the following documents to the negotiating bank. Bill of exchange Invoice Bill of lading or Airway bill/railway receipt /truck receipt Insurance documents Packing list Any other documents, if so required. The negotiating bank will send the same documents to the issuing bank. In accordance with the terms and condition la id down in let of credit.

Security of Document
Whether documents received are meant for the opening bank and specifically for the branch which established the letter of credit. The documents would be negotiated within the validity of L/C. the goods have been shipped within the time allowed under L/C. the goods are mentioned

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in invoice and other documents (e.g. bill of lading, packing list etc) are in accordance with merchandise clause L/C. Whether the documents received pertains to L/C, established by the opening bank and the documents negotiated are within or equal to L/C amount. In case where the value of documents exceeds the L/C amount. The foreign bank may negotiate the documents for amount being marginally excess or sends them on collection, remittance may be allowed in excess subject to the following conditions. The amount does not exceed 5% of the amount of L/C subject to the maximum of US 500/- $.

The importers hold a valid import license against which the excess amount is adjustedprovided remittance is affected within 1.5 year from the date of issue of import license. The name of the importer on the bill of exchange does not differ from that on the import license. The tenor of the bill should be valid. See that the goods are not shipped prior to the date of opening of L/C or the documents are not stated. The goods are consigned or endorsed in the favor of the bank only opening the letter of credit, and in no case it should be consigned to the importer directly.

Retirement of Documents
When the opening bank against a letter of credit receives documents. The customer retires the documents under different arrangements e.g. Retirement against payment by the importer Retirement of documents in case of None-payment by the importer Retirement of document under trust receipt
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INTERNSHIP REPORT Retirement of Documents under Trust Receipt

Shipping documents are released to the importer on trust, that he may get the goods cleared from the custom authority by himself, sell the good, and later pay back the bank. Trust receipt financing is limited to first class customers only as the bank reposed fullest confidence in the importer. Documents are obtained from the customer. The finance is provided for the period of 45 days only.

The Amount of Finance Is Calculated As Under

Rupee value of bill plus foreign bank charges plus taxes, less SBP marging restriction = amount of finance.

Mark up is calculated @ 0.43 RS. Per 1000 per day on the amount of finance utilized. After the retirement of documents the opening bank then transmits the funds to the negotiating bank. The exporter will receive the payment from the negotiating bank.

Credit Card Facility

The facility is given to the customer on their Credit worthiness Sufficient balance Sufficient mean of sources Customer uses the facility of these credit cards only from the affiliated establishments of the MCB.Establishment are those to whom the MCB give the authority to sell their goods or services to the credit card holder. All the charges received by the MCB card department from its establishments. Credit card department debits the cardholder a/c and credits the establishment a/c.

Working of MCB Credit Card

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Branch manager would recommend their clients of good standing for a credit card. Manager collects application from their clients and sends them to the circle office with their remarks and a note about their financial statement .The circle office would inspect, investigate and make inquiries on all such applications and pall them their General Manager with their remarks. In case there the circle office does not consider an applicant fit to have credit card they reject it at their end. Copy of rejection letter is forwarded to credit card department for their information. General Manager forwards the application with his remarks to credit card department. When approved a credit card valid for twelve calendar months would be issued and dispatched to member directly through branch manager.

Member fee for the MCB Credit Card Is RS. 100/- only

Renewal of Card
The expired card would be renewed, if the account holder wants.

Loss/Misplaced Card
If a card is lost or misplaced, immediately inform the MCB card Department. A replacement card having the same validity as of the lost card would be sent to the individual concerned as soon as written intimation is received from him. The account holder would have to pay RS. 50/- as the lost card fee.

RUPEE TRAVELERS CHEQUE

MCB rupee Travelers Cheques have the largest share of the total RTC market. Over 1.5 million satisfied customers have made MCB RTCs their first choice and find them ideal for all transactions whether business or personal. We aim at ledership, attain it and today, we are the market leaders.

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MCB is the only bank to have the Tele-verification System that allows the customer to confirm the validity of each cheque. This facility should assure you that the cheques are not lost/stole. What set MCB RTCs apart are the security features. MCB RTCs are printed in the UK and carry a thread watermark- a feature that prevents counterfeiting. MCB Rupee Travelers Cheques Ideal For Every Deal Different facilities are provided through RTCs, some of them are as follows

As Good As Cash: RTCs are the most convenient substitute for cash for all kinds as
transactions-business, property, trade or personal.

Denominations: cheques are available in denominations of RS. 1000 RS. 10,000 and RS. 50,000. Easily Encashed: RTCs can be easily encashed at any designated MCB branch. Easy refundable: in case of loss or theft, you can get the full amount back.

Exclusive security features: due to special printing and safety precautions, MCB RTCs cannot be duplicated. Various securities features both in design and materials make counterfeiting or fraudulent alteration extremely difficult. Valid unit used: validity of cheques is indefinite. You can use for a week, a year or more after the date of purchase.

Tele-verification system: RTCs enable you to check the validity of a cheque 24 hours a day. Tele-verification UAN: (021) 111-000-456.

Bank charges for RTCs

The bank gets commission or RS. 10 per leaf. Excise duty is calculated at the rate of 0.20% to the total amount and this duty id exempted for tax payees.

Procedure

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The officer firstly writes it in the register (different registers for different types of RTC) when he writes serial #, date, amount and name of the specimen in the cheque, they write name of person at two sides, serial No. Of cheques. They send the serial No. To head office for on line and person gets the RTC.In case of withdrawal, the person can get amount from any branch having facility of RTC all over the country. In person gives it to any body then other person credits it in his a/c and gets money from his next day. If other body wants to get money the same day then he must has to verify it with other a/c holder and can get his amount. In case of stolen of RTC, the specimen firstly goes to police station and inform them and get copy of FIR and then copy of that FIR sends to nearest MCB branch (having facility of RTC) the clerk immediately sends that information head office and head office informs all RTC branches with message having serial of stolen RTC so that thief may not able to get amount. On the other hand the person gets new RTC of the same amount.

MCB- CONSUMER PRODUCTS

ONLINE The largest network of over 250 On-Line branches in the country and growing. Providing customers with 24*7 real time. On Line transaction facilities.

MCB CALL

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Call now for answers to your queries-banking services, mobile banking services, RTC services, Tele Banking services and MCB product information. MCB ATM The nations largest network of over 140 ATMs and growing. Get 24 hours convenience of cash withdrawal, mini statements, bill payments and funds transferred services. At the end of 1998, 75 branches were online and 241 branches had been computerized with multi terminal system, 66 ATMs were in operation and over 50,000 ATM Cards had been issued. The commercial cities of Faisalabad and Multan were added on MCB ATM Network. Plans are in hand for expanding online network to major cities and covering all the four provinces thereby providing the ATM network true national coverage and maintaining our leadership in this service.

CASH PLUS Cash managements services for corporate customers. Help customer substantially reduce their receivable collection time frame, improve cash flow and business management. 365 GOLD A deposit account for customers with substantial balances offering profit on a daily basis with a facility of unlimited withdrawals.

CIRRUS Cash withwaral facility at over 630000 ATM, s worldwide.

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INTERNSHIP REPORT

MAESTRO Convenience of shopping at over 5 million POS locations worldwide.

ISLAMIC BANKING SERVICES Islamic banking services through exclusive units/branches offering a range of liability and asset based sharia complaints products like Musharika, Murabaha, Ijara, and Istasana.

MCB MOBILE BANKING

Banking at your fingertips. Dial in any time to get information

regarding balance and mini-statements.

MNET MCB network for electronic transitions is an electronic hub for ATM sharing plus other touch points. Members include over 20 locally operating financial institutions enjoying ATM sharing and bureau services .The nations largest operating switch with the highest transation volume.

MCB PYARA GHAR Flexible and competitive home financing facility with options of home purchase, construction and purchase. KHUSHALI BACHAT ACCOUNT One of the most popular deposit accounts offered by MCB.

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INSTANT FINANCING Get a loan in an instant at any MCB branch Offering same day

financing facility against liquid collateral at a fine pricing. REMIT EXPRESS Fastest to Pakistan , anywhere un Pakistan .International remittances with a two-way messaging facility delivered at Remit Express your doorstep within 24 to 72 hours. MCB CARDS A local point of sale acquiring network facilitating acceptance of all major card brands.

MCB CAR CASH Car financing and leasing at competitive rates with flexible options. Carcash finances both semi-commercial and non-commercial vehicles for commercial and business use.

MCB RUPEE TRAVELLERS CHEQUE The most widely accepted way to pay cash for travel related purposes. A secure and safe way to make payments nationwide. EASY PERSONAL LOAN
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Personal loans for salaried individuals of reputed local and foreign companies at rates tailored to customers repayment capacity. Loans are offered for a variety of purposes including vacations, car purchases ,furniture, marriage etc. MCB CASH CARD MCB ATM and MCB Cash cards accepted in over 30 cities country-wide and internationally at Cirrus ATMs and Maestro.

MCB LOCKERS The best protection for your valuables. Lockers of different capacities are available nationwide.

FINANCIAL ANALYSIS
MUSLIM COMMERCIAL BANK LTD.
BALANCE SHEET VERTICAL ANALYSIS AS ON DECEMBER 31,2002

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INTERNSHIP REPORT
PARTICULARS ASSETS
Cash on hand Balance with other banks Lending to financial institutions Investments-net Advances-net Other assets Operating fixed assets Deferred tax assets

2002 (RS.000)
17867991 2154190 33874620 89609821 78923737 8883163 3825045 __

% AGE
7.59892 0.916136 14.40624 38.10937 33.56478 3.777842 1.62672 ____

2001 (RS.000)
21287400 3075463 15470519 55376260 76585999 11398468 3659667 220500

% AGE
11.3656779 1.6175526 8.27063795 29.6344257 40.9423581 6.09499693 1.95647005 0.1178807

TOTAL LIABILITIES
Bill Payable Borrowing from financial institutions Deposits &other accounts Sub-ordinate loans Liabilities against assets subjected finance lease Other liabilities Deferred tax liabilities

235138567
6261957 21987824 182705716 1600000 __ 9045634 1838545

100
2.802527 9.840609 81.76959 0.716077 __ 4.048356 0.822837

187074276
8097178 8946624 154544437 __ __ 8580465 __

100
4.49427519 4.96575354 85.7786864 __ __ 4.76128489 __

TOTAL NET ASSETS REPRESENTED BY

Share capital Reserves Inappropriate profit Surplus on revaluation of assets

223439676 11698891
2665455 3026517 621985 5384934

100
22.78383 25.87012 5.3166151 46.02944

180168704 6905572

100

2423140 35.1841478 2278980 33.0909354 302465 4.12282696

6313957 53.970560 TOTAL 11698891 100

5004585 72.471694
1900962 27.6020898

6887022

100

MUSLIM COMMERCIAL BANK LTD.

BALANCE SHEET HORIZONATAL ANALYSIS AS ON DECEMBER 31, 2002
PARTICULARS ASSETS
Cash on hand Balance with other banks Lending to financial institutions Investments-net Advances-net Other assets Operating fixed assets Deferred tax assets

2002 (RS.000)
17867991 2154190 33874620 89609821 78923737 8883163 3825045 __

2001 (RS.000)
21259900 3025689 15470519 55432235 76584120 11400906 3659646 220500

CHANGE (Rs.000)
-3419409 -921273 18404101 34233561 2337738 -2515305

% AGE
-16.063066 -29.955587 118.962402 61.8199225 3.05243521 -22.067045

165378 4.5189357 -220500 -100.00000

TOTAL LIABILITIES

235138567 187053515

48085052 25.692624

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INTERNSHIP REPORT
Bill Payable Borrowing from financial institutions Deposits &other accounts Sub-ordinated loans Liabilities against assets subjected finance lease Other liabilities Deferred tax liabilities 6261957 8097178 21987824 8946624 182705716 154544451 1600000 __ __ __ 9045634 8578240 1838545 __ -1835221 13041200 28161279 1600000 __ 465169 1838545 -22.664946 145.766716 18.222124 100.00000 __ 5.42125631 100.00000

TOTAL NET ASSETS REPRESENTED BY

Share capital Reserves Unappropriated profit Surplus on revaluation of assets Minority interest

223439676 180166493 11698891 6887022

2665455 3026517 621985 2423140 2278980 283940

43273183 24.016919 4811869 69.412338

242315 10.000004 747537 32.8013848 319519 105.638338

6313957
5384934 __

4986060
1900962 ___

1327897 26.163448
3483972 183.274153 ___ ___

TOTAL

11698891 6887022

4811869 69.412338

MUSLIM COMMERCIAL BANK LTD.

PROFIT & LOSS ACCOUNT VERTICAL ANALYSIS AS ON DECEMBER 31,2002
2001 Particular Interest earned Fee commission and brokerage income profit from federal exchange business income from UTP Dividend income Income from dealing Other income TOTAl (RS.000) 17034263 868637 3099 243994 687854 400140 19256362 88.46044 1648 0.016093 1.267083 3.657082 2.079832 100 41.59745 0.12356 8.98754 2.475476 40.45023 0.220533 0.00081 5.513422 100 %AGE 2002 (RS.000) 15385869 90.012654 907071 .987564 ___ 0.986542 ___ 0.017944 297748 2.126548.9 503593 3.411546 881746 5.439037 17976027 100 6074682 36.79828 512 0.284979 ____ 0 721105 4.012546 8077395 50.13016 ___ 0 1313 0.227281 1362426 7.654269 16237433 100 %AGE

OPERATING EXPENDITURE Interest expense 7544897 Provision for diminution in the value of inv. 62064 Profit against non-performing loan and adv. 1704944 Bad debts written off directly 448999 Administrative expenses 7336815 Other provisions 40000 Other charges 147 Taxes 993000 TOTAL 18089674

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INTERNSHIP REPORT

MUSLIM COMMERCIAL BANK LTD.

PROFIT & LOSS ACCOUNT HORIZONTAL ANALYSIS AS ON DECEMBER 31, 2001

PARTICULARS

2001

2002

CHANGE

%AGE

(RS.000) (RS.000) (RS.000) Interest earned Fee commission and brokerage income Dividend income Income from dealing Other income TOTAL 17033225 15385869 -1647356 868637 907071 38434 243994 297748 53754 687854 503593 -184261 400140 881746 481606 19233850 17976027 -1257823 9.60283 -40408 -90.01265 22.54322 -27.39726 120.1904 34.96037

OPERATING EXPENDITURE Interest expense 7544897 6074682 -1470215 19.230288 Provision for diminution in the value of inv. 62064 -62064 -100.000 Profit against non-performing loan and adv. 1704308 -1704308 -100.00 Bad debts written off directly 449635 721617 271982 60.722069 Administrative expenses 7331623 8077395 745772 9.890183 Other provisions 40000 -4000 -100.00 Other charges 147 1313 1166 793.0231 Taxes 993000 1362426 369426 37.0321 TOTAL 18089674 16237433 -1852241 -10.23156

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INTERNSHIP REPORT
PROFITABLITY RATIOS Return on Assets Profit after tax Total Assets Return on Assets Profit after Tax Total assets Ratios 2002 1738594 235138567 0.739%
X 100

(RS. 000) 2001 1108176 180166493 0.6%

This ratio shows that the return is greater in 2002 as compared to return on assets in the year 2001. Although interest and discount on loans which is the major source of revenue for bank has increased in 2002 as compared to last year, but cost on deposits and borrowing which is the major expenditure of bank has increased more in the current year than the last year. Another reason of increase in return is the increase in lending rate and decrease in financial cost, total assets in 2002 have also increased substantially than last year so return on assets increased in 2002.

RETURN ON SHAREHOLDER INVESTMENT

Profit after tax X 100 Shareholder fund

Return on Shareholder Fund

(RS. 000) 2002 1738594 2001 1108176

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Profit After Tax

INTERNSHIP REPORT
Shareholder Fund Ratios 11698891 14.86% 6887022 16.09%

This ratio is a further explanation of the above ratio that is the rate of return has decreased in 2002, in 2002 profit after tax has increased and on the other hand its denominator shareholders fund has also increased due to increase in reserve fund and other reserves. Therefore both the factors are responsible for this ratio.

RETURN ON EQUITY CAPITAL

Profit after tax Paid up Capital
Return On Equity Capital X 100

(RS. 000) 2002 2001 1738594 1108176 2665455 2423149 65.23% 45.73% data available shows that profit earning after taxes in

Profit After Tax Equity Share Capital Ratios Calculation made on the base of

2002 has increased. Here in this ratio we see that ratio has increased not by the single factor but also due to increase in share capital. So both these factors has resulted an increase of the return.

EARNING PER SHARE

Profit after tax Total No. Of Equity share

Earning Per share

Profit After Tax

(RS) 2002 1738594000 2001 1108176000

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Total No of Outstanding equity share

266545483 6.52

242314075 4.57

Ratios

This ratio is telling that is in the current year 2002 profit has increased and that is why earning per share has also increased.

RATE OF RETURN ON LOANS

Interest income Total Loan
X 100

Rate of Return on loans

(RS. 000) 2002 15385869 78923737 19.49% 2001 17033225 76584120 22.24%

Interest Income Total Loan Ratios

Here we are watching very interesting situation, as there is decrease in interest income in 2002 and ratio has also decreased, reason is that interest income has decreased but amount of loan has increased resulting in decrease in return on loan.

LIQUIDITY RATIOS
LOAN TO DEPOSIT RATIO Total Loans Total Deposits
X 100

Loan to Deposit Ratio Total Loans Total Deposits

(RS. 000)
2002

78923737 182705716

2001 76584120 154544451

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INTERNSHIP REPORT
Ratios 43.20% 49.55%

Analysis shows an increase in loan and also increase in the deposits. As rate of increase of deposits is greater than that of loans, therefore it has resulted in an overall decrease in the ratio. LOAN TO ASSETS RATIO Total Loans Total Assets
X 100

(RS. 000) Loan to Assets Ratios Total Loans Total Assets Ratios 2002 78923737 235138567 33.56% 2001 76584120 187053515 40.93%

Total assets of the bank increased from RS. 187 (billion) in 2001 to Rs. 235 (billion) in 2002 and have 25% increase in assets, which has resulted in an increase in loan but to shorter extent. Therefore the net result is decrease in the loan to assets ratio from 40.93% in 2001 to 33.56% in 2002.

CAPITIAL RATIOS
EQUITY CAPITAL TO ASSETS

Equity Capital Total Assets

X 100

(RS. 000)
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INTERNSHIP REPORT
Equity Capital to Assets Equity Capital Total Assets Ratios 2002 2665455 235138567 1.13% 2001 2423140 187053515 1.29%

In current year banks assets have been increased from RS. 187 (billion) to Rs. 235(billion) there by increase @ 25.67% over the last year. On the other hand banks equity has increased and changed during the year 2002 so this is the reason that ratio equity to assets has decreased from 1.29% in 2001 to 1.13% in 2002. Denominator total assets have increased substantially during the year 2002 and increase in equity capital resulted a decrease in this ratio.

EQUITY RATIO
Shareholder Fund X 100 Total assets

Equity Ratio Shareholder Fund Total Assets Ratios

(RS. 000) 2002 11698891 235138567 4.97% 2001 6887022 187053515 3.69%

This ratio explains that participation in the assets by the shareholders funds is limited by outsiders fund but when we take year under review (2002) we see ratio has increased in 2002 as compared to the year 2001. Reason behind this is that increase in assets in financed by outsiders fund rather than the fund provided by the shareholders.

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DEBIT EQUITY RATIO

Total External Debts Total Internal Debts (RS. 000) 2002 223439676 11698891 19.10 times 2001 180166493 6887022 26.09 times

Debt Equity Ratio Total External Debit Total Internal Debts Ratios

This ratio depicts the relation between equity and debt financing. This current year ratio shows an decrease in ratio from 26.09 times to 19.10 times. Because lesser is the equity financing lesser will be the soundness of the bank

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INTERNSHIP REPORT
The reason behind this decrease is an increase in external borrowings and increase in internal debt also but rate of increase in internal borrowing is greater. It is necessary to keep the bank fund up to 40% as reserve.

CONCLUSION
During my internship training at MCB G T Road Branch Muridke I have learned a lot. It was a geed experience for me. In April 1991, the, MCB became the first Pakistans Privatized bank. After privatization, the profitability and performance of the bank has increased. Toda MCB represents a bank that has grown with time.

GOOD FEATURES
The staff of foreign exchange department is highly professional. All the members of this department are highly educated and trained they work in a proper way and follow all the ruled and regulations, that is why this department of this branch is most professional and highly profitable department of the whole MCB.

DRAW BACKS AND SUGGESTIONS

It has been observed that every system has some defects. Although the management is always alert for modification where the defect are notified. DRAW BACKS
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INTERNSHIP REPORT
1- Duty Hours Are not Properly followed the working hours are from 9:00 A.M to 5:00 P.M. this is because of extra burden of work on them and desire to fulfill the goal of the branch 2- It has been observed that most of the staff member knowledge is limited. They only know their routine duties. If any thing other than normal routine occurs, they are confused.

SUGGESTIONS
1- Before adopting or changing any rules or policies of the bank, efforts should be made to first of all provide sufficient training to the staff. Providing proper training to the staff member periodically .2For avoiding duty timing problem, all the departments should have appropriate staff members.

Facility of Computer Cell in All Big Cities Mostly all the big branches of MCB are computerized. Programs are installed by the head office and programmers work like operators. They are strictly prohibited to see the programs. In case of default, the analyst comes from head office and removes the fault. It takes more time. In order to over come this, it is necessary that computer cells should be established in all big cities in Pakistan for providing the immediate service. These will also helpful in decreasing the expenses of air tickets and TADA of analyst.

No Advance Facility for Students

There is not facility for students to get mark free loan in this bank So, this bank should provide free of mark up or easy terms and conditions loan to students and deserving persons on merit. I hope this scheme will be successful in producing intelligent, intellectual and brilliant students.
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