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INTRODUCTION
● History and background
● Business philosophy
● Vision and mission statement
● Market standing
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1. INTRODUCTION
MEEZAN Bank is the first and largest Islamic commercial Bank of Pakistan. The
Bank is headquartered in MEEZAN House - Karachi, Pakistan. It has a network of
over 528 branches in more than 130 cities of Pakistan. It commenced operations in
2002 when State Bank of Pakistan issued first-ever license for Islamic commercial
banking. The Bank has a market share of 35% in Islamic banking industry of the
country.
The Bank offers wide range of Shariah-compliant banking products and services to its
customers, both retail and business. Besides traditional banking channels, the Bank
offers various Alternate Distribution Channels including Internet Banking, ATM
Banking, Visa & MasterCard debit card, SMS Banking, SMS Alerts, Mobile Banking
Application and Utility Bills Payment through ATM and Internet Banking.
Banking plays a very significant role in the economic development of a country. After
Partition of India and Pakistan British Government’s commission distributed the
reserves between Pakistanand India.
In August 1947, various Banks transferred their headquarters and funds to India.
Before partition of Pak-o-Hind, some Banks were operated which were Chartered
Bank, Grind-lays Bank, Imperial Bank of India, Australasia Bank and Habib Bank.
After the independence of Pakistan, Muslim Commercial Bank Limited, Bank of
Bahawalpur Limited, Punjab National Bank and National Bank of Pakistan were
providing banking facilities to general public.
The State Bank of Pakistanwas inaugurated by our great leader Muhammad Ali
Jinnah. On 1stJuly, 1948. Australasia Bank and Habib Bank were providing facilities
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to the Pakistan’s nation. After some period, Australasia Bank Limited was converted
into Allied Bank of Pakistan.
State Bank of Pakistan is a Central Bank of Pakistan. Other Banks are Commercial
Banks, Specialized Bank and Investment Banks.
Now a days in Pakistan, fifty four banks are operated with thousands of branches.
Banks are providing Banking facilities to their customers and clients by offering
different services and packages.
Pakistan’s banking sector consisting of Islamic Banks, Private Banks, Public Sector
Banks, and Micro Finance Banks. These Banks are doing Corporate Banking, Trade
Financing, Lease Financing and some Banks are providing online banking facilities,
ATM facility and money transfer facilities also.
Banking sector is a back bone of our economy. If this sector is making progress than
whole economy is also growing a lot. Our Agricultural sector, Industrial sector,
Mining sector, Export sector all depend on the banking industry because Banks
provide long term funds as well as short term funds to all these sectors to meet out
their short term as well as long term requirement. Hence, banking progress is
necessary indeed.
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1991: Procedure adopted by banks in 1985 was declared un-Islamic by the Federal
Shariah Court (FSC). The Government and some banks/DFIs made appeals to the
Shariah Appellate Bench (SAB) of the Supreme Court of Pakistan.
1999: The Sharia Appellate Bench of the Supreme Court of Pakistan rejects the
appeals and directs all laws on interest banking to cease. The government sets up a
high level commission, task forces and committees to institute and promote Islamic
banking on parallel basis with conventional system.
2002: MEEZAN Bank acquires the Pakistan operations of Society General and
concurrently Al MEEZAN Investment Bank converts itself into a full-fledged Islamic
commercial bank. The first Islamic banking license is issued to the Bank and it is
renamed MEEZAN Bank.
2003: MEEZAN Bank establishes itself as the pioneer of Islamic Banking in Pakistan
and quickly establishes branches in all major cities of the country. A wide range of
products are developed and launched consolidating the Bank’s position as the premier
Islamic Bank of the country Al MEEZAN Investment Management Limited (AMIM),
the asset management arm of MEEZAN Bank, introduces MEEZAN Islamic Fund
(MIF), the country’s first open-end Islamic Mutual Fund.
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2004: The State Bank establishes a dedicated Islamic Banking Department (IBD) by
merging the Islamic Economics Division of the Research Department with the Islamic
Banking Division of the Banking Policy Department. A Shariah Board has been
appointed to regulate and approve guidelines for the emerging Islamic Banking
industry. The Government of Pakistan awards the mandate for debut of international
Sukuk (Bond) offering for USD 500 million. The offering is a success and establishes
a benchmark for Pakistan. MEEZAN Bank acts as the Shariah Structuring Advisor for
this historic transaction.
2006: 62 branches in 21 cities
2007: Bank’s branch network reached the milestone number of 100 branches. The
Bank introduced Istisna' (Istisna' is a sale transaction where a commodity is transacted
before it comes into existence. It is an order to a manufacturer to manufacture a
specific commodity for the purchaser. The manufacturer uses his own material to
manufacture the required goods) financing to cater to the working capital needs of
customers.
2008: MEEZAN Bank introduced Tijarah financing to allow customers to raise funds
for financing of stocks of finished goods.
2009: The branch network reached 201 branches (including sub-branches) in 54 cities
nationwide.
2010: The Bank developed MEEZAN Business Plus, a Mudaraba-based account that
offers an array of free services for businesses, MEEZAN Euro Savings Account and
MEEZAN Pound Savings Account. Bank’s branch network reached 222 branches in
63 cities across Pakistan.
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2011: The inauguration of the new Head office in Karachi. During the year, 53
branches were opened to reach a landmark of 275 branches in 83 cities across
Pakistan.
On 18 October 2014, the Bank acquired the HSBC Pakistan operations. After
conversion of the business and branches of HSBC (Honkong and Shanghai Banking
Corporation) Pakistan to MEEZAN Bank; the HSBC Pakistan Accounts and Term
Deposit Receipts (TDRs) converted to MEEZAN Bank accounts and Certificates of
Islamic Investments (COIIs).
2014: Meezan bank reaches a branch network of 428 branches in 117 cities. The bank
acquired Pakistan operations of HSBC mobile banking application launched.
2015: Agreement signed with Karandaz Pakistan. Meezan Upaisa the first Islamic
branchless banking service launched successfully. 550 branches in over 130 cities.
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Employees shall maintain strict secrecy regarding the Bank's affairs and shall not
(except so far as is necessary and appropriate in the normal course of their
employment disclose to any person, any information as to the practice, dealing or
affairs of the Bank or any of their customers, which may come to their knowledge by
reason of their employment. During the course of employment and after its
termination for whatever reason, the employee must not disclose to anyone (nor use
for any purpose other than the business of the Bank) any information relating to the
Bank or its employees which is not already available to the public unless authorized to
do so. Such information includes customer data, product manuals, technical secrets,
confidential research work, technical processes, operating manuals, marketing plans
and strategies and other confidential financial or business information of the Bank.
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“To be a Premier Islamic Bank, offering a one-stop shop for
innovative value-added products and services to our customers within the bounds of
Shariah, while optimizing the stakeholders’ value through an organizational culture
based on learning, fairness, respect for individual enterprise and performance.”
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Presence 146 Cities 143 Cities
2%
1.3.5. VALUES
1.3.5.2. Staff:
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Committed, motivated and professionally trained employees who are empathic to
their customers’ needs.
1.3.5.4. Relationships:
Our relationships are long-term. We recognize and value our customers’ needs above
all and strive to ensure their fulfillment. All customers are treated with
professionalism and in a friendly manner. It is our Endeavour to ensure that they
receive efficient and timely service. The MEEZAN Bank experience is a unique one.
1.3.5.5. Strategy:
By implementing robust(durable) and aggressive (competitive) strategic and tactical
initiatives on the side of consumer banking, MEEZAN Bank aims to fulfill its prime
objective of providing customers accessibility and convenience, within an atmosphere
and culture of dedicated service and recognition of their needs.
1.3.5.6. Technology:
MEEZAN Bank has a strong technology focus. It has invested heavily in
state-of-the-art software applications – namely Temenos T-24 and Oracle. It has also
recently upgraded its hardware platform and also has a ‘hot’ disaster recovery site in
place to cater to any unforeseen eventualities.
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“The Trend Analysis is a method of analysis that allows traders to predict what will
happen in the future. Trend analysis is based in historical data about the employee’s
performance given the overall trends of the market and particular indicators within the
market”.
MEEZAN BANK market standing can be revealed by credit rating which it gets from
credit rating companies like PACRA is most reliable source of credit rating.
Entity Ratings by PACRA: Long Term: AA- , Short Term: A1+.
Long Term Rating AA: Very High Credit Quality. AA Ratings denote a very low
expectation of credit risk. They indicate very strong capacity for timely payment of
financial commitments. This capacity is not significantly vulnerable for foreseeable
events.
Short Term Rating A1+: Obligations supported by the highest capacity for timely
repayment.
Al Meezan has been time and again recognized for its consistency in performance,
outshining the competitors in domestic and global Islamic funds market. It is
recognized as Pakistan’s largest private sector Asset Management Company. Below is
a list of the awards and accolades we have received from foreign bodies and respected
industry organizations in recognition of our investment management and service
excellence.
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Sr.# Description of Award Given By Announced in
1. Pakistan’s Financial Services AI Global Media 2016
Firm of the Year 2016 publication
2. Best of the Best in Finance AI Global Media 2016
Award-Pakistan 2016 publication
3. Best Private Sector Asset Wealth & Finance-Int’l 2016
Management & Investment
Firm 2016 – Pakistan
4. Best Investment Advisory Firm Wealth & Finance-Int’l 2016
2016 – Pakistan
5. Excellence in Equity Award Investor Review Magazine 2016
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13. Best Discretionary Portfolio APAC Insider Business 2015
Manager – Pakistan Awards
14. Excellence in Shariah Innovation &Excellence 2015
Compliant Financial Services – Awards- Corporate
Pakistan Livewire
JCR-VIS Credit Rating Company Limited has reaffirmed the entity ratings of Meezan
Bank Limited at ‘AA/A-1+’, a statement issued by the company.
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JCR-VIS has also reaffirmed sukuk ratings of Meezan Bank at ‘AA-’. Outlook on the
assigned ratings is ‘Stable’. The previous rating action was announced on June 2, 2016. The
assigned ratings to Meezan Bank incorporate the bank’s healthy customer franchise and a
sound funding base, largely comprising cost effective retail deposits. Ratings also reflect
strong asset quality indicators and adequate capitalization levels.
Meezan Bank continues to dominate the Islamic banking industry in the country with a
market share of 36 percent in total Islamic banking deposits, the statement added. With
aggressive branch expansion pursued over the last five years, branch network has more than
doubled to 571 (2011: 275) branches as at the end of December 2016.
Resultantly, deposit base has grown at a CAGR of 27 percent over the last five years
and market share in total banking deposits has increased to five percent (2016: 4.9
percent; 2011: 2.9 percent).
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CHAPTER 2
MANAGEMENT STRUCTURE
● Organizational chart
● Corporate profile
● Management hierarchy
● Policy formation process
● Managerial policies
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2. ORGANIZATIONAL STRUCTURE:
2.1. Meezan team
The business segments of the banks are:
1. Corporate Banking
2. Investment Banking
3. Commercial Banking
4. Treasury & Financial Institutions
5. Asset Management
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Investment Banking brings superior innovation, experience and the required skill set
to deliver according to the exact requirements of our clients.
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track records in private sector in the area of investment management in Pakistan and
has emerged as one of Pakistan’s leading investment solutions provider in a Shariah
compliant manner. The Shariah Advisor of Meezan Bank Limited, also the Shariah
Advisor of Al Meezan, supervises the operations to ensure Shariah compliance of the
funds.
2.1.1.7. Products
I. Murabaha
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Long-term facilities for acquisition of
fixed assets like vehicles, plant and
machinery etc. These are the
alternatives to conventional leasing
solution operation of the business.
V. Sectors
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three arenas of the economy’s
industry have been enjoying services
that are custom made to ensure the
execution of every transaction in a
fluid and risk-defined protocol.
Organization chart
Company Secretariat
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FINANCE
The organizational structure of the Bank consists of top level management, middle
level management and lower level management. The top level management comprises
of president, executive vice president, and divisional heads. The middle level
management comprises of departmental heads, SVPs and VPs. The lower level
management comprises of AVPs, Managers, and Operation Managers. The reporting
system at horizontal level is much effective and successful. The reporting system at
vertical level i.e. from lower level management to middle level management is also
accurate, timely and complete. The middle level management gives information to
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high level management at which decision are made, rules and regulations are
amended keeping in view the present scenario.
2.1.2. Auditors
The retiring auditors A.F. FERGUSON&Co. Chartered Accountants, a member firm
of Pwc network, being eligible, have offered themselves for reappointment for the
year ending December 31, 2016.The Board of Directors, on the suggestions of Audit
Committee, recommended reappointment of the above firm as statutory auditors of
the Bank for year 2016.
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Mr. Talal S.A. Al-Shehab
2. The Directors have confirmed that none of them is serving as a director on more than
seven listed companies in Pakistan including the Bank
3. All the resident Directors of the Bank are registered as taxpayers and none of them
has defaulted in payment of any loan to a banking company, a Development Financial
Institution or a Non-Banking Financial Institution or, being a member of a stock
exchange, has been declared as a defaulter by that stock exchange.
4. Casual vacancy occurred on the Board upon resignation of Mr. Rana Ahmed
Humayun on July 1, 2016 which was filled up by the Board within 90 days. The
approval from the State Bank of Pakistan for this appointment was received on
August 19, 2016.
5. The Bank has prepared a “Code of Conduct” and has ensured that appropriate steps
have been taken to disseminate it throughout the Bank along with its supporting
policies and procedures.
6. The Board has developed a Vision / Mission statement, overall corporate strategy and
significant policies of the Bank. A complete record of particulars of significant
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policies along with the dates on which they were approved or amended has been
maintained.
7. All the powers of the Board have been duly exercised and decisions on material
transactions, including appointment and determination of remuneration and terms and
conditions of employment of the CEO, other executive and non-executive directors,
have been taken by the Board.
8. The meetings of the Board were presided over by the Chairman and the Board met at
least once in every quarter. Written notices of the board meetings, along with agenda
and working papers, were circulated at least seven days before the meetings. The
minutes of the meetings were appropriately recorded and circulated.
10. The remuneration and terms and conditions of employment of the Chief Financial
Officer (CFO) have been approved by the Board of Directors. Further, a new
Company Secretary has been appointed by the Board of Directors subsequent to the
year end on January 5, 2017 upon retirement of the existing Company Secretary.
There was no new appointment of Head of Internal Audit during the current year.
11. The Directors’ Report for this year has been prepared in compliance with the
requirements of the Code and fully describes the salient matters required to be
disclosed.
12. The financial statements of the Bank were duly endorsed by the CEO and CFO before
the approval of the Board.
13. The Directors, CEO and Executives do not hold any interest in the shares of the Bank
other than that disclosed in the pattern of shareholding.
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14. The Bank has complied with all the corporate and financial reporting requirements of
the Code.
15. The Board has formed an Audit Committee. It comprises of three members, all of
whom are Non-Executive Directors and the Chairman of the Audit Committee is an
Independent Director.
16. The meetings of the Audit Committee were held at least once every quarter prior to
approval of interim and final results of the Bank and as required by the Code. The
terms of reference of the committee have been formed and advised to the committee
for compliance.
17. The Board has formed a Human Resources and Remuneration Committee. It
comprises of three members; a Non-Executive Director, an Independent Director and
an Executive Director. The Chairman of the committee is a Non-Executive Director.
18. The Board has set up an effective internal audit function comprising of professionals,
who are suitably qualified and experienced for the purpose and are conversant with
the policies and procedures of the Bank.
19. The statutory auditors of the Bank have confirmed that they have been given a
satisfactory rating under the quality control review program of the ICAP, that they or
any of the partners of the firm, their spouses and minor children do not hold shares of
the Bank and that the firm and all its partners are in compliance with the International
Federation of Accountants (IFAC) guidelines on code of ethics as adopted by the
ICAP.
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20. The statutory auditors or the persons associated with them have not been appointed to
provide other services except in accordance with the listing Regulations and the
auditors have confirmed that they have observed IFAC guidelines in this regard.
21. The ‘closed period’, prior to the announcement of interim/ final results and business
decisions, which may materially affect the market price of the Bank’s securities, was
determined and intimated to directors, employees and the stock exchange.
22. Material/price sensitive information has been disseminated among all market
participants at once through the Pakistan Stock Exchange.
23. The Bank has complied with the requirements relating to maintenance of register of
persons having access to inside information by a designated senior management
officer in a timely manner and maintained proper record including basis for inclusion
or exclusion of names of persons from the said list.
24. We confirm that all other material principles included in the Code have been
complied with.
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• Sheikh Essam M. Ishaq – from Bahrain Sheikh Essam M. Ishaq graduated in Political
Science from McGill University, Canada. Associated with Al Baraka Islamic Bank,
Bahrain, Bahrain Development Bank.
• Dr. Muhammad Imran Usmani – is an LLB, M. Phil, and Ph. D in Islamic Finance
and graduated as a scholar from Jamia Darul-Uloom, Karachi where he also
completed a specialization course in Islamic Jurisprudence. He has been teaching at
Jamia Darul-Uloom since 1990 and is also a visiting faculty member at the IBA,
Karachi. Dr. Usmani serves as an Advisor/Member of Shariah Boards of SBP, HSBC,
France; GFG, USA; LTSB Bank, UK; Credit Suisse, Switzerland; Future Growth
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our existing and potential customers are now closer than ever in benefiting from
Islamic Banking at their doorstep. All branches provide real-time online banking
facilities to customers.
As the first and largest dedicated Islamic bank in Pakistan, Meezan Bank team
continues to build on its Vision of establishing "Islamic Banking as Banking of First
Choice". One of the key objectives of the Bank is to have its footprint strategically
placed throughout the country enabling the public to avail the benefits of
Shariah-compliant Banking in their neighborhood.
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Chishtian Kharian Sadiqabad
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Gujranwala Mirpur Azad Kashmir Taxila
Hyderabad Nawabshah
Islamabad Nowshera
Jacobabad Okara
Jampur Pakpattan
Jaranwala Pattoki
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8) Mr. Mohammad Abdul Aleem
9) Mr. Noorur Rahman Abid
10) Mr. Talal S.A. Al-Shehab
11) Mr. Irfan Siddiqui (President & CEO)
12) Mr. Ariful Islam (Deputy CEO)
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2.3.1. MANAGEMENT HIERARCHY IN MAIN BRANCH
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2.3.2. Hybrid structure:
Because of complex banking environment, Meezan Bank use hybrid type of structure
that has the following characteristics:
2.3.2.1. Function:
● Allows economies of scale that all employees are located in the same place and share
all facilities.
● Enables in-depth knowledge and skill development.
● Enables organization to accomplish functional goals.
2.3.2.2. Divisional:
● Leads to client satisfaction because responsibilities and contact points are clear.
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● Best in large organization.
● Horizontal
● Promotes flexibility and rapid response to changes in customer needs.
● Promotes a focus on team work and collaboration.
● Direct the attention of everyone toward the delivery of values to the customer.
First of all they have made a policy regarding ‘Business Areas in Pakistan’ which
covers the areas of businessoffered by MBL in Pakistan. The detail of the policy is as
under:
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● Consumer Banking
● Branch Banking
● Assets Sales
● Corporate and Institutional Banking
● Custody and Clearing Services
● Cash management
● Trade Finance
● Treasury Operations
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➢ Debt Securities, Equity shares and Treasury Bills
➢ Deferred Taxation
➢ Off-balance Sheet Financial Instruments
Long term AA AA
Short term A1+ A1+
The JCR-VIS Credit Rating Company Limited, an affiliate of Japan Credit Rating
Agency, Japan, has reaffirmed the Bank’s long-term entity rating of AA (Double A)
and short-term rating at A1+ (A One Plus) with stable outlook. The short-term rating
of A1+ is the highest standard in short-term rating. The rating indicates sound
performance indicators of the Bank.
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CHAPTER 4
MARKETING MIX
● Product
● Price
● Place
● Promotion
● Publicity
3. Marketing strategy
An organization's strategy combines all of its marketing goals into one comprehensive
plan. A good marketing strategy should be drawn from market research and focus on
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the product mix in order to achieve the maximum profit and sustain the business.
The marketing strategy is the foundation of a marketing plan.
“The set of controllable tactical marketing tools that the firm blends to produce
in response to wants in the target market.”
Marketers use numerous tools to elicit desired responses from their targetmarket.
These tools constitute a market mix.
Various elements of marketing strategy are as follows:
➢ Products
➢ Price
➢ Place
➢ Promotion
➢ People
➢ Physical environment
➢ Process
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3.1. Introduction of Products
Types of products offered
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● Meezan Premium Banking
● Online Banking
● Mobile Banking App
● Meezan WebPay
● Meezan VISA Debit Card
● Debit Card
● Meezan ATM Network
● SMS Banking
● SMS Alerts
1. Musharakah
2. Mudarabah
3. Ijarah
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3.1.1. Riba
Meana Providence rests on the well-known and solid financial strength of Meana
Bank, which has a strong and credible balance sheet with excellent operating
profitability, including a capital adequacy ratio that has placed the Bank at the top of
the industry.
Furthermore, its sterling track record shows consistently beneficial and highly
competitive returns for their broad range of investors. Finally, comes the benefit of
truly Halal returns, a benefit you may not have had the opportunity to enjoy before
and one that you can now pass on to your employees, many of whom would be
grateful for such an opportunity.
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➢ Minimum investment amount: PKR 1,000,000
➢ Available tenures of 3, 5 and 7 years.
➢ Pre-mature withdrawal options available
Furthermore, these certificates can be encased at any time without any charge or
penalty, only the profit rates will be adjusted according to the tenure completed. You
can earn profit on your investment on the following basis:
In the Riba Free COII, you enter into the Musharakah agreement that is strictly in
conformity with the principles of Islamic Shariah. The deposits of the customers
together with the Bank’s contribution are invested in a pool that consists of Ijarah and
Murabaha financing. The profit/loss on this pool is calculated every month on the
basis of profit sharing ratio determined by assigning weightings. Such weightings are
assigned at the beginning of every month and are displayed on the bank notice board
and website. This facility is available during the course of investment. However,
profit shall be paid only after completion of one month of investment.
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The riba free Monthly Musharakah
Certificates are a flexible investment
product which has been designed to
give the depositor a monthly return
which is Halal. The depositors
participate with the bank in the pool of
investments which is comprised of
Murabaha and Ijarah transactions. The
minimum investment required is
required is only PKR 100,000 and you
receive profit for each complete month
of investment with the bank. The profit
rate, so calculated, is applied to all
investments which mature between the
periods starting from the 6thday of each
month to the 5thday of the next month.
During your relationship with us, you
would be entitled to receiving the
following additional benefits.
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3.1.1.5. Riba Free-Dollar Saving Account:
With a minimum of only $100 you can open a Dollar Saving Account with us
under a Mudarabah arrangement that is strictly in conformity with the principles of
Islamic Shariah. The return earned on the Mudarabah pool is calculated every month
and the profit ratio for all investors is declared at the beginning of the month. If you
maintain a minimum average monthly balance of $ 500, you shall be eligible to
receive profits that shall be disbursed to you get when they bank with us, we offer the
following additional conveniences to our customers.every month. Apart from first
class service and personalized attention that our customers
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client is eligible for the profits that will
be disbursed every month. However,
the clients of COII may open this
account with any minimum balance.
This bank account that is ideal for businesses and individuals looking for Shariah
compliant banking and ease of access. With a minimum amount of only Rs. 10,000
this product offers you a range of benefits including personalized checking facility, no
restrictions on the number of transactions, free Call Centre facilities, free balance
certificates, priority banking and much more.
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mainly on account of offering wide
range of Shariah-Compliant banking
solutions to cater different needs of its
customers. Following its track record,
Meezan Bank is now offering Islamic
Agricultural Financing Products to
farmers.
PMYBL SCHEME:
Under this scheme, financing will be available to the youth of Pakistan under the four
major categories, along with the eligibility criteria:
1. Small Entrepreneur:
Unemployed youth, especially educated ones who are looking for establishing or
extending Shariah compliant business in their personal capacity through establishment
of enterprise.
2. Microenterprise:
Individuals who have successfully completed 3-4 cycles with Akhuwat and want to
graduate from their current business size.
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Car Ijarah is Pakistan's first
"Interest Free" car-financing
based on Islamic financing
mode of Ijarah or Islamic
leasing. This product is ideal for
interest averse individuals,
looking for a car financing that
provides the convenience of a
well-designed product while
avoiding an interest based
transaction. Car Ijarah totally
halal auto finance facility that is
very affordable, with quick
processing and minimal
documentation. Car financing
that is very competitively priced,
hassle-free, and totally Halal.
As Ijarah is basically is the transfer of usufruct of a fixed asset to another person for an
agreed period, at an agreed consideration. Under car Ijarah agreement the car will be given to
the customer for the period agreed on the time of contract. In car Ijarah the asset remains in
the ownership and risk of bank and the customers only pay the rentals for use of the asset:
just like house rent. The product has grown all over the country with a portfolio of Rs 291
million as of 31st December with non-performing contracts.
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➢ Ease of acquiring any new locally assembled car
➢ No upfront Insurance Payment
➢ No advance Rental
➢ Available in tenures of 3, 4 and 5 years
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3.1.4.1. Key feature:
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Are you still not 12 years old? Then
Meezan Bank has something very
special for you; a chance of having
your own Mudarabah-based Meezan
Kids Club Account. You can now
put all your pocket money, Eidi and
all your other cash in this account,
where it will be safe and invested in
line with Islamic principles. When
you get this account opened, you
will get to learn a lot more about
managing your savings. We will also
make sure you have fun while
learning to save the right way.
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➢ Upgrade to a Meezan Teens Club Account after your 12th birthday
3.1.6. Teens club account:
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➢ Halal profit every month
➢ Free personalized “Teens Club Certificate”
➢ Personalized Cheque Book
➢ Free first Visa Debit Card in different colors for boys and girls
➢ Free Online Banking service and Internet Banking facility
➢ SMS alerts on your transactions
➢ Free Takaful Coverage* upto Rs. 1 million in case of an Accidental Death and
Permanent Disability free ATM Takaful Coverage* upto Card Limit*Maintaining a
monthly average balance of Rs 10,000 and above.
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➢ There is no restriction on withdrawals or numbers of transactions
➢ Free Cheque books** and free Pay Orders
➢ Free Account Statements**
➢ There is no deduction of service charges if the balance maintained is low
➢ Free Hold Mail Facility
➢ Free SMS alert service
➢ Free Inter City Clearing
➢ Free Takaful Coverage* upto Rs. 1 million in case of an Accidental Death and
permanent Disability free ATM Takaful Coverage* upto Card Limit *Maintaining a
monthly average balance of Rs 10,000 and above.
➢ Withdraw money as many times as you need in a single day
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3.1.9. Bike Ijarah:
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with a hassle-free process and a quick
turn-around time.
24/7 call center provides you access to a wide range of Tele-banking solutions and
personalized banking service.
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● Order issuance of cheque book
● Check transaction history of accounts
● Receive information on MBL products and services
● Issue stop payment instructions
● Report loss of your cheque book
● Request or change T-PIN
● ATM PIN Re issuance
● Report loss of ATM/Debit Card or cheque(s)
● Balance inquiry
● Statement viewing
● Statement download
● Cheque status
● Cheque blocking
● Pay order request
● Complaint logging and follow-ups
● Funds transfers between own accounts at MBL
● Change of address request
● Cheque book request
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3.1.11.5. Future Features:
● Alerts by SMS/Fax
● Utility bill payments
● Interbank funds transfers
● Payment to nominated accounts at MBL
● Standing orders for repeated payment.
● ATM Network
● Meezan Quickpay
● SMS Alerts
Meezan Upaisa is a joint venture of Ufone and Meezan Bank and is the world’s first
Islamic Branchless Banking platform that enables customers to send money, perform
bill payments and top-up transactions through Shariah-compliant banking system. The
■ Sending Money - Meezan Upaisa offers send money transaction to its customers
with competitive pricing. Customers just need to present their Original CNIC to send
money to any person pan Pakistan.
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■ Bill Payments - Customers can pay their utility, internet bills at any Meezan Upaisa
Retailerwithout any extra charges.
■ Top Ups - Customers can top up their mobile credits for any teleco of their choice.
In addition, postpaid bills can also be paid through Meezan Upaisa Retailers and is
supported by a digital receipt of the transaction performed.
In line with its customer focused strategy, Meezan Bank is offering takaful coverage
to all of its account holders in case of accidental death or permanent disability.
customers maintaining an average monthly balance of Rs. 10,000 and above, are
entitled to a Takaful cover of upto Rs. 1 million. In addition, ATM cash withdrawal
Takaful Coverage, on the amount withdrawn from any ATM, is offered to all the
account holders, in case money is snatched within the radius of 1.5 kms and 30
minutes.
■ Meezan Visa Platinum Debit Card - a very prestigious card, offering discounts at
selected retail outlets and restaurants across the country.
■ Premium Phone Banking-a dedicated Call Centre exclusively for Premium Banking
customers.
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3.1.11.10. Online Banking:
Meezan Bank offers free Online Banking facility on all Pak Rupee accounts to its
Online Banking customers. This enables the Bank’s customers to access their
accounts and conduct banking transactions from any of Meezan Bank's 571 branches
nationwide, regardless of which branch or city they have their account in. This facility
provides great convenience for depositing and withdrawing cash, making pay orders
and availing numerous other banking services.
Transfer Funds Pay Utility Bills View last 8 transactions Check Account Balances
top-up Mobile Phones And more Download the App FREE!
Designed for the customer on the move, the app is available to download through
Google Play and Apple App Stores. Compatible with all major Android and iOS
versions, the App allows customers to view account activity view transactions date
wise, pay bills, top-up mobile phone credits, transfer funds and block/unblock cards in
a fast, convenient and a secure way.
Shopping has never been more convenient than with Meezan WebPay. The service
allows all Debit Card holders to shop and purchase with online retailers over the
internet. With POS equivalent limits customer enjoys the freedom to transact.
Meezan VISA Debit Card provides convenience to customers to access their money
anytime and anywhere, at all outlets and ATMs displaying the VISA symbol. Meezan
VISA Debit Card is accepted at more than 30 million retail outlets and 2.3 million
ATMs worldwide. The new NFC based payment capability on our VISA Debit Cards
allows customers to pay for any transaction on the go by just tapping the card at the
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merchant counters accepting NFC payments. Equipped with an EMV chip, the cards
provide advanced security and greater convenience. User Guide Terms and
Conditions Mini Statement Prepaid Mobile Phone Airtime Purchase Postpaid Mobile
Bill Payment IBFT (Inter Bank Funds Transfer) Cash Withdrawal Utility Bill
Payment MasterCard
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credit transaction in their account. Meezan SMS provides transaction details along
with latest account balance.
Meezan Bank offers the largest range of Riba-free Deposit Accounts for Personal
Banking.
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The procedure of opening the account is as given under for account Mis Maria Raza
proved so helpful to me to learn that opening of an account and its all procedure
which is as under: For opening of an account there are different types of account
holders are required for all these types. The operation/procedure requirement that is
needed for “Individual Account” differs greatly from the “Joint Accounts”
proprietorship A/C, Partnership A/C, Private Limited Company A/C and Public
Limited Company A/C.
3.1.11.16.2. Documentation:
➢ Copy of National Identity Card.
➢ Proof of Income
➢ Proper Identification (Introduction).
3.1.11.16.3. Operations:
● The person place in the type of account and type of operation required in the account
opening form.
● He/she fills in part 1 of the form a fix his/her either two of four similar signature ( or
thumb expression in the signature space ) and get it introduced and signed by a person
who already has an account with the bank and write his account number in the
specific rows in a specific space.
● The person fills his or her father, mother, husband/wife or any other relative’s name
his/her address, phone number, his or her sign to certify this requirement. This
requirement is needed because in his/her absence bank can have correspondence with
a specific person.
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● The person deposits the initial amount for opening account onto the cash counter. The
person put his signature on form on two places in “authorized Signature” and fills in
the “Title of Account” space by writing his name.
● If the person put his signature in Urdu or any other language other than English he
signed a “Vernacular Form”.
● If the person has changed its signature then he must have to sign the “signature
change
● undertaking”.
● The next step is entering in computer because the centralized account
opening structure and generation of account number.
3.1.11.17. Introduction:
The signature and account number of the account holder introducing the account to
the new person is obtained on the account opening form.
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3.1.11.17.3. Know Your Customer Form:
Every account holder fills this form. The basic purpose of this form is to get some
basic information about the customer’s business and source of incomes.
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3.1.11.17.8. Letter of Thanks:
A letter of thanks is prepared. One letter is for the customer and one for the
introducer. One copy is send to the customer and the other copy is kept in the record
along with other documents.
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3. He withdraws all his money from his account but in case of current account Rs. 150 is
deducted as a charge of closing the account.
4. A liability form is send to the credit department if he has taken a loan from the bank.
If he is cleared from all the liabilities then further proceeds are taken.
5. Permission is granted by the authorized person (the manager).
6. Account is closed in the computer system.
7. His specimen signature card is attached with the account opening form and marked
closed.
1. Musharakah
2. Mudarabah
3. Ijarah
3.1.12.1. Musharakah:
Hadees-e-Qudsi:
Allah Subhan-o-Tallah has declared that He will become a partner in a business
between two Mushariks until they indulge in cheating or breach of trust (Khayanah).
3.1.12.1. Introduction:
i. 'Musharakah' is a word of Arabic origin which literally means sharing. In the context
of business and trade it means a joint enterprise in which all the partners share the
profit or loss of the joint venture. It is an ideal alternative for the interest-based
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financing with far reaching effects on both production and distribution. In the modern
capitalist economy, interest is the sole instrument indiscriminately used in financing
of every type. Since Islam has prohibited interest, this instrument cannot be used for
providing funds of any kind. Therefore, 'Musharakah' can play a vital role in an
economy based on Islamic principles.
"Shirkah" means "Sharing" and in the terminology of Islamic Fiqh, it has been
divided into two kinds:
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2) Dishonesty
3) Secrecy of the Business
4) Clients' Unwillingness to Share Profits
Let us now examine some objections raised from practical point of view against using
Musharakah as a mode of financing.
Before financing on the basis of musharakah, the banks and financial institution will
study the feasibility of the proposed business for which funds are needed. Even in the
present system of interest-based loans the banks do not advance loans to each and
every applicant. They study the potentials of the business and if they apprehend that
the business is not profitable, they refuse to advance a loan. In the case of
musharakah, they will have to carry out this study with more depth and precaution.
Moreover, no bank or financial institution can restrict itself to a single musharakah.
There will always be a diversified portfolio of musharakah. If a bank has financed 100
of its clients on the basis of musharakah, after studying the feasibility of the proposal
of each one of them, it is hardly conceivable that all of these Musharakah or the
majority of them will result in a loss. After taking proper measures and due care,
what can happen at the most is that some and them make a loss. But on the other
hand, the profitable Musharakah are expected to give more return than the
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interest-based loans, because the actual profit is supposed to be distributed between
the client and the bank. Therefore, the Musharakah portfolio, as a whole, is not
expected to suffer loss, and the possibility of loss to the whole portfolio is merely a
theoretical possibility which should not discourage the depositors. This theoretical
possibility of loss in a financial institution is much less than the possibility of loss in a
joint stock company whose business is restricted to a limited sector of commercial
activities. Still, the people purchase its shares and the possibility of loss does not
refrain them from investing in these shares. The case of the bank and financial
institutions is much stronger, because their Maharajah activities will be so diversified
that any possible loss in one Musharakah will be more than compensated by the
profits earned in other Musharakah.
Apart from this, 'an Islamic economy must create a mentality which believes that any
profit earned on money is the reward of bearing risks of the business. This risk may
be minimized through expertise and diversifying the portfolio where it becomes a
hypothetical or theoretical risk only. But there is no way to eliminate this risk totally.
The one, who wants to earn profit, must accept this minimal risk. Since this
understanding is already there in the case of normal joint stock companies, nobody
has ever raised the objection that the money of the shareholders is exposed to loss.
The problem is created by the system which separates the banking and financing from
the normal trade activities, and which has Compelled the people to believe that banks
and financial institutions deal in money and papers only, and that they have nothing to
do with the actual results emerging in trade and industry. Therefore, it is argued that
they deserve a fixed return in any case. This separation of financing sector from the
sector of trade and industry has brought great harms to the economy at macro-level.
Obviously, when we speak of Islamic banking, we never mean that it will follow this
conventional system in each and every respect. Islam has its own values and
principles which do not believe in separation of financing from trade and industry.
Once this Islamic system is understood, the people will invest in the financing sector,
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despite the theoretical risk of loss, more readily than they invest in the profitable joint
stock companies.
3.1.12.1.6. Dishonesty:
Another apprehension against Musharakah financing is that the dishonest clients may
exploit the instrument of Musharakah by not paying any return to the financiers. They
can always show that the business did not earn any profit. Indeed, they can claim that
it has suffered a loss in which case not only the profit, but also the principal amount
will be jeopardized. It is, no doubt, a valid apprehension, especially in societies
where corruption is the order of the day. However, solution to this problem is not as
difficult as is generally believed or exaggerated.
If all the banks in a country are run on pure Islamic pattern with a careful support
from the Central Bank and the government, the problem of dishonesty is not hard to
overcome. First of all, a well-designed system of auditing should be implemented
whereby the accounts of all the clients are fully maintained and properly controlled. It
is already discussed that the profits may be calculated to the basis of gross margins
only. It will reduce the possibility of disputes and misappropriation. However, if any
misconduct, dishonesty or negligence is established against a client, he will be
subjected to punitive steps, and may be deprived of availing any facility from any
bank in the country, at least for a specified period.
These steps will serve as strong deterrent against concealing the actual profits or
committing any other act of dishonesty. Otherwise also, the clients of the banks
cannot afford to show artificial losses constantly, because it will be against their own
interest in many respects. It is true that even after taking all such precautions, there
will remain a possibility of some cases where dishonest clients may succeed in their
evil designs, but the punitive steps and the general atmosphere of the business will
gradually reduce the number of such cases (Even in an interest-based economy, the
defaulters have always been creating the problem of bad debts) But it should not be
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taken as a justification, or as an excuse, for rejecting the whole system of maharajah.
Undoubtedly, the apprehension of dishonesty is more severe for the Islamic Banks
and Financial institutions working in isolation from the main stream of conventional
banks. They have not much support from their respective governments and central
Banks. They cannot change the system, nor can they impose their own laws and
regulations. However, they should not forget that they are not just commercial
institutions. They have been established to introduce a new system of banking which
has its own philosophy. They are duty bound to promote this new system, even if they
apprehend that it will reduce the size of their profits to some extent. Therefore, they
should start using the instrument of musharakah, at least on a selective basis. Each
and every bank has a number of clients whose integrity is beyond all doubts. The
Islamic banks should, at least, start financing them on the basis of true musharakah. It
will help setting good precedents in the market and induce others to follow suit.
Moreover, there are some sectors of financing where musharakah can be used easily.
Another criticism against musharakah is that, by making the financier a partner in the
business of the client, it may disclose the secrets of the business to the financier, and
through him to other traders.
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However, the solution to this problem is very easy. The client, while entering into the
musharakah, may put a condition that the financier will not interfere with the
management affairs, and he will not disclose any information about the business to
any person without prior permission of the client. Such agreements of maintaining
secrecy are always honored by the prestigious institutions, especially by the banks and
financial institutions whose entire business is based on confidentiality.
Many a time, it is mentioned that the clients are not willing to share with the Banks
the actual profits of their business. The reluctance is based on two reasons:
1. They think that the bank has no right to share in the actual profit, which may be
substantial, because the bank has nothing to do with the management or running of
the business and why they should (the clients) share the fruit of their labor with the
Bank who merely provides funds. The Clients also argue that conventional banks are
content with a meager rate of interest and so should be the Islamic Banks.
2. Even if the above was not a factor, the Clients are afraid to reveal their true profits to
the Banks, lest the information is also passed on to the tax authorities and Clients' tax
liability increases. The solution to the first part, though not easy, is not difficult or
impossible either. Such Clients need to be convinced and persuaded that borrowing on
interest is a cardinal sin, unless there is a dire necessity for such borrowing. Mere
expansion of business is not a dire need, by any stretch of imagination. By making a
legitimate arrangement for obtaining funds for their business, by way of Musharakah,
not only do they earn Allah's pleasure but also a legitimate return for themselves, as
well as for the Islamic Banks.
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3. In respect of the second factor, all that can be said is that in some Muslim countries,
rate of taxation is indeed prohibitive and unjust. Islamic Banks as well as their
Clients must lobby with the governments and struggle to change the laws which
hamper the progress towards Islamic banking. The governments should also try to
appreciate the fact that if rates of taxation are reasonable and if the tax-payers are
convinced that they will benefit by honestly paying their taxes, this would increase,
and not decrease, government revenues.
1. Every partner has a right to terminate the musharakah at any time after giving his
partner a notice to this effect, whereby the musharakah will come to an end. In this
case, if the assets of the musharakah are in cash form, all of them will be distributed
pro rata between the partners. But if the assets are not liquidated, the partners may
agree either on the liquidation of the assets, or on their distribution or partition
between the partners as they are. If there is a dispute between the partners in this
matter i.e. one partner seeks liquidation while the other wants Partition or distribution
of the non-liquid assets themselves, the latter shall be preferred, because after the
termination of musharakah, all the assets are in the joint ownership of the partners,
and a co-owner has a right to seek partition or separation, and no one can compel him
on liquidation. However, if the assets are such that they cannot be separated or
partitioned, such as machinery, then they shall be sold and the sale-proceeds shall be
distributed.
2. If any one of the partners dies during the currency of musharakah, the contract of
musharakah with him stands terminated. His heirs in this case, will have the option
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either to draw the share of the deceased from the business, or to continue with the
contract of musharakah.
3. If any one of the partners becomes insane or otherwise becomes incapable of effecting
commercial transactions, the musharakah stands terminated.
Termination of Musharakah without closing the business If one of the partners wants
termination of the musharakah, while the other partner or partners like to continue
with the business, this purpose can be achieved by mutual agreement. The partners
who want to run the business may purchase the share of the partner who wants to
terminate his partnership, because the termination of musharakah with one partner
does not imply its termination between the other partners.
However, in this case, the price of the share of the leaving partner must be determined
by mutual consent, and if there is a dispute about the valuation of the share and the
partners do not arrive at an agreed price, the leaving partner may compel other
partners on the liquidation or on the distribution of the assets themselves.
The question arises whether the partners can agree, while entering into the contract of
the musharakah, on a condition that the liquidation or separation of the business shall
not be affected unless all the partners, or the majority of them wants to do so, and that
a single partner who wants to come out of the partnership shall have to sell his share
to the other partners and shall not force them on liquidation or separation.
Most of the traditional books of Islamic Fqih seem to be silent on this question.
However, it appears that there is no bar from the Shariah point of view if the partners
agree to such a condition right at the beginning of the musharakah. This is expressly
permitted by some Hanbali jurists. This condition may be justified, especially in the
modern situations, on the ground that the nature of business, in most cases today,
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requires continuity for its success, and the liquidation or separation at the instance of a
single partner only may cause irreparable damage to the other partners.
4. If a particular business has been started with huge amounts of money which has been
invested in a long-term project, and one of the partners seeks liquidation in the
infancy of the project, it may be fatal to the interests of the partners, as well as to the
economic growth of the society, to give him such an arbitrary power of liquidation or
separation.
3.1.12.2. Murabaha:
3.1.12.2.1. Introduction:
Most of the Islamic banks and financial institutions are using "Murabaha" as an
Islamic mode of financing, and most of their financing operations are based on
"Murabaha". That is why this term has been taken in the economic circles today as a
method of banking operations, while the original concept of "Murabaha" is different
from this assumption.
"Murabaha" is, in fact, a term of Islamic Fiqh and it refers to a particular kind of sale
having nothing to do with financing in its original sense. If a seller agrees with his
purchaser to provide him a specific commodity on a certain profit added to his cost, it
is called a “Murabaha" transaction. The basic ingredient of "Murabaha" is that the
seller discloses the actual cost he has incurred in acquiring the commodity, and then
adds some profit thereon. This profit may be in lump sum or may be based on a
percentage.
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give a summary of only those rules which are more relevant to the transactions of
Murabaha as carried out by the financial institutions.
1. The subject of sale must be existing at the time of sale. Thus, a thing which has not
yet come into existence cannot be sold. If a non-existent thing has been sold, though
by mutual consent, the sale is void according to Shariah.
Example: A sells the unborn calf of his cow to B. The sale is void.
2. The subject of sale must be in the ownership of the seller at the time of sale. Thus,
what is not owned by the seller cannot be sold. If he sells something before acquiring
its ownership, the sale is void.
Example: A sells to Be a car which is presently owned by C, but A is hopeful that he
will buy it from C and shall deliver it to B subsequently. The sale is void, because the
car was not owned by at the time of sale.
1. The first and the most glaring mistake is to assume that Murabaha is a universal
instrument which can be used for every type of financing offered by conventional
interest-based banks and NBFIs. Under this false assumption, some financial
institutions are found using Murabaha for financing overhead expenses of a firm or
company like paying salaries of their staff, paying the bills of electricity etc. and
setting off their debts payable to other parties. This practice is totally unacceptable,
because Murabaha can be used only where a commodity is intended to be purchased
by the customer. If funds are required for some other purpose, Murabaha cannot
work. In such cases, some other suitable modes of financing, like musharakah, leasing
etc. can be used according to the nature of the requirement.
2. In some cases, the clients sign the Murabaha documents merely to obtain funds. They
never intend to employ these funds to purchase a specific commodity. They just want
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funds for unspecified purpose, but to satisfy the requirement of the formal documents,
they name a fictitiously commodity. After receiving money, they use it for whatever
purpose they wish. Obviously, this is a fictitious deal, and the Islamic financiers
must be very careful about it. It is their duty to make sure that the client really intends
to purchase a commodity which may be subject to Murabaha. This assurance must be
obtained by the authorities sanctioning the facility to the customer. Then, all
necessary steps must be taken to confirm that the transaction is genuine.
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into play one after another at their respective stages. These stages have been fully
highlighted earlier while discussing the concept of 'Murabaha Financing'. Without
observing this basic feature of Murabaha financing, the whole transaction turns into
an interest-bearing loan. Merely changing the nomenclature does not make it lawful
in the eyes of Shariah.
6. The representatives of the Shariah Boards of the Islamic banks, when they check the
transactions of the bank with regard to their compliance with Shariah, must make sure
that all these stages have been really observed, and every transaction is affected at its
due time.
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both cases an Islamic bank cannot finance him on the basis of Murabaha. Murabaha
can be affected only on commodities not yet purchased by the client.
3.1.12.2.4. Uses of Murabaha
Murabaha can be used in following conditions:
Short / Medium / Long Term Finance for:
➢ Raw material
➢ Inventory
➢ Equipment
➢ Asset financing
➢ Import financing
➢ Export financing (Pre-shipment)
➢ Consumer goods financing
➢ House financing
➢ Vehicle financing
➢ Land financing
➢ Shop financing
➢ PC financing
3.1.12.3. Ijarah:
"Ijarah" is a term of Islamic fiqh. Lexically, it means ‘to give something on rent'. In
the Islamic jurisprudence, the term ‘Ijarah' is used for two different situations. In the
first place, it means ‘to employ the services of a person on wages given to him as a
consideration for his hired services."The employer is called 'mushaira' while the
employee is called 'ajar'.
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porter to carry his baggage to the airport, A is a musta‟jir while the porter is an ajir,
and in both cases the transaction between the parties is termed as Ijarah. This type of
Ijarah includes every transaction where the services of a person are hired by someone
else. He may be a doctor, a lawyer, a teacher, a labor or any other person who can
render some valuable services. Each one of them may be called an ‘ajir’ according to
the terminology of Islamic law, and the person who hires their services is called a
‘musta‟jir', while the wages paid to the ajir are called their 'ujrah'.
The second type of Ijarah relates to the usufructs of assets and properties, and not to
the services of human beings. 'Ijarah’ in this sense means ‘to transfer the usufruct of a
particular property to another person in exchange for a rent claimed from him.' In this
case, the term 'Ijarah' is analogous to the English term 'leasing'. Here the lessor is
called 'Mu‟jir', the lessee is called 'musta‟jir' and the rent payable to the lessor is
called 'ujrah'
Both these kinds of 'Ijarah' are thoroughly discussed in the literature of Islamic
jurisprudence and each one of them has its own set of rules. But for the purpose of the
present book, the second type of Ijarah is more relevant, because it is generally used
as a form of investment, and as a mode of financing also.
The rules of Ijarah, in the sense of leasing, are very much analogous to the rules of
sale, because in both cases something is transferred to another person for a valuable
consideration. The only difference between Ijarah and sale is that in the latter case the
corpus of the property is transferred to the purchaser, while in the case of Ijarah, the
corpus of the property remains in the ownership of the transferor, but only its usufruct
i.e. the right to use it, is transferred to the lessee.
Therefore, it can easily be seen that ‘Ijarah’ is not a mode of financing in its origin. It
is a normal business activity like sale. However, due to certain reasons, and in
particular, due to some tax concessions it may carry, this transaction is being used in
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the Western countries for the purpose of financing also. Instead of giving a simple
interest - bearing loan, some financial institutions started leasing some equipment’s
to their customers. While fixing the rent of this equipment, they calculate the total
cost they have incurred in the purchase of these assets and add the stipulated interest
they could have claimed on such an amount during the lease period. The aggregate
amount so calculated is divided on the total months of the lease period, and the
monthly rent is fixed on that basis.
The question whether or not the transaction of leasing can be used as a mode of
financing in Sharia depends on the terms and conditions of the contract. As mentioned
earlier, leasing is a normal business transaction and not a mode of financing.
Therefore, the lease transaction is always governed by the rules of Sharia prescribed
for Ijarah. Let us, therefore, discuss the basic rules governing the lease transactions, as
enumerated in the Islamic Fqih. After the study of these rules, we will be able to
understand under what conditions the Ijarah may be used for the purpose of financing.
Although the principles of Ijarah are so numerous that a separate volume is required
for their full discussion, we will attempt in this chapter to summarize those basic
principles only which are necessary for the proper understanding of the nature of the
transaction and are generally needed in the context of modern economic practice.
These principles are recorded here in the form of brief notes, so that the readers may
use them for quick reference.
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lessee. Thus, anything which cannot be used without consuming cannot be leased out.
Therefore, the lease cannot be affected in respect of money, eatables, fuel and
ammunition etc. because their use is not possible unless they are consumed. If
anything of this nature is leased out, it will be deemed to be a loan and all the rules
concerning the transaction of loan shall accordingly apply. Any rent charged on this
invalid lease shall be an interest charged on a loan.
4. As the corpus of the leased property remains in the ownership of the lessor, all the
liabilities emerging from the ownership shall be borne by the lessor, but the liabilities
referable to the use of the property shall be borne by the lessee.
3.1.12.3.1.1. Example:
A has leased his house to B. The taxes referable to the property shall be borne by A,
while the water tax, electricity bills and all expenses referable to the use of the house
shall be borne by B, the lessee.
5. The period of lease must be determined in clear terms.
6. The lessee cannot use the leased asset for any purpose other than the purpose
specified in the lease agreement. If no such purpose is specified in the agreement, the
lessee can use it for whatever purpose it is used in the normal course. However, if he
wishes to use it for an abnormal purpose, he cannot do so unless the lessor allows him
in express terms.
7. The lessee is liable to compensate the lessor for every harm to the leased asset caused
by any misuse or negligence on the part of the lessee.
8. The leased asset shall remain in the risk of the lessor throughout the lease period in
the sense that any harm or loss caused by the factors beyond the control of the lessee
shall be borne by the lessor.
9. A property jointly owned by two or more persons can be leased out, and the rental
shall be distributed between all the joint owners according to the proportion of their
respective shares in the property.
10. A joint owner of a property can lease his proportionate share to his co-sharer only,
and not to any other person.
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It is necessary for a valid lease that the leased asset is fully identified by the
parties.
3.1.12.3.1.2. Example:
A said to B. "I lease you one of my two shops." B agreed. The lease is void, unless the
leased shop is clearly determined and identified.
3.1.12.3.1.3.2. Example:
In the above example, A puts a condition in the agreement that the rent of Rest.
2000/- per month is fixed for the first year only. The rent for the subsequent years
shall be fixed each year at the option of the lessor. The lease is void, because the rent
is uncertain.
12. The determination of rental on the basis of the aggregate cost incurred in the purchase
of the asset by the lessor, as normally done in financial leases, is not against the rules
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of Sharia, if both parties agree to it, provided that all other conditions of a valid lease
prescribed by the Sharia are fully adhered to.
13. The lessor cannot increase the rent unilaterally, and any agreement to this effect is
void.
14. The rent or any part thereof may be payable in advance before the delivery of the
asset to the lessee, but the amount so collected by the lessor shall remain with him as
'on account' payment and shall be adjusted towards the rent after its being due.
15. The lease period shall commence from the date on which the leased asset has been
delivered to the lessee, no matter whether the lessee has started using it or not.
16. If the leased asset has totally lost the function for which it was leased, and no repair is
possible, the lease shall terminate on the day on which such loss has been caused.
However, if the loss is caused by the misuse or by the negligence of the lessee, he will
be liable to compensate the lessor for the depreciated value of the asset as; it was
immediately before the loss.
➢ Easy Home
➢ Car Ijarah
➢ Laptop Ease
3.1.14. Services:
Meezan Bank is dedicate in its efforts to provide a quality banking experience to our
customer via a range of unique Banking Services
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3.1.15. Competitors
The major competitors of Meezan Bank Limited are Bank Islami, Dubai Islamic Bank
Pakistan Ltd, Albarka Islamic Bank. The other competitors are Bank Al-Falah
Limited, Bank Al Habib Limited, Askari Bank Limited, United Bank Limited, Allied
Bank Limited, Soneri Bank Limited, Faisal Bank Limited.
3.2. PRICE:
“The amount of money customers pays for the products of company”
MBL provides different products to its customers. Pricing of products means the
commission paid by the customers in return of services provide by the bank. The
commission paid for the services mainly includes:
➢ Markup/ interest
➢ Bank charges
➢ Fees and bank commission
These charges and commission are prescribed on schedule of bank charges(SOC) that
keeps on changing time to time, and issued by the bank periodically (generally after
six months)
MBL charges a certain markup along with principle amount, which is to be recovered
in installment.
MBL has charges price called as bank charges for all the financing facility and other
services provided by bank. These prices are approved by SBP.
There has been a lot of controversy regarding the price of banking companies. Some
scholar argues that the markup received by the bank is rent for capital that is issued by
others. On contrary, some called it purely RIBA. This is however a very controversial
and sensitive issue is and I would like not to give any comment on it.
3.3. PLACEMENT:
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“The product should be available from where your target consumer finds it
easiest to shop. This may be High Street, Mail Order or the more current option
via e-commerce or an online shop.”
Meezan Bank (Urdu )ﻣﯿﺰان ﺑﯿﻨﮏis the first and largest Islamic commercial Bank of Pakistan.
The Bank is headquartered in Meezan House - Karachi, Pakistan. It has a network of over 550
branches in more than 140 cities of Pakistan. It commenced operations in 2002 when State
Bank of Pakistan issued first-ever license for Islamic commercial banking. The Bank has a
market share of 35% in Islamic banking industry of the country.
JCR-VIS Credit Rating Company Limited, an affiliate of Japan Credit Rating Agency, has
rated the Bank’s short term rating at A1+ (A-One Plus), the highest standard in short term
rating, and the long-term entity rating at AA (Double A) with “Stable” outlook, making it the
only Islamic bank with AA credit rating in the Islamic banking industry of Pakistan.
Head Office: Meezan House, C-25, Estate Avenue, SITE, Karachi - Pakistan.
PABX: (92-21) 38103500 UAN: 111-331-331 & 111-331-332
www.meezanbank.com
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Ahmedpur East Jhelum Phalia
88
Dina Larkana Shakargarh
89
Hyderabad Nawabshah
Islamabad Nowshera
Jacobabad Okara
For 2017, Meezan Bank has planned to expand its Branch Network by 30 branches
countrywide. Meezan Bank's mission is to provide itscustomers dedicated and pure
Islamic banking facilities with the greatest of convenience and personalized services.
It remains the Bank'sendeavour to establish solid foundations of Islamic banking in
Pakistan.
3.4. Promotion
“Promotion refer to entire set of activitics which communication the product,
brand, service to the user”
Promotion is a very important component of marketing as it can boost brand
recognition and sales. Promotion is comprised of various elements like:
● Sales Organization
● Public Relations
● Advertising
● Sales Promotion
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Advertising typically covers communication methods that are paid for like television
advertisements, radio commercials, print media, and internet advertisements. In
contemporary times, there seems to be a shift in focus offline to the online world.
Public relations, on the other hand, are communications that are typically not paid for.
This includes press releases, exhibitions, sponsorship deals, seminars, conferences,
and events.
It is important to not take this literally. Word of mouth can also circulate on the
internet. Harnessed effectively and it has the potential to be one of the most valuable
assets you have in boosting your profits online. An extremely good example of this is
online social media and managing a firm’s online social media presence.
In creating an effective product promotion strategy, you need to answer the following
questions:
Your combination of promotional strategies and how you go about promotion will
depend on your budget, the message you want to communicate, and the target market
you have defined already in previous steps.
3.5. People
“People of both target market and people directly related to the business.”
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Thorough research is important to discover whether there are enough people in your
target market that is in demand for certain types of products and services.
The company’s employees are important in marketing because they are the ones who
deliver the service. It is important to hire and train the right people to deliver superior
service to the clients, whether they run a support desk, customer service, copywriters,
programmers…etc.
When a business finds people who genuinely believe in the products or services that
the particular business creates, it’s is highly likely that the employees will perform the
best they can.
Additionally, they’ll be more open to honest feedback about the business and input
their own thoughts and passions which can scale and grow the business.
This is a secret, “internal” competitive advantage a business can have over other
competitors which can inherently affect a business’s position in the marketplace.
3.6. Process
“The process of doing so can be modeled in a sequence of steps: the situation is
analyzed to identify opportunities, the strategy is formulated for a value
proposition, tactical decisions are made, the plan is implemented and the results
are monitored.”
The systems and processes of the organization affect the execution of the service.
So, you have to make sure that you have a well-tailored process in place to minimize
costs.
It could be your entire sales funnel, a pay system, distribution system and other
systematic procedures and steps to ensure a working business that is running
effectively. Tweaking and enhancements can come later to “tighten up” a business to
minimize costs and maximiser profits.
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In the service industries, there should be physical evidence that the service was
delivered. Additionally, physical evidence pertains also to how a business and it’s
products are perceived in the marketplace.
When you think of sports, the names Nike and Adidas come to mind.
You immediately know exactly what their presence is in the marketplace, as they are
generally market leaders and have established a physical evidence as well as
psychological evidence in their marketing.
They have manipulated their consumer perception so well to the point where their
brands appear first in line when an individual is asked to broadly “name a brand” in
their niche or industry.
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CHAPTER 4
FINANCIAL ANALYSIS
● Horizontal analysis
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● Vertical analysis
● Ratio analysis
4. FINANCIAL ANALYSIS
The purpose of the analysis of financial statement (FS) is to examine past and current
financial data so that a company’s performance and financial position can be evaluated
and future risk and potentials can be estimated. The analysis can yield valuable
information about trends relationship, the quality of company earnings and its
financial strengths and weaknesses. Financial statements among other things include
balance sheets and income statements. Balance sheet represents assets and liabilities of
the business at a given data, besides showing the ability of the business to service the
loans on the strengths of its financial structure. It also helps in evolving secured basis
for extending financial support. Apart from showing the profitability of a business,
income statement discloses how the business has been constructed and determines
factors behind rise or decline in the net worth.
➢ Horizontal analysis
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➢ Vertical analysis
➢ Ratio analysis
It is the analysis of financial statements, where all balance sheet items are divided
by total assets and all income statement items are divided by net sales or revenues.
The balance sheet uses this presentation on individual items like cash or a group of
items like current assets. Cash is listed as an individual entry in the assets section
with the total balance being listed on the left and its percentage of total assets being
listed on the right.
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Most investors are familiar with a few key ratios, particularly the ones that are
relatively easy to calculate. Some of these ratios include the current ratio, return on
equity (ROE), the debt-equity (D/E) ratio, the dividend payout ratio, and the
price/earnings (P/E) ratio.
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Islamic financing and related assets - net 311,530,270 207,568,823
Operating fixed assets 9,031,686 8,161,435
Deferred tax assets - -
Other assets - net 10,689,082 14,111,489
Total assets 663,267,675 535,949,933
LIABILITIES
Bills payable 9,130,998 6,560,324
Due to financial institutions 32,005,501 13,609,551
Deposits and other accounts 563,999,852 471,799,473
Sub-ordinated Sukuk 7,000,000 -
Deferred tax liabilities 1,955,203 730,923
Other liabilities 14,403,557 13,569,243
Total liabilities 628,495,111 506,269,514
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Balance sheet (Horizontal Analysis)
BALANCE SHEET
ASSETS % % % %
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Balances with other banks 100 54 215 239
Due from financial institutions 100 111 125 1634
Investments - net 100 (24) (0.97) (11)
Islamic financing and related 100 37 62 144
assets - net
Operating fixed assets 100 12 45 61
Deferred tax assets 100 305 -
LIABILITIES
Bills payable 100 55 81 152
Due to financial institutions 100 35 19 181
Deposits and other accounts 100 31 62 94
Sub-ordinated Sukuk 100 - - -
OWNER EQUITY
Share capital 100 - - -
Reserves 100 104 142 173
Unappropriated profit 100 37 113 161
100 29 56 73
NON-CONTROLLING 100 - - -
INTEREST
100
Surplus on revaluation of 100 (38) (14) 144
investments (including amount
relating to share of profit from
associates) - net of tax
INTERPRETATION
Total assets of MBL have increased over year 2012 to year 2016.This asset shows an
increasing trend, as it is the requirement of SBP to maintain a certain percentage amount of
deposits of Islamic banks with it. This contribution shows an increasing trend while with the
excessive amount in hand
The balances provide safety with regard to the liquidity position of the bank. Though this
asset normally reduces the risk of shortage of ready cash in both certain or uncertain
circumstances. There is an up and down ratio of this bank.in 2016 this ratio is normally very
high which shows it has ready cash available to meet any circumstances.
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Bank has provided more loans to financial institutions because there is decrease in the ratio in
2016 -13%as compare to 2012.
INVESTMENT
In 2016 there is Decrease in investment by 11% which shows bank investing in various
business activities. While in 2016 Decrease in investment shown in due to excessive
securities sold by the bank.
Operating fixed assets which include the capital work in progress, property and equipment,
and intangible assets show an increase in 2015 due to expansion in network of branches and
to meet other operational need but a decrease in 2016 because of its non-expansion in
network of branches.
BILLS PAYABLE
Bills payable of the bank has decreased in 2015 of total assets which shows that the bank is
efficiently controlling its payable.
In 2016 there is increasing trend in borrowing from financial institutions which is not good
indication for the bank. This shows that bank borrowing is greater much from financial
institutions. But in 2015 there is much decrease in these borrowing.
Deposits are not accurately handled by the bank there is decreasing trend of the deposits
which are in 2012 is 36% and decrease in 2016 by 20%.
CAPITAL FUND
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In 2014 capital fund is increasing which shows increasing trend.it is the good sign for the
bank. The reserves have also increasing in 2014 by 26% which is an indication of stable
business
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ASSETS 2016 2015 2014
Cash and balances with treasury 161% 147% 125%
banks
Balances with other banks 35% 38% 23%
Due from financial institutions 371% 341% 380%
Investments – net 388% 506% 478%
Islamic financing and related assets – 896% 69% 736%
net
Operating fixed assets 26% 27% 26%
Deferred tax assets - - 2%
Other assets – net 31% 48% 62%
Total assets 1907% 1806% 1832%
LIABILITIES
Bills payable 26% 22% 24%
Due to financial institutions 92% 46% 65%
Deposits and other accounts 1622% 1590% 1593%
Sub-ordinated Sukuk 20% - -
Liabilities against assets subject to - - -
finance leases
Deferred tax liabilities 6% 2% -
Other liabilities 41% 46% 50%
Total liabilities 1807% 1706% 1732%
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Unappropriated profit 33% 31% 25%
89% 94% 97%
NON-CONTROLLING INTEREST 4% 3% 0%
Surplus on revaluation of investments 93% 97% 0%
(including amount relating to share of
profit from associates) - net of tax
7% 3% 3%
INTERPRETATION
Vertical analysis of the balance sheet shows that the percentage of various items in terms of
total assets which is considered as a base. Vertical analysis is a method in which the
relationship between the items in the financial statement is identified by expressing all
accounts as a proportion of total accounts.
This shows increasing contribution in 2016 which is 161% as compare to 2014 which was
125% of total assets this increasing trend shows that the bank has more cash with treasury
banks in 2014 than 2016.
This portion includes the same amount of balances with other banks throughout the three
years of analysis which shows 2016 in 35% of compositions of balances are held with other
banks as concerned with total assets.
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This ratio has significantly increases in 2016 but reduces in 2015 by 30% of total assets
which is not a good sign for the bank. An increase in ratio may shows that the bank has
provided more loans to other financial institutions.
INVESTMENTS
Investment is meant for utilizing the idle funds available with the banks. IN 2016 there is
decreasing in ratio by 388% which is much more same as in 2014 but as compare to 2015 it
has increased which indicates that bank is good position in investing its funds effectively.
Operating fixed assets which include the capital work in progress, property and equipment,
and intangible assets show an increase in 2016 due to expansion in network of branches and
to meet other operational need but a decrease in 2015 is 699% because of its non-expansion
in network of branches.
There is decreased contribution of operating fixed assets in consecutively 3 years 2016, 2015,
2014 which shows the bank has not using its operating assets effectively.
BILLS PAYABLE
Bills payable in 2016 are “26%” which shows that Bank is not efficiently controlling its
payable in 2016.
In year 2016 there is a increases contribution of borrowing from financial institutions from
92% to 46% of total assets by the bank which is healthy indication. This mode of financing is
an expensive one so the increase in percentage is unfavorable for the bank. This increase may
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be because of more balance of banks deposits accounts with Pakistan and the more balances
in current accounts outside the Pakistan.
Deposits are the life blood of bank to survive in the industry but it puts obligations in the
bank to keep on hand reserve to meet the deposits requirements. This percentage is
respectively increasing by 16% by 15% in 2016.
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Profit &loss statement (Horizontal Analysis)
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Income from dealing in foreign 100 170 144 100
currencies
100 26 64 82
OTHER EXPENSES
100 22 54 66
Share of results of associates before 100 - - -
taxation
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INCOME STATEMENT-HORIZONTAL ANALYSIS
Horizontal analysis (also known as trend analysis) is a financial statement analysis technique
that shows changes in the amounts of corresponding financial statement items over a period
of time. It is a useful tool to evaluate the trend situations. The statements for two or more
periods are used in horizontal analysis.
A spread is the difference between an investment's lowest current offering price among
dealers and the higher price a dealer charges a customer. Spread earned decreased over the
period of time in 2016 which is 26% much more lowest than other two years. This decrease
due to decrease in loans and advances, deposit with customers and financial institution and
low securities purchased under resale agreements.
OTHER INCOME
Other income is bank and creditor income derived primarily from fees including dividend and
transaction fees, insufficient funds (NSF) fees, annual fees, monthly account service charges,
Capital gain on sale of investments, inactivity fees, check and deposit slip fees, and so on.
This income is decrease in 2016 which is 26% which means it has decrease 26% of the cash
of the bank.
Administrative and operating expenses increased a rise of 13%. The rise in expenses is
primarily due to full year impact of increase in staff expenses, rent and associated costs as a
result of addition of 123 branches during year 2015– an investment which has reaped fruits
for the Bank, as is evident from the strong growth in deposits and profits over the years. With
a network of 571 branches in 146 cities, the Bank maintains its position as the largest Islamic
Bank in Pakistan both in terms of deposits and branch network.
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Profit before tax (PBT) is a profitability measure that looks at a company's profits before the
company has to pay corporate income tax by deducting all expenses from revenue including
interest expenses and operating expenses except for income tax. Profit before taxation has
decrease in year 2016 by 22% as comparing to 2014 and 2015.this profit is lower due to
except of deduction taxes.
In year 2016 this profit after taxation has also decrease by 16% as compared to year 2015 &
2014 which is good indication of the investors for investing in the bank. A company's
after-tax profit margin is important because it tells investors the percentage of money a
company actually earns per dollar of revenue. PROFIT AFTER TAX (PAT) is the net profit
earned by the company after deducting all expenses like interest, depreciation and tax. Hence
the profit of the bank after deducting all taxes is greater than the prior years.it is not better in
year 2016.
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PROFIT & LOSS STATEMENT (VERTICAL ANALYSIS)
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OTHER INCOME
Administrative expenses
51 42 36
Other (reversal of provisions) / provisions
- - -
Other charges
- - -
Workers Welfare Fund 1 1 1
Total other expenses
52 43 37
30 26 24
Share of results of associates before taxation
4 1 -
Extraordinary / unusual items
- - -
Profit before taxation 33 27 24
Taxation - Current
10 8 8
- Prior years
1 2 -
- Deferred
1 2 -
12 12 8
Profit after taxation 21 15 16
INTERPRETATION
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INCOME STATEMENT-VERTICAL ANALYSIS
Vertical analysis of income statement shows that the percentage of various items in terms of
total markup returns which is considered as a base. Vertical analysis is a method in which the
relationship between the items in the financial statement is identified by expressing all
accounts as a proportion of total account.
When a vertical analysis is done on an income statement, it will show the top-line sales
number as 100%, and every other account will show as a percentage of the total sales
number.
As compare to 2014 in 2016 spread has increased by 59% of sales which is the greater
difference than in 2015 and 2014. This would be a good sign for the bank.
INCOME
This income also increased in 2016 over the period of time which is 22% of sales. There is
increasing trend in income which shows its income is increasing as 22% of sales over the
period of time.
There is increasing trend in 2016 of profit before paying any taxes which is 33% more than
other previous two years while in 2015 it was only 27% of sales. While in 2016 it is 33% of
sales.
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It also shows increasing trend over the period of three years of time.in 2016 profit after tax is
21% of sales while in 2015 it was 15% and in 2014 it was 16%.it does also shows increasing
trend in the profit of the bank. This is due to its huge investment activities larger deposits and
loyalty among customers
A ratio is a simple mathematical expression of the relationship of one item to another. Ratio
analysis involves the method of calculating and interpreting financial ratios to assess the
organization’s performance. Financial ratios of ban can be divided into basic forms, which
are as follows.
Most investors are familiar with a few key ratios, particularly the ones that are relatively easy
to calculate. Some of these ratios include the current ratio, return on equity (ROE), the
debt-equity (D/E) ratio, the dividend payout ratio, and the price/earnings (P/E) ratio. While
there are numerous financial ratios, ratio analysis can be categorized into six main groups:
➢ Liquidity Ratios:
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liquidity ratios measure a company's ability to pay off its short-term debts as they
come due using the company's current or quick assets. Liquidity ratios include current
ratio, quick ratio, and working capital ratio.
➢ Solvency Ratios:
Solvency ratio also called financial leverage ratios, solvency ratios compare a
company's debt levels with its assets, equity, and earnings to evaluate whether a
company can stay afloat in the long-term by paying its long-term debt and interest on
the debt. Examples of solvency ratios include debt-equity ratio, debt-assets ratio, and
interest coverage ratio.
➢ Profitability Ratios:
These ratios show how well a company can generate profits from its operations. Profit
margin, return on assets, return on equity, return on capital employed, and gross
margin ratio are examples of profitability ratios.
➢ Efficiency Ratios:
Efficiency ratio also called activity ratios, efficiency ratios evaluate how well a
company uses its assets and liabilities to generate sales and maximize profits. Key
efficiency ratios are the asset turnover ratio, inventory turnover, and days' sales in
inventory.
➢ Coverage Ratios:
These ratios measure a company's ability to make the interest payments and other
obligations associated with its debts. Times interest earned ratio and debt-service
coverage ratio are two examples of coverage ratios.
➢ Market Prospect Ratios:
Market prospect ratio e.g. dividend yield, P/E ratio, earnings per share, and dividend
payout ratio. These are the most commonly used ratios in fundamental analysis.
Investors use these ratios to determine what they may receive in earnings from their
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investments and to predict what the trend of a stock will be in the future. For example,
if the average P/E ratio of all companies in the S&P 500 index is 20, with the majority
of companies having a P/E between 15 and 25, a stock with a P/E ratio of 7 would be
considered undervalued, while one with a P/E of 50 would be considered overvalued.
The former may trend upwards in the future, while the latter will trend downwards
until
it matches with its intrinsic value
Liquidity refers to the amount of cash a company can generate quickly to settle its debts. A
reasonable level of liquidity is essential to the survival of a company, as poor cash control is
one of the main reasons for business failure.
1. Current ratio
2. Liquidity ratio
Formula
Current Ratio = (Current Assets) / (Current Liabilities)
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2014 29,728,764 0.07 time W-1
40,150,6813 W-2
WORKING
W-1
Current Assets = Provided in the financial statements
W-2
Current Liabilities = Provided in the financial statements
INTERPRETATION
Current ratio is a financial ratio that measures whether a company has enough resources to
pay its debt over the next business cycle or not by comparing firm's current assets to its
current liabilities. If we compare the ratio of last two years, we come to know that in 2016
meezan bank limited have 1.06 times the current assets than current liabilities. It means that a
company has enough assets to pays the liabilities. In the same way, the ratio of current assets
is increasing in 2015. By considering them, we conclude that meezan bank limited ratio has
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gradually increasing over three years span, which shows better financial strength to meet
obligations, in this way companies are able to procure more working capital facilities from
banks
The Quick Ratio recognizes that, for many firms, Inventories can be rather
illiquid. If these Inventories had to be sold off in a hurry to meet an obligation the
firm might have difficulty in finding a buyer and the inventory items would likely
have to be sold at a substantial discount from their fair market value.
This ratio attempts to measure the ability of the firm to meet its obligations relying
solely on its more liquid Current Asset accounts such as Cash and Accounts
Receivable. This ratio is calculated by dividing Current Assets less Inventories by
Current Liabilities.
Formula
Cash + Marketable Securities +
Quick Ratio Receivables
=
Current Liabilities
WORKING
W-1
Cash + Marketable Securities + Receivables = Provided in the financial statements
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W-2
Current Liabilities = Provided in the financial statements
Explanation
Quick ratio also called acid test ratio of meezan bank is increase from year 2014 to 2016. The
year 2016 is better because in this year the quick ratio is 0.12 higher as compare to
succeeding two years in which it is low. The higher the acid test ratio is the higher the bank is
able to meet its short-term obligations.
INTERPRETATION
The depicts increasing trend of quick ratio of Meezan bank. In 2014, the acid test ratio is 0.08
which is lower among other two years and indicates the less liquidity for the Meezan bank. In
year 2015, it increases to 0.11 and also in year 2016 it increases to 0.12.
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These ratios show how well a company can generate profits from its operations. Profit
margin, return on assets, return on equity, return on capital employed, and gross
margin ratio are examples of profitability ratios.
1. Net spread to gross return
2. Net profit before tax to gross income
3. Net profit after tax to gross income
4. Administrative expense to income before provision
5. Return on equity
6. Return on asset
7. Advance to deposit ratio
8. Investment to deposit ratio
9. Capital adequacy ratio
4.3.2.1. Net spread to gross return:
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28,803 W-2
W-1
Net spread = Provided in the financial statements
W-2
Gross return = Provided in the financial statements
INTERPRETATION
Net Spread to gross income increase over the period of time in 2016 which is 59.04% much
more lowest than other two years. This increase due to increase in loans and advances,
deposit with customers and financial institution and low securities purchased under resale
agreements.
Profit before tax measures a company's operating and non-operating profits before
taxes are considered. It is the same as earnings before taxes. Gross income,
or gross pay, is an individual's total pay before accounting for taxes or other
deductions. At the company level, it's the company's revenue minus the cost of
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good sold. In this case it is also referred to as gross profit and, when expressed as
a percentage of revenue, gross margin.
Net profit before tax to gross income = Net profit before tax
Gross income
Formula
W-1
Net profit before tax = Provided in the financial statements
W-2
Gross income = Provided in the financial statements
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INTERPRETATION
There is increasing trend in 2016 of profit before paying any taxes which is 24.02% more
than other previous two years while in 2015 it was only 22.41% of sales. While in 2016 it is
24% of sales.
Net income after taxes(NIAT) is the number of sales dollars remaining after
all operating expenses, interest, depreciation, taxes and preferred stock
dividends have been deducted from a firm's total revenue.
Formula
Net income after taxes= net income before tax
Gross income
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378 W-2
W-1
Net profit after tax = Provided in the financial statements
W-2
Gross income = Provided in the financial statements
INTERPRETATION
The Bank posted profit after tax of Rs 5.56 billion as compared to Rs 5.02 billion, an increase
of 11% over the previous year.In year 2016 this profit after taxation has also increase by
11% as compared to year 2015 & 2014 which is good indication of the investors for investing
in the bank. A company's after-tax profit margin is important because it tells investors the
percentage of money a company actually earns per dollar of revenue. PROFIT AFTER TAX
(PAT) is the net profit earned by the company after deducting all expenses like interest,
depreciation and tax. Hence the profit of the bank after deducting all taxes is greater than the
prior years.it is better in year 2016.
Administrative expenses are the expenses that an organization incurs not directly
tied to a specific function such as manufacturing, production or sales. These
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expenses are related to the organization as a whole as opposed to an individual
department. Salaries of senior executives and costs of general services such as
accounting are examples of administrative expenses.
Formula
W-1
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INTERPRETATION
Administrative and operating expenses increased to Rs 15.6 billion from Rs 13.8 billion, a
rise of 13%. The rise in expenses is primarily due to full year impact of increase in staff
expenses, rent and associated costs as a result of addition of 123 branches during year 2015
an investment which has reaped fruits for the Bank, as is evident from the strong growth in
deposits and profits over the years. With a network of 571 branches in 146 cities, the Bank
maintains its position as the largest Islamic Bank in Pakistan both in terms of deposits and
branch network.
Return on assets is the ratio of annual net income to average total assets of a
business during a financial year. It measures efficiency of the business in using its
assets to generate net income. It is a profitability ratio.
Formula
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W-1
Net income = Provided in the financial statements
W-2
INTERPRETATION
The average of return on total assets is 0.94%. It measures the overall effectiveness of
management in generating profits with its available assets. The higher return on assets is in
2013 which is 1.19%.
Return on equity or return on capital is the ratio of net income of a business during
a year to its stockholders' equity during that year. It is a measure of profitability of
stockholders' investments. It shows net income as percentage of shareholder
equity.
Formula
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Average Stockholders'
Equity
Net income is the after-tax income whereas average shareholders' equity is
calculated by dividing the sum of shareholders' equity at the beginning and at the
end of the year by 2. The net income figure is obtained from income statement and
the shareholders' equity is found on balance sheet. You will need year ending
balance sheets of two consecutive financial years to find average shareholders'
equity.
W-1
Net income = Provided in the financial statements
W-2
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INTERPRETATION
The average of return on common equity is 20.71%. It measures the return earned on the
common stockholders’ investment in the firm. This return is higher in 2013, which is 22.20%.
The Capital Growth Rate, which is calculated by subtracting prior period equity capital from
current period equity capital, then dividing the difference by prior period equity capital,
indicates that either earnings are extremely good, minimal dividends are being extracted or
additional capital funds have been received through the sale of new stock or a capital
infusion, or it can mean that earnings are low or that dividends are excessive. The capital
growth rate generated from earnings must be sufficient to maintain pace with the asset
growth rate.
The 1988 Basel Committee Capital Accord established a benchmark for measuring bank
capital (and for correctly calculating / risk weighting assets, which became the denominator
of the capital ratio).
Formula
Capital adequacy ratio = share capital
Total risk weighting asset
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5,31,850 W-2
W-1
Share capital = Provided in the financial statements
W-2
INTERPRETATION
Bank’s Capital Adequacy Ratio (“CAR”) and will support the future growth strategy of the
Bank. It measures the capital growth rate in the firm. This ratio is higher in 2016, which is
12.91% rather than compare in 2015, 2014 year.
The cash ratio is the ratio of a company's total cash and cash equivalents to
its current liabilities. The metric calculates a company's ability to repay
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its short-term debt; this information is useful to creditors when deciding how
much debt, if any, they would be willing to extend to the asking party. The cash
ratio is generally a more conservative look at a company's ability to cover
its liabilities than many other liquidity ratios because other assets,
including accounts receivable, are left out of the equation.
Formula
Cash
Current
liabilities
Cash ratio =
W-1
Cash= Provided in the financial statements
W-2
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INTERPRETATION
The depicts increasing trend of cash ratio of Meezan bank. In 2014, the cash ratio is 7.15
which is lower among other two years and indicates the less liquidity for the Meezan bank. In
year 2015, it increases to 8.50 and also in year 2016 it increases to 8.71.
The formula for the loan to deposit ratio is exactly as its name implies, loans
divided by deposits. The loan to deposit ratio is used to calculate a lending
institution's ability to cover withdrawals made by its customers.
Advance
Total deposit
Formula
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2016 32,005,501 55.2% W-1
5,64,024 W-2
INTERPRETATION
Advance to Deposits ratio (ADR) of the Bank now stands at an impressive 55%, as compared
to 44% in 2015. The depicts increasing trend of advance to deposit ratio of Meezan bank. In
2014, the advance to deposit ratio is 46% which is lower among other two years and indicates
the less liquidity for the Meezan bank. In year 2015, it decrease to 28% and also in year 2016
it increases to 55%.
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He deposits ratio refers to the deposits raised by the bank from saving account,
current account, Recurring deposit account and Fixed Account But all these are
income to bank which earns an interest to the bank as well as the individual who
has deposited the same in the bank, and once again these money will be invested
in the income earning sources like share market, bonds etc., which would earn a
profit for the banks. The total of all the long term and short-term investment made
by the bank on other sources like banks, share market, loans and advances divided
by the total amount of deposits raised by the bank by various account as
mentioned above.
Investment
Total deposit
Formula
W-1
Advance = Provided in the financial statements
W-2
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INTERPRETATION
The depicts decreasing trend of investment to deposit ratio of Meezan bank. In 2014, the
investment to deposit ratio is 29% which is lower among other two years and indicates the
less liquidity for the Meezan bank. In year 2015, it increases to 31% and also in year 2016 it
decreases to 23%.
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2. Earnings per share
3. Price/earnings ratio
4. Break up value
Price to book ratio (also called market to book ratio) is a relative valuation statistic
which measures the proportion of the current market price of a share of a
company's common stock to the book value per share of the company. Price to
book value tells whether investors in general value the company above, at or
below the face value of the company's assets as they appear in its financial reports.
Market value of a share is determined by the average opinion of the investors
about the company. Book value on the other hand, is determined using accounting
principles. There are a number of factors that are not captured by accounting
information, for example, value of a company's brands, reputation, growth
potential, etc. Such factors create divergence between the two figures and make
price to book ratio a useful tool for finding investor feeling about a company's
future outlook.
Investors who specialize in buying companies whose current market prices are
suppressed place significant emphasis on price to book ratio. They buy companies
with low price to book ratio but good return on equity and sell them when the
market adjusts its opinion about the company's true worth. Price to book ratio can
also be used to find out how much a company is worth by comparing its book
value to the average price to book value of the industry or competitors. The
price-to-book ratio (P/B Ratio) is a ratio used to compare a stock's market value to
its book value. It is calculated by dividing the current closing price of the stock by
the latest quarter's book value per share.
P/B Ratio =
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2015 45.75 1.79 W-1
25,557 W-2
W-1
Market Price per Share = Provided in the financial statements
W-2
INTERPRETATION
The depicts increasing trend of Meezan Bank in price to earnings ratio. However, this
increasing trend is better for bank because instead of this increasing trend the investors are
paying more than the book value. The year 2016 is better among others because in this year
the P/E ratio is higher. In 2014, the price to book ratio is 2.03 which is lower among other
two years and indicates the less liquidity for the Meezan bank. In year 2015, it decrease to
1.7and also in year 2016 it decreases to 2.40.
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4.3.3.2. Earnings per share (EPS):
Earnings per share (EPS) is a profitability indicator which shows dollars of net
income earned by a company in a particular period per share of its common
stock (also called ordinary shares). Earnings per share is calculated by dividing
net income for a period attributable to common stock owners by the weighted
average number of common shares outstanding during the period.
Formula
W-1
Net Income – Preferred dividends = Provided in the financial statements
W-2
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INTERPRETATION
The EPS of Meezan bank is better in all years. It indicates the earnings earned on each share
of outstanding common stock of the bank. The highest EPS is in year 2016 in which it is 5.00
that indicates the highest earning on behalf of each share of outstanding common stock.
Overall EPS of Meezan is favorable as it is of best interest of present and prospective
stockholders and management. The graph depicts the ups in EPS of MBL. In 2014, EPS is
4.55, in 2015 it increases to 5.00. in year 2016, EPS increase to 5.55. year 2016 shows better
earnings per share among other two years.
Formula
140
Total number of
shareholder
W-1
Net asset = Provided in the financial statements
W-2
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INTERPRETATION
The graph depicts the ups in breakup value per share of MBL. In 2014, EPS is 23.21, in 2015
it increases to 25.49 in year 2016, breakup value increase to 28.07. year 2016 shows better
breakup value among other two years.
Price/Earnings or P/E ratio is the ratio of a company's share price to its earnings
per share. It tells whether the share price of a company is fairly valued,
undervalued or overvalued.
Formula
If the EPS is the figure for the current period the P/E ratio is called trailing P/E
ratio. For better analysis the EPS should be the one expected to prevail in the next
reporting period, say next year. P/E ratio calculated based on expected P/E ratio is
called leading P/E and is a more meaningful estimate of the company's justified
P/E ratio.
W-1
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Market price per share = Provided in the financial statements
W-2
INTERPRETATION
The graph depicts the ups and down in price/earnings ratio of MBL. In 2014, EPS is 10%, in
2015 it decreases to 9% in year 2016, P/E ratio increase to 11%. year 2016 shows better P/E
ratio among other two years.
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CHAPTER 5
SWOT ANALYSIS
● Strength
● Weakness
● Opportunity
● Threats
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5. SWOT ANALYSIS
SWOT Analysis can be very helpful for every organization to get large number of
benefits by just checking their Strengths, Weaknesses, Opportunities and Threats. In
SWOT two types of factors are calculated internal factors are Strengths and
Weaknesses where External factors are Opportunities and Threats. SWOT Analysis
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tells the accurate position of business and tells what type of actions should be taken
by Managements to improve the organization.
Meezan Bank being a quality organization strives to provide quality to all its
stakeholders, customers, employees and environment. In Pakistan, it is operating in a
very volatile economic and political environment. I have summarized its major
strengths, weaknesses, opportunities and threats in the following paragraph:
5.3. Strengths:
1. MBL has the privilege to be the first Islamic banking sector which gives a competitive
edge over all other banks and being the pioneer of this industry MBL is enjoying
major share of it.
2. The largest Islamic banking sector with 571 branches nationwide.
3. Strong growth of its Islamic banking SBU.
4. The members of its Shariah supervisory board of MBL are internationally renowned
scholars, serving on the boards of many Islamic banks operating in different countries.
5. Dedicated professional staff.
6. The working environment of the bank is very friendly and cooperative. There is no
bossiness in the higher management. The upper management consults its staff in
making decisions and provides them independence in their job areas. For the objective
is performance and not conformance with the boss.
7. Online banking service means that a customer can withdraw and deposit his money at
any branch in the country. Where this service is not present, cheque must be presented
only in that branch on which they are drawn. But with this facility, a person has
access to its funds at any branch of the bank. That would mean that any person who
has an account with the bank, has an account in 24 branches of it. It provides a lot of
comfort and convenience to the customers.
8. Being an Islamic bank, MBL has a wide national network. As an emerging markets
bank, it has branches in all the major cities of Pakistan with the facility of online
banking, it is very easy for its customers to transact all over the country.
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9. Attention and sensitivity to the competition prevailing in the country.
10. Strong shareholding.
5.4. Weakness:
6. It was observed in the bank that the degree of satisfaction of the employees was quite
low. First, the pays are lower those offered in other banks. Secondly, the employees
are given targets that are too difficult to achieve. For example, the targets given to the
personnel in sales and services department are higher than another bank in the
country, be it a local bank or a foreign bank. This makes the job too stressful and
tensed It is good to keep the people under a continuous move, but to overstress them
can be harmful to them and as well as to the organization.
5.5. Opportunities:
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3. Venturing into Islamic groups outside the countries as opportunity to expand business
in UAE and Golf states. i.e. financial institutions.
4. Coming up with. Products for the SME to targeting the medium level customers.
5. Doing business with companies having Islamic mindset. I-e Islamic financial
Institutions.
6. Increase branch network within the country.
7. To open overseas branches throughout the world like National Bank of Pakistan and
Habib Bank Limited or merger with other foreign banks outside Pakistan. Increasing
focus/target on different types of customers, MBL can open women branches,
especially in those areas where women class want to get involved but couldn’t due to
environmental restriction.
8. The formation of new and energetic marketing teams can increase the disbursement of
loans and new customers can be searched out.
9. They can capture a large portion of the market, if they expand its ATM and branch
network to other countries of the as well.
5.6. Threats:
1. New competitors setting up their Islamic banking sections and they have the
infrastructure, skill, ability, resources & attitude to capture the market more than the
Meezan bank.
2. Rising customers’ expectations
3. Change in Government's attitude towards Islamic banking.
4. Fears on the credibility of Islamic banking ethical compliance and monitoring
systems.
5. High Interest Rate from SBP.
6. SBP has not special policy regarding Islamic Banking.
7. Govt. policies are mostly for conventional banking system not for specially designed
for Islamic banking.
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8. Fears on the credibility of Islamic banking ethical compliance and monitoring
systems.
Reviewing this SWOT analysis from time to time would help evaluate the
bank's position. It would help the management in comparing their strengths of the past
with those of the present and to what extent the management has been able to
overcome the weaknesses.
CHAPTER 6
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TRAINING PROGRAMME
There are following two main departments of MBL which further sub divided into
➢ Bank Accounts
➢ Term deposits
➢ Consumer Finance
➢ Home remittance
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➢ 1Meezan Upaisa
➢ Premium Banking
Business Banking Department:
➢ SME Business Banking
➢ Corporate Banking
➢ Islamic Advisory Services
➢ Agricultural Finance
➢ Correspondent Banking
➢ Asset Management
Following is given the brief Description of each department:
Personal Banking department basically directly related with the customer this
department holds the asset or the deposit of the bank which comes from the accounts and
accounts related to the customers, this department is handled by BDO’s (Business
Development Officer), PBO (Personal Banking Officer) and other employees also all of
the employees have supposed to bring the targeted deposit in the bank through providing
valuable services to the customers.
This department is responsible for the new customers account opening procedure,
and many other services relating to the other services like providing ATM, Cheque
books, MS alerts and E-Statement related to the accounts of the customers:
Meezan Bank Offers its customers Individual, Sole-Proprietor and Joint accounts.
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Following are the types of accounts Meezan Bank Offers:
Consumer Finance includes the Ijarah of house hold products including Car
Ijarah, Bike Ijarah, LED, Fridge etc.
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Meezan Easy Remit is a Home Remittance service which provides an easy, fast and
reliable way for Pakistanis who are working abroad to send money to their families
and relatives living in Pakistan. The money sent from abroad can be immediately
collected from any branch of Meezan Bank which has a strong presence of more than
570 branches and 146 cities in Pakistan.
Meezan Bank provides Shariah compliant banking services like financing, trade and
deposit related services to small & medium sized enterprises. We combine the
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expertise of in-house product specialists and Shariah scholars to provide Sharia
compliant financing solutions to meet the working capital finance, import finance,
export re-finance long-term finance, documentary credit requirements and project
financing needs of our customers.
1. Small Enterprises:
2. Medium enterprises:
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long-term finance, documentary credit requirements and project financing needs of
our customers.
Our Corporate Banking relationship teams work closely with Treasury, Cash
Management, Investment Banking, Commercial Banking and Consumer Banking
departments to develop and deliver value added banking products that fulfill the
diverse business needs of our corporate clients.
The Bank’s trade business (import and export) performed very well in 2016 in
both volume and income and registered a growth of 20% and 27.5%, respectively,
notwithstanding the fact that exports of the country dropped by 13% during the
year. The total trade business volume in 2016 crossed Rs 552 billion.
In line with our vision of establishing Islamic Banking as banking of first choice,
Meezan Bank believes in working for the larger benefit of the society. Meezan Bank
has the unique combination of experts in areas like Islamic law & Jurisprudence,
Accounting, Auditing, Capital Markets, Corporate Finance and Islamic Finance. Our
expertise, accumulated over the years, enables us to provide world class service and
unmatched Shariah-compliant solutions to most sophisticated problems in a timely
manner.
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We’re working to expand the market, not merely our market share. The continuous
interaction with the academia has enabled us to produce a stream of expert
practitioners-cum-trainers. Our trainings are not only backed by solid theoretical
foundations, they are continuously updated based on real life experiences. Our case
studies help learners gain hands-on experience of various aspects of Islamic finance.
6.1.2.6. Islamic Capital Market Services:
6.1.2.6.1. Skuk Structuring:
As a leader in structured finance products, Meezan Bank has been involved in
Sukuk Structuring, Shariah Advisory and Syndication/Consortium financing,
lead-managing a number of new Shariah-compliant Sukuk issues and syndicated
transactions with its corporate clients.
IFAS provides assistance in execution of Sukuk transactions and development of
Sukuk structures based on client-specific requirements. Our multi-layered
approach enables both commercial and Shariah considerations to be incorporated
into proposed structures. Emphasis is placed on developing structures to achieve
wide Shariah acceptance and marketability of Sukuk.
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Meezan Bank has initiated the formation and subsequent management of a
domestic Islamic Market Index i.e. KMI-30 index in collaboration with Karachi
Stock Exchange (now Pakistan Stock Exchange PSX). Shariah Compliance is
necessary not only at the time of IPO, but it also encompasses all operations of the
enterprise at all stages of the organizational life cycle.
In addition to other permissible modes of financing, the Bank offers the following
specific agricultural products finance.
Financial Institutions, a part of the Treasury and F.I. Group, primarily focuses on
building and maintaining relationships within the Financial sector. Relations range
from authenticated communication links by way of SWIFT RMA to Trade,
Treasury and account maintenance in different currencies worldwide.
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With over 360 banks in 86 countries, our 600 globally located correspondents
provide all trade services, seeking to add value and service to our branches and
functional units. Services include advising, confirmation, discounting of letter of
credits, reimbursement undertakings and standby LCs and guarantees. Further, the
ever-increasing SWIFT RMA relationships with financial institutions serve to
route all kinds of transactions.
Al Meezan is the largest fund manager in private sector in Pakistan and the Only
Shariah compliant Asset Management Company in Pakistan. Al Meezan has
successfully completed 20 years of its existence in 2015. This is one of the longest
track records in private sector in investment management in Pakistan and has
emerged as one of Pakistan’s leading investment solutions provider in a Shariah
compliant manner. The Shariah Advisor of Meezan Bank Limited, also the
Shariah Advisor of Al Meezan, supervises the operations to ensure Shariah
compliance of the funds.
6.1.2.6.7. Services:
Following services are provided by this department:
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6.2. Internship Activities
In Meezan Bank limited I really enjoyed working with the bank staff of MBL civic
centre johar town branch and having a wish to be an employee of this organization
following the Islamic discipline. It was very difficult to work in different departments of
bank within limited time but on my request, the bank staff provides me an opportunity to
work in different departments for the sake of practical knowledge.
I started my internship from 26st July 2017 till 11th September 2017 and duration of my
internship is 6 weeks. The staff of branch is much cooperative. They imparted my training
in all departments of the branch i.e. customer service, clearing, remittance and account
opening. On the first day of my internship, the branch manager asked me some questions
about my studies. He told me some basic rules and regulations about banking operation
and introduced me with other staff members of the Bank, and introduce me with
employees working in MBL Civic Centre branch.
I have done the following activities during my internship:
● Filling Cheques
● Filling deposit slips
● Issuance of cheque book
● Remittance Printout
● Filling Account Opening Form
● Online funds transfer
● Pay Order
● Other General Banking Activities
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6.2.1.1. Filling Cheques:
For filling the Cheques, we may write the date, payee, amount in words and figures
then one signature of customer in front and two behind cheque.
For filling the deposit slips the name, account number, amount in words and figures
branch name and signature of depositor are necessary.
For foreign Remittance, pin code, branch name, CNIC number of beneficiary,
Beneficiary’s name, CNIC expiry date, Mobile number of beneficiary, sender name
and city is noted down on remittance form and the signature of beneficiary is taken
and original ID card is seen.
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For account opening forms the CNIC number, mobile number, CNIC copies. Next of
kin’s CNIC copy, customer personal and professional information is necessary. For
thumb account the photos of customers are also necessary.
For online transfer, the account of customer is necessary and amount is written in
words and figures.
6.2.1.7. Pay Order:
Pay order are negotiable instrument used for transferring the amount from one place
to another place safely. Pay order is payable on specific branch of same bank which is
written on the face of pay order.
Also, doing other general banking activities with my branch staff such as verification
of documents, filling of branch documents, and many more.
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customer for account opening and which documents are required for further
procedure
Ans also learned how many accounts are used in bank like
➢ Single
➢ JOINT Personal
➢ Sole Proprietorship
The requirements for opening the above-mentioned account are given below:
1. Original CNIC must be originally seen by the Personal Banking Officer and its copy
is attached to the form.
2. if signatures are not strong/ or signatures are simple than photos of the person
required and thumb impression is taken on the SS Card.
3. Source of Income or Salary slip must be required.
4. If residential or mailing address is change as per CNIC than an under taking is
attached with the form.
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5. And if the signatures differ from CNIC than also undertaking attached with form on
which both signatures are taken as per form or as per CNIC.
VI.2.2.1.2. For Partnership:
1. CNIC copies of all partners must be required and they are originally seen by the
PBO.
2. Attested Copy of partnership deed dully signed by all partners of firm.
3. Attested copy of Registration Certificate with register of Firm. In case the
partnership is unregistered this fact should be clearly mentioned on the a/c opening
form.
4. Authority letter, in original, in favor of the person authorized to operate on the a/c of
the firm.
And learn about the use of the stamps on the right place. Following stamps are
required to be use on account opening form:
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1. Signature Verified
2. Signature admitted
3. Void
4. Picture Admitted
5. Original Seen
6. PBO stamp
7. Operation manager Stamp
8. Branch Manager Stamp
9. L.t, R.t thumb
10. Time, Date stamp on the front page of form.
After form completion and proper Stamping, Nadra verisys is attached and the form is
authorized by operation manager, and after that PBO, Operation manager and branch
manager do their signatures on their specified place. And the complete procedure is given
below:
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After completed account opening form in all respect and checked by the bank officer and
properly signed by the customer which is also verified by the Operation Manager.
2. Computerized Checking:
After filling in the form, the officer connected via internet enters the record of his
customer, then the officer of the bank authenticates the record under his signature and
stamp and send it to the Branch Manager. This is known as CIF.
3. Account Number:
After completion of all formalities, an account number is allotted to the customer and
all the information are recorded in the computer. After completion of all procedures, the
bank prepares a letter and sends it to the client at his postal address to pay gratitude to
the customer.
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activation of account. When Cheque books received in branch call are made to inform
customers that they can receive it from bank and when customer receives the cheque
book signatures are taken from customers on cheque book receiving register.
➢ Silver Card (Transaction Limit up to 50000, and charges 696 along with tax)
➢ Gold Card (Transaction limit up to 100000 and charges 1044 along with tax)
➢ Master Card (Transaction limit is up to 150000 and charges 1392 along with tax)
It also takes 3-4 working days for the processing after account activation. When
Card is received in branch than the calls are made to make them aware of that their
card has been reached in branch, when customer comes signature are taken from him
on ATM Card Register. For activation of ATM, customer has to call the help line
(111-331-331).
Whenever a customer wants to close the account, he fills up an account closing form
and signs there in, account balance should be zero, approval is taken from the Branch
Manager, specimen card is taken back and is attached with the form and account is
closed.
Locker facility is also available at all the branches of MBL for keeping the valuables
there in. As for as privacy is concerned, lockers are located in a specially designed
area protected with strong room doors and grills under the control of two officers,
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operated by use of Master Key and Customers Key supplied to the customer at the
time of locker is rented out. Lockers are three types: Small, Medium and Large
lockers.
Security fee of locker is Rs. 5000 which is refundable when locker is surrendered and
charges(rent) for Small Rs. 2500, for Medium Rs. 3500 and for Large Rs. 5000 per
annum. The process for providing a locker is as follow:
A separate application form is complete and signed by the customer along with a
copy of CINC with two photographs. After completing all the formalities, a locker is
allocated to the applicant and Key is given to him with locker identification card.
And whenever customer have to use the locker he has to bring his card every time
and entry is recorder in the locker operation register where locker number, name of
attendant, Time in and Time out is noted down and the signature of the customer is
taken.
Locker operation is a very critical and confidential task so only the authorize person
of bank have this right to operate the locker. And I have just record the entry of
locker operation.
For stopping the payment, Bank takes sign of the customer on stop payment form
where in account number with date and amount of cheque is written. Customers also
mention the reason of stop payment then Bank mark that cheque as stop payment.
The bank will not make payments of these Cheques. And the charges deducted for
stop payments are 580 rupees rather they are 1 or 2.
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VI.2.2.2. Clearing Department:
Clearing department work with provision used for settlements of proceeds of cheque
among different through the medium of a clearing house. I learnt they’re about
Clearing of different Cheques. I was told there the main objects of clearing. After
making entries in outward and inward clearing registers. All the Cheques are sent to
NIFT (National Institutional Facilitation Technology).I have also Worked in the
clearing department.
6.2.2.2.1. NIFT:
NIFT stand for National Institutional Facilitation Technologies. Clearing House of SBP
has shifted a part of its work to private institution named NIFT. NIFT collects Cheques
from all branches of different Banks within city through its carriers and send them to the
branches on which these are drawn for clearing. NIFT prepares a sheet for each branch
and send it to each branch as well as to State Bank of Pakistan where accounts of Banks
are settled.
VI.2.2.2.2.1.Inward Clearing:
When Cheques of other Banks are deposited in our bank, after clearing these
Cheques through NIFT by the other Banks on which these are drawn. Accounts of
the customers are credited. Afterwards the they check the amount in the specified
account, signature are accurate and authentic and there are accurate date and
stamping is done than clearing takes place.
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When Cheques of our bank are deposited in other Banks and these Cheques are
sent to us for verification, we debit the account of our client after verification of
their accountant person comes daily to branch for purpose of receiving checks for
clearing.On cheque transfer funds following four stamps must be required:
➢ Signature Verified
➢ Payee’s Account Credited
➢ Authorized Date
➢ Meezan Bank Ltd.
VI.2.2.3. Remittance Department:
Meezan Easy Remit is a Home Remittance service which provides an easy, fast and
reliable way for Pakistanis who are working abroad to send money to their families
and relatives living in Pakistan. The money sent from abroad can be immediately
collected from any branch of Meezan Bank which has a strong presence of more than
570 branches and 146 cities in Pakistan.
The Procedure for home remittances is as follow:
1. Customer takes the Remittance print out and fill it out which contains the basic
information like Pin code, Amount, Beneficiary’s CNIC number, Beneficiary’s
name, Beneficiary’s address, Beneficiary’s mobile number and Sender’s name
and city, at the customer must put his signatures.
2. Then customer takes this form to the authorized person who deals the whole
procedure he checks the original CNIC of Beneficiary and Verified the payment.
3. After verification customer submit his CNIC copy and after proper authorization,
customer went to cashier counter for the payment.
Cash department is usually to collect and deliver cash. When a customer comes to
the bank and wants to issue or deposit amount comes to the cash counter to give or
receives amount. So, it is the cash officer’s duty to deposit or withdraw the amount
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after verification of signature or account number of the customer. Cash officer
checks the balance and then pay the amount to the customer. The banker make
journal and ledger to enter notify the customer account all the entry is done in the
system, and take print of those entry to keep record, and check all the entry are
recording right head of account. So, all the cash dealings occurred in the banks are
over to cash officer and the cash officer is responsible for all the deposits or
withdrawals.
In this department, I worked from 26th july 4th September where I learnt a lot about
floor time management and quality assurance affairs in branch.
Furthermore, Bank manages the sale and service area of the branch to provide
maximum opportunities to clients as well as provide a sense of comfort and personal
attention.
Bank maintains and file daily working sheet of Floor Time Management and
record customer’s complaints in the CRM. Bank monitors daily log of TAT sheet
and put up it to Branch Manager. Complaint handling and its follow up is made on
daily basis. Modifications and improvements are suggested in the system and
process. Try to make coordination between branch and Head Office regarding
service quality. Lead Floor Manager is assigned duty first of all.
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VI.2.2.6.2. Responsibilities of Lead Floor Manager/ Floor Manager:
Lead Floor Manager welcomes all the customers and introduces himself with a
smiling face and checks branch cleanliness and pleasant atmosphere in the branch.
He also checks availability customers stationary at proper places as well as
maintain the notice board and assist in SQ. Individual customers are provided
comprehensive services. He moves around the banking hall and cash counters area
to ensure that every customer is looked after properly.
MEEZAN Bank Ltd is the largest Islamic bank in Pakistan, with state of the art
building and work place environment, crossing over 550 branches across the country,
its increasing value and profit margins. Time to time workshops with in-house &
foreign speakers and courses are offered by the bank for its employees, Good
environment, management, and excellent co-workers make a typical day exciting and
challenging.
It is an auspicious and renowned Islamic bank. The Branch Manager and Relationship
managers are very helpful and motivate to perform the tasks assigned efficiently and
effectively. It also provides opportunity of Internship for the students who are
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interested and provide productive, learning environment and the employees get
chances to grow in future career.
I started my internship program on 26th of july, 2015 and ending date of this program
is 8th September, 2016 in Learning and Development Department at Civic Center in
Johar Town, Lahore.
➢ Maintaining Data.
➢ Calling candidates to inform them about time, date and venue of the
recruitment test and interview.
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➢ Took interview of L&D branch manager on the process of hiring to
prepare an assignment of the university.
I started my first day of internship with the introduction of the bank employees and
with introduction of bank department. In this week just know how work done in the
department of the bank.
Manager Mr. Omer Khan gave a brief introduction of the modes of the islamic
banking time to time, so the interns & employees memorize and the other employees
who already know can remind those modes.
VI.3.2.1. MURABAHA
VI.3.2.2. IJARAH
Ijarah is a contract of a known and proposed usufruct against a specified and lawful
return or consideration for the service or return for the benefit proposed to be taken,
or for the effort or work proposed to be expended. In other words, Ijarah or leasing is
the transfer of usufruct for a consideration which is rent in case of hiring of assets or
things and wage in case of hiring of persons.
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VI.3.2.3. ISTISNA’A
It is a contractual agreement for manufacturing goods and commodities, allowing
cash payment in advance and future delivery or a future payment and future delivery.
Istisna’a can be used for providing the facility of financing the manufacture or
construction of houses, plants, projects and building of bridges, roads and highways.
BAI MUAJJAL Literally it means a credit sale. Technically, it is a financing
technique adopted by Islamic banks that takes the form of Murabaha Muajjal. It is a
contract in which the bank earns a profit margin on his purchase price and allows the
buyer to pay the price of the commodity at a future date in a lump sum or in
installments. It has to expressly mention cost of the commodity and the margin of
profit is mutually agreed. The price fixed for the commodity in such a transaction can
be the same as the spot price or higher or lower than the spot price.
VI.3.2.4. MUDARABAH
A form of partnership where one party provides the funds while the other provides
expertise and management. The latter is referred to as the Mudarib. Any profits
accrued are shared between the two parties on a pre-agreed basis, while loss is borne
only by the provider of the capital.
VI.3.2.5. MUSHARAKAH
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the partners in pre-agreed ratios, while the loss is borne by each partner strictly in
proportion to respective capital contributions.
➢ Tijarah
➢ Istisna
➢ Sukuk’s
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VI.3.4. PROCESS OF HIRING:
There are two types hiring in MEEZAN Bank.
1.Direct Hiring.
2.Batch Hiring.
➢ BSO (Branch Service Officer)
➢ TCO (Trainee Cash Officer)
➢ TBO (Trainee Branch Officer)
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VI.3.4.2. Steps:
➢ Advertise/ Publicity (Dawn newspaper, Rosee.pk, MEEZAN’s web).
➢ Collection of C.V’s (Online).
➢ Screening &Short list of candidates.
➢ Generate Email to the short-listed candidates (Venue, Date of Test &Time).
➢ Generate calls to the candidates (Venue, Date of Test &Time).
➢ Recruitment Test.
➢ Short list of eligible candidates after test.
➢ Generate Email for the Interview call (Venue, Date of Test &Time).
➢ Generate Calls to the candidates (Venue, Date of Test &Time).
➢ Conduct Interview by Head of Department, HR manager & Manager of Learning and
development/ Area manager (Panel Interview)
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➢ Confirmation signatures by candidates of receiving Offer Letter at date of Joining.
VI.3.5. TRAINING:
Training is of two types.
1. Class training (Theoretical Information)
2. Rotation / On-Job training (Practically know, how about working / Job)
Names of courses related to the fields the candidates are selected for, Counting, Cash
Handling, Currency Notes Identification, Negotiable Instruments, Other SBP regulations
& SOP Prudential Regulations, F.E. Manual, Other SBP regulations & SOP.
After 2 weeks of class training the trainees are sent to the rotation of the branches for 2
weeks so they can clear their concepts related to the theoretical training, after completing
their rotation of branches, trainees are sent back to the class training for another month.
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● Islamic banking course - level I (IBC)
● Islamic banking course - level II (IBC)
CHAPTER 7
PROBLEMS &RECOMENDATION
● Problems
● Recommendation
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7.1. Problems
Islamic Banking has been growing at a swift speed in Pakistan as well as all over
the world. Pakistan and many Muslim countries are experiencing dual banking
system. The Islamic Banking industry has generated considerable interest in the
financial world in recent years. It is considered as Faith-based banking with
considerable growth potential.
The interest-free Islamic banking has recorded a vigorous growth in the last few
years and would further expand vastly with the help of effective legislation and
introduction of more products.
Market share of Islamic banking has grown exceptionally in the overall banking
industry. Total assets of Islamic banking are 7.8 percent of the total banking
industry while deposits have 8.4 percent share in the total banking sector in the
country.
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In 2002, Meezan bank limited started operations as the first local Islamic bank in
Pakistan. In a decade this Islamic Bank has shown a phenomenal growth.
Islamic banking industry has witnessed an attractive growth during the global
financial crisis. In Pakistan, many full-fledge Islamic Banks are operating with over
600 branch across the country. Many conventional banks have also opened their
Islamic windows to cater the needs of Muslims.
It is also relevant to mention that Islamic Banking industry has been facing many
bottlenecks both operational and institutional.
Some of the hitches being faced by Islamic banking in Pakistan are examined
below:
Islamic Banks have not yet been successful in creating an interest-free structure to
place their funds on a short-term basis. They face the same problem in financing
consumer loans and government deficits.
The risk involved in profit-sharing is so high that most of the Islamic banks have
taken recourse to those instruments of financing which bring them a fixed sure
return.
The problem with the Islamic banking is the lack of expert Islamic bankers who
have clear or deep perception knowledge of Islamic banking and finance. Currently,
our Universities have degree, certificate and diploma programs on Islamic Banking
and Finance. But unfortunately these programs are not up to the mark and do not
provide practical knowledge and expertise in the field of Islamic Finance. It is
advisable that both Shariah Scholars and industry experts provide training in
schools, colleges, Universities and Madrasahas.
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Islamic banks need to improve their management capabilities by training their
personnel in project appraisal, monitoring, evaluation and performance auditing.
The biggest problem for Islamic Banking is the lack of short term Investment
Avenue. Islamic Banks cannot invest in interest based instruments such as T-Bills
and Pakistan investment bonds.
Many Muslim countries are offering relaxed rules and regulations for Islamic
Banking industry. Pakistan should also offer such rules and regulations for Islamic
banking industry which would help this industry to grow swiftly.
Government patronage and regulatory/tax reforms play a vital role for any industry
to grow an accelerating speed. Governments like United Kingdom and Malaysia are
offering relaxed rules and taxation for exploiting the great demand for
Shariah-compliant investment by Muslim investors, especially from the Middle
East.
Pakistan can also become a regional hub for Islamic finance if proper regulatory
reforms are introduced. To achieve this goal, the Government needs to revamp the
existing structure of taxes and duties to make them conducive to Islamic finance.
For example, the Malaysian government has given certain incentives for investors in
Islamic Finance industry till the year 2016 to make Malaysia a regional hub for
investment.
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Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI)
has introduced various Sharia'h standards to bring some consistency into the
Sharia'h based legal framework of the Islamic finance and banking industry. But
these standards needed to bring these agreements in assent with the local taxation
and law makers.
It is not possible to achieve the up to the mark level of allocative efficiency when
executives change over from Islamic banks to conventional banks to escape high
cost borrowing.
It has been evidenced that distributive efficiency of Islamic banking is lost when an
Islamic bank starts operation under conventional banking framework. Any shift
from profit-loss-sharing modes leads the system break the direct relationship
between the incomes of the entrepreneurs, the bank and the depositors.
In the absence of Islamic money market in Pakistan, the Islamic banks cannot invest
their surplus fund i.e., temporary excess liquidity to earn any income rather than
keeping it idle.
All the Government Treasury Bills, approved securities and Pakistan Bank Bills in
Pakistan are interest bearing. So, the Islamic banks cannot invest the permissible
part of their Security Liquidity Reserve and liquid surplus in those securities,
consequently they deposit their whole reserve in cash with state Bank. Alike the
liquid surplus also remains not invested.
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operations. This is, of course, an issue closely related to the creation of financial
instruments, which would be accordingly consistent with Islamic principles and
acceptable to interest-based banks, including foreign banks.
Islamic Banks go very closely to the pricing policies of the government. They
cannot benefit from hidden costs and inputs, which heighten the level of prices by
certain entrepreneurs without any justification.
It is keenly observed when Islamic banks start operation within the conventional
banking structure their efficiency goes on diminishing.
The setback is not because of Islamic bank's own fault but it is the capability -
undermine operation of the conventional banking system that puts a
disadvantageous impact on the efficient operation of Islamic banks.
Even under the conventional banking framework Islamic banks can operate with
certain level of efficiency by applying in a reasonable percentage the PLS modes -
the distinguishing features of Islamic banking.
Due to lack of documentation in the economy, Islamic banks are finding it difficult
to enter into profit and loss sharing based real business ventures with their
customers instead of fixed return products. Moreover, businessmen and
industrialists are also reluctant to share profits with the financiers in low risk
ventures.
Some Pakistani customers are doubtful about the genuineness of Islamic banking
practices. Most customers have opinions that are based on information that is not
correct and represent lack of understanding of Fiqh issues.
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To succeed as a viable banking option, Islamic banks need whole hearted supporters
but also a number of patronizing institutions to perform functions which are being
carried out by various financial institutions in the conventional model.
Attempts should be made to change the existing structure to provide better products
and quality service within the ambit of Islamic laws.
Banking and insurance have to go hand in hand in matters of trade and business in
order to protect investments of banks against unanticipated hazards and disasters.
Unfortunately, Islamic banks have to depend on interest-based insurance companies
in the absence of Islamic insurance companies.
Islamic banks can satisfy most of the conditions if they can operate as only one
system in an economy examined above.
7.2. Recommendations:
Based on my experience &observation regarding the operations and policies of
Meezan Bank, I have tried to show some problems and recommendations for further
improvement:
➢ The employee turnover is very high which they must cut down as they are
losing several good trained employees.
➢ Branches increases but business of Meezan bank may not increase with
same speed.
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in the market. Further more employees are the assets of the bank which
must be motivated by the management of the bank. Employees should be
given incentive in the shape of cash award, increase in pay, promotion
etc. if the customers of the bank are satisfied and employees of the bank
are hardworking as well as loyal, the bank will make progress by leaps
and bounds. Management of the bank must try its best to satisfy the
customers as well as motivate the employees.
As for as ratio are concerned, its current ratio is much below the standard which needs to be
increased to grow in the market. Working capital is the life of every organization, in 2014
working capital is in negative but in 2015 and 2016 working capital is positive but below the
standard. Working capital must be increased by the bank so that the bank may show its
short-term solvency to meet out its short-term debt. Debt of the company is 0.9299 in 2014,
in 2015 is 0.9960 and in 2016 is 0.9284 which shows that the Bank is highly levered. Debt of
the company is on higher side which must be decreased to show it long term solvency. Net
profit Margin on sale although increasing on year to year basis but is much below than the
standard of industry which also need to be increased to grow in the markets.
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● Rifle approach
● Objectives clearly understood
● Vision
● Identifying & understanding customer needs
● Satisfying customer needs
● Educating the customer
● TV. Advertising
● Press Advertising
● Spreading awareness through Dars
● Wall clocks for mosques
● Awareness through curriculum
● Umra and Haj packages
● It will ensure proper auditing and monitoring, which will in turn inspire
public confidence in the bank.
● RIBA FREE COMMERCIAL BANKING to be set up in all countries of
the world/ Muslims & non-Muslims. This will greatly facilitate
international export import trade without the fear of being involved in
any riba dealing
● Increase consumer banking
● Develop the healthy and sound competition b/w employees and bosses.
● Meezan bank does not provide job security to the employees. Mostly are
hired on contractual basis. More people must be employed on permanent
basis/ providing job security and satisfaction.
● There is no separate department for the training of new employees.
There should be establishment of a separate department for the training
of the new employee and a competent teaching staff should be hired for
their training.
● MBL should become very specific about its competitors, so that it can
understand whose its competitor is in the first degree and who is in the
second degree. Then the first-degree
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● Competitors should be closed closely.
● A research cell should continuously try to gather information about the
present action so its competitors and expected future actions. So in this
way more effective strategies can be formulated.
● The performance reward linkage should be making strong as it is said “A
happy employee delivers more than he receives from the organization".
The MBL should also try to make its employees happier.
● The management should develop in workers the operator ownership to
encourage them and make them responsible for their work.
● The worker should be given sense of teamwork and the managers should
be trained to manage the team as a good leader.
● Maximum automated machines should be used.
● New schemes should be introduced and maximum privileges should be
given to customer, so that to win money market.
● Working hours should be increased for customer’s convenience; night
banking service may be used to increase the business.
● New marketing strategies should be developed to attract new customers.
7.4. Conclusion:
I spent six weeks of my internship at MBL Johor town. During these six weeks, I feel
myself be a part of bank. Even this was my experience of working in a bank, but I
learned a lot in from my very first experience. Business of the bank is quite up to the
mark keeping in view the standard of banking industry. Bank is located at JOHAR
TOWN CIVIC CENTRE Road Where Bank Al Habib, Habib bank limited, Habib
metropolitan bank limited as well as Allied bank and Bank Al falah are also doing
business in the same area but Meezan Bank limited is competing with all these banks
and increasing its clients.
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Bank is giving better services to its customers as well as better facilities to its
employees, its employees are making an untiring effort to increase the profit of the
company on year to year basis as well as time their best to increase the wealth of the
shareholders. Bank is offering many products to its customers which are increasing
the margin of the bank.
One of the most important aims of the student life is to express him / her correctly and
adequately. This was believed in my mind when I first decided to go to Islamic
Meezan Bank Limited to complete my internship program. With their focused
strategy and product development initiatives planned for the year, Meezan Bank is
strongly positioned to meet these challenges. The bank has very well repute in the
market. Overall bank is going well and doing a good business but there are few
problems.
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7.5. Reference& sources:
✓ I used following references to prepare my reports
✓ 1I collect information from manager in the form interviews
✓ Pamphlet or brochure
✓ I also study the different pamphlet of the different products and department
✓ The most important of me in the preparation in my reports are my friends and my teachers
who help me and guided at each step.
✓ Internet
✓ The very important source where I collect data about the Meezan bank is the internet. I visit
cite of the Meezan bank and AL-Meezan investment group. Following are both the websites.
✓ Website on google
✓ Practice and Law of Banking in Pakistan by Dr ASRAR H SIDDIQUI.
✓ Money and Banking & Finance by M. SAEED NASIR.
Internet
✓ www.meezanbank.com.pk
✓ www.google.com
✓ www.worldbank.org
✓ www.apnahyderabad.com
✓ www.meezanbank.com.pk
www.almeezan.com.pk
Newspaper
✓ DAWN
✓ Business Recorder
✓ Annual Report 2014,2015,2016.
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CHAPTER 8
LIST OF ANNEXURES
ANNEXURE
193
8. ANNEXURE
Annexure means something annexed; also called annex Annexure is a term substituted
in some legal documents for Appendix. Annex and '-ure' meaning action or process To
attach, append, or add, esp. to something larger or more important.
8.1. Glossary
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8.2. Appendix
LIABILITIES
Bills payable 9,130,998 6,560,324
Due to financial institutions 32,005,501 13,609,551
Deposits and other accounts 563,999,852 471,799,473
Sub-ordinated Sukuk 7,000,000 -
Deferred tax liabilities 1,955,203 730,923
Other liabilities 14,403,557 13,569,243
Total liabilities 628,495,111 506,269,514
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NET ASSET 34,772,564 29,680,419
OWNER EQUITY
Share capital 10,027,379 10,027,379
Reserves 9,724,001 8,611,679
Unappropriated profit 11,340,678 9,238,479
31,092,058 27,877,537
NON-CONTROLLING INTEREST 1,221,989 944,623
32,314,047 28,822,160
Surplus on revaluation of investments 2,458,517 858,259
(including amount relating to share of profit
from associates) - net of tax
Total owner equity 34,772,564 29,680,419
DATA SOURCE: Data collected from Financial Statement of Bank
2016 2015
Profit / return earned on Islamic financing and
31,429,642 33,113,547
related assets, investments and placements
Profit on deposits and other dues expensed 12,871,789 14,895,778
Net spread earned 18,557,853 18,217,769
(Reversal of provision) / provision against
non-performing Islamic financing and related assets (120,246) 425,908
– net
(Reversal of provision) / provision against
(64,673) 121,093
diminution in the value of investments
Provision against off balance sheet obligations - 16,173
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Reversal of provision against amounts due from
- -
financial institutions
Bad debts written off directly - -
(184,919) 563,174
Net spread after provisions 18,742,772 17,654,595
OTHER INCOME
Administrative expenses
16,115,217 14,049,760
Other (reversal of provisions) / provisions
-74,038 59,152
Other charges
3,600 4,067
Workers Welfare Fund 211,940 191,116
Total other expenses
16,256,719 14,304,095
9,350,624 8,687,333
Share of results of associates before taxation
1,166,467 238,580
Extraordinary / unusual items
- -
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3,914,668 3,857,971
Profit after taxation 6,602,423 5,067,942
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