Introduction

 Name: Muhammad Ismaeel Irfan

 Roll No: AD514231
 Level: MBA (IT)
 Course: Financial Accounting
 Tutor: Mr. Naveed Pasha
 Introduction to
Organization
Bank was Incorporated in July 9,
1947 by Adamjee Group, Under
Indian Companies Act VII of
1913. Now Mr. Mian Muhammad
Mancha is the Chairman of MCB
Bank Ltd. MCB Bank has 1026
Branches nationwide. MCB is
Pakistan’s fourth largest bank by
assets having an asset base of
US$6.7 billion.
Where did I Visit
 I did made total three visits to the
Organization, One Visit to MCB
Regional Office Paris Road where did
I met Mr. Alvi Regional Manager
Operations. I get there to obtain all
possible information about MCB.
 And there were two Visits to MCB
Bank Trunk Bazar Branch Sialkot.
There I meets Mr. Asad Internal
Control Head.
Organization Working
 Mcb has the Business of Banking, Car Leasing, Visa
Cards, Credit Cards.
 They Provide Loans, They Provide Customers Savings
and Current Accounts.
 Vision Statement: To be the leading financial services
provider, partnering with thier customers for a more
prosperous and secure future.
 Mission Statement: They are a team of committed
professionals, providing innovative and efficient financial
solutions to create and nurture long-term relationships
with their customers. In doing so, we ensure that our
shareholders can invest with confidence in them.
 Introduction to Issue
 Our issue is to select any organization and
define the Techniques which they are
bieng using in order to minimize the credit
risk.
 What is Credit Risk?
 Credit Risk is the Risk of loss which is usually
faced by the one who offers the loan or
provide any thing on credit basis to any one.
Introduction to Issue
 Credit Risk can be faced by the following
 Credit Risk can be Faced by Lenders to
Customers
 Faced by lenders to Business
 Faced by Business
 Faced by Individuals
Techniques in order to minimize the
Credit Risk in MCB Bank.
 FINANCIAL ANALYSIS: In order to minimize credit risk,
financial analysis is carried out to assess risk, repayment
capacity, liquidity, leverage and debt to equity ratio.
 Financial Statements i.e; Balance Sheet, Income Statement,
Cash Flow statement are the basis tools which are used to
carry out financial analysis.
 Current Ratio which shows liquidity position of a certain
business.
 Acid test ratio is used to ascertain the ultimate liquidity
position of the business.
 REPAYMENT CAPACITY: Timely payment of markup on
quarterly basis and completion of other formalities of Bank
shows repayment capacity.

 FINANCIAL BACKGROUND: Financial background of a

particular borrower helps in making credit decision in sanction
credit. Credit Reports of the borrower can be obtian from
other banks, CIB Report, Search Report etc.

 MARKET REPUTATION AND GOODWILL: Repayment

behavior can also be assessed by market reputation and
goodwill of a particular borrower. Financial Statements, CIB
Report also shows borrower's behavior towards debt
servicing behavior. For this purpose MCB using tools like CIB
(Credit information Bureau) Report, Search Report from ICIL.
 PRIMARY SECURITY: MCB secure lending by means
of primary security i.e; hypothecation, pledge, lien etc.

 SECONDARY SECURITY: MCB secure its financing by

way of secondary security in shape of Mortgate i.e;
Registered Mortgage, token mortgage and Equitable
mortgage in order to secure its loans.

 LEGAL DOCUMENTATION: MCB is the pioneer in

Basel II Implementation and Credit Risk Assessment of
world class standard. MCB does not compromise on
legal documentation.

 LEGAL OPINION AND FINAL LEGAL VETTING: In

order to safe bank's interest, MCB arrange legal opinion
and vetting from senior advocate registered with MCB
Panel.
Data Collection
 1. Mostly Data Collected By Visits. Two Visits to MCB
Trunk Bazar Branch Sialkot, and One Visit to Mcb
Regional Office Paris Road Sialkot.

 2. Other In Internet Searching.

 3. Book Study

 4. My Own Information.

 5. Some Information Obtained from Friends

 6. Some Information Collected from Some Teachers

S.W.O.T
Analysis
Strength.
 As when Bank Takes Primary and
Secondary Security from the Customer to
Which the loan is offered then the Bank
Loan Get Saved. If the Customer Fails to
Return the Loan the Bank can Recover its
Amount by Selling the Securities such as
Mortgage etc.
Weakness.
 The Weak Point is that if Customer is Fraudulent
or Get disappears some where then the bank be
not be able to recover its amount.
 Or If the documents given to Bank are not Legal
then bank have to afford the Loss.
 Or when Customer gets insolvent and its Property
which is pledged by Bank is not sufficient to
recover all the debts then the Bank have loss.
Opportunities.
 As we know that the Business is the name
of Risk, if they want to survive in the World
of Business then they have to take Risks,
by taking and facing these Risks the
Business can gets valuable Customers.
The Business can get many opportunities
to expand its business.
Threats
 There are also many kind of Threat which prevails in
MCB in the Sanction of Loan.
 1. The Threat of Fraud by Customer.
 2. The Threat of Customers Insolvency.
 3. The Threat of Centralizing or Decentralizing of Banks
by Government.
 4. The Threat of Illegal Documentation.
 5. The Threat of deficiency in the Pledged property.
 5. The Threat of Credit Loss.
 6. The Threat of Fraud by Employees.
Conclusion.
 According to all above discussion, All techniques
discussed are sufficient to minimize the credit risk but
still there are some weak points such as if customer is
fraud or if his purpose is to do fraud then may be the
bank will not be able to recover its amount
 Or if any Authority of the bank involves in fraud then the
bank may faces loss
Recomendations.
 The Recommendation is that If MCB want to
minimize the Credit Risk at extreme level then
they should follow all the Steps Discussed above
(Financial Analysis, Repayment Capacity,
Securities Etc), they should hire Honest, talented
and Competent People, They should never Trust
Unknown Person who applies for the loan, first
they should full fill all the requirements which
has been discussed before the sanction of loan.