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Oct 6, 2009
Internship Report on Muslim Commercial Bank page2

Types Of Accounts in MCB

The fund deposited in the MCB bank can be classified under the main heads:
♦ CURRENT OR DEMAND DEPOSITS
♦ SAVIGN DEPIOSITS
♦ FIXED OR TERM DEPOSITS
♦ CALL DEPOSITS
1) Current Deposits (Or) Demand 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 purpose and rate of interest.
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.
A) Minimum Balance
A sum not less then RS. 1,000/- in cash as initial deposit is required for opening a current
account and the same may be maintained as minimum average running credit balance.
B) Profit
♦ No profit will be paid on credit balances 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.
♦ The correspondence relating to current A/Cs should be addressed to manager of the branch
where the account is being maintained.A
♦ 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
C) Issuance of Cheque Book
The Cheque book 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 cheque books issued to them. The account holder will pay excise duty of Rs.4
per leaf to the government.
2) Saving Account
Saving accounts are opened on proper introduction with sums of credit balance within certain
limit for individual (single, joint) institutions, companies, educational institutions etc.
MCB has introduced various schemes under saving a/c,
♦ PLS ACCOUNT
♦ CAPITAL GROWTH SCHEME
♦ MAHANA KHUSHALI SCHEME
♦ KHANM BACHAT SCHEME
♦ KHUSHALI BACHAT ACCOUNT
♦ MALA MAAL SCHEME
♦ SAVING 365 ACCOUNT
1. Profit and Loss Sharing Account
PLS saving account having a running minimum credit balance of RS. 1,000/- 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 judgement in the banking business under the PLS system.
Withdrawals
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/debited on the basis of its net working results at the end of each
half-year. Calculation of products on PLS saving A/c will be made for each calendar month on
the lowest credit balance of 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 loss earning
products will be computed on the monthly minimum balance. Zakat is deducted every year on
non-exempted accounts.
2. Khanam Bachat Scheme
Target Market
♦ Individuals planning to save funds for education & marriages of their young sons
/daughters.
♦ Individuals interested in long term deposits.
♦ Individuals in low class middle group.
♦ Individuals showing confidence in Bank’s long term schemes than schemes of similar
maturities offered by others.
♦ The loving parents that want best for their children.
Deposit Amount
We will have to deposit Rs 1000 on monthly basis t the time birth of your baby or at later stage.
It will continue for upto 10 years without making any withdrawal.
Conditions
♦ The account can be opened singly or jointly.
♦ Account in the name of miner can be operated by mother, father or jointly as guardian.
♦ No advance can be extended against a minor account.
♦ If anybody withdraws prematurely then profit will be calculated on prevailing PLS account.
♦ The bank reserves the right to refuse any depositor in the scheme without giving any reason.
♦ This account can be opened in any MCB branch.
Interest
♦ The interest is given on yearly basis.
♦ Tax & Zakat will be deducted according to rule at the time of maturity and payment.
3. Mahana Khush-hali Scheme
Target Market
♦ Individual interested investing for five years saving schemes.
♦ Individuals who want monthly return on investment.
♦ Middle class income group.
♦ For the persons residing abroad and family in Pakistan.
♦ For retired persons who want regular monthly return on investment.
Conditions
♦ Minimum amount required is Rs 25000 and Maximum is Rs 1 million.
♦ This scheme can be adopted by individuals ( Single or Joint) in their names.
♦ This certificate will mature after 5 years.
Interest
♦ The bank will give profit on monthly basis.
♦ Zakat is deducted on payments and profit according to government rules.
♦ Services
♦ We 7 our nominee can collect cross pay order.
♦ Profit amount can be send to you by postal money order & demand draft.
♦ Profit will be paid from that branch where you have opened Khush-hali Account.
♦ If a customer has a saving or current account in this bank then profit can be deposited in that
account.
The following table gives the monthly returns on various amounts, based method of calculation.

AMOUNT (Rupees) MONTHLY PROFIT (Rupees)

1,000,000 10,830
500,000 5,416
 100,000 1,083
50,000 541
25,000 270

In Case of Premature Encashment

The following rates of profit will apply:
♦ If the certificate is held for less then 90 days No profit
♦ If the Certificate is held for 3 months but less than 6 months PLS rate
♦ If the Certificate is held for 6 months but less than 1 year PLS rate
♦ If the Certificate is held for 1 year but less than 2 year PLS rate
♦ If the Certificate is held for 2 year but less than 3 year PLS rate
♦ If the Certificate is held for 3 year but less than 4 year PLS rate
♦ If the Certificate is held for 4 year but less than 5 year PLS rate
4. Khush-hali Bachat Account
Target Market
♦ Individuals who want to pay dues of insurance, HBFC& instalment.
♦ Individuals living abroad but their families are in Pakistan.
♦ Busy individuals who don’t have time to pay their dues monthly.
Special Incentives
♦ Return is calculated on daily average balance.
♦ Profit is paid half yearly.
♦ It can be operated at mostly all the branches of MCB.
5. 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 time. All that is required is a minimum amount of deposit. At the end of the
stipulated period, the bank returns close to twice as much.
Target Market
♦ Individuals interested in medium term saving schemes.
♦ Individuals of middle income class group.
♦ Individuals keeping excessive balance in current accounts.
♦ Individuals interested to save fund for lump sum, education & marriages.
♦ Individuals seeking protection against increasing inflation rate.
Conditions
♦ Minimum deposit will be Rs 10,000 with no limit for maximum.
♦ Time span is minimum five years can be expanded to 5 years.
Interest
Initial Deposit Payment upto maturity (approx.)
(Rupees) (Rupees)
10,000/- 20,000/-
50,000/- 100,000/-
100,000/- 200,000/-
 1,000,000/- 2,000,000/-

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

6. Fixed deposits
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 or determinable future time date.

Foreign Exchange Department

Import
This department provides the facility to their customers to import machinery or products from
other countries. It is necessary for the importers to have the licenses, which is issued by the chief
controller of imports and exports. Before obtaining an import license the license must be
registered with the chief controller of import and export. For having the license, an individual or
firm submits the application through his bank.
Documents Required
♦ Filled application form for Register
♦ The National Identity Card of the applicant
♦ National Tax Certificate issued by the Income Tax department
♦ In case of firm or company, the Memorandum and the Article of Association.
Banker 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. Rate, mode of
shipment, and other terms and conditions.
Letter of Credit
Definition of letter of credit
A letter of credit is a written instrument issued by a bank authorising the seller to draw in
accordance with certain terms and stipulating legal forms, that all such bills will be honoured.
Explanatory Definition
A letter of credit consist of an undertaking by an issuing bank that bills drawn by the exporter
will be duly owner provided the comply with the terms of credit.
Reasons For L/C
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 bank.
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 seller’s 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.
Explanation
A letter of credit is a:
1) Written undertaking by importers 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 he complies with the specified terms
of credit.
Parties Involved in a Letter of Credit
There are four parties involved in a letter of credit
♦ Account party
♦ Issuing party
♦ Exporter
♦ Paying or negotiating bank
Account party or Importer
The buyer or the importer on whose account and request the letter of credit is opened is known as
account party.
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 favour 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 exporter’s country on which the draft is drawn is called the paying bank.
Operation of a letter of credit
1) The importer of buyer contacts the seller in foreign country for the purchase of a particular
good or goods.
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.
5) The form on which the importer employees for a letter of credit is supplied by the bank.
6) This form contains all the necessary details discussed between the importer and exporter for
the shipment of goods which include the description of merchandise, port of shipment, port of
unloading, the documents against which the bank is the honour the draft, the 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,
ß To issue letter of credit on agreed terms and condition with the buyer.
ß To have a proper examination of the documents.
ß To honour 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 fulfils the terms and conditions. It gives a
complete protection to the exporter.
2. Revocable letter of credit
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 businessman.
3. Confirmed letter of credit
It is that which has the protection of the credit standing of the importers as well as the exporter’s
bank. The exporter 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 exporter’s bank does not give any guarantee to the exporter that the
bills drawn will be honoured by the issuing bank. It is the commitment of the issuing bank to
honour the draft. From the exporter’s point of view, the confirm irrevocable letter of credit is the
best form of receiving payment.
5. Documentary letter of credit
It is the one of which provides for bills to be accompanied by documents of title 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 of the issuing bank
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, port
of unloading, expiry date of the papers and brief description of the goods. If the bank is satisfied
with the applications, it will signed 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
directs the bank to open letter of credit by cable, the importer’s 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 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 honour 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 honours the draft, the importer can claim
damages. The banker is not responsible to see whether the merchandise conform 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 Banks
♦ Increased balances
♦ Commission
♦ New business opportunities
Increased balances
♦ The balances are the lifeblood of every commercial bank.
♦ The banks get mark up on the credit and this mark up increases 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.
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 In MCB
Before opening of L/C certain requirements are necessary that are
♦ The applicant must has import registration #
♦ He must has account in that bank
♦ He must pledges his security against the L/C amount
♦ He must have IB-8 form, indent or agent form, 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 quarters.
♦ If L/C amount is low then minimum bank commission is 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 charges are 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 Of letter of credit to the importer and exporter
♦ Provision of finance
♦ Credit standing
♦ Legal right
♦ Risk covered
♦ Business expansion
♦ Bridges credit gulf
♦ Payment in domestic currency
Shipping Terms
The following shipping terms are used in international trade.
♦ EX-works
♦ FCA ( free carrier)
♦ FAS(free along side)
♦ FOB( free on board)
♦ CFR(cost & freight)
♦ CIF(cost insurance freight)
♦ DAF(delivered at frontier)
♦ DES(delivered EX-ship)
♦ DEQ(delivered EX-quay)
♦ DDU(delivered duty unpaid)
♦ DDP(delivered duty paid)
Documents
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
1. Commercial Documents
Commercial documents consist of following forms.
♦ Invoice form
♦ Certificate of origin
♦ Weight note
♦ Packing list
♦ Quality or insurance certificate
2. Transport Documents
These documents are related with transfer of goods. These documents consist of following
forms,
♦ Airway bill
♦ Bill of lading
♦ Rail consignment note
♦ Roadway bill
♦ Combined transport bill of lading
3. Insurance Documents
Insurance documents consist of following forms.
♦ Letter of insurance
♦ Insurance policy
4. 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
♦ Bank bill
♦ Delivery against acceptance
♦ Delivery against payment
♦ Promissory note
5. Official Documents
These documents consist of following forms.
♦ Black listed certificate
♦ Consular invoice
♦ 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. Card, income tax certificate, bank
certificate which shows that the exporter is his account holder and have 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 laid down in letter of credit.
Security of Documents
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 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 holds a valid import license against which the excess amount is adjusted-
provided remittance is effected 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 documents under trust receipt
Retirement Against Payment by the Importer
The importer approaches the bank for retirement of the shipping documents. Mark is calculated
and recovered on the bill amount for 230 days @ 12.55% for each RS. 100/- or part thereof on
payment against documents (PAD) for intimation purpose only.
Entries Passed by the Bank
♦ Debit importer a/c
♦ Credit PLS-payment against documents A/C
♦ Credit: PLS-income a/c mark-up recovered on PAD
♦ Credit: telegram/telex/postage charges a/c.
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 on the
importer. Documents are obtained from the customer. The finance is provided for the period of
45 days only.
Calculation of Amount of Finance
Rupee value of bill plus foreign bank charges plus taxes, less SBP margin 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 transmit the funds to the negotiating
bank. The exporter will receive the payment from the negotiating bank.
Export Re–Financing
It is most important features of export. Export refinancing is used to enhance the export of the
country. It was firstly started in 1977 and re-established in 1994. Here the exporting companies
can get advances at a very low mark up i.e. lower then inflation rate. Banks get advances from
State bank at 6% and provide advances to the exporting companies at 8% and 2% is spread of the
bank i.e. is the income of the bank. This export-refinancing advance can only be used for export
and not for other purposes, state bank gets information about export through E – form. There are
two parts of export refinancing.
♦ P-1
♦ P-II
P-1
Two forms of P-1 are pre-shipment and port shipment
P-1 Pre-shipment
In P-1 pre-shipment companies make an agreement with foreign companies and get loan from
the bank to make products and shipping them to foreign countries i.e. they get advance before
shipping the products.
P-1 Post-shipment
In P-1 the post-shipment companies make an agreement with foreign countries and produce
some of the products and ship them and get advance from the bank to complete the shipment.
P-II
In P-II pre-shipment companies get lumpsum for the whole next year and the entire amount can
be used to export the products. The companies have to export double than the advance gets
through P-II shipment. In P-II pre-shipment the lumpsum amount can be calculated on the basis
of performance of the last year. If a company is unable to make double export than the advance,
then bank makes some penalty in the forms of amount against the company.
Special Products
Export refinancing cannot be applied for exporting all types of products. Some products are
♦ Cotton cloth
♦ Cotton products
♦ Finished leather
♦ Refined sugar
♦ High quality yarn i.e. more than thirty count
Each company has different limit at a time and bank has to make a report at the end of each
month and one copy of that report is sent to state bank and one copy to head office at Karachi.
Different limits are,
♦ Cash finance
♦ Running finance
♦ Demand finance
♦ Export refinancing I
♦ Export refinancing II
♦ FAFB
♦ FBP
Forms of Export Re Financing
Different forms are required for export refinancing. These forms are
♦ Undertaking as per Annexe UT-DE-1
♦ Form DE-1
♦ Form DE-2
♦ Original contract
♦ Undertaking as per Annexe A
♦ Certificate of non-availment of loan.

Clearing Department
Cheques
When we talk of cheques then there are two types of cheques
1) Open Cheque
Open cheque has following properties:
♦ The word Bearer is not crossed.
♦ Cross stamp is not there
♦ Cheque is not of limited companies.
♦ Self or name should be written on the cheque.
Token
A token is given on open cheques when presented to bank for payment. In this case payment is
made at the spot to the cheque holder. First of all cheque is presented to bank for payment. The
name of holder, no of cheque and amount is written on the register by the bank employee &
token is given to cheque holder. Then Cheque reaches the computer department. There it is again
feeded in computer & it is stamped after checking the holder has enough amount in his account
or not. After feeding in computer ( debiting holder’s A/C ) , the cheque reaches the cash
department where the holder can receives his cash by giving token to the cashier provided that he
has enough amount in his A/C.
2) Crossed cheque
When the cheque does not fulfil the requirement of open cheque then it is known as crossed
cheque.
A) Transfer Delivery
When cheque has following properties then it is proceeded as Transfer Delivery.
♦ Cheque is crossed.
♦ Cheque is of MCB.
♦ Cheque is from local branch.
In this situation cheques are collected separately as transfer Delivery.
Procedure
In Transfer Delivery following process is done.
First of all cheques are noted in Transfer Delivery Ledger with the date in advance because it
takes one day to reach cheque issuing branch in the same city. In T.D Ledger Name of account
holder, Number & amount of Cheque are written and two copies , one original and one carbon
copy of voucher SF-73 B are prepared. Original copy of voucher along with cheque is send to
issuing branch while carbon copy and Pay-In-Slip is with the bank.
The cheque with voucher goes to Main branch then to issuing branch and then reverse from
issuing branch to main branch and then to our branch.
B) Clearing
In clearing the cheques which are
♦ crossed
♦ limited company
♦ different bank in the same city
Procedure
Such cheques are collected as clearing cheques and are noted in Clearing Ledger. Two copies of
voucher SF-37 are prepared (See Annexe ) . Original voucher with the cheques are send to
Main branch which then send to S.B.P in advance date. The payment is not given at hand but it is
transferred to account of account holder. In case if cheque is returned due to number of reasons
then the objection is finished and again send to main branch but this time a credit voucher along
with original cheque is send to main branch instead of any Pay-In-Slip.
Advance Clearing
When cheque is sorted for clearing because of different branch in the same city then we note
these cheques in two days advance date because it takes more time to reach that faraway
branch . For example HBL of Baha-ud-Din Zakariya University Multan.
Procedure of Payment of Cheque of Foreign Currency
When cheques are denominated in foreign currency then procedure is not like that of ordinary
cheques of Rs. First of all cheques are issued and the person give cheque to another person.
When any party receives cheque in foreign currency to deposit in his account then it gives it to
the ban where he has his bank account. The Bank sends this cheque to its Head Office. Head
Office send it to the country where transaction is done over that currency. Then cheque goes to
New York. From there it is send to that issuing bank (domestic) from where party has received
cheque whose bank whose cheque it is. N.Y is credited and that bank is debited by that amount.
N.Y send it to head office of our Bank. Then H.O is credited and N.Y is debited. Amount of
Foreign currency is then send to main or local branch where the party has its account. Now the
account of that person is credited and the H.O is debited
Now there may be two cases:
1) Either account is in Pak Rs.
2) Or account is in that country
3) Or account is in Foreign Currency other than the currency in cheque.
C) Cheque Collection
When cheque is from another city then it is grouped as C.C.
Procedure
SF-37 form is used in Cheque collection (See Annexe ) Original voucher with cheque is send
to main branch. Carbon copy with Pay-In-Slip is taken by bank for record purposes.
Pay-In-Slip
Here it is very necessary to have knowledge about Pay-In-Slip
Purpose
It is used for two purposes
♦ Whenever we want to deposit cash in our account then pay-in-slip is used by writing amount
on it and depositing it to cashier along with money.
♦ Whenever we have cheque from any party to be collected in our account we fill pay-in-slip .
One part is attached with cheque and another is given to cheque holder as a receipt.
Types
It is of two types depending upon the type of account.
♦ Green Pay-In-Slip is used for Saving Account (See Annexe )
♦ Blue Pay-In-Slip is used for Current Account (See Annexe )
Stamps Used In Bank (MCB)
Following stamps are used in for different purposes.
(1)Cross Stamp
This stamp is used to cross the cheque. Crossing can be done by 3 ways.
a) General Crossing
Sometimes the cheque is crossed by the drawing two lines on the upper left corner of the cheque
without writing any sentence on the cheque.
b) Written Crossing
Cheque can also be crossed by stamping it with sentence “Pays Account Only”
c) Special Crossing
Crossing can also be done by stamping a cheque with the words “MCB GBS Branch”. This
means that now cheque is in use of bank only. If it is lost or dropped then it is of no use to
anybody because now it is a cheque of bank. This cheque will not be cashed any where else.
(2) “Payees Account Will be Credited on Realisation”
This is used to stamp on the back of following instruments.
Cheque (simple). 2) Travellers Cheque. 3) Pay Order. 4) Speed Cash.
This means that the account of the payee will be credited provided that cheque is accepted by
Drawer’s bank otherwise not.
(3) Disbursement Guaranteed; Payees Account will be credited on Realisation
It is used to stamp on the back of following instruments
1) Demand Draft . 2) Foreign Remittance
(4) Payees Account Credited
This stamp is used on back of those cheques which are of the same branch. It is of guarantee that
if there is no problem with the cheque or A/C then Payees account will be credited.
(5) Clearing Stamp
This stamp is placed in front of clearing voucher on the same day in which clearing was made
(one day advance date). Or the date in which it is presented by Main branch in State Bank Of
Pakistan.
(6) Round Stamp MCB
It is used in two places.
♦ When we are dealing with C.C then we write the number of C.C which is written inside the
stamp. One stamp is on cheque and other on Pays-In-Slip.
♦ When we fill Pay-In-Slip and give it to the bank officer along with cheque then he places
this round stamp on the face of one part of Pay-In-Slip and marks his signature on it and give it
to the customer as a evidence.
(7) Pay Cash
This stamp is used when cheque is not crossed, it is open cheque. The officer places this stamp
on the front of cheque and writes token number on it. This means that payment in cash will be
made of this cheque on presentation of token to cashier. This is like indication for cashier to pay
cash.
Reasons for Cheque returned unpaid in Cross Cheques
Following are the reasons for the cheque return.
♦ Cheque incomplete
♦ Clearing stamp Required.
♦ Drawer’s sign incomplete
♦ Drawer’s sign different from specimen
♦ Post Dated
♦ Payment stopped by drawer.
♦ Amount in words and figures differ.
Report of Lost or Stolen cheque
In case of lost or stolen incidents following procedure is performed.
♦ Cheque no of lost cheque
♦ Whether it was single or double signed.
♦ Whether it was crossed or related to someone
♦ Phone / Fax of reporter.
♦ NIC no of reporter.
♦ Signature of reporter.
♦ How cheque was lost.
♦ FIR Lodged or not.
Green Sheet
At the end of banking time ( 1:30 o’ clock), three Green sheets are prepared for clearing , cash
and account side. One Green Sheet is also prepared by clearing department.
Heads in Green Sheet
Green Sheet has following Heads:
1) Current A/C(2) Saving or PLS A/C (3) Other A/C(4) General A/C

M.T Payable H.O A/C

T.T Payable Other than 3,2 &1

Pay order

D.D Payable

Sides of Green sheet

There are two sides of green sheet: Debit Side & Credit side.
Both sides should tally in figure amount. If Debit total = Credit total then sheet is balanced and
there is no mistake. It should be taken care that cheques are always debit and pay-in-slip is
always credit. If voucher is of Pink colour then it will be on credit side and if it is of blue colour
then it is debit side.

RTC Department
This department deals in RTC. It stands for Rupees Travellers Cheques. MCB RTC has the
largest share of the total RTC Market. Over 1.5 Million satisfied customers have made MCB
RTCs. These are printed in the UK and carry a thread watermark- a feature that prevent
counterfeiting.
Important Features
As good as cash
The most convenient substitute for cash for all kinds of transactions(property, trade, personal
etc).
Denominations
Cheques are available in the denomination of Rs 1,000 Rs 10,000 Rs 50,000.
Easily Encashed
They can be encashed at any MCB branch.
Easily refundable
In case of Loss Or Theft we can get the full amount back.
Exclusive Security Features
MCB RTCs can’t be duplicated. Various security features both in design and materials make
counterfeiting or fraudulent alteration extremely difficult.
Valid Until Used
Validity of Cheque is indefinite. We can use them for a week, a year or more after the date of
purchase.
Televerification System
It enables us to check the validity of cheque 24 hours a day . Televerification UAN (021) 111-
000-456.
Procedure
First of all RTC-10 is given to customer. It is filled and then cash is deposited to cash department
. One copy is for office and one copy is given to the customer and RTC are issued at that time.
When RTCs are sold then H.O A/C is credited by using form no RTC-20.
It has five copies:
A,B,C,D,E.
A= H.O copy, B= RTC Dept, C& D= Branch.
When RTCs are returned or purchased by the MCB then H.O is debited by that amount by using
form RTC-30. Summary of al RTC purchased by branch is made on form RTC-40.

Remittance Department
Remittance
Transfer of money or equivalent to money from one branch to another branch of the same bank
is called remittance.
Important Terms
Originating branch
It is the branch from which money is send to another branch or the point of origin of remittance.
Responding branch
The branch which receives the instrument or money for remittance is known as Responding
Branch.
Types of Remittance
Remittance is classified into following four types:
♦ INWARD REMITTANCE
♦ OUTWARD REMITTANCE
♦ INLAND REMITTANCE
♦ FOREIGN REMITTANCE

a) Inward Remittance
The branch which receives the instrument(T.T, D.D etc) directly from the customer or from the
originating branch and is responsible to pay to party is called inward remittance. For example if
some D.D is drawn on our bank and we have to pay the party( to whom it was send).
b) Outward Remittance
The branch which issues or sold the instrument to the responding branch is called outward
remittance. In this case we are sending remittance to another branch of the same bank in any
location.
c) Inland Remittance
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.
d) Foreign Remittance
Transfer of money from one country to another country is called foreign remittance.
Modes of payment
MCB uses following four types of modes of payment
1) DEMAND DRAFT (DD).
2) PAY ORDER (PO0.
3) MAIL TRANSFER (MT).
4) TELEGRAPHIC TRANSFER (TT).
1. Demand Draft
♦ Demand Draft is used for the transfer of money outside station.
♦ A draft is an instrument drawn by a bank in favour 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.
♦ It is one of the cheapest methods of transference of money within the country or outside the
country.
♦ 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.
♦ 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.
2. Pay Order
♦ Pay Order is used as instrument for transfer of money within station or city.
♦ Pay order is written order, which is issued and received by the same bank or drawn and
payable on same branch.
♦ For pay order it is not necessary that applicant should be account holder.
♦ It is used for local transference of money from one person to another.
♦ The bank charges excise duty and flat rate from the applicant.
1. 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.
♦ The applicant should be the regular customer or the account holder of the responding as well
as originating branch.
2. Telegraphic Transfer
♦ Originating branch send funds to responding branch instantly and immediately through
telegram and fax.
♦ Bank charges commission, telegram/fax charges on telegraphic transfer.
Documents Prepared
a. Application Form (SF-100)
Firstly, the application(see annexure ) is filled by the applicant in which he writes the name of
payee, his a/c # & the name of branch to which TT is sent as well as the depositor’s name, his a/c
# & address. Then in the office, they collect the charges, commission & excise duty.
Same prescribed application form will be used for MT, TT, DD, and PO.
It is understood that in case of T.T or M.T the remittance is being sent at our entire risk .In case
of T.T Or M.T, there are two options:
1: Advise & Pay
Here the bank informs the beneficiary (to whom the money is sent ) through telephone or
personal contact about the incoming cash.
2: Credit Account No
In this case, if the beneficiary has Account with the Responding Bank then his account is
credited by the incoming amount without informing him.
When the applicant completely fills the application form then he is asked to sign at the bottom of
the page. After signing, the applicant deposits the cash (cash to be sent + Charges) at the cash
counter and receives the application back by having stamped and signed by the cashier. This
application is then submitted to officer.
b. Memorandum (SF-237)
The officer gives Memorandum to the applicant as a evidence of Remittance (see annexe ).
Bank charges along with some information about Remittance is written on it. Officer signs at the
end of the form.
c. Fax/ Telegraphic Message
In case if the Remittance is being sent through FAX/Telegraph then a special form known as “
Fax/Telegraphic Message” (see annexe )
I t contains following information:
T.T No, R.No, Control, Total Rs Amount, Favour, A/C No Of Beneficiary, Test & Date.
T.T No & R.No:
These numbers are noted from T.T register which contains every information of every T.T sent
to different cities( T.T register will be explained more in coming pages).
Control
It is the number written on the form “Confirmation Of Cable Sent”
( SF-89A).(See annexe )
Favour & A/C No
It shows the name of person & his account to whom the cash is being sent.
d. Confirmation Of Cable Sent (SF-89-A)
These are two vouchers A & B. Special features of this form are Originating branch, Responding
branch, Date Total amount & Branch code of both branches. For Example Branch code of MCB
GBS Multan is (1412). These vouchers are used to credit & debit purposes (see annexe ).
e. T.T Register

T.T.No R.No Control Favour Amount Date

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.
Whole Procedure
1) First of all application is filled by the applicant. Cash is deposited in the cash department.
Applicant is provided with Memorandum as an evidence.
2) Now starts the work of Bank officer. The officer enters the information on the Register. In
case of T.T, the T.T No, R.No, Name of Beneficiary, Branch, Code Of branch, Date, Account of
beneficiary is written on the register.
3) Then “Fax / Telegraphic message” is filled which also contains the same information as that
of register.
4) Two Vouchers are prepared (SF-89-A & SF-89-B) which are in Green & Pink colour.
Amount of T.T is written on them. They also contain the heads of Originating Branch and
Responding branch.
5) Then Test Is written on the extreme left column( T.T, M.T, P.O No). The procedure of it’s
calculation is written above.

Financial Analysis Of MCB

For Year 1997-98

Ratios 1998 1997

Interest earned / Advances 27.33 % 26.32 %
Interest paid / Deposits 8.94 % 8.17 %
Admin Expenses / Deposits 4.85 % 4.85 %
Investment / Deposits 46.75 % 46.70 %
Advances / Deposits 50.81 % 51.74 %
EBT / Deposits 0.76 % 0.99 %
ROA 0.27 % 0.21 %
ROE 11 % 9%
EPS Rs 2.19 Rs 1.31
Cash Dividend / Share Rs 1.75 Rs 1.50

Explanation
♦ Interest earned to advances increased in 1998, which is a positive sign and shows increased
income of the bank, and its improving financial position.
♦ Interest paid to deposits, investment to deposits and administration expenses to deposits, the
firm has been able to sustained its position and expenses. There is an increase in the income of
the bank, but there is no major increase in expenses. This shows a satisfactory position of the
bank.
♦ The ratios of advances to deposits and EBT to deposits are not showing a healthy sign due
to:
ß The bank has paid a big amount as a cost/return on deposits
ß The bank has given less advances in 1998 as compared to 1997
♦ The return on assets and return on equity are showing a good position, which refers to an
improved financial position.
♦ The EPS and cost dividend ratios are showing an increasing trend, which means the firm is
enjoying a good financial position.
♦ Overall MCB has a good and healthy position. The profitability and income is increasing,
which is attracting new depositors and investors.