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Marketing Internship Report On Muslim commercial Bank

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Critical Analysis


Now the MCB is working very efficiently in its sector. The success story as mentioned blow is the evidence of its performance.


MCB has been awarded as Euro money Award 2008 for the ''Best Bank in Asia''


Best Bank In Pakistan Award 2005

Best Bank In Pakistan Award 2004

Best Bank In Pakistan Award 2003

Best Bank In Pakistan Award 2001


The award won by the bank is very encouraging and appreciating for the bank and its Employees. But if we look at overall banking sector, it is almost revolutionaries. The way the buildings are erected, off and online services with help of IT, new multinational bank in the market have influenced the working style of the banks

Balance sheet 

Balance sheet as December 31, 2007




Cash and balance with treasury bank



balance with other banks



Lending to financial institution









Operating fixed assets



Deferred tax-assets



Other assets-net









Bill payable






Deposits and other accounts



Sub-ordinates  loan



Liabilities against assets subject to finance lease



Deferred tax liabilities-tax



Other liabilities






NET assets



Replaced by



Share capital






Inappropriate profit






Surplus on revaluation of assets-net of tax







THE asset of the MCB increases from 40,884,314 to 55,119,675 and liabilities from 301,263,929 to 365,365,842. MCB maintain its previous record and also increase assets 15%. The liabilities of the MCB decrease as compared to 2006, so there is better its assets. MCB took much progress in the year 2007. In order to provide a wide range of Investment products and is to complement its banking business; MCB has launched its wholly owned Subsidiary to conduct asset Management business. The first Board Meeting of the newly incorporated Company was held on October 19, 2007. MCB Asset Management Company will shortly be introducing a range of Investment products and services to its Customers. Continuing with the momentum, MC Bank’s operating profit increased by17% to Rs. 8.8 billion during first year07, the highest ever earning in the Bank’s history of over 60 years. The profit after tax, however, was down by 7%toRs.4.07billionduringFY07 compared to Rs.4.39 billion for FY06 owing to the stricter provisioning rules introduced by testate Bank of Pakistan later this year. The assets of the Muslim commercial bank in 2007 are greater than 2006. With regards of the balance sheet the Muslim commercial bank is in the 2nd position in the Pakistan and the Habib bank limited is in the 1st position. Its hope that in the future the Muslim commercial bank will do much effort due to which there are many chances that it will come in the 1st position due to its high assets and low liabilities.

Conclusion of Report

MCB bank Limited is a banking company incorporated in Pakistan and is engaged in commercial banking and related services. The bank’s ordinary are listed on all the stock exchanges in Pakistan whereas its global depository receipts are traded on the international order book system of the London stock exchange.  The bank operates 1’020 branches including Islamic baking branches. After analyzing its income statements, balance sheet, cash flow statement, products and services, loans, it is concluded it is second best bank in the Pakistan. MCB taking progress by leaps and bounds, soon it will become the first best commercial bank of the Pakistan.

The consumer banking industry has many opportunities to grow, customer wants convenience mode of banking for which new products & services should be introduced on the other hand it is giving huge profits to bank while the level to risk is less in consumer financing as compare to others. Wealth Management Service which is a new service in Pakistan Consumer Banking industry its awareness should be increased as in our survey it reveals that most of the respondent even don’t have any idea of consumer financing. Bank’s customers want new services to be introduced in which Inter bank Transfer Facility & Money at door step the most are demanding services. In recent years the regulation for tenure and amount of consumer financing has been changed many times but still the bank’s customers are not totally satisfied by the tenure of consumer financing. Improper guidance, slow processing and bank statement are the major problems faced by bank’s customers in getting consumer loans. The reason for these problems is that people applying for consumer loans don’t have proper information about the requirements by the banks and due to high number of applications & lengthy procedure by banks the loan Very few borrowers know that the rate of interest being charges on consumer finance by the financial institutions is too high as compared to prime interest. Incase of credit cards the respondents in our survey marked High Markup Rate as the major problem they are facing in Credit Cards. Despite of many changes in bank policies and strict regulations by SBP still bank’s customers are facing hidden charges problem. Due to unclear policies and term & condition of banks, customers are not able to know about different charges of banks and the problem of hidden charges occurs. Although CIB provide complete and accurate information about the bank’s customer credit records but still loans default occur in consumer financing the problem is not with only due false customer records but also due to wrong policies and improper assessment by bank which cause defaults on consumer loans. The target market for issuing consumer loans for banks in the middle class because they have the strong ability to pay off their loans, banks should make adequate polices to provide loans to lower class on easy terms and low markup rate. Upper class is generally not focused for consumer financing because they have enough resources & purchasing power to buy any asset.

Due to high markup personal loans and credit cards are among the most preferred category of consumer financing by the banks. While in terms of loans amount the biggest category of consumer loans are auto & mortgage loans and they are preferred by banks because they have collateral which provide security in case of any default. According to bank’s staff the major reason for defaults on consumer loans is improper assessment and Auto loans have become very trouble-some for the private banks. The rate of defaults has increased at phenomenal rates. The cars are auctioned at lower prices which do not recover the entire amount invested by bank. House and car financing are safe modes of financing from the banker’s point of view as the every rising real-estate and car prices coupled with safety margin in the shape of down payment allow the bankers to enjoy a found night sleep. Most of the bank’s customers prefer local banks for general banking activities this is mainly due to large branch network, wide range of services and low service charges

Provided by the local banks. But for consumer banking, customers prefer foreign banks in foreign banks are the introducer of CB in Pakistan still retains the major share of consumer financing in Pakistan.

During the last five years consumer banking had witnessed a high growth in Pakistan but its growth rate is declining now which is due to the high markup rate charged by banks and high increase in NPL with low recovery rate. Maintaining the critical balance between savings, investment and borrowers debt-servicing ability is possible if input prices remain stable affording business to sustain their profitability and interest rate should remain stable. There is no denying to the fact that consumer credit within prudent and sustainable limits is desirable for economic growth, smoothing consumption and improving credit risk diversification. At the same time unsustainable consumer growth in weak macroeconomic environment, ineffective prudential and regulatory framework, weak risk management system and legal infrastructure can create systemic vulnerabilities. The consumer finance is money lending affairs to a needy perform for improvement of his well beings and ultimately his living standard in the society. It is financing facilities that generally and wholesomely support consumption and as a result improves the overall Credit card is a risky mode of finance as no collateral is available to cover risk. Perhaps this is the reason that this segment of bank finance has been allowed to operate o the terms of the bankers without any worthwhile monitoring by SBP. The growth m our economy has led to increasing consumption trends, resulting m the widening demand and supply gap. However as the people of the country become more educated they have realized the benefits and conveniences of using plastic money as a mode of payment. At the moment less than 1% population of the country is using plastic money in Pakistan; therefore one can put complete blame of inflation and price hike on it. Inflation in basic food items which is I I% is not directly linked to plastic money or consumer financing. Developed countries facing rampant consumerism find plastic money most efficient and acceptable mode of payment. The total NPL of commercial banks in Pakistan have touched level of Rs.154 Billion which is covered by 66% provisions in 2007. The local private banks have loan loss coverage of 63% as on June 30, 2007. And for public banks and foreign banks this ratio stood at 74% & 86% respectively. Foreign banks in Pakistan have loan loss coverage of 86% and they have provided more than the required provisions against NPL. (Sharif, 2007)Besides average borrowing of an individual is small but a lot of time and effort have to be spent on documentation, etc. Therefore there is valid reason for charging high interest rates from individuals borrowers.


Bank must let potential customers know that all attractions for banking exist. This is done by advertising on television and obtaining press coverage, in conjunction with direct mail, window displays, leaflet in branches and in appropriate other locations (such as hotels, shops, etc.) and including leaflets in statement of accounts sent to existing customers in the hope that they will tell potential customers about the services provided by our bank.

Financially unsophisticated people might feel bank accounts, cheque books, credit cards, etc. are difficult to understand and to keep control thereof.

Some personal sector customers prefer not to come to branch. They increasingly want to deal with the bank in other ways, such as home banking or use of Automated Teller Machines (ATMs), which need to be at the branch or some important shopping plazas.

It is widely known that there is a substantial Black Economy in Pakistan, Where people earn income that is undisclosed to the revenues authorities. Payments for goods and services in the black economy are necessarily in cash, because transactions by cheques are more likely to be exposed to the revenue authorities. Some people will therefore avoid bank accounts to preserve secrecy of earnings.

One way to retain the personal sector customers is to offer a wide range of services such as tax advice, free life insurance equivalent to amount deposited, shares portfolio management, fund management facility, etc., complimentary to the core services. Banks must have a slightly different mix of services. Banks must have a slightly different mix of services and mean of providing these such that customers can choose the mix that suits them best.

Arguably, there has been a little encouragement from banks to persuade  people to open a bank account. Opening hours are restricted, and there is a commonly held belief that banks operate for their convenience and not for the convenience of the customers.

Logic leads to promotional campaign through employers who are customers of the banks and their employees are paid in cash. Such business accounts should be encouraged to open the accounts of their employees with the banks. It might be worth offering free banking for a specific period to new accounts or simply publicizing the services available by means of posters at the employer’s premises.

It might be possible to attract another type of personal customers through business accounts, namely directors and denier employees, etc. Again an incentive package could be put together.

The banks may choose to make its existing products distinctive or to introduce new products. It is often easier to benefit from adverse changes made by other banks than to attract customers by innovations.

A short term promotional technique is to offer price incentives, for example, low interest rates on advances or limited issue high profit bearing term deposits. Longer term, a Loss Leader may be offered. For example, profit bearing current accounts are not very lucrative but any bank can not afford not to offer these. The reduced profits can be augmented by profits made on other products.

It is also possible to attract/retain personal customers by investment in new technology like ATMs and Telephone Banking facilities, which made the services quicker, easier, cheaper and more flexible.

As the number of complaints of misuse cards increased PIN-based credit cards should be issued that would provided additional security. Financing to negative area residents should be made available and term & policies should be designed accordingly to reduce the chances of defaults. Markup charged on consumer financing should be reduced to a substantial level so the spread between bank loans and deposit could be reduced and customer could easily pay off the loans Better returns should be provided on deposit accounts To facilitate the customers new products and services should be introduced continuously SBP should continuously update its regulations according to need of people and economic situations of the country Increase consumer awareness, give clear instructions and guidance Make customer friendly policies but it should also cover the risk factor Markup charge on loans & interest given on deposits should be regularly monitored and guided by SBP.


v     (MGT411 Money and banking), edition virtual university of Pakistan

v     (Financial Accounting), edition virtual university of Pakistan

v     http://www.mcb.com.pk

v     http://www.sbp.org.pk

v     Sharif, M (2007), “Trends in Consumer Finance”, Jang News Paper, viewed 26 February 2008, http://www.jang.com.-pk/thenews/dec2OO7-weekly/busrev- 03-12-2007/ ...

v   Ghausi, S (2007), “The Debt-Trapped Consumers “. Dawn News Paper, viewed 18 February 2008, http://www.dawn.com/2007/04/16/ebrl.htm

v     Naeem, U (2007), “Consumer Banking”. Net Express Online, viewed 19 February 2008,http://netxvress.com.vk/2007/03/07/consumer-bankin   

v     State Bank of Pakistan (2006), “Prudential Regulations for Consumer Financing”,

v     Banking Policy and Regulation Department, viewed 15 Febaruary 2008,

v     http://www.sby.or.g.-Dk/-Dublications/`Prudential/index.htin.

v     Money and banking MGT411 page no, 80. virtual university of Pakistan

v     http://www.mcb.com, MCB annual report 2007





Survey Form - 11 (For Bank’s Customers)

SURVEY for research based project on

• Need & Scope of Consumer Banking in Pakistan’

Name:                                                                          Gender           Male               Female

Profession:                                                                Qualification:     FA                   BA

                                                                                                MASTER         Others




  • In which bank you operate your account?


  • How will you rate your bank schedule of charges?


  • Which type of bank do you prefer for consumer banking?


  • Have you ever used any consumer financing product?


  • Are you facing any difficulty in getting consumer loans?


  • Are you satisfied by the tenure for consumer loans?


  • What is the major problem in Credit Cards?


  • Which of the following e- banking services are provided by your bank?
  • Is your bank providing any wealth management services?



  • Which of the f new service would you want to be introduced by your bank?



  • Are you facing any hidden charges problem?



  • Do you think SBP should review its policies from time to time?




  • Any specific problem do you face in the area of Consumer Banking?



  • Any suggestion for improvement in the area of Consumer Banking?



Bank’s Customer Survey Results


Demographic Data:


Males                            60.3%

Females             39.7%



FA                                11%

BA                                52%

Masters              31%

Others           06%
















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