Final Internship report

On
MEEZAN BANK LIMITED

1
 Executive Summary

In such a professional education along with the theoretical knowledge, it’s very much
important for us to know the application of this theory.
I feel pleasure and honor that I got the opportunity to work in such a privileged and
reputable bank of the country. During my internship program I tried my every best to
equip myself with all important knowledge. In this report, I have tried to humble
endeavor to cover various aspects of bank like, introduction, its history, main
departments, culture, objectives, working financial analysis and also give me the
opportunity to identify the its strengths, weaknesses, opportunities and also give my
recommendations.
Meezan Bank is a growing bank that has 24 branches in Pakistan including 4 in
Lahore, but now it is panning to open 3 more branches in Lahore. Its main focus is on
customer satisfaction, which they achieve in order to provide better services.

2
 VISION
To be preferred provider of Islamic financial
products in the market.

MISSION
To create exceptional value for their clients,
investors and staff; through market leadership
in providing innovative Shariah complaint
products and solutions, and by adopting and
living their core values.

3
 OBJECTIVES

Their objective is to provide their customers knowledgeable, efficient and reliable

financial services. They are committed to offering superior, differentiated financial
solutions to help customers manage their money better.

INTRODUCTION

Meezan Bank Limited is a publicly listed company first incorporated on January 27,
1997. It started operations as an investment banking license under SRO 585-(1)/87 in
August of the same year. In January 2002 in an historic initiative, the State Bank of
Pakistan granted Meezan Bank the nation’s first full-fledged commercial banking
license dedicated to Islamic Banking. And it’s started working as commercial bank
from 1st May 2002.

HISTORY

Meezan Bank stands today at a noteworthy point along the evolution of Islamic
Banking in Pakistan. The banking sector is showing a significant paradigm shift away
from traditional means of business and is catering to an increasingly astute and
demanding financial consumer who is also becoming keenly aware of Islamic
Banking. Meezan Bank bears the critical responsibility of leading the way forward in
establishing a stable and dynamic Islamic Banking system replete with dynamic and
cutting-edge products and services.

The Bank has made fundamental and significant progress forward, and in doing so has
established a strong and credible management team comprised of experienced
professionals, which have achieved a strong balance sheet with excellent operating
profitability, including a capital adequacy ratio that places the Bank at the top of the
industry, a long-term entity rating of A+, and a short-term entity rating of A1+, the
highest short-term rating.

The Bank’s main shareholders are leading local and international financial
institutions, including

 Pak-Kuwait Investment Company,

(The only AAA rated financial entity in the country,)
 The Islamic Development Bank of Jeddah,
 Shamil Bank of Bahrain,

4
  Islamic Development Bank, Jeddah
 Kuwait Awqaf Public Foundation
 Saudi Pak Industrial and Agricultural Investment Company (Private) Limited.

Those in addition to their strength and stability add significant value to the Bank
through Board representation and applied synergies.
The Bank has an internationally renowned, very high caliber and pro-active Shariah
Supervisory Board presided over by Justice (Retd.) Maulana Muhammad Taqi Usmani,
a renowned figure in the field of Shariah, particularly Islamic Finance. He holds the
position of Deputy Chairman at the Islamic Fiqh Academy, Jeddah and in his long and
illustrious career has also served as a Judge in the Shariat Appellate Bench, Supreme
Court of Pakistan. The Bank also has a resident Shariah advisor, Dr. Imran Usmani,
who strictly monitors the regular transactions of the Bank. The board also includes
Sheikh Essam M. Ishaq (Bahrain), and Dr. Abdul Sattar Abu Ghuddah (Saudi Arabia).

At Meezan Bank, we strive to find commonalties with the conventional banking

system with absolutely no compromise on Shariah rulings. The bank has developed an
extraordinary research and development capability by combining investment
bankers, commercial bankers, Shariah scholars and legal experts to develop
innovative, viable, and competitive value propositions that not only meet the
requirements of today’s complex financial world, but do so with the world-class
service excellence that our customers demand, all within the bounds of Shariah.

Furthermore, the Bank has built a strong Information Technology and customer
knowledge-based focus that continues to use state of the art technology and systems.
The Bank’s Corporate and Investment Banking business unit is geared towards
nurturing and developing a long-term relationship with clients by understanding
their unique financing requirements and providing Shariah compliant financing
solutions across the horizon of corporate banking and structured finance.

The Bank is also implementing robust and aggressive strategic and tactical initiatives
on the consumer banking side. The Bank has a rapidly growing branch network
across all major cities nation-wide. Providing our customers accessibility and
convenience is a prime target, within an atmosphere and culture of dedicated service
and recognition of their needs.

We believe in adding value to our customers’ lives and businesses through dynamic
and competitive products and services that fulfill their needs while conforming
completely to the dictates of Shariah. At the same time, we endeavor to deliver
competitive risk adjusted ret

5
6
 FIELD OF ACTIVITIES

THERE ARE 6 MAIN DEPTT’S IN THE BANK

 OPERATIONS DEPARTMENT
 CUSTOMER SERVICES DEPARTMENT
 CREDIT DEPARTMENT
 TRADE FINANCE DEPARTMENT
 CORPORATE DEPARTMENT
 CASH DEPARTMENT

7
8
BRANCH MODEL FOR LAHORE BRANCH

9
 Hybrid Structure
Because of complex banking environment, Meezan Bank use hybrid type of structure
that has the following characteristics:

 Functional
 Allows economies of scale that all employees are located in the
same place and share all facilities.
 Enables in-depth knowledge and skill development.
 Enables organization to accomplish functional goals.
 Divisional
 Leads to client satisfaction because responsibilities and contact
points are clear.
 Best in large organization.
 Horizontal
 Promotes flexibility and rapid response to changes in customer
needs.
 Promotes a focus on team work and collaboration.
 Direct the attention of everyone toward the delivery of values to
the customer.

ORGANIZATIONAL POLICIES

Policy Formulation in Pakistan

The system at Meezan Bank is totally centralized. All the policies are formulated at
the top level and implemented at the middle and lower level. The policies are
formulated at Karachi, which is the main Head Office of MBL.

The most important thing about policy formulation at MBL is that the policies are
“dynamic” in nature. These are to be framed according to the macro and micro
environmental forces, so they keep on changing.

Main Categories of Policies:

 Functional policies regarding

 Main business areas
 Consumer banking product
 EBBS-the efficient IT system
 Managerial policies
 Accounting policies

10
FUNCTIONAL POLICIES

Business Areas in Pakistan

First of all they have made a policy regarding ‘Business Areas in Pakistan’ which
covers the areas of business offered by MBL in Pakistan. The detail of the policy is as
under:
 Consumer Banking
 Branch Banking
 Assets Sales
 Corporate and Institutional Banking
 Custody and Clearing Services
 Cash management
 Trade Finance
 Treasury Operations

MANAGERIAL POLICIES

Managerial policies include the following;

 Investment Policies
 Lending Policies
 Profit Rates
 Repayment and Collateral
 Audit and Control
 Servicing Policies
 Personal Policies
 Research and Development Policies
 Marketing Policies
 Recruitment Policies
 Environmental Policy
 Creditor Payment Policy
 Promotional Policies

ACCOUNTING POLICIES

 Accounting Convention
 Bad and Doubtful Debts
 Debt Securities, Equity shares and Treasury Bills
 Deferred Taxation
 Off-balance Sheet Financial Instruments

11
12
CONTEXTUAL ENVIORMENT

Culture
The strength of this organization lies in the people that work for it. At the heart of
our success is their commitment to equal opportunity, to a performance culture
where recognition, promotion and rewards are based upon merit and demonstrated
performance, regardless of nationality, race, gender or age. Their culture demands
that there are opportunities in their organization for anyone with a desire to succeed
wherever in the world they come from.
Their future is based on maintaining the confidence and trust of their customers, staff
and the governments and communities in which they do business. They recognize
that they have to demonstrate that they uphold the highest professional and ethical
standards and those they understand and respect the cultures of the countries in
which we operate.
Customers
At Meezan Bank understanding their customers’ business and responding to their
financial needs is fundamental to the way they do their business. As social and
environmental issues gain higher profile, they need to understand how their
customers meet these challenges and the impact this has on the way they do business.
They have dedicated Customer Service Centers with solution-oriented cash product
specialists to provide their customers with cost-effective solutions. Electronic delivery
system has been put in place to give their customers maximum control of their
transactions. Pakistan’s currency is the Rupee (SWIFT code: PKR).
They have revised their lending policy to ensure that they identify their customers’
social issues and any impact they may have on the natural environment.

They will:
Take account of internationally acceptable environmental and social standards in all
applicable lending proposals, and Include consideration of social and environmental
issues resulting from the lending proposal in their decision making where
appropriate.
This means that they will be more conscious of the way all their customers operate,
their attitude to social standards such as child labor and the impact their activities
have on the environment. Specifically they will also look at the environmental impact
where land and buildings are taken as collateral.
Bankers have not traditionally been trained in social or environmental matters.
However, they clearly have a responsibility to their employees to provide them with
the basic tools and training necessary to enable them to recognize the risks associated
with our lending proposals.

13
Training for their lending officers will be amended to include guidelines and
processes that set out:
 When certain actions are required (such as calling for an
environmental impact assessment)
 How to evaluate the social and/or environmental risk associated with
the lending proposal, and
 Where to get specialist help

Ethics
They are a highly ethical company. They expect their suppliers to be ethical
too. Their procurement processes aims to surface ethical issues. Where serious ethical
issues are identified suppliers will be excluded from doing business with us.

Environment
They aim actively to ensure that due regard is given to each of these issues in every
managed procurement by Meezan Bank. This will be achieved by:
1. Taking account of each issue throughout the sourcing process
2. Ensuring each issue is a factor in the supplier selection process

This should lead (wherever possible) to Meezan Bank favoring the use of suppliers
whose policies and actions demonstrate, at a minimum, compliance with Meezan
Bank’s own social, ethical and environmental standards and policies.

14
 PRESS RELEASE

JCR-VIS reaffirms A+/A-1+ratings of Meezan bank Limited. Outlook, Stable

Karachi, May 2,2003:JCR-VIS Credit Rating Company Limited has reaffirmed the
entity ratings of MBL at A+(Single A Plus) for the medium to long term and A-1 +(A
one Plus) For the short term. Outlook on the medium to long-term rating is “Stable”.
The reaffirmation is a reflection of the strong support enjoyed by the bank from its
local and foreign sponsors, as well as its strong capital base and the outstanding
quality of its assest portfolio. MBL’s position in the niche market for Islamic banking
is good as it is widely recognized as one of the pioneers of this form of banking in
Pakistan.
However, JCR-VIS will continue to monitor the ability of the bank to meet its
existing projections in view of the increasingly competitive environment in the
financial sector in Pakistan and the effect on MBL’s niche market of the planned
entry of various commercial banks into Islamic banking.

Faheem Ahmad
President & CEO

Contact:
Safdar Qazi/Saad Ahmad Madani/Faiza Zaidi
JCR-VIS Credit Rating Company Limited
Tel: 5680766,5680996,5671822,5671833
Fax: 5681105,5671600
E –Mail vispk@cyber.net.pk

15
 Branch Network
Meezan Bank has been in Pakistan since 1997. There are 24 branches that offer full
banking services in corporate, institutional and consumer banking and custody
services. Adopting a pro-active approach, they are able to offer a flexible and
comprehensive range of financial services, in particular transactional banking
products. They have also invested in their branches to ensure that their business is
supported by high-tech operations using state-of-the-art technology. Its branch
network is as follows:

Cities No. of Branches

Lahore 4
Karachi 10
Islamabad 1
Rawalpindi 2
Faisalabad 2
Peshawar 1
Sialkot 1
Kasur 1
Gujranwala 1
Multan 1

16
17
MARKETING STRATEGIES
MBL operates as a progressive and adaptive organization maintaining dynamism and
flexibility in all facets of its operations.

 From the very outset, MBL has concentrated on excellence and precision in
banking practice and has consequently been redefining industry standards.

 The Bank’s core strengths stem from its corporate philosophy, which stresses
the highest level of its security, reliability and value for its client’s money.

 The product portfolio concentrates on all facets of Islamic banking as well as

financial needs of corporate sector.

 The bank is currently adopting a Growth strategy in order to make their

position in the local market. And they are making great progress in pursuit of
this strategy facilitating access to high quality banking service to all.

 Currently they are conducting aggressive marketing for the publicity of their
products through billboards, banners etc.

The bank is committed to combine all its energies and resources to bring higher value,
security and satisfaction to its customers, employees and shareholders.

HUMAN RESOURCE MANAGEMENT

HR department in MBL basically deals with the process of acquiring, training,
appraising, compensating employees and attending to their labor relations etc. HR
officials at MBL (Karachi) perform value chain analysis.

EQUAL EMPLOYMENT OPPORTUNITIES (EEO)

Equal employment opportunities are given to all applicants who come for interviews
or tests. No discrimination on the basis of sex is seen at MBL, there are good
percentage of women employees at MBL in various departments.
In case of conflict at any level between any two employees or departments voluntary
mediation is done.

18
19
In this report, my endeavor has been to stipulate my experiences and observations,
during my internship at MEEZAN BANK LIMITED Gulberg Branch Lahore, Which
would always be memorable for me.

CUSTOMER SERVICES
Account opening and closing is the function of customer services department. The
bank’s customers includes individuals (single or joint), firm
(partnership/proprietorship), Autonomous corporations, Limited companies,
Charitable Institutions, associations, Educational Institutions or local bodies. MBL
accounts
 Current account
 Saving Account
 Foreign Currency Account

Brief Explanation of these accounts is as follows

CURRENT ACCOUNT
Current account is basically used to meet the daily transactions. The money kept in
current account is in the form of CARZE HASNA gives the advantage for paying
debts by the convenient and safe means of sending cheques through the post thus
avoiding the trouble and loss.

SAVING ACCOUNT
Mini deposit:::::::::::::::::::::::::::::::::::::Rs.10,000/- only

The deposits of the customers together with the bank’s contribution are invested in a
pool that consists of Ijarah and Murabaha financing. The profit earn on this pool is
calculated every month, and if you maintain a minimum average monthly balance of
Rs.10, 000/- you shall be eligible to receive profits that will be disbursed to you every
month. But if u’r balance is less then 10000 then u get no profit or no penalty is
charges to u. there is no fixed profit b/c every month new rate declared.

Profit Calculation

Rs. 10,000 up to Rs. 9,999,999

Rs. 10,000,000 up to Rs. 49,999,999

20
Rs. 50,000,000 up to Rs. 99,999,999
Rs. 100,000,000 and above

FOREIGN CURRENCY ACCOUNT

Mini deposit:::::::::::::::::::::$100 under Modaraba arrangement.

The return earn on the Modaraba pool is calculated every month and profit ratio is
declared for all investors is declared at the beginning of the month.
If you maintain a minimum average monthly balance of $500, you shall be eligible to
receive profits that will be disbursed to you every month.

BASIC OF ACCOUNT OPENING

The next week of my internship was to open new accounts. The opening of an
account is the establishment of banker customer relationship.

Following are the steps involved in the opening of new account.

INTRODUCTION AND PRELIMINARY INVESTIGATION

GENERAL INFORMATION ABOUT ACCOUNT OPENING

Account opening is the basic and first relationship, which is established between
Bank and the customer. In account opening extreme care has to be exercised in case
of completion of account opening documentation.
Whenever a client comes in the bank in order to open an account the first
information that is given to him/her about the types of accounts, which can be
opened, so far this purpose the client is given detailed information about the accounts
and their respective profit rates.

TYPE OF ACCOUNTS OPENED INDIVIDUAL ACCOUNTS

These accounts can be opened in any one of the schemes

 CURRENT
 PLS/SAVING
 TERM DEPOSIT
 RIBA FREE

At the death of an individual account holder the account is flagged as “deceased

account”. The credit balance is not paid to anyone unless the bank receives the court
order.

21
IMPORTANT DOCUMENTS REQUIRED

MINOR ACCOUNT
 Bay form and copy of passport minor
 National Identity card of Guardian
 Signature requirement of guardian
 Title as follows “ABC (M) DEF (G)

JOINT ACCOUNTS
As evident from the name these accounts can be jointly opened by any number of
persons. The minimum number of persons required to open a joint account is two but
there is no maximum limit.
 National Identity card of all Applicants.
 Signature of all Applicants.
 Zakat Affidavit of all Applicants (In case of zakat Exemption).
 Operation of account clearly mentioned.
 The options available to operate the account are:
o Jointly
 Either or Survivor
 Other(s)(Please specify)

INDIVIDUAL ACCOUNT

 Copy of national identity card

 Complete account opening form
 Letter of introduction if required
 Visiting Card (if the person is employed)

CLUB /SOCIETY/ASSOCIATION
 Certified copy of resolution
 Certified copy of rules
 Copies of National Identity cards of all directors/passports
 Completed account opening form
 Specimen Signature Card
TRUSTS ACCOUNTS
 Completed account opening form
 Specimen Signature Card
 Certified copy of trust deed
 Copy of rules/by laws
 Copies of National Identity cards of all trustees

22
CORPORATE ACCOUNTS

1. ACCOUNTS OF SOLE PROPRIETOR

These accounts can also be opened in any one of the schemes mentioned before.

IMPORTANT DOCUMENTS REQUIRED

 Declaration Letter
 Copy of NIC/Passport of the proprietor
 National Tax Certificate
 Declaration of Sole Proprietor on company letterhead
 Business registration Certificate
 Specimen Signature Cards and completed account op

2. ACCOUNT OF PARTNARSHIP
These accounts can also be opened in any one of the schemes.

IMPORTANT DOCUMENTS REQUIRED

 Partnership Deed, certified copy.

 Photocopies of NIC of all partners.
 Partnership Mandate (Prescribed Format).

3. ACCOUNT OF LIMITED COMPANIES

A lot of documentation is required in case of these accounts.

IMPORTANT DOCUMENTS REQUIRED

 List of Directors of company.

 NIC of all Directors.
 Copy of certificate of Incorporation.
 Memorandum of Association.
 Article of Association.
 Copy of Board Resolution.
 Latest Copy of Form-29
 Stamp of Company, which is to be affixed on the account opening form.
 Certificate of Commencement of Business

23
ACCOUNTS OF LITERATE
Features
 These accounts can be opened individually or jointly.
 For men, the right hand thumb impression and for women, the left hand
thumb impression is taken on account opening form.
 The customer is given advice to come to bank himself in order to withdraw
any cash or deposit the cheque.

IMPORTANT DOCUMENTS REQUIRED

 Photocopy of NIC of Account Holder.

 Two-three passport size photographs.

ACCOUNTS OF MINORS
Features

 The name of guardian is written in Title of Account.

 The account can be in any one of the schemes.
 Signatures of the guardian are always used to perform any transaction.
 Birth Certificate of minor.
 Photocopy of NIC of guardian.

THINGS TO BE CONSIDERED BEFORE OPENING AN ACCOUNT

 Verification of the customers’ credentials.

 The suitability of the prospective customer.
 The proposed relationship should be violate:
o Any of the local laws.
o State Bank’s rules and regulations.
o The Bank’s own policy.
 The prospective profitability of the relationship.

IMPORTANT POLICIES REGARDING ACCOUNT OPENING

 Some of the important policies of bank that has to be considered before

opening an account are as follows:
 Identification and screening of customer.
 Completion of all relevant columns of account opening form.
 Ascertaining the genuineness of credentials furnished by customer.

24
  Proper completion of documentation.
 Verify the genuineness of introduction.
 Account should be opened after seeing the originals documents like

o NIC
o Passport
o Partnership Deed, etc.

FUNCTIONS PERFORMED IN CUSTOMER SERVICES

ACCOUNT OPENING DEPARTMENT

 Account Opening
 Account Closing
 General Client Dealing
 Locker Opening

INFORMATION TO BE FILLED IN ACCOUNT OPENING FORM

 Type of account
 Title of account
 Personal Information of Applicant
I. Name
II. Father’ Name
III. Mother’s Maiden Nam
IV. Occupation

V. Employer
VI. Job Title
VII. Address of employer
VIII. Nationality
IX. Country of Residence
X. NIC
XI. N.T.N. number
XII. Passport number
XIII. Date & Place of Issue
XIV. Residential Address
XV. Correspondence Add.
XVI. Hold Mail Instruction (Either Yes or No)
XVII. E-Mail Address

25
 XVIII. Fax No.
XIX. Telephone No.
a. Next of Kin
b. Corporate Account
c. Type of Entity/Organization
d. Nature of Account
e. Currency of Account
f. Zakat Deduction
g. Signature Requirement
h. Details of other Bank Account
i. Introduced By (most important part in account opening process
without which no account can be opened.)

INTRODUCER CAN BE

 Anyone from the staff members.

 A well reputed customer of the Bank.
 Another well reputed Bank.
 Customer employer, if he/she is of good repute.

PROCEDURES FOR ACCOUNT OPENING

First of all, after inquiring from the customer what type of account he/she wants to
open, the account opening form is got
filled from the customer and signed it. Along with the account opening form, the
customer is also signed two Specimen Signatures Cards.

After fulfilling all the formalities of account opening, the computer generated account
number is given to the customer that is of special series depending on the type of
account.

26
 DIFFERENT SERIES OF ACCOUNT NUMBERS

Sr. No. Account Type SERIES

1 Saving/Pls 0085
2 Current 0081
3 Mark Up 0666

REQUISITION SLIP

A requisition slip is given to the customer to sign it so that the customer can get
chequebook.
Chequebook is issued after one-two days of receiving the requisition slip.

LETTER OF THANKS

After opening the account “A Letter Of Thanks” is send to the customer in order to
thank the customer for opening an account in the Bank. This letter tells all the
information regarding his/her accounts, which are kept very confidential.

ACCOUNT OPENING REGISTER

After an account is opened, an entry is made in the account opening register, which
has the following columns:

 Date
 Account Number
 Name & Address
 Telephone Number
 Initial Deposit

Customer Services /Relation Officer enter the new account opened in computer and
the Specimen signature Cards are also scanned so that whenever a cheque of the
respective account comes for encashment, the signatures can be verified.

27
TRADE FINANCE

I moved to the Trade Finance Department under the supervision of Mr. Rizwan
Qureshi, in charge Trade Finance.

DEFINITION

“Trade finance means that trade which returns we get finance”.

TWO MAIN POINTS

 Imports
 Exports

IMPORTS

 Letter of credit
 Registered contract
 Advance Payments

EXPORTS

 Export Negotiation
 Collection
 Advance Payments

LETTER OF CREDIT

Letter of credit is very useful instrument in facilitating commercial relations b/w

businessman at various places.
A letter of credit is a financial instrument issued by a bank on behalf of one of its
customers, which authorizes an individual or a business firm to which it is addressed
to draw draft on the bank for its account under certain conditions as set forth in the
document.

28
DEFINITION

“The letter of credit is a written instrument issued by the buyer’s bank authorizing
the seller to draw in accordance with certain terms & conditions”.
Or
“The letter of credit is commitment on the part of the buyer’s bank to pay or accept
drafts drawn upon it provided such drafts do not exceed a specified amount”.
Or

“The essence of this letter is that the person taking bills on the faith of
it is to have the absolute benefit of the undertaking in the letter and to
have it in order to obtain the acceptance of the bills, which r negotiable
instruments payable according to their tenor, without reference to any
collateral or cross claims”.

Letter of credit state the limit of the credit and the time during which it is held at the
disposal of the grantee, but they are Neither negotiable nor transferable. Letter of
credit also known as DOCUMENTRY CREDIT.

PROCESS BEFORE OPENING OF LC

 LC AGAINST SECURITY

LAND & BUILDING

 Equitable mortgage
 Registered Mortgage

PLANT & MACHINERY

 Hypothecation & current assets of the co.,

 1st charge
 2nd charge
 So on

LAND & BUILDING

It’s the security of LC against land & building.

29
EQUITABLE MORTGAGE

It’s the agreement b/w bank & party that in case of default the letter party have the
right to sell the property & recover his money.

REGISTERED MORTGAGE

If equitable mortgage is registered by the registrar of the companies its registered

mortgage.

PLANT & MACHINARY

It’s the security of LC against plant & machinery

HYPOTHECATION & CURRENT ASSETS OF THE CO.,

Firstly one customer comes to bank and ask for opening of LC. Then bank evaluate its
assets land & building plant & machinery plant & machinery or Balance sheet analysis
for security purpose. The corporate deptt of bank do this work. After evaluation all
documents are prepared. Then all documents send to the customer for signatures.
Then further procedure of LC is done.

1 ST PARI PASSU CHARGE

Means if customer comes to bank & request to open LC against securities or same as
go to another bank to open an LC. Then 1 st bank allows to another bank then its 1 st
pari passu charge or in case of default all the assets, stocks or receivables are divided
equally b/w two banks

2 nd CHARGE

In 2nd charge more then two banks are involve. In case of default 1 st bank firstly
recover all his money then 2nd & 3rd bank divided banks assets equally.
Same as 3rd 4th or so on pari passu charges.

NOTE

But mostly all blue chip banks do only 1st pari passu charge.

30
LIMIT

When customer says that open an LC of 50 thousand. The bank says no we only open
an LC of 25000.then customer or bank agrees in one rate its called limit.

TYPES OF LETTER OF CREDIT

 REVOCABLE LC
 IRREVOCABLE LC

REVOCABLE LC

The issuing bank reserves the right to cancel the LC at any time and the bank will be
under no obligation to give a notice of cancellation to the beneficiary.

IRREVOCABLE LC

The bank alone cannot cancel credit, and it will have to run its full course; but it can
be cancelled if the beneficiary agrees to such cancellation.

PARTIES OF LC

 A customer, buyer, importer

 Importer issuing applicant bank
 Seller exporter beneficiary
 Exporter bank

TYPES OF SHIPMENT

 Part shipment
 Transshipment

MODE OF PAYMENT OF LC

 Sight LC
 Usance LC

31
EXPORT

EXPORT NEGOTIATION

It’s simply the purchase of documents. Negotiation means the giving of value for draft
or documents by the bank authorized to negotiate. Mere examination of the
documents without giving of value does not constitute a negotiation.

COLLECTION

Collection means the handling of documents by the bank in accordance with

instructions given by the exporter .the exporter after having shipped the goods to the
required port (normally the buyer country) furnishes the export documents to his
bank.

These documents are broadly categorized into 2 types.

 Financial documents
 Commercial documents

FINANCIAL DOCUMENTS

Bill of exchange, promissory note, in international trade use of promissory note is

restricted.

COMMERCIAL DOCUMENTS

Means invoices, transport documents, documents of title of goods or any document

that whatsoever not being financial documents. Some of such documents are :

 Commercial invoice, Performa invoice

 Packing list
 Bill of lading, airway Bill Sea way bill (transport documents)
 Certificate of origin
 Documents of title of goods

ADVANCE PAYMENT

In this method of settlement of payment, the buyer pays 4 the goods to be purchased
in advance. This method facilitates the exporter to go ahead with out any difficulty
where there is a Paucity of funds. This method is best-suited 4 the exporter but highly

32
risky 4 the importer b/c the exporter may default in delivery .the buyer agrees 4 it in
cases where he has utmost faith in the exporter.

33
Corporate Banking Corporate Banking & Corporate Finance

The Corporate Banking Department is geared towards providing comprehensive and

innovative financial solutions to the bank’s client base through a diverse product
offering. The focus is on nurturing and developing a long-term relationship with
clients by understanding their unique financing requirements and providing Shariah
compliant financing solutions. The Bank offers following products and services to its
customers:
The unit tailors solutions for a broad array of financing needs, both short and long
term, and has experience of working closely with customers who are seeking
innovative Shariah compliant solutions for such needs.

 Working Capital Requirements

The Bank offers a wide range of products to meet the customers’ working
capital requirements through various Shariah compliant modes of financing
such as Murabaha, Musharakah, Modaraba, Istisna and Salam

Here is brief description of the Islamic modes which are frequently in use in
MEEZAN BANK LIMITED.

 Project Financing/Expansion/BMR Requirements

Meezan Bank specializes in offering unique project financing solutions, which

have been developed using a wide array of product offerings, which include
Diminishing Musharakah, Ijarah, Modaraba, Istijrar, Murabaha and Istisna
forms of financing and derivatives thereof.

 Export Refinance:

Meezan Bank enjoys a distinction vis-à-vis its competitors, as it is the only

Bank in Pakistan to offer a Shariah compliant “Islamic Export Refinance
Scheme (IERS)” approved by the State Bank of Pakistan (SBP). The scheme has
been developed by the product development team of Meezan Bank in close
coordination with SBP keeping in view the unique needs and requirements of
exporters. The scheme is available in both Part-I and Part-II as per the original
Export Refinance Scheme (ERF) of SBP.

 Trade Related Services:

The Bank offers a complete range of trade products to its customers including
Sight/Usance Letters of Credit, Letters of Guarantee, Export bill collection,

34
 Export bill purchase etc. These products are based on various modes of Islamic
Finance and have been designed to suit the needs of the customers.

Corporate Finance & Advisory

The unit also provides a range of Advisory services integrating industry, product and
regional specialization to help businesses address their strategic issues and formulate
and execute dynamic business strategies. In a short span of time the unit has been able
to develop core specialization in Privatization Mandates, Mergers and Acquisition,
buy-side/sell-side advisory, financial restructuring and related fields.

The unit counsels its clients on the most advantageous a transaction structures and
tactics available and creates new structures to get difficult or complicated M&A deals
done.

Whether advising on a multi-billion rupee M&A transaction or origination and

marketing & distribution of primary market transactions, the Corporate Finance
Department brings superior innovation, experience and capabilities to each of its
clients.

PRINCIPLES OF FINANCING

Five basic financing principles are followed by MEEZAN BANK LIMITED

 Safety:

Banker’s funds are comprised of money, which is mainly borrowed from numerous
customers on various accounts. This shows that whatever money the banker holds
belongs to his customers, who trust the banker with it only because they have full
confidence in the expert handling of their money by the bankers.

 Character of person:

a. It is the most important factor in determining the safety of advance, for

there is no substitute for character. Borrowers character can indicate
his intension to repay the advance, since his honesty and integrity is of
primary importance.

35
 b. If the past record of the borrower shows that his integrity has been
questionable the banker should avoid him, especially when he offers
security is inadequately covering the full amount of advance.
c. Good habits, personality, the ability and willingness to carry out a
project through from beginning to end, and the reputation of the
people with whom he deals, will go to make the character of the
customer.
d. I t is obligatory on the banker to ensure that his borrower is a person of
character, and has enough capacity to repay the money, including the
interest.
e. This can be judged from the following:
1) Past record
2) Experience in that particular industry
3) Amount of capital invested by the customer

 Capacity for repayment of loan:

This is the management ability factor, which tells us how successful a business has
been in the past, and what are the future possibilities.

He may not have vast financial resources but with some management abilities
including the inside into a specific business, he may make his business very profitable.
On the other hand if a person who has no insight into the particular business for
which he wants to borrow funds from the banker, there are more chances of loss to
the banker.

 Capital:

The role of the bank is to provide short-term capital for commerce and industry, yet
some borrowers would insist that their bankers provide most of the capital required
by them. This makes the banker a partner. But the banker must consider the fact that
whether the amount requested is reasonable against borrowers own investment or
resources.

 Liquidity of securities against loan & financing:

Liquidity means the possibility of recovering the advances in emergency, because all
the money borrowed by the customer is repayable in lump sum on demand.
Generally the borrowers repay their advances steadily and the funds therefore
released can be used to allow fresh loans to the other customers.

36
Nevertheless the banker must ensure that the money he is lending is not blocked for
a longer period of time and also the fact that a borrower should be able to repay the
amount outstanding against them on short notice.
In such a situation, it is very important for a banker to study his borrowers’ assets to
liquidity, because he would prefer to lend only for a short period in order to meet the
short falls in the working capital.

 MBL CREDIT POLICY:

 Safety = nature and extent of risk

 Liquidity= maturities
 Profitability= spreads and profit margins.

 BASIC REQUIREMENTS OF CREDIT ADVANCES:

 Belief on the person.

 Good repute of client.
 Trust in a person’s ability and intention to pay back at a later time for
goods and services supplied.

37
Credit process of MEEZAN BANK is as follows:

1. Credit Marketing
2. Credit Analysis
3. Credit Proposal Processing
4. Credit Proposal Evaluation and Decision
5. Credit Administration

i. Completion of documents
ii. Credit monitoring
iii. Dealing with non performing accounts

38
 Credit line proposal processing documentation
STEP 1

REQUEST LETTER

The Manager
MEEZAN BANK Ltd
XXXXXXXXXX Branch
City XXXXXX

Date: XXXXX

Dear Sir,

REQUEST FOR CREDIT LIMIT OF RS = XXXXX

FOR XYZ REASON:

This is to request you to -------------------------

Thanks & Regards

Mr. XXXXXXX
Address House no XXXX
X-Block, X housing authority, Lahore

STEP II
Date: [ ]

39
LIMIT TYPE: NEW/RENEWAL EXPIRY:[date]
CREDIT APPROVAL
FOR FUNDED/UNFUNDED FACILITIES TO
Company name

INTRODUCTION

Introduction to Company, group overview, nature of business, commencement of

operations, location of facility(ies), legal status, stock exchanges etc.

EXISTING RELATIONSHIP & ACCOUNT PERFORMANCE

Discuss the existing relationship and performance of account with MBL in terms of:
Levels of Limits, Utilization of Limit, Account Performance, Account Profitability,
Funded/Non-funded Business etc.

PROPOSED LIMITS

The current proposal is being put forward to the management to seek

a RENEWAL/NEW LIMIT for ABC.
Funded Existing New

Istijrar

UnFunded Existing New

L/C’s (Usance and or
Sight)
Guarantees
Forward Cover

The funded Facility is Valid for upto [Insert date] or for [Insert time Period] years
from the date of first drawdown. The non-funded facilities are valid till [ insert date ]

Note: MBL’s per party exposure (30% of its unimpaired capital and reserves) as at xx-
xx-20xx is Rs mm and that the proposed limits are within the exposure. Furthermore,
MBL’s per group exposure as at xxx is Rs xxmm and that the overall exposure to the
group is within the allowable limit.

Give reasons/justification for your recommendation i.e. for enhancement / reduction

in limits

40
TERMS AND CONDITIONS

Funded
Facility type Master Murabaha
Facility amount
Purpose
Profit Rate
Facility Tenor
Sub Murabaha Tenor
Payment of
Murabaha Cost
component
Payment of
Murabaha Profit
component
Security

Non-Funded
Facility Type Letters of Credit Facility (Usance and or Sight)
Purpose
Facility Amount
Security [Preferably for both sight and usance. However, usance
line must be secured as a policy and exception could only
be allowed after COO/CEO approval.]
Facility Service [PKR Equivalent]
Charges
Facility Expiry
Facility Type Guarantees
Purpose
Facility Amount
Facility Service [PKR Equivalent]
Charges
Facility Expiry

41
Security

42
 S PONSORS /G ROUP P ROFILE
Sponsors/group background, overview, brief financials, associated companies etc. It is
highly recommended that two worksheets providing consolidated key group
financials (B/S as well as I/S items) and summarizing MBL’s exposure (funded &
nonfunded) to the entire group are attached as annexure to the memo.

C OMPANY P ROFILE
The section must cover the following areas of business/operations in detail :

Raw material & supplier info (reliance on suppliers, alternative sources of raw
material, terms of credit offered etc)
Technical information on Plant and equipment, Capacity utilization, recent BMR,
new technology, ISO certification etc
Products and Product break up (market share w.r.t competitive products)
Pricing and credit terms of Product
Distribution, Selling/ Marketing strategy

Financial Strategy

Buyers Info. (names of major buyers with their share of total sales)

Ownership & Board of Directors:

Board of Directors and ownership structure

Shareholders Percentage
shares held
Total 100.00
Must clearly mention the shareholding owned directly by the sponsors and/or
through other group companies.

Management Overview and Strategy:

Discuss the Key Management along with experience and competence of key
managers. Brief overview of the management business strategy etc.

Recent Operational Performance Overview:

Discuss the recent operational performance of the company – in terms of production
and sales, marketing, etc

43
F INANCIAL R EVIEW (AUDITED RESULTS UPTO J UNE 30, S EPT 30, D EC 31, 200X)

The following table illustrates selective financial highlights of the company over the
past three years (atleast)

Insert Table (last 3 years key financials(audited) as well as latest available un-
audited numbers)

Financial review of the company is discussed in terms of profitability, leverage,

efficiency, liquidity and activity as follows:

Profitability (Discuss Income Statement, Net Sales, Gross Margins, Operating Margins
etc)

Leverage (Discuss Leveraging, debt financing, short term and long term finances,
purpose of such financing – inventory financing/BMR etc.)

Operating Efficiency Ratios (Discuss Inventory Turnover, Days receivable, Days

Payable, Operating Cycle Days, asset turnover etc)

Liquidity and Cashflow (Current Ratio, Net Operating Cash Flow, EBIDA, Net
working Capital)

Projections and Debt Capacity Calculations (Mandatory for Long Term Financing
requests of tenors over 3 years)

The section should also discuss the most recent financials available – (management
accounts, un-audited accounts, projections etc).

Note: The commentary on the financial performance must explain the underlying
reasons for any changes in margins, ratios, increase/decrease etc. For example, a
statement only stating that the gross margin improved from x% to y% is not
acceptable. The fact must be supported by reasons for such change.

44
F INANCIAL A RRANGEMENTS

Short Term Finances:

Short-term finance and security (facility Type, rate, security)

Redeemable Capital and Long Term Finance Facilities:

Long-term finance and security (facility Type, rate, security)

I NDUSTRY & M ARKET

In case if the industry section is lengthy (say over 2 pages), the same may be attached
as annexure and an industry report synopsis may be provided (here) in the credit
memo.

Global Industry overview

 Key Industry dynamics

 Demand-Supply Stats
 Key Players
 Growth estimates and future outlook
Industry Overview in Pakistan

 Demand Supply Stats

 Growth estimates
 Structure of Industry: Raw Material, Suppliers Key Players and market share
 Domestic Market Dynamics (Bargaining Power of Buyers, Bargaining Power of
Suppliers, Threat of Competition, Threat of Potential Entrants, Product
Substitutes)
 Critical Success Factors – Regulatory Framework, Taxation, Laws etc
 Future outlook

45
Assessment of Business Risks and their Mitigates :

Raw material & supplier (reliance on suppliers, alternative sources of raw material,
terms of credit offered etc)
Technology, Capacity utilization, certification etc
Market share w.r.t competitive products, Demand / Supply dynamics
Pricing. Reliance on few large buyers
Distribution, Selling/ Marketing strategy

Duty/tax structure

Succession risk

C REDIT CHECK / MARKET CHECK (FROM OTHER FINANCIAL INSTITUTIONS ,

CUSTOMERS , INDUSTRY SOURCES/EXPERTS ETC .)
[At least two references must be obtained and filed in the credit file. Any credit
reference being reported must include the name & contact no. of the person. For any
new relationship with a private limited, partnership or proprietorship, a credit report
from D&B is recommended.]

Any facility (ies) rescheduling done with any FI over the last 5 years must be
mentioned in this section along with relevant details.

C OMPLIANCE WITH P RUDENTIAL R EGULATIONS [ NEW PR ] AND A UDIT

As per the audited Accounts Required Actual
dated xxxx

CIB R EPORT
[Must be requested at the time of initiating the credit proposal and should be part of
the package to be submitted for management’s approval]

If credit is being recommended despite overdue reported in the CIB, the same must be
justified.

46
S EARCH R EPORT
Discuss findings of Search Report

[Disbursement will be subject to clear CIB and satisfactory search report.]

47
R ECOMMENDATION

It is recommended that Meezanbank may renew the facilities at current/enhanced

levels as below on the basis of following strengths:

 Strength 1
 Strength 2
 Strength 3

Funded New
stijrar Rs 100 Mn
UnFunded New
L/C’s (Usance and or Rs 100 Mn
Sight)
Guarantees Rs 40 Mn

Prepared by Reviewed By

___________________

48
APPROVAL SHEET–GRADING OF RISK

To: Date:
Office: Our Ref:
From Your
Ref:

CLIENT: GROUP:
Total Limits (Rs. in Fund Based (Rs. in ‘000) Non-Fund Based (Rs. in ‘000)
‘000)
Financial Statements obtained for the period ending
xxxxx 2004
Audited / Un-audited
Qualified / Un-
qualified

Branch observations :
Symptoms/Weaknesses identified`:

Branch Recommendations:
New Previous (if
applicable)
Grade:
Risk Index Level (RIL):
Condition:
Trend (Financials):
Lowest Grading Assigned to any Group
Account:

Judgmental Risk Assessment:

Justification for Judgmental Risk Assessment:

BCC Chairman BCC Member BCC Member

BCC Member

Area Office Recommendations:

For Head Office Use:

49
Final Assessment:

Justification for Judgmental Risk Assessment (if different from the Branch & Area
Office Recommendations:

Further Action Required: Recommendations:

Signature:

COMPOSITE CREDIT APPRAISAL

Branch Date
Ref no. CLP Review Date
Client Customer Identification
Code
Group Group Code -

Sector
Business
Segment
3
Section–A (Weight Tick  appropriate box
age 40%) Strong Fair
Business Good Poor Scor Out
Information: e of

50
1- Ownership Governm MNC/ Public Partnership
structure en Public L Sole
t Ltd. t Proprietorsh
en (Listed) d ip
tit .
y (
U
n
li
s
t
e
d
)
P
v
t.
L
t
d
.
Scores: 8 5 3 1 8
2- Sector/exposure Prime Less
preference for Preferred R Undesired
MBL (Target i
Market) Branch s
to decide on the k
basis of economic
(operating)
environment,
industry
situation and
outlook, market
conditions recent
business failures.
Scores: 3 2 1 0 3
3- Position in the Top 10% Top Insignificant
industry Top 50% 7 / Unknown
5
%

51
 Scores: 3 2 1 0 3
4- Market Good Accepta Poor/
reputation Satisfacto b Unknown
(Bank’s, ry l
competitors, e
buyers, &
suppliers.
Scores: 4 3 2 0 4
5- No. of years in 5 Years 1-2
business 3-4 Years Y Less than 1
e Year
a
r
s
Scores: 3 2 1 0 3

52
6- Management Have Has Has No
Quality/Professio go average a professional
nal od training v training and
Qualifications: tra & few e experience.
(Technical & ini years r
Commercial) ng experien a
& ce in his g
ma line of e
ny business. t
ye r
ars a
ex i
pe n
rie i
nc n
e/ g
ex &
pe
rt o
in n
his l
lin y
e t
of h
bu e
sin o
ess r
. e
t
i
c
a
l
e
x
p
e
r
i
e
n

53
 Scores: 3 1
2 0 3
7- Existing bankers Over 15 3 to 6
7 to 15 Up to 2
Scores: 3 1
2 0 3
8- Availability of Over Rs. Rs. 100 Rs. 10 Less than Rs.
financing 20 M to M 10 M
(Excluding MBL) 0 Rs.199 M
M t
o
R
s
.
9
9
M
Scores: 3 1
2 0 3
9- Instant Strong Fair
Repayment Good Limited
Ability
Scores: 5 1
3 0 5
1 Willingness to Offer all Partially
0- provide inf On a Resist
information or request v information
ma a
tio il
n a
b
l
e
Scores: 5 2
3 0 5
Total

54
Section– B (Weight Strong Fair
age 30%) Good Poor Scor Out
Financial e of
Information:
1- Availability of 3 Years 2 Years 1Year B/S No
financials B/ B/ & Financial
S S P s
& & &
P P L
& &
L L
Scores: 3 2 1 0 3
2- Evaluation: Debt 50:50 60:40 70:30 80:20
to Net Worth
Scores: 5 3 2 1 5
3- Working Capital Positive & Positive Positive & Negative
im de
pr cli
ovi ni
ng ng
Scores: 5 3 1 0 5
4- Sales & Steady & Fluctuatio
Profitability ab ns,
trend (Sales, ov bu
Margins & e t
Operating Cash In at
Flows) d. go
av od
era lev
ge. el
in
lin
e
Scores: 7 1
4 0 7

55
5- Payment Prompt Reschedul
information on Occasiona ing Default
Long-term l delay /R
Debts /. Short est
term finances ru
ctu
rin
g
Scores: 10 3
7 0 10
Total 30

Section– C (Weight Strong Good Fair Poor Score Out of

age 15%)
Other Information:
1- Compliance of Fully Minor Major Deviatio
lending Co de de ns will
stipulations and mp via via not be
covenants lie tio tio complied
d ns ns
bu bu
t t
wil wil
l l
be be
co co
mp mp
lie lie
d d
Scores 2 1 0 0 2
2- SBP CIB Clean CIB Clean CIB Overdue Default
Scores 1 1 0 0 1

56
3- Dispute/Court None Dispute Under Suit
Action/Litigation Ex liti Filed by
ists gat Banks/D
io ecreed
n
wi
th
ba
nk
s
Scores 2 1 0 0 2
4- Rescheduling / None Once But Twice but More
Restructuring of no no than two
Loans w w times
reg reg
ula ula
r r
Scores: 1 1 0 0 1
5- Group Account / Regular Substanda CIB Default
Associates rd Ov
er
du
e
Scores 1 0 0 0 1
6- Account Conduct Excellent Good Fair Needs
(import (n (very (so improve
settlements, o little me ment
export fol follow-up fol (extensiv
realizations, lo required) lo e follow
mark-up w- w- up
payments, loan up up required)
repayments, re re
submission of qui qui
stock reports, re re
renewal of d) d)
insurance policies
etc.)
Scores 8 5 2 0 8
Total 15

57
Section– D (Weight Strong Good Fair Poor Scor Out
age 15%) e of
Collateral:
1- Security support Cash/near +Easily +Pledge Ranking
(must be assessed cas rea of Reg.
according to the h liz sto Charge
stringent criteria col abl cks on
that take into lat e /1st FA/CA,
account our past era sec Re Un-reg.
experiences with l, uri g. Hypo.
the realization of LG ty, Hy Charge
such collateral & DF po. on
LC I Sto Stocks &
s Gt cks Receivab
of ees /R les, PG,
for , ec Clean
eig Ma eiv Facility
n rk abl
ba eta es,
nk ble Fix
s sh ed
acc are As
ept s set
abl (C s,
e D Re
to C) g. /
M E
BL M
, ov
Ba er
nk pr
Gt op
ees ert
ies
Scores: 15 12 5 0 15
Total 100

58
FACTOTS LEADING TO COMPOSITE CREDIT APPRAISAL:

1. Grading of Account:
2. Risk Index Level:
3. Condition:
4. Trend (Financials):

Current Grading:

Regular Company’s Net

Accounts Worth
Grade-1 (in Rs. M)
1A Over Rs. 500 M
1B 250 499
1C 100 249
1D 10 99
1E Up to Rs. 9 M
Note:
Even if the facilities are fully cash collateralized the account grade should be based
purely on the above criteria. Once an account becomes irregular or doubtful, its
initial rating should not be considered. At the time of upgrade, equity criteria should
be applied again to ascertain its new placement (in other words an account will lose
its initial grading alphabet due to successive losses).

Grade 2
Account
s
WATCHLIST
Grade – 2A Where current audited financial statement are not available, or are
more than 21 months old (if applicable 24 months) non-adherence of
lending covenants, charge / security documentation formalities are
incomplete.
Grade – 2B Weak borrowers who indicate signs of deterioration such as
worsening of financials positions, e.g., operating losses, slide in ratios
and liquidity etc., hardcore cash flow, frequent requests for
TOD/Excess over limit, delay in servicing of mark-up/principal, forced
loans under litigation with any bank.
Grade – Accounts experiencing prolonged irregularity under Grade 2 (Watch
3Accounts list) to be included in Grade 3 (Substandard) accounts.
SUBSTANDA

59
 RD
Grade – 4 Accounts in which there is highly probability of some loss on the basis
Accounts of information available e.g. customer attains a negative net worth and
DOUBTFUL the weakening of security.
Grade – 5 Accounts for which no further recoveries can reasonably be expected
Accounts i.e. debts for which full provision has been made.
LOSS

Account Upgrade:
To formalize upgrading of an account reason for change of grade should be explained.
Where downgrading was initiated and effected by Head Office prior approval of H.O
to upgrade the account must be obtained.

Accounts graded 3, 4 and 5 should be upgraded only with prior approval of Head
Office. However, the concerned Branch Credit Committee must support with valid
evidence, the proposed upgrading, before it is presented to the Head Office.

While watch listing the account, the credit officer / Branch Credit Committee should
determine the period for monitoring the account under watch list. The reason for
watch listing should be documented and specific remedial actions should be
recommended by Branch Credit Committee for approval to Credit Division on the
attached format (Annexure-A). Progress relating to remedial strategy should be
reviewed on quarterly basis by Area Office and Credit Division/ Credit Monitoring
Division.

When classification of a borrower is warranted under grade 3,4 & 5 accounts,

categories “substandard/doubtful/loss” will be assigned depending upon severity of the
weakness, determined on the basis of “time” and / or “event” related criteria. To assign
the proper classification, Credit officer / Branch Credit Committee must:
- Differentiate between symptoms and their causes.
- Assess the borrower’s ability to rectify the problems within a reasonable time
frame.
- Consider the options available to improve its position as creditor.

60
Risk Index Level (RIL):

MBL Risk Index is based on a scale of 1 to 10, where 1 represents a lower and 10 a
higher percentage of observed Business Failures:

Total Risk Index

Score Level
100 1
90 2
80 3
70 4
60 5
50 6
40 7
30 8
20 9
10 10

Condition:
The condition of account will be categorized on aggregate score of the borrower
under following serial number of sections A, B & C.
Serial Section A Max Actual
Number Score Score
4 Market Reputation (Banks, Competitors, Buyers & 4
Suppliers)
9 Instant Repayment Ability 5
10 Willingness to provide information 5
TOTAL 14

Section B
1 Availability of Financials 3
3 Working Capital 5
4 Sales & Profitability Trends 7
5 Payment information on long term debt / short term 10
facilities
Total 25
Section C
1 Compliance of lending stipulations & covenants 2
2 SBP CIB Report 1
5 Group Accounts / Associates 1

61
 6 Account conduct (Import settlement, export 8
realizations, markup payments etc)
Total 12
Based on above criteria conditions should be determined on following parameters:
Aggregate score under above serial no’s in Section A, B, & C Condition
(12+20+8)=40
41 and i.e. 60% to 79% Strong
above
31 to 41 i.e. 60% to 79% Good 
21 to 30 i.e. 41% to 59% Fair
20 and i.e. 40% & less Poor
below

To qualify for categories Strong and Good, mentioned above customers borrowing
relationship during the last one year should have been satisfactory and all the lending
stipulations and covenants have been complied with. In addition to that, there must
not be any default / hard-core over dues in the customer accounts.

Moreover, in case of new relationship, such accounts should not be placed in the
category of “Strong” while recommending credit facilities for the first time.

62
Trend (Earnings Performance / Profitability Situation):

Strong Good Fair Poor

Sustainable income Fluctuations, but at Balanced or negative Information either
situation positive good level but in income situation not available or
and above the line with industry and satisfactory more than 18
industry average: average: equity; months old.
Negative income
Cash flow situation and
comfortably covers Cash flow Cash flow covers shortage of equity /
obligations and comfortably covers obligations, it is not assets.
generates an above obligations and sufficient, however Cash flow does not
average return on generates an average to allow equity to cover current
equity and a return on equity and earn a return and obligations
financial cushion financial cushion for create a financial
for the future. the future cushion for the
future

Special Events: (Critical legal information, change of management, mergers,

legal notices, winding-up orders, fire, large debts, changes within the
subject’s business etc.) NA

Adverse Listings: (Slow payments, bad debts, auditor’s observation etc.)

NA

63
 E LIGIBILITY S CORE S HEET

Applicant’s Name: xxxxxxxxxxxx Branch:

xxxxxxxxxxxxxxxxxxxxxxxxx
Date: xxxxxxx
Ref:
No.xxxxxxxxxxxxxx
More than 50% 25 points
40% or more 20 points
Equity
30% or more 15 points
20% or more 10 points
Monthly payment less than 20% of
15 point
gross monthly income
Monthly payment more than 20% but
10 points
< 30%
Monthly payment more than 40% or
Repayment Ability (-5) points
less
Monthly payment more than 45% or
(-10) points
less
Monthly payment more than 50% or
(-20) points
less
Holds credit card for the last 2 years
and or is or has been a borrower of
Credit History 10 points
bank loan during the last one year
with no delayed payment history
Completely verifiable Income on our
10 points
Income Verification own
Verifiable through authorized agency 5 points
Permanent employee of a corporate
10 points
organization for the last 2 years
Other salaried job 5 points
Profession Status Self employed with audited Balance
10 points
Sheet
Self employed without audited
5 points
Balance Sheet

64
 Is member of employer’s pension
Investments 5 points
scheme or has life insurance
Tax payer 5 points
Tax payer
Non tax payer 0 points
Statement of Bank account for the last
10 points
6 months with satisfactory conduct
Statement of Bank account under 6
Profession 0 points
months with satisfactory conduct
No Bank account (-10) points
On – profession list (-25) points
Property Location In – listed area (-15) points
Unclear CIB or on the – list of Data
CIB (-15) points
Check
Minimum qualifying points needed = 50
SCORE=_____________________

________________
___
APPRAISER

XYZ Client Date

65
 Offer letter

Address

Kind Attn: Mr. ABC

Dear Sirs:

Assalaam-o-Alaikum,

Subject: Grant of Credit Facility to M/s. XYZ

With reference to your recent discussion with us, we are pleased to offer through this
letter the following facilities to you on the terms and conditions stated hereunder:

Funded
Facility # 1 Istijrar (Master Murabaha) Facility / Import Murabaha
Facility for both Sight & Usance LCs / Export Murabaha
Facility
Facility amount PKR 300 MM (Rupees Three Hundred Million Only) or
Equivalent US$ Amount (subject to availability of US
Dollars at MBL’s end).
Facility Structure MBL and XYZ will enter into a Master Murabaha Facility
agreement amounting to PKR 300 Million (or Equivalent
US $ amount). XYZ will be allowed to draw down the
facility under a series of Sub-Murabaha tranches for local
purchase or import of following items. Maturity of each
Sub Murabaha shall be agreed at the time of disbursement
of each tranche. Each Sub-Murabaha shall mature by the
Facility expiry date (365 days from date of first draw down).
Purpose For local purchase / import of raw material, stocks, stores,
tools, spare parts, plant & machinery etc.
Profit Rate To be negotiated at the time of each Sub-Murabaha
transactions
(KIBOR & LIBOR shall serve as the respective bench mark
for PKR Denominated & USD Denominated transactions)
Sub-Murabaha Tenor Sub-Murabaha’s upto 365 days for PKR Denominated Sub-
Murabahas & upto 180 days incase of USD Denominated

66
 Sub-Murabahas.
Repayment of Bullet repayment of principle at the maturity of each Sub
Principle Murabaha.
Profit Payment Profit for each Sub Murabaha will be as per the following
schedule:
Maturity of Sub Murabaha Profit Payments
facility
Maturity upto 90 days At Maturity
Maturity greater than 90 days Quarterly in arrears
Security First Joint Pari-Passu charge over all present and future
current assets of XYZ with 20% margin (With regard to
enhancement of XYZ’s funded limit from PKR 200 Million
to PKR 300 Million & non-funded LCU & LG Limits of
PKR 100 Million, FPPC of PKR 455 Million is already in
place as against required PKR 500 Million. The client shall
initially arrange for creation of Ranking Charge for balance
amount of PKR 45 Million with an undertaking in favor of
MBL to upgrade it to first parri passu status at the time of
next supplemental agreement).

Funded (Sub-Limit of Facility # 1)

Facility # 2 CAD Negotiation Facility
Facility amount PKR 200 MM (Rupees Two Hundred Million Only).
Purpose Negotiation of Export CAD documents
Security Same as Facility # 1.

Non-Funded
Facility # 3 Foreign Letters of Credit Facility (Sight L/Cs)
Purpose For the purchase of imported raw material, spare parts,
tools, stores equipment, plant & machinery etc.
Facility Amount PKR 500 Million (Rupees Five Hundred Million Only).
Security Lien on import documents.
Service Charges 0.03% per quarter (L/C Opening Charges)
0.03% (L/C Retirement Charges)

67
Non-Funded (Sub-Limit of Facility # 3)
Facility # 4 Inland & Foreign Letters of Credit Facility (Usance L/Cs)
Purpose For the purchase of local / imported raw material, spare
parts, tools, stores equipment, plant & machinery etc.
Facility Amount PKR 100 Million (Rupees One Hundred Million Only).
Security Accepted Drafts
Same as Facility # 1.
L/C charges 0.03% per quarter (L/C opening charges)
0.03% (L/C retirement charges)

Non-Funded (Sub-Limit of Facility # 3)

Facility # 5 Letter of Guarantee Facility (L/G)
Purpose To issue Advance Payment, Bid Bond & Performance Bond
L/Gs favoring Government, Semi-Government & other
institutions.
Facility Amount PKR 100 Million (Rupees One Hundred Million Only).
Security Same as Facility # 1.
Service Charges 0.10% per quarter

Facility # 6 Bank Risk Line

Purpose To facilitate exports of the company (Negotiation of Export
Sight & / or Usance Letters of Credit).
Facility Amount PKR 200 Million (Rupees Two Hundred Million Only).
Security Lien on Export Bills drawn against L/Cs opened by Banks
approved by MBL’s Treasury Deptt.

Other Terms and Conditions:

The Facility shall be governed by the all the rules and regulations of the Government
of Pakistan and the State Bank of Pakistan (IXYZUDING SBP PRUDENTIAL
REGULATIONS) now in force and as amended from time to time and credit
restrictions imposed by the SBP from time to time.

The Customer will not create any charge on the pledged, hypothecated and/or Leased
Assets by way of pledge, hypothecation, mortgage, or in any other way with any
banks, financial institutions or any other person in any manner whatsoever without
written permission of Meezan Bank Limited.

68
The pledged, hypothecated and/or leased assets shall be duly insured in favor of MBL
with MBL as the loss payee. The insurance company in such a case shall be approved
by MBL.

The hypothecated/pledged and/or Leased Assets may be inspected by MBL as and

when required by it and the Customer shall allow access to and cooperate with the
authorized representatives of MBL in carrying out such inspections.

Any security created in favor of MBL for the facility by way of mortgage,
hypothecation, pledge or otherwise shall be maintained throughout the tenor of the
facility.

MBL will require evidence by way of invoices or otherwise from the Customer, that
the Murabaha/Import Murabaha/Export Murabaha/Lease Finances have been utilized
for the purpose of acquiring the assets in terms of the Master Murabaha /Import
Master Murabaha / Export Master Murabaha/ Lease Finance Agreement.

The Customer shall not change its scope of activities as specified in its Articles and
Memorandum of Association without obtaining prior permission in writing from
MBL. Any material change in the shareholding structure, ownership or management
of the Customer during the tenor of the Murabaha/Lease facility shall constitute an
event of default under the Murabaha/Import Murabaha / Export Murabaha/ Lease
agreement and the Bank shall be entitled at its sole discretion to amend, cancel or
terminate the Murabaha/Import Murabaha/Export Murabaha/Lease agreement.

All expenses incurred on account of documentation, valuations, charge registration or

any other costs in relation to the Facility mentioned in this letter including bank
charges, legal/documentation expenses, excise duties, Government of Pakistan’s and
State Bank of Pakistan’s levies, duties, stamp duties, fees, etc. (or other similar taxes or
charges) now or hereafter levied on the Bank in respect of or in connection with the
Facility and security thereof shall be payable by the Customer immediately on the
Bank’s demand.

The Bank reserves the rights to amend, cancel or terminate the Funded / Non-Funded
Credit facilities without assigning any reason thereof.
Draw down of above mentioned facilities will be made available to the Customer after
execution and satisfactory review of all documentation, successful financial close
along with perfection of securities as per terms & conditions of this offer letter and
other facility and security related documents to be executed between MBL & XYZ.

69
Kindly return to us this letter IN ORIGINAL signed by XYZ’s authorized signatories
latest by
April 31, 2005 as a token of acceptance of the above-mentioned terms & conditions.

Assuring you of our best co-operation & assistance.

Yours truly,

RM Corporate Banking Manager Corporate Banking

Branch Manager

We accept the above terms and conditions for and on behalf of XYZ.

Authorized Signatory Authorized

Signatory
Please affix Corporate Seal/Company Stamp here

70
 FINANCIAL STATEMENT
ANALYSIS
In this chapter of the report the financial statements of MBL relating to year ending as
at 31st December 04 are analyzed, for the purpose of comparing the banks
performances of the year with the previous year. The financial statements used for
this purpose are Balance Sheet and profit and loss A/C both.
In this chapter I have analyzed B/S and P& L account vertically.
With the help of the analysis we can check the performance of the bank easily
comparing with the previous year.
1. Vertical analysis of balance sheet
2. Vertical analysis of Profit and Loss Account
3. Ratio analysis

71
 MEEZAN BANK LTD.
VERTICAL ANALYSIS OF BALANCE SHEET
AS ON DECEMBER 31 ST 2004

Assets 2004 %age 2003 %age

Rs. In 000
Cash & balance with treasury 659349 9.458 7998 .3895
bank `
Balance with other banks 1058074 15.177 172664 18.409
Due from financial institutions - - - -
Investments 855766 12.275 587720 28.625
Financings 3532188 50.666 864783 42.119
Other assets 818081 11.732 412539 20.093
Operating fixed assets 35942 .5156 7484 .3645
Deferred tax 12048 .1728 - -
Total marks 6971448 100 2053188 100

CAPITAL & LIABILITIES

LIABILITIES 2004 %age 2003 %age

Bills Payable 46842 .6719 - -
Due to financial institutions 11831 .1697 - -
Deposits and other A/C 5079478 72.86 637444 31.047
Other liabilities 247389 3.549 212869 10.367
Share Capital 1001454 14.365 901000 43.883
Capital Reserve 264867 3.799 151313 7.369
Deferred taxation 209630 3.007 150562 7.333
Surplus on reevaluation of 109957 1.577 - -
investments
Total 6971448 100.00 2053188 100.00

72
 MEEZAN BANK LTD
Vertical Analysis of Profit & Loss Account
For The Year Ended December 31, 2004

PARTICULARS 2004 %Age 2003 %Age

INCOME Rs. In 000
Return on financing & 311183 46.698 81292 296.39
placement earned
Reversal of provision 67184 10.082 - -
Fee commissioning & 71968 10.799 41484 151.25
brokerage income
Capital gain 52809 7.925 8581 31.28
Dividend income 111302 16.703 29011 105.78
Income from dealing in 5799 .870 - -
foreign currency
Other income 46129 6.922 (132941) (484.708)
Total 666374 100 27427 100
EXPENSES 195045 79.596 35560 65.51
Other charges 2619 1.068 - -
Taxation 47381 19.336 18722 34.49
Total 245045 100 54282 100

73
 RATIO ANALYSIS

Ration analysis is very important measure to judge the performance of an

organization and to compare that performance ratio with previous year ratios and
future of the position of the organization.

RATIOS

1. PROFITABILITY RATIOS
 Net profit ratio
 Return on assets
 Return on shareholder fund
 Return on equity capital
 Earning per share

2. LIQUIDITY RATIOS
 Current ratio
 Loan to deposit ratio
 Loan to asset ratio

3. LONG TERM SOLVENCY AND CAPITAL RATIOS

 Equity capital to asset ratio
 Proprietary ratio
 Debt equity ratio
PROFITABILITY RATIO
NET PROFIT RATIO
Net profit after tax
=  100
Net spread earned

2003 2004
Net profit/(loss)after tax (53865) 223149
Net spread earned 52198 119510
Net profit ratio (103.195)% 186.72%

74
 NET PROFIT RATIO

300
Percentage 200
100
0
-100 2004 2003

-200
Years

Net profit as %age of net spread earned increased a title in 2004 (from 103.194% to
186.72%).
Net profit is not sufficient; the firm shall not able to achieve a satisfactory return on
its investment.
When higher the ratio in 2004 means better is the profitability.
RETURN ON ASSETS
Net profit after tax
=  100
Total assets

2003 2004
Net profit after tax (53865) 223149
Total assets 2053188 6971448
Return on assets (2.6235)% 3.2008%

4
3
2
Percentage

1
0
-1 2004 2003
-2
-3
Years

75
This ratio shows that the return is in negative as compare to return on asset in the
year 2004.
Another reason of decrease in return is the reduction in lending rate and increase in
financial cost. Total assets in 2003 have also decreased substantially than 2004 so
that’s why return on assets is negative in 2003.

RETURN ON SHARE HOLDER FUNDS

Net profit after tax
=  100
Shareholder fund
2003 2004
Net profit after tax (53865) 223149
Shareholder fund 1202875 1585908
Return on share holder funds (4.478)% 14.070%

16

12
Percentage

0
2004 2003
-4

-8
Years

This ratio is one of the most important ratios used for measuring the overall efficiency
of a firm. This ratio reveals how were the resources of a firm are being used, higher
the ratio, better are the result.

76
 RETURN ON EQUITY CAPITAL
Net profit after tax
=  100
Equity capital

2003 2004
Net profit after tax (53865) 223149
Equity capital 901000 1001454
R.O.E. Share Capital (5.978)% 22.28%

16

12
Percentage

4
0
2003 2004
-4
-8
Years

Calculation made on the base of data available shows that profit earning after tax in
2004 has increased due to decreased financial cost of funds for which expected
investment avenues aid open up the situation rather worsened with increased return
on lending.

77
 EARNING PER SHARE
Net profit after tax
= No. of equity share  100

2003 2004
Net profit after tax (53865) 223149
No. of equity share 100145425 100145425
Earning per share 0.53 .2228
The EPS is a good measure of profitability. It gives a view of the comparative earnings
or earning power of firm. The shareholder wants higher return on their investment.

LIQUIDITY RATIOS
CURRENT RATIO
Current assets
=
Current liabilitie s

2003 2004
Current assets 2045704 6925058
Current liabilities 850313 5385540
Current ratio 2.40:1 1.286:1

A higher C.R is an indication that the firm is liquid and has the ability to pay its
current obligations in time as and when they become due.
On other hand, a relatively low current ratio represents that the liquidity position of
the firm is not good and the firm shall not be able to pay its C.L. in time without
facing difficulties. An increase in the current ratio represents improvement in the
liquidity position of firm while a decrease in the current ratio indicates that there has
been deterioration in the liquidity position of the firm.

LOAN TO DEPOSITS RATIO

Total loans
= Total deposits  100
2003 2004
Total loans 45386 45386
Total debts 637444 5079478

78
Loan to deposits ratio 7.119% .8935%

10
Percentage 8

6
4

0
2003 2004
Years

This ratio shows a relationship between loans and advances and reveals how much
productivity the deposits are used. Analysis shows on decrease in loan to deposit ratio.

LOAN TO ASSET RATIO

Total Loans
=  100
Total Assets

2003 2004
Total Loans 45386 45386
Total assets 2053188 6971448
Loan to asset ratio 2.2105 .6510

79
 5

Percentage
3
2

0
2003 2004
Years

Total assets of the bank increased from Rs. 2 million to 5 million and advances net of
provision have same in the both years.
That’s why decreases loan to asset ratio

LONG TERM SOLVENCY & CAPITAL RATIO

EQUITY CAPITAL TO ASSET RATIO
Equity capital
=  100
Total Assets

2003 2004

Equity capital 901000 1001454

Total assets 2053188 6971448
Equity capital to asset ratio 43.88% 14.365%

80
 50

40

Percentage 30
20

10

0
2003 2004
Years

In current year banks assets have been increased from 2053188 to 6971448. On the
other hand banks equity also increased so this is the reason that ratio equity to asset
has decreased.

81
 PROPRIETARY RATIO
Shareholde r fund
=  100
Total assets
2003 2004
Shareholder fund 1202878 1585908
Total assets 2053188 6971448
Proprietary ratio 58.586% 22.748%

70
60
50
Percentage

40
30
20
10
0
2003 2004
Years

This ratio explains that participation in the assets by the shareholder fund is limited
by outsider’s fund. We see that ratio has decrease in 2004 as compare to the year
2003. Reason behind this is that increase in assets in financed by outsiders fund rather
than the fund provided by the shareholders b/c. There is lesser increase in
shareholders fund as compared to increase in total assets.

82
 DEBT EQUITY RATIO
Long term debt
= Shareholder equity  100
2003 2004
Long term debt 850313 5385540
Shareholder equity 1202875 1585908
Debt equity ratio 70.69% 339.58%

350
300
250
Percentage

200
150
100
50
0
2003 2004
Years

This ratio depicts the relation between equity and debt financing. The current year
ratio shows an increase in ratio from 70.69% to 339.58% time.

The ultimate increase in this ratio has decrease the long term solvency of the bank.
Because lesser will be soundness of the bank. The reason behind this increase is an
increase in internal debt but rate of increase in external borrowing.

83
SWOT ANALYSIS
Meezan Bank being a quality organization strives to provide quality to all its
stakeholders, customers, employees and environment. In Pakistan, it is operating in a
very volatile economic and political environment. I have summarized its major
strengths, weaknesses, opportunities and threats in the following paragraphs.

STRENGTHS

First Islamic Bank

MBL has this privilege to be the first in the Islamic Banking sector which gives MBL a
competitive edge over all other banks and being the pioneer of this industry MBL is
enjoying major share of it.

Network
Being an Islamic bank, MBL has a wide national network. As an emerging markets
bank, it has branches in all the major cities of Pakistan with the facility of online
banking, it is very easy for its customers to transact all over the country.

Online Banking Service

Online banking service means that a customer can withdraw and deposit his money at
any branch in the country. Where this service is not present, cheque has to be
presented only in that branch on which they are drawn. But with this facility, a
person has access to its funds at any branch of the bank. That would mean that any
person who has an account with the bank, has an account in 24 branches of it. It
provides a lot of comfort and convenience to the customers.

Value-Added Features
There are many value added features in the products offered by the bank. ATM cards
are provided with every account. Other features are present in the various products.
The priority customers enjoy a much-pampered status at the bank.

Friendly staff
The employees at the bank provide impeccable customer service to their customers.
For them “the customer is the king’. Customers are treated with great respect and
honored to the utmost degree.

84
Environment
The working environment of the bank is very friendly and cooperative. There is no
bossiness in the higher management. The upper management consults its staff in
making decisions and provides them independence in their job areas. For the
objective is performance and not conformance with the boss.

WEAKNESSES

Awareness in the People

Till the last year, MBL had a totally different perspective. The management was of the
view that the customer should come to them and they don’t need to go to the
customer. But in this era of mass marketing and advertising, it is not possible to stay
in competition without these took. The bank has now changed its perception arid has
started an effective marketing and advertising strategy. But the previous gaps are still
there and there is lack of awareness in the people about the bank and its products.
The bank needs to improve on its marketing and advertising areas.

Satisfaction of Staff
It was observed in the bank that the degree of satisfaction of the employees was quite
low. First of all, the pays are lower those offered in other banks. Secondly, the
employees are given targets that are too difficult to achieve. For example, the targets
given to the personnel in sales and services department are higher than any other
bank in the country, be it a local bank or a foreign bank. This makes the job too
stressful and tensed It is good to keep the people under a continuous move, but to
overstress them can be harmful to them and as well as to the organization.

Higher Turnover
Due to the dissatisfaction of staff, there is high turnover among them. People who
find other alternatives do not stay with the bank. Therefore, the bank incurs loss on
their training and development. The bank should provide incentives to its employees
so that they show more loyalty. For example, there is no commission provided to the
sales personnel which otherwise is a general rule all over the world.

Training Programmes For Employees

There are no sorts of training programmes for the employees. The employees who are
newly appointed are straight away placed at their positions with no prior orientation.
This creates problem for new personnel because they find difficult to understand the
environment and culture of the organization.

85
Centralized System Of Management
The decision-making is carried out the upper management level and the subordinates
are not included in this process. This creates a sense of insecurity in the lower
managers and that is why there is a lack of loyalty among the personnel. Although
the upper management is very friendly with the lower managers but that is only to
the extent of cordial relationships.

OPPORTUNITIES
Better Economic Conditions
The economic conditions are improving in the country. The foreign exchange reserve
has crossed the level the $ 14 Billions, which is something that was never achieved in
the past. The stock exchange index has also crossed fifty years high recently touching
10,000 this year. This provides a better environment for investment and growth. This
would give a push to incomes of the population, which would increase the level of
savings.

Increase in Foreign Investment

There is an inflow of foreign investment in the country. This would increase the
industrial growth Pakistan. The Islamic banks are important part of money markets
and this improvement will definitely effect their positions as well. Due to the growth
in the industrial sector, there will be an increase in the production of this sector. The
levels of deposits of industrial accounts would rise due to this factor.

THREATS

Unstable Political Conditions

Pakistan is very unstable as far as its political conditions are concerned. There is
always a risk of war at the borders. This makes the conditions much volatile. There
cannot be any long term planning due to the ever-changing political conditions. This
problem is a threat to all sectors of economy including the banking industry. When
there is higher risk of war, people start withdrawing their money from banks and
start keeping liquid cash with them. This creates a grave for all banks.

High Competition
Due to the increase in banks, there is an increase in competition. Also there is a lot of
aggressive marketing by the competitor banks. This is also a grave threat for MBL.

86
Meezan Bank is renowned for being first in Islamic banking. With such competitive
edge in the banking industry, it holds a very strong position among its competitors. Its
continuous innovation and adaptation to its changing environment has allowed it to
stand amongst the best of the lot. But I would like to give certain recommendations in
this perspective:
 First of all, I would I like to suggest that the bank must pursue a very
aggressive marketing and advertising strategy so that it can create awareness in
the general public about its islamic products and services
 Secondly, there is a need for creating satisfaction among employees. They do
not feel any attachment to the organization. There is a requirement for
building up their loyalties so that the bank can curtail the dissatisfaction and
turnover among employees.
 The personnel in the bank should not be overstressed with workload. The
workload is of a destructive level. At that level of load the employees loose all
the comfort in their work and remain tense and frustrated.
 There is need of a new branch in the Lahore Main area. In our marketing
research, many traders told us that they really wanted such a good bank to
open a branch in that area. These traders have transactions of millions in a day
that is why it is not easy for them to carry that amount of cash. If MBL opens a
branch in that area, it can take hold of all those big accounts with a lot of daily
transactions.
 Job training is a very important aspect that MBL is lacking in. New employees
are recruited directly without any prior training or orientation. The result is
that they do not understand the organizational structure and culture and
become frustrated in their start. This reduces their productivity and efficiency.
If such a training programmed is started, then the new employees would feel
more comfortable and adapt easily to the environment.

87