Chapter - 5
DEPARTMENTATION
Every organization in banking sector is divided into a number of departments. MCB is divided into various departments. These are:
i. Cash department
ii. Remittance department
iii. Accounting department
iv. Clearing department
v. Computer department
vi. Advance department.
vii. Foreign Exchange Department
5.1 Cash Department:
Cash department performs the following functions.
i. Receipt
ii. Payment
It deals with the flow of cash and records the receiving and paying of cash. This department also deals with the selling and buying of govt. bonds and securities. This department is also responsible for deposit and disbursement of cash through cheques. For disbursement of cash this department accepts cheques. Opened cheques are paid on the counter after verifying the signature of accounts holder, which crossed the cheques are sent to clearing department for clearances. This department on a printed form of MCB accepts, the printed form is signed by the concern officers. The amount is then created to the account of the customer, the cheques which does not fulfill the criteria, of MCB is rejected after specifying the reason of rejection.
MCB may reject a cheque on the following grounds:
i. NSF
ii. Cheque post-dated.
iii. Cheque of outdates
iv. Drawer's signature differs
v. Amounts in words and figures differ
vi. Payment stopped by drawer.
vii. Payee's endorsement requirement.
viii. Cheque manipulated.
5.2 Remittance Department:
Remittance is the department in the bank through which the customers are sent their money from one branch to any other branch, or from one bank to any other bank in the country and with the foreign country banks.
The meaning of remittance of the word remittance is "sending out money". These remittances are credited or debited to the accounts of customer after verifying the branch code and the receipt of advice. This has very important for the business either in the country, anywhere or in abroad.
| a) | Demand Draft (DD) |
| i. | D.D issues |
| ii: | D.D Payable |
| b) | Telegraphic Transfer |
| i. | T.T issues |
| ii. | T.T Payable |
| c) | Mail payable |
| d) | Pay Order |
The MCB remittances are taken place in the following ways:
a). Demand Draft:
The transfer of money, which is taken place on demand. It is of two kinds.
i. Demand Draft Issues:
When any person in Mingora Swat wants to send some amount to another person anywhere in Pakistan, can use this cham1el. The branch is called originating and the bank where this draft will be payable is called responding branch.
Example: MCB Mingora Swat is originating or issuing branch while Ghala Mindi Lahore is responding branch where draft will be payable.
Procedure for Issuance:
The person, who wants to send the money through D.D, will fill the application form, for ail the channels i.e. T.T, MT, and pay order is the same. Application form should provide the following information's:
ü Branch Code, Issuer Bank name, Date of Issuance.
ü Type of channels i.e. TT, MT, D.D and P.O.
ü D.D, T.T, MT etc are Name of responding branch.
ü Beneficiary name and A/C no. i.e. who will receive the amount of draft, sender name, address and phone no.
Charges Section:
Commission:
A) form Rs. 50,000 0.10% minimum Rs. 50/-
And postage charges Rs 75.
Example: Adil wants to send Rs. 50,000 through demand draft. Commission = 0.10% (50,000) = 50
postage charges =75
Total =50,125
In this case the sender have to pay Rs. 50,000 face value of draft and Rs. 125 as charges. After filling application form, draft is filled and draft amount is written in three places in the figure like Rs. 50,000/- and another in words like fifty thousand only and on another place figures are printed on machine in Red color for safety purpose figures are taped so that if anyone want to make changes in figures, he cannot done any change.
Now draft will be handed over to the customer. After giving draft to customer, voucher is kept in DD issue register.
We record in this manner:
| Date | S. No. | Machine no./series | Purchaser/ Remitter Name | Favoring Beneficiary name | Amount | Exchange | Commission and postage |
| 15/4/2007 | 59/14 | 12345 | Adil | Kashif | 50,000 | | 125 |
Four vouchers are prepared containing all the information and signature of authorized person. The bank for office record will keep one copy; and "another one advice will be sent to the responding branch. At the time of receiving of cash on counter in cash sheet record will be as follow:
Cash 50,000 (Dr)
H.O (G.M Lahore) Cr
Demand Draft Payable:
When advice sent by issuing branch reach to the responding branch i.e., Gala Mindi Lahore Bank would record in DD payable register.
| Date Issued | D.D No. | Beneficiary Name | Initial | Date Paid | Initial | Remarks |
| 15/04/2007 | 12345 | Kashif a/c 1430 | | 17/04/07 | | |
When G.M Lahore branch receives actual Draft, bank will check at with advice send by issuing bank in order to keep himself safe and avoid any fraud Bank should check. Issuing date, beneficiary name, amount after this bank will credit the amount to the account holder, and will pass the entry.
H.O( Mingora) (Dr) 50,000
Cash (Cr) 50,000.
In Case of Demand for Cash:
If DD holder wants cash at counter then bank will verify that either DD holder is the actual beneficiary or not, verification may be 1hrough Identity Card, or guarantee of some reliable person.
In Case of Lost:
If some person losses DD, then bank will make payment only after verification or in major losses amount is credited to the A/C holder name mentioned in the DD.
NOTE: It is not necessary that the receiver of the draft must have account in that branch. Such draft may be clear through transfer delivery state bank of Pakistan i.e. clearing house.
Test is Must:
This is secrete code number with bank through which they verify that DD, TT, MT etc. are free from fraud, this key is only known and available to the concerned person.
ii. Telegraphic Transfer:
It is the fastest transfer of money. All the procedure for filling the application form deposit cash at counter records in register is the same as for DD, although there is some basic difference between DD & TT.
TT holder receives receipts as a memorandum from bank, which he has deposited at the
TT amount. In TT two number are mentioned i.e. TT No & Remittances No.
Note: TT No, can be extended beyond 100, but remittance a can be extended to any digit, each year Remittance will start from 1. In TT we record in four books:
i. Day Book:
When fax or telephone is received from issuing branch for our own convenience we record it in this book, so that we could easily give response at calling of TT Beneficiary that your TT is being received by our branch on dated-----.
ii. TT Payable Register:
Entry after recovery from another
H.O 200,000 Dr
TT Payable 200,000 Cr
TT Payable 200,000 Dr
A/C Adil 200,000 Cr
iii. TT Received Register
The TT, which is received, should be noted in TT receipt register. But nowadays most of banks are online so the TT is in the form of CBT which should not be noted in any register.
iv. Record in Daily Sheet.
Commission and Telephone Charges is Bank Income:
Commission 10%
Telephone Charges Rs. 100/-
Postage's Charges Rs. 75/-
Procedure for records in register is the same as for DD, in TT issues register all the TT are recorded one by one. So that we know at the end of the month that many TT issued during the month of…..
If T.T beneficiary has no accoUl1t with the bank, the bank will contact him by Fax, Telephone and will make payment to him.
Note: Test information is must even TT is Rs. 1, no excise duty is taken on TT.
T.T transfer:
TT transfer means amount of TT is not paid in cash on the counter, but amount is deducted from his account, -such TT issues is not recorded in sheet of Remittance section, but it will be only recorded in sheet of current and saving account section entry.
Current Account-Kashif 20,000 (Dr)
H.O-MCB mingora 20,000 (Cr)
b). Mail Transfer:
Procedure for filling of application form depositing of cash, records, in cash registers, preparing of voucher and advices in the same as for DD and YT. MT is sent by post through T.C.S, which is reach to the responding branch within 24 hours. After receiving of advice, the branch will make payment or will give credit to the account of beneficiary, no excise duty is charged on MY, while text information is must in MT.
If MY will not reach to, the bank, the MY holder will show the memorandum receipt of the issuing bank.
c). Pay Order:
Pay order is made for local transfer of money. Here no originating and no responding branch will be shown. The payment will be made at the branch from where pay order is issue. Pay order also comes for clearing from SBP. MCB officials check it with register and debit the entry in the register. It is made for payment of repairs etc.
Charges: Pay order charges are fixed where pay order amount is Rs, 10/- or 10,00,000 and above.
For A/C holder Rs 25/- pay order.
For non A/C holder Rs 501- pay order.
Draft Payment in Suspense Account:
If payment to draft is made only on a presentation of original draft although advice from issuing branch is still not received, bank is bound to make payment and record it in suspense a/c as:
DD Paid suspense a/c (Dr)
Cash a/c (Cr)
Entry after receiving advice H.o (Dr)
| DD Payable | (Cr) |
| DD Payable | (Dr) |
| DD Paid suspense | (Cr) |
5.3 Accounting Department:
The job of this deptt. is that, it scrutinizes all types of reports. This department also helps in transfer of cheques and preparation staff salary. The reconciliation statement of each department is also prepared here.
This department in MCB performs the following main functions:
Staff Salary:
After deduction of income tax and provident fund, the staff salary is prepared on monthly basis by the account depmiment. The account department also process medical claims. There will be deduction from loaner employee's salary in installment with interest. Moreover account department also performs the following functions:
Ø It maintains record of all banking transactions of bank.
Ø It daily prepares statement of affairs and the same is sent to the Head office.
Ø After receiving the statements from the State Bank through Head office, accounts department also prepares daily reconciliation statements.
Ø It follows a predetermined method of depreciation, as MCB maintains different types of asset depreciation by the account department.
Ø Along with administrative function Account department also performs others functions, such as scrutiny of reports etc.
5.4 Clearing Department:
The clearing process is performed in the State Bank of Pakistan. This department helps in clearing all those cheques on which they have made payment on the behalf of other banks. The clearing is done twice in each day. All the cheques related to MCB are brought in the morning. When the cheques are verified because of account holder the same is returned in the afternoon session.
5.5 Computer Department:
The MCB also uses the computers very efficiently. Through networking from one computer to another. The computer facilities, the communication facilities, the MCB major branches are greatly full use of computer. Computers are mostly used in MCB Online Branches. The Melody Branch Islamabad is also one of the online branches of MCB network.
5.6 Advance Department:
Advance department is one of the most important and sensitive departments in any bank. The MCB makes profit by advancing loans. Muslim commercial Bank advances loans to individuals and business for productive activities. In giving loan the bank keep in consideration the over all condition of the long term trends, the government policies, the law & order situation and the need of product for which the loan is required.
Different Types of Advances:
Financial accommodation provided by the bank fall into two broad categories namely:
i. Fund base financing.
ii. Non fund base financing.
i. Funded Facilities:
Running Finance, Demand Finance, Cash Finance, Payment against document, Finance against imported merchandise, Finance against Trust Receipt, Export Finance, Foreign bills purchased and such facilities where funds are provided to customers depend upon functions of the respective credit lines.
A) Running Finance:
Various modes of Bank financing, credit lines afforded to customers under the above
head (Running Finance) are the most commonly used. Withdraws on the current account are allowed in excess of the credit balance, which the customer has maintained, thereby creating Running Finance.
In this type of financial accommodation the borrower is required to adjust the finance provided by the bank with the stipulated expiry period.
B) Cash Finance:
Finance is provided on mark up basis on reducing balance system as stated earlier.
It is provided either against pledge or hypothecation of goods, produce or merchandise.
c) Demand Finance:
A fixed amount of financing accommodation is allowed 10 borrower for a fixed period under the above classified, repayable either in periodic installments or in lump sum at a fixed future date. This accommodation is extended in lump sum for the mutually agreed period and the borrower has to pay the entire amount of finance, together with mark-up the agreed rate.
D) Payment Against Documents:
The importer has to enter into an agreement with the bank to meet his obligation to purchase the import documents at marked-up price in the non-interest based system. The documents as per mark-up agreement would be purchased by the bank and sold to the importer at marked up price when as import bill is received and lodged, two types of transactions shall be deemed to have taken place i.e. purchase and sale of import documents.
E) Finance Against Imported Merchandise:
Financing against import is established through letters of credit on the basis on mark-up
for a short period. According to it facilities an available not exceeding from sixty days.
F) Export Finance:
Export refinance facility is available to banks from State Bank of Pakistan under the Export Refinance Scheme at low rate of mark-up. The government's policy is low mark-up rate in order to boost the country's exports.
ii. Non-Funded Facilities:
Non-funded facility is also known as "contingent facilities" e.g. letter of credit, letter of guarantees and Bonds. MCB formulated various instructions based upon extracts from various Head office circulars.
5.7 Foreign Exchange Department:
Foreign Exchange business arises primarily from trading and trade related transactions, although investment monies, dividends and royalty payments as well as gifts, legacies, loans and interest payments, give rise to very substantial flow of funds moving from one currency to another. For each international trading transaction either the importer or the exporter and sometimes, both, will be involved in a foreign exchange operation, unless one or both maintains a foreign currency account.
MCB mingora main Branch deals in foreign exchange. The bank opens letter of credit for importers and exporter. Letter of Credit is a conditional undertaking by the bank that it will pay on behalf of the customer to the exporter.
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