Beruflich Dokumente
Kultur Dokumente
MEEZAN
INTERNSHIP REPORT
BANK
Prepared By:
NAZISH SOHAIL
BBA HONS
106-862
Page | 2
Dedication
Page | 3
Acknowledgements
MY FIRST AND FOREMOST HUMBLE GRATITUDE TO “ALLAH” THE ALMIGHTY FOR GIVING
Apart from it I take the opportunity to acknowledge the real efforts of:
Page | 4
THE OPENING
(Al-Fatihah 1: 1-7)
Page | 5
Mustansar Ali
-The Branch Manager-
Page | 6
(Agha Hassan Abedi)
Manager Operations
Page | 7
Table of Contents
Chapter 1 Executive Summary 13
Chapter 2 Introduction 16
i. Company Background 16
I. Operational Analysis 22
I. Board of Directors 40
V. Executive Committee 43
Page | 8
X. Auditors 43
I. First P- Product 45
V. Fifth P- People 50
I. Major Competitors 55
II. Innovation 61
Page | 9
Chapter 7 Brief on the Departments I worked during internship
I. Brief Introduction 67
Chapter 11 References 78
Chapter 12 Appendices 79
Page | 10
Appendices
Appendix A: Customer Services Department 79
Appendix H: Attachments 98
Page | 11
LIST OF ABBREVIATIONS
M: Million
Dept: Department
Page | 12
KYC: Know Your Customer
Chapter 1
1. EXECUTIVE SUMMARY
Banking sector of Pakistan has been transformed within last decade (CY2000-
2009) from a sluggish and government-dominated sector to a much more
agile, competitive and profitable industry. Speed and sequencing on banking
sector transformation and its role in promoting economic growth is now a
leading story of a sector success. Within Pakistan SBP offers the story of
effective leadership as a regulator, change management and corporate
governance. Outside Pakistan it is serving to offer rich lessons in what
difference governance regulator can make and how bank restructuring and
privatization can change the landscape of the industry.
Meezan Bank limited is the pioneer Islamic Bank in Pakistan, and it has bright
future forward. Meezan Bank Limited is a publicly listed company first
incorporated on January 27, 1997. The Bank has an internationally
renowned, very high caliber and pro-active Shariah Supervisory Board
Page | 13
I did my eight weeks internship at Meezan Bank, Garden town branch, Lahore.
This branch also serves as a Parent branch to other sub branch. During my
internship I was rotated in different departments but my penetration was
developed in CIBD (Corporate & Investment Banking Division).
The work that I did during my internship at Meezan Bank primarily includes
voucher checking, checking account opening pre-requisites, account opening
backlog checking, analyzing the inward and outward clearing, maintaining
return mail register, completion of pay order and demand draft register, zakat
register maintenance, assisting the cheque book issuance department, know-
how about the lockers available and the rules relating to them, analyzing the
expenses incurred and maintain the records thereof. Assisting the officer
concern for the creation of expense approval sheets, understand the working
of credits department, and to assist the foreign trade wing.
One of the strongest reasons for selecting this company-Meezan Bank- was
that it is named after the Quranic word AL-MEEZAN which means BALANCE.
Second most important thing that influenced me for the selection of this bank
was that it has the privilege of being premiere Islamic bank in the Pakistan
which is why it is the market leader among all the Islamic Banks.
Meezan Bank limited has two major competitors namely Al-Baraka Islamic
Bank B.S.C (E,C), Operations Pakistan and Bank Islami Pakistan Limited
respectively. The market analysis and financial analysis of the competitors
shows that the Meezan Bank limited is current market leader in the pie among
the Islamic banks.
Some of the suggestions in this report were that MBL should pursue aggressive
marketing and advertising strategy, introducing job specific training to
employees and adhering to the criteria laid out by the HR department for job
advancements in complete faith and employee training sessions on regional
level.
Page | 15
Chapter 2
2. INTRODUCTION
Public Limited
Type KSE: MEBL
LSE:
Industry Islamic Banking
Founded Al-Meezan Investment Bank Limited
Headquarters Karachi, Pakistan
Murabaha, Ijarah, Diminishing Musharakah, ATM/Debit Card,
Products Savings, Consumer Banking etc.
Vision:
Establish Islamic banking as banking of first choice to facilitate the
implementation of an equitable economic system, providing a strong
foundation for establishing a fair just society for mankind.
Mission Statement:
To be a premier Islamic bank, offering a one-step shop for innovative value-
added products and services to our customers within the bounds of Shariah,
Page | 16
while optimizing the stakeholders’ value through an organizational culture
based on learning, fairness, respect for individual enterprise and performance.
Chapter 3
Page | 17
(The only AAA rated financial entity in the country,)
• The Islamic Development Bank of Jeddah
• Shamil Bank of Bahrain, > Islamic Development Bank, Jeddah
• Kuwait Awqaf Public Foundation
• Saudi Pak Industrial and Agricultural Investment Company (Private)
Limited.
That in addition to their strength and stability adds significant value to the
Bank through Board Representation and applied synergies.
The Bank has an internationally renowned, very high caliber and pro-active
Shariah Supervisory Board presided over by Justice (Retd.) Maulana
Muhammad Taqi Usmani, a renowned figure in the field of Shariah,
particularly Islamic Finance. He holds the position of Deputy Chairman at the
Islamic Fiqh Academy, Jeddah and in his long and illustrious career has also
served as a Judge in the Shariat Appellate Bench, Supreme Court of
Pakistan. The Bank also has a resident Shariah advisor, Dr. Imran Usmani,
who strictly monitors the regular transactions of the Bank. The board also
includes Sheikh Essam M. Ishaq (Bahrain), and Dr. Abdul Sattar Abu
Ghuddah (Saudi Arabia).
Page | 18
Furthermore, the Bank has built a strong Information Technology and customer
knowledge-based focus that continues to use state of the art technology and
systems. The Bank's Corporate and Investment Banking business unit is
geared towards nurturing and developing a long-term relationship with clients
by understanding their unique financing requirements and providing Shariah
compliant financing solutions across the horizon of corporate banking and
structured finance.
The Meezan Bank is also implementing robust and aggressive strategic and
tactical initiatives on the consumer banking side. The Bank has a rapidly
growing branch network across all major cities nationwide. Providing our
customers accessibility and convenience is a prime target, within an
atmosphere and culture of dedicated service and recognition of their needs.
250
120000
200
100000
150
80000
branches
100 cities 60000
40000
50
20000
0
0
2005 2006 2007 2008 2009
2005 2006 2007 2008 2009
(1) (2)
Page | 19
Total deposits at December 31st 2009 crossed Rs 100 Billion compared to Rs 70
Billion for 2008, an increase of 43%, compared to the national average of
12.63%. In addition to a large branch network, Meezan bank also has an
effective customer outreach programme that uses a team of Business
Development Officers. The branch liability sales teams have done a great job
and need to be complimented for their efforts.
----------------
(1): Branch Network (including sub branches)
The Bank is currently segmented into three Regions of Pakistan. The cities in
which the Bank presently operates are as follows:
Southern Northern
Central Region
Region Region
Hafizabad Mansehra
Page | 20
Jhang Mardan
Kasur Muzaffarabad
Khanpur Nowshera
Khushab Peshawar
Lahore Rawalpindi
Lalamusa Swat
Mandi Bahauddin
Mian Channu
Multan
Okara
Sadiqabad
Sahiwal
Sargodha
Sheikhupura
Sialkot
Page | 21
Pakistan has continued to suffer from the fallout of the international financial
crises that began in 2008. Since the inception of Meezan bank economic
shocks were usual and banks are not exemption to these shocks. The
instability of the economy has also affected the bank to some extent. Current
year’s profit rating shows the managements’ effective policies and viability.
• Operational analysis
• Balance sheet analysis
• Ratio analysis
Profit after taxation- bank Rs. 1.025 Billion Rs. 0.621 65% ↑
Billion
Page | 22
n
Due to increase in profitability, the earnings per share increased from Rs. 122
to Rs 1.71 per share, reflecting an increase of 40%.
Dividend
The board has recommended to issue 5% bonus shares (2008:8.6%) for year
2009 continuing the bank’s unbroken payout record since the date of listing on
the stock exchange. This will increase the bank’s paid up capital to Rs 6.98
Billion
Page | 23
Right Shares
The paid up capital of bank was increased to 6.6 Billion during the year after
taking into account the proceeds of the right issue of Rs 1.7 Billion approved
by Rating Company, an affiliate of Japan Credit Ratings Company, maintained
the Bank’s long term entity rating at A+ and upgraded the outlook from
“stable” to “positive”. The short term rating has been maintained at A1.
The BOD devised a strategic plan in 2006 for the year 2007-2011. One of the
key features of the plan was to aggressively grow the branch network to 200
branches by the end of 2010 which is already achieved. The highlights of the
strategic plan for the period of 2010 to 2014 are to:
The bank will strive to build high quality financial portfolio. The bank is in the
process of installing the latest T-24 technology to all of its branches. The
deployment is in progress and the entire network will be switched to T-24 by
the end of this year.
Page | 24
1. Financial Report 2009
3.3.2 Balance Sheet Analysis2
Page | 25
-
2. Annual Report 2009
Page | 26
The total assets for the year 2009 amounted to Rs. 124182 Million; financing of
the bank had the share of Rs. 44189 Million, followed by the investments made
by the bank of Rs. 23291 Million. The total liabilities of the bank amounted for
Page | 27
Rs. 114998 Million for the year 2009, of which the total deposits and other
accounts amounts to Rs. 1003331Million setting 92% of the total liabilities of
Meezan bank. The shareholder’s equity remained 9091 Million in 2009 after
the increase of 31% from 2008’s equity respectively. There was an increase of
26%, 9091M, in the share capital of Meezan bank as compared to the 2008’s
figures (6341 M).
20
15
10 ROE(%)
5
0
2009 2008 2007 2006 2005
ROE(%) 11.28 9.8 16.84 12.7 14.12
Page | 28
This ratio shows the profit earned by the company as a percentage of the
analyzed last five years ROE to have a better understanding of the company’s
ratio of investment in the business. In the year 2005, this ratio was 14 percent
but this ratio seems to fluctuate in the later years. In the year 2007, this ratio
percent. This is because the company has increased the amount of capital but
the net profit after tax could not be increased according to that ratio. However
in the year 2007, the ratio was increased to the maximum of all the previous
net profit was increased proportionately to that. However in the year 2009, the
situation is not very bad the bank as compared to the last year’s ratio. There is
a slight increase of 1.48% in the return on equity in the year 2009 which
Return on Assets
Return on Assets = Net Profit after Tax / Total Assets
Page | 29
2
1.5
1 ROA (%)
0.5
0
2009 2008 2007 2006 2005
ROA (%) 0.82 0.73 1.43 1.3 1.37
Return on assets is the ratio that shows the percentage of net profit after tax
to total assets. This ratio is also called the return on investments because
types of assets. This ratio of Meezan Bank Limited shows that the return
earned by the bank on its total investments is fluctuating from year to year.
This is because the bank has continuously increasing its investments in the
total assets but against that investment the bank is not earning sufficient
amount of profits. The situation is somewhat better in the year 2007 where
because of highest of all the years’ profits, the return percentage is 1.43. The
bank should consider the situation and should try to rectify this.
Assets
2 Net SpreadMargin(%)
0
2009 2008 2007 2006 2005
This ratio shows the gross earnings on financing less the return paid to the
deposit holders as a percentage of total assets. This is some sort of gross profit
ratio because the earning on financing is the main revenue of the bank where
the return paid to deposit holders is the cost of those funds. Here this ratio
shows that the situation was better in the year 2005 but in the year 2006 it is
again declined. Then in the year 2007 it again became better while in the year
2008 surprisingly this ratio is the highest. Although the net profit after tax in
this year is lesser than that of the previous years but this ratio shows that the
bank has become efficient in its core operations and the problem lies with its
Page | 31
2008 = (707908 / 85276070) x 100 = 0.83 %
2.5
2
1.5
Net Other Income Margin(%)
1
0.5
0
2009 2008 2007 2006 2005
Net other income margin is the percentage that shows the return earned by
the bank from the sources other than its core operations. Keeping in view the
Meezan Bank, this ratio shows that there have been the fluctuations in other
income from year to year but the situation is very bad in the year 2008 where
this ratio is the minimum of all the previous years. Due to this reason the
Page | 32
Earnings per Share
Earnings per Share = Net Profit after Tax / Number of Shares
Issued
2.5
1.5
EarningsPer Share
1
0.5
0
2009 2008 2007 2006 2005
EPS is the ratio that measures how many rupees the company has earned
against one ordinary share issued to the shareholders. The greater is the ratio,
the better it would be. It is because the company will have the greater amount
of profits per share to pay as dividend to the shareholders. This ratio is the
most important ratio from the shareholders’ point of view because they also
want to know that how much the company is going to pay them against the
Page | 33
number of shares they are having. For Meezan Bank, this ratio improved from
the year 2005 to the year 2007 with a little exception in 2005 but in the year
2009 there is a slight increase of Rs.1.71 per share which is because the
2008 = 8.6 %
2007 = 20 %
2006 = 10 %
2005 = 16 %
25
20
15
StockDividendPercentage
10
5
0
2009 2008 2007 2006 2005
StockDividend 5 8.6 20 10 16
Percentage
Over the years from 2004 to 2008, the bank has been paying the stock
dividend instead of cash dividend. Although this is not a good sign but we can
say that since this is because of the consent of the shareholders that’s why it
is compromise able. This ratio shows that the bank has been paying sufficient
amount of dividend to the shareholders from the year 2005 to the year 2007
but in the year 2008 this ratio declined 11.4%. This was because in the year
2008, the bank had not earned a handsome amount of profits to justify the
Page | 34
larger stock dividends. In the year 2009, the situation is lot more alarming the
because the bank, as compared to last year’ profit rate, has earned growth of
65% in 2009 but still the amount of dividend is way too low.
50
40
30
Market Price Per Share (Rs)
20
10
0
2009 2008 2007 2006 2005
The market price per share has been fluctuating from year to year but the
the bank should stop paying stock dividends as this increases the number of
shares in circulation and the ultimate result will be the decline in the market
price.
Page | 35
Price Earning Ratio
Price Earning Ratio = Market Price per Share / Earnings per
Share
20
15
10 Price EarningRatio
0
2009 2008 2007 2006 2005
The price earnings ratio is commonly used to assess the owner’s appraisal of
share value. This ratio measures the amount that investors are willing to pay
for each rupee of company’s earnings. The level of this ratio indicates the
degree of confidence that investors have in the firm’s future performance. The
highest the P/E ratio greater will be the investor confidence in the company.
The figures calculated above show that the investors’ confidence in the
company is increasing year by year as this ratio is increasing from earlier years
to the later years. In the year 2006, this ratio was decreased but soon after
that this ratio was improved in 2007 and became even better in 2008.
Page | 36
Net Profit before Tax Margin
2009 = 14.87 %
2008 = 13.21 %
2007 = 21.43 %
2006 = 22.98 %
2005 = 30.42 %
40
30
10
0
2009 2008 2007 2006 2005
Net Profit Before Tax(%) 14.87 13.21 21.43 22.98 30.42
Net profit before tax margin represents the profit earned before tax as a
percentage of gross revenue. The need to calculate this ratio is that the actual
performance of the bank is measured before tax and not after tax. So this ratio
shows that the profit earned by the bank increased in the year 2005 but in the
later years this ratio continued to decline and in the year 2009 this ratio was
only 14.87 percent but it was better as compared to that of year 2008.
2008 = 8.27 %
2007 = 16.27 %
2006 = 17.80 %
Page | 37
2005 = 20.15 %
25
20
15
Net Profit After Tax(%)
10
0
2009 2008 2007 2006 2005
Net profit after tax margin was about 21 percent in the year 2005 whereas it
started decreasing gradually in the subsequent years. The main reason for this
decrease in the net profit was increase in the other expenses and also because
of an increase in the amount of taxation. Although the better measure for the
efficiency of the management is the net profit before tax margin but since that
net profit after tax margin so that the disposable income of the organization
should be measured. And this ratio shows that the efficiency of the
year 2009 which is not a good sign as this ratio shows the efficiency of the
organization.
2008 = 77.24 %
2007 = 71.21 %
2006 = 73.40 %
Page | 38
2005 = 67.71 %
80
75
65
60
2009 2008 2007 2006 2005
OperatingExpenses 72.15 77.24 71.21 73.4 67.71
to Income (%)
The operating expense to income ratio shows that the organization has been
able to control its operating expenses over the year from 2005 to 2009. This
ratio was 67.71 percent in the year 2005 and in the year 2009 it is ended with
a little increase to 72.15 percent. In spite of the stability of this ratio the net
profit margin of the bank declined to a considerable extent. This was because
focus to decrease its operating expenses so that its net profit should be
improved.
2008 = 51.62 %
2007 = 56.90 %
2006 = 65.68 %
2005 = 73.86 %
Page | 39
80
60
40 FDR(%)
20
0
2009 2008 2007 2006 2005
FDR(%) 44.04 51.62 56.9 65.68 73.86
Financing to deposit ratio is perhaps the most critical ratio for a commercial
bank. This ratio represents the amount extended as a loan by a bank to its
clients compared to deposits that the bank receives from its deposit holders.
receives money from those who have it spare and lends it to those who are in
need of them. This ratio of Meezan Bank has been declining from the year
2005 to the year 2008. The bank should seriously consider this ratio because
these are the core operations of the bank. If the bank could not fully utilize the
funds received from the deposit holders it would have to suffer a loss of its net
income.
Issued
Page | 40
2006 = 4763 M / 3779M = Rs.1.97 per Share
2.5
1.5
BookValue Per Share
1
0.5
0
2009 2008 2007 2006 2005
BookValue Per Share 1.36 1.29 1.95 1.97 1.49
Book value per share is the ratio that shows that how much value of assets the
bank has to pay to its shareholders in the event of its winding up. If we
compare the book value per share with the market value per share we see that
although the book value per share is much lesser than the market value even
then the shareholders are willing to pay much higher price for the share of the
bank. It shows that the shareholders have confidence in the company that the
company will the prosperous in the future. However since the market price has
Page | 41
• Mr. Jassar Dakheel Al-Jassar
• Corporate Banking
• Investment Banking
• Commercial Banking and SME
• Consumer Banking
• Treasury & Financial Institutions
• Asset Management (managed through a subsidiary Al Meezan
Investment Management Limited.)
Page | 42
• Retail Banking is organized in seven regions across Pakistan, namely
South-I Region, South-II Region, South-III Region, Lahore Region,
Faisalabad Region, Multan Region, and North Region.
Page | 43
3.4.4 Shariah Board
Page | 44
• Zaigham Mahmood Rizvi
• Mohammad Abdul Rehman Hussain
3.4.8 Advisory
• Dr. Muhammad Imran Usmani
Shariah Advisor
• Zafar Aziz Osmani
Human Resource Advisor
3.4.10 Auditors
• A.F. Ferguson & Co
Page | 45
John Carmack
Marketing is not the art of finding clever ways to dispose of what you make.
It is the art of creating genuine customer value."
-Philip Kotler
Philip Kotler
Page | 46
As we all know banking sector falls in the category of services. Process of
Marketing is not confined to the marketing of products only. As of 2003, there
is a major shift of attention noticed among the developed countries towards
services sector. Unlike traditional 4 P’s of marketing, services marketing
includes 3 additional P’s; Process, People, Physical evidence to take into
account the special nature of services marketing.
Now banking products has so much deepened that the customers have to do
some basic analysis before pursuing any product. Keeping in view the intense
competition and the diverse range of banking products available in the market,
the product line offered at MBL is presented as under:
Meezan bank was established under the Islamic principles therefore the entire
product portfolio is Shariah based. Financing is based on the following modes
laid out by the Shariah
Page | 47
Islamic Mode of Financing
Musharakh
Mudarbah
Murabah
Salam
Istisna
Ijarah
Market Segments
There are different market segment and strategies for different banks as per
their top management to target but if we have to draw a generalized segment
format for bankers, the segments would be:
• Individuals
• Salaried persons
• Sole proprietor
• Retailers
-----------------------------------------------------------------------------------------------------------
• SME’s
• Corporate Bodies
• Trusts
• NGO’s
Page | 48
• Autonomous and semi-autonomous bodies
• Partnerships
• Clubs
• Societies
• MNC’s
Target Market:
• Middle class
---------------------
Page | 49
Pricing strategy devised at MBL is objectives based. The Meezan bank’s
objectives are to increase its market share in the market. The prices set for its
products and/or services are very economic and minimal in nature as
compared to the other market players of Islamic banking category.
Many experts say that location is the key to successful marketing of services.
This is because the customer is often present at the same place where the
service “manufactured” and delivered.
Customer research has shown that in many cases customers will choose a
conveniently located supplier of services over the best service provider located
far away. Therefore a captive audience of customers could be built up by a
well located retailer of consumer goods, or a service4- bank.
The placement in banking sector plays a vital role. The availability of branches
in the business areas and in the areas where it is convenient for the customers
to reach and get their desired banking services is very crucial. MBL has
strategically designed the placement strategies in order to reach maximum
number of customers. But the strategy is little flawed.
------------
Page | 50
Apart from this the location of branches is questionable. In some areas the
branches are located closely e.g. NGT branch and Model town branch. Whereas
in some locations the branches are located far away this may be a negative
mark on the placement strategy of MBL.
There are total of 209 branches operating within the 54 cities throughout the
country. This is no doubt a good sign as compared to the branch network of
Meezan Bank’s competitors.
Promotion is vital for any business. But many service businesses do not spend
adequately on promotional activities. The ways through which Meezan Bank
Promotes itself includes:
• Electronic media
• Print media
Electronic Media
------------------------------
Television ads for MBL mainly try to emphasize the importance of Islamic
Banking and the services it offers can help you in the time of need which is
totally riba free. Various business channels, like business plus, and commercial
channels, like Indus vision, displays the TV ads respectively.
Page | 51
Another way through which Meezan Bank promotes itself electronically is
through its website, which is designed in an effective manner with detailed
information, so that visitors and the prospective customers can easily get
know how about its available products and/or services.
Print Media
The employees at MBL are fully trained professionals who know how to deal
with the messy customer. They are capable of handling stress involved in
keeping large number of people (customers) happy while not losing their own
temper. They are given suitable level of empowerment required to perform
their various job related tasks. Apart from that they are continuously at on job
training in the form of job rotation and job enrichment. Apart from this the
employee turnover rate is very high because of the job dissatisfaction and the
Page | 52
over burden of work. The salaries offered at MBL are another job dissatisfier
that is leading to the high rate of employee turn over.
Page | 53
Servicescape or the design of the MBL branch (es) is carefully and strategically
designed to attract the potential and actual customers. The atmospherics I
have found at MBL, New Garden Town Branch, were little clumsy. The branch
size was small and the traffic was heavy. This was one of the reasons of
making the PROCESSES slow and keeping the customer(s) at WAIT. Apart from
that the branch had many indoor plants, the well dressed staff, cleanliness and
abaya worn by female staff creates Islamic impact and charisma for the new
comers.
Page | 54
Chapter 4
Overview
The banking system effectively coped with several challenges emanated from
the economic slowdown both at home and abroad due to strong resilience built
over the years and effective regulatory and supervisory regime. According to
the SBP’s quarterly performance review6 of the banking system for the quarter
ended December 31, 2008 asset base of the banking system grew 2.6% over
the quarter to reach Rs 5,653 Billion, well-supplemented by 3.6% and 7%
growth in deposit and shareholder’s equity, respectively.
The liquidity profile of the banking system remained constrained for most part
of the quarter. However, post quarter statistics indicate a significant easing of
the liquidity profile because of gradual increase in deposits and reduction in
bank’s advances.
The inline with the deterioration in macroeconomic indicators, the credit risk
remained high during the quarter. However, satisfactory earnings enabled the
system to cover these loan losses. The NPLs are covered by loan loss
provisions to the extent of 75%, but on account of these increased loan
provisions in absolute amounts, earnings of the banking system came under
pressure and remained lower than the last couple of years. Return on assets
(ROA) was 1.2% for the year 2008 vs 1.5% for 2007 and 2% for 2006. Overall
solvency position of the banking system showed an improvement.
-----------------
Page | 55
6. The growth rate of entire banking industry is compositely gained from
SBP’s quarterly performance review of the banking system for the quarter
ended December 31 2008 and the 1st quarter ended March 31 2009
The Capital Adequacy Ratio (CAR) under Basel-II framework, which also
accounts for the operational risk charge, improved to 12.2% (12.6% for
commercial banks) due to fresh injection of equity and satisfactory earnings.
The CAR improved to 13% jointly for banks and development finance
institutions (DFIs). “Banking system shows strong resilience to unusual shock
in major risk factors. This strength of the banking system largely came from
the prudent regulatory and supervisory regime strengthening the risk
management and governance standards in banks as well as the improved
solvency positions7.”
Page | 56
---------------
7. Business Recorder, March 24, 2009
The balance sheet composition with slight changes remained more or less
stable during the quarter. On the asset side, significant increase was observed
in investments and interbank lending, while financing portfolio contracted.
Deposits of the Islamic Banking increased, despite a decline in deposit base of
the banking system. ‘Due to financial institutions’ also increased marginally
after declining over a couple of quarters. Deposit mix of Islamic banks, due to
decline in deposits from financial institutions tilted toward the customer
deposits.
Page | 57
The financing portfolio of IBIs is concentrated in corporate and consumer with
smaller shares of SMEs and commodity finance, while financing to agriculture
is almost negligible. There is a strong potential for the IBIs to expand into SME
and Agriculture sector. Keeping in view the potential and demand for Agri-
finance and to promote Islamic Financing in this area, SBP has issued
‘Guidelines on Islamic Finance for Agriculture’.
The liquidity position of IBIs improved over the quarter under review, as the
decline in Financing and increase in deposit base led to further lowering in
Financing to Deposits ratio (FDR).
Sector wise analysis shows that textile, chemical and individuals have the
major share in financing. However, infection ratio is quite high for cement,
electronics and individuals. While NPFs of individuals are generally adequately
secured through collaterals, low infection ratio for textile sector vis-à-vis
conventional banks reflects upon the better risk management of IBIs.
The year to date profits of IBIs remained higher than the results of
corresponding period of last year, though there was significant increase in
provisioning for NPFs. However, Islamic banks saw a marginal decline in ROA
due to shift in the mix of earning asset towards low-return assets. Incidentally,
major part of IBIs profitability is coming from IBIs of conventional banks and a
couple of Islamic banks. Islamic banks, therefore, need to improve on their
operational efficiency for keeping their competitiveness in the industry in
terms of both market share and profitability.
Page | 58
4.2 Competition Analysis
Meezan Bank limited feels that its major competitors are as follows:
Page | 59
area of business. It intends to offer retail banking products, proprietary and
third party product,
------------------
9. http://www.bankislami.com.pk/about_us/
and integrated financial planning services. The Bank is expected to start its
operations in the last quarter of year 2005.
The epochal idea of Bank Islami was conceptualized by Jahangir Siddiqui &
Company Limited and DCD Group in late 2003. Mr. Hasan A. Bilgrami was
appointed as Adviser to the sponsors on March 16, 2004 to formalize the idea.
He presented the concept paper of Bank Islami to sponsors on March 24, 2004.
A detailed business plan was then prepared and a formal application was
submitted to the State Bank of Pakistan on May 26, 2004. On September 26,
2005, Dubai Bank joined the Sponsors and became one of the founding
shareholders of Bank Islami by investing 18.75% in the total Capital.
Albaraka Banking Group is the biggest Islamic banking group listed on the
Bahrain Stock Exchange in terms of capitalization. It has been rated by
Standard & Poor's as BBB- with a short-term rating of A-3. ABG offers retail,
corporate and investment banking and treasury services strictly in accordance
with the principles of the Shari’ah. The authorized capital of ABG is US$1.5
billion, while the total equity amounts to about US$ 1.59 billion.
With assets of US$11.2 billion, the Group has a wide geographical presence in
the form of subsidiary banking Units in 12 countries, which in turn provide their
services through more than 250 branches. These banking Units are Jordan
Islamic Bank/ Jordan, Al Baraka Islamic Bank / Bahrain, Al Baraka Islamic Bank /
Page | 60
Pakistan, Banque Al Baraka D'Algerie/ Algeria, Al Baraka Bank Sudan/Sudan, Al
Baraka Bank Ltd / South Africa,
10. http://www.albaraka.com.pk/about/index.php
There are many criteria on the basis of which we can assign the market share
of the banks in the banking industry. Some calculate it on the basis of its
deposits, while others on the basis of its customer base. Likewise some
analysts calculate the market share on the basis of assets and equity one may
have.
Here I have used the data provided by the central bank i-e State Bank of
Pakistan, for the calculation of market shares of MBL and its competitors. The
Page | 61
report published by SBP “Quarterly performance Review September 2009” is
used for overall values of banking sector. There can be different criteria for this
calculation but I am considering the bank’s deposits and advances for this
purpose.
Meezan Bank Limited is the first and largest Islamic Bank of Pakistan with a
204-branch network presence strategically spread across 54 major cities in the
country. The Bank has a cumulative annual growth rate of 60% over a period
of 5 years and currently enjoys 42% market share in the Islamic banking
industry. Meezan Bank has established a strong and credible management
team comprised of experienced professionals, which have achieved a strong
balance sheet with excellent operating profitability, including a capital
adequacy ratio that places the Bank at the top of the industry11.
Page | 62
4.3.1 Technical methods that affect the industry
----------------
11. www.meezanbank.com/NewsDetail.aspx?iNewsID=2
Some of the technical methods that are used and affect the banking industry
are as follows:
4.3.2 Innovation
Page | 63
Innovation is a necessity in contemporary times, as it is becoming one of the
reasons of competitive advantage in banking industry. It helps banks to
compete in today’s highly technologically driven industry. Some of the
innovations that the banking industry is looking forward are:
Page | 64
Chapter 5
Few decades back, people had no other option to go for except commercial
banking. Some of the reasons for this are that at that time many people were
ignorant of the Islamic values n principles regarding the interest –fixed- paid by
the commercial banks. Secondly, even if they had any information or
knowledge and exposure about the working of banks and the commercial
banking they still had to do their transactions through them as there was not a
single bank engaged in Islamic banking.
With the passage of time many Islamic and shariah scholars laid fatwah on the
mode of working of commercial banks and considered the fixed rate of profit
and interest paid by them Haram (unlawful, prohibited). Today, due to the
Page | 65
increased exposure, people are much more inclined to invest or deposit their
money in the banks who are engaged in the Islamic banking. Due to this many
banks has taken initiative to open the branches conducting Islamic banking.
My reason for selecting Meezan bank is that, firstly, it is the pioneer Islamic
bank in Pakistan which is formed on the principles of shariah. A wide range of
products are developed and launched consolidating the Bank’s position as the
premier Islamic Bank of the country. As in marketing, the pioneer in the
market is said to be the market leader as more people are aware of the
company
In 2001, The Shariah Supervisory Board was established at Meezan Bank led
by Justice (Retd.) Muhammad Taqi Usmani as chairman. State Bank of Pakistan
sets criteria for establishment of Islamic commercial banks in private sector
and subsidiaries and stand-alone branches by existing commercial banks to
conduct Islamic banking in the country.
Another reason for selecting Meezan is its connection with the Quran. The term
Meezan is derived from the word Al-Meezan which means balance.
Like wise, the most notable reason for selecting Meezan Bank is the
atmospherics of the organization. Based on the Islamic principles, female staff
is required to wear abaya during the working hours of bank. This has inspired
me a lot. You don’t have to worry about your dressing and about the nasty/
filthy eyes customers.
The how part of the question is answered as: through word of mouth.
Page | 66
5.2 Practical Application of the Subjects
• Banking Operations
• International Banking
• Financial Management
• Communication Skills
• Accounting
• Management
Page | 67
Chapter 6
The person I cherished most during flux of time was Officer Operations,
Miss Rabia Aslam. I liked her not for her beauty, intelligence, personality or her
behavior. I liked her most for her professionalism and courtesy.
Page | 68
The one thing an internee does most during internship is to observe things,
scenarios and situations. My observations guided me that this lady was always
courteous and polite with the customers which is why most of the time there
was notable rush on her table. Her ability to perform well in different
conditions and keeping the customers happy inspired me a lot.
Apart from that she is a very humble and nice human being who was always
there to help me and guide me during my internship. Her method of
supervising was very friendly, respectful and understanding.
Chapter 7
I did my eight week internship at Meezan Bank Limited New Garden Town
Branch Lahore. This branch also serves as a Parent Branch of Model Town
Branch. During internship I was rolled over in departments including accounts
opening, remittance, cheque book issuing, foreign trade, assisting customer
Care, but any penetration was developed in the Credits Department.
The work that I did during my internship at Meezan Bank primarily includes
voucher checking, checking account opening pre-requisites, account opening
backlog checking, analyzing the inward and outward clearing, maintaining
return mail register, completion of pay order and demand draft register, zakat
Page | 69
register maintenance, assisting the cheque book issuance department,
developed know-how about the lockers and the rules related to them,
analyzing the expenses incurred and maintain the records thereof. Assisting
the officer concern for the creation of expense approval sheets, understand
the working of credits department, and to assist the foreign trade wing.
This department is entirely dependent on some other departments for the sake
of client’s verification and legal provisions. The lending cases starts at the
lower level I-e, Relationship officer or Relationship Manager. The case is then
forwarded to the Regional level and then the Head office for the final approval.
Page | 70
Chapter 8
8. Problem Identification
• The lack of awareness among the employees about the exact job
description.
Page | 71
The weakest area of performance which I have identified during my eight
week’s internship is Human Resource Department.
HR is responsible for hiring and firing of the work force within the organization.
Here at MBL the HR dept, I believe, needs lot more attention. A low salary, lack
of motivation at workplace, little or no incentives is the crucial things affecting
the performance of the employees. The employees are not given reasonable
motivational add on which results the poor performance of the staff. This poor
performance in the end badly affects the customers of the banks resulting
unhappy customers and in extreme cases product and or service switchers
Likewise, the policies settled by the company are little problematic as they
involves excess documentation.
Second weak area I have identified was the lack of proper Marketing on behalf
of the Meezan Bank Limited. Today Competitive environment, Marketing is
considered to be crucial for the success of any company or its products and/or
services. Unfortunately marketing at meezan Bank has not achieved the level
which is required for the better penetration of the company in today’s
aggressive banking industry where every bank positions itself strategically
from its competitor.
Likewise, the increased level of costs; the cost of particular one branch is
extremely very high that they have to take most of the times approvals from
the head office or regional offices.
Page | 72
Chapter 9
9. SWOT Analysis
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.
Strengths –Internal
• MBL has the privilege of being the first in the Islamic Banking sector
which gives MBL a competitive edge over all other banks.
• There are many value added features in the products offered by the
bank. ATM cards are provided with every account. Other features are
present in the various products. The priority customers enjoy a much-
pampered status at the bank.
Weaknesses- Internal
• 201 branches are opened so far but the networking within the branches
needs to be worked out.
• Excess liquidity.
• Markets are not open from the point of view of investments. Being an
Islamic bank it has to carefully examine the opportunities available to
invest its money.
Opportunities-External
Threats-External
Page | 75
Chapter 10
“The percent of interns converted to full time e6mployees has increase fro6m
35.6% in 2001 to 50.5% in 2008” (NACE, March 2008, P.5)12
I had the opportunity to work with one of the leading Islamic banks of the
country. By and large, MBL is enjoying the position of a pioneer Islamic bank in
Page | 76
Pakistan. There are currently six dedicated Islamic banks operating in Pakistan
with a total of 475 branches. Having opened 35 new branches in 2009, Meezan
bank has a network of 201 branches across 54 cities, making it the largest
Islamic Banking Institution in the country, commanding a 42% share of the
total dedicated Islamic Banking network in Pakistan.
--------------------
12. http://www.insightintodiversity.com/index.php?
option=com_content&view=article&id=120:the-importance-of-internships-
in-a-declining-economy-&catid=50:april-2009-issue&Itemid=109
services was not very encouraging. The element of “People”, “Process”, and
“Physical Evidence” needs attention from the top management. “People” are
the internal customers (employee) of the company. With which Processes and
Physical Evidence is closely related (linked), that are overlooked in this service
oriented organization. The employee turnover is very high which they have to
cut down as they are losing a number of good trained employees due to its
poor policies.
During my internship period I have identified number of weak points that may
erode the success factors of the organization in the future. As per my
expertise, I am suggesting the following measures to overcome the very
crucial bottlenecks to enhance the performance of every department and more
specifically “People”.
• First of all, I would I like to suggest that the bank must pursue a very
aggressive marketing and advertising strategy so that it can create
Page | 77
awareness in the general public about its Islamic products and services.
Aggressive Marketing strategy is extremely very necessary in today’s cut
throat competitive environment. For this purpose MBL must hire efficient
marketing personnel to increase its market penetration.
• The employee turnover rate is way too high. There is a need of creating
satisfaction among employees. They do not feel any attachment to the
organization. There is a requirement for building up their loyalties so that
the bank can curtail the dissatisfaction and turnover among employees.
• 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.
Page | 78
• Employee motivation level is very low. There must be motivational add
on’s ,which may be in the form of increased salaries, recognition,
incentives scheme, appreciation, job security, recreational and
informational trips, that may increase the employee motivation at work
place which will ultimately become the source of customer satisfaction.
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 clumsy processes for providing the banking facilities to the end
users must be properly managed in order to decrease the customer
dissatisfaction and the waiting involved in getting their desired services.
Page | 79
with other banks. Scheduled computer data backup should be done
within the bank.
- Ronald Fisher
Chapter 11
• www.meezanbank.com
• www.sbp.org.pk
• www.brecorder.com
• www.albaraka.com.pk
• www.bankislami.com.pk
• www.ibp.com.pk
• www.google.com.pk
Page | 80
• www.learnislamicfinance.com
Chapter 12
Appendix A:
Account opening and closing is the function of customer services dept. The bank’s customers
includes individuals (single or joint), firm (partnership/proprietorship), Autonomous corporations,
Limited companies, Charitable Institutions, associations, Educational Institutions or local bodies.
Page | 81
b) Riba Free Dollar Savings Account
Foreign Currency Account
Account opening is the basic and first relationship, which is established between Bank and the
customer. In account opening extreme care has to be exercised in case of completion of account
opening documentation.
Whenever a client comes in the bank in order to open an account the first information that is given
to him/her about the types of accounts, which can be opened, so far this purpose the client is given
detailed information about the accounts and their respective profit rates.
CURRENT
SAVING
TERM DEPOSIT
Sub-categories of Accounts and the Basic Requirements are given in the Appendix____
First of all, after inquiring from the customer what type of account he/she wants to open, the
account opening form is got filled from the customer and signed it. Along with the account opening
form, the customer is also signed two Specimen Signatures Cards.
After fulfilling all the formalities of account opening, the computer generated account number is
given to the customer that is of special series depending on the type of account.
REQUISITION SLIP
A requisition slip is given to the customer to sign it so that the customer can get chequebook.
Chequebook is issued after one day of receiving the requisition slip.
Date
Account Number
Name & Address
Telephone Number
Initial Deposit
Customer Services Officer enters the new account opened in computer and the Specimen signature
Cards are also scanned so that whenever a cheque of the respective account comes for encashment,
the signatures can be verified.
Appendix B:
OPERATIONS DEPARTMENT
FUNCTIONS PERFOMED:
a) CLEARING
b) REMITTANCE
CLEARING
Inward clearing
Outward clearing
2) INWARD CLEARING
In the morning, the bank receives its own cheques, which have been presented by the customers in
some other bank to be deposited in their account. NIFT provides the facility of bringing cheques
for inward and also takes the cheques of outward clearing to other banks. The cheques received in
Page | 84
inward clearing are the cheques drawn on bank and the bank has to pay for them. For this purpose
the bank makes clearing in computer by checking the balances of the respective customer, if their
balances are up to the mark then that cheque is cleared and the respective customer account is
debited with the respective amount. If the balances are short then that cheque is bounced back to
the related bank.
Reasons for returning a cheque:
• All required stamps of Clearing, Crossing and Endorsement are not present on cheques.
• Cheque is post date.
• Refer to drawer
• Effects not cleared, may be presented again
• Amounts in words and figures differ.
If any of these reasons exists then that cheque is returned through NIFT and deducts Rs. 300 from
customer’ account as cheque returned charges.
Then the report of returning any cheque is sent through fax to the head office Karachi. After this
put the entry in Cheque return register showing the following columns:
Date
Title of account
Account number
Cheque number
Bank and Branch name
Reason to return
a) I. TRANSFER OF AMOUNT
If a customer holds two accounts in the bank and he/she wants to transfer money from one account
to other account, customer writes a cheque and fills deposit slip in which he/she writes account
number to which amount is to be transferred. After making transfer entry in the computer, affix
transfer stamp in the middle of the cheque, crossing on the upper left and bank’s endorsement
stamp on the backside of the cheque.
c) Whenever clearing officer receives phone call from the customer inquiring about
his/her account balance after confirming the name, address and other information he
tells the balance through computer.
i) REMITTANCE
a) Pay order
b) Demand drafts
c) Inward collection
d) Outward collection
a. a) PAY ORDER:
Pay order is an order to pay money but this payment is to be made within city. In other words it can
be said that the payee and the payer should be in one city.
In pay order the payment can be made in:
A) Cash
B) Clearing
C) Transfer
2) PROCEDURE:
In case of pay order first of all the customer has to fill a pay order application form in favoring
section: name, account number, amount, beneficiary name, address, etc.
The data is entered in already set format of pay order in computer and pay order print out is taken.
An authorized person and manager operations are signed pay order.
The original copy of the pay order is given to the customer and carbon copy is kept with bank for
office record.
3) b) DEMAND DRAFT
Page | 86
An order to pay money to the payee who is residing outside the city. DD can be for a customer who
may or may not have an account in the bank but the other person’s account must be maintained
with the bank for which the payer has demanded the DD.
i. c) INWARD COLLECTION
When the bank receives cheques of any other bank from its any branch situated in the some other
city, and then those have been dealt as inward collection.
KEY FEATURES:
Available in selected branches
Available in 3 sizes
For all eligible Account Holders
Key security Deposit PKR 3000
Procedure
Application on Prescribed Form duly filled
Saving/Current Account with MBL
02 Passport size Photographs
Charges
Key Deposit PKR 3000/
Small PKR 1000/Year
Medium PKR 1500/Year
Page | 87
Large PKR 2000/Year
Locker breaking charges Rs 3000
CHARGES
PKR 03/Leaf for Saving Account Cheque Book
PKR 01/Leaf for Current Account Cheque Book
PKR 01/Leaf for FCY Account
Appendix C:
Page | 88
Meezan Providence Certificate
Riba-Free Certificate of Islamic Investment (COII) works under the principles of Mudarabah and is
strictly in conformity with the rules of Islamic Shariah.
On agreeing to become a COII holder, the customer enters into a relationship, based on Mudarabah,
with Meezan Bank. Under this relationship, the Customer is an Investor (Rab ul Mal), and the Bank
is the Manager (Mudarib) of the funds deposited by the customers.
The bank allocates the funds received from the customers to a deposit pool. These funds are
utilized to provide financing to customers under Islamic modes that include, but are not restricted
to, Murabaha and Ijarah.
Tenor
3 Months
6 Months
1 Year
2 Years
3 Years
5 Years
3 Months on maturity
6 months on maturity
1 year monthly or quarterly min investment 200K
2 year monthly or quarterly min investment 200K
3-5 year monthly or quarterly min investment 200K
There will be different rate of profit according to the profit payment option and amount and tenor.
Pre-mature encashment
In case of pre mature encashment the profit rate will be calculated according to the completed
tenor, if extra profit is paid that will be recovered
Payment of Premium
Bank pay premium from its own share of profit to high depositors.
Premium Rate
Page | 89
5M-9.99M 1%
10M-29.99M 1.25%
30M-49.99M 1.50%
50M+ 2%
RibaFree Monthly Mudarabah Certificates is a flexible investment product which has been
designed to give you a monthly return which is Halal. The minimum investment required is only
Rs. 100,000 and you receive profit for each complete month of investment with the Bank.
On agreeing to become a MMC holder, the customer enters into a relationship based on Mudarabah
with Meezan Bank. Under this relationship, the Customer is an Investor (Rab ul Mal), and the Bank
is the Manager (Mudarib) of the funds deposited by the customers.
The bank allocates the funds received from the customers to a deposit pool. These funds from the
pool are utilized to provide financing to customers under Islamic modes that include, but are not
restricted to, Murabaha and Ijarah.
Page | 90
Features:
Minimum requirement of PKR 100K
Profit disbursement on maturity
Tire system for profit payment (Refer Rate Sheet)
No payment on premature encashment
On agreeing to become a DMC holder, the customer enters into a relationship based on Mudarabah
with Meezan Bank. Under this relationship, the customer is an Investor (Rab ul Maal), and the
Bank is the Manager (Mudarib) of the funds deposited by the customers.
The Bank allocates the funds received from the customers to a deposit pool. These funds from the
pool are utilized to provide financing to customers under Islamic modes that include, but are not
restricted to, Murabaha and Ijarah.
Requirements:
In USD only
Individuals and Corporate
Minimum investment 10K and above
Tenor:
3Months
6Months
1Year
3Years
The Riba-Free Meezan Aamdan Certificate (MAC) is a long-term deposit certificate with an
exceptionally high monthly profit designed especially for those individuals and corporations who
are in need of regular stream of monthly income. MAC is a monthly income (mahana aamdani)
certificate with a variety of free packaged benefits.
Working
Page | 91
The Riba-Free Meezan Aamdan Certificate (MAC) works under the principles of Mudarabah and is
strictly in conformity with the rules of Islamic Shariah.
On agreeing to become a MAC holder, the customer enters into a relationship based on Mudarabah
with Meezan Bank. Under this relationship, the customer is an Investor (Rab ul Maal), and the
Bank is the Manager (Mudarib) of the funds deposited by the customers.
The Bank allocates the funds received from the customers to a deposit pool. These funds from the
pool are utilized to provide financing to customers under Islamic modes that include, but are not
restricted to, Murabaha and Ijarah.
Features:
Long Term Product
Tenor 5-1/2 years & 7 years
Profit 9.5% 10.50% (Last month)
For Individuals and Corporate
Minimum deposit PKR 100 K
(50K for old citizens and widows)
A long-term investment product specially designed to cater to the needs of corporate and business
concerns for purposes of investing their Provident, Pension and Gratuity Funds.
On agreeing to become a MPC holder, the customer enters into a relationship based on Mudarabah
with Meezan Bank. Under this relationship, the Customer is an Investor (Rab ul Mal), and the Bank
is the Manager (Mudarib) of the funds deposited by the customers.
Tenor
5 Years
7 Years
Other options:
Provident and Pension Fund of large corporate
Premature encashment facility available
Features:
For Islamic Financial Institutions deposit
To invest their access liquidity
Min. investment PKR 10 M and multiplies there of
Max investment 01 B
Appendix D:
CASH DEPARTMENT
Page | 93
The cash department is the most important department of the bank. It receives cash from customers
and then deposits it into the accounts of the customers and maintained their balances.
In cash department following books are maintained.
Scroll book
Paying book
Cash balance book
SCROLL BOOK
When cash is received at the customer it is recorded in the scroll book.
Appendix E:
Page | 94
CREDIT / FINANCE DEPARTMENT
Easy Home
Easy home works under the Diminishing Musharakah where customer participates with Meezan
Bank in joint ownership.
Easy Home finance is available for:
Purchase
3-20 year
Max. Finance 85%
Construction
2-20 year
Max. Finance 70%
Renovation
2-7 year
Max Finance 85%
Replacement
3-20 year
Eligibility
Pakistani National
Age 25—65 (till maturity)
Professional Experience
Salaried person:
2 year of consecutive experience in same industry
Min salary 20 k per month
Business
3 years business experience
Min. business income Rs 50K per month
Page | 95
Processing Charges
Businessmen Rs 12500
Salaried Person Rs 8500
(Up to Rs 4 M, 2000 Additional for above)
Time Frame 3-4 Weeks
Car Ijara
Ijara is a rental agreement under which bank purchase a vehicle and give the same on rent to
customer
Car Ijarah is Pakistan’s first "Interest Free" car financing based on the Islamic financing mode of
Ijarah (Islamic leasing). This product is ideal for individuals looking for car financing while
avoiding an interest-based transaction.
Scope of Facility
Domestic Vehicle (Local made)
Commercial Vehicle (Local+Imported)
Used/Imported Vehicle (1st Transfer only)
Rates offered:
(For New) (For used)
3 year 14% 15%
4 year 15% 15.50%
5 year 16.50% 18%
Eligibility:
• Pakistani National
Salaried individual, self-employed, professional or businessperson
Minimum 3 years of work/business/professional experience
6 month working with present employer
Net income exceeds three times of monthly rental
Page | 96
Appendix F:
Key Features
Check account balances
Instruct issuance of pay orders and demand drafts
Transfer funds between your own accounts
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)
Internet Banking
Page | 97
Internet Banking allows having access to accounts regardless of where they may be in the
world.
Key Features
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
Future Features
Alerts by SMS/Fax
Utility bill payments
Inter bank funds transfers
Payment to nominated accounts at MBL
Standing orders for repeated payments
Page | 98
Appendix G:
This is a contract between two parties: a capital owner (rabb-al-mal) and an investment
manager (mudarib). Profit is distributed between the two parties in accordance with the
ratio that they agreed upon at the time of the contract. Financial loss is borne by the capital
owner; the loss to the manager being the opportunity cost of his own labor, which failed to
generate any income for him.
A musharakh contract is similar to that of the mudarbah, with the difference that in the case
of musharakh both partners participate in the management and provision of capital and also
share in the profit and loss. Profits are distributed between partners in accordance with
agreed ratios, but the loss must be distributed in proportion to the share of each in the total
capital.
3. Diminishing Partnership
Page | 99
This is a contract between a financier (the bank) and a beneficiary, in which the two agree
to enter into a partnership to own an asset, but on the condition that the financier will
gradually sell his share to the beneficiary at an agreed price and in accordance with an
agreed schedule.
Under this contract, the client orders an Islamic bank to purchase for him a certain
commodity at a specific cash price, promising to purchase such commodity from the bank
once it has been bought, but at a deferred price, which includes an agreed upon profit
margin called markup in favor of the bank.
5. Ijarah (leasing)
The subject matter in leasing contract is the usufruct generated over time by an asset, such
as machinery, airplanes, ships or trains. This usufruct is sold to the lessee at a pre-
determined price. The lessor retains the ownership of the asset with all the rights as well as
the responsibilities that go with ownership.
6. Istisna
Page | 100
7. Salam
Salam is a sales contract in which this price is paid in advance at the time of contracting,
against delivery of the purchased goods/services at a specified future date. Not every
commodity is suitable for a Salam contract. It is usually applied only to fungible
commodities.
AIMS-UK Islamic Banking & Finance | Online Certifications | Training & Consultancy
Page | 101
Appendix H: Attachments
• L/C Form
• Form M
• Form I
• Form R
• KYC