DEPARTMENT OF MANAGEMENT SCIENCES

LAHORE BUSINESS SCHOOL

Semester______ Final
1

INTERNSHIP REPORT ON MCB Bank Limited PIA Society Branch, Wapda Town Lahore

DEPARTMENT OF MANAGEMENT SCIENCES

2

Faculty of Master of Business Administration University of Lahore (Lahore Business School)

INTERNSHIP REPORT ON MCB Bank Limited PIA Society Branch, Wapda Town Lahore

SUPERVISED BY: SIGNATURE: NAME: DESIGNATION: __________________ __________________ __________________

CHAIRMAN: SIGNATURE: NAME:

3

__________________ __________________

DEDICATED To

To

To My Friends, Majid & Azhar

MCB Bank Limited (Formerly Muslim Commercial Bank Limited) has a solid foundation of over 50 years in Pakistan, with a network of over 1000 branches, over 850 of which are Automated Branches, over 350 MCB ATMs in 41 cities nationwide and a network of over 12 banks on the MNET ATM Switch. MCBs operations continued to be streamlined with focus on rationalization of expenses, realignment of back end processing to increase productivity, enhancement of customer service standards, process efficiency and controls. The Bank has taken the lead in introducing the innovation concept of centralizing Trade Services to branches with a view to improve the efficiency, expertise and reduce delivery cost. During my internship in MCB I worked in Remittances, Advances, Foreign Exchange and Customer Service Office department and I successfully completed all the task/ duties that were assigned to me.

During the course of internship I learned about different functions performed by Remittance, Foreign Exchange, Advances and Customer Service Office department and bank as a whole. I also learned Bank correspondence with their customers and within branches. I learned about documentation requirements and record keeping for different activities and processes, especially the documentation requirement for different kinds of financing facilities.

All praises is due to Allah whose favors never last and his blessing never ceases and thanks to almighty Allah, the beneficent, all Embracing, all Knowing, who provided us with the opportunity, courage and ability to complete this humble contributions towards knowledge and all respect due to his Prophet Muhammad (PBUH), the most perfect and exalted among those ever born in the universe, who is forever a torch of guidance, knowledge and source of inspiration for humanity as a whole. The internee pays deepest indebtedness to Syed Atif Ali the supervisor, for his patience, able guidance and valuable suggestions, scholarly advice and sympathetic attitude throughout the completion my Internship Report. Internee pays a very special thanks to Mr. Kashif-ud-din, the chairman of my internship Report, for his encouragement, generous guidance and thought provoking suggestions. Other thanks to Mr. Samar Rehan Paracha for his help for the analysis of the data. Words are not enough to express our deepest gratitude to our parents and grandparents whose prayers make life so easy for me. Special thanks is due to my siblings, my source of inspiration, Muhammad Shahid Riaz, Dr. Muhammad Sajid Riaz, Samreen Amna, Sumaira Shahid, Azhar Nawaz, Mazhar Nawaz, Saima Nawaz, Samina Nawaz, Beenish Mazhar, Dr Ayela , Seep Saleem, Majid Shoukat Ali, Salwa Shoukat Ali and my late brother Faisal Nawaz for their endless prayers and support throughout my life.

FAHAD RIZWAN

.. . . ..8 ..11 . .. .. . 77 .78 .. .80 ...81

7

CHAPTER # 1

INTRODUCTION

Chapter one is about the introduction of the report. As a part of requirement of MBA degree six week internship is necessary for the student. This includes background, purpose, scope, objectives, and methodology of the study. It also includes introduction of the organization. BACKGROUND OF THE STUDY: Internship training programme during Master in Business Administration Programme is necessary for the partial fulfillment of completion of Degree of Master in Business Administration. It is necessary for me to complete an internship session of about 6 weeks in some manufacturing or services industry relevant to my area of interest and specialization. So I choose banking field because I have the interest in this sector because of my background is related with this sector. PURPOSE: Internship is the capstone experience that provides me with hands-on, real-world experience in a work setting. Ideally, internship will enable interns to: (1) (2) (3) (4) Integrate and use my knowledge and skills from the classroom. Discover where further competence is needed. Take steps to gain that competence under educational supervision. Better acquainted with types of work settings in which such competence can be applied.

SCOPE: This study will facilitate me regarding the working of banking sector of Pakistan because most of the teachers during their lectures use the examples of Banks like MCB, National Bank, UBL, Bank Alfalah and many others. LIMITATION: This study is done with the sole purpose for doing the best work but there were certain limitation faced during the internship period. The most important limitation from which the study suffers is the nonavaliability of information in a manner required for analysis and the secrecy of the bank. Another important limitation of the study is time and space constraint.
8

OBJECTIVES: I worked as an internee in MCB PIA Society Branch, Wapda Town Lahore. The main objectives to the study in MCB were: (1) (2) (3) (4) To get some experience in working with well reputed organization. To get knowledge about the professional environment of the bank. To know about the technology utilize in the bank. To deal and manage with the situation of stress.

METHODOLOGY: There are mainly two methods that are used for the collection of data. Primary data: (1) Observation of functions of branch operations on the spot. (2) Observation of different processes of branch on the spot. Secondary data: (1) (2) (3) (4) (5) Internet is very helpful for me to study more about banking sector of Pakistan. Different types of booklets of the bank. Annuals reports Journals Newspapers

ORGANIZATION: MCB is one of the leading banks of Pakistan with a deposit base of Rs. 368 Billion and total assets over Rs.500 Billion. Incorporated in 1947, MCB soon earned the reputation of a solid and conservative financial institution managed by expatriate executives. In 1974, MCB was nationalized along with all other private sector banks. The Bank has a customer base of approximately 4 million, a nationwide distribution network of over 1,000 branches and over 450 ATMs in the market. During the last fifteen years, the Bank has concentrated on growth through improving service quality, investment in technology and people, utilizing its extensive branch network, developing a large and stable deposit base.

SUMMARY: This chapter contains the detail introduction of the report. For achieving my purposes, objectives and for the preparation of the internship report I required some kind of data, I used both methods of data collection that are primary sources and secondary sources for this purpose.

10

CHAPTER # 2

PROFILE OF THE BANKING SECTOR

This chapter includes what the current situation of the banking sector in the Pakistan. MCB in the banking sector of Pakistan and play a role in the economic and social development of Pakistan and all the functions that the organization is performing. OVERALL RESPECTIVE SECTORS IN PAKISTAN: Banking is one of the most sensitive businesses all over the world. Banks play very important role in the economy of the country. Banks are the custodian to the assets of general masses. The banking sector plays a significant role in a contemporary world of money and economy. It influences and facilitates many different but integrated economic activities like resources mobilization and poverty elimination, production and distribution of public finance. HISTORY OF BANKING IN PAKISTAN: Before independence, the financial sector was in the hands of foreign banks some of them were British by origin. The oldest bank operating from 1883 in this part of the world was the Chartered Bank while another bank namely the Grind lays Bank which was also working simultaneously from 1883. In order to expand its business operations, the Grindlays acquired other small banks and merged them into the business of Grindlays. Among the contemporaries, Imperial bank of India was the largest Indian Bank which had started its operations in 1919 which was discharging the role of a commercial banks as well as the Central Bank for India until an independent Central Bank i.e. Reserve Bank of India was established in 1935. However, since the Imperial Bank had the largest network of its branches all over India, it continued to play its role as a subsidiary of the Reserve Bank of India. In the Muslim majority areas which were later on became the part of Pakistan, small branches of Indian banks were operating and soon after creation of Pakistan they shifted their branches and headquarters to India. At the time of independence, two major banks including Punjab National Bank at Lahore and Comila Banking Corporation were working in the then East Pakistan. This trend was so obvious that the total number of bank offices between June 30, 1918 and August 14, 1947 were reduced from 631 to 195 only. During the early part of 1949 the numbers of branches of Imperial Bank of India in Pakistani areas were more than of Habib Bank. In the early days of Pakistan, the government worked hard left no stone unturned to establish and strengthen the banking system in Pakistan. These efforts resulted in the establishment of State Bank of Pakistan which was inaugurated by Quaid-e-Azam on July 1, 1948. Quaid-e-Azam flawed from Quetta to Karachi specially to grace the occasion.
11

Originally the State Bank was scheduled to be established in September 1948. Zahid Hussain, who was the first Governor of the State Bank, devoted all his time and energy to streamline the working of the State Bank. In normal situation, the Central Bank of a country is only established when the commercial banking start working on sound footings. But the circumstances forced the government to establish Central Bank and the task of stabilizing the commercial banking was also assigned to the State Bank, which it really did. At the time of independence, commercial banking facilities were provided fairly here. There were 487 offices of schedule banks in the territories now constituting Pakistan. An export committee recommended that reserve bank of India should continue their function until 30th September 1948. Prior to partition in 1947, banking in Pakistan was dominated by branches of British banks. The State Bank of Pakistan, the central bank, was formed after partition in 1948. By 30 June 1948 the number of offices of the scheduled banks declined from 487 to 195. In order to make the necessary arrangement for the assumption of control and expert committee was appointed to recommend the necessary steps including the required legislation to establish a central bank of Pakistan. The governor general of Pakistan Quaid-e-Azam Muhammad ali Jinnah inaugurated the state bank of Pakistan order was promulgated on may 12, 1948. The first Pakistani note were issued in October 1948 in the state bank of Pakistan withdrew the reserve bank of India notes of the value of Rs. 125.02 crores with the help Pakistani notes. On 1st January 1947 all Pakistani banks were nationalized through nationalization act 1947. Under this law all Pakistani banks become a public property. All small banks merged in bigger banks to create the five major Pakistani banks. These banks were to control by Pakistani banking council. There are still controversies about this act of Government as whether it contributed in success of failure of the banks. However the major changes after nationalization were as follows. Working of banks was extended to under developed areas. Market expansion for credit and deposits. Decrease in service level of bank officers. Decrease in profitability as well. In 1990 the government decided to denationalize all the nationalized institutions. Same was also suggested in the banking sector. For this purpose amendments were made to nationalization act 1974 and two nationalized banks were privatized. The two privatized banks are: MCB taken up by the private group in April 1991 & ABL taken up by its own employees in September 1991. After these a large number of private and foreign banks
12

started their operation in Pakistan. The banking system is passing through a difficult phase mainly because of excessive political interference in the working of the nationalized banks by the different governments in the past. Hence the political interference in nationalized banks did not allow them to carry out their business purely on merit. It may be recalled that some twenty years back, the banking system was working on such a solid ground that various developing and under-developed countries used to take guidelines from Pakistani banks. A little earlier before the creation of country, the role of Muslims of the areas which were later included in Pakistan was of no significance due to their restricted participation in the banking sector. There was only a small bank namely Australasia Bank having a few branches in Lahore and its suburbs. In 1942, the Australasia bank was housed in a garage of a trader of Lahore who used to trade at a small scale with Australia during that period. However the only Bank was run by the Muslims of the sub-continent was Habib Bank which was established in 1941. At that time Quaid-e-Azam Mohammad Ali Jinnah expressed his desire that another Muslim bank also be established in Calcutta which came into reality when Adamjee with the assistance of Isphanis established Muslim Commercial Bank a few months before the creation of Pakistan in Calcutta. When Pakistan came in to being The Habib Bank shifted its Headquarters from India to Karachi. A few of Habib Bank's branches were already in operation in Pakistan. The Muslim Commercial Bank also moved its headquarters from Calcutta to Dhaka and later on to Karachi. At the time of independence, another small bank namely Bank of Bahawalpur also started business from Bahawalpur from December 1947. The establishment of the National Bank of Pakistan in 1950 on the pattern of Imperial Bank of India was yet another milestone in the banking history of Pakistan. In September 1949 the rupee value was reduced against the Pound sterling which was a major event in the banking circles. Consequently Indian government devalued its Rupee against Pound Starlings; however Pakistan decided not to devalue its currency against Pound Sterling which resulted in increase of Pakistani cotton and jute prices for India which affected our exports to India. Though Pakistan had to suffer economically due to decline of exports to India, it however gave a sense of economic independence to Pakistan. Cut in imports from Pakistan proved as a blessing in disguise as Pakistan had to explore new exports markets for its products. However Indian banks operating in Pakistan refused to finance Pakistani exports. It assumed the supervisory and monetary policy powers of the State Bank of India. In the period of 60s to 70s the emergence of a number of specialized developments finances institutions (DFIs) such as Industrial Development Bank of Pakistan (IDBP) and the Agricultural Development Bank (ADB). These DFIs were either controlled directly by the state or through the SBP, and were intended to concentrate on specific priority sector lending. In 1974 all domestic
13

commercial banks were nationalized by the Government. The Pakistan Banking Council was established, which assumed the role of a banking holding company but with limited supervisory powers. However, PBC was dissolved in 1997, leaving the SBP as the sole regulatory authority for banks and financial institutions in Pakistan. Nationalization of the banking sector led to pet projects. The branch network of NCBs also proliferated in an effort to provide banking services to all regions/territories of the country, often with disregard to the viability or feasibility of such expansion. CHANGES INTRODUCED IN BANKING SYSTEM: It should be kept in mind that Pakistan despite formulating good policies has not been able to attain the desired results mainly due to poor implementation of the polices. Deregulation of the financial sector and capital markets led to mushrooming growth of banking companies in the private sector. Several big industrial groups set up their own banks, which to date remain relatively small compared to the NCBs and other larger foreign banks. The new banking sector reforms have also stripped the government of its powers to interfere in a banks operations. All such powers now rest with the SBP only, thereby significantly reducing political influence/intervention in financial institutions and, hence, credit quality. After the change the SBP has taken a number of steps to introduce professional management in the nationalized banks. The strategy of the SBP is to, first improve the quality of new loans and then to tackle the non-performing loans problems. All nationalized banks have been asked to curtail their overheads, especially the head counts. Professionals from the private sector have been appointed as Presidents to improve the health of nationalized banks and make them more attractive for privatization. The SBP has completely revamped the disclosure laws and introduced a highly informative new format for presenting annual accounts of banks. Under the new format, banks would now have to provide details about bad loans, the level of provisioning held, maturity profile as well as the currency breakdown of both assets and liabilities, and details of transactions with associated companies. Interest rate has been under pressure since 1997. The SBP has been coercing banks, specially nationalized commercial banks to lower their mark-up rates. A number of NCBs have announced a reduction in maximum mark-up rates, ranging from 2% to over 5%. Yield on government securities have also been driven down to just over 16% to 17.5%. The new military coups government seems to be relying on a lower interest rate
14

environment to spur domestic industrial activity. The intention is to cut mark-up rates, to make working capital more affordable. Banks have been straining under the burden of non-performing loans and low capitalization, and unable to step up lending activities in the recent past. Banks have concentrated on building up provisions. However, the weakness in interest rates is expected to continue. With interest rates set to weaken further the spreads is likely to improve. Large banks with widespread networks would be ideally suited to leverage-off their traditional cost advantage to capture cheap deposits. Profitability is expected to improve dramatically for the banking sector. The banking sector in Pakistan has been going through a comprehensive but complex and painful process of restructuring since 1997. It is aimed at making these institutions financially sound and forging their links firmly with the real sector for promotion of savings, investment and growth. Although a complete turnaround in banking sector performance is not expected till the completion of reforms, signs of improvement are visible. The almost simultaneous nature of various factors makes it difficult to disentangle signs of improvement and deterioration. Commercial banks have been exposed and withstood several types of pressure since 1997. Some of these are: 1) multipronged reforms introduced by the central bank, 2) freezing of foreign currency accounts, 3) continued stagnation in economic activities and low growth and 4) drive for accountability and loan recovery. All these have brought a behavioral change both among the borrowers as well as the lenders. The risk aversion has been more pronounced than warranted. Commercial banks operating in Pakistan can be divided into four categories: 1) Nationalized Commercial Banks (NCBs), 2) Privatized Banks, 3) Private Banks and 4) Foreign Banks. While preparing this report efforts have been made to evaluate the performance of each group which enjoy certain strengths and weaknesses as per procedure followed by State Bank of Pakistan (SBP). The central bank has been following a supervisory framework, CAMEL, which involves the analysis of six indicators which reflect the financial health of financial institutions. These are: 1) Capital Adequacy, 2) Asset Quality, 3) Management Soundness, 4) Earnings and Profitability, 5) Liquidity and 6) Sensitivity to Market Risk. Capital adequacy: Protect the interest of depositors as well as shareholders, SBP introduced the risk based system for capital adequacy in late 1998. Banks are required to maintain 8 per cent capital to Risk Weighted Assets (CRWA) ratio. Banks were required to achieve a minimum paid-up capital to Rs. 500 million by December 31, 1998. This requirement
15

has been raised to one billion rupee and banks have been given a deadline up to January 1, 2003 to comply with this. The ratio has deteriorated after 1998. However, it was fallout of economic sanctions imposed on Pakistan after it conducted nuclear tests. The shift in SBP policy regarding investment in securities also led to a fall in ratio. However, most of the banks have been able to maintain above the desired ratio as well as direct their investment towards more productive private sector advances. Higher provisioning against non-performing loans (NPLs) has also contributed to this decline. However, this is considered a positive development. Asset quality: Asset quality is generally measured in relation to the level and severity of nonperforming assets, recoveries, adequacy of provisions and distribution of assets. Although, the banking system is infected with large volume of NPLs, its severity has stabilized to some extent. The rise over the years was due to increase in volume of NPLs following enforcement of more vigorous standards for classifying loans, improved reporting and disclosure requirements adopted by the SBP. In case of NCBs this improvement is much more pronounced given their share in total NPLs. In case of privatized and private banks, this ratio went up considerably and become a cause of concern. However, the level of infection in foreign banks is not only the lowest but also closes to constant. The ratio of net NPLs to net advances, another indicator of asset quality, for all banks has declined. Marked improvement is viable in recovery efforts of banks. This has been remarkable in the case of NCBs, in terms of reduction in the ratio of loan defaults to gross advances. Although, privatized banks do not show significant improvement, their ratio is much lower than that of NCBs. Only exception is the group of private banks for which the ratio has gone up due to bad performance of some of the banks in the group. However, it is still the lower, except when compared with that of foreign banks. Management soundness: Given the qualitative nature of management, it is difficult to judge its soundness just by looking at financial accounts of the banks. Nevertheless, total expenditure to total income and operating expenses to total expenses help in gauging the management quality of any commercial bank.

16

Pressure on earnings and profitability of foreign and private banks caused their expenditure to income ratio to rise in 1998. However, it started tapering down as they adjusted their portfolios. An across the board increase in administrative expenses to total expenditure is visible from the year 1999. The worst performers in this regard are the privatized banks, mostly because of high salaries and allowances. Earnings and profitability: Strong earnings and profitability profile of banks reflects the ability to support present and future operations. More specifically, this determines the capacity to absorb losses, finance its expansion programme, pay dividend to its shareholders and build up adequate level of capital. Being front line of defense against erosion of capital base from losses, the need for high earnings and profitability can hardly be overemphasized. Although different indicators are used to serve the purpose, the best and most widely used indicator is return on assets (ROA). Net interest margin is also used. Since NCBs have significantly large share in the banking sector, their performance overshadows the other banks. However, profit earned by this group resulted in positive value of ROA of banking sector during 2000, despite losses suffered by ABL. Pressure on earnings was most visible in case of foreign banks in 1998. The stress on earnings and profitability was inevitable despite the steps taken by the SBP to improve liquidity. Not only did liquid assets to total assets ratio declined sharply, earning assets to total assets also fell. T-Bill portfolio of banks declined considerably, as they were less remunerative. Foreign currency deposits became less attractive due to the rise in forward cover charged by the SBP. Banks reduced return on deposits to maintain their spread. However, they were not able to contain the decline in ROA due to declining stock and remuneration of their earning assets. Liquidity: Movement in liquidity indicators since 1997 indicates the painful process of adjustments. Ratio of liquid assets to total assets has been on a constant decline. This was consciously brought about by the monetary policy changes by the SBP to manage the crisis-like situation created after 1998. Both the cash reserve requirement ((CRR) and the statutory liquidity requirement (SLR) were reduced in 1999. These steps were reinforced by declines in SBP's discount rate and T-Bill yields to help banks manage rupee withdrawals and still meet the credit requirement of the private sector.

17

Foreign banks have gone through this adjustment much more quickly than other banks. Their decline in liquid assets to total assets ratio, as well as the rise in loan to deposit ratio, are much steeper than other groups. Trend in growth of deposits shows that most painful part of the adjustment is over. This is reflected in the reversal of decelerating deposit growth into accelerating one in year 2000. Sensitivity to market risk: Rate sensitive assets have diverged from rate sensitive liabilities in absolute terms since 1997. The negative gap has widened. Negative value indicates comparatively higher risk sensitivity towards liability side, while decline in interest rates may prove beneficial. Deposit Mobilization: Deposit mobilization has dwindled considerably after 1997. Deposits as a proportion of GDP have been going down. Growth rate of overall deposits of banks has gone down. However, the slow down seems to have been arrested and reversed in year 2000. Group-wise performance of deposit mobilization is the reflection of the varying degree with which each group has been affected since 1998. Foreign banks were affected the most due to their heavy reliance of foreign currency deposits. They experience 14 per cent erosion in 1999. However, they were able to achieve over 2 per cent growth in year 2000. Similar recovery was shown by private banks. Deposit mobilization by NCBs seems to be waning after discontinuation of their rupee deposit schemes linked with lottery prizes. Growths in their deposits were on the decline. Despite the decline NCBs control a large share in total deposits. Aggressive posture of private banks in mobilizing more deposits in year 2000 is clearly reflected in their deposit growth, from 1.9 per cent in year 1999 to 21.7 per cent in year 2000. This has also helped them in increasing their share in total deposits to over 14 per cent in year 2000. Due to the shift in policy, now banks are neither required nor have the option to place their foreign currency deposits with the SBP. Although, the growth in foreign currency deposits increases the deposit base, it does not add to their rupee liquidity. The increasing share of foreign currency deposits in total base is a worrying development. In order to check this trend, SBP made it compulsory for the banks not to allow foreign
18

currency deposits to exceed 20 per cent of their rupee deposits effective from January 1, 2002. Credit extension: Bulk of the advances extended by banks is for working capital which is self-liquidating in nature. However, due to an easing in SBP's policy, credit extension has exceeded deposit mobilization. This is reflected in advances growing at 12.3 per cent in year 1j999 and 14 per cent in year 2000. Group-wise performance of banks in credit extension reveals three distinct features. 1) Foreign banks curtailed their lending, 2) continued dominance by NCBs and 3) aggressive approach being followed by private banks. Private Banks were the only group that not only maintained their growth in double-digit but also pushed it to over 31 per cent in year 2000. With this high growth, they have surpassed foreign banks, in terms of their share in total advances in year 2000. Banking spreads: Over the years there has been a declining trend both in lending and deposit rates. Downward trend in lending rates was due to SBP policy. The realized trend in lending rates was in line with monetary objectives of SBP, though achieved with lags following the sharp reduction in T-Bill yields in year 1999, needed to induce required change in investment portfolio of banks. Downward trend in deposit rates was almost inevitable. One can argue that banks should have maintained, if not increased, their deposit rates to arrest declining growth in total deposits. However, this was not possible at times of eroding balance sheet; steady earnings were of prime importance. Consequently banks tried to find creative ways of mobilizing deposits at low rates. However, due to inefficiencies of the large banks, the spread has remained high. Asset composition: Assets of banking sector, as per cent of GDP, have been on the decline. Slowdown in asset growth was also accompanied by changing share of different groups. Negative growth in the assets of foreign banks during 1998 and 1999 was the prime reason behind declining growth in overall assets of the banking sector. Share of NCBs have

19

been decreasing since private banks were allowed to operate in 1992. In terms of asset share, private banks are now as large as foreign banks. Problem bank management: The central bank is the sole authority to supervise, monitor and regulate financial institutions. It is also responsible to safeguard the interest of depositors and shareholders of these institutions. Lately, SBP took actions against two private banks which became a threat to viability of the financial system in the country. These were Indus Bank and Prudential Commercial Bank. On the basis of detailed investigations, the license of Indus Bank was cancelled on September 11, 2000. After successful negotiations, management and control of Prudential Bank handed over to Saudi-Pak group. Outlook: Commercial banks have been going through the process of restructuring. There are efforts to reduce lending rates. The SBP has been successful in implementing its policies. Most of the banks have been able to adjust to new working environment. The proposed increase in capital base will provide further impetus to financial system in the country. In the post September 11 era, the GOP borrowing from SBP and commercial banks is expected to come down substantially and private sector borrowing to increase. However, a temporary decline in repayment ability of borrowers may increase provisioning for the year 2001. The situation is expected to improve in year 2002. Unless efforts are made by banks to shrink spread, depositors will not be able to get return which corresponds with the rate of inflation in the country. Privatization of NCBs is expected to be delayed due to external factors. However, it is an opportunity for the banks to further clean their slate. Pakistan National Banks or Nationalized scheduled banks:

National Bank of Pakistan The Bank of Punjab The Bank Of Khyber The Sindh Bank

20

Pakistan Specialized banks or Specialized banks:

Industrial Development Bank Zarai Taraqiati Bank Limited Punjab Provincial Cooperative Bank SME Bank Arslaan Bank Limited Pakistan Banks which issue Cards:

Standard Chartered Habib Bank Askari Bank United Bank MCB Allied bank Faysal bank Bank Al-Habib Bank Alfalah Development financial institutions:

Pak China Investment Company Limited, Islamabad Pak Kuwait Investment Company Limited, Karachi Pak Libya Holding Company Limited, Karachi Pak Iran Joint Investment Company Limited, Karachi Pak-Oman Investment Company Limited, Karachi Saudi Pak Industrial and Agricultural Investment Company Limited, Islamabad House Building Finance Corporation, Karachi Investment Corporation of Pakistan, Karachi Pak Brunei Investment Company Limited, Karachi

Pakistan Commercial banks:

Allied Bank Limited Bank Alfalah

21

Habib Bank Limited Bank AL Habib Standard Chartered Bank Limited Citibank Limited United Bank Limited Askari Commercial Bank MCB Bank Limited

Pakistan Investment banks:

BMA Capital Management Limited Invest Capital Investment Bank Limited AMZ Securities Orix Leasing (Pakistan) Limited Trust Investment Bank Limited JS Investment Bank Limited Atlas Investment Bank Limited Discount and guarantee houses:

First Credit & Discount Corp Limited National Discounting Services Limited Speedway Fordmetall (Pakistan) Limited

Pakistan Housing finance companies:

Asian Housing Finance Limited Citibank Housing Finance Company Limited House Building Finance Corporation International Housing Finance Limited

Micro finance banks:

NRSP Micro Finance Bank Limited The First Micro Finance Bank Limited
22

Khushali Bank Limited Karakorum Bank Network Micro Finance Bank Pak Oman Micro Finance Bank Rozgar Micro Finance Bank, Karachi Tameer Microfinance Bank Limited Kashf Microfinance Bank Limited

Pakistan Islamic banks:

Meezan Bank Limited-Premier Islamic Bank In Pakistan AlBaraka Islamic Bank (Merged into Al Baraka Bank (Pakistan) Limited[11]) BankIslami Pakistan Limited Dubai Islamic Bank Pakistan limited Dawood Islamic Bank Limited Emirates Global Islamic Bank Limited (Merged into Al Baraka Bank (Pakistan) Limited

23

CHAPTER # 3

PROFILE OF THE MCB

MCB Bank Limited formerly known as Muslim Commercial Bank Limited was incorporated by Adamjee Group on July 9, 1947 in Kolkata in Bengal under the Indian companies act 7 of 1913 as a limited company but due to changing scenario of the region the certificate of incorporation was issued on 17 August, 1948 with the delayed of almost one year; the certificate was issued at Chittagong. The first head office was established at Dacca and Mr. G.M Adamjee was appointed its first chairman. It was incorporated with an authorized capital of Rs. 15 million. The bank transferred its registered head office from Dhaka to Karachi on August 23, 1956 through a special resolution. The bank was established with a view to provide banking facilities to the business community of South Asia. The bank was nationalized in 1974 during the Government of Zulifaqar Ali Bhutto. This was the first bank to privatize in 1991 and bank was purchased by a consortium of Pakistani corporate groups led by Nishat Groups. MCB in Pakistans fourth largest bank by assets having an asset base of US $6.7 billion, and the largest by market capitalization of US $4.1 billion. The bank has a customer base of approximately 4 million and nationwide distribution network of 1166 branches including 8 Islamic banking branches and over 450 ATMs in a market with a population of 180 million.

Overall Organization and Functions of Organization in Pakistan: MCB is one of the leading banks of Pakistan with a deposit base of Rs. 368 Billion and total assets over Rs.500 Billion. Incorporated in 1947, MCB soon earned the reputation of a solid and conservative financial institution managed by expatriate executives. In 1974, MCB was nationalized along with all other private sector banks. The Bank has a customer base of approximately 4 million, a nationwide distribution network of over 1,000 branches and over 450 ATMs in the market. During the last fifteen years, the Bank has concentrated on growth through improving service quality, investment in technology and people, utilizing its extensive branch network, developing a large and stable deposit base.

24

Vision Statement: To be the leading financial services provider, partnering with our customers for a more prosperous and securing future. Mission Statement: We are the team of committed professionals, providing innovative and efficient financial solutions to create and nurture long term relationships with our customers. In doing so, we ensure our shareholders can invest with confidence in us. VALUES: Integrity: Respect: Excellence: Customer centricity: Innovation: NATIONALIZATION: In January 1974, the government of Pakistan nationalized MCB following the banks nationalization act 1974 subsequently in June 1974 premier bank limited merged into MCB. PRIVATIZATION: A wave of economic reforms swept Pakistan in late 1990s introducing the need for privatization of state owned banks and companies in April 1991, MCB because first Pakistani privatized bank the government of Pakistan transferred the management of bank to Nishat Group- group of leading industrialist of the country by selling 26% shares of the bank with a view to broaden the equity holding the government sold 25% paid up of the capital to the general public. In terms of agreement between the government of Pakistan and Nishat group additional 24% shares have been purchased by the group making their holding 50%. As of June 2008 the Nishat Groups owns a majority stake in the bank 25% retained by the government.

25

Mian Muhammad Mansha is the chairman of the group and played instrumental role in its success. In recognition of Mr. Manshas contribution the Government of Pakistan conferred him with Sitara-e-imtiaz one of the most prestigious award of the country. MCB is Pakistans fourth largest bank by assets having an asset base of US $6.7 billion and largest by market capitalization of US $4.1 billion. The bank has customer base of approximately 4 million and nationwide distribution network of 1066 branches including 8 Islamic banking branches and 450 ATMs in market with a population of 18o million. Awards of MCB: You trust and our commitment always an award winning contribution. MCB has become the only bank to receive the euro money award for the seventh time and Asia money award for the fifth time in the last ten years. MCB won Best Bank in Asia award in 2008. MCB won the Best Bank in Pakistan award in 2008, 2006, 2005, 2004, 2003, 2001, 2000. In addition MCB also has the distinction of winning the Asia money award in 2009, 2008, 2006, 2005, and 2004 for being the The best Domestic Commercial Bank in Pakistan. Relationship of Head Office to Branch Offices: In MCB decision, strategies, policies are made by top level management and these are implemented in each branch. Top level management doesnt involve the lower management in decision making process. MCB is the pioneer of computerization, as far as it has a very developed and fastest network, so the head office and all of its branches are linked through a electronic network, that make possible easy and in time transformation of the important information. Management of the MCB: Mian Muhammad Mansha S.M Muneer Mr. M.U.A Usmani Tariq Rafi Shahzad Saleem Raza Mansha Sarmad Amin Chairman Vice Chairman President/CEO Director Director Director Director
26

Mian Umer Mansha

Director

Audit Committee: Tariq Rafi Dr Muhammad Yaqoob Dato Muhammad Hussain Mr. Aftab Ahmed Khan Mr. Ali Zeb Khan Chief Financial Officer: Mr. Salman Zafar Siddiqi

Chairman Member Member Member Member

MCB BRANCH NETWORK PROVINCE WISE: Province Punjab Sindh N.W.F.P Baluchistan Azad Jammu Kashmir Domestic Total Overseas EPZ Grand Total Branches 680 281 131 39 20 1151 6 1 1158 Sub Branch 7 1 8 8 Total 687 282 131 39 20 1159 6 1 1166

PRODUCT LINE: The following is the list of product line of MCB Bank Limited Internet banking Online banking ATM network Deposit account Islamic banking
27

Agriculture Corporate leasing Retail Banking: Accounts Banc assurance self service channels Loans Cards Travelers cheque Remittance Corporate: Trade finance Transaction banking Investment banking Cash management Virtual Banking: Individual users Corporate users Virtual walkthrough Islamic Banking: Deposit Schemes Fund based facilities Islamic banking products Privilege Banking: Deposit product Investment product Privilege cards Privilege cheque book Virtual banking Mobile banking

28

Hierarchy of Management:

29

INFORMATION ABOUT MY BRANCH: Management of the Branch: Branch Code Branch Manager Operation Manager Remittance Clearing Supervisor Cash Teller Teller Investment Officer Credit officer Accounts Public Business Advisor Customer Service Officer Security Guard Sweeper Trainee 1522 Samar Rehan Paracha Muhammad Ramzan Shahid Ahmed Adeel Ahmed Cheema Khalid Latif Shahid Munir Muhammad Umer Ahmed Raza Miss Zainab Shahzad Mughal Zeeshan Asghar Miss Fiza Latif Ahmed Haseeb Muhammad Fahd Rizwan

GENERAL INFORMATION ABOUT MY BRANCH: Deposits: The total deposit of the PIA Society Branch is 245.10 million. No of Accounts Current Accounts 1050 PLS Accounts 995 BBA Accounts 650 Remittance Total remittance of the PIA Society Branch is 20.11 million. No of Vouchers Transfer: Debit 890 Credit 755

30

Clearing: Cash: Debit Credit 1700 1237 Debit Credit 446 540

Rate of Interest: The rate of interest provided by such bank is minimum 4.45% and maximum 9 %. Financing: The Business Finance scheme is being dealt here. Capital: Capital of the branch is treated in the head office. Revenues: The total revenue of this branch is 9.25 million.

31

CHAPTER # 4

BANKING SECTOR BUSINESS PROCESS

The whole banking sector includes different products which makes the process who these products deal with our daily routine life. These are some defined as follows. General Banking: To analyzed the cash flow as the way to assessing the credit worthiness of the customer and to analyze the business risk. Financial Services: Financial services refer to services provided by the finance Department. The finance industry encompasses a broad range of organizations that deal with the management of money. Consumer Finance: Consumer finance has to do with the lending process that occurs between the consumer and a lender. In some instances, the lender may be a bank or financial institution. Consumer finance can include just about any type of lending activity those results in the extension of credit to a consumer. Internet Banking: Online banking (or Internet banking) allows customers to conduct financial transactions on a secure website operated by their retail or virtual bank, credit union or building society. Corporate Leasing: A corporate lease is almost exactly like a regular customer lease except that the business name will be on the lease contract and registration. In most cases you will need to have the business name put on as the "buyer" part of the contract, with a guarantor (representative of the company) signing as co-buyer. SME: Small and Medium Enterprises Development Authority (SMEDA) Premier institution of the Government of Pakistan under the Federal Ministry of Industries and Production, SMEDA was established in October 1998 to take on the challenge of developing Small & Medium Enterprises (SMEs) in Pakistan. With a futuristic approach and professional management structure, it has focus

32

on providing an enabling environment and business development services to small and medium enterprises. Agriculture Banking: Bank that lends money to farmers over a long period of time and at low rates of interest. Commercial & Retail Banking: A commercial banking is the type of financial institution or intermediary. It is a bank that provides transactional, savings, and money market accounts and that accepts time deposits. Corporate Banking: Corporate banking definition is financing (usually unsecured), management of cash and other services. Financial institution & Cash Management: The strategy by which a bank administers and invests its cash. ATM Network: A machine at a bank branch or other location which enable a customer to perform basic banking activities checking balance, withdraw amount and transferring funds even when the bank is closed. Lockers: A small cupboard for personal belongings which you can close with the key. Banc assurance: The sale of insurance and other similar products through a bank. Short Term Finance: Referring to any investment, financial plan, or anything else lasts for one year or less.

33

Trade Finance: The management of money, banking, credit, investments and assets for international trade transactions. Consumer Banking: An institution which accepts deposits, make personal loans, and offers related services. Branch Banking: A branch, branch center or financial center is a retail location where a bank, credit union or other financial institution offers a wide array of face to face and automated services to its customers. Corporate Banking: Financing often unsecured, cash management and other banking services custom tailored for corporations. Personal Loan: Unsecured debt refers to any type of debt or general obligation that is not collateralized by a lien on specific assets of the borrower in the case of a bankruptcy or liquidation. In the event of the bankruptcy of the borrower, the unsecured creditors will have a general claim on the assets of the borrower after the specific pledged assets have been assigned to the secured creditors, although the unsecured creditors will usually realize a smaller proportion of their claims than the secured creditors. Demand Drafts: Demand draft is also known as remotely created check, tele check, check by phone is created by merchant with buyers checking account number on it, but with buyers original signature.

Travelers Cheque: A traveler's cheque is a preprinted, fixed-amount cheque designed to allow the person signing it to make an unconditional payment to someone else as a result of having paid the issuer for that privilege.

34

Letter of Credit: A letter of credit is a document issued mostly by a financial institution, used primarily in trade finance, which usually provides an irrevocable payment under taking. The letter of credit can also be payment for a transaction, meaning that redeeming the letter of credit pays an exporter. Letters of credit are used primarily in international trade transactions of significant value, for deals between a supplier in one country and a customer in another. Micro Credit Service: Micro credit service is any movement that proposes a different system of supplying money and financing the economy from the current system. Trust Services: A trust company is organized to perform the fiduciary of trusts and agencies. It is normally owned by one of three types structures: an independent partnership, a bank, or a law firm, each of which specializes in being a trustee of various kinds of trusts and in managing estates. Virtual Banking: A bank that offers services predominately or exclusively over the Internet. Virtual bank offers normal banking services, access to one's checking and savings accounts and personal and business loans. Even non-virtual banks almost always offer virtual banking services. Privilege Banking: Privilege customers across banks are entitled to special rates on other products like loans and credit cards. They also get preferential rates on their deposits. Term Loan: A loan from a bank for a specific amount that has a specified repayment schedule and a floating interest rate. Term loans almost always mature between one and 10 years. Working Capital Loan: A loan whose purpose is to finance everyday operations of a company. A working capital loan is not used to buy long term assets or investments. Instead it's used to clear up accounts payable, wages.

35

Liquidity & Hybrid Instruments: Preferred stocks occupy a unique place. Because of their characteristics, they straddle the line between stocks and bonds. Technically, they are equity securities. Some investment commentators refer to them as hybrid securities. In this article, we provide a thorough overview of preferred shares and compare them to some better-known investment vehicles. Home Loan: A consumer loan secured by a second mortgage allows home owners to borrow against the equity based on the difference between the homeowner's equity and the home's current market value. The mortgage also provides collateral for an asset-backed security issued by the lender and sometimes tax deductible interest payments for the borrower. Syndicate Loan & Debt Capital Market: A loan offered by a group of lenders (called a syndicate) who work together to provide funds for a single borrower. The borrower could be a corporation, a large project, or sovereignty (such as a government). The loan may involve fixed amounts, a credit line, or a combination of the two. Interest rates can be fixed for the term of the loan or floating based on a benchmark rate. A capital market is a market for securities (debt or equity), where business enterprises (companies) and governments can raise long-term funds. The capital market includes the stock market (equity securities) and the bond market (debt). Transaction Banking: It includes the transaction of accounts, their date, and specification all the information including doing in the market place. Retail Banking: Retail banking aims to be the one-stop shop for as many financial services as possible on behalf of retail clients. Some retail banks have even made a push into investment services such as wealth management, brokerage accounts, private banking and retirement planning. While some of these ancillary services are outsourced to third parties (often for regulatory reasons), they often intertwine with core retail banking accounts like checking and savings to allow for easier transfers and maintenance.

36

Project Finance: The financing of long-term infrastructure, industrial projects and public services based upon a non-recourse or limited recourse financial structure where project debt and equity used to finance the project are paid back from the cash flow generated by the project. Musharka Finance: Musharka Financing mode has been launched by commercial banks to meet their working capital requirement of the trade and industry. The Bank carry out Musharka functions out of profit and loss accounts (PLS) deposits. Borrower receives interest free loans on the basis of equity participation and profit or loss from the bank or any other financial institution. Mudarba Finance: Mudarba may be enacted as a single-tier agreement in which the investor deals directly with the entrepreneur. In a two-tier Mudarba, investors pool their funds with an intermediary who subsequently deals with entrepreneurs. Structured Finance: A service that generally involves highly complex financial transactions offered by many large financial institutions for companies with very unique financing needs. These financing needs usually don't match conventional financial products such as a loan. Merger & Acquisition: Buying a company is to create shareholder value over and above that of the sum of the two companies. Two companies together are more valuable than two separate companies. Mobile Banking: Mobile banking (also known as M-Banking, SMS Banking) is a term used for performing balance checks, account transactions, payments, credit applications and other banking transactions through a mobile device such as a mobile phone or Personal Digital Assistant (PDA). Wholesale Banking: Wholesale banking contrasts with retail banking, which is the provision of banking services to individuals. Wholesale finance means financial services,
37

which are conducted between financial services companies and institutions such as banks, insurers, fund managers, and stock brokers. Modern wholesale banks are engaged in: finance wholesaling, underwriting, market making, consultancy, mergers and acquisitions, fund management. Mortgage Loan: A mortgage loan is a very common type of debt instrument, used to purchase real estate. Under this arrangement, the money is used to purchase the property. Commercial banks, however, are given security - a lien on the title to the house - until the mortgage is paid off in full. If the borrower defaults on the loan, the bank would have the legal right to repossess the house and sell it, to recover sums owing to it. Secured Loan: A secured loan is a loan in which the borrower pledges some asset (e.g., a car or property) as collateral for the loan. Unsecured Loan: Unsecured loans are monetary loans that are not secured against the borrowers assets (i.e., no collateral is involved).

38

CHAPTER # 5

MCB BUSINESS PROCESS

There are different products MCB delivered to his valuable customers which makes the business process. These products are as follows. ATM Network Corporate Banking Virtual Banking Islamic Banking Agriculture Banking Internet Banking Corporate Leasing

ATM Network: MCB ATM Cards: Welcome to a world of convenience with the MCB ATM Smart Card. "It Works Anytime, Anywhere in Pakistan & abroad. MCB ATM Smart Card is accepted at over 4,500 ATMs nationwide. MCB ATM Smart Card enables you to access fast cash, inquire account balance, transfer funds and pay utility and mobile bills/mobile top-ups from any of over 550 MCB ATMs in the country. Card Categories: MCB ATM Regular Card: MCB ATM Classic Card allows withdrawal of up to Rs.15, 000 per day and a maximum of 3 withdrawals per day per card. MCB ATM Gold Card: The MCB ATM Gold Card allows withdrawal up to Rs. 25,000 per day and a maximum of 6 withdrawals per day per card. The cardholder has to make at least two transactions to withdraw the full amount of Rs. 25,000.

39

Corporate Banking: MCB corporate banking includes accounts, loans, financing, cash management and investment banking. Term Loan: You as an individual can gain and benefit the most through MCB Consumer Banking. In MCB you get friendly, efficient and attentive personalized banking services - a unique banking relationship experienced by each MCB client. Working Capital Loan: Based on the customer's specific needs, the Corporate Bank offers a number of different working capital financing facilities including Running Finance, Cash Finance, Export Refinance, Pre-shipment and Post- shipment etc. Tailor- made solutions are developed keeping in view the unique requirements of your business. Trade Finance: MCB offers trade finance services that comprise of an entire range of import and export activities including issuing Letters of Credit (L/Cs), purchasing export documents, providing guarantees and other support services. Trade Products: MCB offers a wide range of products and trade related services for its valuable customers to choose from. Import Services: MCB provides to help any business having importing needs. Sight Usance Mix Payment Back to back documentary credits Standby documentary credits Documentary collections Shipping guarantee Import contract registration Open account transactions

40

Export Services: MCB help your export business through any one or combination of following products being offered through wide network of our branches and trade services centers. Documentary credit advising Documentary bill drawn against LCs Standby documentary credits Documentary collections Documentary credit confirmation Trade and credit information Trade Financing: MCB provide wide range of financing options for the trade business is as follows. Bill purchase/ negotiation (inland & foreign) Foreign currency bill discounting Foreign currency export finance Finance against foreign bills Finance against important merchandise Finance against trust receipt Foreign currency import finance

INVESTMENT BANKING: Our Investment Banking arm has played a dynamic role in the local market space in Pakistan through innovative structured solutions for its customers and is regarded as one of the leading investment banking house in the country. Our IB team has strong origination and distribution capabilities and a successful track record for efficient execution. In 2007, a USD 53 million listed bond issue led by MCB was awarded The Banker's Deal of the Year for Pakistan, by Financial Times, UK. During the last three years, we have led or participated in deals over USD 5bn, of which 65% are in the energy sector, 14% in fertilizer and chemicals, 11% in telecom and 10% in other industries. Our goal is to provide best financial solutions to our client helping them achieving their objectives and support economic growth of the Country.

41

Investment Banking Products: Project & Structured Finance: Involves financing complex projects, usually in an SPV structure, where the loan is tightly structured around the cash flows, risks are allocated amongst various stakeholders, and there is limited or no recourse to the sponsors. Syndicate Loan & Debt Capital Market: Involves structuring/advisory arrangement, underwriting and placement services for significant financing requirements by large and medium sized corporate and institutional clients. Our wide array of activities also includes financial restructuring of corporate, issuance of commercial paper, placement of syndicated loans and bonds. Hybrid Instruments: Structuring and placement of a category of debt that has some characteristics of equity such as being unsecured or subordinated or with a potential equity upside. Equity Capital Rising; Services include due diligence and valuation, private placements, underwriting and management of public offers. Advisory Services: Varied services such as financial advisory, commercial structuring support and M&A advisory. Facility Administration: Management of creditor interests in syndicated transactions in capacities such as facility agent, security trustee, project monitoring bank, book-runner etc.

42

VIRTUAL BANKING: MCB Virtual Internet Banking offers you the convenience to manage and control your banking and finances; when you want and where you want. MCBs Virtual Internet Banking facility is: - Simple - Secure - Free of cost. MCB Virtual Internet Banking allows you to access banking services, 24 hours a day, 7 days a week and throughout the year. It includes individual user and corporate user. INDIVIDUAL USER & CORPORATE USER: MCB Virtual Banking - internet banking at its best! It is a safe and convenient way to manage and control your banking and finances. This service meets your essential banking needs. RETAIL BANKING: The retail banking includes banc assurance, car 4 u loan, travelers cheque, remittance. MCB BANC ASSURANCE: As dreams pass into the reality of action, from the actions stems the dream again. This interdependence constructs the highest form of living. Your dreams may be to give your children the best education, live a dignified life after retirement, or just keep your loved ones financially secure and protected. What everyone wants from life is a continuous and genuine happiness. Your action to plan for your future financially will stem your dreams. MCB Banc assurance has a financial plan that fits all your needs by fulfilling you and your loved ones dreams and keeping your Har Pal Mehfooz. Combining the best of banking and financial solutions, MCB Banc assurance provides a one-stop shop solution for you by guaranteeing convenience and security with a wide range of products available for all your financial needs. All our plans are specially designed by reputable insurance providers. These companies have excellent experience with insurance products and guarantee that your funds would

43

be in good hands as there is a team of professional investment experts in each company working on making the funds grow higher in a secure manner. Each plan is designed to give you a peace of mind because we know that in the end, its not the years in your life that counts. Its the life in your years. MCB CAR 4 U: Life in the fast lane can be really slow without a car. MCB Car 4 U makes it a breeze to finance/lease your new/used car. So get up to speed, because "Kahin Na Kahin Tau Hai1 Car 4 you". MCB DEBIT CARD: MCB now brings you MCB Smartcard -a secure and convenient instrument of payment with unmatched functionalities. It provides 24-hour direct access to your bank account. The convenience and flexibility of MCB Smartcard will help you live a smarter life. It not only helps you manage your expenses, but also eliminates undue interest on your day to day credit card transactions. Your balance is always within your reach and you spend accordingly. MCB VISA PLATINUM: It is with great pleasure that we welcome you to experience the exciting world of MCB Visa Platinum Credit Card - a world full of surprises waiting to be explored. With our perfect combination of premier features and superior service, the enclosed rewards and recognition offer you the prestige and luxury of a lifestyle you can uniquely call your own. MCB VISA: MCB Visa is not just another card in your wallet. It not only provides the conventional credit card services in a manner that is superior in comparison, but goes an extra mile. Makes MCB Visa the most affordable credit card in your wallet. MCB VISA offers you a wide range of products that will cater to your diversified taste perfectly.

44

Buy now and pay later in easy and affordable monthly installments! Saving you from the hassle of making multiple payments on your various credit cards. You need cash and want to pay back in installments. Life is too precious to be spoilt by unforeseen events and mishaps. How About a credit card that acts like hard cash.Now experience peace of mind of having a credit card free from fraud or misuse.MCB Cards SMS Facility Keeping you informed anywhere & everywhere through your cell phone. ISLAMIC BANKING: Islamic Banking Division was formed with effect from 1st January 2003, which in a short span of time, has developed sufficient expertise, necessary infrastructure, information technology, and manpower to run Islamic Banking Operations and offer Islamic Banking Products. To play a dynamic role in promotion of Islamic Banking and win customers trust by providing sharia compliant financial services. To become a leader among Islamic Banks of the country in the coming years capturing major share of the domestic Islamic financial market. It includes fund based facilities and deposits schemes. AGRICULTURE BANKING: MCB is financing agriculture sector since 1973. Due to large branch network and specialized staff posted in the branches, MCB caters to the financing requirement of the farming community spread throughout the country and facilitates in achieving increased productivity. MCB has reinvigorated its agri financing products under the brand name MCB Green Scheme. The scheme is designed and aimed at meeting all types of financial needs of agriculture sector covered under extended list of eligible items. Agri financing facilities are available throughout the country at designated Lending Branches. All types of financing is available for short, Medium and Long term depending upon farmers choice and the nature of finance. MCB gives top priority to small & medium size farmers so that they could be protected from the exploitation of private money lenders.

45

CHAPTER # 6

MCB DEPARTMENTAL FUNCTIONS

Basically there are two basic categories on the basis of functioning of MCB bank, which are following Primary Function Auxiliary Function PRINCIPAL FUNCTION: The principal functions are basically the core functions of the bank that is their life blood of bank which are accepting of deposits and financing. DEPOSITS: There are basically two types of deposits and nature vary due to time factor which are Demand Deposits: The demand deposits have no legal restriction on drawing of the deposits amount and cash is readily available on demand without any condition. Current Deposits: The current deposits are non interest bearing deposits and earn most for banks as there is no cost for the banks but the depositor can claim no interest whatsoever. Saving Deposits: The saving deposit are the interest bearing deposits and although there are no restrictions but is mostly preferable for saving and salaried class and similar class clients deposit in this category to earn interest so no regular with drawl take place in this type of deposit. Time Deposits: The time deposits are the deposits for the particular period of time and cannot be easily withdrawn on demand and if the amount is withdrawn certainly penalty is levied on withdrawal before time.

46

Notice Time Deposits: The opposite is a demand deposit or a sight deposit with can be withdrawn at any time, without any notice or penalty. Fixed Term Deposits: A deposit held at a financial institution that has a fixed term. These are generally with short term maturities ranging anywhere from month to a few years. FINANCING: Demand Finance: Demand finance is that finance which is given on demand. It is a single transaction. It can long, medium, short term. Markup is also charge. Amount can be withdrawn once at the time of disbursement. Running Finance: It is always a short term loan. It can be withdrawn and withdrawal at any time. It is basically for running day to day business operations. This type of loan is provided to the person who has the strong relation with the bank. Cash Finance: Cash finance is for a limited period of time. It is advanced to the people to complete the working process. Fixed Asset Finance: This type of account is provided to the business for the purchase of fixed assets and an asset is considered as a security. Overdraft: Loan is provided to the individual that has very healthy position and they are allowed to withdraw up to the limit if there is no balance in the account. The rate of interest is charged on the daily basis.

47

AUXILIARY FUNCTIONS: These are the functions that have the secondary position in the bank point of view. These functions are cause to attract the customers. Banks performs these kinds of functions as per demand on the extra charges. Collection of Cheques: MCB acts as an agent to its customers in the collection and payment of cheques, bills, and promissory notes. This is done on the behalf of the customer and MCB charges the commission. Locker: MCB also provide locker facility to its valuable customers where of value people can be kept their precious ornaments. Collection of Dividends: The bank provides very useful facility in the collection of dividends or interest earned on the stocks and shares held by his customers. The customer is simply to inform the issuer of the securities that the interest on the securities to be credited to his account in the bank. Purchase and Sale of Securities: MCB is authorized by the customers purchase or sale of securities on his behalf and thus adds other benefits to his portfolio. Transfer of Funds: MCB also transfer funds of the customers from one bank to another bank. If the transfer at one station they dont charge any commission and even if they charge on reduce rate. Issue of Travelers Cheque: The bank has introduced the scheme of Rupee Traveler Cheques and issues them for the convenience of travelers and charges a nominal commission. Discounting Bills of Exchange: The bank utilized their surplus funds in another important way. They discount the bill of exchange at their market worth. These bills are usually drawn for three months period and use for internal and external trade.

48

Acts as a Referee: MCB provides a useful service to his customers by acting as a referee for his credit worthiness, these information is provide in almost secrecy and impartially on the respectability and financial standing of the client. Foreign Exchange Business: MCB transfer foreign exchange business by discounting foreign bills of exchange and thus provided the facilities for financing the foreign trade. ORGANIZATION OFFICE IN WHICH I M WORKING: I have completed internship in MCB PIA Housing Society Branch Wapda Town Lahore (1522). Although it is a small branch in this area, but they are facilitating their customers by providing quality services. They provided different services to their customers and fully satisfy their customer and for efficient working. They assign different services to different departments. Few of the following below

General Banking Foreign Exchange Advances/ Credit Cash GENERAL BANKING: General banking deal with the following services. Remittance: It is transfer of funds and it can be transferred in shape of pay orders, demand drafts, mail telegram, and telegraph transfer. Payments of fees of different organizations, fulfillment of tenders and collection of funds are main functions of remittance. Maximum part of general banking depends on this department. Pay Order: Pay order is the property of the person/company that has to take the benefit of the amount being pay ordered by the concerned person. Pay orders are made for the payment of fees, tender or issued for the payment of dealings. These are required for the proof of payments made between the bank and the customer in the favor of beneficiary. These are noted in printed block letters and yearly serial numbers are issued from the computerized system.

49

Demand Draft: Demand draft are made for the beneficiary for payments, funds etc, and made for the outstation branch of the concerned banks. An advice is also made for the confirmation of the draft send. These are also approved and safe way of sending amount to the beneficiary. And also noted by the computerized system and serial number is issued from the computer system. Mail Transfer: Mai transfer is made within the city for transfer of amount and advice is also made for the confirmation of the draft send. These are also approved and safe way of sending amount to the beneficiary. It is also noted by the computerized system and serial number is issued from the computer system. Telegraphic Transfer: Telegraph is the telegram message for transferring the amount from on branch to another branch. A message advice and a confirmation advice both are made with TT numbers that are issued for TEST. TEST depends on two steps: First day is on day, date and code number of the branch. Second test is on currency whether Pakistan rupees or foreign currency, amount and TT number is issued from manual registers and confirmed from computerized system. Payment of Pay Order and Demand Draft: Pay order and demand draft both could be paid in shape of physical payment of cash and in case transfer of amounts, the amount could be transferred in the beneficiary account. In case of physical payment authorized signature of beneficiary are taken for the proof of the amount being paid to him and in case of transferring of amount authorized signature of the beneficiary are checked and verify for the reducing risks. Cancellation of Pay Order and Demand Draft: Any type of pay order and demand draft is cancelled by the permission and instructions made by the beneficiary. The customer could only cancel the pay order and demand draft as the verified signature of the beneficiary is present on the advice.

50

PERFORMA OF DD, MT, PO, TT:

51

VOUCHERS: Vouchers are made for the records and they should be complete in all respects. The amount, date, its head, particulars, amount in words, authorized signatures, and contra advice or voucher should be presented. Vouchers are advice either debit or credit slips. They are contra of each other. If any voucher of debit is passed its contra credit voucher is also passed for the balancing of accounts, their respective sheets. INWARD CLEARING: It depend on those cheques that are cleared inter branch and within the city. As the concern branch receive any type of clearing cheque first of all physical checking is take place. For clearing procedure there should be two days margin. These cheques have their vouchers and amount of cheques and vouchers should be identical. Then these cheques are stamped and noted on receiving sheets as well as feed in the computerized system. OUTWARD CLEARING: It depends on those cheques that are cleared outside the city. For outward clearing cheques are send because the home branch has their accounts but cheques of other banks. Contra of those cheques and vouchers are recorded in the home branch.

52

PERFORMA OF VOUCHERS:

53

ISSUANCE OF CHEQUE BOOKS: Any account holder that has opened the account he/she could credit his/her account and for his purpose there should be a cheque book, so he/she able to credit the needed amount whatever he/she wishes. For the issuance of cheque book a person is advised to fill a requisite slip with his/her full names and account number with two verified signatures. These signatures are checked and then other requisite slip prepared by the bank staff send to NIFT, and it issue the printed cheque books after completion of the procedure in two or three days. Account holder can take it by signing on the issuance register or if the absence of the account holder another person could also take the cheque book only if he/she has authorized signature of the account holder. When the cheque books are issued they are feed in the computer system from the requisite slip so when the cheques are given for the credit/transfer of the amount they could checked. In this way neither the cheques could be repeated nor could the invalid cheques be claimed. ISSUANCE OF ATM CARDS: Head office issue ATM cards with their PIN codes and when the customer claims for their ATM card they are checked from the list that is also issued from the head office, and the claim is checked from the list and if the name is found than the cards are issued by taking the signature and their PIN codes are given to them by taking signatures on their ATM cards forms. The ATM card has been activated by the number provided at or with the specific card. CANCELLATION OF ATM CARDS: The cancellation of ATM cards becomes necessary in the following conditions: If folded or damaged Stolen PIN code missed or forgotten Card captured by machine and expired If requested by the customer The cancellation or inactivity of the card is being processed by the request or instructions provided by the customer.

54

SHORT NOTICE TERM DEPOSITS: There are short times either for seven days or for thirty days and profit is calculated by the given percentage from the head office at the payment time. If customer fails to complete the duration of seven days or thirty days then no profit is given. If any amount is outstanding only in case of automatic continuity then the profit is calculated for the whole period by the rate given from the head office multiplying from the number of days divided by the 365 for the one day profit. CALL DEPOSITS: It is highly liquid instrument; it can be cashed at any time when needed. This instrument bears no profit on it. It is mostly used for the purpose of tender. FOREIGN EXCHANGE: LCS ESTABLISHMENT: Any company can provide its documents containing eform, bill of lading, short shipment notice in case of short shipment, packaging list etc. the information provided from the document is recorded in LC establishment portion or section in the computer. PAYMENT OR RETIREMENT: When the transactions have been completed then approved documents from the concerned bank are sent to the home bank for the payment or retirement of the Lc. These transactions have been recorded in the payment or retirement section of the computer. FORIGN CURRENCY DEPOSITS: The foreign currency deposit relates with the foreign currency accounts, cash deposit or credit and foreign remittance. FORIGN REMITTANCES: If message received from the SWIFT for foreign remittances, which recorded in the respective accounts, if these are relates with the Pakistan rupees then it was transferred in the Pakistani rupees with the latest rate and if they relates to foreign currency than it is dealt with accordingly. The amount has been recorded to respective account and the head office has been debited against it. After crediting the amount to the respective account all the subsequent entries have been made in registers and also in the computer record. As we are reporting daily to the head office, so an annexure has been maintained and faxed to the head office.

55

ADVANCES/CREDIT: This department deals with the approval of different kinds of loans to different business entities. The loans, which are being approved by the department, are kept with some securities such as bonds, properties and any other type of asset, which is equally valuable or more than this as a guarantee. Every branch has its own limit, if the amount is within the limit of the branch then it is being approved by the branch but if the amount of the loan is exceeding the limit then it has to make it approved by the head office. In this case branch stored all the required papers and sent them to the head office for necessary action. If the head office approved the loan then mostly the period contains a year and if the party requires more loan then after a year then the loan has been re approved required that they should have the limit. In case if the head office doesnt approve the loan and if the reason approved by the concerned party then it could be sent again for approval. This whole process is recorded in back remain with the bank until the party has not refunded all the amount of loan and bank has an authority to liquidate those assets for preventing it from loss. ACCOUNTS: BASIC BANKING ACCOUNT: Open basic banking account with little as Rs- 1000/- only. No minimum balance maintenance required. No monthly account maintenance charges. Two free deposit per month including (cash and clearing). Two free withdrawals per month including (cash and clearing). Unlimited free withdrawal transaction through MCBs ATMs. Unlimited transaction through virtual banking. Use your MCB smart card to shop at thousands of merchants outlets across Pakistan. CURRENT ACCOUNT: Low minimum balance requirements. Unlimited cash deposit and withdrawal facilities at hundred of branches nationwide. Use MCB smartcard to shop at thousands of merchants across Pakistan. Lockers and other affordable transaction facilities.

56

SAVING ACCOUNT: Low monthly average balance required. Profit paid into your account every six months. Unlimited cash deposit and withdrawal facilities at hundred of branches nationwide. Use your MCB smart card to shop at thousand of merchants across Pakistan. Locker facilities at economical rate.

FOREIGN CURRENCY ACCOUNT: Open your account in US Dollar, UK Pound Sterling, or Euro. Open for as little as US$ 500 or equivalent. Unlimited transactions at your branch. Free Foreign Currency cash deposit and withdrawal facility. Rate of Return directly linked with international market. Profit paid into your account every six months. Foreign Remittances facility available. Countrywide network of Foreign Currency Branches. Cash withdrawal in PKR equivalent. SMART DOLLAR ACCOUNT: USD Current, Savings and Term Deposit accounts. Competitive profit rates. Attractive incentives being offered, if you maintain the minimum amount of USD 10,000/- or above. Free Lockers (subject to availability). Pak Rupee Account: without minimum balance requirement. Free collection for crediting Foreign Currency Account. Free Standing Instructions for Current Account. Free Bank Statements. Discount (up to 50%) on processing of Personal Loans. SAVING 365 GOLD ACCOUNTS: The higher your balance, the higher your rate. Profit calculated on daily basis. Profit paid into your account every month.
57

Open your account with Rs. 500,000/- only. Cash deposit and withdrawal facility at hundreds of branches nationwide.

SPECIAL RUPEE TERM ACCOUNT: Highly attractive profit rates. Multiple tenors from one month onwards. Option of premature encashment. Option for ATM debit card to access profit earned. Option for automatic renewal of term deposits. BUSINESS ACCOUNT: Higher the balance, the higher the number of free transactions. Open a Business Account with Rs.50, 000 only. Unlimited free cash deposit and withdrawal facility at hundreds of branches nationwide. When you maintain average monthly balance of Rs.100, 000 or above* Cancellation for Demand Drafts/Pay Orders. Demand Drafts/Pay Orders. Cheque Book. International ATM Gold Card.

SAVING EXTRA ACCOUNT: The higher your balance, the higher your profit. Now avail attractive rates up to 8.5%. Profit calculated on monthly basis. Profit paid into your account semi-annually. No joining fee on Debit/ ATM Card. 50% Discount on Lockers. Cash deposit and withdrawal facility at hundreds of branches nationwide. Unlimited number of ATM withdrawal transactions. 3 Free withdrawal transactions through the branch every month.

58

CURRENT LIFE ACCOUNT: Open a Current Life Account with just Rs.1, 000. Free comprehensive life insurance coverage. No joining fees on Debit/ATM Card. 50% discount of Debit Card Annual Fee at the time of renewal. Low monthly average balance requirement. Unlimited free cash deposits/withdrawals across hundreds of branches.

59

ACCOUNT OPENING FORM:

60

61

62

63

64

65

CASH DEPARTMENT: The following books are maintained in the cash department. Receiving cash book Paying cash book Token book Scroll book Cash Balance book When cash is received in counter, it is entered in the scroll book and receiving cashier book. At the close of the day these are balanced with each other. When the cheques and negotiable instruments is presented at counter for payment, it is entered in the token book and token is issued to the customer, the token clerk and cashier make entries in the paying book and payment is made to payee. Opening balance + Receipts Payments = Closing Balance

66

CHEQUE BOOK REQUISTION SLIP:

67

CHAPTER # 7
STRENGTH:

SWOT ANALYSIS OF BANKING SECTOR

Allocates funds for the highest value use while on the flip side. Proponents of state controlled mechanism of firms operations; the enterprises need monopoly in markets mainly to achieve social objectives such as creation of employment opportunities. Banking system of Pakistan is a two-tier system including the State Bank of Pakistan (SBP), commercial banks, specialized banks, Development Finance Institutions (DFIs), Microfinance banks and Islamic banks. The banks in Pakistan provide settlement and cash services to individuals and companies, including correspondent-banking. Banks also offer domestic and cross-border remittance services to the population. Depository services for the accounting and safekeeping of securities. 80 percent of the banking assets are held by the private sector banks and the privatization of nationalized commercial banks has brought about a culture of professionalism and service orientation in place of bureaucracy and apathy. Banking Technology that was almost non-existent in Pakistan until a few years ago has Revolutionized the customer services and access on-line banking, Internet banking, ATMs, mobile phone banking/ branchless banking and other modes of delivery have made it possible to provide convenience to the customers while reducing the transaction costs to the banks. The Credit Cards, Debit Cards, Smart Cards etc. business has also expanded. Islamic Financial Services (IFS) needs careful nurturing and development to make a significant impact on the financial landscape of Pakistan.

68

WEAKNESS: Credit risk is the key challenge of the banking system in Pakistan these days. The overall fragile economic situation and weaknesses in the operating environment has aggravated the credit risk since end 2008. As a result, Non Performing Loans (NPLs) have been mounting and the advances declining.
Interest rate volatility, besides affecting interest rate risk, alters the cost of borrowing which is inextricably linked to the repayment capacity of the borrowers.

High government borrowing, persistent fiscal deficits and the resultant rampant inflation are largely to blame for the lending rates remaining in double figures.
Banks loan classification by major segments indicates that in line with the overall slow growth in advances, the shares of loans to the corporate sector, SMEs, Agriculture and Consumer Finance all declined.

Sectorwise distribution of loans to the private sector also highlights credit risk concentration as loan to the textile and sugar sector alone constitute almost 40 percent (about 20 percent each) of banks loans portfolio. Management of a bank is failing to discharge its responsibility in accordance with the applicable statutory criteria or banking rules & regulations or is failing to protect the interests of the depositors or for advancing loans and finance without due regard for the best interests of the bank or for reasons other than merit. OPPORTUNITIES:

Agriculture is strategically an important sector for the economy, having above 20% share of GDP and a major source of livelihood for 65% of the countrys population living in rural areas. The sector is largely unserved / under-served by banks; less than 20% of about 7 million farm households in the country have access to bank credit. SME sector is another under-served area. Presently only 0.2 million SMEs have access to bank financing out of 3.1 million SMEs across the country. The low presence of banking services in SMEs is attributable to the high risk perception about SMEs, over conservatism of banks in underwriting the risks in serving the non-traditional sectors like SMEs and agriculture. On the contrary, banks place their surplus funds in risk free government securities.
69

Housing finance is another attractive avenue. Despite a deficit of more than six million housing units in the country - that is increasing due to supply shortage - the housing finance market is largely under developed; mortgage loans are approximately 1 percent of GDP, which suggests that a huge un-tapped market awaits banks to exploit. A large portion of 180 million people in Pakistan are potential consumer loan customers. However, banks need to developing sound lending strategies to manage their risk. Islamic banking and generally Islamic Financial Services are a growing phenomenon, which came into existence to meet the needs of the devout Muslims around the world; Pakistan with 97% Muslim population presents a huge market for Islamic Financial Service. Microfinance is another sector which provides a lot of opportunities. Commercial banks and other financial institutes may have an opportunity to invest their funds in this sector. THREATS:

Major challenges facing the domestic economy can only be partly attributed to the GFC. Indeed there was a decline in exports due to recession in economies which are Pakistans major trading partners, and there was pressure on capital flows where strained liquidity position in global financial markets impacted foreign portfolio investment. Factors such as the power shortages leading to under utilization of industrial capacity and rise in the cost of production, the longstanding issue of intercorporate circular debt, considerable decline in foreign direct investment due to weak economic fundamentals, high inflation, security concerns and above all, the mounting fiscal deficit breaching previous records. Public sector borrowed heavily from banks for budgetary support, financing needs of Public sector Enterprises (PSEs) and commodity operations.

70

The leading evidence of these various pressures on domestic firms and industries is that their loan repayment capacity has been compromised, with a consequent rise of nonperforming loans (NPLs) on the banks balance sheets. Banks have been forced to build contingency reserves and provide for infected assets. Such requirements have been affecting their dividend payments and consequently putting pressure on their share prices.

71

CHAPTER # 8
STRENGTH: 4TH largest Bank of Pakistan in term of deposits. Mainly operated by Mansha's group. MCB is working in Pakistan over 60 years of success. 3RD largest Privatized Bank of Pakistan.

SWOT ANAYSIS OF MCB

MCB offering Customized Products and services aggressively betters than its competitors. Improved operational efficiency as to its past. Courteous Customer service and fast delivery of online and offline services. Marvelous Image and Reputation of the bank in the eyes of its customers. Extensive Branch network. MCB Product positioning is very effective. MCB targets the segment like salaried person, business people and self employed person. MCB product positioning affects the life style of the people as they help in improving standard of living. 1166 Branches all over Pakistan. Stands in the list of Profitable bank in stock exchange. Overseas Branches.

72

Bank is continuously focusing on developing new and innovative products to attract their target market. Brand image because of "Muslim" word in the name in an Islamic country. Personnel of MCB are very well trained. Majority of employees have many years of experience in banking sector and are an asset for the bank.

WEAKNESS: No standardization in terms of branches some of the branches are very attractive and most of the branches are not very good like other branches. In some regions, urban areas of Pakistan service of MCB are not good as compared to other privatized banks.

Customer facing problem of NADRA verification while opening their accounts because its process is time consuming. No promotions in MCB and it can be gone couple of years. Lack of organizational loyalty among employees. The application time is also quite lengthy. MCB is a step behind in using new technology as compared to other banks. All branches need orientation for customer dealing. Most of the employees are overload with the work and promotion is also not timely. Most of employees are experienced and they are not able to deal customers well, adopt new culture and above all they are unable to use of new technology like computers. As most of the employees are young they have more tendencies to switch the organization and to seek more opportunities.

73

No separate training center to train their employees. Employees are not well dressed. Workforce is not diverse. Security system in most of the branches is not up to the mark. OPPORTUNITIES:

Bank can extend its network in other cities of Pakistan like other 4 remote cities, it would increase their sales. Proper orientation of employees in all branches can help them to cope up with foreign banks. Bringing new technology and modern business processes will bring the change and increase their profitability. Call centre services should be improved to enhance their network.

Emergence of Islamic banking in the country and MCB is increasing its Islamic Banking operations. Bank has earned a good name by introducing innovative products like car financing home financing credit cards these products can easily enhance the market share. Bank introduces Islamic banking in country that attracts large number of people. Free staff training facilities offered. Greater profitability can be achieved through strong internal control. Profit and deposit of banking industry have shown an increasing trend because of better marketing environment. Elimination of risk of fraud through professional training.

74

Opportunity to open branch in ruler area to increase its branch network and gain more profit. The bank can earn more profit by advancing to farmers and industrialists at low rates. New schemes for deposits and finances should be introduced regularly.

THREATS: Large and increasing competition. High operating costs. Unregistered business concern and Weak economic condition of Pakistan. Current economic crunch and Political instability. Political instability. Rising deposit rates and People losing trust in banks. Foreign banks in market having more marketing budgets. People losing trust in banks. Decline in private and public sector credit due to tight monetary policy. Participation of foreign banks in local market that can hurt the market share. Growing NPL's of the industry which may hurt MCB also. Mergers & acquisition activities, consolidating the banking sector and MCB is also vulnerable to it. The market is already saturated Uncertainty in Pakistan and poor law and order situation are also big threat for bank. Restructuring of privatized banks. Tough competition by foreign nationalized and privatized banks in foreign trade business in fact competition is always a threat for organization.

75

The stiff competition also causes switching of employee bank have to pay more salaries to their employees. Cost of doing business is increasing day by day so its very hard to compete with financial sector. Government policies are changing day by day and government stability is also not there.

76

CHAPTER # 9

IDENTIFICATION OF PLAUSIBLE PROBLEM

Lack of knowledgeable staff working in the branch. No proper ventilation system. No proper shelves of banking books and they are separated here and there. ATMs performance is so bad (card stuck and some other problems). There is no lighting system in the branch. Each cabin has very bad conditions and all the glass sheet are broken from different sides.

Server issue occurs many times; sometimes it could be disconnected from the main head office and maintained after three or four hours. There is no proper person of banc assurance and in the credit department. There is no maintenance of notice board.

77

CHAPTER # 10

RECOMMENDATIONS FOR SUITABLE COURSE OF ACTION

Proper ventilation system is going too maintained in the branch. Changing the ATM machine. Oracle 10.1 MCB software has been installed in the computer system to solve the issue of server disconnected. Cabin could be maintained proper wood and glass fiber should be used to make a good impact on the customer.

Proper maintenance of notice board each new information can be on notice board. Proper recruitment of banc assurance and for the credit department.

78

CHAPTER # 11

CONCLUSION

The banking in Pakistan - a highly regulated industry - has witnessed a rapid progress in recent years and has been characterized by an increasing sophisticated provision of banking services. However, a large portion of the 180 million population of Pakistan is still un-banked or underserved by the formal financial system which is attributable to, among others, low penetration of the banking system particularly in rural/semi rural areas and general dislike for interest income (un-Islamic banking system). A World Bank study on access to finance published in 2008 estimated that only 14% of the population in Pakistan is banked and has access to the formal financial system. Thus a huge un-tapped market is available for financial services. Today, the biggest challenge for Banks in Pakistan is increase in non-performing loans (NPLs) and low private sector credit demand as high lending rates and weak economy is adversely affecting the borrowers payment capacity. Furthermore, heavy flooding in Pakistan during August 2010 caused humanitarian disaster and altered the macroeconomic outlook. These adverse developments create a difficult operating environment for banks. However, some experts are of the opinion that the weak economic growth is for a short run. Due to the said challenges, Pakistans banking industry has been undergoing risk consolidation since 2009 by rebalancing its assets from advances to investment. The banks efforts to contain the element of credit risks are clearly visible from their inclination to invest in government securities and their preference to meet financing needs of the government rather than the private sector. Notwithstanding the difficult operating environment, the Banks numbers show that the banking sector in Pakistan has been performing well - though dominated by five large commercial banks.

79

CHAPTER # 12
www.mcb.com.pk www.scribd.com www.slideshare.net

BIBLOGRAPHY

ishrathusain.iba.edu.pk/speeches/.../Pakistan_Banking_Sector.doc www.pakistaneconomist.com/issue2000/issue3/f&m.html www.bankingmohtasib.gov.pk/ www.4shared.com/document/.../Pakistan-Banking-Sector.html www.scribd.com/doc/.../12/Banking-Sector-Supervision-in-Pakistan www.sbp.org.pk/publications/c_rating/index.html Pkeconomists.com/interview-with-president-of-bank-alfalah-on-the-banker pakinvestorsguide.com ... Pak Equities BANKING SECTOR www.osec.ch/internet/.../economic.../PakistanBankingSector2011.pdf zulkiflihasan.wordpress.com/2011/.../islamic-banking-share-improved-6-4-percent-inpakistan/ www.financeasia.com/.../252173,asia-pacific-issuers-set-for-a-positive-2011-butchallenges-lurk.aspx http://www.oppapers.com/subjects/impact-of-government-policies-on-bankig-sectorin-pakistan-page2.html www.alacrastore.com/.../moodys-global-credit-research-Pakistan-COP_600014773 www.pakistanbanks.org/industry.../news/banking.../2011/01.html mpra.ub.uni-muenchen.de/30558/1/MPRA_paper_30558.pdf www.business-standard.com Home Banking & Finance www.rejournal.eu/Portals/0/Arhiva/Gul%20et%20al%20-%20JE%2039.pdf pakteahouse.net/2011/.../tracing-bhuttos-impact-on-the-pakistani-political-social-andeconomic-landscape/ www.docstoc.com/.../Financial-Crisis-of-Pakistan-Banking-Industry www.academicjournals.org/.../2011/.../Siddiqui%20and%20Shoaib.htm uicifd.blogspot.com/2011/.../imf-warns-pakistan-on-economic-reforms.html
80

CHAPTER # 13

APPENDIX

Mr. Samara Rehan Paracha

Mr. Owais Ahmed

MCB Manager PIA Society Branch Lahore MCB Manager telephone exchange PIA employees

cooperative housing Society Fiaz Ur Rehman Fiazi Mr. Ramzan MCB Staff College Director MCB Operation Manager PIA Society Branch

Studies internship reports of different internees working in the PIA Society Branch Lahore Studies different journals in Punjab University for helping me to complete my internship report Visit to MCB Office on Jail Road Lahore Visit MCB Cash Management Office in Nela Gun bad Lahore

81