Chapter – 4
PRODUCTS & SERVICES
Commercial banking is regarded as a "Conservative" business because the rewards are modest and the penalties of bad banking are many. As a trustee of the public funds, they have a greater responsibility for safety and prudence. Many businesses can enjoy some slack in their affairs, commercial banks cannot afford this, since commercial banks must make a living by putting the money at their disposal to work, they are faced with the problem of making living 'without jeopardizing the safety of their institution. The art of commercial banking is solving this basically conflicting requirements, that of being safe and yet profitable.
4.1 DEPOSITS:
Deposits are the main source of commercial bank funds and without them banks cannot exist. It is very important for an individual bank to get funds as its one basic function is to put them to work safely and profitably. The larger the difference between the rates at which these deposits are borrowed and lent out, the greater will be the profit margin of the bank.
Deposits are broadly divided into the following:
i. Demand Deposits
ii. Fixed Deposits
iii. Savings Deposits.
i. DEMAND DEPOSITS:
Demand Deposits are also Called current Deposits. These are payable to the customer whenever they are demanded. Bank does not allow any profit or return on these deposits, and customers are required to maintain a minimum balance, failing which incidental charges are deducted from such accounts. Most of the depositors of this account include businessmen.
ii. TERM DEPOSITS:
Term Deposits are also called Fixed Deposits. These can be withdrawn after a specified period of time. Interest is paid to the depositors on all Fixed or Term Deposits. The rate of return varies with the duration for which the amount is kept with the bank.
iii. SAVINGS DEPOSITS:
Savings Deposits refer to deposits, which are made-up of thrift and are kept by the customer to ill effects of an unexpected outlay or a failure of receipts to safeguard f1napcial outlay. Profit is paid at a flexible rate calculated on half-yearly basis under the interest-free banking system. There is no restriction on the withdrawals from the deposit account but the amount of money withdrawn is deleted from the amount to be taken for calculation of products for assessment of profit to be paid to the account holder.
4.2 Products & Services:
The Bank provides a complete range of domestic and international services to its customers. Additionally, the following products have been developed:
4.2.1 KHUSHALI BACHAT ACCOUNT:
This scheme has been introduced to inculcate the habit of savings among the people.
SALIENT FEATURES:
i. Expected profit is as high as 8 percent per annum.
ii. Profit is paid on half yearly basis and calculated on daily products.
iii. Provides the facility to pay accounts holders utility bills through his/her accounts, without' making queues and delays.
4.2.3 HAJJ MUBARAK SAVINGS SCHEME:
This is a Term Deposit Scheme started for fulfilling the lifetime ambition of every Muslim to perforn1 Hajj.
SALIENT FEATURES:
i. Duration of the scheme is 2 years and 3 years.
ii. Under Hajj Mubarak 2 years and 3 years schemes, a monthly deposit of Rs. 1800 and Rs. 1200 is required respectively.
iii. Upon maturity of 2&3 years schemes, the~ Bank will pay approximately Rs. 48,160 and Rs. 51,200 respectively.
iv. Account may be opened by an intending Hajj, who will also nominate his/her successor.
v. Premature encashment is permissible subject to commensurate adjustment in profit.
vi. Deduction of withholding Tax and Zakat as per government rules in force.
4.2.4 CAPITAL GROWTH CERTIFICATE SCHEME:
This is a Term Deposit Scheme under which the growth of deposit is quite fast accelerating with the passage of time. The amount would be more than double in 5 years.
SALIENT FEATURES:
i. Account may be opened with a minimu111 initial deposit of Rs. 10,000 with no limit on maximum amount.
ii. Deposit may be placed for a minimum period of five years.
iii. Growth of deposit accelerates with the passage of time.
iv. Premature encashment is permissible subject to commensurate adjustment is profit.
v. Deposit may be placed by individuals; proprietorship concerns, partnership firms, public or private companies, corporations, institutions, trusts, funds etc.
vi. Deductions of Withholding Tax & Zakat as per government rules in force.
4.2.5 PLS SAVINGS - 365:
This is a specially designed PLS Savings Account Scheme which gives the depositor a very high profit with complete flexibility and convenience of a Current Account. Under this scheme, profit will be paid on daily product basis at the same rate as for PLS Saving scheme.
SALIENT FEATURES:
i. Account may be opened in personal or joint names in four global currencies namely US dollar, Pound Sterling, Japanese Yen and Deutsche Mark.
ii. No restrictions on withdrawals and transfer or remitting the amount to any part of the world.
iii. Expected profit is as high as 7% per annum.
iv. Exempted from all forms of taxes.
4.2.6 CREDIT CARDS:
The Bank offers the largest and must comprehensive credit facility to its customers who may have Visa Card, Cirrus and Maestro local or international Credit Cards at their choice. With worldwide acceptability and a wide range of ancillary services to the cardholder, these are the world's foremost credit cards.
4.2.7 Visa Card and Rupees Travelers Cheque:
It is a specific branch of MCB deals in the Visa Card and Traveler Cheques. It is discussed as under:
4. 2.8 MCB Visa Card:
It is just like plastic money. MCB offer this facility to customer to use card money in place of cash money. MCB Visa Card is issued to those customers who have account with issuing branch or good business relation with MCB. MCB Visa Card is introduced by MCB to attract customer so that business relationship is developed with them, other wise there is very low, profit margin for MCB in this scheme.
With MCB Visa Card customer shows world of convenience in his hands whether shopping or availing various services, traveling for business or please or entertainment, with his family, MCB Visa Card will help in a lot. MCB have two types of Visa Card:
i). The Rupees MCB Visa Card:
| a) It is valid only in Pakistan: it is accepted at more than 2000 outlets all over Pakistan, hotels, restaurants, resort, travel agents, shopping malls, retailer, petrol pumps, hospital and many more. |
a) Pont of sale terminals provides the customer the privilege of having on line authorization within 36 seconds
b) Insurance: Whenever you make travel plans ensue that tickets are charged on your MCB Visa Card, which will automatically cover you for an amount of up to Rs. 1 million, free of cost.
c) 24 hours customer service: 24 hours a day, 7 days a week and 365 days a year MCB Visa Card personnel, are there to increase customer credit line or replace customer credit card in an emergency.
ii) The International MCB Visa Card:
a) Global Convenience: MCB Visa Card can be presented at any outlet displaying the Visa Card loge, worldwide. Over 12 million merchants accept the card globally in 170 countries and this number is constantly growing.
b) MCB Visa Card holders are able to receive a. wide range of emergency and travel related service at 1600 Thomas Cook Office worldwide.
c) Emergency Replacement: In case cards being stolen, it can be replaced quickly and efficiently.
d) The MCB Card bills customer in US dollar for expense incurred abroad.
e) MCB offers Visa Card facility in collaboration with Visa Card Company and Thomas Cook.
How MCB Visa Card is used:
MCB has assigned Visa Card acceptance authority to domestic mid international merchant. These merchants usually paste a sticker on the main entrance of their shop etc, on which it is written, “MCB Visa Card is accepted here”. So the customer by seeing this sticker goes for shopping or any other purpose to this merchant. They make shopping and then show their Visa Card to merchant. He puts the card in a machine, which is linked with Head Office of Visa Card to Division. Through this machine they check the limit of card.
This machine is very costly and is available only in few placed in Pakistan. In routine process the merchant only check the Visa card. When the cardholder has made shopping, he signs Visa card sales draft, given by the merchant.
It has four copies:
i) To merchant.
ii) For customer cardholder.
iii) Bank
iv) Head Office.
Credit Card Division of MCB informs, the branch, which has issued Visa card to the customer that we have debited your branch with sum of Rs.------on account of payment of bill of Visa card No-----of Mr.-----please debit his account--------.
Commission of MCB Visa Card is charge not from customer but from merchant. Commission charged is 2% MCB Visa Card is valid only for 1 year renewal is made after observing performance of card holder. MCB charges for Visa Card Rs.1250/- annually for domestic use and Rs.1500/- for the international.
4.2.9 Smart Card:
A secure instrument of payment providing cash free convenience, it is more than just an ordinary debit card offering customers the peace of mind through unmatched and convenient services including easy bill payments, funds transfer,24-hour cash withdrawal, balance inquiry and unlimited shopping pleasure.
4.2.10 MCB Rupee Travelers Cheque (RTC):
These are used only in Pakistan. It is a sort of undertaking. RTC are as good as cash, because with R TC one have power to purchase and a feeling of security that should one lose them, one will get a refund.
MCB, RTC are accepted at major shops, travel agents, hotels, business establishment and MCB branches. One does not have to be an MCB account holder to buy the Rupee Travelers Cheque. Any body can purchase them. MCB, RTC is a safe and convenient way to conduct everyday business. The person goes to MCB branch and asks for the issuance of R TC. Then the deposits the money on the cash counter and give receipt to RTC officer. He issues RTC in him name stamp the RTC. The buyer must sign at the cheque because if bank/ unsigned cheque is lost he will lose protection.
RTC are in different denomination. Rs.10, 000 and Rs.50, 000 per leaf. One can purchase RTC of maximum Rs.50, 000 at one time from one branch. RTC should be counter signed at the space provided in cheque only at the time of encashment and is presence of officials of enchasing branch. About 400 branches of MCB are authorized to sell RTC, MCB, RTC division in Head office RTC money controls RTC.
RTC is very profitable scheme for MCB. Because the money cash deposited by customer for MCB RTC is at HO disposal as for as RTC is not encased the more is the period between issuance and encasement, the more is profit for MCB.
MCB also takes 1 % commission RTC. In case the RTC are stolen/lost, one must rep011 to the nearest branch of MCB and also reports to nearest police station. The party rep011ing loss should contact original of MCB branch that had issued the cheque a complete refund procedure as per their advice?
4.2.11 AUTOMATED TELLER MACHINES:
The Bank has the largest network of Auto Teller Machines in Pakistan. These ATMs have been installed at airports, major business centers, leading gas stations and other important places all over the country. This facility is provided for extending round the clock money withdrawals facility to Bank's clients. Currently, 260 ATMs are in operation and still growing .
4.2.12. Pyara Ghar:
Low mark-up rates: MCB gives you your dream home at the lowest and best possible mark-up rates. You can choose either one of our two mark-up rates options-fixed or variable. Early repayment option tailor-made to allow you to make partial prepayments at dates that suit you. Option to club your spouse's income to avail higher financing amount. We also tailor Corporate Packages for the employees of selected institutions.
Who Can Apply:
Pakistani national residing in the city and area where the product is launched and 25
years old or above when you apply and under 60 at the time of maturity of the applied financing period. Salaried person, self-employed professional or a businessman with a verifiable businessman with a verifiable monthly income stream. Net take-Home income not less than Rs.25, 000 per month, Have 5 years or more of business or professional experience. Employed with the present employer for 2 years with a total employment history of 5 years.
| | Home Purchase | Home Renovation | Home Construction |
| Financing Amount | Rs. 200,000 to Rs. 5,000,000(flexible up to 7m) | Rs. 100,000 to Rs. 2,000,000 | Rs. 200,000 to Rs. 5,000,000 |
| Debt to Equity Ratio | 60:40 (3:2) | 30:70 (3:7) | 50:50 (1:1) |
| Tenure | 3 years to 15 years | 2 years to 5 years | 3years to 15 years |
4.2.13 Car 4 u:
- Lowest car financing rate of 16%(Limited time offer).
- Down payment as low as 20%.
- Finance tenure of up to 5 years.
- You can finance from Rs. 150,000 to Rs. 1.5m depending upon your income, vehicle cost and the down payment.
- Low processing fees of Rs. 3,500.
Eligibility:
- MINIMUM NET TAKE HOME INCOME OF Rs. 15,000. Your monthly installment for MCB Car4U should not exceed 45% of your net take home Income.
- 25 to 57 year of age. Age of 60 shall not be reached before the maturity of the facility.
- Pakistani National residing in cities where MCB Car4U has been launched.
- Businessmen and self employed with the minimum experience of 3 years in the same business and profession. For salaried individuals, 2 years with the same employer and overall three years of employment history.
Monthly Installment/Rental Calculation:
Your total monthly installments will include finance installment amount and insurance charges. You can calculate your monthly finance installment by using the following calculator for your selected term:
| Term (years) | Advance Installment | Deferred Installment |
| 3 | .03469 | .03516 |
| 4 | .02797 | .02834 |
| 5 | .02400 | .02432 |
Calculate at introductory rates of 16%.
Fill in the blanks to calculate your monthly finance installment excluding insurance premium charges.
| | Example | Your Calculation |
| List price of Car | 400,000 | |
| Financing Duration | 5 years | |
| Down payment (%) | 20 % | |
| Down Payment (Rs) | 80,000 | |
| Finance Amount | 320,000 | |
| Factor* | 0.02400 | |
| Monthly Finance Installment | 7,680 | |
*Calculated on advance mode of installment payment.
4.3 Different Types of Accounts:
In M-CB various type of accounts can be opened depending up the requirement of customers. For example:
1. Individual Account:
A single person as the name implies can open individual account. It may be a current or saving account.
2. Joint Account:
It may be current deposit or profit and loss sharing account. It can be opened by 2 to 4 persons. If more than 4 person want to open joint account then they can open only current account.
There are two clauses in joint account:
a. Anyone can Operate:
According to this clause anyone of the joint account holder can operate the account. In case of death of one, the other cannot operate it.
b. Either or Survivor:
Anyone of the joint account holder can operate it incase of death of any one the survivor will operate it.
3. Illiterate Account:
For the illiterate customer, an illiterate account is maintained. For this purpose a thumb impression and a recent photograph of the customer is required.
4. Minor Account:
A guardian operates it on behalf of a minor. "When the minor attain maturity then he can operate it by himself.
5. Non Resident Account:
Non-resident account' is maintained for customer who live outside Pakistan i.e. middle east, U.K etc.
6. Proprietorship Accounts:
Proprietorship account can be opened by the sole proprietor of a firm or business but it must be a current deposit. The proprietor will have to specify it on the letterhead pad of the firm.
7. Staff Account:
Staff account is maintained for the employees of the MCB (non clerical, clerical, officer, executives)... Salaries of the staff are credited to their account.
8. Public or Private Limited Company Account:
This account may be opened in the name of a public or a private limited company. For opening a public or private limited company account two documents are essential.
i. Articles of Association of the company.
ii. Resolution of the Board of Directors.
9. Attorney Account:
Attorney account can be opened by some one on behalf of any person, if that person gives him power of attorney.
4.4 Accounts Offered in MCB:
1) Operating Account or Current Account
2) Investment Account.
1. Current Account:
Current accounts are called demand liability in banking terminology. No profit is paid on these accounts. In MCB demand liability are following type:
- Current Account or Operation Account:
In this account cheque book is issued and transaction are carried. One can draw and can deposit it. Current account can open with a minimum amount ofRs.500.
- Call Deposits:
It is also called Earnest Money it .is required by govt. It is a type of security. Call deposit issued in the name of concerned govt. Department and the contractor. It is usually opened for tenders.
- Margin Account:
These are specifically opened for bank guarantees and LCs. When one opens a LC a certain amount is required as margin according to regulations of SBP.
- Key Deposits:
These are deposits bank's lockers. A contract is made between customer and locker holder. It is a type of lockers. How one operates it, it's one's own responsibility.
2. Investment Accounts:
These are called time liability. There are two types of such accounts i-e,
i). Long Term.
ii). Short Term.
Long terms are fixed or term deposits. Time limit for such accounts is mentioned from 3 months to 5 years. Profit is paid on such accounts.
i) Long Term Deposits:
a) Term Deposits Receipt:
It is also a fixed deposit for 5 years. One it compounds interest rate is applied, amount deposited is almost doubled after 5 years.
ii) Short Term Investment Accounts:
a) PLS Saving Account:
It is also called chequing account. Profit is paid on half yearly basis. Profit is computed every month but is, paid after six months. Minimum amount Rs.l00 and there is no limit on maximum amount.
b) Smart Saving Account:
MCB Smart Saving Account gives you the optimum value you deserve. A saving Account where not only you get competitive returns but also enjoy unlimited number of fringe benefits.
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