Professional Documents
Culture Documents
Islamic Banking:
Islamic banking has been defined as banking in consonance with the philosophy
and value system of Islam and governed, in addition to the conventional good
governance and risk management rules, by the principles laid down by Islamic
Shariah. Interest free banking is a narrow concept denoting a number of banking
instruments or operations, which avoid interest. Islamic banking, the more
general term is expected not only to avoid interest-based transactions, prohibited
in the Islamic Shariah, but also to avoid unethical practices and participate
actively in achieving the goals and objectives of an Islamic economy.
The Islamic Banking system employs the concept of participation in the
enterprise, utilizing the funds at risk on a profit-and- loss-sharing basis. This by no
means implies that investments with financial institutions are necessarily
speculative. This can be excluded by careful investment policy, diversification of
risk and prudent management by Islamic financial institutions.
Islamic Shariah prohibits ‘interest’ but it does not prohibit all gains on capital. It
is only the increase stipulated or sought over the principal of a loan or debt that is
prohibited. Islamic principles simply require that performance of capital should
also be considered while rewarding the capital. The prohibition of a risk free
return and permission of trading, as enshrined in the Verse 2:275 of the Holy
Quran, makes the financial activities in an Islamic set-up real asset-backed with
ability to cause ‘value addition’.
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The forms of businesses allowed by Islam at the time the Holy Quran was
revealed included joint ventures based on sharing of risks & profits and provision
of services through trading, both cash and credit, and leasing activities. In the
Verse II:275, Allah the Almighty did not deny the apparent similarity between
trade profit in credit sale and Riba in loaning, but resolutely informed that Allah
has permitted trade and prohibited Riba.
Profit has been recognized as ‘reward’ for (use of) capital and Islam permits
gainful deployment of surplus resources for enhancement of their value. However,
along with the entitlement of profit, the liability of risk of loss on capital rests
with the capital itself; no other factor can be made to bear the burden of the risk of
loss. Therefore, financial transactions, in order to be permissible, should be
associated with goods, services or benefits. While at micro level this feature of
Islamic finance leads to generation of real economic activity and stable growth, at
macro level it can be helpful in creating better discipline in conduct of fiscal and
monetary policies.
Besides trading, Islam allows leasing of assets and getting rentals against the
usufruct taken by the lessee. All such things/assets corpuses of which are not
consumed with their use can be leased out against fixed rentals. The ownership in
leased assets remains with the lesser that assumes risks and gets rewards of his
ownership.
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Major Modes of Islamic Banking and Finance:
MURABAHA
IJARAH
ISTISNA′ A
MUSHARKAH
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History & Introduction of
Islamic Banking Services
Islamic Banking was launched under the brand 'Askari Islamic Banking', by
opening 6 dedicated Islamic Banking branches in major cities of the country.
Further expansion is planned with improved capabilities for offering products
conforming to the Shariah principles. Now it has fourteen branches in the big
cities of Pakistan .Askari Islamic Banking opens the doors for Halal banking
solutions.
Objective of ABL-IBB
“Is to put in place an efficient banking system supportive to economic justice and
welfare of society in line with Shariah standards”
A comprehensive range of Islamic Banking products and services is being offered,
in order to meet customer's demand of Shariah Compliant Banking, in the
following areas:
Islamic Banking products have been approved by the Bank's Shariah Advisor. As
per Shariah requirements, funds and products of Islamic Banking are managed
separately from the Conventional Banking side. All funds obtained, invested and
shared in Halal modes & investments, under supervision of the Shariah Advisor.
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Askari Islamic Bank in Gujranwala
The staff in Gujranwala Branch is expert and highly educated. And they have
special skills and awareness about the entire region. So ABL-IBB offer total
security and protection to the people of Gujranwala.
Shariah Advisor
He has taught and written on Fiqh and usool-e- Fiqh matters for over two decades.
He has also responded to a large number of queries issued religious rulings I-e
Fatwa’s on various matters pertaining to Islamic law, especially in the field of
commercial law.
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Vision
Mission
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Goal of my internship:
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Branch Network
1. Rawalpindi Branch
2. Peshawar Branch
3. Queeta Branch
4. Multan Branch
5. Faisalabad Branch
6. Gujranwala Branch
7. Sailkot Branch
8. Islamabad Branch
Lahore Branches
9. Cavalry Ground Branch
10. Gulberg Branch
11. DHA Branch
Karachi Branches
12. Jodia Bazar Branch
13. DHA Branch
14. North Nazimabad Branch
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Branch Hierarchy in Gujarnwala:
Branch Manager
Zahid Ibrahim
Officer Corporate
Incharge General Banking (Muhammad Bilal
(Salman Nawaz Warriach) Mehar)
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Products and services in ABL-IBB Gujranwala
Askari Halal saving Account:
It is an easy to open checking account having special features of no
restriction of withdrawals or number of transactions.
Current Account:
A complete business account which provides instant access of funds at
all branches without any restriction on withdrawals or number of transaction.
Basic Banking Account:
This account will be open for salaried person .every month client must do the two
transactions .if the transition exceeded then RS 75 charged of this account.
Term certificates:
• Askari Islamic Investment Certificates (AIIC)
• Askari khas Islamic deposit account (AKIDA)
• Askari Islamic term quality deposit (AITQD)
• Askari Halal certificate of Aasan monthly Mudarbah (AHCOAMM)
• Askari wakalah –tul- istimal
All terms and conditions are same but difference in all terms of time period
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Service Quality:
Askari Islamic bank is committed to delivering its Products and Services within
the highest service quality parameters. The Bank prides itself for the restless
pursuit of excellence in all the spheres of its activities.
The defining value in Islam itself to inculcates, in the essence the source of what
Service Quality itself means. Honesty, Complete transparence, Effective delivery,
Fair pricing, Respects and Recognition for the consumer are all clear aspects of
our faith and belief.
The Service Quality mission of Bank itself clear defines the parameters of this
goal:
“To delivered Service Cultural which ensures the consistent of our Products
and Service, within the highest Service Quality service parameters,
promoting Islamic values and ensuring recognition and quality banking
experience to our customers”.
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Hierarchy of Departments
Operations
Credit Admin
Corporate
Car Ijarah
Trade Finance
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Hierarchy of Operation Department
Operation
Department
Customer service
Accounting
Remittances
Opening
Accounts Cash
SUPERVISING
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Account Opening, Closing and Clearing
This section is also called Front office. It basically divided into four sub-
departments.
Remittances & Clearing (Inward & Outward)
Account
Customer service/Account opening
Cash
All these are separate departments but collectively known as
Operation department.
I worked first week for operation department. And different department in-charges
guided me in the different working fields. The first section I started work
in account opening and clearing section. Sir Safdar helped me and told me
how to account open and also told me what types of documents are require
for the account opening procedure.
During this practice I filled the account opening forms and issuance the cheques
book to the account holders. It is also called the Customer Service Section.
In the Bank the first step is Account Opening. It is contractual agreement between
bank and customer after which both concerned parties indulge in a mutually
beneficial business relationship. And both are interact directly. If the any person
who wants to transaction through the Bank firstly he opens the account than he
can proceed further.
Types of Accounts
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Individual Account:
• Copy of CNIC/NICOP/POC
• Any job /business proof (if applicable)
Students Account
All the documents which are necessary for the Individual Account that are
same for the students Account but a little bit documents are different that are:
• Student’s ID card
• Copy of the B form
• And copy of the Guardian
For Limited Company account
• Copy of Certificate of Incorporation
• Memorandum & Articles of Association
• Board Resolution
• Latest copy of Certified Form-29
• List of Directors
• Copies of CNICs of all Directors Certificate of Commencement of
Business (for Public Ltd co).
Partnership account
• Partnership Deed (certified copy)
• Letter of Authority & Mandate
• Copies of CNICs of all partners
• Account Opening Request.
Proprietorship account
• Copy of CNIC.
• Copy of NTN Certificate
• Account opening Request & Proprietorship Letter
Club / Society / Association and Trust account
• Copy of Rules / By-laws
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• Copy of Registration (if applicable)
• List of Executive Members / Management committee/ Management Board
etc.
• Certified copy of Resolution CNICs of all members of Management Body
Account
Bank Register entry Number
Issuance of Cheques
System Input ID card Verification Book
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Remittance and Clearing
After the account opening section I worked in the Remittance and Clearing
section. I saw the representations of Cheques which come for clearing. Sir
Shahzad helped me in this section and told me the basic steps of clearing and
remittance. During the working of this department I filled vouchers of many
account holders in this bank.
Clearing
Intercity
In intercity section the Cheques are drawn to other bank that is out of cities by
ABL-IBB In intercity NIFT directly present Cheques in the concern bank if
clearing then the bank clearance stamp on this Cheques and State Bank
transfer amount to the other bank’s account. NIFT charges on this RS. 150.
Bank gets commission on it RS.250 per Cheques.
Local
Local clearing is free means that bank does not charge by its clients for clearing
and pay for it by self. It can be said that it is free for customers.
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Inward
Inward Clearing means the Cheques drawn from ABL-IBB another banks. Where
as clearing branch to branch is done through online.
Outward
In outward clearing I saw how the Cheques drawn on other banks with in city
ABL-IBB.
OBC (Outward Bank Collection)
The OBC Cheques drawn by another banks outside city. ABL-IBB does not take
NIFT services but send Cheques to other branch. And that branch does
clearing locally.
IBC (inward Bank Collection)
IBC Cheques drawn on ABL-IBB from other city. Branch of that city confirm
about that Cheques through fax which drawn on ABL-IBB Gujranwala. After
clearing ABL-IBB Gujranwala transfer funds in the Nostro Account.
Services Charges
NIFT perform all clearing services Intercity and local both. It charges for return
report and clearance report RS.150.
• Return report means if Cheques is not clear by other bank NIFT returns
this to the particular bank.
• Clearance Report means if Cheques clear by other banks NIFT report to
the particular bank to which that Cheques belong.
Stamps
Three types of stamps are pasted on Cheques at the time of clearing. Those two
stamps are:
Crossing stamp
Clearance stamp
1. Pay account will be credited on realization
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Crossing stamp used for ownership whereas Clearance stamp used for clearing
that indicate that this Cheques complete in all aspects and fulfill all
requirements.
Procedure of Inward & Outward Clearing:
Inward clearing:
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It deals with transfer entries, Bank statements (customer information about
account), day to day expenses, postage expenses, taxes, Debit, credit, ledger
accounts and received mail from courier and passed the entries in register for
record. This department also performs account verification means that when
the account opening form come from the customer service department this
particular department verify that whether this form is complete or not. If
complete then send letter of thanks to accountholder’ house if not then come
back to the customer service department. It counts the total debit and credit in
the whole working report of the bank. Practically I worked in this department
passed the entries in recording register.
Account department responsible to manage the following
Transfer Entries:
Local transfer:
Local transfer is the transfer of funds from one account to another within branch.
Day to day expenses include:
Office stationary
Repair and maintenance
Office equipment
Advertising expenses
Electricity bills
Gardener salary
Telephone bills
Postage expenses include:
OSC
TCS
DHL
When all these expenses are occurred account department present these through
expense vouchers.
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Supervising
Sir Awais Chisti is responsible of the entire Operation department and supervises
rechecks all the activities of the operation department. If he realizes any mistake
in any activity, then he returned it to the concern section for remove the deficiency
and after supervised this finally.
At the end of the day the related person In-charge checks all the activities to the
Operation Department Head (Sir Salman warrich) but in the day routine if any
discrepancy exist then he solves it at that time.
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Corporate:
Corporate deals with funded and non funded facility. In other
words it can be said that it covers with both long-term and short-
term requirements.Murabaha meet working capital needs whereas
Ijarah and Diminishing Musharkah fulfill long-term financing
requirements for plant and machinery. Corporate is divided into the following
Categories:
Corporate
Non-Funded
Funded
Funded
Non- Funded
Sight LC Usance LC LG
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Murabaha:
“The Murabaha transaction was prevalent in the day of
Prophet .”
• Islamic banks therefore use a sale-based transaction (Murabaha) instead of
loan-based transactions for financing purchase of assets by their clients.
• Over 70% of all advances made by Islamic banks comprises of Murabaha
transactions.
• Murabaha is a particular kind of sale
• Islam prohibits charging interest on money, but permits charging profit on
sale of goods
• Where the transaction is done on a “cost plus profit” basis i.e. the seller
discloses the cost to the buyer and adds a certain profit to it to arrive at the
final selling price
• The distinguishing feature of Murabaha from ordinary sale is: the seller
discloses the cost to the buyer and a known profit is added.
• Prohibition of: Major Uncertainty (Gharar) and Sale of debt
• Subject matter of sales must conform to Shariah rules: Be in existence,
Possession by seller either physically or constructive.
Valid Sale:
A valid sale contract exhibits two features:
• Knowledge; i.e. parties’ full knowledge of the object of sale.
• Existence; a concrete sale object.
Absence of these features introduces Gharar in the transaction
Murabaha:
The profit may be added: On a lump sum basis & as a percentage of cost
Payment of Murabaha price may be
1) At spot
2) In installments
3) In lump sum after a certain time
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Hence, Murabaha does not necessarily imply the concept of deferred payment.
Basic rules for Murabaha financing:
1. Asset to be sold must exist.
2. Sale price should be determined.
3. Sale must be unconditional.
4. Assets to be sold: should not be used for un-Islamic purpose, should be in
ownership of the seller at the time of sale, and should be in physical or
constructive possession of the seller.
Quranic view on Gambling & Risk
O
believers! Intoxicants and gambling and Al Ansab (Animals sacrificed for idols)
and Al Azlam (arrows for seeking luck or decision) are an abomination of Satan's
handiwork. So avoid them in order that you may be successful. Satan wants only
to excite enmity and hatred between you with intoxicants and gambling and
hinder you from the remembrance of Allah and from prayer. So, will you not
then abstain? (Al Maidah 90 – 91)
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• “The Prophet forbade the sale of grapes until they become black and
the sale of grain until it is strong.” (Bukhari, Muslim, Abu Dawood,
Tirmidhi)
Clien
Bank
t
Agreement to
Murabaha
Step # 2
Client appointed as agent to purchase goods on bank’s behalf.
Clien
Bank t
Agreement to
Murabaha
Agency
Agreement
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Step # 3
Agency
Agreemen
t
Disbursement to the agent or supplier
Suppli
er
Step # 4
Transfer of
Risk Vendor Delivery
of goods
Bank
Agent
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Step # 5
Client makes an offer to purchase the goods from bank through a declaration.
Bank Client
Offer to
Purchase
Step # 6
Murabaha Agreement
+
Transfer of Title
Bank Client
Step # 7
Client pays agreed price to bank according to an agreed schedule. Usually
on a deferred payment basis (Bai Muajjal)
Client
Bank
Payment of Price
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Documentation:
There are a number of documents involved in a Murabaha financing transaction.
The most essential of these documents are:
• Master Murabaha/Istijrar Finance Agreement.
• Agency Agreement.
• Draw down notice.
• Description of assets.
• Summary Payment Schedule.
• Declaration.
Master Murabaha:
• It’s an agreement between the client and the Bank whereby the client
agrees to purchase goods from the Bank from time to time as per the terms
and conditions of this agreement.
• This is an over all facility agreement under which various Sub-Murabaha
may be executed from time to time.
• Hence it needs to be signed once at the time the facility is sanctioned.
Agency Agreement:
• The client is appointed by the Bank as its agent to purchase goods. This
agreement needs to be signed once between the client and the bank.
• The disbursement of funds is done under this agreement.
Declaration:
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• Proper timing of declaration is extremely important.
Import Murabaha:
• LCs opened and subsequently financed by ABL-IBB is an ideal example
of a direct payment Murabaha.
• The customer opens the LC from ABL-IBB as an agent of the Bank (i.e.
places order with the foreign supplier on behalf of ABL-IBB.
• Upon receipt of documents ABL-IBB makes payment to the foreign
supplier.
• ABL-IBB sells the goods to the customer on Murabaha (i.e. cost plus
profit basis)
Credit Administration Department (CAD):
The Credit Administration Department (CAD) is involved in security
documentation monitoring and accounting for all banking products and services.
Furthermore, CAD monitors the documentary compliance of Shariah related
requirements on an ongoing basis. CAD also ensures that SBP regulations and/or
legal requirements of the transaction are adhered to at all times. CAD also handles
a large volume of back end operations for Corporate, Consumer and SME related
businesses.
This department is also responsible for the issuance / cancellation of guarantees
and centralized SBP reporting for various activities. As per our Shariah
requirements, the complete preparation and maintenance of pools for the liabilities
products and the Islamic export refinance are also part of this department.
Particularly I match all the documents of Murabah financing with check list.
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For Corporate, Consumer and SME:
What is Credit?
• That the transaction booked will prove rewarding for the bank.
• Ability.
• Solvency.
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Foreign Trade Department:
The Trade finance department is: divided into three parts:
Foreign Trade
Export:
There are following three basic modes of export:
• Export on Collection Basis
• Export on Advance Payment
• Export by Negotiation
Collection:
Exporter comes to the bank to issue E-FORM for shipment. Shipment goes first
then foreign bank sends money to the exporter’s bank. All the risk bear by
exporter in collection base export.
Two terms used in Collection base export
• C A D (cash against documents)
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Procedure of Collection Base Export:
• Exporter comes to the Bank to issue E-FORM for shipment.
• Exporter fills E-FORM and returns it to the Bank for certification.
• Bank certifies E-FORM and gives it to the exporter for shipment.
• Exporter goes to the custom for shipment with shipping documents.
• Custom stamp on the E-FORM of shipping bill number. Custom keep
original E-FORM copy.
• After that he goes to shipping company and after verification of the
documents, shipping company issues Bill Of Lading. He keeps duplicate.
• E-FORM copy.
• Shipment goes
• After shipment, Exporter comes to the bank and returns the Bill Of Lading
and copy of all other documents. Bank keep triplicate E-FORM copy and
give the Quard –duplicate to the exporter.
Advance Payment:
Foreign bank sends money to the exporter on the account of export advance
payment. Exporters bank receives the payment and asks the exporter to give
the purpose of this payment. Get the “Advance Payment Voucher” signed by
the exporter and finally realize the payment
Procedure of Advance Payment in Export:
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• Bank certified E-FORM and gives it to the exporter for shipment.
• Exporter goes to the custom for shipment with shipping documents.
• Custom stamp on the E-FORM of shipping bill number. Custom keep
original E-FORM copy.
• After that he goes to shipping company and after verification of the
documents, shipping company issues Bill Of Lading. He keeps duplicate
E-FORM copy.
• Shipment goes.
• Exporter comes to the bank and returns the Bill Of Lading and copy of all
other documents. Bank keep triplicate E-FORM copy and give the Quard –
duplicate.
• Bank report to the SBP with triplicate E-FORM.
Negotiation:
Exporter comes to the bank and submits the shipping documents along with
LC (letter Of Credit) exporter bank received the documents with LC. Checks
the documents with LC, take indemnity or guarantee from the exporter and
after approving from the branch manager and head office, gives value of the
documents to the exporter. In other words negotiation means payment of
documents in export by the bank to the beneficiary (exporter). When the
exporter submits the shipping documents along with the export.
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Difference between Collections, Advance Payment,
And Negotiation
:
Shipping Documents
Shipping documents are the documents that must required for export/import.
1) Commercial invoice
2) Packing list
3) Shipping certificate
4) Certificate of origin
5) Bill of lading
These are the documents that are required for all types of export.
I.C.C Rules for Foreign Trade :( International Chamber of
Commerce)
• URC 522 (uniform rules for collection). Foreign Trade done all over the
world according to the rules and regulations of URC 522.
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Terms of contract/sale:
In negotiating a contract, an exporter must determine who is to meet the various
charges as they are incurred. The more common terms of contract are:
1. CIF
2. C & F
3. FOB
It means that the price will include the cost of goods and freight paid in
connection with the delivery of goods on board the carrying vessel for unloading
at the port or airport of destination named in the contract. Documents needed are:
• Commercial invoice.
• A full set of bills of lading evidencing that the goods have been shipped on
board the carrying vessel and stating that freight has been paid by the
exporter.
FOB (free on board):
It means that the exporter has only arranged the space and shipped the goods
without payment of freight. Thus the freight charges are to be paid by the
consignee at the port or airport of destination.
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Import:
There are three types of import:
1. Letter of credit
2. Firm’s contract
3. Advance payment
LC:
Letter of credit means guarantee to pay by the issuing Bank if either of the parties
(importer or exporter) defaults/unable to pay at sight (immediately /arrival of
documents) or at payment in due date in acceptance.
Types of LC:
1. Sight LC
2. Usance LC (day acceptance)
Differences between the Sight and day acceptance LCs:
In Sight LC payment within 7 days whereas in Usance LC payment at maturity
date.
LC Process:
Related field In-charge told me about the process of LCs and what
types of steps are involve in it. Those steps are:
1. LC issuance
2. LC lodgment
3. Retirement
LC Issuance:
Issuance of LC the following steps are necessary:
Issues the LC, one copy is send to the SWIFT department for advising Bank. One
copy is given to the applicant (importer).
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Recover LC opening charges as follows.
Customer AC DR
(As per Bank schedule of charges)
LC commission C R
SWIFT charges C
2. The issuing Bank books liability in his own favor on account of the
applicant. The process of booking liability is as under:
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3. Liability Booking.
Amendments (Before expiry of LC):
There are four types of amendments that we can do in our LC.
1. Validity Period: extend expiry and shipment date before the shipment
date is expired.
2. Enhancement of Amount: you can increase the amount of money of
the commodity but in this case book new liability
3. Change quality: quantity and price but not to change the commodity.
4. Beneficiary may change but on the acceptance of the applicant (Importer).
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Export Import goods
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Export Import Procedure
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Remittances:
Remittances are of two types
1. Inward Remittance.
2. Outward Remittance.
Remittance
Inward Outward
Inward Remittance:
The Bank receive inward message through SWIFT for credit to the beneficiary
account being maintained either in Pak rupees or FC account. In case of Pak
rupees account mentioned in the SWIFT Message. The receiving bank converts
the FC account into Pak rupees by applying TT Buying Rate of the value date of
that day.
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Foreign Bank sends FC in Pakistan through SWIFT
ABL-IBB
Converted in
Pak Rupees Applying TT buying
rate
Outward Remittance:
Until or unless special approval an Remittances
Remittances are of two types
3. Inward Remittance.
4. Outward Remittance.
Remittance
Inward Outward
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Inward Remittance:
The Bank receive inward message through SWIFT for credit to the beneficiary
account being maintained either in Pak rupees or FC account. In case of Pak
rupees account mentioned in the SWIFT Message. The receiving bank converts
the FC account into Pak rupees by applying TT Buying Rate of the value date of
that day.
ABL-IBB
Converted in
Pak Rupees
Applying TT buying
rate
Outward Remittance:
Until or unless special approval and permission have been granted by SBP.
The FC amount can be duly remitted through FC account only by depositing
FC cash.
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NOTE:
FC FC
NO conversion rate will be applied
FC Pak
Rupees
Conversion rate will be applied
Foreign exchange means must be converted into Pak rupees.
Reporting to SBP:
1. Import
2. Export
3. Remittance
Import:
I-Form will be prepared at the time of payment to foreign bank against the
documents of Import. In the month of which we transferred the foreign currency
to the foreign bank, at the end of the month, we will send I-Form, copies of bill of
lading and commercial invoice.
Export:
When we receive the foreign currency from foreign bank, after getting this
amount, we will send E-Form along with copies of bill of lading and commercial
invoice to SBP.
Remittance:
All the inward remittance will be reported to SBP on IRV-Form (inward
remittance voucher).
Profit on FC account:
Monthly profit paid to foreign currency accountholders will be reported to SBP
on M-Form.
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Forms:
NOTE:
FC FC
NO conversion rate will be applied
FC Pak
Rupees
Conversion rate will be applied
Foreign exchange means must be converted into Pak rupees.
Reporting to SBP
4. Import
5. Export
6. Remittance
Import:
I-Form will be prepared at the time of payment to foreign bank against the
documents of Import. In the month of which we transferred the foreign currency
to the foreign bank, at the end of the month, we will send I-Form, copies of bill of
lading and commercial invoice.
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Export:
When we receive the foreign currency from foreign bank, after getting this
amount, we will send E-Form along with copies of bill of lading and commercial
invoice to SBP.
Remittance:
All the inward remittance will be reported to SBP on IRV-Form (inward
remittance voucher).
Profit on FC account:
Monthly profit paid to foreign currency accountholders will be reported to SBP
on M-Form.
Forms:
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Car Ijarah:
Mode of Financing:
The chosen mode of financing would be the Ijarah agreement, where the Bank
acquires an asset (vehicle) and the rents it to the client for an agreed period.
At the completion of the agreed period, the Bank gives the customer an option to
purchase the asset (vehicle).
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The following table details some of the macro-features of the applicable mode
of financing:
Parameters Detail
Role of ABL-IBB To purchase a vehicle and rent it to a customer
under an Ijarah agreement.
Ownership (Title) Ownership lays with ABL-IBB
Periodicity Pre-determined monthly rentals.
Period of facility 3 years to 5 years.
Mode of payment Through post dated cheques or direct debit
instructions.
Purchase option to the At the end of the Ijarah agreement period, ABL-IBB
customer will make an offer to the customer to purchase the
asset at a pre-determined value.
Security:
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The vehicle will be registered and insured in favor of ABL-IBB before its physical
possession is given to customer. In cases where the Approving authority feels the
need, they may direct that additional security be taken from the applicant before
execution of the transaction.
Deposit Margin:
For New Vehicles:
• Minimum 15% of cost of the vehicle.
• Maximum 50% of the cost of the vehicle.
For New Vehicles:
Under the ABL-IBB’s Car Ijarah scheme the vehicle should not be more than 8
years old at the time of maturity of lease. This means that if a car id 5 years old, it
should not be leased more than 3 years and its 4 years old, it can be leased fir a 3
or 4 year term. This scheme is valid for both vehicles manufactured in and outside
the country.
Insurance:
Insurance premium will be paid by the bank and will be recovered through lease
rentals charged from the customer.
Repayment of Lease Rentals:
Monthly rentals to be paid through post-dated cheques in favor of ABL-IBB or
through Standing Instructions to debit account on due date if ABL-IBB account
holder.
Processing Charges:
Non-refundable processing charges to be collected at the time of collection of
legal documents. These include the cost of legal documents, address verification
and CIB report & vehicle appraisal (in case of second hand vehicles
In case, where applicant wants to change his/her vehicle after approval has been
given by credit approving authority, a non-refundable Rs. 1,000/- will be charged
for the change/replacement of approved asset.
Documentation Charges:
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To be charged at actual and will be recovered in rental. This amount includes
registration charges, number plate related expenses, taxes and other government
levies and cost of legal documents.
Pre-mature Termination:
In Case of pre-mature termination of the Ijarah contract, the client will pay the
purchase price as mentioned in the Terminal-value schedule forming part of the
lease documents. The purchase price takes into consideration the following
amounts:
Normal Vehicle:
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• The Bank purchases the item required for leasing and receives title of
ownership from the vendor.
• The Bank makes payment to the vendor.
VENDO
. .
ISLAMIC BANK Agreeme
CUSTOMER
R nt-1
Step#2
• The Bank leases the asset to the customer after execution of lease
agreement.
• The customer makes periodic payments as per the contract.
• Title transfers to the customer.
. .
ISLAMIC BANK Agreeme
VENDOR nt-2 CUSTOMER
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• No Advance Rental.
• No Advance Insurance.
• We get the vehicle registered before delivery and bear those expenses.
• We stop Rentals in case of vehicle gets stolen/snatched.
• No late Payment charges if the applicant has some genuine problem (he
has proves that).
• We stop Rentals in case vehicle declared total loss.
• In case of booking the applicant do not have to pay Rentals until the
vehicle appears from booking.
• Fix amount of Rentals throughout the period of Ijarah.
• In case if the applicant can not afford to pay Rentals he can return vehicle
and get his security deposit back
• Most of all 100% Islamic Mode of facility.
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Operation Department:
Ist Week:
Account opening:
• Outward Clearing.
Account:
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• Ijarah Repayment & Schedule.
• Fill post dated checks.
• Calculate the average Balance of Claims in Bank Statements.
• Monthly accruals of Car Ijarah.
•
4th, 5th & 6th week:
Foreign trade:
• Practically check Shipping Documents.
• Check practically LC Process: LC Opening to LC Retirement.
• Check practically all the modes of Export except Negotiating.
• SBP Returns & Reporting.
Corporate:
Check practically of the process of Murabaha & its documentation
e.g.
• Financials of the firm.
• Security Documents.
• Legal Opinion.
• Valuation.
• Approval/Sanction advice.
• Offer Letter.
• BBFS (Borrower Basic Fax Sheet)
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Internal Analysis:
Strength:
• Trained staff
Weaknesses:
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• Unable to capture market even after launching the highest number of
products.
• Congested place of branch
External Factors:
Opportunities:
• Still a largely un-tapped market for Shariah compatible products.
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Askari Islamic bank is new in Islamic banking systems. So it needs a lot of
improvement in its sectors. Some of the recommendations & suggestion to the
bank would be as follows:
• Along with the officers, the training must also be given to the clerical staff.
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• Deterioration in efficiency is mostly due to promotion without merit. So
promotions must be awarded on merit and also when due.
To motivate the employees of the bank, regular bonuses and incentives should
be given to them.
• There must be a friendly environment among all the employees as it
enhances the trust and sincerity.
• At the moment the bank is not providing ATM facility to its customers.
Bank should start giving this facility in order to highlight the value added
features offered along with the basic product. As the bank has the good
image, they can use that image as a benefit in this regard. To stay in the
competition the bank should introduce its ATM cards soon.
• The number of Fax machines and photocopying machine in the bank are
also less than they are needed. For photocopying one has to go downstairs.
So there should be more machines and also their placement should be at
the right place.
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During my internship in Askari Islamic Bank G.T. Road Gujarnwala,
for one and half month I have worked as a member of the organization
providing good services. They also try to provide more and more
facilities like Business Loan, Car Ijarah facility to their valued clients.
I have viewed the last six month performance of the bank. The bank’s
the staff members. This branch is not only maximizing its profit every
month but also controlling its expense ratio and it is a good sign for a
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Banks Ability as Going Concern
There is no doubt about the bank’s ability to continue as a going
concern. This branch is not only competing with other banks but also
Employees Behavior:
The employees are hard worker and keen to capture the clients on the
basis of their fair dealing. The do not waste any single opportunity to
get a good deposit from their valued clients. The staff also tries to
good relations but also increase the overall deposits of the branch.
banking industry and taking necessary measures to keep pace with the
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Glossary
[A]
AOF: Account opening form (AOF) is used by the customers to complete the
written requirements for the records to open an account in a bank.
Automated teller machines – ATM: Short form for automated teller
machine, a machine at a bank branch or other location which enables a customer
to perform basic banking activities (checking one's balance, withdrawing or
transferring funds) even when the bank is closed.
[B]
Balance: The amount of money in an account equal to the net of credits and
debits at that point in time for that account. Also called account balance.
Bank Rate: The discount rate set by a central bank.
[C]
CAD: (Cash against Documents).A transaction in which the buyer assumes
the title for the goods being purchased upon paying the sale price in cash.
CAD: Credit Administration Department
CNIC: Computerized National Identity Card.
Current account: The net flow of current transactions, including goods,
services, and interest payments, between countries.
[D]
DD: Demand Drafts are the most economical way to make payments or transfer
funds overseas. Customer can purchase demand drafts in just about any currency
and they can be cashed worldwide.
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[E]
Exchange Rate: Rate at which one currency may be converted into another
also called rate of exchange or foreign exchange rate or currency exchange rate.
FC: Foreign Currency.
[G]
[I]
Interest Rate: A rate which is charged or paid for the use of money.
[J]
Joint Account: Any account owned by two or more people.
[L]
Letter of Credit: (L C) a binding document that a buyer can request from his
bank in order to guarantee that the payment for goods will be transferred to the
seller.
[M]
Maturity: The date on which a debt becomes due for payment also called
maturity date.
Mortgage: A loan to finance the purchase of real estate, usually with specified
payment periods and interest rates.
[N]
Nominal Interest Rate: Currant stated rates of interest paid or earned.
[P]
PLS: Profit and loss sharing
[R]
Remittances: Transfer of money is known as remittances.
[S]
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Savings Account: A deposit account at a bank or savings and loan which pays
interest, but cannot be withdrawn by check writing.
Trade Finance: This program improves market-based access to, and delivery
of, SME finance, including the regulatory and credit information infrastructure.
Term Finance Certificates: A certificate of deposit with a longer time to
maturity is TFC.
[V]
Voucher: A document which acknowledges a liability or provides authorization
to pay a debt.
[W]
Working Capital Loan: A short-term loan which provides money to buy
earning assets.
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Bibliography:
All the information provided by making this Internship Report has been
gathered during doing Internship in Askari Islamic Bank and from the
following sources:
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