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The word 'Bank' is said to have been derived from the words
Bancus or Banque or Bank. This history of banking is traced to as early
as 2000 B.C. The priests in Greece used to keep money and valuables
of the people in temples. These priests thus acted as financial agents.
The origin of banking is also traced to early goldsmiths. They used to
keep strong safes for storing the money and valuables of the people.
The persons who had surplus money found it safe and convenient of
deposit their valuables with them. The first stage in the development of
modern banking, thus, was the accepting of deposits of cash from those
persons who had surplus money with them.
The goldsmiths used to issue receipts for the money deposited
with them. These receipts began to pass from hand to hand in
settlement of transactions because people had confidence in the
integrity and solvency of goldsmiths. When it was found that these
receipts were fully accepted in payment of debts; then the receipts were
drawn in such a way that it entitled any holder to claim the specified
amount of money from goldsmiths. A depositor who is to make the
payments may now get the money in cash from goldsmiths or pay over
the receipt to the creditor. These receipts were the earlier bank notes.
The second stage in the development of banking thus was the issue of
bank notes.
The goldsmiths soon discovered that all the people who had
deposited money with them do not come to withdraw their funds in
cash. They found that only a few persons presented the receipts for
encashment during a given period of time. They also found that most of
the money deposited with them was lying idle. At the same time; they
found that they were being constantly requested for loan on good
security. They thought it profitable to lend at least some of the money
deposited with them to the needy persons. This proved quite a
profitable business for the_ goldsmiths. They instead of charging safe
keeping charges from the depositors began to give them interest on the
money deposited with them. This was the third stage in the
development of banking.
DEFINITION OF A BANK:
The term 'bank' is being used for a long time, yet it has no precise
definition. The basic reason is that the commercial banks perform not
just one but many types of functions. The term bank has been defined
differently by different authors. Some are as follows:
According to Crowther,
www.hailianz.com
Muslim Commercial Bank Limited Internship Report 6
Commercial Banking In
Pakistan
The interesting point which I observed during the span of mine
internship was the historical background of Banking & Financial sector
which is the one in which great improvement and growth is observed
since the formation of Pakistan. For studying the growth of this sector
we can divide it into three stages, which are as follows:
a) Pre-Nationalization Era
b) Nationalization Era
c) Post Nationalization Era
banks.
5) Establishment of specialized banks, such as ADBP (1952);
a) HBFC (Nov, 1952);
b) P1CIC (Oct, 1957)
c) IDBP (Aug. 1961);
d) NDFC (Jan, 1973).
These were the steps, which built a strong banking sector in Pakistan.
This is also obvious from the facts that by 1973 there were almost 10 foreign
banks were working in Pakistan and all over deposit position was around
Rs.2300 crore (23,000 million). A bird eye view of 5 top banks was as given
below:
BANK POSITION IN 1973
B) NATIONALIZATION PERIOD
On January 01, 1974 all Pakistani banks were nationalized through
Nationalization Act 1974. Under this law all Pakistani banks became a
public property. All small banks were merged in bigger banks to create
5 major Pakistani banks Pakistani banks. These banks were to control
by Pakistan Banking Council. There are still controversies about this act
of government as whether it contributed in success of failure of 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.
However the effect of expansion was enormous and it can also
be depicted with the help of table 2 which shows the deposit & branch
positions of different nationalized banks.
SCHEDULE BANKS
Category No. of Banks
Nationalized Commercial Banks 3
Private / Privatized Commerce Banks 18
Public Sector Specialized Banks 4
Foreign Banks 19
Total Schedule Banks 44
In addition to above mentioned scheduled banks there are 7
Development Financial Institutes, 14 Investment Banks and Modarbah
Companies.
1
UBL to her uply a UAE party in 2002.
HISTORY
This bank was incorporated under companies’ act 1913 on 9th
July, 1947 (just before partition) at Calcutta. But due to changing
scenario of the region, the certificate of incorporation was issued on 17th
August, 1948 with a delay of almost 1 year; the certificate was issued at
Chitagong. The first Head office of the company 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.
After some time the registered office of the company was shifted
to Karachi on August 23rd, 1956 through a special resolution, now
recently the Head office of MCB has been transferred to Islamabad in
July, 1999 and now Head office is termed as Principle Office.
This institute was nationalized with other on January 1st, 1974. At
that time it had 506 branches and deposits amounting to Rs. 1,640
million. Although. MCB has a reputation of a conservative bank but
nationalization also left its effects on this institute as well and by end of
year 1991 in which it was privatized the total number of branches were
1.287 and deposits amounting to as high as Rs. 35,029 million.
When privatization policy was announced in 1990, MCB was the
first to be privatized upon recommendations of World Bank and IMF.
The reason for this choice was the better profitability condition of the
organization and less risky credit portfolio which made'' it a good choice
for investors. On April 8th, 1991, the management control was handed
over to National Group (the highest bidders). Initially only 26% of shares
were sold to private sector at Rs. 56 per share.
DEVELOPMENTS
After privatization, the growth in every department of the bank
has been observed. Following are some key developments:
1) Launching of different deposit schemes to increase saving level.
2) Increased participation on foreign trade.
Management of the
organization
AUDIT COMMITTEE
• Ali Amin
COMPANY SECRETARY
• Tameez-ul-haque
ORGANIZATIONAL STRUCTURE
As MCB is a banking company listed in stock exchange therefore
it follows all the legalities which are imposed by concerned statutes Mr.
Muhammad Mansha is chairman & chief executive of the company
with a team of 10 directors and 1 vice chairman to help in the business
control and strategy making for the company.
Operational Management of the bank is being handled by a team
of 10 professionals. This team is also headed by Mr. Muhammad
Mansha. The different operational departments are Consumer Banking
& IT div; Financial & Inter branch div; Banking operations div; HR &
Legal div; financial control & Audit div; Credit management div;
Commercial Banking div; Corporate Banking div; Treasury management
& FX Group and lastly Special Assets Management (SAM) Group.
For effective handling of branches, it has been categorized into
three segments with different people handling each category. These
categories are:
a) Corporate Banking
b) Commercial Banking
c) Consumer Banking
A) CORPORATE BANKING:
These are branches which have an exposure of over Rs. 100
million. Usually includes multinational & public sector companies.
B) COMMERCIAL BANKING;
The branches which has a credit exposure of less than Rs. 100
million but having a credit portfolio of more than Rs. 20 million
(excluding staff loans)
Usually branches in large markets and commercial areas come under
this category.
C) CONSUMER BANKING
These are the branches which have exposure up to Rs. 20 million
and these include all the branches which are neither corporate nor
commercial branches.
Recently the organizational structure was re-designed as follows:
Province wise branches
Punjab 632
Sindh 232
NWFP 123
Blochistan 34
Azad Kashmir 19
Domestic 1040
Overseas 4
EPZ 1
Total 1045
Sri Lanka 3
Bahrain 1
Hierarchy Of Management
GRADES OF BANK
SEVP
ESEVP
SVP
VP
AVP
GRADE-1
GRADE-2
GRADE-3
ASSISTANT
Cashier Messenger
For proper functioning of branches and the over all bank has
been divided in different departments. These departments handle
different jobs so that division of work is there for improvement of
functions and also it is easy to control the situation. The general division
in a branch is as follows:
1) Cash department
2) Deposit department
3) Advances & credit department
4) Foreign exchange department
Technology department (new addition in order to cop with the
growing needs of day to day technology requirements)
Cash Department
The following books are maintained in the Cash Department:
1. Receiving Cash Book
2. Paying Cash Book
3. Token Book
4. Scroll Book
5. 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 cheque or any negotiable instrument is presented at
counter for payment, it is entered in the token book and token is issued
to the customer. The token clerk and the Cashier make entries in the
paying book and payment is made to payee. At the close of day, the
Token Book and Paying Cashier Book are balanced.
The consolidated figure of receipt and payment of cash is entered
in the cash balance book and drawn closing balance of cash.
Opening Balance + Receipts - Payments = closing Balance.
This is very important department because cash is the most liquid
asset and mostly frauds are made in this department, therefore, extra
care is taken in this department and nobody is allowed to enter or leave
the area freely. Mostly, cash area is grilled and its door is under
supervision of the head of that department. All the books maintained in
this department are checked by an officer.
Deposit Department
Bank deals in money and they are merely mobilizing funds within
the economy. They borrow from one person and lend to another, the
difference between the rate of borrowing lending forms their spread or
gross profit. Therefore we can rightly state that deposits are the blood of
the bank which causes the body of an institution to get to work. These
deposits are liability of the bank so from point of view of bank we can
refer to them as liabilities.
The total deposits of MCB are growing since its inauguration but
after privatization there is a sharp incline in over all deposits of the
bank. The increase in deposits is also a cause of increase on total
number of accounts; bank has progressed in both aspects.
TYPES OF DEPOSITS
Deposits can be segregated on two bases, one is the duration in
which there funds are expected to be with the bank and second is the
cost of getting these funds. So divide deposits in two classes according
to duration of deposits i.e.
1) Time deposits / liabilities
2) Demand deposits / liabilities
And on the basis of the cost to acquire these funds, a deposit
can be classified as any one of following four, High Cost Medium
Cost, Low Cost No Cost.
Banks has different kinds of deposit schemes in order to induce
deposits. These schemes are a mixture of the above mentioned two
types of deposits with an addition of different services & requirements
such as minimum balance' requirement, mode of transaction, basis for
calculation of profit, deductions, additional benefits, eligibility for
different groups.
In the similar fashion, MCB has a large variety of deposit
schemes and some of them are as follows:
NOTE:
PLS Saving, Kushali Bachat & PLS 365 saving accounts can be
opened in foreign currency also. Before nuclear tests of 1998 these
accounts were opened in four major currencies but now these are only
opened in USD ($). However, now bank discourages the opening of
foreign currency accounts because no forward cover risk is provided by
State Bank of Pakistan (SBP) and all the loss in case of devaluation or
depreciation in local currency has to be born by bank himself. This
increase in cost has left foreign currency account of no use, therefore,
now bank prefers to accept deposits in local currency rather in foreign
exchange.
FUNCTIONS
This was a brief review of different types of deposit schemes. The
Deposit Department handles the account opening, profit payment and
accounting of all types of deposit schemes.
ACCOUNT OPENING:
Account opening is an agreement in which customer offers his
funds and bank accepts these funds, therefore the nature of relation
between a banker and customer is of a contractual one and all the
conditions applicable to this contract act are also applicable.
Clearing Department
Every banker acts both as a paying as well as a collecting
banker, It is however an important function of crossed cheques. A large
part of this work is carried out through the bankers clearing house.
A clearing house is a place where representative of all banks of
the city get together and settle the receipts and payment of cheques
drawn on each other. As the collecting banker runs certain risks in
receipt of their ownership the law has provided certain protections to the
banks.
The Negotiable Instrument Act, 1881, lays down hat drawer or
holder of a cheque or draft may cross the instrument generally or
specially. It further lies down that a crossed cheque can only be paid to
a banker, who collects it for a customer in good faith and without
negligence.
SCRUTINY OF CHEQUES
a) The instrument should be neither stale/ nor post-dated.
b) If the instrument is crossed not negotiable it can be for the third
party (an endorsee of an order cheque, or a holder of bearer
cheque).
c) The Instrument should not bear any unauthorized alternation.
d) The instrument should not be mutilated.
e) The amount in words and figures should be same.
f) The instrument should be drawn on any local branch.
g) If cheque is "crossed Account Payee's" only or "Payee's
Account", it should only be accepted for collection for the payee's
account.
h) The cheques or drafts should not be crossed specially to any
other bank.
i) A cheque payable to a firm should not be accepted for credit to a
partner's account.
j) A cheque payable to one of the joint account holders should not
be collected for the joint account without the payee's
endorsement, or consent.
k) A cheque drawn by a customer in the capacity of agent, Attorney,
or Manager of his company or firm, should not be collected for
credit to his personal account.
l) Pay orders, although negotiable should not be collected for third
parties.
m) Do not collect an instrument in the account of an agent or of the
servant of the payee or endorsee of the instrument.
n) “Not transferable" instruments, like Telegraphic Transfer, or Mail
Advances Department
Advances are the most important source of earning for the banks.
MCB is also giving full attention towards this aspect and it is also
obvious from the growing portfolio of advances and from very low
delinquency rate. The credit portfolio of this institution is in a very much
better shape than other financial institutions of Pakistan and the credit
goes to the management and the staff who are concerned about the
quantity and quality as well.
1) Loans
2) Cash Credits
3) Overdraft
1) LOANS:
Loans are monetary assistance by a financial institution to a
business, individual etc. The loans are granted by the bank in lump
sum, so these types called fixed or demand loans. Interest is charged
on the whole amount of a fixed loan.
The borrower withdraws whole the amount of loan. This type of
loan is normally granted against security of gold documents.
In case of demand loans against gold or documents, a demand
promissory note for the amount of loan is taken from the borrower loans
are granted under;
2) CASH CREDIT
Cinder such cash account is opened in the name of the
customer who borrows from the bank. Customer is granted a loan up to
a certain limit, sanctioned by the head office, from which he can draw
when he requires and interest is charged on the amount actually utilized
by the customer. In order to avoid the danger of idle fund, the bank
charges a certain rate of interest, even if the customer does not
withdraw any amount. The rate charged by the bank on cash credit in
46 paisa per thousand on daily basis.
The credit is usually given against the securities of goods or
merchandize as follows:
3. MORTGAGES OF PROPERTY:
Title deeds of immovable property are accepted by the bank only
as collateral security or alternatively as unauthorized security.
A FUNDED FACILITY
1) Running finance
2) Cash finance
3) Demand finance
4) Payment against documents
5) Finance against imported merchandise
6) Finance against trust receipt
7) Export finance
8) Foreign bill purchased
9) Others
Remittances
DEMAND DRAFT
1) Demand draft is a written order drawn by a branch of a bank upon
the branch of same or any other bank to pay certain sum of
money to or to the order of specified person
2) Demand draft is a negotiable instrument.
3) Legal provisions are same as that of cheque.
4) It is to be ensured that purchaser can at least sign.
5) Thumb expression is not accepted on DD
6) The following are the parties.
a) purchaser
b) issuing branch
c) drawee branch
d) payee
A demand draft may be issued against the written request of the
customer before issuing it must be seen that the demand draft is in
order.
SCRUTINY OF APPLICATION
The DD application must be scrutinized by the counter clerk in
respect of following points.
A There should be branch where payment is to be made.
B full name of payer should be mentioned
C amount in words and figures must be same
D application to be signed by the purchaser
TELEGRAPHIC TRANSFER
■ Transfer of funds from one branch to another branch of the
same bank or upon other bank under special arrangements.
■ Telegraphic transfer is not negotiable
■ The funds are not payable to bearer
■ Minor cannot avail this facility
PARTIES
Following are the parties involved
■ Applicant
■ Drawing branch
■ Drawee branch
■ Beneficiary
Full name of the beneficiary or account number should be mentioned in
the application form.
■ Instruction regarding mode of payment should be obtained.
■ A record in the remittance outward register should be
maintained.
■ All the remittance must be controlled through number.
MAIL TRANSFER
■ Transfer of funds from one branch to another branch of the
same bank with in or out side the city is called mail transfer.
■ Mail transfer is not negotiable
■ The procedure is same as for DD
■ All precautions must be observed
PAY ORDERS
■ Pay order is meant for bank own payment but in practice they
are also issued to customers.
■ A pay order is written authorization for payment made in a
receipt form issued and payable by the bank. To the person
named and address.
The following are the parties
A purchaser
B issuing branch
C payee
■ Charges must be recovered at prescribed rate.
■ Pay order should be prepared like demand draft.
■ A record of all issued and paid should be maintained.
■ Credit voucher should be prepared
Technology Department
Technological advancements are also affecting the banking
industry. The foreign banks have a competitive edge over all local
banks in their technologies' advancements and automated systems.
Local banks have also realized the gravity oil this situation and are
striving to add computerized systems to their branches
MCB is ahead of all other local banks in this field and now it is in
a position to even compete with foreign banks. There are more than
1045 branches of MCB all over Pakistan and out of these more than
300 branches are fully computerized Almost all .the branches of big
cities are computerized; therefore, the need for a technology
department at each branch is growing. Now a day, a computer division
is working in each city to provide service to ad the branches of that
area.
MCB has also introduced the now concept of online banking.
There are now more than 250 branches linked through this system
and they can transact with each other directly using computer systems
at their own branches. Now customers do not have to wait long for their
transactions and can operate their account through all the online
branches.
ATM NETWORK:
ATM stands for Automatic Teller Machine. This machine is used
to transact in one's account without intervention of humans. These
machines are basically used for taking cash, confirming balances and
requesting statements / cheque books.
MCB has the largest ATM network in the country at the moment
with almost one ATM at each online branch and also ATM terminals at
International Airports. This network covers more than the 27 cities of
Pakistan including the provincial capitals and large commercial cities of
the country.
ATMs are operated through a card issued to the valued
customers and by application of Personal Identification Number (PIN
number). A person can withdraw from any machine across Pakistan
with having an account in only one branch of MCB. This was only
possible with the help of online system. In this system all the machines
are linked to central banking host at IRM division Karachi through either
satellite or telephone controller. This system identifies the card holder
and his PIN Number.
Now MCB has also entered into a contract with Cirrus which is
Miscellaneous
PRODUCTS AND SERVICES OF MCB
Following are some products of MCB that are introduced by
Musing Commercial Bank after privatization.
SALIENT FEATURE:
a) Minimum amount of investment shall be Rs.0.010m and the
maximum amount of investment would be Rs. 1.000m.
b) Khushali Certificates can be purchased by individuals (singly or
jointly) or by the Proprietorship/Partnership concerns or
Companies, etc. in their name
c) The Khushali Certificate will be of five years maturity.
d) The interim rate of profit offered will be minimum 1% per month. If
the profit declared by the bank is higher, additional profit will be
paid.
e) Zakat will be deducted wherever applicable on yearly basis
whether you will be receiving your profit or encashing your
certificates.
f) As per Government Directions, tax on the profit / return is to be
deducted by MCB branches at the time of payment.
FEATURES:
a) 8% rate of return per annum.
b) Returns calculated on daily.
c) Average balance and paid half yearly.
d) Introduced first time in Pakistan.
e) The facility of helping account holders pays utility bills (electricity,
telephone and gas) through their account. No queues. No delays.
FEATURES:
a) Owing foreign currency account under the Prime Currency
Scheme allows you to earn attractive rates of interest in foreign
currency.
b) You have a choice between opening this account in your personal
name and opening it under joint names.
c) Whether you are a resident or a non-resident Pakistan, MCB
Prime Currency Scheme invites all to operate a foreign currency
account.
d) Foreign nationals and foreign companies can also open a foreign
currency account under the Prime Currency Scheme.
e) Your foreign currency account can be opened in four global
currencies: The United States Dollar, the Pound Sterling, the
Japanese Yen and the Euro.
f) Travellers Cheques and Foreign Currency Notes can also be
issued to holders of persona! and Joint accounts.
g) Remittance from abroad, Travellers Cheques, Foreign Currency
Notes and Foreign Exchange generated by encashing F.E.B.Cs
may be deposited in these accounts.
h) Rupee Loan facility will also available against this account.
i) You can draw any amount of foreign exchange from your foreign
currency account and transfer or remit the amount freely to any
part of the world without any restrictions.
j) The restrictions imposed by the State of Pakistan for the opening
of foreign currency accounts in case of passport; Work-permit
and resident Visa have been withdrawn. Your account will be
restriction free.
k) The Prime Currency Scheme is exempt from al! forms of taxes
including Income Tax, Wealth Tax and Zakat deductions.
l) MCB Prime Currency Scheme is a world in itself.
MCB - committed to working for your convenience - offers the
foreign currency account facility at more seventy of its branches
all over Pakistan.
8) CONSULTANCY SERVICES:
In the process of privatization of public sector units, prospective
buyers need professional assistance and MCB, with its expertise, offers
to them specialized service for valuation of the market value of the
industrial unit, preparing bid documents and arranging finance for the
purchase of the unit.
Objectives of MCB
The following are the objectives of Muslim Commercial Bank Limited.
Branch Network
The following is the Branch Network of Muslim Commercial Bank
Limited.
Sector wise position of circle,
As on 30-12-2002
Consumer Sector 810 Branches.
Overseas Branches 4
EPZ Branch 1
Total Branches 1045
NUMBER OF ACCOUNTS:
Accounts in this branch of MCB are as follows:
CURRENT ACCOUNT:
Total numbers of current accounts are 1049.
PLS ACCOUNT:
Total numbers of profit and loss accounts are 2120.
REMITTANCE:
Total remittance of this branch is 26.22 million.
NO. OF VOUCHERS:
The vouchers which are transacted in this branch are as
follows:
TYPES DEBIT CREDIT
Transfer 961 901
Clearing 591 810
Cash 1754 1389
Rate of interest 4.45%
Maximum 9%
RATE OF INTEREST:
The rate of interest provided by such bank is minimum 4.45% and
maximum 9%.
FINANCING:
Mainly, the short term financing schemes are being dealt here.
CAPITAL:
Capital of branch is treated in its Head Office.
REVENUES:
The total revenues of this branch are near to 11.25 million.
Work done by me
In the Muslim Commercial Bank Ltd. I really enjoyed working with
the staff of Ghalla Mandi Branch Renala Khurd and having a wish to be
employee of MCB. It was almost impossible to work in all the
departments within that limited time. But on my request, the staff of the
branch provided me the opportunity to work in the different departments
for the sake of practical knowledge. I feel highly indebted to work in the
Renal Khurd Branch on the request of the manager of that branch Ch.
Abdul Sattar, because I learnt a lot in that branch.
During my internship training in the MCB as I early mentioned
that I have worked in different departments & seats and learnt the
followings.
During the span of mine internship in MCB I learned and observed a lot
of about the opening of an account. Basically I think that the opening of
an account is the establishment of a contractual relationship between
the banker and the customer. By opening an account at a bank a
person becomes a ‘customer’ of a bank. Further I am going to express
the basic requirements and steps involved in the opening of an account.
INVESTIGATION
directly but also for other bankers and the general public who may be
affected indirectly. In Ladbroke & Co. V Todd (1914), the banker did not
obtain introduction at the time of opening the account, and it was
construed a negligence within Section 82 of the Bills of Exchange Act
1882.
In order to further strengthen and streamline this process, the
Federal Ombudsman of Pakistan, vide his ruling on complaint No.
II/31/5186, has directed the banks to retain with the account opening
form a Photostat copy each of the National Identity Cards of the person
desiring to open an account as well as that of the introducer. As per
these directions, the concerned Branch Managers are required to obtain
the original National Identity Cards along with their Photostat copies and
then return the original after attesting the authenticity of the retained
copy.
3. Occupation
4. Address
5. Telephone No.
6. Currency of account
7. Nature of Business
8. Introducer’s Name, Address & Signatures
9. Special instruction regarding the account
10. Initial Amount of the Deposit
11. Signature of the applicant
When all above matters are satisfied then come to the Token
register and check:
1) Token number.
2) Cheque number.
3) Amount of cheque.
4) Particulars.
• Token number.
• Time of giving token to client.
• Signature of token giver.
Note:
Payment is also made when cheques of same branch account is
presented for transfer to other account in same ranch along with cheque
for payment.
There are two stamps put on each cheque, sent for clearing:
a) Crossing Stamp.
b) Manager Stamp.
CHEQUES IN COLLECTION:
When cheques received in clearing are intra city then these are
controlled under CC.
First of all, these cheques are recorded in day book then allotted
number and then serial number. Then a performa is prepared in which
Bank on whom was drawn, cheque number, amount, beneficiary name
are recorded. After completing that performa cheque is posted along
with performa.
CLEARING
concerns who need a number of cheque books at a time, may ask the
bank to stock as number of cheque books in their name and to point
their name on these cheque books.
Bank debits the client’s account for excise duty of Rs.2.50/- per
cheque and keeps the cheque book ready for the customer, as on his
advice.
The officer keeps and maintains the cheque book register
Cheque book inventory and cheque books issued are recorded in this
register. The account number for which the cheque book is issued and
the number of leaves are also recorded in this register when the cheque
book issued an entry is passed in the cheque book issue register.
Financial Analysis
Rupees (000)
Item 2000 2001 2002
Cash and balance 12571424 212559900 17867991
Balance with other bank 4757413 3025689 2154190
More at call and short notice 6064332 15470519 33874620
Investment 36480913 55432235 89609821
Advance 86312721 46584120 78923737
Fixed assets 3482950 3659646 3825045
Other assets 13862305 11400906 8883163
Total 174715063 187053515 235138567
Rupees (000)
Item 2000 2001 2002
Deposit & other account 135990147 154544451 182705716
Borrowing from bank 5856198 8946624 21987824
Bills payable 7803443 8097178 6261957
Others 8438055 8578240 9045634
Share capital 2202855 2423140 2665455
Preserve 12277630 2278980 3026517
Un-appropriated profit 3185 283940 621985
Surplus on revelation of 1188122 1900962 5384934
fixed assets
174715063 187053515 235138567
Rupees (000)
Item Increase (Decrease Increase (Decrease)
Amount %age Amount %age
Cash 8688476 69.11 (339109) (15.95)
Balance with other bank (1731724) (36%) (871499) (28.80)
Money at call and short notice 4618425 42.55 18404101 118.96
Investment 12321288 28.58 341775896 61.65
Advance (9773140) (113.31) 2339617 3.05
Operating fixed assets 55290 1.53 165399 4.51
Other assets (1803004) (13.65) (2517743) 22.8
Rupees (000)
Item Increase (Decrease) Increase (Decrease)
2000-2001 2001-2002
Amount %age Amount %age
Deposits and other account 18554304 13.64 28161265 1822
Borrowings (7944051) 47.03 13041200 145.76
Bills payable 293735 3.76 (1835221) 22.66
Other liabilities 142064 1.68 467394 5.44
Share capital 220285 9.99 242315 10
Reserve fund & other 1350 0.5 747537 32.81
reserves
Un-appropriated profit 2800775 8814.9 338045 119.05
Surplus on revaluation of 791889 71.40 3483972 183.27
fixed assets
Rupees (000)
Items 2000 2001 2002
Cash 7.21% 1137% 7.60%
Balance with other bank 2.73 1.61 0.92
Money at call and short notice 6.22 7.75 14.41
Investment 24.71 29.67 38.11
Advance 49.50 41 33.56
Operating fixed assets 2.07 1.95 1.62
Other assets 7.57 6.10 3.78
Total 100% 100% 100%
Rupees (000)
Items 2000 2001 2002
Deposits and other account 77.84% 82.62% 78.85%
Borrowings 9.67 4.78 9.49
Bills payable 4.47 4.32 2.70
Other liabilities 4.83 4.59 3.90
Share capital 1.26 1.30 1.15
Reserve fund & other reserves 1.30 1.22 1.30
Un-appropriated profit .0018 .15 .27
Surplus on revaluation of fixed .63 1.02 2.32
assets
Total 100% 100% 100%
Rupees (000)
Items 2000 2001 2002
Interest / return earned 1424242 17033225 15385869
Fees, commission 909045 868637 907071
Income from dealing foreign 609838 687854 503593
currency
Dividend income 158909 243994 297748
Other income 1085614 400140 881746
Total 16887648 19233850 17976027
Rupees (000)
Items 2000 2001 2002
Cost / return on deposit 7238680 7544897 6074682
Administrative expense 7128658 7331623 8077395
Provision for diminution the 46048 62064 -
value of investment
Provision against non- 601799 1704944 -
performing advance
Other provisions 30000 40000 -
Bad debts 483943 448999 721105
Other charges 36725 147 1313
Profit before tax 1321795 2101176 3101020
Taxation 587066 993000 1362426
Total 17474714 20226850 19337941
Rupees (000)
Item Increase (Decrease) Increase (Decrease)
2000-2001
2001-2002
Amount %age Amount %age
Interest / return 2908983 20.60 (1647356) (9.67)
earned
Fees, commission (40408) (4.44) 38434 44.42
etc.
Income from dealing 78016 12.79 (184261) (26.78)
foreign
Dividend income 85085 53.54 53754 22
Other income (685204) (63.11) 481606 120.35
Rupees (000)
Item Increase (Decrease) Increase (Decrease)
2000-2001
2001-2002
Amount %age Amount %age
Cost/return on 306217 4.23 (1470215) 19.48
deposit
Administrative 202965 2.84 745772 10.17
expense
Provision for 160126 34.78 (62064) (100)
diminution
Provision against 1103145 183.30 (1704308) (100)
non-performing
advances
Other provisions 1000 33 (4000) (100)
Bad debts (34944) 7.22 272106 606
Profit before tax 779381 58.96 999844 47.58
Tax 405934 69.14 369426 37.20
PERFORMANCE 1993-2002
The following figures will give an idea of the progress made after
privatization.
(Rs. In million)
1993 2002
Authorized share capital 2000 3500
Paid-up share capital 663 2665
Reserve funds & other reserves 12010 3027
Total assets (excl. contra) 75427 235139
Deposits 62783 182706
Advances 30753 78924
Investments 27864 89610
Imports 32734 48842
Exports 16931 28284
Home remittance 3023 32962
Pre-tax profit 346 3103
No. of branches 1290 1045
No. of employees 13768 10926
No. of accounts 3411427 4463530
LIABILITIES
EXPENSE
■ Return on deposit decreases which shows good sign and it is
due to decrease in return rate.
■ Adm and diminution and provision against non performing loan
decreasing turned that is favorable.
■ Bad debts increased with huge amount not positive sign.
■ Profit before taxation has increased with greater proportion.
■ Tax increases which are not bad because it is interrelated with
profit, if profit increased, tax also increase.
VERTICAL ANALYSIS
INCOME
■ Interest earned decrease which is negative sign.
■ As we know that banks provide many facilities other than
money lending and borrowing. Banks receive fee, commission
etc. for these services. Therefore fee and commission income
are increasing which is good and favorable signs.
■ Divided income increased but it is very small.
■ Other income increase with great proportion good sign.
EXPENSES
■ Return on deposit decrease good sign because it increases
the profit.
■ Administration expenses are increased but no alarming rate.
■ Position against non performing loan us zero which show bank
have good customer.
■ All provision is zero which sows the good credit policy.
■ Bad debt and other charges increased but the situation is not
alarming.
■ Profit increased.
■ Tax is increased but it is interrelated with profit.
Overall Review
The Bank has now completed more than 12 years, since its
privatization and it is, indeed, gratifying to note that during this period,
MCB has performed well and has sustained its growth in all the major
sectors. The well deserved credit, for this good performance and
progress, must surely go to the Bank’s management, its Directors and,
in no small measure, to the entire MCB team for its dedication,
concerted efforts and excellent team spirit.
Ratios Analysis
RATIO ANALYSIS
1. RETURN ON EQUITY
Rs. (000)
2000 2001 2002
N.P.A.T × 100 734729×100 1108176× 100 1738594× 100
Share holder equtiy 5592743 6887022 11698891
13.14% 16.09% 14.86%
2. RETURN ON ASSETS
Rs. (000)
2000 2001 2002
N.P.A.T ×100 734729×100 1108176× 100 1738594× 100
Total assets 5592743 187053515 235138567
0.42% 0.59% 0.73%
Rs. (000)
2000 2001 2002
N.P.A.T 73472900 110817600 173859400
No. of outstanding shares 220285500 242314075 266545483
3.33 4.57 6.52
4. RETURN ON DEPOSIT
Rs. (000)
2000 2001 2002
N.P.A.T 734729×100 1108176× 100 1738594× 100
Total Deposit 135990147 6887022 182705716
0.54% 0.71% 0.95%
7. RETURN ON DEPOSIT
Rs. (000)
2000 2001 2002
135990147 154544451 182705716
5592743 6887022 11698891
24 times 22 times 15 times
16.00%
This ratio is more meaningful for 14.00%
12.00%
share holders who are interested to
Percentage
10.00%
know the profit earned by the 8.00%
6.00%
company because the dividend paid 4.00%
from available profit higher ratio 2.00%
0.00%
means factor of production fully 2000 2001 2002
utilized and good position. Here ratio Ye ar s
Percentage
0.50%
4
This ratio got really improved as 3
0.60%
0.40%
0.20%
4. RETURN ON DEPOSIT
0.00%
2000 2001 2002
Return on deposit is increasing
Ye ars
trend which is favorable. This ratio
shows with the increase of deposit
the profit margin also increases.
Increase in return on deposit is
positive sign. This ratio has the same trend as the above mentioned
ratio of return on equity has which is a good sign for the Bank.
RATIO 2.60%
2.50%
Percentage
liquidity position of the bank. This 2.30%
2.20%
ratio is very low means that Bank 2.10%
has no idle fund but even low ratio 2.00%
WORTH 35
30
This ratio shows the 25
Percentage
40%
Percentage
30%
Percentage
8.00%
shows that interest income as 6.00%
Recommendation
From the Quantum of the profit and its financial data it can be
easily judged that after privatization, MUSLIM COMMERCIAL BANK is
performing well. Its deposits are growing day by day and so its
profitability. The controlling body is responsible for the productive
performance of the Bank.
• Most of the bank employees, are sticking to one seat only with
the result that they become master of one particular job and
loose their grip on other banking operation. In my opinion all the
conclusion
It is evident from this report and the financial statements of MCB
that it is making progress by leaps and bounds. The profits of MCB
have grown considerably during the last few years and this trend is
expected to continue into the future. Therefore, we conclude that MCB
has a very prosperous present and future, which assures the
shareholders of wealth maximization. Side by side of it I think that if
bank would be able to cover and control on the above mentioned
recommendations then it would be in such a situation that will really
lead it towards the road of prosperity, development and integrity. And
with the above mentioned sentences I think there is too fault of the
customers and in order to make the proper working of the bank the
customers should also cooperate with the bank which will be really a
good, ambitious and diligent condition for the bank. And then bank will
be really in such a situation and position to compete its competitors in
the country as well as on international level.