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Transcript of Internship Report Mcb
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HISTORY OF BANKINGHISTORY OF BANKING
Evolution of BankingEvolution of Banking
It has not so far been decided as to how the word ‘Bank’
originated. The explanation of this origin is attributed to
the fact that the jews in Lombardy transacted the business
of money exchange on banches in the market place and
when the business failed, the people destroyed the Bank.
Incidentally, the word ‘bankrupt’ is said to have been
evolved from this practice. The opponents of this opinion
argue that it was so, then how is that the Italian
moneychangers were never called ‘Banchierei’ in the
Middle Ages?
Other authorities hold the opinion that the word ‘Bank’ is
derived from the German word back which means joined
stock fund. Then ‘Back’ was Italianize into ‘Bank’.
Early GrowthEarly Growth
Banking in fact is as primitive as human society for
eversince man came to realise the importance of money as
a medium of exchange. Perhaps it was the Babylonians
who developed banking system as early as 2000 B.C. It is
evident that the Temples of Babylon were used as ‘Banks’
because of the prevalent respect and confidence in the
clergy.
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King Hamurabi ( 1728 – 1686 B.C ), the founder of the
Babylonian empire, drew up accede where in he laid down
standard rules of procedure for banking operations by
temples and great landlords. He got his code inscribed on
the block of diorite about 8 feet tall, containing about 150
paragraphs which deals with nearly all aspects of loans,
interest, pledges, guarantees, natural accidents, loss, theft
etc. Later on Sumerians, Babylonians, Hitties and
Assyrians standardised the values of the goods in silver,
copper and bronze.
It is not certain as to whom invented money but history
recess that king of Lydia castled electrum ingots of
identical shapes and of uniform weights with a triple
emblem engraved on it as an official guarantee of value in
687 B.C. In 1401 a German public bank was framed
comprising the operations of discounting and transferring
of money. By the 16th century, some more public banks
were formed in Venice, Milan, Amsterdam, Hamburg and
Nuremburg. In order to streamline Banking organisations
and techniques, conferences were held in Nuremburg
from 1548 to 1551 and it was agreed that the commercial
interest of the time needed a bank with facilities of growth
and transfer but it should not be a bank run by private
individuals. Ultimately in 1587, a State Bank under the
name of banco DI rialto was formed in Genoa. Later the
bank of Amsterdam was also formed in 1609. This Bank
had a guarantee by the State and rendered valuable
services to the Netherlands traders upto the year 1795.
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Similarly in 1690, the Bank of Hamburg came into
existence in Hamburg with the business of accepting
deposits of fine silver or of foreign money and to run
accounts on these deposits. This Bank rendered great
service to the merchants as well as countries it dealt with
until 1873, when it was merged with the Reich bank. By
the year 1700, the bank of England was not only issuing
notes but also conducting accounts for customers. Its
directors were conducting the business like that of limited
companies. The bank had the monopoly of issuing banking
notes. Upto 1813 or there about in England, the main
profit of bank was derived from the circulation of notes.
Development of Modern BankingDevelopment of Modern Banking
In 1918 came into being eleven clearing banks of today.
The effect of this historical development of banking in
England has been fairly wide. First, emergence of a small
number of large banks with wide network of branches.
Second, increase in the popularity of bank accounts and a
large-scale use of cheques.
In 1946, the labour government nationalised the bank of
England and transferred the existing stock to the nominee
of British treasury. In 1955, the British Banks made a
departure from traditional banking by undertaking hire-
purchase finance for companies buying industrial plants
and machinery and took interest on hire-purchase finance.
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Banking In PakistanBanking In Pakistan
At the time of independence, there were 631 offices of
scheduled banks in Pakistan, of which 487 were located in
West Pakistan alone. As a new country without resources
it was very difficult for Pakistan to run its own banking
system immediately. Therefore, the expert committee
recommended that the Reserve Bank of India should
continue to function in Pakistan until 30th September
1948, so that problems of time and demand liability,
coinage currencies, exchange etc. be settled between
India and Pakistan. The non-Muslims started transferring
their funds and accounts to India. By the end of June 1948
the number of officers of scheduled banks in Pakistan
declined from 631 to 225. There were 19 foreign banks
with the status of small branch offices that were engaged
solely in export of crop from Pakistan, while there were
only two Pakistani institutions, Habib Bank of Pakistan
and the Australasia Bank. The customers of the bank are
not satisfied with the uncertain condition of banking.
Similarly the Reserve Bank of India was not in the favour
of Govt. of Pakistan. The Govt. of Pakistan decided to
establish a full-fledge central bank. Consequently the
Governor-general of Pakistan Quaid-I-Azam inaugurated
the State Bank of Pakistan on July 1, 1948. Thus a
landmark was made in the history of banking when the
state bank of Pakistan assumed full control of banking and
currency in Pakistan.
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The banking structure in Pakistan comprises of the
following types.
1) State Bank of Pakistan.
2) Commercial Bank of Pakistan.
3) Saving banks.
4) Co-operative banks
5) Specialised credit institutions.
Up to December 31, 1973, there were 14 Pakistan
commercial banks that functioned all over the country and
in some foreign countries through a network of branches.
All these commercial banks were nationalised in January
1, 1974, and were recognised and merged into the
following five banks:
1) National Bank of Pakistan
2) Muslim commercial bank limited
3) Habib Bank Limited
4) United Bank Limited
5) Allied Bank of Pakistan
The state bank of Pakistan is the Central bank of the
country and was established on July 1, 1948.The
separation of East Pakistan and its repercussion in the
form of economic depression has caused a lot of
difficulties to the banking system in Pakistan. The
network of bank branches now covers a very large
segment of national economy. The numbers of branches
have increased appreciably and there is now on branch of
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bank for every 3000 heads of population approximately.
There is done reasonable growth in deposits from the
establishment of Pakistan. Besides this growth,
specialised credit and financial institutions have also
developed over the years.
The Government of Pakistan in the late 90’s introducing
the need for the privatisation of state owned banks and
companies. The private sector has accepted the challenge
and most of the banks are privatised today. The State
Bank of Pakistan issues the shares of these periodically.
Bank employees and other common peoples can also
purchase these shares and earn profit.
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MUSLIM COMMERCIAL BANK LIMITEDMUSLIM COMMERCIAL BANK LIMITED
History of Muslim Commercial BankHistory of Muslim Commercial Bank
Muslim Commercial Bank (MCB) unfolds 52 years of
growth. MCB is not an overnight success story. The bank
started corporate life in Calcutta on July 9, 1947. After
the partition of the Indo-Pak Subcontinent, the bank
moved to Dhaka from where it commenced business in
August 1948. In 1956, the Bank transferred its
Registered office to Karachi, where the Head Office is
presently located. Thus, the bank inherits a 52-year
legacy of trust in its customers and the citizens of
Pakistan.
NationalizationNationalization
In January 1974, the Government of Pakistan nationalized
MCB following the banks (Nationalization) Act 1947,
Premier Bank Limited merged with MCB.
PrivatizationPrivatization
A wave of economic reforms swept Pakistan in the late
1990, introducing the need for privatization of state
owned banks companies. In April 1991, MCB became
Pakistan’s first privatized bank. The government of
Pakistan transferred the management of the Bank to
National Group, a group of leading industrialists of the
country by selling 26% shares of the bank.
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In terms of agreement between the Government of
Pakistan and the National Group, the group, making their
holding 50% has purchased additional 24% shares. Now,
25% is purchased by the Government, which shall be sold
in the near future.
Board of DirectorsBoard of Directors
The board of directors has the authority in guiding Bank
affairs and in making general policies. Some directors are
the personnel of the MCB Bank and others are successful
businessperson and executives of other major
organization. Ten members are included in board of
directors, see in a list.
Mian Muhammad Mansha Chairman and chief Executive.
Mr. Tariq Rafi Vice Chairman
DirectorsDirectors
Ten directors are:
1) Mr. S. M. Muneer.
2) Sh. Mukhtar Ahmed
3) Mr. Muhammad Arshad
4) Mr. Shahzad Saleem
5) Mr. Raza Mansha
6) Mr. Sarmad Amin
7) Mr. Umar Mansha
8) Dr. Aleem Mehmood
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9) Mr. Tanveer Ali Agha
10) Dr. Najeeb Samie
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Structure of MCBStructure of MCB
PRESIDENT AND CEO
EXECUTIVE EXECUTIVEDIRECTOR DIRECTOR
INT SAMG INSPECTION OPERATION GSDDIV & FRAUD FORGERY
CONSUMER CORPORATE HRD BANKING BANKING GROUP GROUP
(continued)
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CONSUMER CORPORATEBANKING BANKINGGROUP GROUP
GENERALMANAGER
REGIONALMANAGER
CHIEFMANAGER
MANAGER
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Structure of MCB – General Bus Stand Structure of MCB – General Bus Stand Branch (1412)Branch (1412)
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Overall performance Of MCB in 1998Overall performance Of MCB in 1998
Net ProfitNet Profit
Profit after taxation in 1998 was Rs. 399.2 million, an
increase of 67% from Rs. 238.8 million in 1997. Since a
complete provision for non-performing assets has been
made, the balance of the bank now reflects its true
strength. For the first time after MCB’s privatization in
1991, a dividend of 15% was declared last year. It gives
me great pleasure to state that for the year 1998 it has
been decided to announce an increased dividend of 17.5%.
Reserve Fund/EquityReserve Fund/Equity
A sum of Rs. 79.8 million has been transferred to
Statutory Reserve this year, raising the total Reserves to
Rs. 1,796.6 million at the end of 1998, from Rs. 1,716.8
million as last year.
DepositsDeposits
Deposits with the Bank at the end of year 1998 stood at
Rs. 123.8 billion as compared to Rs. 124.4 billion in 1997.
The reason for this slight decrease of 0.4% was the
withdrawal of Foreign Currency Accounts as a result of
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Government’s decision to freeze Foreign Currency
Accounts in May 1998. Let me assure you with confidence
that the depositors have complete faith in MCB, which is
evident from the fact that in the very first month of
launching the MCB Maal-a-Maal Rupee Deposit
Certificates Scheme attracted Rs. 7.6 billion.
AdvancesAdvances
Total Advances at the end of 1998 were Rs. 62.9 billion as
compared to Rs. 64.4 billion in 1997 showing a fall of
2.3%. This is mainly due to the slowing down of economy
following the events described above, as well as, in
keeping with our policy of prudent lending.
InvestmentsInvestments
Investments slightly declined by 0.2%. The current policy
of the management is to dispose off Investment in shares
of listed and unlisted companies at the best possible
prices.
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RecoveriesRecoveries
The recovery position in the year 1998 was most
encouraging. Bank recovered Rs. 1.04 billion in cash. The
bank also disposed off properties which were acquired in
settlement of accounts. The recovery of loans shall remain
a priority in 1999.
Foreign TradeForeign Trade
The bank conducted Import business during the year
amounting to Rs. 54.0 billion as compared to Rs. 56.4
billion in 1997. The export business slightly improved to
Rs. 36.9 billion from Rs. 35.1 billion in 1997. Home
remittances declined to Rs. 16.7 billion from 30.6 billion.
The decline in home remittances business was due to
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freezing of Foreign Currency Accounts, which has effected
the confidence of the Pakistanis working overseas.
Rupee Travellers ChequesRupee Travellers Cheques
Muslim Commercial Bank who are pioneers of Rupee
Travellers Cheque in Pakistan maintained their leadership
position and sales recovered during the year 1998 were
Rs. 67 billion an increase of 57% over the previous year.
Human ResourcesHuman Resources
To induct fresh blood in the bank and cater for future
needs, a new batch of management trainees was selected
strictly on merit. After thorough training these offices
have been inducted in various divisions and branches.
Attention was paid to upgrade operational and managerial
skills of staff and a number of professional courses were
conducted at MCB Staff and Training Institutes during the
year. We have continued our programme of hiring of some
senior level Banking Executives from the market,
wherever necessary.
Year 2000 ComplianceYear 2000 Compliance
The management and the staff of relevant divisions are
fully aware about the Millenium issues. All the core
computer systems operating in MCB are in full
compliance. All the necessary steps had been taken and
MCB was very much aware about the Y2K bug.
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AutomationAutomation
The progress is as per plan. At the end of 1998, 75
branches were online and 241 branches have been
computerized with multi terminal systems. 66 ATMs were
in operation and over 50,000 ATM Cards had been issued.
The commercial cities of Faisalabad and Multan were
added on the MCB ATM Network. Plans are in hand for
expanding the online network to major cities and covering
all the four provinces thereby providing the ATM network
true national coverage and maintaining our in this service.
Social SectorSocial Sector
The bank had been actively participating in ex-Prime
Minister’s Self Employment Scheme (SES). The
applications received from various applicants were being
processed on merit and disposed off as quickly as
possible. Nowadays, no new loans are being granted as
per the order of Chief Executive of Pakistan.
Foreign OperationsForeign Operations
Our bank’s foreign operations in Bangladesh and Sri
Lanka continue to remain profitable. In April 1999, the
bank opened its third branch in Sri Lanka at Maradana a
suburb of Colombo.
Our country is passing through a critical phase of its
history. Pakistan’s economy continues to remain under
pressure as it adjusts to new economic challenges and
realities. The performance of the economy directly
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influences the performance of the financial sector. MCB is
cognizance of its role in the national economy, and will
continue to play its role as a lead bank.
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Chairman’s ReviewChairman’s Review
1998 was an eventful year for our country. Pakistan joined
the polity of nuclear powers and strategic imbalance
created in the region due to a nuclear test by a
neighboring country was restored.
The May 1998 Nuclear Test led to the imposition of
sanctions and suspension of multilateral assistance by the
leading Western Aid giving countries, putting the
Pakistan’s economy and balance of payment position
under severe pressure.
The Government of Pakistan took a number of far
reaching decisions in the wake of the Nuclear Test which
included freezing of Foreign Currency Accounts,
introduction of three Foreign Exchange rates and increase
in Petrol prices and Sales Tax.
Overall 1998 was difficult and challenging year for the
nation especially for trade and commerce and industrial
sectors.
However, as a result of various corrective measures taken
by the Government, the economy is now slowly coming
back to normal. According to a recent statement of the
Federal Finance Minister, the inflation rate has been
brought down to around 6% and the Foreign Exchange
Reserves which had touched US$ 440 Million in 1998,
were at US$ 1.8 Billion by the end of April 1999.
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In keeping with the W.T.O. requirement, the Government
also had to reduce the custom duty on Imports. There has
been a small drop in electricity tariff for industrial and
commercial consumers. The State Bank of Pakistan
reduced the Repo rates from 16.5% to 15.5% and then to
14%. This resulted in reduction in mark up rates by the
large commercial banks in April 1999, which is bound to
encourage higher credit growth.
The economy still faces major challenges. The growth rate
of economy has gone down to around 4% from 6%. The
Export target of US$10 billion for the current financial
year ending June 30, 1999, has been reduced to US$8
billion (this figure is static for the last few years now).
However, there is likely to be significant reduction in the
Trade Deficit during 1998-99.
A very significant achievement of 1998 was holding of
population census after 17 years, which was necessary to
formulate various socio-economic policies by the
Government.
Keeping with the above economic scenario in view, the
over-all performance of Muslim Commercial Bank, during
1998 can be termed as very satisfactory
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ADVANCES DEPARTMENTADVANCES DEPARTMENT
MCB provides the facility to the people who need advance
money to meet their requirements. For getting the
advance the following steps are there:
1) Information required by the bank
2) Preparation of credit proposals
3) Sanction advice
1.1. Initial Information Initial Information
Following information is required to be submitted to bank.
Nature & structure of borrower business.
Names of proprietors, partners or directors.
Detail of all firms or companies associated with borrower.
Financial condition of borrower business.
An assessment of his business abilities.
Accurate and upto date financial statements of last two years for comparison purposes.
Market report on the borrower where borrower has maintained an account with another bank, a report from his bank should also be obtained.
A report from credit standing bureau of State Bank of Pakistan.
2.2. Preparation of Credit ProposalPreparation of Credit Proposal
At first a formal application for credit approval is obtained
from the party along with complete group position. The
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party’s credibility report is obtained from the bank with
which the bank is doing its business. The party’s
credibility report is also taken from the Head office of
Trade Information Division.
For obtaining credit, party has to submit the last two
years Balance Sheet and Profit & Loss statement duly
attested by authorised auditors. If the party is also
involved in export or import business then the bank also
considers the data of three years about import & export.
Current debt and equity ratio is also calculated by the
bank. The type of data required to prepare the credit
proposal is to be gathered from the different departments.
Some data is obtained from the foreign Exchange
department. Some data is available in Advance
Department. The purpose of obtaining Credit should be
explained clearly. The securities offered by the party to
the bank are also evaluated. In case of pledging of
property in shape of land or building the complete
evaluation of the property should also be attached.
After all the necessary documents for applying for
advance is fulfilled by the party then the case is sent to
Manager for approval. If the credit limit is in his range
then he can decide over it otherwise the case is forwarded
to seniors. If there is any discrepancy then the party is
informed of it.
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3.3. Sanction AdviceSanction Advice
When the documents required are complete and there is
no ambiguity then the party is advised that their credit or
loan is approved and will be available to you soon. There
is a separate form for every annual approval or in case of
a new facility (See Annex - ).
The form contains following information:
Nature and amount of limit.
Purpose
Security/ Collateral
Margin (%).
Mark up/ Charges
Validity
Other Terms and ConditionsOther Terms and Conditions
1) The bank reserves the rights to revise / amend / modify the rates of mark-up commission or any other conditions of the liabilities within the period so decided by the Bank.
2) The bank shall have full authority to cancel the facilities allowed without assigning any reason and to call for adjustment of the liabilities within the period decided by the bank.
3) The facilities granted are subject to SBP’s Prudential regulations.
4) The hypothecationed goods, building and machinery must be insured at all times against the risk of fire, riots, strike, burglary, malicious damage risks withthe bank as the mortgage and yourself as a mortgager, and the relevent policy held by us.
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5) Assets hypothecated to the bank will have to be insured at all times for full market value. The insurance policy will be made in the joint name of the company and the bank. The relevent insurance policy will be held by the bank along with the premium payment receipt.
6) Stock statements together with a list of book debts are to be submitted at the end of each month to reach us by the first week of the following month.
7) The bank would undertake the inspection of stocks from time to time and in any case atleast once in the calendar year.
8) SBP has imposed Prudential regulations on all the banks. These facilities are being offered withthe understanding that your company’s financial condition will comply with these regulations.
9) Audited accounts should be submitted to the bank within six months of date from the date of your financial year end.
10) All levies and taxes now or at any time hereafter levied and payable in respect of the financial accommodation and banking facilities set out in this letter will be exclusively borne by you.
11) All requisites charge forms to be submitted duly filled in and signed by the authorised persons.
12) For any change in any ownership, prior permission of bank shall be obtained otherwise existing owners shall also continue to be liable.
13) In normal banking practice the facility is repayable on demand and we reserve to ourselves the right to vary the terms and condition or ask for repayment if circumstances arrive which in our opinion justify our doing so.
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Types of AdvancesTypes of Advances
MCB provides advances, which are of two types. These
are as following:
Fund Based Advances
Non Fund Based Advances
1.1. Fund Based AdvancesFund Based Advances
Funds are given to customer according to their
requirement against securities.
These loan are given specially to traders, business, small
industrial units, including cottage industries,
agriculturists, thus ensuring an equitable distribution of
bank credit among various sectors of the country’s
economy.
There are following types of advances, which are given to
customer on fund basis.
1) Industrial loan
2) Commercial loan
3) Agricultural loan
Industrial LoanIndustrial Loan
Loans are given to industrial units including cottage
industries up to or less than RS. 20 million. Loans and
advances shall not exceed amount specified by marginal
restriction on the type of securities offered. Industrial
loans are granted to the manufacturing section of the
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economy including finance for fixed investments and
working capital requirements of small industries.
Loan Period
Loans are allowed for a maximum period of 5 years
including a maximum grace period of 1 year. In special
case up to 10 years also, depending upon the merit of the
case.
Commercial LoanCommercial Loan
Total principal amount of loans to a single
enterprise/borrower shall not exceed RS. 0.5 million.
Maximum maturity is 3 years, depending upon the nature
and type of advances, decided upon case to case basis.
Mark-up
Both for commercial and industrial loan, mark-up will be
charges as per existing rate, subject to changes from time
to time. Presently it is 0.51 RS per day per RS. 1000/-.
Mode of Repayment
Equal monthly, quarterly or half-yearly, repayment of
principal and interest or as per term of approval.
Securities and Margin
Loans can be made against any or more of the following
securities mortgages of immovable property (land and
building), pledge of stocks, raw materials, and finished
goods, hypothecation of stocks, raw material, and finished
goods, State bank of Pakistan guarantee.
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Types Of Advances by MCBTypes Of Advances by MCB
1. Fund based Advances1. Fund based Advances
Following are the Fund based Advances:
Running Finance(RF)
Cash Finance(CF)
Finance against imported goods(FIM)
Export Refinance part-I (Pre-shipment)
Export Refinance Part-II
Finance against purchase collection(FAPC)
Finance against foreign bills(FAFB)
Foreign bill purchases(FBP)
Local Manufacturing Machinery(LMM)
Payment Against Document(PAD)
Demand Finance(DF)
Khud Rozgar Scheme
The detail of above-mentioned items are given below:
a.a. Running Finance (RF) Running Finance (RF)
The max time of repayment is one year. It is according to
will of customer. This type of advances are given to Trade,
Commerce and manufacturing general purposes. These
finances as evident by the name are given to meet their
daily needs. The mark up is charged on daily balances.
Normally 0.54 paisa per thousand is charged on daily
basis. It is drawn through cheque.
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b.b. Demand Finance (DF)Demand Finance (DF)
The duration of DF is more than running or Cash Finance.
These are made in Lump sum and are there is a
permission to repay the amount in periodic instalment.
Upon receipt of documents negotiated by the seller bank,
the opening bank makes sure that documents are
according to terms and conditions of the credit. Bank
makes the payment to the party against document and
upon expire date, bank receives back money with mark up
rate.
c.c. Payment Against Document (PAD)Payment Against Document (PAD)
LMM funds are provided by the SBP. The bank provides
the facility to the businessman who wants to buy the local
manufactured machinery.
d.d. Local Manufacturing Machinery (LMM) Local Manufacturing Machinery (LMM)
It is a long term financing. MCB also gives loan under the
head of demand finance to individuals, industrial units and
commercial business etc. This is a type of secured loan
and demand loan is never allowed without security.
e.e. Foreign Bills Purchases (FBP)Foreign Bills Purchases (FBP)
The exporters, which are under L/C are also provided with
the facility of loan. Amount is given to the exporter after
the approval of L/C by the issuing bank.
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f.f. Cash Finance (CF) Cash Finance (CF)
MCB gives the facility of cash credit to the business. The
borrower gives a specific reason for the need of cash. The
amount is passed through voucher and credited to party’s
account. Normally 0.52 paisa per thousand is charged on
daily basis to customers.
g.g. Finance against Imported Goods (FIM)Finance against Imported Goods (FIM)
These types of advances are granted against the pledge of
imported goods. These goods are pledged by the bank.
Bank pays all the charges to customs and keeps the goods
in its control. The bank releases the good on payment
from the client to bank.
h.h. Export Refinance Part-1 (Pre-Shipment)Export Refinance Part-1 (Pre-Shipment)
The government pursues the banks to provide the loanto
the exporters to promote the export. The bank provides
this type of advance facility to only those exporters who
have not enough money to make shipment. Bank provides
the loans to the customer at the rate of specific % for
period of 150 days.
i.i. Export Refinance Part-1 (Post Shipment) Export Refinance Part-1 (Post Shipment)
This means that the customer has enough amount to make
first shipment but not more. So the bank issues a loan to
the exporter. This financing is for period of 150 days.
Finance is provided by the SBP to the exporters for
purchase of raw material, its processing, Packing and
shipment. In case, if the party is unable to make the
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shipment within 150 days of financing. The party has to
pay certain amount of finance as asked by the SBP and
after 150 days the rate of mark up also goes up @ 51
paisa per thousand per day. So usually exporters try to
make the shipment within the fixed period set by the SBP
which is usually 150 days.
j.j. Export Refinance Part-11Export Refinance Part-11
In this case the bank after receiving the performance of
years in export business of party sets the limit for the
period of one year. Here the limit cannot be set by the
terms pledged of the permission of the bank.
k.k. Finance Against Purchase Collection (FAPC)Finance Against Purchase Collection (FAPC)
A bill may be purchased by the bank. If a client is in
urgent need of money and he has a bill whose clearance
may take a few days then he sells it to bank. Bank pays
the amount to the client after deducting its commission.
l.l. Finance Against Foreign Bills (FAFB) Finance Against Foreign Bills (FAFB)
Bank also provides finance against the foreign bills. This
facility is given to the exporter, if he needs an urgent
money. He gives bill of exchange to the bank as security
and bank sends these bills for collection and gives money
to exporter.
m.m. Khud Rozgar SchemeKhud Rozgar Scheme
Limit for loan
The limit of this loan is from Rs 10,000 to Rs 500,000
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Security/Pledge
A personal security is required to obtain loan otherwise anyother security will be required.
Total business assets will have to be hypothecated.
Mark up & return of loan
Mark up will be at the rate of 15 % for timely return of loan otherwise rate of mark up will be 16 % per annum.
The payment of mark up on loan will start after 12 months of payment of principal amount.
Eligibility of Applicant
1) The age of applicant should not be less than 19 years and he has not applied for any type of loan from any bank.
2) Applicant has been living in the residence shown as address for atleast one year.
3) Applicant is not the student nor the employee of any govt organisation.
Eligibility of Guarantor
1) He has been living at the given address atleast for one year.
2) He is not the employee nor the family member of MCB.
3) He is not the officer of any Govt organisation.
Fees for Loan
A fee of Rs 100 will have to be submitted which will be
non-refundable.
Important documents required
Two copies of application form (one original & one photocopy).
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Original Identity card will have to be shown. Similarly two photo copies of ID card will also be required.
Two passport size snaps of both applicant & guarantor.
Original & attested documents of asset of guarantor.
Conditions
The application of loan can be rejected in case of
incomplete or wrong information. Approved loan can be
cancelled. It should be informed that the rejection and
acceptance of loan are sole right of bank. If the rent of
loan is not paid for more than 3 months then the
remaining amount will be required to refund immediately
with 16 % mark up.
Agricultural LoanAgricultural Loan
Bank provides the agriculture advances in order to
enhance and support the agriculture sector of the country.
Bank’s Agriculture division deals with the agriculture
advances. These advances are of following types:
1) Farm Credit
2) Non Farm Credit
Farm CreditFarm Credit
These are the credits provided by the MCB or purchases
of inputs for development of agriculture sector. Following
are two main Sub classes of Farm credit:
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Production Finance
These are short term loans. These laons are provided to
farmers for purchases of different types of input, for
example seeds, fertiliser, and pesticides.
Development Finance
These are medium or long term loans. These loans are
provided for the development of agricultural sector. Main
Purposes of these loans are as under:
To purchase tractors
To purchase implements (Trolley, Threshers, Drill etc).
For installation of tube wells
For planting of gardens
Non Farm CreditNon Farm Credit
The second major form of agriculture advance is Non
Farm credit. These loans are provided to boost up
agriculture sector to provide the sources of earning of
foreign exchange as well as to provide employment
opportunities to people. These loans are provide against
mortgage of land as security or pledge of equipment as
collateral security. These are long term or medium term
investment depending upon the project.
Following are the different types of small industries for
which loans are provided to improve the economy of the
country.
Fish Farm
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Cattle Farm
Poultry Farm
Dairy Farm
2.2. Non Fund Based AdvancesNon Fund Based Advances
When an applicant for an advance cannot offer any
tangible security the banker may rely on personal
guarantees, letters of credit to protect himself against loss
on advance or loan.
There are two type of advances which come under Non
Fund Advances.
Guarantees.
Letter Of Credit.
Letter Of Credit is explained in Foreign Exchange
Department while Guarantees are elaborated below.
GuaranteesGuarantees
Introduction
Bank examines customer’s relation with the bank 7 the
nature of the business. Bank also sees his past business
with the bank. Sometimes bank issues Guarantee on the
behalf of the customer by getting some margin from him.
This margin may vary from customer to customer.
Requirements for Guarantee
Banks issue guarantee on the behalf of customers. Limit
proposals covering transactions should be submitted
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with full detailsfor the approval of appropriate sanctioning
authority.
Generally Guarantees are issued in favouring of Shipping
companies, Govt Departments guaranteeing specific
payments at future dates by customer on whose behalf the
guarantees are issued. While executing a guarantee, the
terms and conditions of the guarantee are closely
examined in order to determine the extent of bank
obligations and financial liability under the guarantee
and the type of guarantee, all condition are contained in
the guarantee.
Procedure
Bank charges a commission on the amount for which
guarantee is issued. Normally the validity period of
guarantee does not exceed one year. After the guarantee
has been issued, a copy of same is issued to the counter
guarantee issued to the customer.
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DEPOSIT DEPARTMENTDEPOSIT DEPARTMENT
Account OpeningAccount Opening
The general banking performs various functions among
them the first and most important function is A/C opening.
The process of opening an account is very simple and any
body who would like to open his account could do it easily
without any difficulty.
Types of AccountsTypes of Accounts
There are three types of accounts
CURRENT ACCOUNT
SAVING ACCOUNT
TERM DEPOSITS ACCOUNT
Procedure for Account OpeningProcedure for Account Opening
1) Application Form1) Application Form
The customer would like to open his account is required to
meet with the manager or second officer, who will give
him an “APPLICATION FORM” specifically used for
account opening. Separate colour-coded Application
Form is available for each type of account. So that a
particular coloured form is given to the customer to fill in
for opening a related account.
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2) Specimen Card2) Specimen Card
As I have already mentioned about “SIGNATURE
SPECIMEN CARD”. This card contains three signatures
of an applicant, applicant A/c no, A/c type, branch code,
title of A/c, it will be attached with an application form.
Banker uses this card at the time when he receives the
cheque; he compares customer’s signature with the
signature on the cheque for avoiding fraud.
Manager has every right not to accept this contract if he
is not satisfied by the details provided by the customer.
3) Account Opening Register3) Account Opening Register
The manager records the necessary details into this
register and allots an a/c number from this a/c opening
register. This register is maintained for each type of
account and the a/c numbers are allotted serially. After
opening a saving and current account every applicant’s
data is entered into the computer to maintain a safe
record and application form is properly filled so that it can
be available when necessary. For fixed deposit only that
application form is needed which is prepared manually,
because most of the procedure of fixed deposit is done
manually.
4) Cheque Book4) Cheque Book
Cheque book is issued to the customer when the bank
accepts the A/C opening application form.
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Types Of CustomersTypes Of Customers
1) Individual1) Individual
Only one person can operate this a/c. We can call it a
personnel or individual a/c.
2) Joint2) Joint
In case of joint A/c, applicant mentions that how much
person will operate the A/c. Instruction are given for joint
A/c such that the account shall be operated by
a) Any one of us or survivor. a) Any one of us or survivor.
In first case if one of the a/c holders died then the other
can operate the a/c individually.
b) Any two/All of us jointly.b) Any two/All of us jointly.
In second case if one of the a/c holders died then the other
partner can’t operate this a/c individually without having
permission from the court.
3) Partnership A/C3) Partnership A/C
For partnership a/c, along with the application form
signature card. Other documents are also needed such as
Registration Certificate
Agreement among partners
Commencement of business
NoteNote
In case of addition or withdrawal of any partner a new
agreement will be required.
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4) Company Account4) Company Account
For company accounts following documents are required:
-
Private registration
Resolution of board of directors
Commencement of business
Memorandum and Articles of Association
Balance sheet
Letter of ThanksLetter of Thanks
Bank prepares two ‘LETTER OF THANKS’ one for the new
customer and the other for his introducer. This act
promotes good will among the customer and the
introducer.
Closing of an AccountClosing of an Account
There are no. of reasons of closing an account. Some are
listed below:
1) If customer desires to close his account
2) In case of death of one account holder.
3) Bankruptcy of the account holder.
4) If an account contain nil balance or not up to the requirement of rules.
Before closing any account, bank send letter to the
account hold for informing him that his account is going to
be closed. There is need an approval form higher
authority to close any account.
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Importance of Deposits for BankImportance of Deposits for Bank
The primary economic function of the commercial bank is
to receive surplus income of individuals, firms, public
houses, institutions, companies and to honour cheque
drawn upon it. Deposits are to bank as a backbone is to
the body of a man. It is the lifeblood of a bank. The
deposits of a bank are useful in many ways.
The bank borrows money from the general public by
accepting deposits by offering suitable rates of interest to
them or simply promise to repay on demand.
Types Of Accounts in MCBTypes Of Accounts in MCB
The fund deposited in the MCB bank can be classified
under the main heads:
CURRENT OR DEMAND DEPOSITS
SAVIGN DEPIOSITS
FIXED OR TERM DEPOSITS
CALL DEPOSITS
1) Current Deposits (Or) Demand Deposits1) Current Deposits (Or) Demand Deposits
Current deposits are those which are payable to bank whenever demanded by the customer.
Bank does not pay any profit on current deposits.
There are of different scheme of saving deposits, which are classified under different duration purpose and rate of interest.
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Rules for Current AccountRules for Current Account
Current a/c holder opens Current Accounts on proper
introduction only. However, introduction of a PLS Saving
Account holder of repute may be accepted at the
discretion of the manager.
A) Minimum Balance
A sum not less then RS. 1,000/- in cash as initial deposit is
required for opening a current account and the same may
be maintained as minimum average running credit
balance.
B) Profit
No profit will be paid on credit balances held in current accounts.
The bank reserves the right to allow opening of current a/c at its description.
All deposits and withdrawal from a current a/c will take place only at the branch where the account is being maintained.
Current a/c cannot be overdrawn, except by prior agreed agreements with the bank.
The correspondence relating to current A/Cs should be addressed to manager of the branch where the account is being maintained.A
A distinctive number will be allotted to each current account and shall be quoted on all correspondence relating to the respective account and at the time of making deposits and withdraws
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C) Issuance of Cheque Book
The Cheque book is issued against the valid requisition
slip signed by the account holder as per signature
provided by the bank. The account holder can draw sums
from his account by means of cheque supplied to him by
the bank for that particular account. In drawing cheques
the amount in words and figures should be written
distinctively and the cheque should be drawn in such a
way as to prevent the insertion of any other word or
figure. Account holder should take well care of the
cheque books issued to them. The account holder will pay
excise duty of Rs.4 per leaf to the government.
2) Saving Account2) Saving Account
Saving accounts are opened on proper introduction with
sums of credit balance within certain limit for individual
(single, joint) institutions, companies, educational
institutions etc.
MCB has introduced various schemes under saving a/c,
PLS ACCOUNT
CAPITAL GROWTH SCHEME
MAHANA KHUSHALI SCHEME
KHANM BACHAT SCHEME
KHUSHALI BACHAT ACCOUNT
MALA MAAL SCHEME
SAVING 365 ACCOUNT
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1. Profit and Loss Sharing Account1. Profit and Loss Sharing Account
PLS saving account having a running minimum credit
balance of RS. 1,000/- would be eligible for sharing
profit/loss of the bank. The bank would be within its
rights to make investment of credit balances in the PLS
saving accounts in any manner at its sole discretion and to
make use of the fund to the best of its judgement in the
banking business under the PLS system.
Withdrawals
Withdrawals from PLS saving account are allowed not
more than 8 times in a calendar month and for a total
amount not exceeding RS. 15000/- without the approval of
bank manager. For withdrawal of larger amount, 7 days
notice in writing is required to be given.
Profit/Loss
The profit/loss will be credited/debited on the basis of its
net working results at the end of each half-year.
Calculation of products on PLS saving A/c will be made for
each calendar month on the lowest credit balance of an
account between the close of business on the 6th day and
the last day of the month. If the balance is less than
Rs.100/- the product will be nil.
Rules for PLS
Account holder can only withdraw sums from his account by means of cheques supplied to him by the bank for that particular account.
Post dated and stale cheques shall not be paid.
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The bank reserve to itself the rights to close any account without previous notice any account which has not satisfactory account credit balance.
If the account holder withdrawals the money under 7 days notice, the profit loss earning products will be computed on the monthly minimum balance. Zakat is deducted every year on non-exempted accounts.
2. Khanam Bachat Scheme2. Khanam Bachat Scheme
Target Market
Individuals planning to save funds for education & marriages of their young sons /daughters.
Individuals interested in long term deposits.
Individuals in low class middle group.
Individuals showing confidence in Bank’s long term schemes than schemes of similar maturities offered by others.
The loving parents that want best for their children.
Deposit Amount
We will have to deposit Rs 1000 on monthly basis t the
time birth of your baby or at later stage. It will continue
for upto 10 years without making any withdrawal.
Conditions
The account can be opened singly or jointly.
Account in the name of miner can be operated by mother, father or jointly as guardian.
No advance can be extended against a minor account.
If anybody withdraws prematurely then profit will be calculated on prevailing PLS account.
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The bank reserves the right to refuse any depositor in the scheme without giving any reason.
This account can be opened in any MCB branch.
Interest
The interest is given on yearly basis.
Tax & Zakat will be deducted according to rule at the time of maturity and payment.
3. Mahana Khush-hali Scheme3. Mahana Khush-hali Scheme
Target Market
Individual interested investing for five years saving schemes.
Individuals who want monthly return on investment.
Middle class income group.
For the persons residing abroad and family in Pakistan.
For retired persons who want regular monthly return on investment.
Conditions
Minimum amount required is Rs 25000 and Maximum is Rs 1 million.
This scheme can be adopted by individuals ( Single or Joint) in their names.
This certificate will mature after 5 years.
Interest
The bank will give profit on monthly basis.
Zakat is deducted on payments and profit according to government rules.
Services
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We 7 our nominee can collect cross pay order.
Profit amount can be send to you by postal money order & demand draft.
Profit will be paid from that branch where you have opened Khush-hali Account.
If a customer has a saving or current account in this bank then profit can be deposited in that account.
The following table gives the monthly returns on various
amounts, based method of calculation.
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AMOUNT (Rupees) MONTHLY PROFIT (Rupees)
1,000,000 10,830
500,000 5,416
100,000 1,083
50,000 541
25,000 270
In Case of Premature Encashment
The following rates of profit will apply:
If the certificate is held for less then 90 daysNo profit
If the Certificate is held for 3 months but less than 6 months PLS rate
If the Certificate is held for 6 months but less than 1 yearPLS rate
If the Certificate is held for 1 year but less than 2 yearPLS rate
If the Certificate is held for 2 year but less than 3 yearPLS rate
If the Certificate is held for 3 year but less than 4 yearPLS rate
If the Certificate is held for 4 year but less than 5 yearPLS rate
4. Khush-hali Bachat Account4. Khush-hali Bachat Account
Target Market
Individuals who want to pay dues of insurance, HBFC& instalment.
Individuals living abroad but their families are in Pakistan.
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Busy individuals who don’t have time to pay their dues monthly.
Special Incentives
Return is calculated on daily average balance.
Profit is paid half yearly.
It can be operated at mostly all the branches of MCB.
5. Capital Growth Certificate5. Capital Growth Certificate
MCB has a risk-free return scheme by which your capital
can grow to nearly double the amount in just a few year
time. All that is required is a minimum amount of deposit.
At the end of the stipulated period, the bank returns close
to twice as much.
Target Market
Individuals interested in medium term saving schemes.
Individuals of middle income class group.
Individuals keeping excessive balance in current accounts.
Individuals interested to save fund for lump sum, education & marriages.
Individuals seeking protection against increasing inflation rate.
Conditions
Minimum deposit will be Rs 10,000 with no limit for maximum.
Time span is minimum five years can be expanded to 5 years.
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Interest
Initial Deposit(Rupees)
Payment upto maturity (approx.)(Rupees)
10,000/- 20,000/-
50,000/- 100,000/-
100,000/- 200,000/-
1,000,000/- 2,000,000/-
In case of premature encashment of certificates, the depositor will be given “PLS Saving Accounts “ profit rates declared by the bank for that particular period.
Depositors will be required to fill in Account Opening Forms.
6. Fixed deposits6. Fixed deposits
Fixed deposits are those deposits which are by the bank
under the conditions that they will not be payable on
demand but will be payable under fixed or determinable
future time date.
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FOREIGN EXCHANGE DEPARTMENTFOREIGN EXCHANGE DEPARTMENT
ImportImport
This department provides the facility to their customers to
import machinery or products from other countries. It is
necessary for the importers to have the licenses, which is
issued by the chief controller of imports and exports.
Before obtaining an import license the license must be
registered with the chief controller of import and export.
For having the license, an individual or firm submits the
application through his bank.
Documents RequiredDocuments Required
Filled application form for Register
The National Identity Card of the applicant
National Tax Certificate issued by the Income Tax department
In case of firm or company, the Memorandum and the Article of Association.
Banker issues the letter of credit normally in the response
of the Performa Invoice. The seller sends this invoice to
the buyer and it contains seller name, product quality.
Rate, mode of shipment, and other terms and conditions.
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Letter of CreditLetter of Credit
Definition of letter of creditDefinition of letter of credit
A letter of credit is a written instrument issued by a bank
authorising the seller to draw in accordance with certain
terms and stipulating legal forms, that all such bills will
be honoured.
Explanatory DefinitionExplanatory Definition
A letter of credit consist of an undertaking by an issuing
bank that bills drawn by the exporter will be duly owner
provided the comply with the terms of credit.
Reasons For L/CReasons For L/C
1) The exporters are uncertain of the importer capacity to pay.
2) The importers are unwilling to pay the amount unless the goods are actually shipped and the documents received by the bank.
3) In case of non-payment the seller should be assured to legal rights in foreign country.
4) There should be an agency, which should meet the seller’s need of finance when the goods are shipped.
5) The commercial banks come to the help of exporters and importers.
6) The importers can undertake the obligation to pay to the exporter for the purchase made by the importer and this is usually done through a letter of credit.
ExplanationExplanation
A letter of credit is a:
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1) Written undertaking by importers bank to a third party i.e. the exporter.
2) That it will be pay or accept draft (letter of credit) drawn upon it up to a started sum of money within a specified time.
3) That the payment will only be made to the exporter if he complies with the specified terms of credit.
Parties Involved in a Letter of CreditParties Involved in a Letter of Credit
There are four parties involved in a letter of credit
Account party
Issuing party
Exporter
Paying or negotiating bank
Account party or ImporterAccount party or Importer
The buyer or the importer on whose account and request
the letter of credit is opened is known as account party.
Issuing partyIssuing party
The bank, which issues or opens a letter of credit at the
request of importer, it is called the issuing bank.
ExporterExporter
The seller or the party in whose favour the letter of credit
is draw is the third party and it is also known as
beneficiary.
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Paying or negotiating bankPaying or negotiating bank
The paying bank in the exporter’s country on which the
draft is drawn is called the paying bank.
Operation of a letter of creditOperation of a letter of credit
1) The importer of buyer contacts the seller in foreign country for the purchase of a particular good or goods.
2) He settles with the seller the quantity and quality of the goods to be importer.
3) The sale contract also includes the method of payment.
4) The importer then submits an application to his bank for the issuing of an individual letter of credit.
5) The form on which the importer employees for a letter of credit is supplied by the bank.
6) This form contains all the necessary details discussed between the importer and exporter for the shipment of goods which include the description of merchandise, port of shipment, port of unloading, the documents against which the bank is the honour the draft, the total value of the goods etc.
7) If the documents supplied by the seller conform to the terms of contract the exporter will be paid.
8) The issuing bank will not be responsible if there is any fraud or the merchandise does not conform to the sales contract.
9) The obligation of the buyers bank is,
To issue letter of credit on agreed terms and condition with the buyer.
To have a proper examination of the documents.
To honour draft when presented with proper documents..
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Types of Letter of CreditTypes of Letter of Credit
1) Irrevocable letter of credit
2) Revocable letter of credit
3) Confirmed letter of credit
4) Unconfirmed letter of credit
5) Documentary letter of credit
1. Irrevocable letter of credit1. Irrevocable letter of credit
It is the one in which the issuing bank gives a lasting
undertaking to accept and in due course to pay bills
drawn upon it provided the exporter fulfils the terms and
conditions. It gives a complete protection to the exporter.
2. Revocable letter of credit2. Revocable letter of credit
It is the one in which can be modified or cancelled by the
issuing bank at any time without any obligation on its
part. They are not acceptable to the businessman.
3. Confirmed letter of credit3. Confirmed letter of credit
It is that which has the protection of the credit standing of
the importers as well as the exporter’s bank. The exporter
bank, which confirms the letter of credit, takes the
liability of paying in case the issuing bank fails to make
payment to the exporter.
4. Unconfirmed letter of credit4. Unconfirmed letter of credit
It is one under which the exporter’s bank does not give
any guarantee to the exporter that the bills drawn will be
honoured by the issuing bank. It is the commitment of the
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issuing bank to honour the draft. From the exporter’s
point of view, the confirm irrevocable letter of credit is the
best form of receiving payment.
5. Documentary letter of credit5. Documentary letter of credit
It is the one of which provides for bills to be accompanied
by documents of title to goods such as the bills of landing,
invoice, the policy of insurance etc.
How a letter of credit is opened?How a letter of credit is opened?
1) Application for a letter of credit
2) Line of credit
3) Opening of the letter of credit
4) Handling of the documents
5) Payment by the importer to the bank
6) Liability of the issuing bank
1. Application for a letter of credit1. Application for a letter of credit
An importer prepares an application on the prescribed
form available from the bank. The information which are
supplied in the application are based on the contract of
sale and include only the importer feature of contract such
as the value of the merchandise, port of shipment, port of
unloading, expiry date of the papers and brief description
of the goods. If the bank is satisfied with the applications,
it will signed and acceptance agreement with the
importer.
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2. Line of credit2. Line of credit
Before issuing a letter of credit, bank takes all necessary
precautions for securing its credit. The bank first
examines the customers credit standing, the type of goods
to be imported, the market demand for the goods, the
collateral offered to cover the credit. Then it establishes
the amount i.e. the line of credit.
3. Opening of letter of credit3. Opening of letter of credit
The letter of credit can be opened by mail or by cable.
When it is opened by mail, the issuing bank sends letter of
credit and to carbon copies to the importer. The importer
then dispatches the letter of credit to the exporter in
foreign country by mail. One carbon copy is kept for the
record. The second carbon copy after signing is sent to
the bank by the importer. If an importer directs the bank
to open letter of credit by cable, the importer’s bank sends
a cable to the corresponding bank in the foreign country
with a request to notify the exporter.
4. Handling of the documents4. Handling of the documents
When the exporter receives a letter of credit, he presents
the required documents and the draft to the bank in his
own country after shipping of documents. If the bank is
satisfied with the documents in the importing country and
pays the exporter at official rate in the currency of his
own country.
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5. Payment by importer to the bank5. Payment by importer to the bank
When a bank approves the application of a customer for
opening letter of credit, it does not lend money to the
importer. The bank only lends the importer to use the
credit standing of the bank to the exporter in the foreign
country. The bank makes a contract with the importer
that when the draft if send by the negotiating bank for
payment the importer will make the payment to the bank
not later then the day only the bank is to honour the
obligation. In case of a sight letter of credit the payment
to the corresponding bank is to be made on the day the
draft and documents are received. When the time of letter
of credit is used the importer is to arrange the payment
not later than the day on which the draft is to mature.
6. Liability of the issuing bank6. Liability of the issuing bank
The liability of the issuing bank is to examine the
documents in order to confirm their validity. If the
documents on the face appear to be in order the payment
should be released. If any defect is found in the
documents and the issuing bank honours the draft, the
importer can claim damages. The banker is not
responsible to see whether the merchandise conform the
sale of contract or they physically exist. The issuing bank
is only responsible for the completeness and regularity of
the documents relating to the letter of credit.
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Importance of Letter of CreditImportance of Letter of Credit
The bank charges nominal commission on financing the
import and export shipment.
Benefits to the BanksBenefits to the Banks
Increased balances
Commission
New business opportunities
Increased balancesIncreased balances
The balances are the lifeblood of every commercial bank.
The banks get mark up on the credit and this mark up increases the money of the bank
CommissionCommission
The commission charged by the banks varies with the
kinds of letters issued by them. Though the commissions
are small, yet when counted on the whole, they form an
important part of earning of the banks.
New Business OpportunityNew Business Opportunity
The letter of credit provides new business opportunity to
the bank. The firms, which are engaged in the export and
import of merchandise, are introduced to the banks, which
by serving them develop profitable relationship.
Opening of Letter Of Credit In MCBOpening of Letter Of Credit In MCB
Before opening of L/C certain requirements are necessary
that are
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The applicant must has import registration #
He must has account in that bank
He must pledges his security against the L/C amount
He must have IB-8 form, indent or agent form, and performance invoice.
Bank ChargesBank Charges
The bank takes commission @ 0.40 % of amount of L/C for one quarter and 0.25% for two or more quarters.
If L/C amount is low then minimum bank commission is RS 500/-
Postal charges are RS. 1200/-.
Stamp duty is calculated @ 0.50% of L/C amount.
Mark up is calculated at RS 0.50 per day per 1000.
For Collection For Collection
In case of sight payment service charges are calculated @ 0.10 % of bill amount and minimum charges are RS. 500/-and handling commission is RS. 500
In case of D/A L/C, commission is calculated @ 0.10 % per month
Advantages of Letter of CreditAdvantages of Letter of Credit
Advantages Of letter of credit to the importer and
exporter
Provision of finance
Credit standing
Legal right
Risk covered
Business expansion
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Bridges credit gulf
Payment in domestic currency
Shipping TermsShipping Terms
The following shipping terms are used in international
trade.
EX-works
FCA ( free carrier)
FAS(free along side)
FOB( free on board)
CFR(cost & freight)
CIF(cost insurance freight)
DAF(delivered at frontier)
DES(delivered EX-ship)
DEQ(delivered EX-quay)
DDU(delivered duty unpaid)
DDP(delivered duty paid)
DocumentsDocuments
Documents are the most important part of international
trade. Without them trade cannot be completed.
Documents are of five types.
1) Commercial documents
2) Transport documents
3) Insurance documents
4) Financial documents
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5) Official documents
1. Commercial Documents1. Commercial Documents
Commercial documents consist of following forms.
Invoice form
Certificate of origin
Weight note
Packing list
Quality or insurance certificate
2. Transport Documents2. Transport Documents
These documents are related with transfer of goods.
These documents consist of following forms,
Airway bill
Bill of lading
Rail consignment note
Roadway bill
Combined transport bill of lading
3. Insurance Documents3. Insurance Documents
Insurance documents consist of following forms.
Letter of insurance
Insurance policy
4. Financial Documents4. Financial Documents
These documents are concerned with the payments of
goods. These documents consist of following forms.
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Bill of exchange
Clean bill
Short bill
Documentary bill
Bank bill
Delivery against acceptance
Delivery against payment
Promissory note
5. Official Documents5. Official Documents
These documents consist of following forms.
Black listed certificate
Consular invoice
Health, Vetenary, Sanitation certificate
ExportExport
Usually the exporter does not rely on the credit of a
banker in the country of importer, and insist on a
confirmation from a banker carrying on business in his
own country. Thus this department of a bank helps the
exporters to settle down their financial affairs. For
exporting it is necessary for exporter to get export license
from the chief controller of import and export after
registration.
Documents are required for the registration such as N. I.
C. Card, income tax certificate, bank certificate which
shows that the exporter is his account holder and have a
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good dealing with them. In response to the letter of credit
exporter submit the following documents to the
negotiating bank.
Bill of exchange
Invoice
Bill of lading or Airway bill/railway receipt/truck receipt
Insurance documents
Packing list
Any other documents, if so required.
The negotiating bank will send the same documents to the
issuing bank. In accordance with the terms and condition
laid down in letter of credit.
Security of DocumentsSecurity of Documents
Whether documents received are meant for the opening
bank and specifically for the branch which established the
letter of credit. The documents would be negotiated
within the validity of L/C. The goods have been shipped
within the time allowed under L/C. The goods are
mentioned in invoice and other documents (e.g. bill of
lading, packing list etc) are in accordance with
merchandise clause L/C.
Whether the documents received pertains to L/C ,
established by the opening bank and the documents
negotiated are within or equal to L/C amount. In case
where the value of documents exceeds the L/C amount,
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the foreign bank may negotiate the documents for amount
being marginally excess or sends them on collection,
remittance may be allowed in excess subject to the
following conditions
The amount does not exceed 5% of the amount of L/C subject to the maximum of US$ 500/-
The importers holds a valid import license against which the excess amount is adjusted-provided remittance is effected within 1.5 year from the date of issue of import license.
The name of the importer on the Bill of Exchange does not
differ from that on the import license. The tenor of the bill
should be valid. See that the goods are not shipped prior
to the date of opening of L/C or the documents are not
stated.
The goods are consigned or endorsed in the favor of the
bank only opening the letter of credit, and in no case it
should be consigned to the importer directly.
Retirement of DocumentsRetirement of Documents
When the opening bank against a letter of credit receives
documents. The customer retires the documents under
different arrangements e.g.
Retirement against payment by the importer
Retirement of documents in case of None-payment by the importer
Retirement of documents under trust receipt
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Retirement Against Payment by the ImporterRetirement Against Payment by the Importer
The importer approaches the bank for retirement of the
shipping documents. Mark is calculated and recovered on
the bill amount for 230 days @ 12.55% for each RS. 100/-
or part thereof on payment against documents (PAD) for
intimation purpose only.
Entries Passed by the BankEntries Passed by the Bank
Debit importer a/c
Credit PLS-payment against documents A/C
Credit: PLS-income a/c mark-up recovered on PAD
Credit: telegram/telex/postage charges a/c.
Retirement of Documents under Trust ReceiptRetirement of Documents under Trust Receipt
Shipping documents are released to the importer on trust,
that he may get the goods cleared from the custom
authority by himself, sell the good, and later pay back the
bank. Trust receipt financing is limited to first class
customers only as the bank reposed fullest confidence on
the importer. Documents are obtained from the customer.
The finance is provided for the period of 45 days only.
Calculation of Amount of Finance
Rupee value of bill plus foreign bank charges plus taxes,
less SBP margin restriction = Amount of finance
Mark up is calculated @ 0.43 RS. Per 1000 per day on the
amount of finance utilized.
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After the retirement of documents the opening bank then
transmit the funds to the negotiating bank. The exporter
will receive the payment from the negotiating bank.
Export Re–FinancingExport Re–Financing
It is most important features of export. Export
refinancing is used to enhance the export of the country.
It was firstly started in 1977 and re-established in 1994.
Here the exporting companies can get advances at a very
low mark up i.e. lower then inflation rate. Banks get
advances from State bank at 6% and provide advances to
the exporting companies at 8% and 2% is spread of the
bank i.e. is the income of the bank. This export-
refinancing advance can only be used for export and not
for other purposes, state bank gets information about
export through E – form. There are two parts of export
refinancing.
P-1
P-II
P-1P-1
Two forms of P-1 are pre-shipment and port shipment
P-1 Pre-shipmentP-1 Pre-shipment
In P-1 pre-shipment companies make an agreement with
foreign companies and get loan from the bank to make
products and shipping them to foreign countries i.e. they
get advance before shipping the products.
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P-1 Post-shipmentP-1 Post-shipment
In P-1 the post-shipment companies make an agreement
with foreign countries and produce some of the products
and ship them and get advance from the bank to complete
the shipment.
P-IIP-II
In P-II pre-shipment companies get lumpsum for the
whole next year and the entire amount can be used to
export the products. The companies have to export
double than the advance gets through P-II shipment. In P-
II pre-shipment the lumpsum amount can be calculated on
the basis of performance of the last year. If a company is
unable to make double export than the advance, then bank
makes some penalty in the forms of amount against the
company.
Special ProductsSpecial Products
Export refinancing cannot be applied for exporting all
types of products. Some products are
Cotton cloth
Cotton products
Finished leather
Refined sugar
High quality yarn i.e. more than thirty count
Each company has different limit at a time and bank has
to make a report at the end of each month and one copy of
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that report is sent to state bank and one copy to head
office at Karachi. Different limits are,
Cash finance
Running finance
Demand finance
Export refinancing I
Export refinancing II
FAFB
FBP
Forms of Export Re Financing Forms of Export Re Financing
Different forms are required for export refinancing. These
forms are
Undertaking as per Annexe UT-DE-1
Form DE-1
Form DE-2
Original contract
Undertaking as per Annexe A
Certificate of non-availment of loan.
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CLEARING DEPARTMENTCLEARING DEPARTMENT
ChequesCheques
When we talk of cheques then there are two types of
cheques
1) Open Cheque1) Open Cheque
Open cheque has following properties:
The word Bearer is not crossed.
Cross stamp is not there
Cheque is not of limited companies.
Self or name should be written on the cheque.
Token Token
A token is given on open cheques when presented to bank
for payment. In this case payment is made at the spot to
the cheque holder. First of all cheque is presented to bank
for payment. The name of holder, no of cheque and
amount is written on the register by the bank employee &
token is given to cheque holder. Then Cheque reaches the
computer department. There it is again feeded in
computer & it is stamped after checking the holder has
enough amount in his account or not. After feeding in
computer ( debiting holder’s A/C ) , the cheque reaches
the cash department where the holder can receives his
cash by giving token to the cashier provided that he has
enough amount in his A/C.
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2) Crossed cheque2) Crossed cheque
When the cheque does not fulfil the requirement of open
cheque then it is known as crossed cheque.
A) Transfer DeliveryA) Transfer Delivery
When cheque has following properties then it is
proceeded as Transfer Delivery.
Cheque is crossed.
Cheque is of MCB.
Cheque is from local branch.
In this situation cheques are collected separately as
transfer Delivery.
Procedure
In Transfer Delivery following process is done.
First of all cheques are noted in Transfer Delivery Ledger
with the date in advance because it takes one day to reach
cheque issuing branch in the same city. In T.D Ledger
Name of account holder, Number & amount of Cheque
are written and two copies , one original and one carbon
copy of voucher SF-73 B are prepared. Original copy of
voucher along with cheque is send to issuing branch while
carbon copy and Pay-In-Slip is with the bank.
The cheque with voucher goes to Main branch then to
issuing branch and then reverse from issuing branch to
main branch and then to our branch.
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B) ClearingB) Clearing
In clearing the cheques which are
crossed
limited company
different bank in the same city
Procedure
Such cheques are collected as clearing cheques and are
noted in Clearing Ledger. Two copies of voucher SF-37
are prepared (See Annexe ) . Original voucher with the
cheques are send to Main branch which then send to S.B.P
in advance date. The payment is not given at hand but it is
transferred to account of account holder. In case if cheque
is returned due to number of reasons then the objection is
finished and again send to main branch but this time a
credit voucher along with original cheque is send to main
branch instead of any Pay-In-Slip.
Advance ClearingAdvance Clearing
When cheque is sorted for clearing because of different
branch in the same city then we note these cheques in two
days advance date because it takes more time to reach
that faraway branch . For example HBL of Baha-ud-Din
Zakariya University Multan.
Procedure of Payment of Cheque of Foreign CurrencyProcedure of Payment of Cheque of Foreign Currency
When cheques are denominated in foreign currency then
procedure is not like that of ordinary cheques of Rs. First
of all cheques are issued and the person give cheque to
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another person. When any party receives cheque in
foreign currency to deposit in his account then it gives it
to the ban where he has his bank account. The Bank sends
this cheque to its Head Office. Head Office send it to the
country where transaction is done over that currency.
Then cheque goes to New York. From there it is send to
that issuing bank (domestic) from where party has
received cheque whose bank whose cheque it is. N.Y is
credited and that bank is debited by that amount. N.Y
send it to head office of our Bank. Then H.O is credited
and N.Y is debited. Amount of Foreign currency is then
send to main or local branch where the party has its
account. Now the account of that person is credited and
the H.O is debited
Now there may be two cases:
1) Either account is in Pak Rs.
2) Or account is in that country
3) Or account is in Foreign Currency other than the currency in cheque.
C) Cheque CollectionC) Cheque Collection
When cheque is from another city then it is grouped as
C.C.
Procedure
SF-37 form is used in Cheque collection (See Annexe )
Original voucher with cheque is send to main branch.
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Carbon copy with Pay-In-Slip is taken by bank for record
purposes.
Pay-In-SlipPay-In-Slip
Here it is very necessary to have knowledge about Pay-In-
Slip
Purpose
It is used for two purposes
Whenever we want to deposit cash in our account then pay-in-slip is used by writing amount on it and depositing it to cashier along with money.
Whenever we have cheque from any party to be collected in our account we fill pay-in-slip . One part is attached with cheque and another is given to cheque holder as a receipt.
Types
It is of two types depending upon the type of account.
Green Pay-In-Slip is used for Saving Account (See Annexe )
Blue Pay-In-Slip is used for Current Account (See Annexe )
Stamps Used In Bank (MCB)Stamps Used In Bank (MCB)Following stamps are used in for different purposes.
(1)Cross Stamp(1)Cross Stamp
This stamp is used to cross the cheque. Crossing can be
done by 3 ways.
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a) General Crossing
Sometimes the cheque is crossed by the drawing two
lines on the upper left corner of the cheque without
writing any sentence on the cheque.
b) Written Crossing
Cheque can also be crossed by stamping it with sentence
“Pays Account Only”
c) Special Crossing
Crossing can also be done by stamping a cheque with the
words “MCB GBS Branch”. This means that now cheque is
in use of bank only. If it is lost or dropped then it is of no
use to anybody because now it is a cheque of bank. This
cheque will not be cashed any where else.
(2) “Payees Account Will be Credited on Realisation”(2) “Payees Account Will be Credited on Realisation”
This is used to stamp on the back of following
instruments.
Cheque (simple). 2) Travellers Cheque. 3) Pay Order. 4)
Speed Cash.
This means that the account of the payee will be credited
provided that cheque is accepted by Drawer’s bank
otherwise not.
(3) Disbursement Guaranteed; Payees Account will (3) Disbursement Guaranteed; Payees Account will be credited on Realisationbe credited on Realisation
It is used to stamp on the back of following instruments
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1) Demand Draft . 2) Foreign Remittance
(4) Payees Account Credited(4) Payees Account Credited
This stamp is used on back of those cheques which are of
the same branch. It is of guarantee that if there is no
problem with the cheque or A/C then Payees account will
be credited.
(5) Clearing Stamp(5) Clearing Stamp
This stamp is placed in front of clearing voucher on the
same day in which clearing was made (one day advance
date). Or the date in which it is presented by Main branch
in State Bank Of Pakistan.
(( 6) Round Stamp MCB6) Round Stamp MCB
It is used in two places.
When we are dealing with C.C then we write the number of C.C which is written inside the stamp. One stamp is on cheque and other on Pays-In-Slip.
When we fill Pay-In-Slip and give it to the bank officer along with cheque then he places this round stamp on the face of one part of Pay-In-Slip and marks his signature on it and give it to the customer as a evidence.
(7) Pay Cash(7) Pay Cash
This stamp is used when cheque is not crossed, it is open
cheque. The officer places this stamp on the front of
cheque and writes token number on it. This means that
payment in cash will be made of this cheque on
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presentation of token to cashier. This is like indication for
cashier to pay cash.
Reasons for Cheque returned unpaid in Cross Reasons for Cheque returned unpaid in Cross ChequesCheques
Following are the reasons for the cheque return.
Cheque incomplete
Clearing stamp Required.
Drawer’s sign incomplete
Drawer’s sign different from specimen
Post Dated
Payment stopped by drawer.
Amount in words and figures differ.
Report of Lost or Stolen cheque Report of Lost or Stolen cheque
In case of lost or stolen incidents following procedure is
performed.
Cheque no of lost cheque
Whether it was single or double signed.
Whether it was crossed or related to someone
Phone / Fax of reporter.
NIC no of reporter.
Signature of reporter.
How cheque was lost.
FIR Lodged or not.
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Green SheetGreen Sheet
At the end of banking time ( 1:30 o’ clock), three Green
sheets are prepared for clearing , cash and account side.
One Green Sheet is also prepared by clearing department.
Heads in Green Sheet Heads in Green Sheet
Green Sheet has following Heads:
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1) Current A/C(2) Saving or PLS A/C (3) Other A/C(4)
General A/C
M.T Payable H.O A/C
T.T Payable Other than 3,2 &1
Pay order
D.D Payable
Sides of Green sheetSides of Green sheet
There are two sides of green sheet: Debit Side &
Credit side.
Both sides should tally in figure amount. If Debit total =
Credit total then sheet is balanced and there is no
mistake. It should be taken care that cheques are always
debit and pay-in-slip is always credit. If voucher is of Pink
colour then it will be on credit side and if it is of blue
colour then it is debit side.
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RTC DEPARTMENTRTC DEPARTMENT
This department deals in RTC. It stands for Rupees
Travellers Cheques. MCB RTC has the largest share of the
total RTC Market. Over 1.5 Million satisfied customers
have made MCB RTCs. These are printed in the UK and
carry a thread watermark- a feature that prevent
counterfeiting.
Important FeaturesImportant Features
As good as cashAs good as cash
The most convenient substitute for cash for all kinds of
transactions(property, trade, personal etc).
Denominations Denominations
Cheques are available in the denomination of Rs 1,000 Rs
10,000 Rs 50,000.
Easily EncashedEasily Encashed
They can be encashed at any MCB branch.
Easily refundableEasily refundable
In case of Loss Or Theft we can get the full amount back.
Exclusive Security FeaturesExclusive Security Features
MCB RTCs can’t be duplicated. Various security features
both in design and materials make counterfeiting or
fraudulent alteration extremely difficult.
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Valid Until Used Valid Until Used
Validity of Cheque is indefinite. We can use them for a
week, a year or more after the date of purchase.
Televerification System Televerification System
It enables us to check the validity of cheque 24 hours a
day . Televerification UAN (021) 111-000-456.
Procedure Procedure
First of all RTC-10 is given to customer. It is filled and
then cash is deposited to cash department . One copy is
for office and one copy is given to the customer and RTC
are issued at that time. When RTCs are sold then H.O A/C
is credited by using form no RTC-20.
It has five copies:
A,B,C,D,E.
A= H.O copy, B= RTC Dept, C& D= Branch.
When RTCs are returned or purchased by the MCB then
H.O is debited by that amount by using form RTC-30.
Summary of al RTC purchased by branch is made on form
RTC-40.
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REMITTANCE DEPARTMENTREMITTANCE DEPARTMENT
RemittanceRemittance
Transfer of money or equivalent to money from one
branch to another branch of the same bank is called
remittance.
Important TermsImportant Terms
Originating branchOriginating branch
It is the branch from which money is send to another
branch or the point of origin of remittance.
Responding branchResponding branch
The branch which receives the instrument or money for
remittance is known as Responding Branch.
Types of RemittanceTypes of Remittance
Remittance is classified into following four types:
INWARD REMITTANCE
OUTWARD REMITTANCE
INLAND REMITTANCE
FOREIGN REMITTANCE
a) Inward Remittancea) Inward Remittance
The branch which receives the instrument(T.T, D.D etc)
directly from the customer or from the originating branch
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and is responsible to pay to party is called inward
remittance. For example if some D.D is drawn on our bank
and we have to pay the party( to whom it was send).
b) Outward Remittanceb) Outward Remittance
The branch which issues or sold the instrument to the
responding branch is called outward remittance. In this
case we are sending remittance to another branch of the
same bank in any location.
c) Inland Remittancec) Inland Remittance
Transfer of money from one branch to another branch of
the same bank within the same country is called inland
remittance. In this case both originating branch and
responding branch will be situated in the same country.
d) Foreign Remittanced) Foreign Remittance
Transfer of money from one country to another country is
called foreign remittance.
Modes of paymentModes of payment
MCB uses following four types of modes of payment
1) DEMAND DRAFT (DD).
2) PAY ORDER (PO0.
3) MAIL TRANSFER (MT).
4) TELEGRAPHIC TRANSFER (TT).
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1. Demand Draft1. Demand Draft
Demand Draft is used for the transfer of money outside station.
A draft is an instrument drawn by a bank in favour of any person on a branch of its own bank or any other bank to pay a certain amount of money which is demanded to the person named on it.
It is not necessary for the demand draft that applicant or recipient account should be open in originating and responding branches.
It is one of the cheapest methods of transference of money within the country or outside the country.
Applicant has to fill in the application form for availing the facility of demand draft. After depositing the amount of draft, remittance officer prepares the cheque of demand draft.
When banker issue draft to the customer, he also records customer particulars in a demand draft register where record is maintained branch wise.
Responding branch and originating branch debit/credit the head office account and send the daily statement of transaction to head office.
2. Pay Order2. Pay Order
Pay Order is used as instrument for transfer of money within station or city.
Pay order is written order, which is issued and received by the same bank or drawn and payable on same branch.
For pay order it is not necessary that applicant should be account holder.
It is used for local transference of money from one person to another.
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The bank charges excise duty and flat rate from the applicant.
3.3. Mail TransferMail Transfer
The transfer of money from one branch to another branch of the same bank through mail or courier service is called mail transfer.
The applicant should be the regular customer or the account holder of the responding as well as originating branch.
4.4. Telegraphic TransferTelegraphic Transfer
Originating branch send funds to responding branch instantly and immediately through telegram and fax.
Bank charges commission, telegram/fax charges on telegraphic transfer.
Documents PreparedDocuments Prepared
a. Application Form (SF-100) a. Application Form (SF-100)
Firstly, the application(see annexure ) is filled by the
applicant in which he writes the name of payee, his a/c #
& the name of branch to which TT is sent as well as the
depositor’s name, his a/c # & address. Then in the office,
they collect the charges, commission & excise duty.
Same prescribed application form will be used for MT, TT,
DD, and PO.
It is understood that in case of T.T or M.T the remittance
is being sent at our entire risk .In case of T.T Or M.T,
there are two options:
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1: Advise & Pay 1: Advise & Pay
Here the bank informs the beneficiary (to whom the
money is sent ) through telephone or personal contact
about the incoming cash.
2: Credit Account No2: Credit Account No
In this case, if the beneficiary has Account with the
Responding Bank then his account is credited by the
incoming amount without informing him.
When the applicant completely fills the application form
then he is asked to sign at the bottom of the page. After
signing, the applicant deposits the cash (cash to be sent
+ Charges) at the cash counter and receives the
application back by having stamped and signed by the
cashier. This application is then submitted to officer.
b. Memorandum (SF-237) b. Memorandum (SF-237)
The officer gives Memorandum to the applicant as a
evidence of Remittance (see annexe ). Bank charges
along with some information about Remittance is written
on it. Officer signs at the end of the form.
c. Fax/ Telegraphic Message c. Fax/ Telegraphic Message
In case if the Remittance is being sent through
FAX/Telegraph then a special form known as “
Fax/Telegraphic Message” (see annexe )
I t contains following information:
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T.T No, R.No, Control, Total Rs Amount, Favour, A/C No
Of Beneficiary, Test & Date.
T.T No & R.No:T.T No & R.No:
These numbers are noted from T.T register which contains
every information of every T.T sent to different cities( T.T
register will be explained more in coming pages).
ControlControl
It is the number written on the form “Confirmation Of
Cable Sent”
( SF-89A).(See annexe )
Favour & A/C NoFavour & A/C No
It shows the name of person & his account to whom the
cash is being sent.
d. Confirmation Of Cable Sent (SF-89-A)d. Confirmation Of Cable Sent (SF-89-A)
These are two vouchers A & B. Special features of this
form are Originating branch, Responding branch, Date
Total amount & Branch code of both branches. For
Example Branch code of MCB GBS Multan is (1412).
These vouchers are used to credit & debit purposes (see
annexe ).
e. T.T Register e. T.T Register
T.T.No R.No Control Favour Amount Date
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Head Office AccountHead Office Account
All transaction relating to remittance will be routed
through head officer account. All the branches of MCB
have an account of “Head Office”. Through this Head
Office account it become easier for branches to do the
transaction with other branches and update their books.
Whole ProcedureWhole Procedure
1) First of all application is filled by the applicant. Cash is deposited in the cash department. Applicant is provided with Memorandum as an evidence.
2) Now starts the work of Bank officer. The officer enters the information on the Register. In case of T.T, the T.T No, R.No, Name of Beneficiary, Branch, Code Of branch, Date, Account of beneficiary is written on the register.
3) Then “Fax / Telegraphic message” is filled which also contains the same information as that of register.
4) Two Vouchers are prepared (SF-89-A & SF-89-B) which are in Green & Pink colour. Amount of T.T is written on them. They also contain the heads of Originating Branch and Responding branch.
5) Then Test Is written on the extreme left column( T.T, M.T, P.O No). The procedure of it’s calculation is written above.
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FINANCIAL ANALYSIS OF MCBFINANCIAL ANALYSIS OF MCB
For Year 1997-98
Ratios 1998 1997
Interest earned / Advances 27.33 % 26.32 %
Interest paid / Deposits 8.94 % 8.17 %
Admin Expenses / Deposits 4.85 % 4.85 %
Investment / Deposits 46.75 % 46.70 %
Advances / Deposits 50.81 % 51.74 %
EBT / Deposits 0.76 % 0.99 %
ROA 0.27 % 0.21 %
ROE 11 % 9 %
EPS Rs 2.19 Rs 1.31
Cash Dividend / Share Rs 1.75 Rs 1.50
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ExplanationExplanation
Interest earned to advances increased in 1998, which is a positive sign and shows increased income of the bank, and its improving financial position.
Interest paid to deposits, investment to deposits and administration expenses to deposits, the firm has been able to sustained its position and expenses. There is an increase in the income of the bank, but there is no major increase in expenses. This shows a satisfactory position of the bank.
The ratios of advances to deposits and EBT to deposits are not showing a healthy sign due to:
The bank has paid a big amount as a cost/return on deposits
The bank has given less advances in 1998 as compared to 1997
The return on assets and return on equity are showing a good position, which refers to an improved financial position.
The EPS and cost dividend ratios are showing an increasing trend, which means the firm is enjoying a good financial position.
Overall MCB has a good and healthy position. The profitability and income is increasing, which is attracting new depositors and investors.
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PREFACEPREFACE
Prerequisite of MBA study is to undergo internship. I got
the opportunity to join the MCB General Bus Stand
Branch, Multan for the said purpose for a period of 6
weeks.
Practical involvement was a great experience as
interactions both with the experienced executives and
clients cemented the base of knowledge I have been
acquiring in the classroom.
This internship report includes the material about MCB
and different departments along with their working
procedure.
For the completion of this project I met the various
persons of these organizations. As far as my knowledge
and hard work is concerned this report will provide a
good in sight of MCB.
I have special thanks for following persons who have
encouraged & guide me lot. I learned very much under
their guidance.
Mr. Muhammad Saleem Khan Branch Manager.
Mr. Liaqat Raza Jaffery Accountant.
Mr. Masroor Mehmood Officer.
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Riaz Hussain
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ACKNOWLEDGEMENTACKNOWLEDGEMENT
All praise to Allah, the Beneficent, the merciful, and
respect for His Prophet “Peace Be Upon Him” who made
us recognize our creator.
First of all I am highly obliged to my honorable teachers
Mr. Muhammad Shoukat Malik and Mr. Muhammad
Rizwan because of them I could be able to do an
internship in the MCB.
I am also thankful to the Employees of MCB who provided
me a friendly and knowledgeable environment through
which I learned a lot.
Riaz Hussain
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CONTENTSCONTENTS
HISTORY OF BANKING 1
EVOLUTION OF BANKING 1EARLY GROWTH 1DEVELOPMENT OF MODERN BANKING 2BANKING IN PAKISTAN 3
MUSLIM COMMERCIAL BANK LIMITED 6
HISTORY OF MUSLIM COMMERCIAL BANK 6BOARD OF DIRECTORS 7STRUCTURE OF MCB 8STRUCTURE OF MCB – GENERAL BUS STAND BRANCH (1412) 10OVERALL PERFORMANCE OF MCB IN 1998 11CHAIRMAN’S REVIEW 16
ADVANCES DEPARTMENT 18
1. INITIAL INFORMATION 182. PREPARATION OF CREDIT PROPOSAL 183. SANCTION ADVICE 19OTHER TERMS AND CONDITIONS 20TYPES OF ADVANCES 21TYPES OF ADVANCES BY MCB 22
DEPOSIT DEPARTMENT 31
ACCOUNT OPENING 31TYPES OF ACCOUNTS 31PROCEDURE FOR ACCOUNT OPENING 31TYPES OF CUSTOMERS 32CLOSING OF AN ACCOUNT 34IMPORTANCE OF DEPOSITS FOR BANK 34TYPES OF ACCOUNTS IN MCB 34
FOREIGN EXCHANGE DEPARTMENT 43
IMPORT 43DOCUMENTS REQUIRED 43LETTER OF CREDIT 43EXPORT 54EXPORT RE–FINANCING 56SPECIAL PRODUCTS 58FORMS OF EXPORT RE FINANCING 58
CLEARING DEPARTMENT 60
CHEQUES 60
RTC DEPARTMENT 68
IMPORTANT FEATURES 68PROCEDURE 69
REMITTANCE DEPARTMENT 70
REMITTANCE 70
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Good Banking Getting Better Internship Report
IMPORTANT TERMS 70TYPES OF REMITTANCE 70MODES OF PAYMENT 71DOCUMENTS PREPARED 73HEAD OFFICE ACCOUNT 75
FINANCIAL ANALYSIS OF MCB 76