Muslim Commercial Bank (Internship) 2 Chapter -8

INTERPRETATION:

The ratio demonstrates the ability of operating expense to attract more and more deposits. Deposits have increased during 2005 tremendously but the increase in 2006-2007 is not up to the mark.

8.1.12 Cash Ratio:

cash ratio       =           .    cash            x 100

                                     current liabilities

Ratio for the year 2007 = 39683883 x 100 = 11.60%

                                         341983955

Ratio for the year 2006 = 32465976 x 100 = 11.25%

                                         288494993

 

INTERPRETATION:

Cash ratio has increased during financial period of 2007 because the bank has decreased the lending to the people. This trend increase the ability of MCB in meeting its current obligations as they arise with cash.

8.3  CRITICAL ANALYSES:

Critical analyses is the most important part of the report, because it depends on the personal observation of the internee, only a good, keen and comprehensive analysis leads to good recommendations for the improvement of the existing conditions. Therefore in MCB, I have observed much of things and have analyzed them to the best of my effort and knowledge. MCB faces the following problems:

1. Delegation of Authority:

Muslim Commercial Bank to great extant is a centralized bank. The manager and other officers of the branch have very limited authority, especially in the case of advances. They have to take approval of the chief manager even in the case of minor issues. Lack of delegation of authority creates problems and then the manager is not present in his office and costumers have to wait for long, some times. There is top to bottom flow of authority and lower level of employees cannot participate in the decision making process and only top level of authority take all the decisions. This completely centralized decision-making decreases the interest and loyalty of the employees toward organization.

2. Seniority Vs Performance promotions:

Promotion in MCB is purely on seniority basis rather than on performance. This really de-motivate the employees because they know that it does not matter whether they perform will or not.

3. Job Rotation:

Most of the employees work in a particular department and they specialize as well for the customer. In case of absence of an employee, other employee cannot perform his work. In this way bank not only losses the business but also results in dissatisfaction of the customer.

4. Unequal Load of Work on Employees:

There is an unequal distribution of work on branch level. Some of the employees have to do a lot of work. There is a heavy load of work on remittance department and only one person is assigned to this department who has to do all the work. While other departments like credit and advance there is very little to do and person assigned to this department is killing the time.

5. Lack of Theoretical Knowledge of Employees:

 There is a deficiency of theoretical knowledge of the employees of MCB. Although their work is mostly routine and practical but some times lack of theory can be dangerous for tem. They have to consult the Regional Manager Office or General Manager Office, which is the wastage of time and resources. It also affects their efficiency.

6. Discouragement of Small Depositors:

The stop members give proper attention and respect to those customers who have deposited huge amount of money while the small depositors mostly the salaried people are discouraged to open an account within the branch. In this way they discourage saving habits in the general public, depriving the county from needed savings.

7. On the Job Training:

It has been analyzed that most of the employees are not been provided job training, which is very essential for better performance of employees.

8. Lack of Discipline:

In MCB lack of discipline is observed in the way that some employees do not care about the office timings. They usually come late in the morning similarly employees take long leaves without any valid reason.

9. Organizational Objectives:

Most of the employees of MCB are not aware of the basic mission, core values and objectives of the organization. So there is lack of coordination and integrated efforts toward the achievement of organization objectives.

10. Excessive Paper Work:

There is an excessive paper work in MCB, which takes more time and reduces the effective banking performance.

11. Lengthy Process of Loan:

To meet the immediate requirements of the business customers, there requires finances on emergency basis but due to centralization of decision-making there are unnecessary delay in sanctioning of loans, resulting in dissatisfaction of customers.

12. Inadequate Fringe Benefits:

The main purpose of fringes benefits is to retain the employees in the organization on long term basis. The fringe benefits are always welcomed by the employees. It has been analyzed that the fringe benefits package offered by MCB is not much attractive as compared to other organizations. From the near past MCB has further more reduced the fringe benefits of the employees that may result in de-motivation and reeducation of existing employees.

13. The Nature of Work:

Mostly of the bank employees are sticking to one seat only with the result that they become master of one particular job and loose their command on other banking.

14. Low Rate of Return:

Due to low rate of return the depositors are drawing their money from the banks and depositing it with saving centers, which are offering a good rate of return as compared to the banks.

15. Limited Application of Electric Media:

MCB is not utilizing the electric media for its promotional campaign. There is lack of awareness among the customers and general public about the scheme offered by MCB.

16. Improper Working Condition:

Most of the branches of MCB are facing the problem of shortage of space. This creates hurdles in the free movement of the staff and customers and it is also risky from the security point of view. There is lack of furniture and improper arrangement for the customers.

17. Limited Foreign Operations:

MCB is a large organization and has the required potential and resources for foreign operations. Presently there are five foreign branches, four in Sri Lanka and one in Bahrain. Large number of Pakistani living in USA, UK and Middle East and there is  a need of extended foreign operations to provide banking services to these Pakistanis.

18. Application of Technology in Banking:

Most of MCB branches are not fully computerized, which is very important cater the electronic needs of the customers and to provide the quick and quality services.

19. Political Interference:

Banks are not free from political influences. Due to political pressure on the management for the sanctioning of the loan in favour of their own persons resulted in huge amount of bad debts because in this way the banks are unable to get a good security, which makes the recovery of the loan very difficult, and these loans are not used for productive purposes. 

8.4 TOWS ANALYSES:

A TOWS analysis is an important tool to analyze the overall situation in which organization is conducting its affairs. Each issue remains relevant and useful for corporate strategy formulation.

The Threats, Opportunity, weakness and Strength. in summery can be stated for MCB as below:

Treats:

1.           New competition in Domestic & Foreign Markets.

2.           Political instability results in inconsistent bank policies.

3.           Cutbacks in Compensations for the employees.

4.           Demoralized staff.

5.           Slower market growth.

6.           Adverse govt. policies.

7.           Recession in economy.

8.           Changing customer needs.

Opportunities:

1.           Exploring New Markets.

2.           Diversification.

3.           Growth of financial market in Pakistan.

4.           Favorable govt. policies.

5.           Introduction of new products.

6.           Opening of Women Branches.

1.           .

Weakness:

1.           Centralized authority.

2.           Less active Research and Development.

3.           Political instability.

4.           Lack of technology at branch level.

5.           Weak marketing efforts.

6.           Narrow Product Line.

7.           Lack of sound corporate culture.

8.           Not very attractive physical infrastructure of the branches.

Strength:

2.           Adaptation of Islamic banking.

3.           Adequate financial and human resources.

4.           Capable top management.

5.           Competitive skills of employees.

6.           Acknowledge market leader.

7.           Over 50 years of experience with excellent reputation.

8.           Largest ATM network.

9.           Good competitive and innovative skills.

TOWS ANALYSIS OF MCB:

Threats:

1.           Competitors are increasing in the private sector banking in Pakistan due to privatization of the domestic bank.

2.           Increasing number of competitors as in the form of foreign banks in Pakistan, whose services are mere advance due to modern techniques, and they provide highly specialized and attractive services to their customers.

3.           Inconsistency in government policies due to political instability in the country, threats the business and economic sector.

4.           Rapid growth of advanced global technologies.

5.           Strict regulations by the government over credit facilities to the customers as well as to meet the prudential regulation.

6.           Changing of customer needs.

7.           Loss of confidence of overseas prospects and customers due to freezing of accounts.

After TOWS & Critical analysis the top management of the bank should make a committee for proper research and development to identify the customer needs and design some new schemes and strategies to overcome the stated weakness and use the opportunities. MCB should take some steps to face the threats and they have to properly plan for the growth of the bank and introduce some new schemes as Mal-a-Mall certificates, which was very effective. If MCB gives proper attention to their customers then in few years time this bank will be the leading bank in Pakistan.

Opportunities:

1.           Due to efficient and experienced management group ,MCB can also improve well and expand its foreign operations successfully.

2.           ATM network can be expanded its 24 hours cash facilities to other cities of the country in order to meet the growing market demand

3.           Increasing focus on different types of customers, MCB can open women branches especially in those areas where women class want to get involved but could not, due to environmental and cultural restrictions.

4.           Foreign exchange department can be open in those cities branches where foreign exchange activates are developing.

5.           Growing policies of government on business and commerce sector provides MCB an opportunity to efficiently meet with the business people’s requirement off instant cash and financing facilities.

6.           Customer’s feed back on different products and accounts has really improved the bank performance and encouraged the atmosphere for other future policies.

7.           MCB also has an opportunity to expand new technological advancement like:  Tele bank and Internet banking facilities in order to serve customer more efficiently and according to the international or modern banking techni1ques.

Weaknesses:

1.           Numbers of branches are decreasing every year, due to which, those employees at the low profitable branches feel unsecured about their jobs.

2.           Slow down in advances growth in the short-term as MCB focuses on quality customers in the market.

3.           New schemes are not introduced this year, due to which the attraction of the customers in slowing down.

4.           Customers having accounts with small amounts are not given same services and dealing, which is given to those who have high accounts.

5.           Management group is also having huge investments in other interest like: Textile and Cement industries, which may divide their attention and resources also.

6.           Political or government influence or pressure from some interest groups.

7.           System of recruitment and selection is not transparent and offering few training programmes to junior level officers.

Strengths:

1.           MCB has adopted Islamic Banking System as well, as there is a growing ned of Islamization in our economy.37

2.           MCB’s emphasis on consumer banking by providing consumers with innovative saving schemes, products and services suit best as according to consumers life style.

3.           The largest private sector bank in Pakistan with a network of 988 domestic and 5 foreign branches with  1 branch in the Export Processing Zone (EPZ)

4.           Experience of operation as the bank was established in 1947.

5.           First bank to privatized which has now become the leader in market with largest ATM 24 Hours online facility in the country.

6.           Extension and improvement in services to domestic as well as foreign customers.

7.           Attractive and higher interest rates and prizes on various accounts and products.

8.           Increasing foreign operation by establishing branches in other countries.

9.           Best optional po9licies for an employee, which has really improved their commitment dedication and hard work towards the accomplishment of bonus’s objectives.

10.       Human resource development and employment of technology towards modern development.

11.       24 hours cash access and safe payment products for high value transaction.

12.       MCB intends to finance products for customers wanting instant loan facilities at MCB’s branches.

13.       Pioneer in introduction of MCB Master Card with photograph and Rupee Traveler Cheques (RTCs) which minimize the degree of risk.

14.       Attention and sensitivity prevailing in the country.

15.       An efficient and experienced private management group also involved in other interests like textile and cement industries.

16.       Easy access for the customers through a high number of branches.