Final Project Proposal

I have highlighted the mistakes so remove them and then upload it against assignment # 4.
COMPARATIVE STUDY OF ISLAMIC BANKING WITH COVENTIONAL BANKING

Submitted By: Name: Muhammad Bilal ID# mc080201372 MBA (Banking). VIRTUAL UNIVERSITY OF PAKSITAN

DATE OF SUBMISSION: 19-July-2010.

O mankind If you have a doubt about the resurrection (consider) that we created you out of dust, then out of sperm, then out of a beach like cloth, then out of a
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morsel of flesh, partly formed and partly unformed, in order that We may manifest (Our Power) to you; and We cause whom We will to rest in the wombs for an appointed term, then do We bring you out as babies, the (foster you) that you may reach your age of full strength; and some of you are called to die, and some are sent back to the feeblest old age, so that they know nothing after having known much,

Holy Quran

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Table of Contents:
1. Introduction of Project. 2. Description of Project 3. Rational of Project 4. Background 5. Objective 6. Significance 7. Project Proceedings 8. Project Methodology 9. Bibliography

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1 1 1 2 2 2 3 5 7

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Chapter 1:
1.1 Introduction of the Project: a) This research is about comparative study of two types of banking systems. In this research, I will use comparative study consists of two section. First section contains general overview of what is Islamic banking and what is commercial banking. In second section, study will be done regarding banking practices from conceptual to practical working under rules and regulations. This research will result in the overall operational study of different products used in banking. It will provide us the way two types of banking system is in operation, which will base on facts, views and reviews. Meezan Bank Limited will represent Islamic Bank and Commercial bank will be represented by Habib Bank Limited. b) Description of Project: The main purpose of this project is comparison of two types of banking. I will visit banks for understanding the banking products, procedures and relating by-laws and rules. I will study their products services, operations and procedures. Comparison of products, loans or advances, deposits, and services of respective banks, will be performed. Study of practices of banks under this research will be thoroughly cross examined on grounds.

c) Rationale: This research is needed because it will provide us the distinguishing parameters of banking practices. Product differentiation with respect to procedures and practices will be studied. This will provide reader of this research contrasting methods of banking systems. Conceptual and operational differences will be elaborated with a view in mind that reader can apprehend about the topic.

1.2 Background: Most of the research has been done on growth of Islamic banks in this category [1] StateBank of Pakistan publication on the topic Islamic bulletin September 2006. p13 showed, Today, Islamic financial and banking activities have reached an impressive size of over US$250bn, as compared to a meagre US$6bn in the early 1980s[2] Background of the research shows the impact and implication of the topic on the environment (the specific set up in which you are studying the issue). None of this type of research has been done earlier using comparison approaches.

1.3 Objectives: Objective can be to find out variations in the operational workings, products and services of both banking systems. Write this iobjective. The aim of this research is to understand the banking processing. The research will be based on item-wised working under rules and regulations of banks. All logical steps will be presented in its true outcome. I will visit these banks and discuss the different areas for my research work. I will discuss about my research details and their help and suggestions will be discussed with the same post of two banks and then presented under specific areas of research

1.4 Significance: These project finding will really help for the stakeholders, customers, investors and all related persons that can be influenced by decisions. How?

Chapter 2: Project Proceedings: Expected project sections include following headings. a. Background of banking b. What is Islamic Banking c. What is Conventional Banking d. Products of Islamic banks 1. Murabaha, Ijarah, Musharakha, etc, Detailed study will be presented how these products are in operational mode and study of laws relating to these. e. Products of Commercial Banks a. a. Finances: which may be short term, medium term and long term , fund based and non-fund based their types and working. Difference in operations and strategies. No description of second part i.e. comparison of Meezan and HBL Name of Item Fund Based Advances Inland Foreign Advances P.A.D Payment against Documents Non fund Bases Advances Letter of Credit Islamic Bank Conventional Bank

Letter of Guarantee

Working of these products will be worked out by visiting banks and most importunately, operational mangers, their responses and discussion will recorded. b. Deposits: c. Remittances d. Bills f. Operations: Under operational manager, different department work according to their rules and regulation manuals. 1. Role of Clearing Department 2. Account Department 3. Deposit Department 4. Advances 5. Foreign Exchange Department 6. Cash Department In this section, I will discuss in detail how these departments deals with banking products and how they follow the rules and regulation.

Chapter 3: Methodology:

3.1 Data Collection Sources: Primary Sources: Operational Managers of banks, their respective banks Performas about banking products will be our primary source of my research. Interviews, scheduledmeetings with managers are my main source of data collection. Secondary Sources consists of published accounts of banks, respective banks web-sites for overall information of banks. 3.2 Data Collection Tools/ Instruments: I will do interviews, taking observation of different processes in the banks. Structured meetings will be arranged with managers of different departments in both banks. Different type of products samples forms (Fdd, Ftt, Fmt etc. Forms,) will be collected. Forms of products will be attached and will be analyzed in the research. Microsoft Office will be our data processing tool. I will use multiple tools because data research is more dependent on observations, and personal opinion which may vary, but I will also considering banking practices and rules. 3.3. Subjects/ Participants. Meezan bank Ltd and Habib Bank Limited and their representative are our participants in this research. Table and their responses will be recorded about banks. Our participant Meezan Bank is situated on G.T Road Gujranwala and Habib Bank is at bank-Square Gujranwala.

3.4. Field work/ Data Collection: For field work, I will visit banks for data about products will be collected and meetings and interviews will be held for procedural studies. For example, in case of product item Remittances, category foreign, sub product FTT (Foreign Telegraphic Transfer) is used for remitting funds from one country to another country. Then on next stage, banks procedure for FTT will be discussed in detail. In case of FTT, three banks are involved in this process, remitting bank, intermediate bank and beneficiary banks. 3.5 Processing & Analysis. Data will be stored on Microsoft office. Information and data will clearly draw the demarcation line between two banking system. We will present what we conceive and get by the available data and information. Our data will be shown in percentages.

Bibliography [1].Ahmed.Imran & Baloch.Sumera , Islamic Banking bulletin September 2006. page 13 www.sbp.org.pk/ibd/IBB.pdf [2] Iqbal, Zamir (1999), Financial Engineering in Islamic Finance, Thunderbird on Islamic finance. On topic Emerging Islamic CAPITAL MARKETS - a quickening pace and new potential by Zamir Iqbal and Hiroshi Tsubota, The World Bank www.habibbankltd.com www.meezanbank.com www.sbp.org.pk