The report is all about the internship work on MCB. In this report I discuss all the important features of bank that I observed during this internship period. The report basically exposes the rights of bank from incorporation to present situation along with its policies, procedures and processes.
MCB came into being in 1947 and later the Government of Pakistan privatized it. The majorities of MCB shares are purchased by Nishat Group and start controlling its operations. After bank privatization, for making it Pakistan best bank many type of policies was implemented that was not only cause of presenting new product and services it also become the reason of increases in operations through opening branches all over the Pakistan. MCB that is formally known as Muslim Commercial Bank Limited Pakistan has been formed over 50 years ago in Pakistan it contain almost 1200 branches all over the Pakistan. Operations of MCB are efficient due to validation of expenses estimation and processes that increases the productivity, enhancing the standards of customer services and efficiency of processes and proper controls. The MCB offer variety of services like paying order, Transformation of Mail, foreign Remittance, Short Term Investment, commercial finance etc.
I did my internship at MCB Railway Road branch. In my internship I work in Cash department, Advances department, General banking finance and bank as entire. At this time period I performed all the tasks with high degree of responsibility and learned about different functions policies and procedures of Remittance and Foreign exchange departments. The bank’s links or communication with its customers and within branches was also observed by me.All the department was discussed in detailed in report.
The main purpose of this internship report is to learn the working through practical experience of all the knowledge that I gained in my studies. How to utilize the academies learned skills and knowledge to tackle the real world problem. In this internship repot the detail analysis of organization has been made and to analyze the current position of MCB technical, managerial, strategic and financial aspect has been calculated. The report specifically covered the financial and operational aspect of Bank that is very important. In the end the learning and experience section which was consist of policies, procedures, and processes I observed all of them and also its implementation in the internship program.
MCB is introducing new product and services that depict its speedy growth in banks activities it also depict its existence in country through increasing its branches all over the country. The report also contain mine perception about employees satisfaction its level of motivation and organizational working environment.
5.1- INTRODUCTION TO REPORT
5.1.1-Background of Studies:
The educational requirement for MBA degree the internship of six week is necessary with in organization. The purpose of internship is to familiarize the student with practical implication of knowledge within organization specifically in banking sector.
The report is on Muslim Commercial Bank of Pakistan Limited that was established in 1947 and in1991 it was privatized. And since now it expand its operations and a large network. MCB is country’s one of the largest and best commercial bank that offer a variety of product and services. During the fifteen years ago the bank focus on its growth by continuously improving the quality of services and product, Invest in technology and people as well, establishing a wide range of branches network, developing a base that is large and stable for deposit and Risk management improved processes are used to handle non-performing loans.
5.1.2-Scope of Studies:
By way as internee of MCB I mainly pay attention on general banking measures in one of the branch of MCB. It includes the operations like assigning deposits and advances paying and receipts etc. MCB Different aspects are also discussed in this report. The study also helps the students to get the practical experience of its classroom and mostly teachers during delivering lectures use the banking sector examples like UBL, NBP, and MCB etc.
5.1.3- The Purpose or Aim of the Studies:
The primary aim or purpose of my research work is to gather the proper information on MCB for compiling the internship report. The study purpose is
‘ To practically work in the business organization.
‘ To make observation, analyzing, interpretation of data in useful manner.
‘ To enhance the communication relationship with internal and external customers.
‘ To enhance the skills of report writing
5.1.4-Objectives of studying the organization:
During the internship and research work as internee I want to attain the listed objectives:
‘ To get the knowhow about different departments and its operations.
‘ To practical implication of theory.
‘ In practical situation I want to get qualified experience.
‘ To improve the working style and enhance the sense of responsibility.
‘ To improve mu learning skill of the concept application that we learned in classroom.
‘ To help me in banking sector knowledge improvement.
5.2- ORGANIZATIONAL OVERVIEW
5.2.1-HISTORY OF BANKING AND MCB
188.8.131.52- HISTORY OF BANKING IN PAKISTAN:
After the separation of Pakistan which plan was issued in 1947.the agreement was made among the both countries that Reserve bank of India will handle the all the financial issues of Pakistan till the date of 30 September 1948 because of its managerial and procedural difficulties for the immediately opening of Central Bank in Pakistan.
In the period of separation the Pakistan have 2 commercial banks like HBL and Australia Bank of India. The total Rs.880 million deposits were in Pakistan’s banks and the advances was Rs. 198 million. In July 1948 the Governor General of Pakistan Muhammad Ali Jinnah established the State Bank of Pakistan. The federal Government performed the entire task related to management, ownership, and controlling of the banks. The finance minister broadcast the Islamic banking system in 1980 but its implementation become possible in August 2003.
184.108.40.206- BREIF HISTORY OF MUSLIM COMMERICAL BANK
Formally MCB known as Muslim Commercial Bank limited. It didn’t get success story overnight. The Adamjee group integrated it under companies Act of India in 1913.The basic vision of bank is to providing products and services to the people of South Asia. After the separation of Pakistan and India the bank was situated in Dhaka but in 1956 the bank shifted it place on Karachi and registered itself there. The bank takes over 59 years of its clients trust and citizen of Pakistan. Its journey began in following way:
The Government of Pakistan owned and registered the MCB under the nationalization Banks Act 1974.the MCB is only the bank that was entirely public owned specifically due to its policies and sound situation.
For modification of swept in Industry and trade the Pakistan take decision to privatize the stat owned banks and industry. The MCB privatized in 1991 that is the earliest stage for it. The Nishat Group which was the Pakistani company purchased the bank. The mainly expanded and basic trade group of Pakistan. The group has great contribution in in production sector like banking sector, cement and textile sector and also insurance sector. The Chairman of Group and also the MCB is Mian Mohammed Mansha and in its successes he play significant position. The Government of Pakistan awarded him with Inspiring national award known as ‘Sitara-e-Imtiaz”
5.2.2- Nature of the organization:
The financial institution is MCB where people deposit money MCB provides the money transformation facility so that a person or organization can transfer money from one to another. The providing services of MCB are very time saving and ensuring that the savings of people are in save hands.
Vision: Becoming the leader of financial services provider and make partnership with customers for wealthy and safe future.
MCB is highly connected with its customers for the fulfillment of their requirements and threat them with respect and importance. For customers the MCB have strength of motivation for performing its obligation and ensure that it not only gather but it serve beyond the success. They make struggle to make a clear image in its client mind through dong things accurately in early time and all time. The mission of MCB is to take initiates in the field that prominent the banking success. Like from cash to convenience of synthetic, from local banking to online banking, and from communication through face to face to online communication.
MCB is preliminary paying attention on three form of core businesses that is corporate banking, Commercial banking, Consumer banking. Corporate customers are included companies of public sector and also the companies of local and international. MCB also paying attention to middle class customers by providing the products related to assets and liabilities. Over the fifty years the MCB is well established in Pakistan. MCB offering 2 hour banking facilities to its customers through above the 1000 branches and a wide network of ATM in Pakistan almost 450 ATM locations the MCB have in marketplace. MCB be serving as:
‘ Deposits acceptance of money through different accounts
‘ Loan taking and from other banks finance making.
‘ To its customers bank lending money.
‘ Making of joint ventures with foreign dealers
‘ Generating and undertaking and promoting, etc. activities like in issue of shares and, bonds etc
5.2.3-Business volume of National Bank of Pakistan:
Rupees in Millions
Year 2013 2012 2011 2010 2009 2008
Total Assets 815,508,000 767,075,000 653,782,000 567,553,000 509,244,000 40,044,000
Deposits 632,330,000 545,061,000 491,189,000 431,372,000 367,605,000 330,182,000
Advances 268,192,000 262,392,000 249,914,000 274,144,000 269,722,000 272,847,000
Reserves 46,601,000 44,253,000 42,186,000 40,163,000 38,386,000 36,769,000
Investments 449,006,000 402,069,000 316,652,000 213,061,000 167,134,000 96,632,000
The volume of MCB business is stated in form of total assets as well as deposits and advances and reserves and investments. The Total assets of MCB are in increasing position from pervious years. And the banks advances deposits and reserves are moving upward which is a good sign for its success. The banks mostly enhancing its investment from 2008 to 2013 by investing in risk free Markets like in Pakistan Bond investments and in treasury bills.
5.2.3- Rewards and accomplishments and victory stories in the latter 5 years:
The Muslim Commercial Bank was awarded in 2013 and 2012 with ‘The best domestic bank’ in Pakistan by the Assets Tripple A.MCB was also awarded ‘The best Islamic deal 2013’ The best also received the award of ‘The best website Award 2013’ form LK domain Registry Sir lanka .Lanka pvt. Limited also awarded the MCB with the award of T+1 cheque clearing award. The MCB gets the award of ‘Best bank of Pakistan 2012 and 2011’ from the Euro money. The bank was rewarded by ‘Best Media coverage’ CRS excellent business award from NFEH. ‘Second Best Corporate Report Award 2011’ of banking sector was awarded by ICAP and ICMAP. The ‘Best Commercial bank of Pakistan’ was given to MCB by world finance.Mcb also collected the ‘PCP corporate Philanthropy 2012’ award from the Pakistan Centre for Philanthropy. The CFA association of Pakistan awarded MCB ‘The Most Stable Bank of the Year 2011’ and ‘The Best Bank 2011’ the MCB also collect the award of ‘1st BCR 2010’ from ICAP and ICMAP the SAFA give the award of ‘second Runner up for BCR 2010’.
The Asian Banker awarded the MCB with ‘Strongest Bank in Pakistan 2010’ and ‘leadership Achievement Award 2010’.MMT presents the ‘Best Bank Led MMT Services 2010’ award. The ICAP and ICMAP give the ‘1st Award of Best BCR 2009’ to MCB. The MCB also collected the award from SAFA that was ‘Certificate of Merit Award for BCR 2009’ The Asianmoney and the asset presented the award to MCB ‘Best Domestic Bank in Pakistan 2009’.The Euromoney awarded the ‘Best Bank in Pakistan’ in 2009 and 2008
5.2.4-PRODUCT / SERVICE LINES
The MCB is providing a variety of product and services to its customers to meet the standards at national and international level. The product or services that MCB providing to its customers are as follow:
FULL DAY BANKING:
To its customers Muslim Commercial Bank provide full day banking services and Even in Saturday or every day in week the bank facilitates to its customers.
For the customers convenient the bank provides the online banking facility and almost 315 branches of MCB are providing this facility 24 hour in a week.
SPECIAL RUPEE TERM DEPOSIT
The MCB provide facility that its customer can open deposit account that suits him and which are fulfill its long term or current needs. The customers can open a variety of deposit account.
The MCB offering the 365 deposit account in which customers can deposit money on daily basis and also earn profit on daily basis as well. The customers can also take the withdrawal decision.
For the customers things which are expensive and valuable the MCB bank provide the facility of lockers for customer’s convenient.
REMIT EXPRESS OF MCB:
The MCB provide international remittance ability to its customer so that they can collect its remittances with 24 to 72 hours.
According to Islamic and Shariah point of view the bank provide facilities to its customers for the convenient.
CARDS OF MCB:
A limited situation of getting sale associated with providing the facility of acknowledgment of all main card brands.
Facility is specifically for ATM and smart card holders of MCB. Only they can take the benefit of this facility.
This facility is only for ATM and smart card holders. This is basically the cash withdrawal facility and more than 900000 ATMs can withdrawal money from all over the world.
MOBILE BANKING FROM MCB:
The MCB providing the banking transaction through online banking now customers can get the information of their account and its mini statement through mobiles. Now the customers are more facilitating with this service of bank.
EFFECTIVE INTERNET BANKING:
Now the customer can enjoy the online service of MCB. They can get access at any time and 24 hours in a day in whole year.
CALL CENTRE OF MCB:
The Call Centre of MCB provides facility to its customer and tries to solve the customer’s problem that they are facing regarding any issue of banks services like ATM or smart card etc.
ATM 2 HOURS CASH:
The MCB providing its customers a wide ATM network with almost 450 services related to ATM nation wise.
Smart cards of MCB provide facilities to its customers to attain the banking services such as the withdrawal of money, payment of bills like utility and mobile etc.
MCB offer its customers variety of financing that diversify the financing alternatives like loans related to working capital, term loan, trade finance loan and investments service of banking.
EASY BILL PAY THROUGH MCB:
The facility that MCB is providing to its customers is that they can pay their bills through ATM or smart cards. So that they can take the benefits from this service anywhere they are.
This facility is basically a place that electronically interbank display in which all the ATM and other isolated banking channels deals.
CAR 4 U SCHEME:
The MBC also provide finance related to auto. This service is suitable for those people who want to buy its own car the MCB fulfill their dream in easy terms and conditions.
PYARA GHAR SCHEME OF MCB:
MCB also assigns the loans for housing to its customers. They can purchase and build their own houses. For its customer MCB finance more than 20 million rupees.
RUPEE TRAVELLER CHEQUE OF MCB:
These services provide a safe way to its customer for the transformation of money from one place to another. MCB is the leader in market for rupee traveller cheque.
There is large number of accounts that MCB provides to its customers.the saving account helps the customers to saver their money for short period of time and also get profit on it.
The MCB provide a variety of current accounts to its customers and also give a lot of facilities on it e.g. DD, online transaction, and pay orders etc.
MCB also offers a lot of more product and services to customers.
The PEST analysis is very important for an organization who wants to start it business. The organizational environment contains internal aspects like staff, offices, technology, wages etc. and Micro environment aspects which contain agents, distributor, customer, competitors etc. last one is Macro environment that contain Political, technological, cultural, social forces. These are known as PEST analysis. The PEST factors are discussed in detailed as follow:
POLITICAL AND LEGAL:
‘ The deregulation and the policy of privatization.
‘ Intervention of politics and instability of politics.
‘ High taxation charges on banking industry.
‘ Mobilization of customer’s savings was restricted due to inflation.
‘ Cost of staff.
‘ Cost of operations.
‘ Increments in Bad debts
‘ Lack of Human resources (HR).
‘ Lack of work ethics and education.
‘ Incompetent process of accountability.
‘ In adequate network of communication.
‘ Lack of resources like computer facility.
5.2.6- MCB ROLE IN THE ECONOMIC PROGRESS OF PAKISTAN:
For economic development and also for the encouragement of economic activities in any country banking sector play very important role. The major activities are related to industry, trade, agricultural sector, and activities related to commerce are highly depending on banks. Like other banks of Pakistan Muslim Commercial Bank paly very important role in the economy of country. MCB play major role in mobilization of money its takes money from customers who have excessive and then invest it in some profitable projects and increase its earning as well as its customer’s earnings. For poor formers the MCB establish the short term financing scheme. For the development of agricultural and establishment of rural the banks finance moderate type loans. The basic objective of MCB is to expand its branches national and international level for ensuring the availability of finance in various sectors of economy. The MCB also took initiate in assigning the SME loans for the five tears duration. It also providing loans to common man at large level for assigning the type of loan MCB is more concerned to contribute in build up the developing nation. The bank also has a huge contribution in Earning through foreign exchange business in Pakistan and all over the world.
5.3.1-Hierarchy chart of MCB
Board of Directors
Peons and helpers
5.3.2-Number of Employees of Muslim Commercial Bank of Pakistan:
In banking sector the MCB provide the opportunities of employment to the people that have interest in this sector. In Pakistan the total number of employees are about 15000.Each branch contain maximum 13 numbers of employees. a credit manager, general banking officer, customers servicing officers, cashier, cash officers, an administrator and hired two person as guard and peons.
5.3.3-Main offices of MCB:
The Head office of MCB is sited in Karachi at Chundrigar raod MCB Tower and the Branch office is situated at Defense Housing Authority BranchKarachi.
In Punjab the main head office is situated in Gulberg maeket Lahore. Thebranch office is placed in Waheed Palaza Lahore cantt. Second branch is at Garhi shahu 86, Allama iqbal road Lahore.
In Islamabad the Regional office is situated in main civic centre G-6 Islamabad.It also have branches within country as well as abroad.There total 1053 branches of MCB.
5.3.4-MCB BANK’S DRPARTMENT
Division of organization in various parts according to the function can know as department of any organization. The MCB basically have four departments:
1. DEPOSIT DEPARTMENT:-
The bank normally takes the money from the customers who have excessive money and lend it to borrowers for specific period of time and earn profit. Bank also gives some portion to customers who deposited the money. we can easily conclude the dopesit amount that customer give are the blood of the bank which help the failure organization to again come in the race. Deposit is basically the responsibility of bank because it has to pay back to customers so bank treat it as liability. Before the privatization of MCB the bank deposit was at rising point but after privatization it was at declining point and it’s a reality the deposit boost the total amount of account the cause the success of bank.
Deposits can be differentiated by two points the period in which bank finance it in the projects and second is receiving rate of returns on that loans.On the bases of periods the deposits are divided into two form
‘ Deposit with time
‘ Demand Deposits
The deposit system in all the ank have different and encourage it differently.All banks use the different kind of deposits by combining the above listed form of deposits like with combination of different product and services, operation form, source of profit computation, extraordinary advantages, meeting qualified set of standards. The MCB offer diversified deposits accounts some are listed below:
‘ Current a/c
‘ PLS saving a/c
‘ Scheme of monthly khushali
‘ Scheme of Hajj mubarik
‘ Scheme of khanaum bachat
All above are the various kinds of deposits and this department also handling clearing and account opening department. Each banker performs multiple task of collecting and paying.it also performed he cross cheques function the clearing house of banker play very important role. The acceptance and payment of cheques drained is resolved through clearing house where the agent of all the bank set together.
2. CASH DEPARTMENT:-
This department normally deals with following form of books.
‘ Cash paying book
‘ Token book
‘ Scroll book
‘ Cheque book
‘ Cash receiving and balance book
The amount of cash that customer receive on the bank’s counter. The banker maintaining it record in scrolling book as well as cashier receiving book and at the end these are corresponding and well-adjusted with one another.
When at the counter of bank any kind of transferable cheque or tool is represented it is firstly recorded in token book and token number is assign to customer. The clerk of token and its teller make entries and payment is given to customer. In the last the amount of token book and paying cashier book compared and balanced it.
In the cash balanced book the payment and receipts of these are confirmed and after that the closing balance of cash is being maintained. It’s very important section and a lot of care is required for this department. No one can go in this department because the liquid assets like cash. The administrator checks all the entries that passed on books.
3- LOAN OR ADVANCES DEPARTMENT:-
This department made the acceptance of loan at business level and for customer’s personal need. It can be in Form of
‘ Cash credit
For take the advances or loan from bank it is essential for customer to give something as collateral like property or gold and make sure it’s worth equal to the amount of loan. The branch is allowed to give loans only the certain limited amount .if the amount of loan is exceeded the branch will approved it from the Head Office . For that purpose all the necessary document will attached to a form and sent it to head office. If head office allows him the loan amount the process will continued further. The loan normally assign for one year. If a person failed to pay back loan amount then bank has authority to use its collateral for the recovering of loan amount.
4- FOREIGN EXCHANGE DEPARTMENT:-
The department specifically deals with affair of foreign exchange such as foreign remittances payments etc. When the transaction is ended a conformation letter sent to Head office of payment or retirement. The department of foreign exchange basically deals with the foreign currency accounts, cash deposit and remittances. The transaction that is made with foreign banks is normally with the settlement rate of SBP. List of rates of all countries are deliver in all branches of MCB on similar day.
5.3.5-Comments on organizational structure:
Structure of Muslim Commercial Bank is bureaucratic. The organization is highly appeal performing the operations in systematic manner. It can be accomplished through Specialization, following the formal rules and regulations, functional department organized and assign tasks, authority was centralized, span of control was narrow and decision making power used by the structure. In all Inquiries the employees really corporate each other in good manner. They are very cooperative. I did six week internship in MCB and gain practical experience in such a short period of time. The staff of MCB was skilled and expert in his or her area of job. The Branch of MCB has bright future due to its effectiveness
5.4.1-Introduction of the branch:
I had worked in Muslim Commercial Bank of Pakistan and its branch named where I worked is as Railway Road Gujrat.i started internship at 22 July 2013 and completed at 31 August 2013. There was total 09 numbers of employees. The address and detail of MCB branch are given below.
Branch Name Railway Road Gujrat
Branch Code 0260
Address Railway road Gujrat Pakistan
Swift Code —
5.4.2-Management hierarchy in branch:
Detail of supervisors
Mr. Naveed Naqvi (INCHARGE DEPOSIT):
The incharge deposit of MCB was Mr. Naveed Naqvi. His qualification is B.com along with 20 years of working experience in MCB. He guides me about cheque book issuance. He is very intelligent and logical and cooperative person. I also learned from him about the account opening department. Even I feel any kind of difficulty he guide me in very well and effective manner.
Mr. Asif Ali (HEAD Credit Department)
Mr. Asif Ali’s qualification is MBA Finance with 9 years of working experience in MCB. He is competitive and experienced person in his area of work. I learn from him about the credit department. He also guided me about demand financing and agri-financing. He also explains how all these recorded in their ledger as well. He always ready to guide me in case of any difficulty.
Mr. Syed Arslan Haider (ASSISTANT DEPOSIT):
He has qualification of B.Com degree with 6 year working experience in MCB. He was the assistant deposit with such an intellectual personality and a very hard working Person because he had 5 year experience of working in banking administration. Her work was writing the deposit slips and transformation of slips. He guides me about it.
Mr. Adil Khalid Butt (HEAD CASHIER):
He is very honest and hardworking employee in the branch. His qualification is B.A and had 16 years working experience in MCB. He has such a jolly personality. He entertains the whole staff in boring working hours. He guides me about cash department and all the area of his work. He told me the professional counting method of money. He also guide me how to make documents and vouchers writing.
Date Day Department Tasks Supervisor
22-Jul-2013 Monday DEPOSIT
DEPT. Introduction of the Deposit department. Mr. Naveed Naqvi
23-Jul-2013 Tuesday Get learning about Cash & Transmission pay-in-slips
24-Jul-2013 Wednesday Learning about how to fill the cheques.
25-Jul-2013 Thursday Learn how to issue token6 number.
26-Jul-2013 Friday Do same things as mentioned above
27-Jul-2013 Saturday Do same things as mentioned above
29-Jul-2013 Monday CREDIT DEPT. Credit department introduction.
Mr. Asif Ali
30-Jul-2013 Tuesday Learn the Demand Finance issuance procedure
31-Jul-2013 Wednesday Learn the Agri Finance Issuance procedure.
01-Aug-2013 Thursday Preparation of AF & DF vouchers
02-Aug-2013 Friday Learn the way how to calculate the markup at Gold account closing
03-Aug-2013 Saturday stamps Affixation on DF & AF forms
04-Aug-2013 Monday Learn the method of entering DF and AF record in their particular ledger.
05-Aug-2013 Tuesday Learn the way of entering the eCIB (electronic Credit Information bureau) record.
06-Aug-2013 Wednesday Repeated activities of the department
07-Aug-2013 Thursday Repeated activities of the department
08-Aug-2013 Friday Eid Holidays
09-Aug-2013 Saturday Eid Holidays
10-Aug-2013 Monday ACCOUNT OPENING DEPT. Eid Holidays
Mr. Asif Ali
11-Aug-2013 Tuesday Understand the basics rules and procedure for an account opening Lean about the forms filling for open the Current & PLS accounts
12-Aug-2013 Wednesday Filling the specimen signature (SS) pass and on forms punch stamps and SS cards
13-Aug-2013 Thursday Forms Filling for Current & PLS accounts (Joint
14-Aug-2013 Friday filling SS card and punch stamps on form and SS card
15-Aug-2013 Saturday Filling the forms for
opening FC accounts (individual & Joint
Account)+ filled SS card and punch stamps on form and SS card
16-Aug-2013 Monday Recording of account opening into their specific registers
17-Aug-2013 Tuesday Learn basic procedure for issuance of cheque book to new account holders, existing Account holders and
18-Aug-2013 Wednes day Issue the letter for verification of NADRA about ID cards.
19-Aug-2013 Thursday Repeat the activities of this department
20-Aug-2013 Friday CASH DEPARTMEN Introduction about the activities of this department Mr. Adil Khalid Butt
21-Aug-2013 Saturday Learned about bills collection
22-Aug-2013 Monday Learned about Traffic Challan collection
23-Aug-2013 Tuesday Preparation of credit scrolls for electricity bills and deduction of commission of bank and prepare vouchers for it.
24-Aug-2013 Wednesday Preparation of credit scrolls for Traffic Challan and made summary of all scrolls, and prepare voucher for it.
25-Aug-2013 Thursday Preparation of credit scrolls for Provincial tax and recording of this in receipt book of cashier, and prepare voucher for it.
26-Aug-2013 Friday Preparation of credit scrolls for EOBI collection and prepare voucher for it.
27-Aug-2013 Saturday Writing the cashier’s book
b-52. issuance of money through Western Union.
I have studied all the above mentioned time table tasks of credit, cash, deposit department from 28 to 31 August.
I enlist the description of department in which I had worked
1-DEPOSIT DEPARTMENT: –
It contains the activities that are:
‘ Account opening.
‘ Cheque book issuance.
‘ Current account
‘ Saving account
‘ Cancellation of cheque
1) Account opening:
The account opening depicts the customer relationship with bank. When a banker opens an account and give preliminary orientations he should determine the customer morality, occupation, respectability and nature of business. Due to following purpose the initial investigation is necessary
‘ Fraud avoidance activity
‘ Protection against involuntary overdraft
‘ Inaccuracy or carelessness
‘ Analysis the customers
For account opening there are certain formalities which bank perceived that are
‘ Application in formal form
‘ The Specimen Signature (SS)
‘ Initial Deposit minimum limit
‘ Account operation
‘ Book of Pay-In-Slip
‘ Pass Book
‘ Cheque Book issuance
a) Customer Qualification:
The customer and banker relationship are fully contract base but they have to fulfill the certain requirement:
‘ The customer must be at the age of majority.
‘ Have sound mind.
‘ Should not be disqualifying by law.
b) Accounts Types in Bank:
The following are the major types of accounts:
‘ Account for individual
‘ Account named as Joint A/C
‘ Special Types of Account
‘ Account named as Partnership A/c
‘ Joint stock Co. A/c
‘ Clubs, societies and associations A/c
‘ Agents A/c
‘ Trust A/c
‘ Administrators accounts and Executor accounts
‘ Pak rupee non-resident A/c
‘ Foreign currency A/c
2) Issuance of cheque book:
The department specifically issues the cheque books to those customers that open the account .For issuance the cheque books to account holders the basic requirement are as follow:
a) The signed of account holder on requisition slip.
b) In cheque book issuing book entry should be passed.
c) Debit account holder’s account if 5 Rs. Per cheque is not recovered by bank.
3) Current account:
When customer demanded the cash from this a/c the bank is liable to pay. The bank is liable to pay all the cheques if the bank accepts all the demand deposit against him to the level of balance in the account. The banks treated the current a/c as current liability due to its nature. In Pakistan bankers on such account didn’t allow any kind of profit however customers required to maintain minimum limit of balance failing in maintaining cause the deduction of minor amount from their accounts. Although in pervious decades the current account proportion as compare to Fixed Deposits was very low while now the Current Deposit have more importance than Fixed Deposits but their proportion vary from bank to bank branches to branches and time to time
4) Saving account:
The account can be open with a very minor amount of money and account holder can withdrawal money through cheque. The Interest Free Banking system calculation of interest on six month basis is paid to account holder that have flexible rates. The account holder can withdrawals money form account because there is no restriction but the amount of withdrawals will be deleted from the principle amount on that base the account holder get profit.it disappoints the excessive deposits withdrawals from account. The main focus was given to school and college students and as well as industrial labor to promote the scheme by State Bank of Pakistan. The main purpose was to develop the saving habits in citizens. A very nominal amount was required for such account opening.
5) Cancellation of Cheque:
On the following bases this department can cancel the cheque;
‘ Due to Postdated cheque
‘ Decayed cheque
‘ Warn out cheque
‘ Wrong sign etc.
This department also makes transaction of cash like deposit of cheque, payment of cheque etc.
The following functions performed by cash department:
This department maintains proper record of money that comes in or goes out from bank. The ledger accounts are maintained for the deposit of customers. Every customer has a separate and his or her own ledger card.
It’s a contract of banker with its customer to repay the amount of account through cheques.
3) Cheques and its Payment
The Negotiable Instruments Act, 1881 state cheque is bill of exchange that draws on banker and banker is liable to pay on demand. According to above mentioned Act section 5 the cheque contains all characteristic of bill of exchange.
4) The Cheque prerequisites
The cheques didn’t contain any rules for words or writing design however there is some requirements that have to follow
‘ Cheque must be in writing form
‘ The unqualified order
‘ Only drawn on specific banker
‘ Issue on demand of payment
‘ Sum Assured in money
‘ payment to specific person
‘ Signed by the account holder
5) Parties Involve in Cheque
The Drawer, a drawee and a payee or sometime no payee then bearer deals with cheque
6) Kinds of Cheques:
There are basically three types of cheques in which Pakistani bankers mostly deals
Bearer cheques although collected by clearing but normallay these are cashable at the bank’s counter.
b) Order cheques
Such type of cheques is cash at counter but bankers verifies its holder and ensure the cheque holder is proper person for payment collection then banker cash the cheque. The cheque holder has to show his or her proof of identity. Through clearing the cheques also be collected.
The cross cheques are normally not paid at counter it’s basically transfer money from the payer to payee. If two people have accounts in a same bank the account holder can issue cheque to another accountholder so that the bank will transfer the money from ones account to another account holder. The person who the issue the cheque his account will be debit and the person to whom cheque were issued will be credit.
7) Payment of Cheques
The bankers basic contract is to repay the amount of money on demand that customer have in his account. The basic function of bankers is to pay the customer deposited amount on his demand through cheque. The receipts of money from depositor are critical test of banker and repay them. The bank paying function is unique feature that differentiate it’s from other institutions. Payment in Due course the bankers have legal protection. Its obligation of banker and in fact a contract to honor the cheques of customer if customer cheque fulfills the following basic requirements
‘ In proper form:
‘ Should not be in form of crossed cheque:
‘ Drawn on the particular bank
‘ Must not be damaged
3- Credit and Advances department:
The bank lend money to borrowers because it’s a great source of profit maximization Bank lends against promissory notes and against collaterals or securities which have some worth .State Bank of Pakistan define specific rules and regulation that is known as Prudential Regulation which every bank have to follows in case of violation the bank have to pay penalty. The company or any individual who want to get loan from bank it have to provide the essential information that is listed below:
1) The borrower Name and addresses.
a) In any particular branch the borrower financial record.
b) The details of account if borrower have in any other banks
c) Loans assigned against any securities.
d) The company current financial position like its Balance Sheet & Income Statement.
e) The validation of note is also very important For lending the promisory note is basic requirement in which borrower make contrat to pay back the amount with certain interest.
2) Principles of Advances
When bank lends money to borrower the following principle bank must consider
a) Protection and Safety
a. Protection and Security
Banker’s funds consist of its customer money in different form of account like Current A/c, Saving A/deposit A/c that is in two form Call and Fixed deposit account and Special Notice account. The money that customers kept in their accounts basically they have trust and confidence on their banker that handled their money in efficient manner. The Bank has to safeguard the safety and security of their money.
One of the most important factors that indicate the borrower character.it refer the borrower intention whether he pay back the loan amount or not for that purpose banker should observe its past record. The banker’s main obligation is to confirm that the borrower is not a characterless person and have ability to pay back loan amount along with interest.
This factor is basically belong to management ability of borrower what kind of opportunities it have in future and now where it stand. The banker observe its capacity that in which project businessman wants to use money it have the probability of success or not or there is more chances of failure in pay back loan amount.
The banks provide short term and long term loan to commercial and industry. The banks have to ensure the borrower investment or resources are equitable with requested amount.
The bank make sure that its funds are not invested only in a particular sector or field like in agriculture or in textile sector.it should invest its funds in wide range of fields like in commerce, small businesses, farming and different type of housing projects etc. Its help the banks to prevent from the riskiness of loan recovery if there is loss in any one sector.
Its means in case of insolvency of borrower the probability of recoverment of the loan amount. The loan amount is normally assign at lump sum to customer on demand while the borrower payback it slowly and received amount then used to lend again however back have to stickly considered the concept of liquidity
The basic earning of banks come from interest amount and sufficient earning require the bank to meet the below things
a) Interest that the bank is liable to pay on deposited amount
b) Salaries and other benefits that is payable to members of staff.
c) The depreciation and fixed assets maintenance of bank and Overhead expense
d) The sum of amount required to meet the possibility of losses.
e) Dividend payable to shareholders.